Lords Sitting of 5 May 1983

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Southwark): The LORD CHANCELLOR on the Woolsack.
The Viscount Blakenham—Sat first in Parliament after the death of his father.

Air Transport Tariffs: Enforcement
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 they accept the recommendation of the International Civil Aviation Organisation that organisations issuing licences have an important obligation to see that the terms of the licences are carried out; and whether they will make a statement clarifying the position of the Department of Trade and the Civil Aviation Authority on this matter.
The Secretary of State for Trade (Lord Cockfield): My Lords, Her Majesty's Government accepted the recommendations on tariff enforcement which were adopted at the Special Air Transport Conference in Montreal in April 1977 and the Second Air Transport Conference held there in February 1980. The policies of the Department of Trade and of the Civil Aviation Authority are consistent with this position.
Baroness Burton of Coventry: My Lords, could the Minister go a little further than that? Although I am glad that the Government accept the recommendations made at both those conferences, does it mean that the Government, the Department of Trade and the Civil Aviation Authority will check that this clause is held to by those holding the licences?
Lord Cockfield: My Lords, it is one thing making the rules and the regulations, which is what we have in fact done. It is much more difficult ensuring that the rules are obeyed. The chief offenders in this respect are the airlines themselves. We are doing everything we can to persuade them to forsake the sin that does so easily beset them.
Baroness Burton of Coventry: Yes, my Lords, but does the Minister understand—I am sure he does—that the airlines themselves would welcome the Department of Trade seeing that this clause is adhered to? Does he recall that last Thursday in this House he did say that the operating permits we are discussing now make it clear that the approved fares must be charged? Will the Government see if they can help in that matter?
Lord Cockfield: Yes, my Lords. As I have said on a number of occasions in the past, we are taking every
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measure we can to ensure that the airlines comply with their obligations, but it must necessarily be done primarily by persuasion, because many of the airlines of course are foreign airlines and they are backed by foreign Governments. If we were to take too vigorous action in this country, it would almost certainly lead to retaliation against our own airlines.
Baroness Burton of Coventry: My Lords, I am sorry to persist, because I am sure the Minister wishes to help. But, while we in this House think he is a very firm Minister and will stand by what he says, does he not feel that some pressure should be brought to hear on airlines (if there are any) which persistently break the clause which the Minister himself has now inserted in these permits?
Lord Cockfield: Yes, my Lords. We have in fact taken action by way of persuading airlines, where that remains the only course open to us. But it is impossible, I fear, to solve this problem completely so long as there remains a large amount of surplus capacity in the airline business. But, as the noble Baroness knows, agreement has been reached on a number of important routes to ensure compliance with the published and approved fares. That is progress, and we will continue to do our best to ensure that progress is maintained.

Leaded Petrol: Future Availability
3.4 p.m.
Lord Montagu of Beaulieu: 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 appreciate the necessity of having leaded petrol available after 1990 for use by vehicles constructed previously, the modification of whose engines to use unleaded fuel would be impossible or impractical.
Lord Lucas of Chilworth: My Lords, the Government fully accept that when lead-free petrol is introduced transitional arrangements will be needed for a number of years to ensure that leaded petrol continues to be available for vehicles that need it.
Lord Montagu of Beaulieu: My Lords, I thank my noble friend for that Answer. Is he aware that what he has said will be of considerable comfort to the owners of the more exotic and historic vehicles, such as vintage Bentleys and so on, the continuing use of which gives immense pleasure to the general public?
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend for those remarks. I am equally glad that we are able to give that comfort to those owners.
Lord Underhill: My Lords, do the Government accept the view of the Royal Commission that so long as there is a demand for leaded petrol there is no reason at all why it should not be supplied? Will the Government, in their various consultations, be having talks with the motoring organisations on this

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important point which has been raised by the noble Lord? Finally, as everything will depend upon negotiations with the EEC, will the Government keep Parliament informed of progress in this direction in case things should not be going satisfactorily?
Lord Lucas of Chilworth: My Lords, I can assure the noble Lord, Lord Underhill, that full consultation with all the interested parties in the United Kingdom—the oil industry, the motor industry and, indeed, the users—will be undertaken. I am quite sure he will accept that these consultations may take some little while to resolve, as there are a number of problems. So far as the EEC is concerned, noble Lords may like to know that my right honourable friend the Secretary of State for the Environment will be discussing this matter with colleagues at the council meeting in Europe next month, in June.
Lord Mowbray and Stourton: My Lords, am I right in thinking that Her Majesty's Government are ordering that by 1985 the lead content in petrol for all new cars should be down from 0.4 grammes per litre to 0.15? Can my noble friend give me some indication of the percentage of lead reduction that is?
Lord Lucas of Chilworth: My Lords, the noble Lord is quite right. It was in 1981 that the Government recognised the problems associated with lead in petrol and made arrangements for the level to be reduced from 0.4 grammes per litre to 0.15 in 1985. This will be a 60 per cent. reduction in the lead content in petrol, and will make the most significant difference to the whole problem of leaded petrol. The move towards lead-free petrol, I am quite sure it will be realised by all noble Lords, will therefore be of a very much smaller denomination.
Lord Leatherland: My Lords, while we are talking about petrol, may I ask the Minister whether he is aware that at many garages announcements on the pumps say that the petrol is so much per litre? Can we please have the announcements on these pumps in gallons?
Lord Lucas of Chilworth: My Lords, the price of petrol is somewhat wide of the Question on the Order Paper, but certainly there has been a move during the last few years to adopt the litre system. But if one looks very carefully one will see, certainly at all the garages and filling stations with which I have been associated over a number of years and have knowledge of today, that there is a chart on the side of the pump giving the equivalent rates.
Lord Bishopston: My Lords, will the Minister give some thought to the need to keep the cost of petrol down, especially if there are any changes in the lead content? I think he will recall that exactly four years ago today, at the last general election, petrol could be bought for about 93p per gallon—and that price has now almost doubled. If the present trend continues, and if the present Government stay in office, the cost of cars and motoring will be such that the only vehicles to be seen will be in motor museums.
Lord Lucas of Chilworth: My Lords, first. I have little doubt but that the present Government will remain in power. So far as the cost is concerned, noble Lords will recall that lead-free petrol was shown to be somewhat more costly. If people wish to have all the environmental benefits of lead-free petrol, they must recognise that they have to be paid for. In Chapter 7 of its report, the Royal Commission on Environmental Pollution sets out all the costs associated with this move.
The Earl of Lauderdale: My Lords, will my noble friend not agree that the rise in the price of petrol has nothing whatever to do with Government policy? It is entirely due to the increasing surplus of refining capacity.
Lord Lucas of Chilworth: My Lords, I am not sure that I have any note about the surplus of refining capacity, but certainly the cost of petrol at our pumps results from a wide variety of factors.
Lord Hankey: My Lords, can the Government tell the House whether any encouragement is being given to industrial and chemical research with a view to producing a substitute for lead which will maintain the octane level in petrol without being equally damaging to the health of the population?
Lord Lucas of Chilworth: My Lords, research has been going on for a number of years, and there are a number of alternatives to lead. One is methanol, and another is MTBE. These are both produced in small quantities, largely on the continent. They are very expensive, but they could certainly provide an alternative additive to increase the octane rating.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that the best answer that he can give my noble friend Lord Bishopston is quite simple: get on your bike?
Lord Jenkins of Putney: My Lords, is the noble Lord aware that the cost of petrol in this country, which has its own oil resources—as we understand it, quite ample resources—is very much higher than it is in some countries which do not have any oil at all of their own? Can he explain how his Government have managed to arrange that for us?
Lord Lucas of Chilworth: My Lords, if the noble Lord cares to put down a specific Question on the Order Paper, I shall be delighted to give him what answer I can.
Lord Bruce of Donington: My Lords, will the noble Lord investigate the whole question of the cost of additives to petrol to be used in substitution for lead, to which he referred in answer to another noble Lord? My information is that there are additives which do not add significantly to the cost of the fuel itself. Will he undertake to investigate that a little further?
Lord Lucas of Chilworth: My Lords, I am quite happy to give the noble Lord, Lord Bruce of Donington, an assurance that I shall look at that point. He uses the word "significant", and I would point out

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that it is very difficult to quantify exactly what is meant by that.

Video Recorders: Manufacture in Britain
Lord Gainford: 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 when the manufacture of video tape recorders in the United Kingdom is likely to commence.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, by the end of this year, there will be three manufacturers of video recorders in the United Kingdom. A joint venture with JVC of Japan commenced production at Newhaven in October 1982, and Mitsubishi and Sanyo have announced that they plan to commence production later this year in Scotland, and at Lowestoft, respectively.
Lord Gainford: My Lords, I thank my noble friend for that Answer. Will the opportunity for British technology now to enter this very popular form of entertainment possibly produce a combination of increased quality and competitive price?
Lord Trefgarne: I certainly hope so, my Lords. However, I should point out that the present licences for this technology are held by Japanese companies, and it is, I believe, thought that yet another type of video recorder—as I say, there are already three on the market—might not necessarily be commercially attractive.

Civil Servants: Trade Union Activities
3.14 p.m.
Lord Renton: 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 non-industrial civil servants are now engaged full-time on trade union activities, and what is the estimated cost to the Exchequer of their incomes, accommodation, telephones, typewriters. et cetera.
The Lord Privy Seal (Baroness Young): My Lords, I regret that central figures are not available at present, but are due to be collected in the summer in order to monitor the effects of the new national framework agreement on facilities introduced in 1982. I gave the last available figures in answer to the noble Lord, Lord Boyd-Carpenter, on 1lth March 1982.
Lord Renton: My Lords, is not the expense involved in employing these civil servants entirely on trade union duties quite considerable, and should the cost to the Exchequer still be justified when the unions can now well afford to bear it?
Baroness Young: My Lords, with regard to the first part of the noble Lord's supplementary question, I should like to make it quite clear that the greater part of time off is for industrial relations duties, and not in fact trade union activities. But I should also say that the new national framework agreement provides for greater control of facility time through increased accountability for individuals' time off, and through provision for a review at least annually of the facility time allowances.
Lord Renton: My Lords, I am grateful to my noble friend.
Lord Brockway: My Lords, may I ask the Leader of the House whether it is not the case that in Civil Service departments highly paid, full-time officers are engaged in watching worker relationships, and should not the workers themselves have the same right to representation?
Baroness Young: My Lords, the noble Lord, Lord Brockway, has made an allegation about what might be going on in Civil Service departments on which I would rather not comment. The object of this particular exercise is to negotiate not only the new national framework agreement, as has been agreed, but also agreements within departments, and this is intended to encourage both responsible activities of trade unions and responsible debate on industrial relations matters.
Lord Cledwyn of Penrhos: My Lords, can the noble Baroness confirm that she is satisfied with the state of industrial relations in the Civil Service at the present time, and does she agree that the national facilities agreement will assist towards improving industrial relations in the Civil Service? Does she also agree that the amount of money spent is negligible and is well worth it in terms of achieving good industrial relations in the Civil Service?
Baroness Young: My Lords, I believe that industrial relations in the Civil Service are good. The national framework agreement has been agreed. It is now being discussed with departments. Over 60 per cent. of non-industrial civil servants have now reached agreements with departments, and, as I indicated in my original Answer, we expect the rest to be completed later on in the summer.
So far as the expense is concerned, this was the point of the Question that was asked originally by my noble friend Lord Boyd-Carpenter, and I stated the sums of money involved. However, in answering today's Question, I should like to make it clear that the paid time off allowed to union representatives for trade union activities is strictly limited, and that, under employment legislation, employers are required to allow reasonable time off for trade union activities.

Business
Lord Denham: My Lords, it may be for the convenience of your Lordships to know that dinner will be available this evening at the usual time. The Committee stage of the Telecommunications Bill will be adjourned at approximately 7 p.m. for a short

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period. During this adjournment the Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983, and the Rates (Amendment No. 2) (Northern Ireland) Order 1983 will be taken.

Kingston upon Hull Bill [H.L.] Staffordshire Bill [H.L.]
The Principal Deputy Chairman of Committees (Baroness Llewelyn-Davies of Hastoe): My Lords, on behalf of my noble friend the Chairman of Committees, I beg to move the procedural Motion standing in his name on the Order Paper.
Moved, That those provisions in the Bills against which no petition has been presented, or if presented has been withdrawn in whole or in part, or which become unopposed by reason of any of the provisions of Standing Order 113 be committed to a Select Committee and that the quorum of the Select Committee be two.—(Baroness Llewelyn-Davies of Hastoe.)
On Question, Motion agreed to.

Ports (Reduction of Debt) Bill
Read a third time, and passed.

Agricultural Holdings (Amendment) (Scotland) Bill
3.20 p.m.
The Minister of State, Scottish Office (The Earl of Mansfield): My Lords, I beg to move that this Bill be now read a second time. The purpose of the Bill is to introduce changes in the law governing the relationship between agricultural landlords and tenants in Scotland; changes affecting the procedure for determining rent in rent review cases which go to arbitration and the arrangements for succession on the death of a tenant. The House may find it helpful if I briefly describe the background to the Bill.
As your Lordships may be aware, there has been a gradual decline over a considerable period of time in the number of farms available to let. This decline was noted by the committee under the chairmanship of the noble Lord, Lord Northfield, which reported in 1979 on its inquiry into the acquisition and occupancy of agricultural land. I should like to pay tribute to the noble Lord for his personal contribution to that far-reaching inquiry. I am sure that the majority of noble Lords here will agree with the view of the Northfield Committee that there is a good case for retaining and encouraging a healthy and reasonably large let sector.
In Scotland over the past 10 years, the percentage of total area of agricultural land held under the traditional landlord/tenant system has dropped from 36 to 31 per cent. Both sides of the industry in Scotland, the Scottish Landowners' Federation and the National Farmers' Union of Scotland, were of course aware of, and concerned about, this decline, and with every encouragement from this Government and at my instigation they entered into discussions
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with a view to considering what action might be taken which would be acceptable to both sides of the industry.
These detailed discussions led to agreed joint proposals presented to my right honourable friend the Secretary of State in February 1981. Clearly provisions for succession to tenancies and arrangements for determining rent levels on arbitration are sensitive issues in which there are differing views relative to landlords' and tenants' interest. The fact that joint proposals in this sensitive field were agreed by both sides of the industry is a measure of the responsible and statesmanlike way in which they approached the exercise and I should like to take this opportunity of paying tribute to the union and the federation for the spirit of co-operation in which they carried out this difficult task.
On receipt of the joint proposals, which I of course welcomed, I immediately met both sides of the industry and set up a working party under the chairmanship of my department with a remit to examine and establish the precise intention of the proposals on rent and succession with a view to translating these into amending legislation. The working party, which included representatives of both sides of the industry, met on six occasions and reported at the end of 1981 when there followed a round of consultations on the report with a wide range of interested bodies in Scotland. Comments on the recommendations were discussed at a meeting of the reconvened working party in June 1982 when final agreement was reached with both sides of the industry on the legislative changes necessary to implement the intentions of the joint proposals.
I now turn to the Bill. The legislative changes affecting rent and succession are provided for by way of amendments to the provisions in the principal Act, the Agricultural Holdings (Scotland) Act 1949, and the clauses of the Bill follow the order of sections in the 1949 Act.
Clauses 2 and 5 deal with the determination of farm rents on arbitration. Under existing legislation, the criterion for determining rent on review by arbitration set out in Section 7 of the 1949 Act, as amended by Section 2 of the Agriculture Act 1958, is the level of rent a particular holding would be likely to attract if available to let in the open market and the means of establishing what that level might be in comparison with similar holdings which have actually been let in the open market. For a variety of reasons, very few farms are now offered to let in the open market and, accordingly, there are situations in which rent offered may be unrealistically high because a particular would-he tenant is prepared, for one reason or another, to offer an abnormally high rent, possibly even including an element of "key money" to secure the holding.
It is considered appropriate to modify the existing statutory formula to allow arbiters, where appropriate, to take into account other factors than open market rents to correct for any element of "key money" in the open market comparable. Clause 2 therefore provides that while normally the criterion for determining rent on review will remain as at present—that is, comparison with the open market—in future, an arbiter who considers that the available evidence

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about a comparable open market rent is insufficient or insufficiently reliable to enable him to determine the review rent on straight comparison, shall be able to take into account other factors defined in the new subsection (1A) to Section 7 of the 1949 Act introduced by Clause 2—factors which as already explained will enable him to discount any element of "key money" in the open market evidence.
The new factors are fourfold: first, open market comparisons outwith the surrounding area; secondly, entire range of offers made for comparable subjects; thirdly, sitting tenants' rents fixed by agreement for comparable subject in the surrounding area; and fourthly, current economic conditions in the relevant sector of agriculture.
Clause 2 also reduces the period between rent reviews from five to three years. At this stage I should explain that during the course of the proceedings of this Bill in another place, concern was expressed to me by both sides of the industry that Clause 2 of the Bill, as drafted, might not achieve one of the main aims of the Bill, namely, that in rent review cases, an arbiter should have regard to factors additional to open market rents in the surrounding area where these rents were unrealistically high because of scarcity of subjects to let. Similar concern lay behind an Opposition amendment to Clause 2 at the Report stage in another place.
It has always been the Government's intention in this Bill to provide that the arbiter must look to factors other than evidence of open market rents for comparable subjects in the surrounding area where he is of the view that such evidence as there is is "insufficient or unreliable" and it was envisaged that this phrase would encompass situations in which there was a scarcity of subjects to let. We acknowledge, however, that it is vitally important to ensure that the wording of the proposed new statutory formula for determining rent on rent reviews by arbitration is the correct one since this formula will affect the whole of the let sector in Scotland.
In the circumstances the Government gave an undertaking at the Report stage in another place to re-examine the wording in detail and, if necessary, to present an amendment for the consideration of your Lordships at the Committee stage in this House. Our re-examination of the wording is in hand and I shall report the outcome to the House when it is in Committee on the Bill.
Under existing legislation in rent review cases, there is no right of appeal by either party against an arbiter's findings of fact, or against the level of rent he finally determines, although there is an appeal on questions of law. An arbiter's decision in any particular case can be of vital importance to the livelihood of a tenant or, indeed, a landlord, particularly since rents can now involve considerable sums of' money. In present circumstances, we consider it appropriate that the important question of level of rent should be subject to review. Clause 5 of the Bill therefore provides for a right of appeal by either party to the Scottish Land Court, on questions of law or fact, against an arbiter's award in a statutory rent review case, and associated with this a provision that the arbiter shall be required
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to explain in writing the reasoning behind his decision. The clause also details procedural requirements as regards the arbiter's award and arrangements for appeals.
The provisions in the Bill relating to succession to tenancies and security of tenure are contained in Clauses 3 and 4. In Scotland, as your Lordships may know, a tenancy does not automatically end on the death of a tenant and can normally be bequeathed or transferred by the executor if there is no will or if the bequest is for any reason invalid.
The existing legislation differentiates between near relative successors and non-near relative successors. Where a non-near relative has succeeded to a tenancy on the death of a tenant, the landlord can, if he wishes, gain repossession of the holding by serving an incontestable notice to quit on the successor within certain time limits; and the existing provisions contained in Section 6(3) of the Agriculture Act 1958 are re-enacted in Clause 3 of the Bill, in a simplified form.
Where, on the death of a tenant, the successor is a near relative, statutorily defined as a surviving spouse or child including an adopted child, that near relative successor has considerable security of tenure and the landlord can only regain possession of the holding if he can prove to the Scottish Land Court, following service of a notice to quit, that he should get repossession of the tenancy for specific reasons defined in statute. These are that the successor has neither sufficient training in agriculture nor experience in farming to farm with reasonable efficiency; that the holding is not sufficiently large to provide full-time employment for more than two men and the landlord requires it for the purposes of amalgamation; or that the successor already has an agricultural holding of his own prior to the death of the tenant. Existing tenants have an expectation that these statutory provisions will apply to their near relative successors for unlimited generations and the Government consider it appropriate that this expectation should be safeguarded in the amending legislation—a view shared by both sides of the industry in Scotland. For tenancies let before 1st January 1984, the existing provisions shall continue to apply to future generations of near relative successors, provided of course that there is no break in that succession. Clause 4, as read with Cases 1 to 3 in Part I of Schedule 1 to the Bill, re-enacts the provisions of the existing relevant statute—that is, Section 18 of the Agriculture (Miscellaneous Provisions) Act 1968—in a simplified form.
For existing tenancies, therefore, the statutory provisions relating to rights of succession and security of tenure remain exactly as they are under existing legislation, and the reason for re-enacting these provisions in this Bill is to bring together as a matter of convenience in one piece of legislation the main statutory provisions relating to succession to tenancies in Scotland. The relevant sections of earlier Acts are repealed.
So far as new tenancies are concerned—that is, tenancies created on or after 1st January 1984—the Bill in Clause 4, as read with Cases 4 to 7 in Part II of Schedule 1 to the Bill, adjusts slightly in favour of the landlord but only in that it enables the landlord to

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regain possession where the tenant is clearly not suitable. Both sides of the industry—landlords and tenants—share this view and are agreed that the balance should be adjusted in this way in favour of the landlord by widening the grounds on which a notice to quit may be served on a near relative successor to a new tenancy. The new circumstances are set out in Cases 4 to 7 of Part II of Schedule 1 to the Bill and are briefly that a successor does not have sufficient financial resources or relevant training or experience to farm the holding with reasonable efficiency, or that the successor at the date of the notice to quit occupies other agricultural land capable of providing full-time employment for himself and at least one other man. In these cases the onus of proof before the Scottish Land Court, following the service of a notice to quit, will shift from the landlord, as at present, to the tenant. Where a notice to quit is served on the grounds that the holding is required for an amalgamation, the onus of proof will remain with the landlord as under the existing law.
For new tenancies, therefore, the Bill does not introduce any dramatic change in security of tenure for near relative successors but adjusts the position slightly in favour of the landlord, though, I would emphasise, only so far as the continued good farming of the holding requires.
There is no question of providing an instant solution to the problem of the decline in the let sector which has taken place over a period of time under successive Governments. We consider it important, however, to take steps towards halting this decline and encouraging the traditional landlord/ tenant system. We also consider it important that any changes in this sensitive and complex field should be acceptable to both sides of the industry, as indeed the measures in this Bill are. I beg to move.
Moved, That the Bill be now read a second time.—(The Earl of Mansfield.)
3.35 p.m.
Lord Ross of Marnock: My Lords, we should be grateful to the Minister of State for his explanation of this Bill. It is a limited Bill. I do not agree with the Minister in another place, who said that it was an historical Bill—unless, of course, every Bill is a piece of history. However, it is one as regards which I have an interest to declare. I think I shall be the only one without a real estate interest in the case of this particular Bill.
The whole of Clause 1 tells us that in this Bill the principal Act is the Agricultural Holdings (Scotland) Act 1949. I was on the committee of that Bill. This Bill also affects the 1958 Act, and I was on the committee of that Bill, too. Then there was the 1968 Act. There, I was the author of Part III of that Act, which applied to Scotland. In fact, both of the latter two Bills which I have mentioned were United Kingdom Bills. Now we have this Bill.
My main interest is the wellbeing of Scottish agriculture and of the agricultural population of Scotland; that is, the farmers and the whole community. There is no doubt that in my lifetime—and this was brought out by the Northfield Committee—the proportion of let or tenanted farms in Scotland has gone down from
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about 88 per cent. to 31 per cent. By now it is probably down to about 30 per cent. The Northfield Committee suggested that in another 40 years it would be down to half of that—probably about 16 per cent. It represents a complete change in the whole structure of landholding and farms in Scotland. Indeed, it concerned the Labour Government because it was the Labour Government that set up the Northfield Committee in 1977. I am surprised, first, that it has taken so long to get important, if limited, legislation: and, secondly, I am equally surprised that it is so limited.
I have here the report. Your Lordships will see that it is a very considerable report with a considerable number of recommendations about which we have heard nothing but which are probably equally important to the problems that we could be discussing today. I should like the Minister to give us an indication whether there is any other legislation coming forward to be put on the statute book in relation to this.
I almost feel that I have strayed into a not very well attended meeting of the Scottish Landowners' Federation—and no doubt they will all be members of the NFU. Therefore, I can well understand how they got together and came to an agreement. I do not disagree with the entire balance that has been reached. It is a very astute balance, coming down, of course, on the side of the Scottish landowners. We shall probably be hearing about the Labour Party's ideas for land, which arc not related to this Bill at all and are not related entirely to the Northfield Committee. But the Northfield Committee tackled this point with a wide range of recommendations in relation to let land and land that is let in some form or another outside the agricultural holdings statutes, and even recommended that there should be a measure of state ownership of land. They mentioned particularly the Highlands. They mentioned new powers that should have been given to the Highlands and Islands Development Board. I should have loved to hear something about that in the Minister's Second Reading speech on this Bill, but we heard nothing at all, either in the other place, or here.
We must bear in mind that security of tenure in relation to let farms in Scotland is way beyond what has ever been known in England. We have had this measure of security of tenure since at least 1923. That was hardened up in the 1949 Act, and in 1958 the Tory Government took it away, and even the "near relative"—who, when the father died was probably looking forward to taking over a farm which had been in the family for generations and generations—was subject to eviction; and eviction did take place. That was why in 1968, after a considerable contest with my agricultural colleagues in England—and I see that they have both left the field—
Lord Bishopston: My Lords, I am here.
Lord Ross of Marnock: My Lords, my noble friend Lord Bishopston was not there in 1968. That was why in 1968 we managed partly to restore the position in Scotland. It is what is happening to that position about which I am concerned in this Bill. The Government start with the aim of trying to increase the number of

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let holdings in Scotland. Quite frankly, I do not think that that will work. I am very glad that they have not gone right back to the 1958 position. With the help of Norman Buchan, the Member of Parliament who was the Scottish Minister on that particular Committee, we retained that security of tenure for existing tenants. But now we have a new position. In Scotland we have two classes of tenants, with two different measures of security. In the long run I do not think that that will be for the good. I do not think that it is the kind of compromise for which everyone would have hoped and, recollecting the support that I received from the National Farmers' Union in 1968, I dare say that they would have been unhappy if they had decided to leave Scotland alone in that respect.
But the basis of the Bill is the importance of the let sector. As the law stands, it has considerable merit in that it imports the advantage of continuity and efficiency deriving from the tradition of the son being brought up on the farm, having a detailed knowledge of it and inheriting the tenancy on his father's death. There is every incentive for the tenant's family to put the maximum skill and effort into farming the land efficiently and, as a result, everyone concerned—the landlord, the tenant and the community at large—benefits from the arrangements. Those are not my words; they are the words of the Government Minister in the other place. If it is as good as that, why interfere with it? But no, the bargain was made and the balance was struck.
But I am concerned—and I hope that the Government are concerned—at what has been happening. I say that this will not work, that we will not get that increase. I doubt whether we shall even stem the decline in the number of let farms. When the landlord gets vacant possession, what will he do? If the present trend continues, he will take the land in hand and farm it himself as part of an estate business. He may sell it to a pension fund. That is happening in the Aberdeen area of Scotland to a greater extent than in other parts of Scotland, and the figures are all in the Northfield Committee Report. He may let it to the highest bidder, and here we come to the question of how the highest bidder gets it. There is no doubt that premiums or key money are being involved more and more in respect of this because of the scarcity of land to let. I do not say that it happens in every case, but it has been happening, and in a particular case it can inflate the rent for existing tenants.
At present in respect of a succession to tenancy the question of training and experience in farming arises; but when the landlord lets with vacant possession, or indeed when he sells to anyone, the question of the person buying or the person who gets the let having experience does not even arise. The only question that arises is money, which gives rise to exploitation of the land. Remember, the state has a considerable interest in the land. The state has put millions and millions of pounds into the health of the land—certainly since 1945. So we are right to examine what is being done and should not just leave it to a get-together of the National Farmers' Union and the Scottish Landowners' Federation.
I think that the NFU was concerned about whether or not the question of key money is properly covered.
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I am very grateful to the Minister for telling us that he is still examining it, although he has been examining it for some time now. I do not know when the Committee stage of the Bill will be, but it could even be next week if the Prime Minister decides to have an early election. So I ask the Minister not to dally with his consideration and to come back with the right answer, or it may well be that this Bill will be delayed. When we may be on the eve of an election, I fear that the Government will refuse amendments, because if they accept amendments, the Bill will have to go to another place, which means more time lost. But we must get it right and we must keep the bargain with the farmers.
I should like to comment on the mood of draftsmen. Here we have a simple Bill of seven clauses. Clauses 1, 6 and 7 do not really matter. Clause 1 is the interpretation clause; Clause 6 refers to repeals; and Clause 7 tells us when the Bill will commence. The substantive clause is Clause 4. But to make any sense of the Bill you have to read Clause 2 with Clause 5, and Clauses 3 and 4 together, or Clauses 2 and 5 with the one schedule that really matters. I admire present-day draftsmen for their ability to render the simplest of Bills obscure, complex and virtually unintelligible. I know that the noble Lord, Lord Burton, will read this Bill like a book. Like me, he has been interested in this for a long time. But legislators should be given a little better guidance than they get, even from the Second Reading speech of the Minister. I defy anyone who is not concerned with this subject, and even many of those who are concerned with it, to read this Bill and understand it.
We have the 1949 Act; we have the 1958 Act; we have the Succession (Scotland) Act, which followed from the McIntosh Report on Succession. I believe that that took about 13 years before it was put into legislative form in 1964. I was on the Committee of that Bill too. Now we have this Bill. Will there be some measure of consolidation, or have the Government decided to wait because they have something else in mind in respect of agricultural holdings? It is only fair that we give people a proper indication, so that they can read a statute through and know just exactly how they are involved.
I turn first to rents. I disagree with the change from five years to three years. That rents must be reviewed every three years does not show a great deal of confidence in the Government's ability to keep inflation down. Of course there is only one reason for it, and that is to increase the rents. That has been their experience over a long time. If English Peers are concerned about the fact that it was five years in Scotland and three years in England, there always has been a difference between Scotland and England, in this respect. It goes way back even before the 1958 Act, and the Government did not change it in 1958 because they realised that the traditions were different there.
Certainly there has been a speeding up in respect of inflation over recent years, but we are told now that it is going to be relatively easy; that in fact the problem has been solved. I should like to get the justification for this change from five years to three years. It is not long enough to allow any farmer to do any serious planning in respect of it. When you consider many other aspects of legislation, the Government are certainly not

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prepared to act when the period is longer than three years. When were valuations in Scotland last brought up to date? It is going to be about eight or nine years before they are brought up to date. They have a considerable effect. This is one of the points I shall be taking up in Committee in that respect.
I welcome the fact that the Government are now by statute instructing arbiters where there is dispute. We should appreciate that most of the rents and rent reviews are settled by agreement between landlord and tenant. But in those cases where they are not it is unfair at the present time where there virtually is no open market, and where a farm has been let with special circumstances applying to the person who is taken over, that that should be considered adequate, as it is at present, for fixing new rents for farmers in the surrounding area, and that there is no appeal in respect of fact. When they have taken it to the land court, the arbiter is announced, be makes his decision, comes down to the place and gives his award, and the facts may be completely wrong and there are plenty of grouses on the part of the tenant, but nothing can be done outside a question of law.
If the noble Earl likes to go to the files of the Scottish Office for the year 1978ߝ79 he will find letters from one William Ross, MP for Kilmarnock, in respect of certain cases which took place around that particular area. A large number of farmers received letters about an increase in their rents—astounding increases to them. That was based on a farm in the area which had changed hands for very special circumstances indeed. The adviser from the National Farmers' Union produced another farm, but the farmers were told. "No, it cannot be done. It is outside the area". I am glad in that respect that a widening range of comparisons can now be taken where there is no really open market in the immediately surrounding area.
I remember that particular case because one of the things I was told by the farmers was that the arbiter visited when they could not see a farm: there was snow covering all the ground, and it lay there for a fortnight. The arbiter made his judgment about comparability in respect of a particular farm. But there was no appeal. I am glad now that there is an appeal in respect of facts as well as law. That is one good aspect in the Bill that I certainly applaud. I shall be happy in respect of this provision if we get that amendment which ties the matter up.
The other point is about possession. It is not as bad as I thought it might have been. But it leaves aside all the other questions in respect of whether we should redefine the meaning of near relatives. Is the reference to the Succession (Scotland) Act of 1964, as amended, a reference to the fact that an illegitimate child was given rights in respect of inheritance? It is mentioned in Clause 4.
When we come to the other questions affecting let farms and the decisions of landlords to let, the Government were asked by the Northfield Committee to monitor what was happening in respect of sales to overseas buyers, and that has been happening in Scotland. They were asked to monitor—they did not wish to stop—sales to institutions, to pension funds, and the rest of it, because many of them put in tenants rather than put in managers. Thirdly, they were asked to have a look at partnerships.
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I was impressed by a speech made in the other House by Mr. John Conic. He was subject to a partnership agreement in which he had no security at all, and one day was told that the partnership was at an end. It is a pretty phoney partnership when that happens; when one person is really being exploited by another. I know that it does not happen in all cases, but from some of the speeches we had in another place it must have angered people who entered into them in a real business and fair co-partnership sense. The Government were asked to look at these matters by the Northfield Committee. So far as I know they have done nothing. These are all important from the point of view of stopping the decline in tenant farms in Scotland.
The other aspect that the Northfield Committee discovered was that there was scanty statistical information about the whole field. They asked for land registration. It might be embarrassing if we had complete land registration in Scotland. People would know who owned the land in Scotland, and would not leave it to the likes of Mr. McEwan in Perthshire—
A noble Lord: He was wrong.
Lord Ross of Marnock: Oh, he was wrong? My Lords, of course he was wrong, because some of the information was not available. Mind you, we have plenty of information that is available—I could gladly spell it out—covering the whole of Scotland. But should we not have more statistical information in respect of agricultural holdings? Then it may well be that we should be in a better position to legislate and to see exactly what should be done.
The Bill is limited. The balance which has been struck is in favour of the landlord. However, I am not surprised that there is a sigh of relief among the tenant farmers that the 1968 Act was left alone so far as existing people are concerned, but it is bad that in future we are going to have two types of land holding for let land, with it being easier for the land owner now to get vacant possession.
I do not think the Committee stage will be a long one; but it will be an important Committee stage. I hope that the Government will be able to tell us how often and how long they have looked at the Northfield Committee, and whether they have any other ideas in respect of legislation for any of their other important suggestions and recommendations.
3.58 p.m.
Lord Mackie of Benshie: My Lords, I listened to the noble Lord, Lord Ross of Marnock, detailing his part in the changes which have come about. But we have got it wrong so often that I am glad that at least this new Bill is based on some form of agreement. Whatever good intentions the Labour Party had in 1949, they produced a curious situation. They produced a closed shop for farming, and produced a privileged section of tenants who hung on, and the landlords often suffered. Not that my heart bleeds much for the landlords, but they are human beings and they deserve the same consideration as other people. The landlords were done down right, left and centre by the legislation, and many tenants grew extremely rich

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on taking advantage of the legislation which was enacted.
What happened to the farm servant? What happened to the fellow who used to work his way up, work a small farm and become a farmer? He had no chance; farming was left as a closed shop. Whenever the landlords had a farm in their possession, either they sold it or they took it in hand. The effect of the policy, which was supposed to be good for Scottish farming and good for the tenant farming system, has been appalling. The result is that there are vast areas affected in Scotland. For example, in Angus alone, I can show your Lordships one estate farming 4,000 acres with eight men and eight large tractors. That is the lot. There are no tenants there whatsoever. That is all because of the type of legislation we have had. It has been one-sided and has taken no account of the social considerations.
The legislation we have in Scotland, to which the noble Lord referred, consists of long leases and the ability to bequeath the lease to anyone, not just to relatives. The beqeathing of a lease was a fair working system. If that system had been continued with some improvements, such as those over death perhaps, it would have been far better for the country as a whole than the present system and the state we are in where one has to be enormously rich—a football pools winner or the son of a rich farmer—before one can take over a farm. This is an unhealthy state for farming.
I welcome the Bill. It has flaws in it as obviously all Bills have, but it does not try to reverse a decision in favour of one side or another. It tries to reach a measure of consensus and that must be good. For that reason I welcome it. I agree with the noble Lord that it is a smallish Bill, but it is an improvement. Along with it has to go a big change in the law on taxation. It must be profitable for a landlord to let a farm and good for him in the long term. It must be profitable for him to let farms in family-sized units instead of in big units. We now have to think of the life of the countryside. We are no longer like the EEC trying to amalgamate farms to get people off the land. There are 12 million people unemployed in the EEC and many of them have come off the land. We have to forget about land purely as a commercial factor and let the free play of the market work. That is not good enough; it is much more than that. We have to look carefully at any legislation if we are to encourage the traditional system, which was a good system in Scotland. It must be more profitable for the landlord and safer for him to let land than to farm it himself or to sell it. On all hands it is agreed that it is a system that can provide a ladder, and does so. If we are trying to preserve that system then I welcome the Bill.
The noble Lord, Lord Ross, implied that many people here have an interest. When he said that he looked hard at me with that piercing gaze. I admit that I have an interest in that I have been a landlord, a tenant and an owner-occupier, all three—and sometimes at the same time. But the point about the Bill is that it is a trade-off. I welcome the rent provisions. It is extraordinary that when the market is closed for land, somebody with a scheme to grow strawberries or roses or some obscure but valuable
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product will pay a lot for a farm; but if another man starts growing that product he will knock the bottom out of the market. That is typical of what has been happening. Traditional farmers have had to pay the high rents which were achieved in the open market because of the scarcity value. Then those rents were applied in arbitration to the people farming on the normal system; farming well but not the high specialist system of farming. If that were multiplied, conditions of surplus would occur which drive prices down.
I am sorry that the old formula has been rejected (which I thought was a good one) of the rent that a prudent farmer would offer a prudent landlord, or that a prudent landlord would take from a prudent farmer. It was not a bad formula if it was allied to the open market. I was very glad to hear the Minister say that an amendment would be brought forward because the Bill as it stands does not alter this situation and it will need amendment. At present, the arbiter is bound to take the open market rent, if there is an example in the area. That will certainly have to be altered.
The change from five years to three years will be welcome. I do not have the same optimistic view of the future of farming that some people have. I think the tenants of Scotland will be able to get their rents down every three years instead of having to wait five. I do not look to great advancing years in farming with surpluses in every part of the world. I welcome the three-yearly period. I think it will be useful and better.
I do not think the matter of succession has done a great deal of good to the farming industry. I do not believe it has done what it was meant to do. It is all very well for the farmer's eldest son; but if the farmer has two sons—which many farmers have, or, indeed, daughters who may wish to farm (not wishing to be sexist)—their chances of getting a farm will be very much reduced. Nevertheless, I agree with the noble Lord, Lord Ross, that to have two systems will be somewhat complicated. This Bill is welcome. It is welcome more as a step in the right direction, but it is a step that I welcome.
4.7 p.m.
Baroness Elliot of Harwood: My Lords, I should like to congratulate the noble Earl, Lord Mansfield, and the Government on bringing this Bill forward. Admittedly it is limited, but it deals with a subject that is highly controversial, or has been in the past. The result of the Bill will be to take much of the controversy out of the subject. I congratulate the noble Minister on the way in which he introduced the Bill, and on the Bill itself.
I should like to say to the noble Lord, Lord Ross of Marnock, that I am a member of both the National Farmers' Union and of the Scottish Landowners' Federation. I have never found that to be very controversial. Both organisations, on the whole, are fundamentally anxious that farming—the land and the community that lives on the land and farms it—should have every possible help and benefit. I agree with the noble Lord, Lord Mackie of Benshie. I do not like these huge areas owned by companies or insurance companies unless they are prepared to let the land to people who will treat their work as part of the community and not only as something from which

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they hope to make a lot of money, and who do not really care very much about the areas in which they live. That is a wrong point of view, and I hope that the Bill will help in that matter and will concentrate, as it does, on the importance of both sides of the industry and of the industry itself.
I agree that fair rents for sitting tenants are very important. I am in favour of excluding that element of premium or key money to which the noble Earl, Lord Mansfield, referred. That is a good provision, and we should support that amendment to the existing legislation.
The second point relates to new leases to be given to successors of tenants. It is right that such people should have to prove that they are proper persons and have some agricultural knowledge. The reasons which are outlined in the Bill, although they may not be perfect, at least deal with both the landlord who has a farm to let and with the tenant who wants to remain in it or whose son or whose relations want to continue. I think that that is fair, provided that the person who succeeds is a good person, a good farmer and one who will use the land to the best advantage. I also agree that it is a good thing that in the case of a controversy the land court decision should be subject to appeal. I understand that that has not been allowed previously, and I think that it is only fair.
I agree that the question of revising rents from five years to three years is also only fair. I do not agree with the noble Lord, Lord Ross, who thinks that this is too short a period. Things happen quickly these days; and changes in agriculture also happen very quickly. There is a lot to be said for reducing the limit from live years to three years. It is fair to both sides. An appeal from the arbiter's decision on a point of law is also right. The working party suggested that the right of appeal to the land court on a point of fact will also go to law. I think that that, too, is fair. This would happen if the Secretary of State appointed the arbiter. If the landlord or the tenant do not want the appeals procedure, then they can agree to an arbiter.
These are all good points, which I think will help in this very difficult subject, because there is no doubt that there has been controversy in the past. I live in an area where there are several very big, old and well-managed estates. On the whole, the tenant and the estate owner have had a very happy relationship for a good many years. I think it is important that that should be preserved. Also, I feel that it is only fair that the landlord should be able to get his property if he wants it desperately for a son or relation. This Bill, agreed as it is between both sides, between the Scottish National Farmers' Union and the Scottish Landowners' Federation, shows that there has now been an agreement which will help both sides and also the industry. I support the Bill strongly.
4.13 p.m.
Viscount Massereene and Ferrard: My Lords, I wish to declare the usual interest regarding agriculture, in that I have tenants and I am a member of the various landowning and countryside organisations. I remember speaking on the 1968 Bill and saying that this would cause the drying up of tenancies in Scotland and that, for any young man coming out of an agricul-
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tural college and wishing to become the tenant of a farm, it would be difficult to get one. I said that it would be practically impossible. And, of course, so it has proved. As the noble Lord, Lord Ross, well knows, the reason was that the then Labour Government turned farming tenants into what could almost be called a new hereditary class—into a closed shop, as the noble Lord, Lord Mackie of Benshie, said—because, provided that they kept on breeding and they had therefore reasonably near relatives, they could keep on farming the farm for a thousand years, or two thousand years. There was no end to it.
But I regret the damage which has been done to the old landlord-and-tenant farming system in Scotland, because the majority of the landowners were very good to their tenants. I remember how, in the Western Highlands in Mull, once or twice, when there had been a bad winter—and, of course, the rents were pitiful—my father would not take the rent at all. Now, if the state had owned that farm—and, of' course, the state is an absentee landlord and a very ruthless one—I am quite sure that it would have had that tenant out. But I must not dwell on that too much.
I made a few notes while other noble Lords were speaking. I. too, welcome Clause 2, which is associated with Clause 5 regarding arbitration. I think it is an excellent idea that the arbiter will now have to put in writing his findings, the reasons he has given, for making the new rent. I understand that one can appeal against the arbiter's ruling to the Secretary of State or to the land court if one decides to use that particular route. I also understand that one does not have to abide by that but can use the old system. I should have thought that every sensible tenant and landowner, if unable to come to a private agreement, would use the new system as set forth in the Bill.
It is really hopeless to assess new rents on comparable farms which are let on the open market. The system in the 1968 Act, which, to a certain extent, ran through the original Act, completely dried up the supply of farms available for letting on the open market. I think that I should now say that I agree wholeheartedly—as, I am sure, do noble Lords opposite except for the noble Lord. Lord Ross—with the reduction of the period of rent review from five years to three years. Of course, there is the question of inflation and also the question of higher and higher subsidies for farmers and, therefore, higher and higher gross profits. Therefore, I think that five years is far too long and that a fairer period in which to go to arbitration would be three years. I think it is fairer for the tenant and the landlord. True, the tenant will have to pay an increased rent, but as I have said, owing to inflation and subsidies, he will have far greater gross income.
I have known cases where the landlord has been far poorer than the tenant. Not so long ago in the Western Highlands there were tenants who had, say, 2,000 ewes, and those tenants were paying rents which would hardly have rented a council house. They were pitifully low. Scotland is so varied in its agriculture. One can take the land south-east of Edinburgh, for example, with probably the best arable farms in the world. It is very difficult to make comparisons.
I should also like to go for a moment on to Clauses 3 and 5 regarding successors. I am worried about one

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point. I am rather on the side of the tenant here; in fact I am always on the side of good tenants because it is a well tried system. But what happens if the tenant dies and he leaves a widow and a young son? I may not have read the Bill as fully as I ought to have done. It refers back to the 1949 and subsequent Acts. What happens in such a case presumably is that if the young boy wants to follow in his father's footsteps—though, of course, not all boys do—there ought to be some provision so that eventually he is able to do so and farm where he was brought up.
The other point I am not quite sure about concerns adoption. That can be abused. I heard of a tenant who was paid a large sum of money to adopt a child who could eventually take over the tenancy. Apart from that, there are no doubt questions of adoption where it would be perfectly fair for the adopted child eventually to take on the tenancy.
The noble Lord, Lord Ross, made one or two remarks—I realise that I must finish quite soon because I have been speaking for seven minutes—and referred to state ownership. He said, quite rightly, that the state has put millions and millions of pounds into the Highlands. That is quite true; but the state has also lost millions and millions of taxpayers' money through putting that money into the Highlands, and I should like him to bear that in mind. However, I agree with the noble Lord regarding the drafting. For the ordinary layman like myself who is not a lawyer, it is gobbledegook. It is extremely complicated and it would take you a very long time, with all the previous Acts before you, to fathom it correctly. It ought to be put into far simpler English.
I welcome the Bill and I think it will increase tenants. The fear of the noble Lord, Lord Ross—and of course he has a point here—is that some landlords, when they get a farm hack, will sell it to the highest bidder. Certainly some will. I would point out that what the Department of Agriculture has now done in Scotland for its own farm tenants is to allow them to buy their farms at a third under market price; and I fear that the majority of those tenants will sell their farms extremely quickly and make a very nice profit. The trouble is that they may well sell to the wrong people. I am all against these pension funds, consortia and big companies buying land in Scotland, but especially in the Highlands. I am also against foreign companies coming in—
A noble Lord: Including the English?
Viscount Massereene and Ferrard: My Lords, I do not count the English or the Irish; but we have quite a number of foreigners now buying farms in the Highlands. That also, I fear, will break down the old landlord-tenant system which has served Scotland very well. I have spoken long enough and, on the whole, I should like to welcome the Bill. I think we shall have quite an interesting Committee stage, but, generally speaking, it is a good Bill.
4.25 p.m.
Viscount Thurso: My Lords, there is an old but true maxim that hard cases make had law, and it is perhaps
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a pity that the noble Lord, Lord Ross of Marnock, did not think of that before he fathered the series of measures for which he has claimed such happy paternity this afternoon, because there is no doubt that the instructions—
Lord Ross of Marnock: If I may intervene, my Lords, I fathered only one and it was only part of the 1968 Act. It has been continued within this statute; so the noble Viscount should vote against it if he feels that way.
Viscount Thurso: My Lords, I beg the noble Lord's pardon but I thought I understood him to say that there were at least two other measures which he helped to bring before another place. I may have misunderstood him and I will look carefully at Hansard to make sure whether I got it wrong or right. However, as I was saying, it was hard cases which produced the original legislation and destroyed a system which had worked remarkably well for a very long time. What I worry about particularly is the effect the Agricultural Holdings Act has had upon the farming ladder. It is exceedingly difficult for a young man who is not already in a farming family, or very rich, to get his foot upon the bottom rung of the farming ladder. There just are not the let farms available. The conditions which allow him to do so just are not available.
The noble Lord, Lord Ross of Marnock, referred to a suggestion in an excellent report by the noble Lord, Lord Northfield, that the Highlands and Islands Development Board should have more powers to help in this matter. But from recent personal experience I am not terribly encouraged in the belief that the Highlands and Islands Development Board might be able to help in this connection.
In the summer of last year one of my tenants—the tenant of a hill sheep farm—gave me notice that he wished to quit at the November term on health grounds and because his daughters did not wish to succeed him in the farm. A young man whom I employed as a shepherd approached me and said that he would like to leave farm service and go into farming itself. He said he would like to embark upon the farming ladder and asked whether I would consider him as a tenant. He is an excellent young man with an excellent wife and a small family. He was an ideal person to go into this farm, but unfortunately he was not rich. Although I was prepared to temper the terms of his lease to a shorn lamb, it was almost impossible to find him finance. The Highlands Board, at first blush, said: "Yes, we will lend you money and give you grants and so forth". But they were still arguing about what they could or could not do in early November, when he was due to do an entry at the November term. Had it not been for myself, who lent him some sheep, and for the Mart, who lent him money to buy further sheep, the young man would never have got started. To place your hope in the Highlands and Islands Development Board to start young people up the farming ladder is to place your hope in a mirage.
There is no doubt that it is the tenanted farm which can allow young people of this kind to get started; but what has happened to the tenanted farm since the original Agricultural Holdings (Scotland) Act? It has

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begun to disappear as we know it, because it just does not pay an ordinary landlord to go on owning tenanted farms. He is much better, if he gets one vacant, to sell it or to take it in hand; and so it disappears, as we have seen over the years. It is for that reason that I welcome this measure, because it will be a little more possible to enter into arrangements which will make it economic for people to go on owning tenanted farms and offering them for rent.
I do not fear the insurance companies and the big business people—the pensions funds—who buy land as investments, provided that there are legislative provisions which allow them to offer it upon a sensible basis to let, because they are then doing that useful service which has always been the landlord's traditional service, which is to provide the fixed capital and allow the farmer to provide the stock and the working capital. This is the way in which the smaller farm can be financed and the way in which the smaller farm should be financed.
I do not think that this Bill will put right overnight all the things that are wrong with the system of farm tenure in Scotland, but it is certainly moving in the right direction to correct at least some of the things that have gone wrong, and to make it possible for some of the people who ought to be in farming to be there. It is on those grounds that I, too, welcome this measure.
4.33 p.m.
Lord Stodart of Leaston: My Lords, as my noble friend Lady Elliot remarked at the beginning of her speech, the subject of agricultural holdings, and particularly the tenure of them, has for as long as I can remember been an extremely contentious subject in Scotland. Just mention security of tenure to me on a moonlit night, and I can hear the sound of hooves and a gentleman whom. I suspect, some noble Lords may remember by name, Captain Arthur McDougall of Blythe, galloping across Lauderdale, shouting imprecations at every landlord in sight, with the great geniality for which he was known.
For reasons to which I shall come in a moment, I must confess that I find it hard to work myself up into a state of enormous enthusiasm for this Bill, and I shall not be in the least surprised or affronted if, in his reply, my noble friend says that I have been guilty of damning it with faint praise. I just cannot see being achieved what the National Farmers' Union of Scotland describe as the express aim of the Bill, which is to encourage landlords to make more farms available to let; and I think that I am not misquoting the noble Lord, Lord Ross of Marnock, when I say that he, too, doubted whether this would happen. There will be so little difference after the Bill is enacted that I do not see it happening.
But having poured what I fear my noble friend can only regard as somewhat lukewarm water on his Bill, I must very sincerely and warmly congratulate him, if not on producing some kind of consensus between the Scottish Landowners' Federation and the National Farmers' Union certainly on harnessing them, for when the 1968 legislation was passed (in which I, too, was rather heavily involved) one could hardly say that relations were warm between those two bodies.
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Legislation on Scottish land tenure has travelled a very long road, and it is quite interesting to note that in this year of 1983 it is exactly 100 years since an Agricultural Holdings (Scotland) Act first made it possible for the remainder of an agricultural lease to be bequeathed. Before that, there was no such possibility. As has been mentioned, there have been many milestones along the road—some slightly more prominent than others. One might describe some as kilometre posts rather than milestones. There was legislation in 1949, 1958 and 1968, and this present legislation merits some consideration, for it is from what happened then that the proposals now before us stem. What was then described as "strong pressure" from the National Farmers' Union encouraged the then Government to bring in the legislation which exists today.
As a result of that, as noble Lords know, not only can a husband or a wife, or a son or a daughter, real or adopted, be named as heirs, but these near relations of future generations are given the same rights. Of course, it does not follow that these heirs will be successful. As my noble friend has said, they have to satisfy various qualifications, with the possible involvement of the land court. But what I remember arguing strenuously in 1968 is that that move would inevitably reduce the number of farms which landlords would be prepared to offer to let, and that it would become much more difficult for a young man to get into farming. I make this point not only because a young man is keen to farm but because I have always believed that it is essential to bring new blood into farming, just as in every other industry, for the invigoration of it.
As I said, when all this was going on the National Farmers' Union and the Scottish Landowners' Federation were very far from seeing eye to eye. I must tell the noble Lord, Lord Ross of Marnock, that I am one of those who does not fall into the category into which he grouped us. I have been a member of the National Farmers' Union for a very long time. I have never been a member of the federation. But in 1968 I found myself in the position of arguing strenuously against the National Farmers' Union and in favour of the federation. However, I found then that warnings to the National Farmers' Union about the inevitable reduction in farms to let fell on totally deaf ears. The National Farmers' Union thrive on controversy, and I am sure they will not mind my pointing out that the pressure which they exerted then has produced precisely the wrong result.
My noble friend has pointed out the decline in the number of farms to let during the last 10 years, and the NFU are now expressing anxiety. They say they believe in the system, and they want to do something to halt the decline. I do not minimise the advantages of amending the rules which bind an arbiter when he is adjudicating a rent; nor do I minimise the advantages of changing the rent review period from five years to three, or tackling the vexed question of so-called key money. But none of these changes will do anything to satisfy the express aim of the National Farmers' Union to produce more farms to let. The rules for succession to tenancies, which I still regard as basic to the problem, are to be amended only in the very slightest of ways.

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Since 1968 something has been happening which the advocates of that particular legislation—surely not the political advocates—can have neither envisaged nor desired. Since 1968 landlords have been playing a much more active and general part as partners. The partnership system was born out of a determination by all concerned, both landlords and would-be tenants, to avoid the restrictions that were imposed by the 1968 legislation. According to Mr. MacKay in another place, this system has been on the increase as the landlord-tenant system has declined. It is now a regular feature of many estates, at the expense of the traditional system. Share farming is in its infancy, but I am quite certain that it will grow. Both systems will ease the way into farming for many young men.
As the noble Viscount, Lord Thurso, pointed out, finance is by no means a small or minor problem. Having looked at my own valuation figures for 1968, it appears that the costs of going into a farm today are up by between five and 10 times. The irony—which I hope the noble Lord, Lord Ross of Marnock, will appreciate—is that the junior partner (if one may so describe him) in either system, partnership or share farming, who would formerly have been a tenant will not have the security which he had before the last milestone on this long road was passed.
4.43 p.m.
Lord Burton: My Lords, I, too, must declare an interest as an agricultural landlord and also as an agricultural tenant. I must declare a further interest as a member of the SLF executive and a member of the NFU area committee. As such, I welcome this modest alteration to the agricultural law of Scotland. All parties seem to acknowledge the need for young men to be able to get a foot on the farming ladder. This is obviously of the greatest importance if our great and efficient agricultural industry is to thrive. One of the best methods of securing this foothold, we are told, is to be able to procure the lease of a farm so that the landlord provides a large proportion of the capital required.
Latterly, however, the letting of agricultural property, particularly of the poorer ground and more especially in Scotland, has been a most unattractive investment. Not only has the return on capital been very low compared with modern interest rates, but Scottish landlords have been subjected to certain disadvantages compared with England's. As a landlord in both countries, I know that, among other things, the level of Scottish rents is way below those which are the rule in England. Indeed, the Highlands of Scotland have been subjected to certain disadvantages, even compared with other parts of Scotland. For example, our ancestors granted leases to smallholders who became crofters. These tenants are now fragmenting highland estates by exercising their right compulsorily to acquire their holdings for nominal capital sums. Indeed, they are some of the very few individuals who have the right compulsorily to acquire somebody else's property.
Now, however, the Opposition is threatening further compulsory acquisition of tenanted land. This must inevitably be a great deterrent to any landlord to let his land, if he can avoid doing so. Indeed, the noble Lord,
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Lord Ross of Marnock, issued further threats today and gave no apology for the 1949 Act, the 1958 Act or the 1968 Act. I agree with the noble Viscount, Lord Thurso. I thought the noble Lord had given himself credit for these Acts and that he had fathered them, but I am prepared to accept that this is not the case.
Lord Ross of Marnock: My Lords, does the noble Lord expect that I would ever take credit for a Tory Act of 1958 which took away altogether security of tenure?
Lord Burton: My Lords, the noble Lord said that he was on the committee, and because of what he said I thought that he had had a great deal of influence on these Bills.
Lord Ross of Marnock: No.
Lord Burton: The fact is that these Acts have caused a drop in agricultural lets from 36 per cent. of holdings to 31 per cent. or, as the noble Lord, Lord Ross of Marnock, said, from 80 per cent. to 30 per cent. Whatever the percentage, there has been a marked drop in agricultural tenancies in Scotland. Therefore, Scottish landowners, not surprisingly, went to the National Farmers' Union to try to get some proposals introduced. This Bill is the result. Regrettably, the proposals put forward by the Landowners' Federation have been very much watered down. Indeed, I very much doubt whether these proposals will provide the incentive for more land to become available for let. I was very pleased to hear my noble friend Lord Stodart of Leaston agree with this. He was more forceful than I intend to be. I rather hope that I am wrong, but time will tell.
My fear is that this Bill will not produce more agricultural leases. A farm which I own will become vacant next May and I am in a quandary about what to do with it. The moment I sign a lease I shall probably reduce the value of the property by 50 per cent. I do not believe that this can be good for agriculture.
I was pleased to hear my noble friend the Minister say that some changes might be made to Clause 2. I am not very happy with the clause as it stands at the moment and I hope that it will be possible to alter its wording. My noble friend the Minister may be pleased to hear that on 19th May when the Committee stage of the Bill is to take place there is to be an SLF open day. Therefore, I apologise in advance for the fact that I may be unable to be here for the Committee stage. Clause 2(b)(iii) requires examination, particularly as regards the reference to the goodwill between landowner and tenant.
The noble Lord, Lord Ross of Marnock, complained about the lack of statistical information concerning agricultural holdings. The noble Lord's complaint puzzles me. I have been a farmer for some years and twice a year I have to fill in a very large form which gives all the acreage or, perhaps I should say, hectare statistics. That change, incidentally, caused some confusion; one had to translate the acres into hectares. One is required to give details of all the cropping. An enormous amount of statistical information is available to the Ministry of Agriculture, so I

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cannot understand what the noble Lord is complaining about.
I should like to thank the noble Lord, Lord Mackie of Benshie, for having said so clearly what I should have liked to say about the Bill. I agree, perhaps surprisingly, with everything that he said about it. I welcome the Bill on the basis that half a loaf is better than no bread at all and I thank my noble friend and the Government for it. All I would ask the Government to do, if they can, is to try to ensure that this legislation is dealt with expeditiously, so that if there is an election in the near future it is not scuppered. My noble friend the Minister must be well pleased with the welcome which his Bill has received.
4.50 p.m.
Lord Rugby: My Lords, would it not be true to say that agriculture has developed over the past 40 years into an enormous asset-stripping exercise, in which the amalgamation of land has virtually prevented any young man from getting his foot on the ladder at all? This is because the arbitration system that has existed has worked totally in favour of the landlord and totally out of favour of the tenant. It is a well known fact that anybody who wishes to dispute an arbitration claim dare not do so because he is told straight away that the arbitrator will be upset and will only increase the arbitration figure against him. Consequently, one has the situation of people accepting almost anything that is put on front of them rather than face that music.
There is also the problem of the young man wanting to come into farming. He does not have any experience, and so he is ruled out straight away. He has no capital, and so he is ruled out straight away. It is an enormous tragedy of agriculture today that, with these asset-stripping exercises and amalgamations into bigger and bigger units, a young man simply does not have a chance of coming in.
Lord Drumalbyn: My Lords, if the noble Lord, Lord Rugby, will forgive me, what does he mean by "asset stripping" in this sense? Does he mean that part of the assets are disposed of? If that is so, to whom are they disposed? Does he mean that they are being disposed to farmers—to tenants?
Lord Rugby: My Lords, I believe that it is perfectly true to say that these big institutions and financial houses come in very largely from the point of view of using the land as a method either of safeguarding capital or of improving their capital position. That is what I am really saying.
A new situation is arising in agriculture today which is almost a sinister one. It is the fact that there are a number of charities which are in fact religious cults buying land. I have seen a very large spread of religious cults actually buying land and bringing in their followers to act as the workers on that land, which is free labour, and no doubt they are given the benefits of charity tax avoidance. They amalgamate land and set up young men working on the land in a religious context rather than in a farming context. This is happening in quite a big way.
When one is now legislating for agriculture, one has to advise people who are on the arbitration side of
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these various problems that they should consider very much the point that a young man with limited capital and requiring experience, and who has a young family, should somehow get a starter farm; and that that should be part of the calculation.
4.54 p.m.
The Earl of Mansfield: My Lords, I welcome the way in which this Bill has been received by noble Lords, with the possible exception of the last speaker, the noble Lord, Lord Rugby, but I shall think about what he said while I am on my feet. Nobody pretends—and least of all do I pretend—that this Bill is other than a fairly modest legislative change. Certainly, nobody pretends that it will lead to a significant increase in the number of farms becoming available to let.
Many noble Lords pointed out that we are facing a long-term problem and that there can be no overnight solution. But this Government consider it important to take the initiative in this matter with measures that have the support of both sides of the industry in Scotland. If I have a criticism of the speeches of noble Lords this afternoon, it is that not enough credit has been given to the fact that the two sides of the industry—and traditionally, at least in Scotland, landlords and tenants are not supposed to be even on speaking terms—did sit down and thresh out over a great number of meetings a package they thought was fair and beneficial in the circumstances.
The noble Lord, Lord Ross of Marnock, who says that he has the welfare of farmers at heart, sneered at that and said, in effect, there was some kind of cosy NFU/SLF agreement with the balance of advantage to the Scottish Landowners' Federation. He does not have the welfare of farmers at heart—and certainly he does not understand them—if he can possibly imagine that Scottish farmers could have something like that put across them—particularly when this package went back to every single branch in the country for their comments and agreement, or disagreement.
Another point we have not touched on very much is that fiscal matters have deterred and continue to deter landlords from making land available to let under the traditional landlord and tenant system. The worst of the lot of course was the capital transfer tax introduced by the then Socialist Government. That vindictive tax had a number of important effects: it stopped private planting in the forestry sector almost stone dead, and it dried up what lettings there were, so far as farm tenancies were concerned, almost overnight. It is a measure of this Government's concern that in successive Finance Acts we have introduced a range of important taxation reliefs for agricultural land. I shall briefly remind the House of those reliefs.
Generally speaking, we have lessened the burden of capital transfer tax and capital grants tax. The special position of tenanted agricultural land was recognised in the 1981 Finance Act by the introduction of relief for the first time on that land for CTT purposes at the rate of 20 per cent. In his last Budget Statement, my right honourable and learned friend the Chancellor of the Exchequer announced that this rate of relief for let land was to be increased from 20 per cent. to 30 per cent., and indicated that this should help to mitigate one of the factors reducing the number of farms

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available for letting—and both sides of the industry in Scotland agree with this view.
The recent Budget Statement also included a proposal to allow farmers to pay CTT by interest-free instalments over 10 years rather than eight years, which is the situation at present. There were also in the proposals those which would allow tenant farmers who were required to live on their land to purchase a house off the farm to the benefit of tax relief on the mortgage. In previous Finance Acts, provision has been made for the value of the tenant's interest in an agricultural holding in Scotland to be left out of account in assessing capital transfer tax on the death of the tenant and the removal of the provision under which the Inland Revenue could claw back the CTT charge if the successor to a tenancy disposed of it during his lifetime.
These taxation reliefs are a positive expression of the Government's concern about the decline in the tenanted sector. All this I believe is welcome to noble Lords on the Liberal Benches. As we are now adopting, even in this House, a slightly higher political profile than is our wont, I found myself in possession of a document entitled Liberal Country—which is not, surprisingly enough, an organically-produced margarine but a manifesto for rural Britain by a number of Liberals. I see that this form of relief, basically speaking, is agreed to in that document.
As the noble Lord, Lord Ross of Marnock, said, consideration of the Northfield report has played a very large part in the thoughts behind this Bill. The publication of the report in May 1979, shortly after the then Government fell, must have come as an unwelcome shock because a lot of the old nostrums were rejected, and rejected without any equivocation, by that committee. Examples were the general nationalisation of agricultural land; legislation to regulate farming partnerships; quasi-tenancies and similar arrangements, which were held not to be justified; and an all-embracing rural land authority, which the Labour Party had proposed, was rejected.
So the noble Lord, Lord Ross, on the one hand says that this is a Bill which does not go very far and at the same time complains that we should have gone very much further in carrying out a number of Northfield recommendations. When he complains that the period between rent reviews—not arbitration, as my noble friend Lord Massereene said, I am sure by a slip of the tongue—was reduced from five to three years, that is directly consistent with Northfield; that is what he said and recommended.
Lord Ross of Marnock: My Lords, not he—but most; it was a majority decision.
The Earl of Mansfield: Well, my Lords, I am not going to exchange semantic waffle with the noble Lord at this stage.
Lord Ross of Marnock: My Lords, it is not semantic waffle; some of them said no.
The Earl of Mansfield: My Lords, I was reminded, while the noble Lord was speaking, of seeing in yesterday's Hansard, at column 126, that when his
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noble friend Lord Longford had been speaking for some considerable time on relationships between the third world and the USSR, he said on looking at the annunciator, "I cannot have been speaking for 22 minutes", and his noble friend Lord Bishopston, speaking from the heart, said, "No, it only seems like it". I think the noble Lord. Lord Ross, was actually 25 minutes this afternoon.
I am not going to be tempted to go down the interesting by-ways of the Highlands and Islands Development Board and its powers and functions. One of my regrets during the last four years has been that nobody from the Benches opposite has seen fit to ask, even by way of Unstarred Question, what should happen to the board and its powers. That is one of the many things in regard to which I have experienced disappointment. I am also not going to go down the by-ways of some other agreeable matters which have been raised.
The importance of this measure is that the changes do have the support of both sides of the industry. When some noble Lords, such as my noble friend Lord Stodart and my noble friend Lord Burton, say in effect that the Bill is not leaning far enough in favour of the landlord—that is what it amounted to, because my noble friend says the Bill is ineffective and what he means is that it would not be ineffective if it was more favourable for landlords; there is no other construction that one could put on it—and the noble Lord, Lord Ross, says that the Bill is rather too much in favour of landlords as opposed to tenants, this exemplifies what I mean: this Bill has the favour of both sides of the industry.
The point was taken about land registration, and with that I couple sales of land to institutions and foreigners, not counting the English, Irish and other lesser breeds. The Government have considered this matter of land registration. There is need for adequate information. The cost of introducing an elaborate system which would provide the sort of information that I think noble Lords would like simply would not be justified. Statistics have improved and my department has been monitoring (if that is the word) the records of purchases of this type. I can say this. The latest figures available indicate that in the three years 1979ߝ81 there was a total of 65 sales of agricultural land to financial institutions. I emphasise agricultural land and not land for forestry. And the land remains in agricultural use after the sale. The area involved was approximately 19,000 hectares. So over those three years about 10 per cent. of the agricultural land changing hands in Scotland has been sold to financial institutions, which represents, I submit, only a small proportion of the total agricultural land in Scotland, because of course only a small proportion changes hands each year.
So far as foreigners are concerned, in the period 1979ߝ81 there were 20 sales of properties to foreign nationals with some agricultural interest. Most of it was poor quality land, probably for sporting purposes, and it certainly lay outside the main agricultural areas. It was used for sporting purposes such as deer-stalking. The activities of foreign nationals since 1981 seem to have been very much less than in the years immediately preceding Northfield, probably because of the escalation of the price of land in Scotland.

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At this point, I can confirm that adopted children and illegitimate children, arising by way of succession in respect of persons dying on or after 25th November, 1968, are for the purposes of this Bill "near relatives".
As I have said, we are working to make Clause 2 of the Bill better, if it does need to have improvements, and that will no doubt come forward in Committee. I am conscious that there are points which have been made to which I have not replied. I think they are Committee points. An example is the widow and orphan point brought up by my noble friend Lord Massereene; we can go into that in Committee.
The noble Lord, Lord Ross, complained because he did not like the way in which the Bill was drafted nor indeed the language. In fact it is in some ways a consolidating measure. One is always in the difficulty, particularly where one is regulating the legal rights as between one class of citizen and another, that if one tries to be precise and not leave room for dispute and litigation one has to be very careful about the choice of language. On the other hand, by being careful you do not provide the kind of statute which is everybody's bedtime reading. We struggle to take a line down the middle. I think that that is quite enough from me by way of winding up. I commend the Bill to your Lordships.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Telecommunications Bill
5.8 p.m.
Lord Trefgarne: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AMPTHILL in the Chair.]
Clause 1 [The Director General of Telecommunications]:
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede moved Amendment No. 1:
Page 2, line 3, after ("shall") insert ("after consultation with the Telecoms Equipment Manufacturing Association and the Trade Unions recognised by the successor Company").
The noble Lord said: As we begin consideration of the first amendment of what I fear will be a long Committee stage on this Bill, I should at the outset make quite clear that we are implacably opposed to the purposes of this Bill, but we will seek in a constructive way to try to improve what we believe to be a bad Bill. The Government themselves are still obviously trying to improve the Bill. I bring to noble Lords' attention the fact that 37 new amendments were tabled by the Government this Tuesday. I should have complained bitterly about the late tabling of such a large number of amendments had it not been for the fact that only one of these amendments may be reached in our consideration of the Bill this evening.
Amendment No. 1 seeks to ensure that the appointment of the Director General of Telecommunications is not made without consultation with those organisations which will be affected by his action. The clause as it stands enables the Secretary of State to appoint whoever he wishes without consulting anyone. The appointment of a director general is of great importance, as on his shoulders will ultimately lie the responsibility for the British telephone service.
The director general's first duty will be to establish the Office of Telecommunications. Oftel will have the responsibility of monitoring the activities of British Telecom and other organisations in an effort to ensure that they honour and keep their licence obligations. The responsibility of the director general and Oftel will be to take action to enforce those obligations if they are not carried out, and to initiate licence amendments if licences are shown to be inadequate. Equally, Oftel will have the responsibility to receive, consider and follow up complaints from individual consumers and firms that use telecommunication services or buy telephones or other telecommunication apparatus.
The director general will also be obliged to check that British Telecom and other organisations which supply telecommunication services or apparatus compete fairly with each other and do not abuse their monopoly or engage in practices which prevent, restrict or distort competition. British Telecom are concerned that the powers of the director are capable of arbitrary application, with only limited appeal against his decision, despite the width and scope of his powers. They are also concerned by the fact that licence enforcement lies in the hands of the director general and can be challenged only on the grounds that he has acted beyond his statutory powers and has not gone through the necessary statutory processes. The licence, when granted, may be amended by the director general against the successor company's wishes, subject only to a reference to the Monopolies and Mergers Commission. This also is a cause of concern to British Telecom.
The director general will have powers to direct, restrict or prohibit the day-to-day activities of telecommunication companies. It is for this reason, and because there are some 235,000 employees in the industry and another 70,000 employees in Telecoms Equipment Manufacturing Association jobs, that it is vitally important that there should be this consultation. I know that in his reply the Minister is likely to say that of course he will consult, but this is not enough. A requirement for him to consult, as outlined in the amendment, should be in the Bill. I beg to move the amendment.
Lord Lloyd of Kilgerran: In rising to support this amendment, I think that it would be appropriate for me to make a somewhat neutral introduction. I agree with the noble Lord, Lord Ponsonby of Shulbrede, that this is a bad Bill, but we on these Benches will endeavour to be constructive in the amendments we are proposing. It is ironic that the Government's overwhelming and almost passionate desires for the so-called liberalisation of the market for the provision of telecommunications equipment—and the Government's announcement that it is giving new

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opportunities for British industry by weakening the dominance of British Telecom—could have precisely the opposite effect. Unless amendments on the lines of this amendment concerning the appointment of the director general, and the later amendments concerning the scope of his duties, receive the careful consideration of the Government—in different words possibly, but the theme being adopted—there will be an even greater loss of confidence in the actions of the Government in this field.
There is no convincing argument for privatisation as envisaged in the Bill. The Economist recently referred to your Lordships as providing:
"the last chance to catch British Telecom before it escapes untamed into the private sector".
Referring generally to this Bill, it went on to say:
"All that will have been achieved is to set a £8 billion predatory monster free.".
This amendment and others with which I am concerned are therefore designed to help the Government to create a climate of confidence so that there will be less unfair competition in carrying out the proposals of the Bill and that the Bill will create more jobs in the United Kingdom and better relationships for employees, including the famous research teams and innovators in the BT research establishments, such as Martlesham.
I can see the noble and learned Lord, Lord Elwyn-Jones, looking at me. I hope that he will not disapprove too strongly of my next few words. Incidentally, in the public interest, the object of my amendments is to create less work for lawyers than the Bill is bound to create if it continues in its present form. The amendment before your Lordships should go a long way towards giving confidence to British Telecom employees and to users of Telecom systems and their customers as to the way that the Office of Telecommunications would be run. Before the appointment of this director general, as the amendment suggests, there would be consultation with the Telecoms Equipment Manufacturing Association (TEMA) and the trade unions.
Perhaps I ought at this stage to declare an interest. I was a guest of TEMA at their annual dinner only a fortnight ago. I am consoled in making that declaration by the fact that the Secretary of State for Industry was also there and spoke very warmly about the activities of the association. So perhaps I have wasted a little of the Committee's time in declaring such an interest, when the Secretary of State himself was also so prominently present there.
Those of us who are concerned with industrial and technical problems in industry know how difficulties arise in interpreting not only contracts but sections of an Act. In the case of disagreements or potential disagreements, surely there would be more confidence in the ability of the director general to deal with such problems or potential problems if he had been appointed after the kind of consultation envisaged by this amendment.
The Economist article to which I have just referred prompted the Secretary of State for Industry to write a long letter to the magazine which appears in the current issue. He referred to some of the powers of
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Oftel and the orders which Oftel could make. In referring to licences, the letter states that,
"Such orders can be made when Oftel thinks there is a breach (there is no delay to establish the facts), the order can require sweeping remedial action (any step which in Oftel's opinion is requisite) and failure to obey an order leads to fines or imprisonment or both".
Yet as at present drafted the Bill envisages that one man, appointed in the way to which the noble Lord, Lord Ponsonby, referred, should have to deal with such problems.
In his letter, the Secretary of State then goes on to say that,
"Oftel will have a duty (enforceable in the courts) to promote efficiency and economy on the part of operators".
So at once the Secretary of State himself envisages problems—serious problems—which require the intervention of the courts. As I have indicated, the amendments that we have put forward try whenever possible to avoid reference to the courts. Before the noble Earl, Lord Mansfield, sat down after winding up the debate which preceded this Committee stage, he remarked on how important it was to try to avoid conflicts arising in the courts by ensuring clarity of expression in Acts of Parliament.
I am a little surprised that the Secretary of State himself indicated that the director general, or his office, should have such powers, and I am also a little surprised at the reference he made to taking the disputes to the courts. I have the highest regard for much of the work of the Secretary of State for Industry. By chance on one occasion he and I found ourselves in a trade mark case, led by a most distinguished advocate, who is now a very much respected High Court judge, Mr. Justice Arnold. Even in that case our attempt was to limit the applications of court processes. It seems to me that, as one step towards that kind of situation, this amendment would be effective.
Since Clause 1 is so important, I have also considered whether Amendment No. 1 alone is enough, and, with the leave of your Lordships' Committee, I should like to refer also to Amendment No. 2, as well as to Amendments Nos. 3 to 5 and Amendment No. 12, so as perhaps to save a little of your Lordships' time. Amendment No. 2, which I have proposed, and which is supported by the noble Lords, Lord Ponsonby and Lord Bruce of Donington, provides that the director general shall not operate on his own. If Amendment No. 1 is approved, the director general will be chosen following consultation with the trade unions and TEMA. I go further than that and ask rhetorically whether it would not be more appropriate for a director general with such important duties to carry out—duties which inevitably will lead to conflict, as indicated by the letter of the Secretary of State for Industry—to have around him a group of experts or of persons with experience in industry and trade unions. In the subsequent amendments associated with the main amendment (No. 2), I have suggested that the proposed council shall include two members of trade unions. The council would in effect be an advisory body, possibly on a part-time basis, to which there could be referred from time to time disputes arising regarding licences, modification to licences, or the scope of the duties of the director general. I should also

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be prepared to suggest, as one of the amendments proposes, that the director general should be the chairman of the council.
I want to make it quite clear that I am not suggesting an advisory council to which all matters would have to be referred by the director general, thus slowing up the organisation and administration. I am suggesting that, having been selected after consultation as proposed in Amendment No. 1, the director general should also have the assistance of a council, or call it what you will; a group of people who could help him in dealing with difficult matters of importance to industry.
Having analysed the position very carefully as to the problems which a man in the position of the director general will have to deal with, I have certainly come to the conclusion that his appointment should be made after consultation with TEMA and the trade unions. I have included a reference to my Amendment No. 2 in the hope that, when he replies, the Minister will be good enough to direct some of his remarks towards it, though later, if there is time, I shall develop the theme in relation to Amendment No. 2 and my subsequent amendments.
At this stage, I must register an apology to your Lordships' Committee, since I shall be unable to remain here throughout the debate. I see from the expression of cheerfulness on the part of the Minister, the noble Lord, Lord Trefgarne, that he is very pleased about that, though of course I may have misinterpreted the meaning of his smile. I had expected that other Bills would be dealt with today, and I am committed to an engagement which I cannot at this stage cancel. I beg to support the amendment.
5.27 p.m.
Lord Campbell of Alloway: In opposing Amendment No. 1, I should like to limit my very brief observations to that amendment, and leave the monster languishing in his den for the moment. The noble Lord, Lord Lloyd of Kilgerran, peripherally referred to Amendment No. 3, but, with the greatest respect to him, I must say that, as I understand it, what is envisaged is not an advisory function, but a decision-making role. To revert to Amendment No. 1, I would say that it enjoins the Secretary of State to entertain mandatory consultations with both the employers' association and recognised trade unions before appointing a director. I think that that is novel. Mandatory consultation constitutes a perhaps unacceptable derogation from the exercise of administrative discretion. It is a departure from past practice. It has no legal efficacy. It is, as I understand it, cosmetic, in order to give confidence. Finally, does not extending the functions of trade unions and employers' associations to the question of appointments reflect a misunderstanding of the true nature of those functions? For those reasons I oppose the amendment.
Lord Molloy: It is of great importance that we should realise what a mammoth organisation is being created. There will be a huge hotch-potch of varying responsibilities, with the people of the country being represented by the Government and the Secretary of State in the first instance. All the various people who
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are to invest their money in the new organisation will, I assume, want to have their voice heard as much as the voice of the state will be heard, and that is quite fair. That is the position with regard to the principle of the matter. What happens when the organisation gets under way, I am afraid that we shall have to wait and see, but there are a number of points I would like answered.
First and foremost, the people of our land are, in my judgment, being robbed by the Bill. However, through the Secretary of State they have a right to have their voice heard. They have a right to be heard because the measure at the moment is a Bill and not an Act of Parliament. It is still the people's property. Does anyone disagree that it is still the people's property?
We have a right to submit what should be done. This powerful individual is to be appointed by the Secretary of State and to be responsible to him. We have therefore a right to demand answers to our questions. How will the post be advertised? In what manner will it be advertised? Where will it be advertised? It should be advertised in such a manner that anyone interested in the post has the right to apply for it. If that is not accepted, one has to decide those who have not the right in Britain to apply for the job of director. There is a need to examine closely the sane suggestion of my noble friend, who proposed the first amendment, that the Secretary of State should consult with important people like TEMA and the trade unions who are experts in the machinery of running the new organisation due to their massive experience gained in the previous organisation.
I would have thought that a sensible Secretary of State would realise that one of his most important jobs is the appointment of a director. There are, of course, Permanent Secretaries and other important people with whom he will consult. However, when it comes to the actual running of the organization, I would have thought it would be wise and prudent of the Secretary of State to have discussions with those who will be involved from the outset. They will be able to give the Secretary of State the benefit of their experience and their wisdom on the calibre of the individual to be appointed. I consider the amendment very worthwhile. It should commend itself to the House.
I turn now to the proposition outlined by the noble Lord, Lord Lloyd of Kilgerran. Unlike the noble Lord, I am not necessarily singing for a supper that I have had. The arguments, in my judgment, were very sound. They were very applicable.
Lord Trefgarne: I wonder whether the noble Lord would like to reconsider the terms of the assertion he has just made.
Lord Molloy: It was a humorous remark which, I notice, caused the noble Lord, Lord Lloyd of Kilgerran, to smile when he declared his interest. I thought it was probably not worth declaring. It is in vein of the work of Lord Lloyd to declare every little thing with which he might have been concerned when he speaks in this House. I commend him on his exactness and his thoroughness. He gives an example to a few other Members of this Chamber. They will note that the noble Lord, Lord Lloyd, when he speaks, is always careful to make this transparently clear. If it had been

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a bun and a cup of tea, he would have made the point in your Lordships' House.
I wish to discuss the wisdom of his submission in calling for the creation of a council of six that will include two trade union members. Here again, this should commend itself both to the Committee and to the Government. The amendment makes it transparently clear that the council will have a chairman who will be the director himself. There will be no one between. The proposition is that the council of six wise men should be able to advise the Director General who will always attend the meetings because he is chairman. He will no doubt also be responsible for the agenda and have particular regard to possible administrative changes. However, rather than carry them out only to find that he had made an error, which would mean calling together the trade unions and other interested bodies, he will have the issue at his finger-tips.
What is proposed is that prevention is better than cure. Neither amendment dramatically changes the Bill. Yet the points submitted by my noble friend and by the noble Lord, Lord Lloyd, represent worthy amendments. It would appear that Lord Lloyd's party, and certainly mine, are opposed to the Bill. It is nevertheless in the tradition of our Parliament that amendments are proposed that seek to improve a Bill even when one disagrees with it. I hope therefore that the Government Front Bench will accept what I say in that spirit which is peculiar to the British Parliament.
Lord Underhill: I wish to support my noble friend Lord Ponsonby of Shulbrede in Amendment No. 1. There is no intention of debating the whole question of the regulatory machinery. We are dealing only with the narrow issue of the appointment of the Director General. We can deal with the wider issue at a later stage. While appreciating the points made by the noble Lord, Lord Lloyd of Kilgerran, supported by my noble friend Lord Molloy, a separate principle is involved. We would prefer to keep the two issues separate. We might support one but not support the other. We shall support both but there might be a difference of view.
The noble Lord, Lord Campbell of Alloway, said that Amendment No. 1 would make a mandatory qualification and added that this was an unusual provision. So is the Bill an unusual Bill. It is a massive Bill of so-called privatisation. It is of a calibre that has not previously appeared before your Lordships' House. It contains many important features. I am certain that the Government want to make the regulatory machinery a success. This amendment will help towards achieving that aim. The Department of Industry's own paper has stressed the detailed knowledge that will be required to carry out this machinery. It will involve expert knowledge of telecommunications, of technology and of commercial aspects—all in one man.
On previous Bills that have passed industries over to the private sector, we have often criticised the great powers given to the Secretary of State. Now we are giving great powers to another individual to be called the Director General. When we come to deal with the machinery, I hope that we shall make some of these points effective. Everything that has been stated in departmental papers and ministerial statements
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stresses the importance of this post. The noble Lord, Lord Campbell of Alloway, argued that this might be just cosmetic. If industrial relations and consultation with the unions in this massive industry are assisted, that alone will justify this appointment.
The noble Lord also questioned whether or not the employers' body should be consulted. But TEMA is not the employers' body. In fact, TEMA is the manufacturers' body from which British Telecommunications obtains 95 per cent. of its equipment. It is vital that it should have confidence in the director general. In view of the vital importance of this post, not only is it essential that there he a democratic procedure—call it "cosmetic" if you like—but because of the very important considerations here it is sheer common sense. Moreover, it will also assist the Government in their objective of giving both the manufacturers and the workforce some confidence in the regulatory machinery. Later we shall put our views on the regulatory machinery, but if it is to come into effect it is vital that both the manufacturers and the employees should have a great degree of confidence in the director general. That is why the amendment should be supported.
5.41 p.m.
Lord Trefgarne: I understand the concern of some of your Lordships about consultation before the holder of any important post is appointed. However, I do not believe that formal consultation is appropriate. It is not provided for in the appointment of the Director General of Fair Trading, nor in the appointment of the Chairman of the Board of the Civil Aviation Authority. This is not to say that the Secretary of State makes such appointments without informal consultations. But the need for consideration of a wide range of suitable appointees, for flexibility in discussions and discretion in approaching persons who are already in employment, all preclude formal consultations.
However, there is another reason why I cannot accept the amendment. There will always be some person with an interest who thinks that he should be consulted. The proposed list of bodies who have to be consulted emphasises this difficulty. It is simply not possible to consult everyone. Why should consultation be limited to one equipment manufacturing association? Incidentally, I am happy that the noble Lord, Lord Lloyd of Kilgerran, managed to have dinner with them but he actually got the name slightly wrong. Indeed, the name is slightly wrong in the amendment, and maybe the noble Lord went to the wrong place! In fact the correct title of TEMA is the Telecommunication Engineering and Manufacturing Association and not the Telecommunication Equipment Manufacturing Association.
What about the Electronic Engineering Association and the Business Equipment Trade Association? What about system operators and providers of telecommunication services over systems? Why are they not to be consulted? What about the trade unions representing those who work, for example, in the Kingston-upon-Hull telephone system? What about consumer bodies? The director will be required to deal with their complaints. The list is endless. It is simply not practicable to provide for formal consultations in the manner suggested in the amendment.

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The noble Lord, Lord Molloy, asked me about how we would appoint the director general. I can assure the noble Lord that the appointment will be made in accordance with the normal procedures for all public appointments. We are certainly looking at the possibility of advertising for the post in order to attract the best possible candidates. I can see, for example, that on the present scale the salary is £35,000 a year, which is a good deal more than I get!
I believe that I have been able to describe—at least, I hope so—some of the difficulties which this amendment presents. Of course the most important one is that the range of people to be consulted is so great that it is not possible to put a definitive list in the amendment. I hope, for that reason, that the noble Lord will not press it.
Lord Oram: When the Minister began his reply he gave two examples—the Office of Fair Trading and the Civil Aviation Authority—in which appointments had been made without consultation.
Lord Trefgarne: Without formal consultation.
Lord Oram: I agree, without formal consultation laid down in any statute. I should like from my own experience to give a contrary example and it is a very small one. My noble friend Lord Molloy referred to the organisation in this Bill as being a mammoth. The organisation to which I wish to refer is a minnow by comparison.
I am referring to the setting up of the Co-operative Development Agency under the 1978 Act. I happen to know that consultation took place with the appropriate bodies on that occasion because, as a result of the consultations, I was the fortunate person who emerged as the chairman of the Co-operative Development Agency. That Act provided that the Minister should consult with representatives of the co-operative movement. The Minister went on to say that there are many organisations involved and that therefore it is difficult to have consultations. But I assure him that if he knows about the co-operative movement he will realise that it is an extremely complex organisation with many ramifications. Yet, under that Act it was perfectly feasible to have satisfactory statutorily required consultations before the appointments were made.
Therefore, not only do I see no reason why it should not happen in this case, but I see an overwhelmingly greater reason why it should happen in this case. As regards the organisation to which I have referred, the staff numbered only a couple or dozen or something of that kind and the amount of money involved was less than £1 million. If formal consultation was necessary for the setting up of such an organisation, then when we are talking about an organisation which employs a quarter of a million people, and realise that when the director general's work gets under way he himself will have to consult with representatives of the organisations mentioned in the amendment, is it not likely that his consultations day by day will be smoother and more effective if he has come to his appointment after consultation with those organisations? I suggest that this amendment is an extremely necessary one and I give it my support.
Lord Trefgarne: I hope that I may be permitted to intervene again. I suggest to the noble Lord that there may well be difficulties on the other side of the coin as well. Although the noble Lord has cited an example where he says that formal consultation was provided for, I have no doubt that the list of people who are required to be consulted under the legislation to which he refers is not exhaustive and there may well be people who are not required to be consulted in the appointment to which he refers. In this context that could certainly create a good deal of difficulty if, for example, TEMA was written into the Bill and had been consulted, and one of the other trade associations to which I referred had not been consulted. I think that there would be no justice in that. In my view it is better to leave the Bill as it is and I hope that your Lordships will agree to do so.
Lord Lloyd of Kilgerran: The noble Lord the Minister has emphasised the fact that one of the main reasons why he has to reject this amendment is that the range of organisations to be consulted is so large and he has mentioned many other organisations. However, there are two defects in his argument.
The first defect surely is that he has, with great respect, misread the amendment. The amendment is not conclusive about the number of organisations to be consulted. It says that two large organisations are to be consulted. There is nothing wrong in consulting other organisations if necessary.
As regards the other defect in his argument for rejecting the amendment, the noble Lord said that it is far better to have informal discussions and informal inquiries. Would the noble Lord the Minister be prepared to disclose to the Committee the number of organisations which might be consulted informally in this way? Where is the harm in putting into an amendment that at least two large, respected organisations should be consulted? That does not prevent further organisations from being consulted informally or formally.
Lord Mottistone: As a Fellow of the Institution of Electronic and Radio Engineers, I take grave exception to its omission from the amendment, and will vote against the amendment on that ground as well.
Lord Howie of Troon: I have the strongest sympathy with the Institution of—
Lord Mottistone: The Institution of Electronic and Radio Engineers.
Lord Howie of Troon: I have the strongest sympathy with the Institution of Electronic and Radio Engineers, and many other organisations have been omitted. However, as the noble Lord, Lord Lloyd of Kilgerran, has quite clearly said, there is no problem. This amendment simply says that in consultations, which presumably will take place—because I find it inconceivable that the Government would blunder on into this appointment without consulting anybody—two bodies should be included. There is nothing in the amendment or elsewhere to prevent the Government from casting their net as wide as they feel so inclined, just so long as they do not exclude these two organisations. The amendment is extremely sensible

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and extremely helpful, and the Government should accept it without further cavil.
Lord Morris: I believe that this amendment should be positively resisted because, in effect, it is dangerous. As all noble Lords are well aware, the telecommunications and, indeed, the information technology industries, are dynamic and volatile industries, and it is absolutely essential that whoever is appointed as director general be just as dynamic, and that nothing should be put in his way to hamper the decision-making process, because he will have to take some vitally important decisions which affect the commercial and economic future of this country. I would suggest that to bring in various interest groups as part of his statutory duty to consult would do nothing other than cramp his style.
Lord Ponsonby of Shulbrede: In his reply to the debate on this amendment I think that the noble Lord, Lord Trefgarne, pulled a certain amount of wool over noble Lords' eyes. He set his face against any form of formal consultation. He made some comments about the particular list set out in the amendment, but he was not even prepared to concede any form of formal consultation on the appointment. I have had considerable support for this amendment and I think it right that the feeling of the Committee should be tested on it. I would remind noble Lords that we have even reached the situation today when the Prime Minister consults with the Church about the appointment of the most reverend Primate the Archbishop of Canterbury.
5.53 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 60: Not-Contents, 105.

DIVISION NO. 1

CONTENTS

Airedale, L.

Longford, E.

Ardwick, L.

Lovell-Davis, L.

Aylestone, L.

McIntosh of Haringey, L.

Banks, L.

Mais, L.

Birk, B.

Mishcon, L.

Bishopston, L.

Molloy, L.

Brockway, L.

Nicol, B.

Collison, L.

Oram, L.

David, B. [Teller.]

Peart, L.

Denington, B.

Perry of Walton, L.

Diamond, L.

Pitt of Hampstead, L.

Ezra, L.

Ponsonby of Shulbrede, L.

Fisher of Rednal, B. [Teller.]

Prys-Davies, L.

Foot, L.

Rochester, L.

Gaitskell, B.

Ross of Marnock, L.

Granville of Eye, L.

Shinwell, L.

Hale, L.

Stedman, B.

Hampton, L.

Stone, L.

Hanworth, V.

Strabolgi, L.

Harris of Greenwich, L.

Taylor of Blackburn, L.

Hatch of Lusby, L.

Thurso, V.

Houghton of Sowerby, L.

Tordoff, L.

Howie of Troon, L.

Underhill, L.

Jenkins of Putney, L.

Wallace of Coslany, L.

Kagan, L.

Whaddon, L.

Kilbracken, L.

Wigoder, L.

Kilmarnock, L.

Wilson of Langside, L.

Llewelyn-Davies of Hastoe, B.

Winstanley, L.

Lloyd of Kilgerran, L.

Winterbottom, L.

Lockwood, B.

Wootton of Abinger, B.

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NOT-CONTENTS

Abercorn, D.

Lauderdale, E.

Airey of Abingdon, B.

Lawrence, L.

Alexander of Tunis, E.

Long, V.

Ampthill, L.

Loudoun, C.

Auckland, L.

Lucas of Chilworth, L.

Avon, E.

Lyell, L.

Bauer, L.

Mackay of Clashfern, L.

Belhaven and Stenton, L.

Macleod of Borve, B.

Bellwin, L.

Mancroft, L.

Beloff, L.

Marley, L.

Belstead, L.

Massereene and Ferrard, V.

Burton, L.

Merrivale, L.

Caccia, L.

Mersey, V.

Caithness, E.

Molson, L.

Campbell of Alloway, L.

Monson, L.

Campbell of Croy, L.

Morris, L.

Cathcart, E.

Mottistone, L.

Cockfield, L.

Mowbray and Stourton, L.

Colville of Culross, V.

Murton of Lindisfarne, L.

Colwyn, L.

Nugent of Guildford, L.

Cork and Orrery, E.

Orkney, E.

Cottesloe, L.

Orr-Ewing, L.

Craigavon, V.

Pender, L.

Cullen of Ashbourne, L.

Portland, D.

Daventry, V.

Rankeillour, L.

Davidson, V.

Romney, E.

De La Warr, E.

St. Aldwyn, E.

Denham, L. [Teller.]

St. Davids, V.

Drumalbyn, L.

Saltoun, Ly.

Eccles, V.

Sandford, L.

Ellenborough, L.

Selkirk, E.

Elliot of Harwood, B.

Sempill, Ly.

Elphinstone, L.

Shannon, E.

Elton, L.

Skelmersdale, L.

Faithfull, B.

Southborough, L.

Ferrers, E.

Stamp, L.

Fraser of Kilmorack, L.

Stanley of Alderley, L.

Gainford, L.

Stodart of Leaston, L.

Glanusk, L.

Strathcona and Mount Royal, L.

Glenarthur, L.

Grantchester, L.

Strathspey, L.

Greenway, L.

Swann, L.

Gridley, L.

Swansea, L.

Hailsham of Saint Marylebone, L.

Swinfen, L.

Swinton, E. [Teller.]

Halsbury, E.

Thomas of Swynnerton, L.

Henley, L.

Todd, L.

Hives, L.

Trefgarne, L.

Hornsby-Smith, B.

Trenchard, V.

Hunt of Tanworth, L.

Vaux of Harrowden, L.

Hylton-Foster, B.

Vickers, B.

Killearn, L.

Vivian, L.

Kinnaird, L.

Young, B.

Lane-Fox, B.

Resolved in the negative, and amendment disagreed to accordingly.
6.1 p.m.
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 2:
Page 2, line 3, after ("appoint") insert ("a Council known as the Telecommunications Council (in this Act referred to as "the Council")")
The noble Lord said: I beg to move that "a Council known as the Telecommunications Council (in this Act referred to as 'the Council')", should be created and appropriate words put into Clause 1, so that the Secretary of State will be appointing not only a Director General of Telecommunications but also a council. Earlier this evening I spoke about this council and its nature, but I am encouraged by the observations of the noble Lord, Lord Campbell of Alloway, to make a few further observations. With the leave of the Committee I should like to speak to Amendments Nos. 3, 4, 5, 7, 8, 9 and 10, all of which

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are concerned with the council and its structure, and also to Amendment No. 12.
As the noble Lord, Lord Campbell of Alloway, rightly indicated, Amendment No. 3 describes the functions of this council which I have suggested should be created to assist the director general. It is not to be concerned with all administrative problems, and therefore to hinder him in his work; but where there are disputes or potential disagreements which may arise as to the scope of his duties or the scope of licences, or as to what should be put into licences, he would have some experts, some representatives of industry, and, the amendment says, two representatives from the relevant associated trade unions, there to help him.
Whether that group of persons should decide any of the problems that come up before it or are referred to it is a matter for further consideration. It is true, as the noble Lord, Lord Campbell of Alloway, pointed out, that in my Amendment No. 3 it is mandatory in the sense that it says:
"The Director shall refer to the Council for decision any matters in which disputes have arisen or appear likely to arise relating to the administration and performance of the functions assigned or transferred to him under this Act."
If the Committee were to accept Amendment No. 2, which says that "a Council" should be appointed, then it would be a matter of administration. It would be a matter of creating guidance notes or guidelines, which would not appear in the Bill, as to how that council should be constructed. In one of my amendments, Amendment No. 4, I have suggested that the director shall be the chairman of this council, and that the number of members of the council should be seven, including the director. Naturally, that is not an amendment which I propose to press, but that is a matter for later discussion.
Amendments Nos. 7, 8, 9 and 10 are consequential amendments to the Bill which I need not discuss further, but I should like to draw your Lordships' attention to Amendment No. 12. This amendment indicates the kind of problem that would in my view inevitably arise in the administration of this Bill. If I may read it, it says:
"In relation to any matter which is referred to the Council the Council shall consider whether any licence or agreement concerning any United Kingdom Consumer or United Kingdom Operator or foreign user or associations of such consumers, operators or users may effect the prevention, restriction or distortion of competition between United Kingdom operators in the United Kingdom or in markets outside the United Kingdom."
Those words are not words which I have devised. They are taken almost verbatim from Articles 85 and 86 of the Rome Treaty, which deal with competition matters in relation to business activities in the European market. In passing, I should like to ask the Minister whether he has considered the effect of EEC competition law Articles 85 and 86 in connection with this Bill, because the scope of those articles of the Rome Treaty is bound to affect, particularly agreements of an international nature.
It would be part of the function of the council to consider these matters. It may be appropriate to say that I had the honour of being co-opted recently to a committee of the EEC whose function was to consider what are the obstacles to trade between companies in
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the EEC which have research and development activities. That committee sat for about nine months. It was ably and efficiently chaired by the noble Earl, Lord Shannon, who I am pleased to see in his place this evening. It has recently produced a report endeavouring to assist the commission on how to remove obstacles to trade when the companies have research and development activities and are concerned internationally in their business.
It seems to me inevitable, therefore, that that kind of problem will arise with Oftel, and surely it would be far better that the director general, instead of merely relying on his staff, which he can appoint as he thinks fit, should have a council of the order of six persons to support him and give him such advice as is necessary. Therefore, I beg to move Amendment No. 2, that "a Council known as the Telecommunications Council" should be created to assist the director general.
Lord Ponsonby of Shulbrede: I rise to support the noble Lord, Lord Lloyd of Kilgerran, in his Amendment No. 2 and in the amendments which he mentioned as being in association with it. This amendment effectively starts to put some flesh onto the structure of Oftel. The Bill as it now stands creates an organisation with a head who has wide powers to direct the organisation. Inevitably there will be layers of staff beneath that particular head, but as of now we have no concept what those layers will be or who will act in the absence of the director, or what support he will have in terms of advice.
We warmly welcome and support this amendment to create a telecommunications council. As I see the noble Lord's amendment, this will effectively be the Oftel board of directors. The proposal in Amendment No. 4 that two members of the council should be two trade union representatives is widely welcomed. The telecommunications industry has a fine record of partnership between those who work and those who employ in the industry. Noble Lords will recall that until 1979 trade union members previously sat on the old Post Office board before it was split into the post and telecommunications businesses after the 1981 Act, when this experiment in industrial democracy, which had been deemed a success by those involved, was ended by the present Government.
As I have said, it was acknowledged that this experiment was a success and that the seven trade union nominees who sat on the board had no trouble in terms of divided loyalties between their unions and the work of the hoard as a whole, which many critics had suggested might happen in advance of this experiment taking off. A report was presented to the Post Office and the unions at the time which commented particularly on the part played by industrial democracy experiment at regional and area levels. The report concluded by saying that the people compiling the report had been impressed by the express desire from all sides to continue.
It may be that the views of the independent members are particularly relevant here, for in addition to those who were generally enthusiastic about what was being achieved, or what might be achieved in the future, there was also a very strong view, even among those not generally in favour, that to withdraw at that

225
stage would have been undesirable and would have a generally bad effect on the climate of industrial relations within the Post Office. The amendment will have the effect of creating this council and of diffusing the decision-making policy within Oftel and will enable more heads to be able to be consulted to bear on particular items of decision making. That would greatly strengthen the work of Oftel.
6.13 p.m.
Lord Campbell of Alloway: I oppose the series of amendments to which the noble Lord, Lord Lloyd of Kilgerran, has spoken. For the moment I exclude Amendment No. 12. The effect of the series appears to be that one sets up a council instead of the director general. One enjoins the director, in matters of administration under the Act, to defer to decisions of that council. One ensures that one-third of that council—the decision-making body—is comprised of members of trade unions and one ensures that the appointment of staff should take place only after consultation with trade unions.
These amendments would appear to have been sired out of Employment Act worker participation by Vredeling or perhaps vice versa. The administration of all British telecommunications as envisaged by the Bill must require a firm hand, sound and effective decision making and a relatively simple structure. This the Bill provides with the Secretary of State—answerable to Parliament—who discharges certain functions, who appoints the director, who discharges other functions, who appoints staff, subject to Treasury approval.
Is it not much to be doubted whether administration by council in committee (where one-third of the members concerned with the making of decisions are members of recognised trade unions) could ever afford the type of administration requisite for the due and orderly exercise of functions and discharge of duties under this Bill? So far as I am aware, there is no precedent for setting up any such system as is envisaged by the amendment. Surely this cannot be the occasion on which to indulge in an unproven experiment.
Particularly I oppose the introduction of the concept that the appointment of staff with Treasury consent may take place only after consultation with the trade unions. This seems to misunderstand the true nature and functions of trade unions and could only serve as a cause of friction if the views of the trade unions are not adopted. Provided there is consultation the provisions of Amendment No. 6 have no legal efficacy.
Lord Ponsonby of Shulbrede: Amendment No. 6 is not covered by the present debate.
Lord Campbell of Alloway: I am very much obliged to the noble Lord. With the Committee's leave, I should like to excise what I have just said about Amendment No. 6 and perhaps come to that, if necessary, if the amendment is moved later.
I conclude with Amendment No. 12 which stands on its own. With the greatest respect to the noble Lord, Lord Lloyd of Kilgerran, it does not really follow Articles 85 and 86, and it does not quite make sense, because the last alternative—or in markets outside the
226
United Kingdom if it was to follow Articles 85 and 86—should be limited to the territories of the Common Market. This would include China, the USA or wherever. That is not the point. I am not making a drafting point. I am trying to suggest that the concept of including this amendment is otiose, because Articles 85 and 86 apply in any event by decision of the Court of Justice. They apply to state enterprises, and the noble Lord knows the decisions, and to such an enterprise as this. They can operate, as the noble Lord knows, either on the complaint of any aggrieved party or by the Commission acting ex officio. Thus, with the utmost respect, I suggest that Amendment No. 12 is unnecessary.
Lord McIntosh of Haringey: I fear that the noble Lord, Lord Campbell of Alloway, has introduced objections to these amendments on a principle that is dear to his heart: that nothing should be done for the first time. However, leaving that aside, I fear that he has misconstrued the amendments in two serious respects. First, he has been talking as if the council proposed by the noble Lord, Lord Lloyd of Kilgerran, is to be a council of a body responsible for administration of British telecommunications. That is not the case. The council is to be of the Office of Telecommunications which, of its nature, is a body, small, deliberately compact and concerned with relations with a large variety of outside bodies, including trade unions but also, particularly, including existing and potential licencees.
Lord Campbell of Alloway: I am obliged to the noble Lord for giving way. If he will look at Amendment No. 3, in its present form—and I am not trying to take drafting points—it is mandatory that the director shall refer to the council for decision any matters relating to the administration. It is on that interpretation, with the greatest respect to the noble Lord, that I think I am not mistaken about this. Maybe it is not what the movers of the amendment intend, but, as the amendment stands, I think that I am not mistaken.
Lord McIntosh of Haringey: The distinction that I was attempting to draw was between the administration of the office, a body of 50 people, and the administration of British Telecom, a body of nearly a quarter of a million people. That is the extent to which I was saying that the officers were concerned with the outside world and that internal administration surely will be a very minor part of its activities.
If I may resume, the activities of the Office of Telecommunications will certainly involve the licensees; and they will involve the trade unions, the Government and the manufacturers and suppliers of equipment, both in this country and, almost certainly, outside this country. It is in that respect that I understood that the amendments meant that the appointment of a council—a small, compact, hardworking council, I have no doubt—would be of value to the director in helping him in those relations with the outside world.
The second respect in which I fear that the noble Lord has misconceived the amendment is when he refers to the need for a firm hand in management. I take it that what he means here by "a firm hand" is an untrammelled hand in management, without, as he

227
repeated, being obliged to refer various matters to the council for decision. The experience of British Telecom has been that the period during which the board of British Telecom had by statute seven trade union members as members of the board was a period of unparalleled success in management terms, in terms of financial results, in terms of investment and in terms of the adoption of new technology.
It was only the accident of the division between the Post Office and the telecom business in 1979, and the determination of the Government not to continue with experiments in industrial democracy, that led to that experiment being terminated. It was certainly not through any failure of the experiment itself, and it was certainly not through any failure of the principle of having trade unions taking part in the management of an organisation. To that extent, too, I think that, although it is a minor change, perhaps, the amendments express something which it is worth the Government taking up and is worth being included in the Bill.
Earl De La Warr: I should like to say a word about this in rather more general terms, which means that I shall confine what I say to Amendment No. 2. I am not concerned with the way the body is made up. I suppose that what we are really discussing is whether an extra ministerial body such as this one should consist of one man, as is proposed in the Bill and as we find in the case of the Director of Fair Trading, or whether we should go right to the other end of the spectrum—and there is, of course, an existing "other end" of the spectrum, and that is the IBA, where there is a director general who is responsible for nearly all the decisions but who has a chairman and a non-executive board which meets regularly and to which he refers.
I do not think that this is an easy decision. I have thought for some time that the DGT, as he is to be called, was going to be rather a lonely fellow. On the other hand, in an indirect way I have for many years had some considerable experience of the IBA, and I have to say that, on balance, I find that the decision-taking capability of a body like the IBA—including that for fast decisions when they are necessary—is cumbersome and frequently takes too long. Therefore, just from the point of view of expedient and competent management, after considering it very carefully, I would plump not for the IBA method but for the DGT on his own.
Lord Molloy: I think it suffices to say that any large organisation in our country has something similar to the proposal that is being made by the noble Lord, Lord Lloyd of Kilgerran, in his amendment. What I find particularly nauseating, coming from the Benches opposite, is this. Whenever there are strikes and industrial unrest we on this side of the Committee are regaled and are pleaded with to look at the German system, where the Germans have, in both private and public industries, what they call their Betriebsrat; that is, the business advisers, to advise the director or chairman of a company or the person who is responsible for a state organisation. We have been told that it is about time that the British trade union movement had a look at this; that this is how it ought to be done.
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But the Government, when they drafted this Bill, forgot that advice which they are always giving us; and we, in our good socialist "confelicity" and liberal way of thinking, think that it is not fair that a Government which have always embraced this principle should now take it by the throat and strangle it. That is not a good way to start an organisation of this character. I would remind your Lordships that these debates will be read—and I was absolutely shocked when I heard the noble Lord, Lord Campbell of Alloway, describe it as (I am not quite sure of his expression) either vicious or odious; anyway, it was something which caused him displeasure.
Lord Campbell of Alloway: Otiose in relation to a technical, legal amendment. It was nothing vicious.
Lord Molloy: I must say that, as a layman, I, like the noble Lord, find all legal and technical amendments somewhat odious. Let us come down to the facts of the matter. I can understand Members opposite saying, "We did not really mean what we used to say about the German example, about having a form of collective security and sensible, intelligent discussion. We only meant that particular thing when there were strikes and when there were industrial disputes. We were using that German argument simply to lambast the Labour Party and the Liberal Party". That is not a particularly good way of working, either.
When one hears the argument which, no doubt, will be submitted, as I think it was adumbrated by the noble Lord, Lord Campbell of Alloway—the argument of one-third of this advisory body representing a few hundred thousands of working people who will be engaged in this thing—I can hear people saying: "What do the Labour and Liberal Parties mean? Are they telling us that, unlike we who always pay lip service to industrial democracy but who in no way are going to make it a reality, they intend to make it a reality with this amendment by Lord Lloyd of Kilgerran?" That is the point of conscience that has to enter every breast opposite if there is a Division on this; because, if not, they will have to be harried to the rack at every instance of unrest that can happen in our country. I hope there is none.
Let us have a look to see whether there have been any examples of where this has actually happened and what contribution it has made. Let us take one which is very similar: namely, the Post Office Board. Does anyone deny that the Advisory Council, with more powers than we are proposing in this amendment, was a failure? It was lauded and praised by successive Ministers from both parties when they had responsibility. Why, when this principle has been so successful, has it suddenly to be discarded? This seems to me to be quite remarkable.
I should like to close on one particular point. There is sometimes argument about representatives of the skilled craftsmen, technicians and professional people who go to work in this telecommunications organisation, giving advice to the General in charge. Indeed, speaking in parenthesis and looking at the arguments that we have heard, if this were applied to the Army and the Navy, all chiefs and their staffs would be sacked tomorrow morning. How daft the opposing arguments are about this proposal, because

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the idea has been proved. No one can contradict me when I say that in the Post Office Board, and in a number of other boards, such representatives have proved to be successful; and the figure of six is even a small number.
The argument is: how can trade unionists, professional men, skilled artisans, on the one hand, look after the interests of their members and then sit on these boards? The answer is simple. Every responsible trade union leader detests any possibility of industrial unrest and knows full well, particularly in the public sector, that if the whole organisation is working as a team that means that the trade union representatives must be as much interested in the success of the organisation. By doing that they are contributing to the welfare and the satisfaction of their members, who are vital to any organisation. Therefore I beg Ministers and Members opposite to look at the quintessentials of this simple proposal. If it is no good and does not work it could be removed, but I believe it is of such proven value that at least we ought to start off with it and test it.
6.33 p.m.
Lord Orr-Ewing: I support the Government on this matter. I have had misgivings, as probably all of us have, about the setting up of a new independent authority and I am worried about the overlapping between this authority and the Office of Fair Trading, which has been much quoted, by the RRD Department of the Home Office; and possibly the new cable authority in certain areas will be overlapping. So I think there will be a reshaping and possibly, over the next 10 or 20 years, a growth in the powers of this authority. Therefore I would not wish to saddle it at its birth with statutorily-laid-down members—two of this, two of that and two of the other—whom they should consult and who should be sitting on the council, and so on. I believe we would be much wiser to leave it to the authority as they begin to grow into their responsibilities. It is necessary in a high technology industry—and in a developing high technology industry—which they are going to be responsible for monitoring and policing to some extent, to have great flexibility so that the system can develop along the lines that are needed.
I contemplated putting down an amendment suggesting that we ought to have a High Court judge as the director. I felt there ought to be, as I suggested at Second Reading, a High Court judge with Patent Bar experience, because I thought he would be numerate and would understand some of the technicalities. But I did not do that because I thought that, again, if that were in an amendment I would be limiting the choice. If it be possible to persuade somebody with great industrial experience to serve here, I think it would be perhaps even better than a High Court judge because you want somebody who has authority and has the respect of all the people with whom he is going to negotiate and deal.
It is not going to be easy. One of the great problems of setting up organisations like this, or even of running the great nationalised industries, is to find leaders of adequate calibre who will go through all the hassle, the problems and the difficulties and who will serve
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loyally. We find them, but it is not easy; and in this case I am not sure that the reward of 05,000—which after average taxation will be about 17,000—is going to match the need for all time. If it is to be limited to that, I think Parliament will have to be consulted and the amount would have to be adjusted in accordance with inflation, which of course will take off if the Party opposite by any chance should become the Government.
So I think we should have flexibility. I do not believe that it is wise to limit the number of people on a council or to say exactly who they should represent. For that reason I decided not to put down an amendment suggesting that perhaps a deputy permanent secretary was not the ideal person, which I believe was contemplated. I agree that it would be much better if the person came from industry or from the law. But, above all, if we leave it as the Government have suggested—flexible and without statutory obligations to any one commitment—then it is very important that we should get the best and most influential director who really knows his job and can manage this new-born child and see that it undertakes the responsibilities which this Bill lays upon it.
Lord Perry of Walton: We on these Benches support these amendments; but we are debating first of all Amendment No. 2 and I should like to ask the Government not to consider all amendments together, because Amendment No. 2 simply asks for the appointment of a council. It leaves complete freedom as to the nature of that council, unless the further amendments are accepted together with it. I would therefore suggest that the Government accept Amendment No. 2 and bring forward at Report stage their own proposals to be debated at that time about the nature and shape of the council, if they cannot agree to the rest of the amendments today.
Baroness Fisher of Rednal: I want to speak particularly to Amendment No. 3, regarding any disputes that may be likely to arise, bearing in mind that one of the new directions which the director will be working under will be that of the responsibility for looking after the interests of the consumer. If one reads the Government handout, it says that one of the functions will be the receiving and considering of representations by consumers and other users of the telecommunication services.
I feel quite strongly that this will be a cause of great conflict. On the one hand, we have the director having the responsibility of granting licences to telecommunication operators and also assuming the role of consumer watchdog. When we are considering anything to do with the Post Office and telecommunications, we have to remember the late Lord Peddie, who served in this Chamber for a considerable number of years. I remember him with great affection because he was one of the Peers who introduced me into this Chamber. He was a very active and highly-thought-of Chairman of POUNC.
I have information from many sources that the POUNC was recognised as one of the very good consumer organisations, and for that to be destroyed is a very retrograde step, which the Government will

231
take when they give responsibility to a director who is part and parcel of the organisation of the industry.
I should like to remind the Government that only a few weeks ago the Water Bill was going through this House, and one of its important aspects was the role of the consumer consultative committees. It is important for the Government to remember that one of the important issues that were then faced was the fact that the guidelines for those committees had to be placed before Parliament. So it was felt, because of the loss of local government representation on the water boards, that consumer representation needed to be identified. We are in exactly the same position here. We are losing consumer representation, if the director is to take over the receiving and considering of representations by consumers and other users of telecommunications services.
As the noble Lord, Lord Orr-Ewing, said, there will be an overlapping of the functions of the man who is in charge. The Secretary of State for Industry, the Monopolies and Mergers Commission, consumer protection, fair trading and even, possibly, taking people to court will be involved. It is a very formidable task that this person will have. But this group of consumers, which means everybody, should have protection and it is for that reason that by Amendment No. 3 we ought to make sure that the council recognises that there is a great need for consumer protection and it must not be cast aside so easily, as the Government seem to be recommending in the Bill.
Lord Ezra: I wonder whether I might make a short contribution. I was very struck by the judicious comments made by the noble Earl, Lord De La Warr, and the noble Lord, Lord Orr-Ewing, because it seemed to me that they had very carefully considered this problem and, on the whole, had inclined towards the view that there should be a single director in charge of this operation. I have had experience of running a fairly large organisation for many years, and I have also thought about this in the light of that experience. After the same careful thought as those noble Lords gave to this problem, I have come to the conclusion that, bearing in mind that this is a totally new experiment in a very large sector of industry, we would on balance be better advised to set up a council alongside the director general, so as to make people feel that there was full representation at the top of the body which would set the rules and see that they were carried out.
This is an experiment of vital importance and there must be created a feeling of confidence that the body which will regulate the operation of this sector under these new rules will be such as to have been drawn from a number of sources, albeit to have presiding over it the director general, as is suggested in this amendment. But I believe that your Lordships ought very seriously to consider that aspect of creating confidence in the new body that is to be set up.
6.45 p.m.
Lord Trefgarne: It might be appropriate if I reply to this amendment in the same way as the noble Lord, Lord Lloyd of Kilgerran, moved it: that is, to address myself to the general principles rather than to go through all the amendments one by one. May I take
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first the question of whether there should be a council? I must confess that I was slightly puzzled to see that the noble Lord is proposing that the council should be in addition to the director and not instead of him. Several people have suggested the latter, usually arguing that it would be more appropriate to have a body like the Civil Aviation Authority, rather than an individual officer such as the director.
I do not want to go into the arguments for and against each of these, since they are set out in detail in the explanatory note on Clause I that was circulated to your Lordships some days ago. But regardless of which model is the best—and I must say that I myself firmly believe that the one we have in the Bill is the right one—I am very doubtful of the merit of having both, for this seems to be duplicating the bureaucracy and a recipe for delay and over-administration.
Turning now to the functions of the proposed council, what I think the noble Lord has in mind is that it should act as a sort of appeal body for the resolution of disputes between the director and, for example, a licensee. If this is so, perhaps I might explain why I believe that to be unnecessary and why I do not believe the procedures envisaged in these amendments would actually work.
First, let me take the case where the dispute is over-administration or, perhaps more accurately, maladministration. I should like to point out that this is already covered by the Parliamentary Commissioner for Administration—usually called the ombudsman. Paragraph 4 of Schedule 1 widens his ambit to include the director's activities. If the dispute concerns the actual performance of his functions by the director, then the director—
Lord Lloyd of Kilgerran: I apologise for interrupting, but I was not pressing that aspect of the amendments. I was concentrating, as I thought the noble Lord was doing, only on Amendment No. 2 as to whether a council would be helpful for any purpose. As my noble friend Lord Ezra indicated, help would appear to be required and, therefore, we are considering only that aspect. I entirely agree with the noble Lord that there are difficulties about Amendments Nos. 3 and 4 and possibly 5, but I am not concerned with the details of the structure or scope of the council at the present time.
Lord Trefgarne: I accept that that is what was in the noble Lord's mind. But other noble Lords have raised different points and I was seeking to reply to the debate altogether, so that I do not have to rise to my feet a dozen times between now and dinner. Let me say that I think it is sufficient that aggrieved persons should have access to the courts, if they believe that the director has failed to fulfil any of the duties in Clause 3, so it is unnecessary to provide a special council.
But there are two further matters which puzzle me. If the council is to act as an appeal body about the performance or administration of the director's functions, it would be quite wrong for him to be its chairman. This would, in effect, make him judge, jury and defendant. Secondly, Amendment No. 3 empowers the director to refer disputes to the council for decision, but the other party has no such power. I

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do not think that the noble Lord could really have intended the arrangement to be as one-sided as that.
I could raise a number of question marks, but I do not want to be on my feet forever. But may I just touch on one more, which is raised by Amendment No. 12? The effect of this, it seems to me, is to require the council to have regard to one, and only one, objective; namely, the promotion of competition. I, of course, wholly agree that this is very important but, as will be explained when we come to Clause 3, there are other factors to be considered when determining telecommunications policy and it would be wrong to concentrate upon one alone.
May I finally turn to one or two points that I think were in the mind of my noble friend Lord Orr-Ewing? I do not think that he is now in his place, but perhaps I may just refer to them. My noble friend asked what sort of person the Director General of Telecommunications would be. This matter is in the mind of at least one noble Lord on the other side of the Committee. No decision has yet been taken, but I can assure your Lordships that whoever is appointed will be a person of considerable stature.
The Government attach great importance to the job of the director, as must be obvious from the role we have already prescribed for him. Clearly he must be somebody of both knowledge and authority. We are determined that the appointee shall have those qualities. Parallels have been drawn with the Director General of Fair Trading. Indeed, the Government themselves have drawn those parallels. The last two directors general in that post, Sir John Methven and Sir Gordon Borrie, were very successful and set a very reassuring precedent. The salary will be tied, as I said, to that of a Second Permanent Secretary. Currently, that is £35,000. However, to answer my noble friend, that scale is reassessed from time to time.
I hope I have said enough to convince your Lordships that we think that this is the wrong course to go down. I hope, therefore, that the noble Lord will not seek to press his amendment.
Lord Bruce of Donington: I seek to persuade your Lordships that it would be in the best interests of the Bill if the Committee supported Amendment No. 2, which stands in the name of the noble Lord, Lord Lloyd of Kilgerran. It is quite clear that Clause 1 of the Bill reached its final form long before Clause 3 found its way to the other place. Clause 3 was drafted and put before the other place because of the general disapproval and distrust expressed in all parts of the other place as to the new set-up proposed by the Bill. All that Amendment No. 2 seeks to do is precisely to establish the degree of flexibility to which the noble Lord, Lord Orr-Ewing, referred.
In effect, this is a new tier of Government inside the telecommunications industry. The duties of the director general and of the Secretary of State had not been closely defined when the Bill first came before the other place. They were elaborated only when Clause 3 was introduced. Clause 3 includes a number of specific duties. One duty, however, escaped the Government. Clause 3 lays a joint responsibility on both the Secretary of State and the new director. In certain
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respects their responsibilities are absolutely identical. What will happen if the resonable interpretation by the director of, in particular, subsection (2) of Clause 3 differs from that of the Secretary of State? However intelligent, however purposeful the Secretary of State may be—or, for that matter, the director general—I cannot see that an identity of viewpoint, an identity of attitude towards the carrying out of the specific functions of Clause 3 can be guaranteed. The director general is, in one sense, a tier alongside the Government, because he has identical responsibilities to those of the Secretary of State. This is a tier above the ordinary business administration of British Telecom. In many respects his position is analogous, even though his duties and responsibilities are carefully defined, to that of the chief executive of a very large holding company.
If we carry the principle of personal, individual control too far, shall we not run the risk of confirming what many people already think, with abundant justification—that some of the boards of big public companies are grossly inflated by having what, broadly speaking, is the equivalent of a council? But a council consisting of six members (two of whom are members of trade unions) for consultative purposes—in order to sound out views, or to reinforce one's own views, or dissent from them, or to pass observations on the views of the Secretary of State if the views of the Secretary of State quite honestly differ from those of the director general in the application of Clause 3—would be a very sensible way of dealing with this matter. Those who are in positions of public or commercial, professional or industrial responsibility find it very helpful to be able to talk aloud at the level of those with whom they normally confer—say, a board of directors or, as in this case, a council.
I have very grave reservations about the establishment of this further tier of administration. I dissent from it completely. The country considers that the whole Bill is a complete waste of time, anyway. Amendment No. 1 has been defeated; but, on the assumption that a director general will be appointed, surely it is a matter of common sense that he ought to be assisted by a council of the type proposed by the noble Lord, Lord Lloyd of Kilgerran.
I appeal to your Lordships to be reasonable. There is no party dogma about this amendment. It is a matter of sound business, commercial and professional experience. It is a matter of everyday common sense. I warn noble Lords on the Government side that there is no unanimity in the country on this question. I shall not regale your Lordships with what the Economist, which is by no means friendly towards either the Liberal-SDP Alliance or the Labour Party, said about the matter on 23rd April. It is one of the most pungent criticisms of Government that I have read for some time and I would suggest that the Committee should heed it. I appeal to noble Lords, who have a degree of independence since they are not dependent upon selection for a constituency, to assert that independence and to insist upon common sense being paid some heed.
Lord Lloyd of Kilgerran: We have had a very long and interesting debate on Amendment No. 2, and I should like to thank those noble Lords who have taken

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part in it. In particular I should like to thank the noble Earl, Lord De La Warr, for his sympathetic and statesmanlike approach to the matter. I also thank the noble Lord, Lord McIntosh of Haringey, for dealing with the suggestions made by the noble Lord, Lord Campbell of Alloway. I am also deeply grateful for the support of my noble friend Lord Ezra, who has great experience of these matters. It seems to me that the time has come to test the views of the Committee. May I say that we are dealing only with Amendment No. 2 and whether or not to form a council.
7 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 49; Not-Contents, 79.

DIVISION NO. 2

CONTENTS

Aylestone, L.

Lovell-Davies, L.

Bishopston, L.

McGregor of Durris, L.

Bruce of Donington, L.

McIntosh of Haringey, L.

Buckmaster, V.

Mishcon, L.

Collison, L.

Molloy, L.

Craigavon, V.

Monson, L.

David, B.

Nicol, B.

Diamond, L.

Oram, L.

Ewart-Biggs, B.

Peart, L.

Ezra, L.

Pitt of Hampstead, L.

Fisher of Rednal, B. [Teller.]

Ponsonby of Shulbrede, L.

Foot, L.

Prys-Davies, L.

Gaitskell, B.

Ross of Marnock, L.

George-Brown, L.

Stedman, B.

Han worth, V.

Stone, L.

Harris of Greenwich, L.

Strabolgi, L.

Hatch of Lusby, L.

Thurso, V. [Teller.]

Houghton of Sowerby, L.

Tordoff, L.

Jenkins of Putney, L.

Underhill, L.

Kagan, L.

Wallace of Coslany, L.

Kilmarnock, L.

Whaddon, L.

Llewelyn-Davis of Hastoe, B.

Wigoder, L.

Lloyd of Kilgerran, L.

Wilson of Langside, L.

Lockwood, B.

Winstanley, L.

Longford, E.

NOT-CONTENTS

Airey of Abingdon, B.

Glenarthur, L.

Avon, E.

Gowrie, E.

Bauer, L.

Grantchester, L.

Bellwin, L.

Greenway, L.

Beloff, L.

Gridley, L.

Belstead, L.

Henley, L.

Burton, L.

Hives, L.

Caccia, L.

Hornsby-Smith, B.

Caithness, E.

Hunt of Fawley, L.

Campbell of Alloway, L.

Hunt of Tanworth, L.

Cathcart, E.

Killearn, L.

Cockfield, L.

Kinnaird, L.

Colville of Culross, V.

Kinnoull, E.

Cork and Orrery, E.

Lane-Fox, B.

Cullen of Ashbourne, L.

Lauderdale, E.

Davidson, V.

Lawrence, L.

De La Warr, E.

Lindsey and Abingdon, E.

Denham, L. [Teller.]

Long, V.

Drumalbyn, L.

Loudoun, C.

Elliot of Harwood, B.

Lucas of Chilworth, L.

Elphinstone, L.

Lyell, L.

Elton, L.

Mancroft, L.

Faithfull, B.

Marley, L.

Ferrers, E.

Massereene and Ferrard, V.

Forte, L.

Merrivale, L.

Fraser of Kilmorack, L.

Molson, L.

Glanusk, L.

Morris, L.

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Mowbray and Stourton, L.

Stodart of Leaston, L.

Murton of Lindisfarne, L.

Strathcona and Mount Royal, L.

Newall, L.

Orkney, E.

Suffield, L.

Pender, L.

Swinfen, L.

Rankeillour, L.

Swinton, E. [Teller.]

Romney, E.

Thomas of Swynnerton, L.

Saltoun, Ly.

Todd, L.

Sandford, L.

Trefgarne, L.

Skelmersdale, L.

Trenchard, V.

Southborough, L.

Vickers, B.

Stamp, L.

Vivian, L.

Stanley of Alderley, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
Lord Glenarthur: I believe that now may be a convenient moment for the Committee to break until 7.55 p.m. I therefore beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983
7.8 p.m.
The Minister of State, Northern Ireland Office (The Earl of Gowrie)The Minister of State, Northern Ireland Office (The Earl of Gowrie) rose to move, That the draft order laid before the House on 19th April be approved.
The noble Earl said: My Lords, before I turn to the details of the order I should like quickly to refer to the role played by the Northern Ireland Assembly in the consultative process. On 13th December last year my right honourable friend the Secretary of State referred the proposal for this order to the Assembly for consideration and comment. The report of the Assembly's careful deliberations, which fully supports the change in legislation propounded in the order, has been laid before your Lordships' House.
The purpose of this short but important piece of legislation is to simplify the manner in which mortgages in Northern Ireland may be discharged. The order contains just one substantive article, Article 3, which sets out the main principle underlying the order—that a receipt is sufficient to discharge the mortgage and revest the property. The article further provides in paragraph (3) that the receipt shall be given in the form set out in the schedule, and paragraphs (4) and (5) prescribe certain requirements for the receipt. Paragraph (6) provides for registration of the receipt in the Registry of Deeds.
The order will be of benefit to the public and to the legal profession: to the former because it will provide a cheaper method of discharge; to the latter because it will replace a cumbersome method of working with a simpler one. It has been warmly welcomed by those bodies which will be directly affected by it—the solicitors' profession and the main banks which carry on business in Northern Ireland. A number of useful technical drafting amendments, made by commentators, have been incorporated into the order since it was published as a proposal. None of the changes affected the substance of the order.
My Lords, at a time when the mortgage marketplace is no longer the sole preserve of the building societies, as banks and other financial institutions have begun to enter this arena, it is right that the method of discharging mortgages be uniform across the board. This the order achieves. I beg to move.
Moved, That the draft order laid before the House on 19th April be approved.—(The Earl of Gowrie.)
Lord Underhill: My Lords, may I thank the noble Earl for explaining the purpose of the order, and say briefly that we welcome it for four reasons: first, as the noble Earl said, it was brought before the Assembly—we are pleased to note that—and they gave it approval; secondly, there were consultations with the professional bodies concerned; thirdly, I understand it will bring the Northern Ireland law on this matter into line with that appertaining in England and Wales; and fourthly (possibly as important as any), it will bring a cheaper and simpler system of revesting property. For those four reasons we welcome the order.
On Question, Motion agreed to.

Rates (Amendment No. 2) (Northern Ireland) Order 1983
7.12 p.m.
The Earl of Gowrie: My Lords, I beg to move that the Rates (Amendment No. 2) (Northern Ireland) Order 1983, a draft of which was laid before your Lordships on 19th April 1983, be approved.
The order is both short and simple. It sets out to do just one thing: to extend industrial de-rating in Northern Ireland from the present level of 75 per cent. to 100 per cent. Your Lordships will recall that my noble friend Lord Ferrers announced in this House on 23rd March a new and integrated package of industrial incentives to stimulate industrial growth and maintain industrial employment in the unique situation of severe economic and social problems which besets Northern Ireland. The present order provides for the legislative adjustment needed to give effect to the rating element of the new economic initiative.
The effect of the order is limited to that sector which already benefits from industrial de-rating in Northern Ireland; it is not concerned with the service sector, with shops, offices and so on, or with any other sector. The Government are still considering these and other aspects of rating in the United Kingdom as a whole in the context of the very extensive consultations which took place on the proposals of the Green Paper on Alternatives to Domestic Rates, which was published in December 1981. The House will wish to be assured that industrial de-rating, whether at the present or at the proposed higher level, does not mean bigger rate bills for other ratepayers. The cost of 100 per cent. de-rating, estimated at £7 million in the 1983ߝ84 rating year, in addition to the estimated £21 million which would accrue from de-rating at the existing level of 75 per cent., will in fact continue to be met from within existing Exchequer allocations to Northern Ireland services. The change does not, therefore, have the effect of increasing public spending in Northern Ireland. The local authorities will continue to be paid
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compensatory grant in respect of deprivation of national rate revenue which would accrue to them if industrial de-rating did not exist.
I apologise to your Lordships that the order is presented without the usual period for consultation. The contents of the new industrial incentives package were made final only in late March, and if the impact of the new de-rating concession is to be maximised it is essential that it should be available as soon as possible. The new rating year has already started, and I am therefore seeking the approval of your Lordships for retrospection of the effect of the order to 1st April this year. Your Lordships will, I hope, acknowledge that the order is modest enough in length and in content. Its single purpose is to enhance the rating inducement to existing industry to stay and to new industry to establish itself in Northern Ireland. I commend the order to your Lordships.
Moved, That the Rates (Amendment No. 2) (Northern Ireland) Order 1983 be approved.—(The Earl of Gowrie.)
Lord Underhill: My Lords, once again I thank the noble Earl for explaining the order. I note that this again was one of the recommendations from the Assembly when they considered the whole question of industrial development incentives. When the noble Earl, Lord Ferrers, repeated a Statement in your Lordships' House I said that there was need to consider whether the proposals for de-rating and corporation tax were the right ones. What there is general agreement upon is that there is a pressing need, and I recall that on that occasion I drew the attention of your Lordships to the fact that there are more persons unemployed in Northern Ireland than there are at present engaged in manufacturing industry. Since then I have noted in a Written Answer to a Question in another place that male unemployment has reached 25.4 per cent., and of course we know that in some areas it is about 50 per cent. Therefore, undoubtedly something needs to be done.
We on these Benches would have wished to see some action on the lines proposed by the Northern Ireland Committee of the Irish Congress of Trades Unions, but if this proposal to give industrial de-rating up to 100 per cent. will help to bring in new investment, if it will assist existing concerns to maintain their position, then we give that a qualified welcome, and we readily understand the point made by the noble Earl regarding retrospection.
I hope the noble Earl can give an assurance that this provision for 100 per cent. industrial de-rating will not be taken as a precedent for any extension of de-rating to England and Wales. Northern Ireland has had the special facility up till now of 75 per cent. de-rating. The only other de-rating that is applicable in the United Kingdom is that in Scotland, where it is 50 per cent.; but there is no de-rating for industrial premises in England and Wales, and we would hope that this will in no way prejudice the position and create a precedent to introduce that sort of de-rating into England and Wales without full consideration of the whole rating situation.
On Question, Motion agreed to.
[House adjourned during pleasure from 7.17 until 7.55 p.m.]

Telecommunications Bill
7.55 p.m.
Committee stage resumed.
[Amendments Nos. 3 to 5 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 6:
Page 2, line 20, at end insert ("and after consultation with the appropriate trade unions")
The noble Lord said: It is a peculiarity of the way in which the Bill is organised that subjects of very great moment appear to be introduced at the outset of this Committee stage on matters which appear to be relatively trivial, but the issues which are raised, even by these perhaps minor matters of the composition and administration of the Office of Telecommunications, do have harmonics which will undoubtedly reverberate (if that is the right word for harmonics) later in the Bill. We come with Amendment No. 6 to an issue—the issue of the consultation with the appropriate trade unions—which has very considerable importance throughout the later stages of the Bill and to which we shall undoubtedly be making future reference.
It is not quite so unimportant as the Government would have us believe. Ministers in another place pretended to think, or may indeed genuinely have thought, that a comparable amendment put down there was simply a matter of terms and conditions of service. The assurance was given by a Minister in the other place that the terms and conditions of service of the staff of the Office of Telecommunications would be comparable with those of the Civil Service. I am quite sure that that assurance was accepted by my honourable friends there. Indeed, the noble Baroness, the Leader of the House, said in response to a Question this afternoon that industrial relations in the Civil Service are good. I would not attempt to deny that. But the issue here in this clause and in the amendment is much wider than the issue of the terms and conditions of service. It is about the appointment of staff and about the very complex range of subjects which the Office of Telecommunications and the Director General of Telecommunications will have to deal with with their relatively small staff.
Just as in Amendment No. 2 it was urged from the Opposition Benches, and from the Liberal Benches in particular, that under these circumstances the director general ought surely to have as much help as he can in dealing with these complex issues with the outside world, so I argue that it is highly desirable that the director, in formulating his own staffing policy, should consult with the relevant trade unions. This may be something which is totally unprecedented. The noble Lord, Lord Campbell of Alloway, is not here to object to it on those grounds, and I am sure that the noble Lord, Lord Trefgarne, would not dream of objecting to it on those grounds. The fact that it may be unprecedented is not an argument for not trying it here.
I say that with particular reference to the telecommunications industry. In the telecommunications industry, on consultation, cooperation between management and trade unions and participation by the trade unions in the management
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of the Post Office (which was the case in those two years of the experiment to which I have referred up until 1979), the record is first class. It has gone together with good management. It has gone together with commercial and technological success and advancement. It has gone together with a vast expansion in the service provided, with only a very small increase in the numbers of people employed for the purpose. Surely if ever there was to be a case for starting correctly at the beginning, even in this minor way, and having the trade unions involved in initially establishing the Office of Telecommunications, it should be on this occasion, and in this industry.
As I have said, it is not simply a matter of the terms and conditions. We must consider those who are experienced in the Civil Service unions and in the telecommunications unions, those who are experienced in the telecommunications industry and in the complexity of Government control of that industry, which no doubt we shall be referring to later this evening and on days to come. Such people will, I am sure, feel that the experience gained by the trade unions over the years ought to be shared with the Director of Telecommunications as he makes his decisions about staff and as he represents his views to the Treasury about numbers of staff and terms and conditions of service.
As I say, this may appear to be a minor matter, but in fact it is a question of starting correctly in the way that we mean to go on. It is also a question of treating the industry—and all sides of it—with the respect which it has come to deserve and which in the past has been shown to be so successful. I beg to move.
Lord Oram: In rising to support my noble friend who has moved the amendment I make only two points. The first is that I am glad that he has made it quite clear that the addition of the words contained in his amendment applies to the phrase "as to numbers" just as much as to the phrase,
"as to terms and conditions of service".
That was certainly my reading of the amendment, and it seemed to tally with what my noble friend has in mind. It is desirable that the trade unions should be consulted specifically under the provisions of the Bill not only on terms and conditions, which is obvious, but also on wider considerations of staffing policy. That is the first reason why I support my noble friend's amendment.
My other reason is also in line with what my noble friend has said, and here I wish to reiterate a point that I made on Second Reading. Lest any Conservative members of your Lordships' Committee should be in fear and trembling whenever the words "trade unions" are introduced into our discussions, I can assure them that in this particular case we are dealing with trade unions which have a long record of responsible trade union action. As I put it at Second Reading, within the spectrum of TUC membership they are among the most reliable and responsible of trade unions. I believe that because of the record which my noble friend has spelled out, as well as on grounds of general principle, these trade unions are entitled to have the amendment written into the Bill.
8.4 p.m.
Lord Trefgarne: I am not quite clear how the noble Lord sees the amendment working in practice. Who would decide which were the "appropriate" trade unions? The assumption must be that it would be for the director to interpret that. In any event, however this question is decided, I think that the amendment is undesirable. Of course I appreciate the noble Lord's concern about the need to consult trade unions about manning levels. But, as the noble Lord, Lord McIntosh, has already indicated, he appreciates Oftel's staff will be civil servants, and there already exist long-established procedures for consultation on all the matters to which he referred in his opening remarks. Terms and conditions of service, including salaries, are agreed centrally. To add a further level of consultation would at best be unnecessary, and I submit might also undermine existing procedures.
I really believe that there is nothing between the noble Lord and me on this matter. We both agree that the objectives which he has described are desirable; but I suggest that they are already achieved by the arrangements at present in place.
Lord Bruce of Donington: I hope that the words of the noble Lord the Minister on this particular aspect of the Bill are not his last on the subject. I do not know whether those who framed the Bill as originally presented in another place had any real concept of what they were doing, other than presenting the various finance houses within the city with a very good opportunity to make large sums of money. This is of course implicit in privatisation.
I have before me the accounts of British Telecom, which show in extended form the results over the past six or seven years. If at any point the noble Lord wishes to challenge me and say where British Telecom has proved to be below the standard of efficiency and service to which the Government very often pay at any rate some lip service, I should be very glad to be reproached, and indeed to be cross-examined on the financial results shown in the accounts.
The noble Lord surely must realise—as I believe the country realises—that the entire fortunes of British Telecom over the years, with the progressive improvements that have been effected within it, have in the main been the result of very dedicated effort by highly specialised technicians, scientists, and engineers, as well of course as some other employees who do not have functions which call for such high qualifications. One is not dealing with the trade unions in the form which is very often imaginatively put forward by Mr. Tebbit. One is dealing with people with intellectual abilities and work qualifications much higher than those of Mr. Tebbit himself, and probably higher than even those of the Secretary of State referred to in the Bill.
Over the years the people to whom I refer have been responsible for the entire conduct of British Telecom's affairs and have played the main part in its continued success. They belong to their respective trade unions, according to their particular vocations as scientists, engineers, technicians, or whatever they may be. They know what the Government do not know. They know how the industry runs. They know its functions, its real needs, and its day-to-day work. They are not subject to
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the periodical political arbitrament of elections. They have their vocations to which they dedicate themselves and in which they work. They are a fine body of men. The qualifications of many of them—technically, scientifically, and administratively—exceed those held by any member of the present Government. Any insult that can be—
Earl De La Warr: May I—
Lord Bruce of Donington: I shall give way to the noble Earl in a moment, when I have completed my sentence. If the noble Lord the Minister can think of any greater insult to these people than that their unions—which they support—should not even be consulted, then he in turn is insulting them. If the noble Lord looks at his own speech again, although he said—
Lord Trefgarne: The noble Lord has, I fear, become the victim of a misapprehension. We are talking about the staff of Oftel, not that of British Telecom.
Lord Bruce of Donington: I agree. The noble Lord makes my point. If the noble Lord reads those matters set out in Clause 3 of the Bill which the director, now a lone individual with no council to consult, is required to deal with, is it conceivable that he should proceed upon the whole business of making appointments of the staff he requires in order to enable him to deal with his various functions under Clause 3 and elsewhere without consulting the trade unions? No-one disputes the right (I use the term colloquially) of the manager to rule. Non-one disputes the right of the director general, after interview and after examining the CVs of the various applicants for the task, to appoint whoever he wishes. No-one disputes his right and, indeed, his duty, within the parameters of Clause 3 and elsewhere, to have a rough idea or to put forward some rough proposals—he has no council to which he can put them—on the staffing and the qualifications that he needs.
We shall come back to this super-person and the qualifications that he individually requires at a later stage. But can anyone—an ordinary businessman, a professional man or an industrialist—in his right mind, really think that the advice of the council of trade unions in devising the parameters and the staffing would not be of value? The amendment does not say that the director general has to accept any kind of diktat, or anything of that kind. He alone, without the council, is responsible ultimately for doing what he has to do in the appointment of his staff.
I begin to feel sorry for the Government and this pitiable little Bill. I would have thought, once again, that it is plain common sense to consult with the appropriate trade unions. I do not know why Her Majesty's Government seem bent on putting every trade unionist in the country into purdah as some untouchable type. I agree that there is the fashionable Thatcher-Tebbit philosophy that, of course, despises and hates all trade unionism.
Lord Trefgarne: Nonsense!
Lord Bruce of Donington: But that cannot be pervasive of the whole Government and all on the

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Conservative Benches. I would have thought that the amendment was a very reasonable one, and something that ordinary prudent people would do. Do the Government want this industry to function in an atmosphere of complete antagonism? I agree that, like The Economist, most of the responsible unions involved in British Telecom regard the Bill as a complete nonsense. They have expressed hostility towards it. But there is no doubt that their collective wisdom, accumulated over the years, would be of assistance to this "lone ranger" who is to be appointed—at a salary, I understand, of £35,000 a year—in making up his mind on his staffing arrangements. Why do the Government bother to resist? It is ridiculous.
The noble Lord may speak to his brief, which has been prepared in the usual way along the lines of "The Minister might say", "The Minister will argue", or whatever those things are that are immortalised in the programme "Yes, Minister". However, as a matter of common sense, does he really believe in the argument he puts forward when he says that he understands what my noble friend Lord McIntosh says and that there is not all that much between them? If there is not all that much between them, why does he not accept the amendment? There is no diktat in it beyond the statutory responsibility to consult. It is a very reasonable amendment. I will now give way. I apologise to the noble Earl, but he interrupted my flow of argument.
Earl De La Warr: Has the noble Lord finished, or am I interrupting him? I realised where I differed from the noble Lord when he asked if it would not be prudent to discuss these things with the right people. Of course it would. The noble Lord and myself are both businessmen. He runs a large professional firm; I ran a large industrial undertaking. Of course we took advice. Did we not quietly go and have a drink—
Lord Bruce of Donington: Is the noble Earl inviting me to interrupt his interruption?
Earl De La Warn:—in my case with David Basnett and, in his case, I do not know with whom. I do not want to confine this to trade unions. Of course we take advice. But does the noble Lord not think advice is sometimes more useful when you take it of your own volition and not because an Act of Parliament says that you have to do so and because the people you take it from know that you are bound to ask for it? Why do we not leave some things to the good sense of this lonely fellow, the director general, instead of trying to guide his everyday steps by telling him he must do this and that? I think that this is the weakness in what the noble Lord says. I feel quite strongly about it.
Lord Bruce of Donington: I am grateful to the noble Earl. I invite the noble Earl to examine Clause 3 of the Bill carefully. As the noble Earl knows, it was only introduced under pressure and as an afterthought in another place. He will find that precise functions have been laid down.
I do not know about the noble Earl's experience. My experience, at any rate in parliamentary life, which
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extends over some time in another place and here, is that power can tend to corrupt and that unless certain duties and responsibilities are imposed on people they are likely to behave irresponsibly. I am not saying that the Secretary of State, in his appointment (if, indeed, the Secretary of State, as distinct from the Prime Minister, appoints the director general), will appoint the wrong man to the job, or anything of that kind. I am not saying that the individual concerned would not possess all those high professional, commercial and industrial qualifications that would commend themselves to the noble Earl, Lord De La Warr. I am saying that, in the same way that one has given both the Secretary Of State and the new director certain specific duties—we shall seek to give him more at a later stage of the Bill—so this ordinary elementary duty to consult with the appropriate trade unions should be specified. I am fortified in that belief by what the noble Lord, Lord Trefgarne, has himself stated. The noble Lord will recall that he made a Statement in the House a few days ago on the Alvey Report. I asked him whether in this particular matter and in the consultations that took place afterwards he had consulted with the trade unions. The noble Lord replied, "We sent the TUC a copy".
That is indicative of the Government's attitude at present not only towards the trade union movement as a whole, which they have caricatured so far quite successfully—how successfully we shall see—but also towards some of the highest qualified and responsible people within the whole of the telecommunications industry who themselves have been responsible for the great developments that have taken place scientifically, commercially and industrially in the telecommunications industry over the past 10 or 20 years.
If the noble Lord wishes to persist and declines to accept this amendment, he will have automatically created a different climate within which this Bill, if it ever comes into operation, will ultimately have to function. He will be telling the trade union movement and all those technical people in it—scientists and graduates of all kinds—that he is treating them on the same basis as he treated them dismissively in the case of the Alvey Report, a copy of which was sent to the TUC in lieu of consultation. If the noble Lord thinks that this is good for the future development of the telecommunications industry, that is his affair —indeed, it is the affair of the whole Government.
I am trying to help the noble Lord as best I can based on my own professional, commercial and industrial experience. The noble Lord is making a very great mistake. I am trying to prevent him from injuring himself. Why does he persist in being masochistic about it? All he has to do is the reasonable thing. Unfortunately most of his colleagues are not on the Benches opposite to listen to the arguments that I am deploying. I have no doubt that as and when a Division comes he can rely on their support because they have not listened to the arguments. Even if they had done so perhaps their party loyalties exceed their regard for the national interest.
This is, in a way, a very small point; but, in another way, it is a very big point indeed and I invite the noble Lord to reconsider it before he forces us into the Division Lobby against him.
Viscount Thurso: Before the noble Lord the Minister replies, I wonder whether he can explain something which at the moment is not quite clear to me. In the Bill the words used are:
"subject to the approval of the Treasury … as to terms and conditions of service".
The Minister has said that these terms and conditions would be exactly the same as those centrally negotiated for the whole of the rest of the Civil Service. Do those words mean precisely that, or do they mean that they are subject only to a general approval? It is important to understand that, if they mean precisely that, then the terms and conditions of service will have been negotiated in various joint industrial councils, and as such would have been laid before trade union representatives. I should like to be quite clear about this because I am not at present.
8.24 p.m.
Lord Trefgarne: If I may intervene at this point, I can answer the noble Viscount in the affirmative on that particular matter. As I understand it, the Treasury are responsible for approving the terms and conditions of all civil servants. The employment and the terms and conditions of all civil servants are subject to Treasury approval and this form of words has been put into the Bill so that the terms that would be approved would be identical to those agreed for all other civil servants in parallel grades.
I turn to the speech of the noble Lord, Lord Bruce of Donington. It seemed to me that the noble Lord was running out of arguments in favour of the proposals now before the Committee because most of his speech was concerned with personal invective against my right honourable friend the Prime Minister, my right honourable friend the Secretary of State for Employment, my right honourable friend the Secretary of State for Industry—and more latterly I think that all Members of the present Government came in for the noble Lord's verbal lash. But that is not the issue at this particular moment. What your Lordships are being asked to consider is the terms of the amendment on the Marshalled List.
The proposal which the movers of this amendment, supported by the noble Lord, Lord Bruce, seek to put before the Committee at this juncture, is a proposal which is wholly and utterly without any type of precedent in the whole of the public service so far as I can understand it. There is no provision for the unions to be formally consulted in connection with—
Lord Molloy: I should—
Lord Trefgarne: Just a moment, please. There is no provision for the formal consultation machinery with so-called appropriate trade unions in respect of the appointments to any of the public bodies of which I am aware. I stand open to correction if the noble Lord, Lord Molloy, can think of a parallel body; but, so far as I know, there is none.
Lord Molloy: The noble Lord said that this is without precedent, as he understands it. His saving grace is, "as he understands it". Those of us who have been involved for 30 and 40 years in this form of organisation know how totally and absolutely
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incorrect his statement was. His saving grace is that he said "as he understands it". He should now get up and say, "as he misunderstands it".
Lord Trefgarne: I am not going to rise to that sort of proposal. What I am saying is that there is no formal consultative machinery, as is proposed in this amendment, in any of the other public bodies of which I am aware. If the noble Lord can think of one then of course I shall give way and hear what he has to say, and if I am wrong I shall immediately withdraw.
Lord Bruce of Donington: I am grateful to the noble Lord. The noble Lord said that it is without precedent. Will he agree that we are dealing with a situation that is without precedent? We are dealing with the case of a highly successful industry that is being privatised. This is a situation without precedent.
Lord Trefgarne: No, the noble Lord is not quite correct. We are considering here the appointments to a regulatory body. That is a very different matter from the appointments to a public corporation or, less still, a private corporation. I stand by what I said: appointments to public bodies, especially regulatory bodies such as this, are not the subject of formal consultative procedures with the trade unions involved or, as I think the noble Lord, Lord Bruce, appeared to imply, almost any trade union that might have some distant interest in the matter. That is not to say that there will not be informal consultations, as we have already discussed in other contexts and at great length. However, if I may say so, I do hope that the noble Lord will not continue to mar the tone of this debate with a number of personal references, as he did earlier on.
Lord Molloy: We must look at the amendment in its context and how it will read as an addendum to Part I of the Bill. Subsection (5) reads:
"The Director may appoint such staff as he may think fit, subject to the approval of the Treasury".
Everything has to be subject to the approval of the Treasury. That is where the power is in this island of ours—it is in the Treasury. And yet we allow little things like this to slip by. I want someone on the Benches opposite to tell me right now who elected these moguls to the Treasury and gave them such massive power. All Governments are guilty of it. It is about time that we realised that they have to adhere to the rules of Parliament as much as anyone else.
Lord Trefgarne: It is of course Ministers in the Treasury who formally take the decisions to which I have referred. As the noble Lord will be aware, when a matter such as this comes before the Treasury it is a Minister in the Treasury who takes the decision on the advice, no doubt, of his officials. However, it is the Minister who takes the decision.
Let me make one additional point. The noble Lord said that the Treasury rules all our lives. I am sometimes tempted to agree with him. However, the fact of the matter is that in past years—and I am not saying just under the previous Labour Administration but under previous Administrations of every complexion—there has not been sufficient adherence to some of the appropriate dictums of the Treasury or in any event to some decent disciplines. I think that in recent years we have paid the price for that.
Lord Molloy: I accept what the noble Lord has said. Therefore, I hope that they will accept an amendment to make it transparently clear to the people of this land that it is the Ministers at the Treasury, because this Bill does not say so and so long as it remains in this form, it is inaccurate. So that must be made clear some time.
Lord Trefgarne: I am sorry, but I must correct the noble Lord again. The procedure in this matter—and I speak from some experience in these matters—is that when Treasury approval for something such as this is sought, that approval is not regarded as valid unless it is issued by the Minister concerned.
Lord Molloy: That may very well be so. I am trying to say that the ordinary people who are the bosses—not the Treasury, not Ministers or moguls—have a right to know what these nuances are. As a former staff side chairman of Whitley Councils, I was always appalled at the contributions to debates that senior civil servants could make without any authority of the Minister, who was sometimes sitting there, and we had to challenge the Minister to put some of these people in their place. I am hoping that those days are over and that that has passed.
The probability is that very many people know who the Chancellor of Exchequer is and they know who the Financial Secretary is. If they do not, they receive a copy of Hansard once a month and find out. I do not even know who the Permanent Secretary is or all those who sit around him. So this needs to be made transparently clear.
I now wish to continue with what I was saying. The Bill says:
"(5) The Director may appoint such staff as he may think fit, subject to the approval of the Treasury as to numbers and as to terms and conditions of service",
and if we add the amendment, it simply says:
"and after consultation with the appropriate trade unions.".
What can be wrong with that? Let me put it in other words: after consultation with the appropriate representatives of the thousands of professional and skilled people who are going to work in this particular sector. For example, that little phrase means that there will probably be represented 23,800 members of the Society of Telecom Executives. What is wrong with that? What is wrong with all these men learning their trade—and many of them are the products of our universities—and being asked to contribute to the smooth running of this new organisation?
As I have said, I really cannot understand the attitude of the Government. I am vehemently and passionately opposed to everything in this Bill; but I still think that in a democratic society it behoves me and, for example, my noble friend Lord Bruce of Donington, even to make suggestions which would improve the Bill. In this country we have been at this business of democracy for a very long time, and I frankly and freely admit that people from other parts of Europe cannot quite understand our procedures.
Why should the Labour, Liberal and SDP opposition be trying to improve the Bill, to make sure that their contribution will make the whole operation smoother, when they ought to be opposing it tooth and nail? Here we are—and this involves Her Majesty's Opposition in this House, the Liberal Party and the
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SDP—all supporting a proposition which involves representations of thousands of skilled men and women, without whose full support the measure will collapse. Anyone looking on would say that we on this side of the Committee must be barmy, why do we not try to wreck the Bill, why do we not try to make sure that there will not be any professional representation, that there will be one dictator? Then when the director is appointed, with massive power given to him by the Conservative Party to rule over everybody, the trouble will start.
An outsider could be excused for thinking that that ought to be our attitude, but that is not our attitude. By these amendments, our attitude is to make certain that the principle and the spirit of the democratic structure of publicly-owned and partially publicly-owned industries are maintained. In addition to the 23,800 members in the management of British Telecommunications at the moment, there are many other thousands of trade unionists. The only reason I can imagine why the Government are not prepared to accept these amendments is that they will not take the risk that within perhaps months of this Bill becoming law and this organisation being set up, we shall see the headlines from The Times to the Daily Express, "Trouble, Anarchy, Strikes"—unofficial and otherwise—in this new organisation.
We are saying that that is not a good way to start, even with an organisation which we believe does not exist. But we are practical people; we know that it has to be established. Of course, the Prime Minister may decide otherwise and go to the country before this measure can become law despite, as I read in the newspapers, the appeals made by the Leader of this House. If she loses, we get the best of both worlds. We do not get this rotten Bill and we get rid of a rotten Government.
Nevertheless, despite that, we are making propositions to improve the most vital part of any industrial organisation. If the Minister were to talk to any experienced member of the Confederation of British Industry, he would say that it is vital in any new organisation—particularly one that is technically and technologically involved to a high degree—that we get our personnel relationship as near to perfect as we can. To do that we must say to people, "Come and be part of the team". As I have always understood it—
Earl De La Warr: If the noble Lord will allow me, I think that he (and I have to say that he is not the only one) is getting way beyond this particular point of what the DGT does before he decides on the appointment of the members of his regulatory authority. The noble Lord is ranging over a huge number of questions and it is destroying what could be a very good little debate.
Lord Molloy: It is a huge subject.
Earl De La Warr: Not this one.
Lord Molloy: It has huge threats; it has huge possibilities. Not for one sentence have I gone away from the need to ensure that there is proper teamwork. What is wrong with that? Are Members of the Committee opposite against teamwork in this industry? Their silence is the answer. That is the basis

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from which I am arguing. Where do you get this teamwork? It comes from the technicians, the high technologists, right the way through to the other aspects of the trade union movement—their representatives; so that the director general with, if you like, his top staff, can call on these people to make this proposal a great success. That is what we are asking. I am of the opinion, and I am going to say it, that secretly any member of the CBI, any industrial director with knowledge of industrial relations, would be with us one hundred per cent. So would the trade unions. Why not the Government?
8.40 p.m.
Baroness Lockwood: I wonder whether we can draw a distinction between the meaning of two parts of this particular clause. The clause talks about the numbers and the terms and conditions of service. The terms and conditions are determined, as the Minister has rightly said, at national level, but that is the terms and conditions of particular grades. Surely what we are talking about in this particular clause and the amendment is the numbers at particular levels. It would seem appropriate, when we are establishing a new and important organisation such as this, that the appropriate trade union should be consulted about the numbers at different levels, and therefore the terms and conditions which would apply to those levels.
Lord Trefgarne: I am disinclined to try to extend this debate much longer. That is for others if they seek to do so, not for me. We are basing this new body on the form that was agreed, and I believe widely welcomed even on Benches opposite, when we set up the Director General of Fair Trading and his office a few years ago. That was a proposal which was welcomed on all sides of your Lordships' House and in another place. The procedures that we are now adopting are procedures modelled closely on the procedures agreed at that time.
What the amendment seeks to do is to set up a wholly new and unique consultative process for this body, and for this body alone. As I said to the noble Lord, Lord Molloy, just now, there is no parallel for the proposals now before your Lordships in any of the other regulatory bodies in our entire public life. I say that with certainty and with conviction, but naturally I stand open to correction if noble Lords opposite can think of any such body.
Lord Molloy: In the 1947 Act creating British Rail, in the creation of the public ownership of the air services, and then finally when the public ownership of the steel industry was brought about, a very similar procedure was adopted.
Lord Trefgarne: I said "regulatory bodies". I was careful to use those particular words. I do not think that any of the organisations which the noble Lord refers to would fall into that category. We have had a longish debate on this matter. It is not for me to say when such a debate should be drawn to a close, and there is at least one noble Lord who certainly ought to intervene before we reach a conclusion on this matter, but I put it to your Lordships that what is proposed is
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a wholly new and different consultative process which would not, I think, be in the interests of the smooth working of this organisation.
Lord Wilson of Langside: In spite of the discouragement of the Minister, may I try to make three short points in support of the propositions of the noble Lords, Lord Molloy and Lord Bruce of Donington? First, surely if precedent is to be the test in these matters, it is quite inappropriate. I speak as a member of a profession which, without precedent, was frequently unable either to move backwards or forwards. If precedent is to be the test, it is quite the wrong test.
The second point is that these matters under subsection (5) of Clause 1 are subject both as to numbers and terms and conditions of service to the approval of the Treasury. What that means is that the Treasury has a veto, or what the noble Lord, Lord Molloy, referred to rather picturesquely as "the dead hand of the Treasury". I am sure that is a very unfair approach to the Treasury's problems and the problems of Ministers who are responsible for the Treasury. Nevertheless it seems to me extraordinary that, having given this veto to the Treasury, the Government refuse to accept consultation—not a veto—with the trade unions.
The Minister—and this completes my point—spoke rather critically (there is no reason why we should not be critical in this Committee from one side or the other) of the invective of the noble Lord, Lord Bruce of Donington. Speaking for myself, I am not surprised that the noble Lord, Lord Bruce of Donington, was a bit "invective", if that is the right word, in this context, when here we have a situation in which the Government, having given the power of veto to the Treasury, refuse even to accept consultation with the trade unions.
I accept the wisdom of what the noble Earl, Lord De La Warr, said in this context. It was obviously wise and it may be more sensible just to have these consultations informally rather than put them into a statute. I accept the wisdom of that. On the other hand, do the Government not appreciate the unwisdom of their reaction to this proposal that trade union leaders should be consulted in these matters?
Lord Trefgarne: I agree with the noble and learned Lord that, if the only argument I had to deploy tonight was that this was some long-established arrangement and therefore there was no good reason to upset it, that would not be a particularly good argument. But that is not the case. What we are comparing these proposals with is a recently established arrangement in so far as the Director General of Fair Trading is concerned—an arrangement which was widely welcomed both by your Lordships and in another place. It is the amendment which now seeks, I would say prematurely, to reject that as unsatisfactory when it has worked so well, and to propose these new alternative arrangements.
What I was complaining about with regard to the speech of the noble Lord, Lord Bruce of Donington, was not the mere tone of invective. We have become used to that so far as the noble Lord. Lord Bruce, is concerned, and I do not complain about it. What I

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complain about is his personal remarks about certain members of the Government.
Lord Oram: When I spoke briefly in favour of this amendment, I meant to ask a question. I wonder whether I may ask it now and can the Minister perhaps help me? What is the Government's estimate of the size of the Oftel staff as at the moment? I may have missed it in some debate, or document or other. I should be grateful to know that.
Lord Trefgarne: We have it in mind that the staff would number about 50 in this particular office. I think that is the answer to the noble Lord's question.
Lord McIntosh of Haringey: The Minister, in his several responses on this amendment, has no doubt wisely exercised the better part of valour. He has taken the amendment at its face value and he has sought to argue against it, first, I am sorry to say, on the grounds of precedent—and I shall come back to that in a moment—and, secondly, on the grounds that it is difficult to say who the appropriate trade unions should be. That second objection can readily be answered. So far as the Civil Service element is concerned, it should be the trade unions representing the grades who will be employed in the Office of Telecommunications. In so far as the Government have it in mind to recruit from outside the Civil Service, possibly only on secondment but possibly on a longer-term basis, this will most likely be from the telecommunications industry in its widest sense. The appropriate unions would therefore include those unions recognised in the telecommunications industry. This need cause no serious problems to the Government at all.
So far as precedent is concerned, the Minister made several references to the Office of Fair Trading. I had assumed that the choice of the non-ministerial department as the formula for this office was an issue which ought not properly to be debated on this amendment but should be debated when we come to debate the Question, That the clause stand part? That was where I had proposed to make my own humble interventions. Now that he has raised it, there are substantial differences from the Office of Fair Trading which ought to be recognised.
First, the Office of Fair Trading—as far as I know—except for the appointment of a director general, does not recruit from outside the Civil Service. The members of staff of OFT are all career civil servants with the exception, as he has rightly said, of Sir Gordon Borrie and his predecessor, Sir John Methven.
Secondly, the Office of Fair Trading operates not merely on a telecommunications code, as is proposed in the Bill, and on certain other relatively limited though broad legislative criteria, but it operates on very detailed regulations laid down by departments. For example, the Consumer Credit Act is, in fact, implemented by means of enormously lengthy and complex regulatory controls and the Office of Fair Trading, therefore, does not have the kind of independence which I understand it to be the wish of the Government that the telecommunications office should have. The situation is not really parallel. I
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should have thought that it was undesirable for the Minister, in approving this alternative to quangos such as the Civil Aviation Authority, or to a Government department, to cite in aid the Office of Fair Trading.
The one aspect of the amendment in which the Minister has gone beyond the strict wording has been the issue raised by several of my noble friends about the Treasury. I find his arguments curious, not in themselves about the clause, but in relation to the other provisions of the Bill. The noble Lord mentioned to us the controls of the Treasury—which I do not particularly object to, for I think it proper for Government centrally to keep control over numbers and over money; that is what any Government have to do. In these matters it requires at least the formal approval, I think he said, of Treasury Ministers. Therefore he is saying that there is to be political control over the basic issues of the size and cost of the Office of Telecommunications—and so be it.
However, why is it that in every respect other than the staffing the Government have allowed the Office of Telecommunications to escape from Government control? Why has the formula of a non-ministerial department been chosen rather than, as we have now, a perfectly satisfactory regulatory body for telecommunications with responsible offices within the Department of Industry? It can only be because on everything else the Government want to avoid the political control which it appears from their reaction to this amendment they want to impose on the staffing of the Office of Telecommunications. I suggest that the argument being put forward is in complete contrast to the argument which was put forward elsewhere in the Bill and in complete contrast to the arguments which I fear will be put up against further amendments which my friends and I have put down and which attempt to secure what the Notes on Clauses contemptuously call "political influence" but which I call "proper parliamentary responsibility".
That was an issue upon which it was unwise of the Minister to venture in his response to these amendments. I think on subsequent clauses he will regret what he has said. As it is, the amendment may not be of fundamental importance in itself, but it is true that industrial relations in the telecommunications industry as a whole are of wider import than they are in an office of 50 people, though, having controlled for many years a company rather smaller than 50 people, I am very well aware of the need, even among 20 people, for consultation with my own staff on all these matters. The amendment starts to raise issues of principle which we on this side cannot let go and cannot ignore, even when they raise a tiny threatening head, and I shall ask your Lordships to express your opinion on this matter.
On Question, Whether the said amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 18; Not-Contents, 54.

DIVISION NO. 3

CONTENTS

Bishopston, L.

Collison, L.

Bruce of Donington, L.

Ewart Biggs, B.

Buckmaster, V.

Fisher of Rednal, B. [Teller.]

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Hatch of Lusby, L.

Ponsonby of Shulbrede, L. [Teller.]

Houghton of Sowerby, L.

Lockwood, B.

Ross of Marnock, L.

McIntosh of Haringey, L.

Strabolgi, L.

Molloy, L.

Underhill, L.

Oram, L.

Wilson of Langside, L.

Pitt of Hampstead, L.

NOT-CONTENTS

Airedale, L.

Lyell, L.

Auckland, L.

Macleod of Borve, B.

Avon, E.

Marley, L.

Beloff, L.

Marshall of Leeds, L.

Belstead, L.

Massereene and Ferrard, V.

Bessborough, E.

Molson, L.

Brougham and Vaux, L.

Morris, L.

Burton, L.

Mottistone, L.

Caccia, L.

Murton of Lindisfarne, L.

Campbell of Alloway, L.

Pender, L.

Cathcart, E.

Rankeillour, L.

Cockfield, L.

Saltoun, Ly.

Cork and Orrery, E.

Skelmersdale, L.

Davidson, V.

Stanley of Alderley, L.

De La Warr, E.

Stodart of Leaston, L.

Denham, L. [Teller.]

Suffield, L.

Elliot of Harwood, B.

Swinton, E. [Teller.]

Elton, L.

Thomas of Swynnerton, L.

Glanusk, L.

Thurso, V.

Glenarthur, L.

Trefgarne, L.

Gridley, L.

Trenchard, V.

Hives, L.

Vaux of Harrowden, L.

Hornsby-Smith, B.

Vickers, B.

Lane-Fox, B.

Vivian, L.

Long, V.

Windlesham, L.

Loudoun, C.

Wise, L.

Lucas of Chilworth, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 7 to 10 not moved.]
9.2 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 11:
Page 2, line 26, at end insert ("but the annual sum so payable shall not exceed £1 million without approval of both Houses of Parliament.").
The noble Lord said: This amendment seeks to make an addition to Clause 1(6), which reads:
"There shall be paid out of money provided by Parliament the remuneration of, and any travelling or other allowances payable under this Act to, the Director and any staff of the Director, any sums payable under this Act to or in respect of the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of this Act".
To these words this amendment would add:
"but the annual sum so payable shall not exceed £1 million without approval of both Houses of Parliament".
I commend this amendment to the Committee. What we are talking about here is the expenditure of taxpayers' money. Your Lordships may feel that the allowance of £1 million, which, on the assumption that the staff is 50, works out at an annual average of £20,000 per member—and we should bear in mind, too, that there is going to be some differential because the director himself, I believe, is going to receive £35,000—ought to be adequate for this purpose. I cannot see any reason why, if it is necessary to go over this quite reasonable sum, Parliament should not be consulted. After all, Parliament is the ultimate custodian of the taxpayers' money.
I shall try to put this as pleasingly as I can. The noble Lord reproached me, when we were dealing with the last amendment, on the quality of my personal vituperation. May I say to the noble Lord, in partial reply to that, that I have listened to and read some of the personal vituperation that has emanated from Members of his own Government in another place. This vituperation has grown over the Government's four years in office progressively as the arrogance has grown. So the noble Lord must not complain if, every now and again, the party opposite, his party, get it back in kind. Sometimes they deserve it. I will say immediately that none of my vituperation is directed against the noble Lord, for whom I have the utmost respect—nay, even affection! Such invective as I am able to use is directed at places that ought to be accustomed to receiving it and which will be receiving it in even greater measure at a later stage.
Lord Mottistone: Is it not out of order to cross-connect between the two places in debate in the way that the noble Lord is suggesting? I would suggest to him that he keeps his thoughts to this Chamber and to people in this place, and does not worry too much about what happens elsewhere in the Palace of Westminster.
Lord Bruce of Donington: The noble Lord has a point there. I quite agree that it is advisable from time to time to pay attention to the monkey and to ignore the organ-grinder; but every now and again one has to refer in context to the real organ-grinders behind the whole business. It does no real violence to our procedure.
Now, having put myself right, I trust, with the noble Lord, may I say that the main purpose of this amendment is to limit expenditure and then to seek parliamentary approval. But the noble Lord must be asking himself why. I am bound to confess to him that I had in mind the first year only in regard to this amendment, and not the subsequent expenditure. Your Lordships will recall that a person has to be appointed as director general. We know what a terrible trouble it was to obtain a person to lead British Steel and then again to lead the National Coal Board. I am sorry to have to allude to the other place for just a moment but, if the noble Lord, Lord Mottistone, will bear with me, he will recall the circumstances surrounding the appointment of Mr. Ian MacGregor where, according to the then Secretary of State, they had to scour the country—ignoring the fact that Mr. MacGregor was already on the board of BL—before they were able to find somebody. But they were not able to find anybody from domestic resources. So what did they have to do? They had to pay a transfer fee of £1,500,000 million to Lazard Frères, and that has been repeated in the recent appointment to the coal industry.
How can we be quite sure, unless the constraints that we are proposing to put into the Bill are accepted, that it is going to be possible to fill this important post of director general without paying somebody a transfer fee? If I may remind the noble Lord, there are very good precedents (to use his own term) for it. We want to prevent that. If the Secretary of State, without the intervention of the Prime Minister, is to appoint his

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own director, we do not think we ought to give him such financial latitude when he is called to see the Prime Minister, who has already made up her mind whom she wants to fill the post and is prepared to pay a transfer fee for it. We just do not want that to happen. We all know perfectly well that no noble Lord or noble Baroness in this Chamber in his or her secret heart really approved of this MacGregor transfer fee. They had to take it because they all had to dance to the Prime Minister's tune—"the only man in the Cabinet". We know this. We just want to prevent it. We think this is a very prudent way of seeing that no transfer fees and no extraordinary sums are paid in head hunting.
As a matter of ordinary commercial prudence, whatever legal arguments about precedent might fall from the lips of the noble Lord, Lord Campbell of Alloway—who is notoriously reliable on these occasions—I would have thought this amendment would commend itself to your Lordships and I sincerely hope that the Government will accept it. Otherwise they will be saying that they think the expenditure will exceed £1 million per annum. I do not think they want that to happen and I am quite sure they would be amenable to the adoption of the ordinary Parliamentary controls, limiting it to what the taxpayer might feel was a reasonable annual sum. I beg to move.
9.12 p.m.
Lord Campbell of Alloway: May I oppose this amendment. I have listened with very great care but I do not understand the reasoning. Surely, if the approval of the Treasury is requisite, as it is, then whatever party may be in Government that is a fair and sufficient safeguard. This approval, as I read the Bill—I shall be corrected if I am wrong—relates to the appointment of staff and must inferentially relate to the approval of the salaries. I should hate to disappoint the noble Lord, Lord Bruce, so I shall ask: why should this be so? Is there any precedent for a provision of this type to which anyone can point? If not, when one already has the belt, why do we have to have the statutory braces?
Lord Morris: For the noble Lord, Lord Bruce of Donington, even by way of analogy, to refer to the other place as the "real organ-grinder" and to refer to the Upper House of Parliament as "the monkey" is not only clumsy and extremely unattractive but also deeply offensive. I would ask him to withdraw the terms.
Lord Underhill: I wonder whether I can add one further reason to that put forward by my noble friend in reply to the question raised by the noble Lord, Lord Campbell of Alloway. This is a new body. I know we have other regulatory bodies but this is a regulatory body of a type we have not already had, with its dimensions and extensions. It is a non-ministerial body, not directly accountable to Parliament. This will be an opportunity for accountability—an opportunity for Parliamentary "quizzing"—because if the £1 million were exceeded and they had to come to both Houses of Parliament for affirmative approval, that would give an opportunity for both Houses to question
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what is being done and what is the nature of the activities carried on. It may be the only opportunity that Members of your Lordships' House would have to question this important regulatory body. Therefore, for that reason alone I believe that the Government ought to accept the amendment and endeavour to introduce some accountability for the actions of what will be an important regulatory body.
Lord McIntosh of Haringey: Before the Minister rises, I have a simple question which he might like to take on board at the same time as he gives his other replies. It has to do with the difference between financial control by the Treasury and control by affirmative approval of both Houses of Parliament. My question is this. Is a non-ministerial department of the kind proposed, like the Office of Fair Trading, within the orbit of any of the Select Comittees of the other place? Is there any other opportunity than that proposed in this amendment for something more than financial control, and for some real questioning by either House of Parliament of the activities of the office?
Lord Trefgarne: This amendment clearly seeks to limit the size of Oftel through direct parliamentary control of its budget. May I first repeat the assurance that I gave to your Lordships at Second Reading? I made it clear then that the regulation would be operated with a light rein and that there would be a minimum of interference with the legitimate commercial decisions, so that companies can flourish in response to this matter as long as they compete fairly with each other. Secondly, the budget of the director and his office will already be voted by Parliament. The normal parliamentary scrutiny—the procedure is, I am sure, well familiar to the noble Lord, Lord Bruce—is surely appropriate. No more is done before money is voted to the Office of Fair Trading, and I see no special reason for extra parliamentary control in the case of Oftel.
May I also refer to the significance of the sum of £1 million? This is the estimate, given in the Explanatory and Financial Memorandum accompanying the Bill, of the cost of issuing, monitoring and amending licences. It would seem that the proposers of this amendment would not wish the director to carry out his functions, except those under Part II of the Bill, without parliamentary approval. But Part III of the Bill, which we shall discuss in due course, contains some important functions; for example, the giving of advice, the investigation of consumer complaints, the establishment of advisory bodies for England, Scotland, Wales and Northern Ireland and the exercise of certain functions under the fair trading and competition Acts. Is it the wish of the proposers of this amendment that there should be specific parliamentary approval before the director can carry out these functions? I would hope not, but that is certainly the effect of the amendment. I think, therefore, that the amendment is unnecessarily restrictive and bureaucratic, and I hope that your Lordships will reject it.
Lord Ross of Marnock: Is the Minister quite right in saying that the functions under Clauses 50 and 51 are

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included in that sum? The amendment of my noble friend relates purely and simply to the remuneration of the director general and his staff. The noble Lord said that part of the functions is the provision of advisory councils for England, Scotland, Wales and Northern Ireland. Are these to be appointed without consultation? Is he to use the same argument in relation to remuneration, et cetera—which had some force—as about not consulting trade unions? I felt at one time like asking about the advisory councils, but then I thought I would be quite out of order because they have nothing to do with the argument on this clause. Yet in opposing this amendment we have the Minister praying in aid the cost of these things. With due respect, I think that he is quite out of order in doing that. It is not included in this sum of £1 million.
I was concerned about the fact that the Explanatory and Financial memorandum states:
"It is estimated that the costs of the Director and his staff in discharging his functions, the additional costs of an increase in the number of members of the Monopolies and Mergers Commission and also any additional expenditure incurred by the Secretary of State in exercising his licensing functions"—
the latter two have nothing to do with this amendment—
"will be about £1·5 million a year".
So I estimate that the costs of the staff and the director general will be well under £1 million. When we look at the functions of the director general in Clause 2, we are worried about whether there is going to be a pretty bureaucratic set-up. We are not told anything about staff selection, their quality and so on. Parliament should be given an indication. Incidentally, I am not sure whether something so financially concentrated as this is a matter for your Lordships' House. The other place might have something to say about this House taking powers in relation to finance which should not be ours. But Parliament should be able to watch how this develops and, if necessary, should be able to stop it. It is all very well for the noble Lord the Minister to say that the cost will be printed in the Estimates. The House of Lords will never have a chance to debate the Estimates. And because of the way that they are dealt with in the other place, it may be that this particular item will not properly be dealt with there, either.
Because this matter is so important, it is essential that Parliament should have the right to draw attention to costs which soar well beyond what Parliament was led to believe they would be in respect of the development of this new organisation. I do not wish to touch upon the MacGregor theme, but I am sure that many noble Lords on the other side of this House and on the other side in the other place must be horrified at the cost of this superman. It may be that in his spare time he will do the job of director general of this body. If he is to get only £35,000 a year, it will only take him half an hour. It should be well within his range of abilities. Seriously, however, I believe that the Government ought to have another look at this matter if they wish to create something that is manageable and will not get out of control financially. We should be able to get on to it if this body is required to come back to Parliament, should it need more than the £1 million to be allocated to it.
9.22 p.m.
Lord Trefgarne: Whatever the intention of the amendment may be, the fact is that the functions which I described in my earlier remarks will have to be paid for out of the sums of money we are here discussing and which are provided for in this clause. The noble Lord, Lord Ross of Marnock, is right to sound a cautionary note about how far it is proper for Members of your Lordships' House to consider these matters. The other place would take grave exception to any proposal that your Lordships' House should have specific control over the sum of money which is to be made available, or otherwise, for these purposes.
I believe that the fears which have been expressed about the creation of some monster which is out of control are exaggerated. First, there are the procedures involved in the approval of the Estimates, to which I have referred. The noble Lord, Lord Ross of Marnock, indicated that his experience is that these matters do not always receive the scrutiny they deserve in the other place. Doubtless that is the case. I have not had the privilege of being a Member of the other place so I cannot say whether or not that is so. Your Lordships will also be aware that the director is obliged to prepare an annual report for Parliament. This will give considerable scope for parliamentary scrutiny of the affairs of Oftel and the director general. The combination of those two procedures—the scrutiny of the Estimates, however effective that may be, and the submission of an annual report to Parliament—will, I believe, provide proper Parliamentary control over these matters. I hope the Committee will be content to leave it there.
Lord Molloy: I can understand the noble Lord's position tonight. He has to resist the amendment. But could not the noble Lord at least say that there are to be further stages of the Bill? There are Members on all sides of the Committee who are anxious about this subsection if there is to be no amendment. Therefore, if the Government cannot accept the amendment now, can they say that they will be prepared to look at some of the serious arguments which have been advanced in support of this amendment and will then come back with some modus operandi?
Lord Trefgarne: I am sorry to have to tell the Committee that I have not been persuaded by the arguments which have been deployed in support of this amendment. If I were to give some assurance that we will look at the matter, I fear that I should be misleading your Lordships. I am convinced that the proposals contained in this Bill are the right course to follow.
I have said before that these arrangements have some precedent—as indeed they do—in terms of the Director General of Fair Trading. Your Lordships have not found that argument particularly convincing, but it is the case that we are looking at an established procedure—not an historical, long-established procedure which may be creaking with the passage of years, but a recently-created procedure which has worked very well indeed, in my estimation. It is one that, at the time of its inception, enjoyed the support both of your Lordships and of another place. I hope that the Committee will be content to leave it there.
Lord Oram; Can the noble Lord the Minister clear up the point raised by my noble friend Lord Ross of Marnock? As and when the advisory bodies come to be set up, presumably they will be staffed by professionals. I wonder whether they are included in the estimate of 50 Oftel staff, or will they be additional? That seems to me to be relevant to the matter we are now discussing.
Lord Trefgarne: My understanding is that the advisory staff will be additional to the number I gave to your Lordships earlier. If I am wrong about that, I will write to the noble Lord.
Lord Bruce of Donington: I am obliged to the noble Lord the Minister. It is quite clear from the financial explanations on page viii of the Bill that the sum of f £1 million suggested by this amendment is quite a reasonable sum anyway. If one says that the total cost, which includes the additional staff, of the Monopolies Commission will be about £1½ million; if there are going to be savings, as my noble friend Lord Ross of Marnock pointed out, of £100,000 in connection with the Post Office Users' National Council; if there is to be further revenue; and if the total cost is put at £500,000, I should have thought that the £1 million suggested was a reasonable sum.
I am mindful of what was said by the noble Lord as to the desirability of this House intervening in financial matters. I noted too the observations of my noble friend Lord Ross of Marnock on that point. I should not have thought that they were applicable in this particular case. The House is not entitled to intervene in Finance Bills or anything of that kind, but we frequently discuss various expenditure on one thing or another to be made by the Government in connection with Bills, so far without any particular disapproval on the part of another place.
May I say to the noble Lord, Lord Morris, whose sensitivities I appear to have upset, that the words I used were of an allegorical nature and were certainly not intended to give any personal offence? If I may say so, I find the noble Lord, Lord Morris, to be a most agreeable person with whom to debate matters and I should not wish to cross him in any way.
Although I should prefer the limitation that I have mentioned to be in the Bill, and indeed we on this side of the House support this amendment, I am persuaded by the reasonableness of the noble Lord the Minister in this matter. I am sure he will use his best endeavours to ensure that taxpayers' money is not wasted on excessive transfer fees. I would hope to have an assurance that no transfer fees will be payable in circumstances of this kind. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 12 not moved.]
9.30 p.m.
On Question, Whether Clause 1 shall stand part of the Bill?
Lord Bruce of Donington: I am sorry to have to return the Committee to the whole purposes of Part I
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of this Bill, which sets up the appointment of a director general and a completely new tier to the new team of administration and supervision within the industry itself. We cannot let this occasion pass without indicating very firmly that of course this Part of the Bill is a complete irrelevance to the needs of the telecommunications industry in this country; it serves no useful purpose whatever. No complaint has been made concerning the conduct of British Telecom and its undoubted success over the past decade and even before. The country knows perfectly well, in spite of inspired press propaganda in some sections of the press to the contrary, that the story of British Telecom is a success on every count.
Really, the sole purpose of the Bill, which necessitated this regulatory machinery, is the determination of the Government to privatise this highly successful industry. I am sorry the noble Lord finds that boring, but I am afraid that it has got to be said and it is going to be said again. It is only when one comes into the later parts of the Bill that one finds the terrific amount of machinery that has to be established in order to preserve the public interest. As British Telecom has been working over the years—and I have made reference to the accounts and have offered to be cross-examined upon them—it is quite clear that British Telecom has served a national purpose, has operated profitably and has been able to finance itself for the past 6 years out of its own resources with an average of 6.8 per cent. return on capital employed in the business. It has been responsible for a very great deal of the technical innovation that has taken place in the telecommunications field. Employed in British Telecom are some of the finest telecommunication and electronic engineers in the country, and scientists as well. It is, therefore, a story of success.
All the items that are put in by way of public regulatory machinery, of which Clause 1 of the Bill is the leading part, are completely unnecessary unless British Telecom passes out of public control—I repeat, completely unnecessary. Under the telecommunications Acts and the wireless telegraphy Acts and the various licensing provisions, the appropriate Minister has always been able, should he so desire, merely by the issue of directions to the chief of British Telecom, to ensure that the public interest is preserved. Those who have led British Telecom over the years have been fully conscious of that: they have been conscious of their public duty; they have known what is required of them. And, where they have been uncertain as to what has been required of them, they have always been able to consult with the appropriate Secretary of State to find out what he thinks about their plans.
So British Telecom has been able to function over the years without this kind of regulatory machinery. Indeed, the Government found out in another place—I am sorry to mention another place again—that this machinery did not meet the requirements of their own supporters, let alone those of the Opposition. As a result, we had at a very late stage the introduction of specific duties under Clause 3. But none of this would have been necessary had it not been for the Government's determination to see that 51 per cent. of the industry was privatised. It was then hurriedly realised—as indeed is very succinctly set out

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in the Economist for 23rd April last—that they had created a private giant over which, unless they did something, they could exercise no control at all in the public interest. That is why of course all this regulatory machinery becomes necessary.
Even so, I have no doubt that further misgivings will be expressed. The noble Lord, Lord Orr-Ewing, is not in his place, but I can imagine what he possibly thought when he read The Times for 30th April, where it was revealed that British Telecom are to sell computers, or what he might have thought when he read the Financial Times of the same date, where it was indicated that British Telecom was going to move into office automation. I suspect that perhaps in a later stage of the Bill he will express misgivings as to how all this will react on the British electronic manufacturing industry.
British Telecom was conscious of its public responsibility. Under the general supervision of the Secretary of State, it has always been the policy of British Telecom to give preference to British manufacturers. It did not have to be told what its public duty was at all. But fired with the magnificent vision of the industry being privatised, can it be wondered that the chief of British Telecom (who presumably will carry on his functions as before under the control of the director general or the Secretary of State) has already given notice that he intends to buy cheaply wherever he can? This, after all, is in the best traditions of competitive industry as defined by the Prime Minister in another place. So the whole of this machinery which has been put in is an expression of the Government's fundamental distrust of the way in which this gigantic private corporation will function if it is left to its own devices to function within the normal canons of free enterprise.
Nowhere is the barrenness of the thinking behind this Bill more revealed than it is by the establishment of Oftel. It is argued that unfettered competition yields the best results in the best possible of worlds and ensures the prosperity of everybody, and why is not free enterprise completely unfettered to do exactly as it wishes. This Government in this Bill already destroy this basic philosophical argument. They acknowledge that there has to be control. This whole elaborate apparatus of control is being introduced solely so that there can be some plausible justification seen by the British public, British manufacturers, the staff and the world at large for this truly pathetic effort to privatise on a scale which the London Stock Exchange will find difficult to deal with, in any event. It will absorb the total capital resources available for investment, so The Times informs us, over a couple of years. The Government will have to think again.
I should like to eliminate this clause altogether as that strikes to the root of the Bill. The Government would describe a vote on the Question that the clause shall stand part of the Bill as an effort to wreck it. With what I hope is engaging candour I shall say that that is precisely the purpose of voting against the Question that the clause stand part. With those amiable sentiments, I express the hope that the Government will accept in good faith, and that the noble Lord, Lord
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Morris, will approve, the intimation that we may have to troop into the Division Lobby against them.
Viscount Thurso: On behalf of my noble friends on the Liberal Benches, and in particular my noble friend Lord Lloyd of Kilgerran, I feel that at this point I should say that we were very sad to have lost the amendment which would have set up a council to advise and help the Director General of Telecommunications, or whatever he is to be called. We are especially sad that, because of its wording, Amendment No. 12 was lost in the general collapse of that particular effort on our behalf to set up a council.
We feel that the principles enshrined in Amendment No. 12 are worthy of consideration and probably debate, and at a later stage we may well feel it necessary to bring forward another amendment which is properly worded. It could perhaps be put to your Lordships' House at Report stage. However, I consider that now, when we are discussing the Question of clause stand part, it is right to mention this particular point; otherwise it might be thought that we simply let the principle enshrined in Amendment No. 12 go by default. We do not let it go by default, and we may well return to it later.
Lord Morris: It is quite clear from what the noble Lord, Lord Bruce of Donington, has said, that he has totally and completely missed the whole point and purpose of the Bill. In these days of dynamic change in this industry, which will affect the way of life of every single person in the country, it is quite wrong that the tempo of change resides in the hands of one, two, or even six, corporations. It is essential that the tempo of change resides with Government, and that is the fundamental reason for Clause 1.
I do not think that the noble Viscount, Lord Thurso, should be distressed about Amendment No. 12, because Clause 3(2)(b) of the Bill provides that one of the duties of the director general shall be,
"to maintain and promote effective competition between United Kingdom operators".
That certainly covers part of the point which is in line with Amendment No. 12. I would certainly suggest to Members of your Lordships' Committee that you support the clause in its entirety.
Lord Trefgarne: If I may say so, the speech of the noble Lord, Lord Bruce of Donington, admirable though it was, had a familiar ring about it. Rather than reply at length, may I refer your Lordships to what I said on the Second Reading of the Bill, since the noble Lord repeated much of what he had said on Second Reading. My reply is in col. 403 of Hansard of 18th April. If your Lordships want even further enlightenment, I would refer you to the speech of my noble friend Lord Glenarthur, which begins at col. 461.
9.43 p.m.
Lord Ross of Marnock: I should like to make a very simple point, for I am a very simple person. We are dealing here with the Director General of Telecommunications. We have spoken about his remuneration. We have spoken about his staff, and the cost of providing them. Where is he going to meet the

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staff? Are they going to meet somewhere on the Embankment? There is no evidence that they are to have any office of their own. Is the remaining nationalised part of the telecommunications industry going to have to put them up? If they have to get themselves an office in London, it will cost them some money, and it may well be that the Financial Memorandum which we spoke about earlier underestimates just what the cost of this body is going to be.
I agree with everything that my noble friend said about the daft dogma of this whole thing. Not a single soul in your Lordships' House or in the other place, on either side, ever thought that we would get to the point where a Tory Government which proclaimed their pride in what was being done in these services and in what was done in the old services of the Post Office for so long would descend to this kind of thing.
I am proud of what was done. For a long time after the war, when I became a Member of Parliament, I served on the Post Officer Users' Council, which in those days also dealt with the telegraph side. The work that was done by the engineers, and the co-operation that existed between them and British manufacturers, was all to the good of this country. It built up a tremendous reputation, which has continued under British Telecom. It is a sad day when the Government ask us to be proud of the virtual destruction and breaking up of an organisation in which there was a pride and prestige that was a credit to Britain. It is not a happy day for Britain that they should do something like this purely for dogma—and daft dogma, at that.
Lord Trefgarne: I am happy to be able to reassure the noble Lord, Lord Ross of Marnock, that the director general will not have to meet on the Embankment, and that offices will be provided.
Lord Ross of Marnock: By whom? Who will pay for them? Is that sum contained within the Financial Memorandum?
Lord Trefgarne: It is the provision made in Clause 1(6).
Lord Underhill: We are discussing, on clause stand part, the regulatory machinery and the director general. We are not discussing the tempo of change, as suggested by the noble Lord, Lord Morris. We shall come to that when we deal with Clause 2. There will undoubtedly be much to be said about it.
I understand that the Department of Industry has a section of 40 or more staff which, with British Telecom, handles the affairs of telecommunications satisfactorily and with the expertise to which my noble friend Lord Bruce of Donington referred. Why can it not be left there? We have often had to question powers being left with the Secretary of State. But here we have a department with a section that functions efficiently. Surely, with that staff and all the expertise, the knowledge and the know-how that exists in British Telecom, which cannot be denied, why cannot the regulatory machinery, if it has to exist, be left with the Department of Industry and the section to which I have referred?
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I think that on a previous amendment, if I heard correctly, the noble Lord, Lord Trefgarne, said that this matter will be exercised with a light rein. My noble friend, in speaking on clause stand part, referred to the reasons why we are faced with this regulatory machinery. Paragraph 2 of the Department of Industry's own paper on the functions of the Office of Telecommunications, issued in November 1982, stated:
"The Government wishes to be able to ensure that after BT is transferred to the private sector those who own, manage and work in BT PLC do not use its market dominance to make excessive profits, operate inefficiently or prevent or restrict the development of competition in telecommunications".
The very fact of giving market dominance to stop people making excessive profits and operating inefficiently means that we have to set up this regulatory machinery. The noble Lord, Lord Mottistone, says, "Nonsense". I am quoting—
Lord Mottistone: Of course we have to do so, because the market is not proper. The trouble is that British Telecom has 97 per cent. of it thanks to the years of nationalisation previously suffered. Until the market is made proper, one is bound to have some kind of regulatory machinery. I personally hope that in due course British Telecom will find itself breaking up into bits so that it does not continue to dominate the market. I think that that is very dangerous and I entirely agree that it is very dangerous right now, before the Bill ever becomes an Act. It is a great pity that we have these huge organisations which have come out of the dogma of noble Lords opposite and which dominate markets which they should not dominate. We can have proper competition if we have organisations of a reasonable size and we have to have some type of regulatory machinery because that is not yet the case.
Lord Underhill: I am grateful to the noble Lord, Lord Mottistone. He has given us some further information as regards the facts when we come to deal with Clause 2, which is what we are really talking about. There is another side of the argument that will have to be heard. Nobody challenges—and I am not going to do so as regards Clause 2—the success, competence and efficiency of BT and its research and development capabilities. I have quoted the reason why the Government say that we have got to have regulatory machinery: with the change to the private sector, the company has to be stopped from making excessive profits or operating inefficiently. If you had never interfered and brought forward Clause 2 you would not need to have this, and that point will be made when we come to Clause 2.
The Government have often said that they want to avoid bureaucracy in industry. If there was ever a piece of bureaucracy that has been set up, it is this regulatory machinery. However, time is getting on and I shall therefore leave out many of the points which I had intended to raise. It must be borne in mind, as was said during a previous debate, that this regulatory machinery is taking over the work of POUNC, but there will be no consumer representative putting the case for the consumers as there is under the present machinery.

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My noble friend Lord Ross referred to the advisory committees to be set up under Clause 50. There has only been reference from this side of the Committee to Clause 50 and the fact that there is power for the director general to set up advisory committees. But do we know how they will be formed? The advisory committees will be composed of members whom the director general himself will appoint. Yet these are supposed to be the only advisory committees which will provide regulatory machinery. If noble Lords challenge this, they can read Clause 50, because I read it before I made my notes a few minutes ago.
This is a bureaucratic device. It is unnecessary. I recognise that, if we are going to have privatisation, we shall need regulatory machinery, but it surely could be left with the body which now exists inside the Department of Industry and with the Secretary of State so that it could be made directly accountable. Surely no one will regard reference to an annual report as sufficient accountability and control over this vast industry with an expenditure of £2 billion a year. That is why we oppose Clause 1.
Lord Campbell of Alloway: I wonder very briefly whether my noble friend the Minister will look into this question because it seems that neither Clause 1(6) nor Clause 50(5) are apt to provide the appropriate answer to the noble Lord—
Lord Mottistone: Oh yes they do.
Lord Campbell of Alloway: With respect, I doubt it very much. If we read the clause, we find that they are related to remuneration, travelling or other allowances, and then:
"any sums payable under this Act to or in respect of the Director and any expenses duly incurred by the Director."
I have heard my noble friend Lord Mottistone say, "No", three times from a sedentary position. All I am saying to my noble friend the Minister is that this really does need looking at.
Lord Trefgarne: I could explain at some length how the matter works. Perhaps your Lordships will forgive me if I do not do so, but I will happily write to my noble friend with an explanation.
Lord Ross of Marnock: Will the noble Lord include me in that explanation? Before we leave this matter, may I have a promise that I, too, shall be included in the explanation?
Lord Trefgarne: With pleasure.
Clause 1 agreed to.
Schedule 1 [Director General of Telecommunications]:
9.55 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 13:
Page 76, line 6, at end insert ("subject to approval by a resolution of each House of Parliament".).
The noble Lord said: I draw attention to Schedule 1 of the Bill. It deals generally with the matters relating to the Director General of Telecommunications and, indeed, was referred to specifically in Clause 1 of the Bill. Paragraph 1 of the schedule says:
"There shall be paid to the Director such remuneration, and such travelling and other allowances, as the Secretary of State with the approval of the Treasury may determine."
The amendment to which we seek to obtain the approval of the Committee is to add the words:
"subject to approval by a resolution of each House of Parliament".
On the face of it, it would not appear that this is a matter of very great importance, although this is a new office, and of course Parliament has a legitimate interest in determining the director's remuneration, travelling and other allowances. There would seem to be no reason why it should not be subject to the parliamentary safeguards that this amendment suggests.
On an earlier occasion I had the opportunity to advert to Section 29 of the Companies Act, where, as noble Lords will recall, the mere alteration of a category to be included in an appendix was made subject to the affirmative resolution of both Houses of Parliament. It was a very trivial matter, but for some reason the Government thought it necessary that such a revolutionary change—which I believe involved pharmacists or people of that kind—merited the attention of the whole House. Judging relatively, I should have thought that this is a matter upon which Parliament ought to be consulted, particularly in the earlier stages. I commend it to the Committee. It seems to me to be eminently reasonable, and I look forward to the noble Lord agreeing with the amendment. I beg to move.
Earl De La Warr: It seems to me rather surprising that the noble Lord should bring forward these two amendments, because he gave way on an amendment which, so far as I can see, dealt with nearly the same principle. Having said that, it appears to me to be quite ridiculous that Parliament should have to deal with the salary of one man. I cannot think of anything more calculated to waste Parliament's time than just to pick one man almost out of a hat just because it is a new job.
Lord Trefgarne: I was about to say exactly the same as my noble friend. The amendments, indeed, seek to fix the salary and pension entitlements of the director, who will be a civil servant, by an affirmative resolution of both Houses. Why pick on the poor director? There are over 600,000 other civil servants whose salaries, wages or pensions could be fixed in the same way. However, I take it that the intention is to reduce the director's salary and so reduce the attraction of the post to able and well-qualified candidates.
However, I do not see why Parliament should wish to become involved in such a matter. The director will be a senior official ranking, as I have said, with the

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Director General of Fair Trading, and will be paid accordingly. There are already arrangements for setting the salaries of senior officials, and we do not intend to breach such arrangements for the director. The Director General of Fair Trading's salary is not fixed by Parliament.
If the amendments are accepted, they would delay the establishment of Oftel, and cause extra work for Parliament, which in my view is wholly unnecessary. I should point out that the Bill already provides for scrutiny of any financial arrangements by the Treasury, which acts as an effective guardian in such matters. Therefore, I hope that the noble Lord will promptly withdraw his amendment.
Lord Bruce of Donington: I am sorry that the noble Lord should take that attitude about it. I hasten to reassure him that our interests would not be purely negative. We might even decide that the salary offered was inadequate. There is no intention to apply the pruning knife to these matters; merely to bring it to public review. The noble Earl, Lord De La Warr, indicated that the appointment of one man and the salary was of insufficient significance to attract the interest of Parliament. May I recall to his memory the almost uproar in another place when the appointment of Mr. MacGregor was originally announced. That was of sufficient parliamentary interest and aroused a great deal of criticism from his own party in the other place. There is very often interest in the appointment of an individual.
Earl De La Warr: Will the noble Lord give way? Were there not other circumstances attached to his salary which naturally provoked a slightly greater interest?
Lord Bruce of Donington: I quite agree, but there is no undertaking from the Government—I have not heard one this evening, although I would be pleased to receive it—that we shall not once again in this case he faced with a transfer fee. There is no undertaking to the contrary from the Government. For all I know, there may be some unsuspecting soul in the world—probably in America—to whom an inducement in terms of a transfer fee may be offered in order to fulfil the onerous burdens of this office. I do not want to press the point, particularly at this late hour. Possibly the best thing for me to do in these circumstances would be to ask your Lordships' leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 14 not moved.]
10.2 p.m.
On Question whether Schedule 1 shall be agreed to?
Lord Ross of Marnock: I was hoping that my noble friend would move his next amendment. I am fascinated by paragraph 2 of this schedule. Those who have heard me on the subject before will not be surprised that I have raised this because I have raised it on recent Scottish measures. I am appalled by the fact that not only have we got to pay this new director general a very
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substantial salary, but we have to pay him, or there is the possibility that he will be paid, as may be determined by the Secretary of State with the approval of the Treasury—the whole band is there—
"such a pension, allowance or gratuity, as may be so determined",
in respect of his retirement or death.
This gentleman is appointed for five years. I have not the slightest doubt that he is already well endowed with pensions from his other work, and here we have to give him another pension for five years' service. When I think of what happened in another place, which eventually got round in, I think, 1965 to even thinking about pensions after service which had lasted 33, 34, 35 years in some cases, it astonishes me that this MacGregor theme goes on. I hope my noble friend realises when he is calculating the cost to this country of Mr. MacGregor that we have not seen it all yet. There may well be a pension. There may be a gratuity, an allowance when he actually gives up the job. Judging by the way he has been able to negotiate in the past, I have not the slightest doubt that he will be able to negotiate a very handsome pension or gratuity in respect of his eventual retirement from his present positions.
I want to know what is the justification for this. It was not always so. I welcome the fact that there is one new phrase in this clause. The recent case we dealt with was, I think, in respect of the chairman of the Mental Welfare Commission in Scotland, who was given the possible advantages of these things as well. But the new phrase—and I want to know if it is new—is:
"payments towards provision for such a pension, allowance or gratuity, as may be so determined".
Is that new? If it is not, may I be referred to the other statutes in which it appears?
Lord Trefgarne: I can answer that question swiftly. It is taken straight from the statute which, as I have said on so many occasions this evening, set up the Director-General of Fair Trading in his office. The provisions are identical.
Schedule 1 agreed to.
Lord Denham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Water Bill
Returned from the Commons with the amendments agreed to.
House adjourned at six minutes past ten o'clock.