Restrictive Trade Practices (Stock Exchange) Bill

HL Deb 17 January 1984 vol 446 cc929-64

3.3 p.m.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

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 Cockfield.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [Exemption of certain agreements relating to The Stock Exchange]:

Lord Bruce of Donington had given notice of his intention to move Amendment No. 1:

Page 1, line 5, at end insert ("for the time being").

The noble Lord said: This amendment was put down by me immediately before the Christmas Recess in the knowledge that the Committee stage would be taken shortly after we resumed. The Christmas season gave me occasion to meditate on this particular amendment, and I came to the conclusion that all Bills that come before Parliament are of necessity for the time being, because they can always be amended or subsequently replaced by another Bill. Therefore, in strict philosophical terms this amendment is quite unnecessary, and I therefore do not propose to move it.

[Amendment No. 1 not moved.]

Lord Bruce of Donington moved Amendment No. 2:

Page 1, line 13, after ("State") insert ("or").

The noble Lord said: Your Lordships will recall that Clause 1(1) of the Bill contains a provision for an agreement in respect of any of the matters referred to in subsection (1)(a) to be made between the Stock Exchange and the Secretary of State, the Treasury or the Bank of England, or any two or more of them. The purpose of this amendment, taken in conjunction, by leave of your Lordships, with Amendment No. 3, is to eliminate one of the four parties from this consultative process.

Amendment No. 3: Page 1, line 13, leave out from ("Treasury") to end of line 14.

In my view—and I hope I may carry your Lordships with me—it should be between three parties only, and without the rather loose option of a selection of any three of them. It is as well, when a Bill goes through Parliament, that all parties to the sections contained within it should know clearly in advance exactly what their responsibilities are. There is no point in having four bodies on continuous alert, as it were, for the purposes of this Bill and then selecting only three of them on an arbitrary basis.

Looking at it from that point of view, as well as from the point of view of some other matters on which I shall address your Lordships, I came to the conclusion that the Bank of England ought not to be involved in this. If there were any agreements to be come to in conformity with what is judged to be the public interest, the Secretary of State, the Treasury and the Stock Exchange would be quite sufficiently important and significant, and would have sufficient resources, to arrive at the necessary agreements. This is, as I say, on the hopeful assumption that when the agreements are arrived at they will be in conformity with the law, as has been the position up to this time.

The Bank of England is a very august institution, and your Lordships will be well aware that it was founded not by an Englishman but by a Scotsman called Paterson, a matter from which my native country can presumably take some comfort. Immediately following the last war the Bank of England was nationalised, and it is in fact a state bank operating for all practicable purposes under the general direction of the Government. But it is a state bank, and in my view it ought to remain aloof from matters of this kind.

The Bank of England enjoys an enormous reputation, and, one would hope, in some ways a reputation for impartiality almost analogous to that of the BBC. I well remember, when I was an articled clerk before the war, looking out of the window and seeing, every afternoon at about 4 o'clock, a small number of guardsmen headed by an officer marching along Queen Victoria Street with bayonets fixed, as they are permitted to do, going to the Bank of England. I can remember being very much impressed in those days, being very young at the time, and I thought to myself, "The Bank of England is one of the foundations upon which the country rests". That being so, it ought to be aloof.

I cannot help feeling that, within the general context of this Bill, the Bank of England is being propelled into a situation where it is regarded as part of a general conservative establishment (I use the term with both a big "C" and a little "c")—the City. I think this unfortunate. I have noticed—and I have to mention it in this context here—that over the years, and particularly since the end of the war, the Bank of England, through its spokesmen, has become ever more closely identified with the Conservative Party itself.

I choose my words carefully. I do not wish to suggest that distinguished governors of the Bank of England, whom we are fortunate enough to see here from time to time—it would be difficult for me to state the number, but I can think of at least three distinguished ex-governors of the Bank of England who grace our House with their presence from time to time—are doing anything improper, but they have been known, growingly over these last few years, as identifying themselves with anti-Labour financial policies and pro-Conservative financial policies.

I am bound to say that I have found, as others have found—and I deliberately use this occasion to mention it—on the occasions when Labour Chancellors of the Exchequer turn up at these extremely welcoming and lush functions of City banquets to receive scarcely veiled lectures from governors of the Bank of England as to the inequities of their policies, that that detracts from the reputation for impartiality with which any holder of the office of governor and the Bank itself ought to be associated.

It would be a very good thing if the Bank of England took steps for its governor, and for those who publish its reports, to make it clear that they are aloof from the party struggle. Although they are at liberty to give advice from time to time—and I am bound to say, in parenthesis, that they have not yet taken many steps to dissociate themselves from the disastrous monetary policies that have been pursued over the last four years—it would be a great advantage to the country.

For this reason, it would be wise if we relieved the Bank of England of this responsibility of working closely in association with the Stock Exchange, and left it to the Secretary of State and the Treasury to do this, in the hope that the Bank of England may be able to resume its impartial—perhaps almost aloof—stance, which members of the public, members of all parties and Members of Parliament ought to be able to expect from it. I beg to move.

3.13 p.m.

Lord Cockfield

I am grateful to the noble Lord, Lord Bruce of Donington, for the complimentary remarks which he made about the Bank of England in the opening part of his remarks, but I cannot, I am afraid, agree with many of the things that he said in the latter part of his speech moving this amendment. I well remember the day when the late Mr. Hugh Dalton—Lord Dalton as he subsequently became—nationalised the Bank of England in 1946. It was thought at the time that this would restrict the independence and the independence of mind of the Bank of England. This has not, in fact, happened. The Bank has always shown great independence of mind, I think to the national good, and governors of the Bank have never hesitated to speak their minds in public as well as in private. Of course, it is not always acceptable to everybody to have to listen to things with which they do not agree. Nevertheless, the contribution which the Bank of England has made to many of our debates on economic and financial matters has been of very great value.

There is one particular incident—and I am sure the noble Lord will not mind my drawing his attention to it—which occurred in 1976, when it was the Bank of England which masterminded the financial measures which were taken ultimately through the IMF to bail out this country when it was in quite severe financial difficulty. I remember quite clearly that tribute was paid at the time by senior members of the Labour Government to the part played by the Bank of England. I think that the Bank has proved itself to be an institution of very great value to the country as a whole.

I should like to say, just by way of introduction, that I entirely appreciate that the noble Lord, Lord Bruce of Donington, will not agree with many things said, either by the governor or in the Bank's quarterly review, but I imagine that that equally goes for many things said by bankers in other countries in the world—in the United States and elsewhere.

So far as the amendment itself is concerned, it relates to paragraph (b) of subsection (1) of Clause 1 of the Bill. The purpose of paragraph (b) arises out of the monitoring arrangements which the Government have set up. The Stock Exchange have agreed that they will dismantle certain of their important restrictive practices, and the Government felt that it was not right to leave matters just there, and that progress should be very carefully monitored. It was felt that the right people to monitor it were the Secretary of State for Trade and Industry and the Bank of England. The Bank of England was joined in this monitoring process, because it has great experience and knowledge of the City of London, and it could bring that expertise to bear for the general benefit.

What we are concerned to do here is to ensure that the monitoring is effective, and our feeling is that the inclusion of the Bank of England will make the monitoring more effective than it otherwise would be. If you have a monitoring process of this kind, it is important that any agreement that may be reached between the people who are parties to the monitoring should not itself be subject to the restrictive practices legislation. This, quite simply, is the reason for this provision in the Bill.

There is nothing unusual in associating the Bank of England with a process of this kind. For example, there is an exemption from the Restrictive Trade Practices Act for agreements relating to the Bank's supervision of some other financial institutions and markets in paragraph 6 of the Schedule to the Restrictive Trade Practices (Services) Order 1976. That is an order which was brought into effect, quite properly, during the period of a Labour administration, and in associating the Bank with the present monitoring and relieving it from the Restrictive Trade Practices Act in relation to that monitoring—it is important to make the point that the paragraph states any agreement with respect to any of those matters"; that is, the matters dealt with in that Act—we are simply proceeding along a path for which there is precedent, which we think is a perfectly sensible and reasonable thing to do.

Lord Taylor of Gryfe

We on these Benches will support the noble Lord, Lord Bruce of Donington, in his contention, not that we subscribe to everything he said in proposing his amendment. This Bill is designed to permit the Stock Exchange to be exempt from the rules governing restrictive practices, on condition that they apply certain important changes in their practices.

The rate at which these changes are implemented can be the subject of debate in the next few years. This may even be affected by some of the recommendations of the Gower Committee, which will be the subject of a good deal of debate in the next year or two, affecting financial institutions. It is because we desire that the Bank of England should retain its independence, its integrity and the great respect which it enjoys, not only in the nation but internationally, that we are anxious to keep the Bank of England out of this process.

The Council for the Securities Industry might have been involved, but that is not provided for in the Bill. I should have thought, however, that in this country the balance which we have achieved in the Bank of England is just about right. It is the envy of many other countries. It has always been a disaster when a country has made the state bank an instrument of Government political policy. It is because we want to keep the Bank of England out of this contentious area that we would subscribe to the amendment moved by the noble Lord, Lord Bruce of Donington.

Lord Boyd-Carpenter

The noble Lord, Lord Bruce of Donington, was very unfair in his observations with reference to the political impartiality of the Bank of England. Indeed, he indulged rather entertainingly in a curious, subconscious transition of thought when he objected to Governors of the Bank of England (I believe he was referring to their speech at the bankers' dinner at the Mansion House) being somewhat unenthusiastic about the policies of Labour Governments and then went on to say that he thought they ought to be critical of the policies of Conservative Governments. The noble Lord cannot have it both ways. Either the Governor of the Bank of England should be dumb on these occasions or he should be allowed to express the views which, as a responsible and experienced man, he holds, though to express them with the studied moderation which Governors of the Bank of England always use.

I can draw on my own experience. I had two terms of office at the Treasury and dealt with two successive Governors of the Bank of England. I can tell your Lordships that they showed no unnecessary enthusiasm for supporting the policies of the Government of the day. They gave us their honest, experienced opinion, and for that reason it was of the very greatest value.

I, for one—this is the only reason I am intervening on this motion—would like to say that I regret very much that the noble Lord on the Front Bench opposite should have, however moderately, sought to reflect on the complete impartiality in the discharge of their great office of successive Governors of the Bank of England. I think that on reflection the noble Lord will regret having done so.

Lord Diamond

May I, very shortly, endorse eveything that my noble friend Lord Taylor of Gryfe has said and ask also for some explanation which I think would be appropriately attached to this amendment, which relates to the Bank of England? Paragraph (b)(ii) refers to "any two or more of them". If there were only two—that is, if the Bank of England were not included—on every single occasion the Secretary of State and the Treasury would have to be referred to.

What I am not clear about is the position of the Secretary of State. I find it unusual (although I am sure that the Minister who is to reply will be able to give me precedents for this) that there should be a circumstance in which the Secretary of State is sometimes responsible, and therefore answerable to Parliament, while at other times, without Parliament knowing a thing about it, the Secretary of State does not intervene and is therefore not responsible. I should find it very difficult to understand a situation in which the Secretary of State was sometimes responsible, in having to be a party to this kind of agreement, while at other times, without anybody knowing, because one could just pick on any two of three, he was not responsible. I hope that the Minister will be good enough to say what is likely to happen in practice and how that will be reconciled with the wording of the Bill if it is left undisturbed.

Lord Cockfield

I am grateful to my noble friend Lord Boyd-Carpenter for his intervention. I think that there is—for it came out in most of the speeches which were made—very great respect for the Bank of England and for the part that it has played. There is always a risk that nationalisation of a concern, or its being taken over by Government, may affect its impartiality. One of the things that we have been very appreciative of is the fact that in the case of the Bank of England this has not happened at all. I should like, therefore, to go further and say that I can see no reason why joining the Bank of England in this process of monitoring the progress made by the Stock Exchange in dismantling certain restrictive practices will prejudice the independence of the Bank of England. In fact, on the contrary; the Bank of England comes into this process by virtue of its independence.

It is because an independent view of that kind is so important that we felt that the monitoring ought not simply to be done by the Secretary of State for Trade and Industry. The Treasury comes into so many matters, as the noble Lord, Lord Diamond, knows. As a matter of precaution, one needs to add their name to almost anything. But, instead of the monitoring being restricted to the Secretary of State for Trade and Industry, we felt that there was also great merit in bringing in an independent mind to look at these matters and that the Bank of England was the pre- eminent authority in the City of London, with the widest knowledge and understanding of these matters.

I assure the noble Lord, Lord Taylor of Gryfe, that this is not in any way a failure to appreciate the importance of the Council for the Securities Industry, which has done a very good job and still has a part to play in ensuring that all the parties to the monitoring process are informed about the views of institutional investors and others. But if one is looking for an independent body, it is the Bank of England, perhaps, rather than the Council for the Securities Industry, which is the body in point. I agree entirely with the noble Lord, Lord Taylor of Gryfe, that when Professor Gower's report is published tomorrow it may contain a number of points that will require very careful consideration, but that is a matter for the future rather than a matter for today.

The noble Lord, Lord Diamond, said that sometimes the Secretary of State seemed to be responsible for what went on and sometimes he was not—that sometimes he took action for which he was answerable to the House and that sometimes he took action for which he was not answerable to the House. I am not entirely certain just what the noble Lord, Lord Diamond, has in mind, but I imagine that what he means is this. There are occasions when the Secretary of State performs statutory duties under the terms of particular legislation, but there are many, many other things that every Secretary of State does which do not arise directly from the enforcement of specific statutory provisions.

The monitoring process is a non-statutory function. There is no provision in the Bill or in the legislation that there should be monitoring. Therefore the Secretary of State is carrying this out as a non-statutory duty. In the course of this monitoring there is always the risk that something may be done which legally counts as an agreement. The purpose of the paragraph in this particular subsection is to ensure that if this happens the action is not itself a registrable agreement. It is just as simple as that.

If the noble Lord is concerned about the question of Parliament knowing what goes on, there is a simple answer: that it is always open to noble Lords to ask questions on the progress of the monitoring process. We would wish to be as open as possible. Certainly the Government have been, and will no doubt continue to be, pressed to give information on this point. There is no question of trying to avoid revealing what in fact emerges from the monitoring process. On the contrary, the whole point of the monitoring process is to ensure that progress towards dismantling the various restrictive practices is monitored and, in due course, publicly known. Most of it, of course, is known already because the Stock Exchange itself has shown no reluctance to tell people exactly what it is doing. A great deal of progress has been made, and this is a matter of public knowledge.

Lord Bruce of Donington

I am most grateful for the courteous nature of the noble Lord's reply to the questions which have been raised by a number of noble Lords. I must, however, take the slightest possible exception to the remarks of the noble Lord, Lord Boyd-Carpenter. I do not intend, and never do intend, any personal affront to any Governor of the Bank of England or to any of its personnel. But I am bound to say that I do not regard it as being a cardinal sin to raise misgivings from time to time as to its publicly expressed attitude.

I am fully sensible of the observations of the noble Lord, Lord Cockfield, concerning the help which the Bank of England was able to give in 1976. It is a matter of some wry reflection that, owing to a Treasury error at that time in its estimate of the public sector borrowing requirement—an error of some £4,000 million too much, and £3,000 million too much the next year—it emerged in the event that the aid we received was not required anyway. In fact, as the noble Lord well recalls, it was very speedily repaid. This is not to deny or to disparage in any way the efforts made by the Bank of England to assist the Government and the country as a whole on those occasions.

One does, however, wish—and I must repeat this, without, I sincerely hope, giving offence—that the economic researchers in the Bank of England, its advisers, and those who are responsible for enunciating its policies showed a rather greater degree of independence from current Conservative economic thought. I trust that in so saying I shall not be regarded by the noble Lord, Lord Boyd-Carpenter, as exceeding the bounds of conventional courtesy, or, indeed, real courtesy, in these matters.

The independence of the Bank of England in the present circumstances is under rather peculiar conditions. Your Lordships will be aware that I myself and we on this side of the House consider that certain aspects of this Bill go to the root of this country's constitutional procedures. I shall be dealing with that aspect of the matter in a later amendment. But there is no guarantee by the Government so far that the agreements arrived at ultimately, and in which all these participants are going to take part, will not result in an agreement being reached which, if this Bill had not been passed, would not have been in conformity with the Restrictive Practices Act, Fair Trading Act or Competition Act 1980.

These are controversial matters. If subsequently it were found that it would have been rather wiser for the Director General of Fair Trading to have proceeded with the action initiated by him with the agreement of the Government, it would be unfortunate if the Bank of England as an institution were seen as condoning in the existence of one or two clauses of the agreement which, but for the passing of this Act, would have been illegal.

It is exactly to preserve that degree of aloofness and independence—aloofness from the controversy which, I regret to inform the noble Lord, is certainly not finished in connection with this matter—that this amendment is moved. It is not for any disparagement of the capabilities or the intentions of the Bank of England itself. I beg to move.

3.35 p.m.

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

Their Lordships divided: Contents, 101; Not-Contents, 121.

DIVISION NO. 1
CONTENTS
Allen of Fallowfield, L.	Jenkins of Putney, L.
Amherst, E.	John-Mackie, L.
Ardwick, L.	Kilmarnock, L.
Attlee, E.	Leatherland, L.
Aylestone, L.	Listowel, E.
Banks, L.	Llewelyn-Davies of Hastoe, B.
Beaumont of Whitley, L.	Lloyd of Hampstead, L.
Beswick, L.	Lloyd of Kilgerran, L.
Birk, B.	Lockwood, B.
Bishopston, L.	Mackie of Benshie, L.
Blyton, L.	Mais, L.
Boston of Faversham, L.	Mayhew, L.
Bowden, L.	Melchett, L.
Briginshaw, L.	Mishcon, L.
Brooks of Tremorfa, L.	Molloy, L.
Bruce of Donington, L.	Monson, L.
Caradon, L.	Nicol, B.
Carmichael of Kelvingrove, L.	Oram, L.
Cledwyn of Penrhos, L.	Peart, L.
Collison, L.	Pitt of Hampstead, L.
Cooper of Stockton Heath, L.	Ponsonby of Shulbrede, L. [Teller.]
Cudlipp, L.
David, B. [Teller.]	Raglan, L.
Davies of Penrhys, L.	Rathcreedan, L.
Dean of Beswick, L.	Rhodes, L.
Diamond, L.	Roberthall, L.
Donaldson of Kingsbridge, L.	Rochester, L.
Donnet of Balgay, L.	Sainsbury, L.
Elwyn-Jones, L.	Seear, B.
Ennals, L.	Sefton of Garston, L.
Ewart-Biggs, B.	Serota, B.
Ezra, L.	Simon, V.
Fisher of Rednal, B.	Stallard, L.
Fulton, L.	Stedman, B.
Gaitskell, B.	Stewart of Alvechurch, B.
Gallacher, L.	Stewart of Fulham, L.
Gladwyn, L.	Stoddart of Swindon, L.
Glenamara, L.	Stone, L.
Gormley, L.	Strabolgi, L.
Graham of Edmonton, L.	Taylor of Blackburn, L.
Grey, E.	Taylor of Gryfe, L.
Grimond, L.	Tordoff, L.
Hale, L.	Underhill, L.
Hampton, L.	Wallace of Coslany, L.
Hanworth, V.	Walston, L.
Hatch of Lusby, L.	Wells-Pestell, L.
Howie of Troon, L.	Whaddon, L.
Hughes, L.	Wigoder, L.
Irving of Dartford, L.	Wilson of Rievaulx, L.
Jacques, L.	Winstanley, L.
Jeger, B.	Wootton of Abinger, B.
NOT-CONTENTS
Adeane, L.	Clancarty, E.
Airey of Abingdon, B.	Cockfield, L.
Alexander of Tunis, E.	Cottesloe, L.
Allerton, L.	Craigavon, V.
Alport, L.	Crathorne, L.
Ampthill, L.	Cullen of Ashbourne, L.
Annan, L.	Darnley, E.
Atholl, D.	Daventry, V.
Bauer, L.	Davidson, V.
Belhaven and Stenton, L.	De Freyne, L.
Bessborough, E.	Denham, L. [Teller.]
Blake, L.	Drumalbyn, L.
Boyd-Carpenter, L.	Ebbisham, L.
Brabazon of Tara, L.	Eccles, V.
Broxbourne, L.	Effingham, E.
Bruce-Gardyne, L.	Ellenborough, L.
Caccia, L.	Enniskillen, E.
Campbell of Alloway, L.	Fraser of Kilmorack, L.
Campbell of Croy, L.	Gainford, L.
Chelmer, L.	Gardner of Parkes, B.

Gisborough, L.	Mottistone, L.
Glenarthur, L.	Moyne, L.
Gray of Contin, L.	Nathan, L.
Gridley, L.	Northchurch, B.
Grimston of Westbury, L.	Nugent of Guildford, L.
Harvington, L.	Orkney, E.
Hawke, L.	Orr-Ewing, L.
Hayter, L.	Pender, L.
Henley, L.	Penrhyn, L.
Hornsby-Smith, B.	Peyton of Yeovil, L.
Hylton-Foster, B.	Porritt, L.
Ilchester, E.	Portland, D.
Inglewood, L.	Reilly, L.
Ingrow, L.	Richardson, L.
Killearn, L.	St. Aldwyn, E.
Kilmany, L.	St. Davids, V.
Kinloss, Ly.	Saltoun, Ly.
Kintore, E.	Sandys, L.
Lane-Fox, B.	Seebohm, L.
Lauderdale, E.	Selkirk, E.
Lloyd, L.	Sharples, B.
Long, V.	Skelmersdale, L.
Lothian, M.	Stamp, L.
Loudoun, C.	Stodart of Leaston, L.
Lucas of Chilworth, L.	Sudeley, L.
Luke, L.	Suffield, L.
Lyell, L.	Swinfen, L.
McFadzean, L.	Swinton, E. [Teller.]
Mackay of Clashfern, L.	Teviot, L.
Macleod of Borve, B.	Thomas of Swynnerton, L.
Mar, C.	Thorneycroft, L.
Margadale, L.	Trefgarne, L.
Marley, L.	Trenchard, V.
Merrivale, L.	Trumpington, B.
Mersey, V.	Vaux of Harrowden, L.
Middleton, L.	Vickers, B.
Milverton, L.	Vivian, L.
Molson, L.	Waldegrave, E.
Monk Bretton, L.	Whitelaw, V.
Montgomery of Alamein, V.	Wise, L.
Morris, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 3 not moved.]

3.45 p.m.

The Chairman of Committees

The next amendment is Manuscript Amendment No. 3A. If this amendment is agreed to, I cannot call Amendments Nos. 4 and 5.

Lord Bruce of Donington moved Amendment No. 3A:

Page 1, line 15, leave out subsection (2).

The noble Lord said: I am grateful for the noble Lord's co-operation in assenting to the submission of this manuscript amendment. The Committee may be aware that, according to the Marshalled List, I gave notice that I was going to oppose the adoption of Clause 1 of the Bill as a whole. I was advised that that was in effect equivalent to a vote against the Bill on Second Reading, which is not, as I am given to understand, the custom of this House. So as an alternative to doing that, I propose to move the deletion of subsection (2) of Clause 1.

This is the clause by virtue of which Her Majesty's Government seek to abate or in effect withdraw the action which was in process involving the Director General of Fair Trading and the Stock Exchange before the Restrictive Practices Court. On the Second Reading of the Bill I voiced the opinion, which I now reiterate, that this clause makes a complete break with all precedent and is in fact, perhaps not in law, bordering upon the unconstitutional. In his reply to my assertion the noble Lord who wound up the debate—and, therefore, no reply could be made to him immediately afterwards—said this: …numerous cases in which action not dissimilar to this has been taken in the fiscal field. May I refer him, for example, to Section 15(7) of the Finance Act 1971 which overturned the decision in Restorick v. Baker (47 Tax Cases, 116)? The law in that case was changed retrospectively, the only exception being where there had been a determination by the commissioners or a court had actually given judgment. Again, Section 86 of the Finance Act 1981 overturned the decision in Berry v. Warnett despite the fact that in that case judgment had been given in the Court of Appeal and that judgment was under appeal to the House of Lords but not then decided. The position simply is that in matters of this kind the decision as to the content of the law is one for Parliament and the Bill therefore is a very proper Bill in that respect."—[Official Report, 15/12/83; col. 380–381.]

Since that debate I have, naturally, refreshed my mind as to the position in the two cases that were referred to by the noble Lord in order that the Committee may judge whether there is the remotest similarity in any way between the two cases cited by the noble Lord and subsection (2) of Clause 1 of this Bill.

In Restorick v. Baker the inspector of taxes in the particular case computed the personal release from income tax to which he was entitled on the footing that under Section 14(4) of the Finance Act 1968 it fell to be reduced by £36. On appeal the respondent contended that since Section 14(4) provided for the personal release to be reduced by £36 for each family allowance, if more than one, it applied only where more than one family allowance was received. The general commissioners allowed the appeal, and the court itself confirmed this.

The alteration to the law was made under Section 15 of the Finance Act 1971, and its effect was to reinterpret just two words. It was to enforce the law as it was thought to be before the case of Restorick v. Baker. In that particular case it was held that because of the words, for each allowance if more than one",

there was no clawback where only one family allowance was received. Although the amendment that was made by Section 15 had retrospective effect, it did not affect taxpayers who had obtained a decision from the commission or the courts on or before 16th March. Indeed, all the words of Section 15 were, in fact, designed to reinterpret the Act into something that it had always been assumed to be before. This was therefore a minor technical correction which was made in the taxing statutes on the construction purely of a word, or a series of words, in a section of the previous Finance Act under reference. That cannot in any way be compared with this. Moreover, it should be noted that a judgment had been given. The case had been argued before the commissioners and before the courts; everyone interested had an opportunity of seeing what the evidence was and, as the noble Lord said, it was quite proper for the amending Act to be passed.

Exactly the same considerations apply to the second case, because the Capital Gains Tax Act 1979 provided that, a gift in settlement is to be treated as a disposal of the entire interest of the transferor in the property which passes into the settlement".

In Berry v. Warnett it was held that the expression "gift in settlement" did not extend to a transfer of property. All that Section 86 did was to substitute the wording in order that a transfer of property was included.

These are very technical matters, which the noble Lord, who has more than a passing interest in taxation matters, and, indeed, myself and other accountants and lawyers, know perfectly well. But they cannot in any way be compared with the action that is proposed in this Bill, which exempts wholesale a particular body of people, or an association of people, from the operation of an Act. Moreover, the subsection itself invokes that exemption prior to the court having reached any kind of decision and prior to any kind of published judgment being made available to anyone. I would say that that is a constitutional impropriety that could create a very undesirable precedent. I could say that in certain circumstances if might favour interests that the noble Lord might not wish to favour. The noble Lord is well aware that Section 26(1) of the Competition Act 1980 provides: Where the Court has declared under section 1(3) of the Restrictive Trade Practices Act 1976 that any restrictions or information provisions in an agreement are contrary to the public interest, any party to the agreement or the proceedings in which the declaration was made may, at any time before the declaration comes into effect, submit a revised agreement or draft of a revised agreement to the Court and the Court may declare that any restrictions or information provisions contained in the revised agreement by virtue of which the said Act of 1976 applies or would apply to that agreement are not contrary to the public interest.

The alternative was always available to allow the case to be heard by the Restrictive Practices Court and to allow the Restrictive Practices Court to make a judgment and then, if there were any further matters arising from that, there was a further procedure that could be embarked upon. I believe that that would have been the correct procedure. In this case it certainly is not being invoked and one is bound to wonder why not.

That there is a constitutional impropriety there can now be little doubt. But the reasons now begin to trouble one. Why, after a period of four years, with the approval of successive Governments of different political complexions, of the rectitude of the actions embarked upon by the Director General of Fair Trading, should this step suddenly have been taken? Why would there be any difficulty in allowing the law to take its course and the result to be made public? If necessary, the Government could say at that stage, "Well, we did not really mean the Restrictive Trade Practices Act to apply in this particular way. We did not really mean that. We will bring in a new law which deals with this peculiar circumstance which has been revealed in the exchange of views between the Stock Exchange and the Director General of Fair Trading and in the judgment of the court." That would have been constitutionally proper. As the noble Lord himself said on Second Reading, and as I admitted somewhat wryly at the beginning of our deliberation this afternoon, all Acts of Parliament are "for the time being", and of course one can amend them. A perfectly proper and constitutional course was open to the Government.

The only inference one can draw—and I do not wish to be offensive; the noble Lord knows that I strive for moderation whenever the circumstances permit—is that this rather smacks of a backdoor deal which has been reached by a Conservative Secretary of State for Trade and interests in the Stock Exchange that he knew to be friendly to his own party. That is what it looks like. I do not think that it is right. If my own party were in Government and contemplating such a step I should take exactly the same view. I regard it as completely undesirable and an abuse of the powers of Government to intervene in the proceedings of a case when they apprehend, for whatever reasons may appear logical to them, that a judgment is going against their friends. That is wrong, and I invite all sides of the House to support my amendment.

Lord Taylor of Gryfe

We are in some difficulty on this amendment. It is a manuscript amendment, and is it available to other Members of the Committee? We have been unable to secure a copy of this amendment.

The Chairman of Committees

It is available in the Printed Paper Office and, I imagine, outside.

3.59 p.m.

Lord Cockfield

Perhaps it would be for the convenience of the Committee if I intervened at this stage. This will enable noble Lords who have not done so to read the manuscript amendment tabled by the noble Lord, Lord Bruce of Donington.

May I start by saying that the noble Lord is endeavouring on a side wind to challenge the whole principle of the Bill. He has said nothing whatever about the amendment that he has tabled. All he has done is repeat all the arguments he advanced on Second Reading and which were fully and amply dealt with at that time.

The noble Lord has challenged my action in quoting two cases which related to the law of taxation. Perhaps I may start by reminding him of what he himself said in the opening words of his speech on Second Reading: It is…an interference with the process of law…Parliament…has…rarely interfered with the process of law once that process is in operation".—[Official Report, 15/12/83; col. 359.] The cases that I quoted were specifically designed to answer that point. The cases also dealt with the other argument which is so commonly advanced in this field; namely, that the Act is retrospective or is alleged to be retrospective and that is objectionable. In the fiscal field, retrospective legislation, although rarely indulged in, is not at all unknown. The two cases I quoted were both of retrospective legislation.

In the first instance there was not only the case which had actually been decided, but there had been—as the words I then gave to the House indicated—many other cases which were in course of the process of litigation at the time. The effect of the change in the law was to stop that litigation. The second case that I quoted was half-way between the Court of Appeal and the House of Lords. So far as Parliament intervening in cases of this sort, it is by no means unknown. I entirely agree that it is the kind of action that needs to be considered very carefully indeed, which is exactly what we have done.

There are other examples of retrospective legislation in this field. I thought that the noble Lord would be interested in them. The first was in the Restrictive Trade Practices Act 1976, which exempted retrospectively certain agreements relating to the granting of credit. There was another one in the Competition Act 1980, which exempted copyright agreements, again retrospectively. To be fair, in the latter case there had been some dispute as to whether the Act did or did not apply; but the Government took the view—and I think very properly indeed—that, rather than allow such a dispute to go to the courts to the great benefit of the lawyers but of nobody else, it was desirable to legislate in order to clarify the position. None of these examples is a direct precedent for the present Bill, which is very much sui generis, but they illustrate the fact that the criticisms and arguments that have been made on the specific grounds of retrospection, and also of interference with the due process of law, simply do not hold water.

The noble Lord, Lord Bruce of Donington, also claimed that the proposal was a constitutional impropriety. I do not know whether he used the popular phrase and described it as a constitutional outrage. But these are merely phrases that are used when one does not like something that the other party is doing. There is nothing unconstitutional about coming to Parliament and to your Lordships' House to propose legislation. There has been much criticism on the opposite ground; namely, that Governments—I am not talking specifically about the present Government—do things without coming to Parliament for authority. In this instance nothing could be more constitutionally correct than the Government coming to Parliament and saying, "This is what we propose doing and we want the assent of both Houses of Parliament". That seems to me to be absolutely and completely correct.

The noble Lord went on to say that there was an alternative course available, that is, to allow the case to be heard, for judgment to be given and then for a decision to be taken on what further action should be pursued. This goes right to the heart of the matter. Of course such a course was open; but on very careful consideration of all the factors the view of the Government was that that was the wrong course to take. I set out at length the reasons in the speech I delivered on Second Reading. We felt that the process of change, which we recognise is very necessary in this field, was actually being obstructed by the case which had gone to the Restrictive Practices Court. That judgment has been confirmed by events. Nothing happened between 1978 or 1979 when this issue first arose and when finally the Stock Exchange agreed in the autumn of last year that it would dismantle some of its more important restrictive practices.

Since that agreement was reached, the pace of change has been very great. The Stock Exchange has accepted that many of the more important restrictive practices which had given rise to legitimate anxiety and concern on the part of the director general and of others should be eliminated on a reasonable time scale. That process is going ahead. This is a matter of judgment. Our judgment is that the course that we have chosen is the better of the two. It is on that basis that I commended the Bill to your Lordships' House on Second Reading, and it is on that basis that I take my stand this afternoon.

4.7 p.m.

Lord Elwyn-Jones

I regret that the noble Lord, Lord Boyd-Carpenter, has left the Chamber, no doubt for excellent reasons. On Second Reading he expressed the view that it is impossible to get away from the fact, as stated by my noble friend Lord Bruce of Donington, that the procedure we are examining involves some interference in the operation of the law in respect of a particular case. The noble Lord went on to say that what puzzled him was why it was thought necessary to take the action at this stage. But that raises another matter. I am bound to say that I find myself in accord with the observations of the noble Lord, Lord Boyd-Carpenter.

I have suffered from the great battle about retrospective legislation. I observe that the noble Lord, Lord Cockfield, may have been present when I was savaged on the Burmah Oil case. That has left a scar on my mind which still remains—more or less under control, I am happy to say. That case related to retrospective legislation after the termination of proceedings, in the House of Lords on that occasion, and I am happy to say that the then Attorney-General had the support of a former Conservative Lord Chancellor. But that is by the way. It is merely a matter of prejudice that I express in my favour.

Here we are not concerned with mere retrospective legislation. We are concerned with the interference of the Executive, in the form of the Secretary of State, in the processes taking place before the courts. The Director General of Fair Trading had referred the matter to the Restrictive Practices Court, and I should like to know how far the matter had gone. It had been around for an awful long time—about five years. The position arises that the Secretary of State apparently orders and requires the Director General of Fair Trading—for whom, incidentally, he has no ministerial responsibility—to stop the proceedings pending in the Restrictive Practices Court in order to fulfil the purposes of this legislation. It seems to me that that is a very clear illustration of interference by the Executive with the judicial or court process.

I cannot deny that there may be exceptional circumstances of public policy which require that to be done, but I must say that I have listened in vain to hear what exceptional considerations of public policy would require the action to be taken in this case. I did not have the advantage of hearing the speech made by the noble Lord the Minister on Second Reading, but I have read it and I failed to detect any considerations of public policy affecting the public at large—not a particular interest of a group or body—requiring the Executive to interfere with what is going on in the courts in the way which has been proposed in this case. At the very lowest it is highly questionable, and in applying the proper responsibility of Parliament to see that that kind of thing is not done I think it is right that your Lordships' Committee should not only examine what is proposed, but should reject it.

Lord Diamond

What the noble and learned Lord has just said is surely absolutely right in the sense that, though it may be proper, we do not think it wise to interfere as an Executive in the process of law when it is in the stage mentioned unless there is an overwhelming reason which makes it essential to do so. The noble Lord the Chancellor of the Duchy has referred to cases of tax law, as has the noble Lord, Lord Bruce of Donington. I do not know what is the present accepted rule with regard to taxation law, but I know exactly what it was in my time. It was that one could legislate retrospectively in favour of the taxpayer but one could not legislate retrospectively against his interests. That is to say, as the Minister has said, it is perfectly proper for Parliament to legislate on anything at any time, but it is extremely unwise and against all precedent to legislate retrospectively in certain circumstances.

Having made that absolutely clear, I wish to go on to say why we on these Benches will be abstaining in the vote which I imagine will shortly take place. The noble Lord the Minister was absolutely right when he said that the amendment goes to the heart of the matter. That is to say, it is just the same as an amendment to reject the essence of a Government Bill on Second Reading. I hope I have made it absolutely clear how unhappy we are with the way the Government have handled this matter and with the essence of the Bill, and how much I agree with all the arguments in that direction which were put forward on Second Reading. However, I must say that we have had the Second Reading and we felt it right to let the Bill go through at that stage because we took the view that the constitutional position of your Lordships' House is not—I repeat, not—to deny a Second Reading to a Government Bill. We on these Benches take the view that to support in the Lobby—and possibly successfully support—the amendment which has been moved would have the effect which I have mentioned, and we shall therefore abstain.

Lord Bruce of Donington

There remains very little for me to say following the intervention of my noble and learned friend Lord Elwyn-Jones. I think it has been proved beyond any doubt that in this particular instance there would be an interference with the due process of law.

I am extremely sorry to learn from the noble Lord, Lord Diamond, that he regards a vote against subsection (2) of Clause 1 of the Bill as involving a constitutional principle affecting the conduct of your Lordships' Committee. In point of fact, I sought independent advice officially on this matter before the debate. As your Lordships will recall, at one time I gave notice that I was going to oppose the Question, Whether Clause 1 shall stand part of the Bill? I was advised that that would be equivalent to a vote against the Bill on Second Reading, and consequently would not be in conformity with the usage of your Lordships' House. However, I was also advised—and I was advised officially—that a vote against subsection (2) of Clause 1 did not fall into the same category and would not involve any breach of the usages of your Lordships' House. Therefore, I hope that on reflection the noble Lord, Lord Diamond, and his noble friends will take some notice of that position.

I have no desire to prolong this debate for the sake of prolonging it. My noble and learned friend Lord Elwyn-Jones has already replied very effectively, and so I simply commend the amendment.

Lord Cockfield

I should like to assure the noble Lord, Lord Bruce of Donington, that I was not in any way suggesting that he was not entitled to put down the amendment that he has tabled. The point I was making was that the arguments that he was advancing were arguments against the whole purpose of the Bill. I wonder whether, in relation to what the noble and learned Lord, Lord Elwyn-Jones, said, I may, with very great respect, suggest to him that he is wrong on a point of law—

Lord Elwyn-Jones

It is perfectly proper for the noble Lord to do that.

Lord Cockfield

This is not intervention by the Executive at all. If there is intervention, it is intervention by Parliament or the legislature.

4.18 p.m.

On Question, Whether the said amendment (No. 3A) shall be agreed to?

Their Lordships divided: Contents, 70; Not-Contents, 123.

DIVISION NO. 2
CONTENTS
Allen of Fallowfield, L.	Irving of Dartford, L.
Ardwick, L.	Jacques, L.
Beswick, L.	Jeger, B.
Birk, B.	Jenkins of Putney, L.
Bishopston, L. [Teller.]	John-Mackie, L.
Blyton, L.	Lawrence, L.
Boston of Faversham, L.	Leatherland, L.
Bowden, L.	Llewelyn-Davies of Hastoe, B.
Briginshaw, L.	Lockwood, B.
Brockway, L.	Mishcon, L.
Brooks of Tremorfa, L.	Molloy, L.
Bruce of Donington, L.	Monson, L.
Caradon, L.	Nicol, B.
Carmichael of Kelvingrove, L.	Oram, L.
Cledwyn of Penrhos, L.	Peart, L.
Collison, L.	Phillips, B.
Cooper of Stockton Heath, L.	Pitt of Hampstead, L.
David, B.	Ponsonby of Shulbrede, L. [Teller.]
Davies of Penrhys, L.
Dean of Beswick, L.	Prys-Davies, L.
Denington, B.	Sefton of Garston, L.
Donnet of Balgay, L.	Serota, B.
Elwyn-Jones, L.	Stallard, L.
Elystan-Morgan, L.	Stewart of Alvechurch, B.
Ennals, L.	Stewart of Fulham, L.
Ewart-Biggs, B.	Stoddart of Swindon, L.
Fisher of Rednal, B.	Stone, L.
Fitt, L.	Strabolgi, L.
Gaitskell, B.	Taylor of Blackburn, L.
Gallacher, L.	Taylor of Mansfield, L.
Glenamara, L.	Underhill, L.
Graham of Edmonton, L.	Wallace of Coslany, L.
Hale, L.	Wedderburn of Charlton, L.
Hatch of Lusby, L.	Wells-Pestell, L.
Howie of Troon, L.	Wilson of Rievaulx, L.
Hughes, L.
NOT-CONTENTS
Adeane, L.	Brabazon of Tara, L.
Airey of Abingdon, B.	Broxbourne, L.
Alexander of Tunis, E.	Caithness, E.
Allerton, L.	Campbell of Alloway, L.
Ampthill, L.	Cathcart, E.
Atholl, D.	Chelmer, L.
Bauer, L.	Cockfield, L.
Belhaven and Stenton, L.	Constantine of Stanmore, L.
Bessborough, E.	Cottesloe, L.
Blake, L.	Craigavon, V.

Crawford and Balcarres, E.	Middleton, L.
Cullen of Ashbourne, L.	Milverton, L.
Darnley, E.	Molson, L.
Daventry, V.	Monckton of Brenchley, V.
Davidson, V.	Monk Bretton, L.
De L'Isle, V.	Montgomery of Alamein, V.
Denham, L. [Teller.]	Morris, L.
Drumalbyn, L.	Mottistone, L.
Ebbisham, L.	Northchurch, B.
Eccles, V.	Nugent of Guildford, L.
Ellenborough, L.	O'Brien of Lothbury, L.
Elton, L.	Onslow, E.
Enniskillen, E.	Orkney, E.
Fortescue, E.	Orr-Ewing, L.
Fraser of Kilmorack, L.	Pender, L.
Gainford, L.	Penrhyn, L.
Gardner of Parkes, B.	Peyton of Yeovil, L.
Gibson-Watt, L.	Porritt, L.
Gisborough, L.	Portland, D.
Glanusk, L.	Reilly, L.
Grantchester, L.	Richardson, L.
Gray of Contin, L.	Rochdale, V.
Greenway, L.	St. Aldwyn, E.
Gridley. L.	St. Davids, V.
Grimston of Westbury, L.	Saint Oswald, L.
Harvington, L.	Saltoun, Ly.
Hawke, L.	Sandys, L.
Hayter, L.	Savile, L.
Hornsby-Smith, B.	Selkirk, E.
Hylton-Foster, B.	Sharples, B.
Ilchester, E.	Sherfield, L.
Ingrow, L.	Skelmersdale, L.
Killearn, L.	Slim, V.
Kilmany, L.	Somers, L.
Kinloss, Ly.	Stamp, L.
Kintore, E.	Stodart of Leaston, L.
Kitchener, E.	Sudeley, L.
Lane-Fox, B.	Suffield, L.
Lauderdale, E.	Swinton, E. [Teller.]
Long, V.	Terrington, L.
Loudoun, C.	Thomas of Swynnerton, L.
Lucas of Chilworth, L.	Thorneycroft, L.
Luke, L.	Trefgarne, L.
Lyell, L.	Trenchard, V.
McFadzean, L.	Trumpington, B.
Mackay of Clashfern, L.	Vaux of Harrowden, L.
Macleod of Borve, B.	Vickers, B.
Mar, C.	Vivian, L.
Margadale, L.	Waldegrave, E.
Marley, L.	Whitelaw, V.
Merrivale, L.	Wise, L.
Mersey, V.

Resolved in the negative, and amendment disagreed to accordingly.

4.26 p.m.

Lord Bruce of Donington moved Amendment No. 4:

Page 1, line 19, after ("above") insert ("and shall at the same time publish any such particulars, together with any documents relating to such particulars, which he has filed with the Restrictive Practices Court").

The noble Lord said: We on this side do not accept, as a matter of law, that there has been no intervention by the Government in the process of law. In point of fact, directions were explicitly given by the Government prior to this Bill to the Director General of Fair Trading to discontinue the action. All that this Bill does is to seek to legalise what has already been directed by the Government. It is therefore important, as a matter of public interest, that the documents in this case are made public. There is no reason at all why they should not be made public. If the Government are inspired by the nobility of purpose that they put forward, they should regard the production of the documents, the publishing of the documents and the public availability of the documents as vindicating their own fidelity to the rule of law.

What conceivable objection can there be to that? This is a case where, after approximately four years of governmental support, as I have previously stated, for the action taken by the Director General of Fair Trading and following at least three parliamentary public declarations by Governments declining to give any kind of support to the withdrawal of the action, the action has been withdrawn in midstream. Whatever the noble Lord the Minister may say—he always argues his case not only amiably but with some thoroughness—he would surely wish to have his arguments completely vindicated by the documents that are relevant to this case. After all, democracy has been defined as government by discussion—preferably by informed discussion.

Despite the fact that the noble Lord has sought to allay the anxieties of his colleagues—and, with respect, has enunciated one or two extraordinary propositions in law about this matter—the principles behind the action that the Government have taken are not going to lie down. There are going to be further inquiries about this matter because the explanations that the Government have given simply will not wash, and they are still causing anxiety which is not purely confined to this side of the Committee—and I am grateful to the noble Lord, Lord Diamond, for indicating in so far as it affects those for whom he speaks—but which is also widely shared elsewhere.

Why should these documents remain a state secret? There are not any security problems involved in their production. Had the case gone to court, the documents would have been put in as exhibits. Evidence would have been given in support of the documentation already submitted to the court and there would have been a public judgment. The arguments could all have been set out as they are normally set out; and of course as the noble Lord well knows, in extreme cases court transcripts are available, on payment of what some may regard as rather a heavy fee, at the conclusion of any case. So had the case taken its normal course, had there been no intervention by the Executive in the proceedings involved in this case, everybody would have known what it was all about.

The Government will have their Bill; they will have all the actions that they want. Why should they conceivably resist this amendment? The noble Lord may dismiss the arguments raised here; he may cast doubt upon them; and he may argue with his customary ingenuity that a different set of principles, of which we have not yet heard, probably apply to this particular case which fully exculpate the Government and vindicate his case. He may do all that, but I still maintain that, in order that Parliament may check and the people may judge whether the Government have really acted with propriety in this case, both in their intervention and in their submission of the Bill to the House, these documents ought to be published. This amendment seeks to do that. Nobody who has behaved properly, sincerely and honourably has anything to fear from the documents becoming available. I therefore urge your Lordships to support the amendment which I sincerely hope that the noble Lord, in vindication of his own arguments, will be only too happy to accept on behalf of Her Majesty's Government.

Lord Cockfield

I wonder whether I might deal first with certain allegations made by the noble Lord, Lord Bruce of Donington. He claimed that directions were given by the Secretary of State to the director general to discontinue the action. No such directions were given and nor could they have been given. The position was that the litigation was between the director general and the Stock Exchange, and the application to the court was made by the Stock Exchange, not by the Secretary of State at all.

Having disposed of that matter I now turn to the amendment. The documents currently on the Register of Restrictive Agreements, which will be removed by virtue of Clause 1(2), are already in the public domain because the register is open to public inspection. No purpose therefore would be served by an obligation to publish them. They are already there and they are available.

As regards the documents filed by the director general with the court, these so far consist merely of his answer to the Stock Exchange's statement of case and his further rejoinder. Proofs of evidence have not yet been exchanged. The documents filed by the director general would be meaningless without being read along with the Stock Exchange's own statement of case and its reply to the director general's answer. These were supplied by the Stock Exchange on the basis that they would be used only for a very limited purpose—that is, for the court proceedings. Indeed, Section 41 of the Restrictive Trade Practices Act 1976 provides criminal sanctions against disclosure of documents of this kind.

Quite apart from this, the director general's documents would not be particularly illuminating; they are technical, legal documents which do not show how the director general's case would have been presented. On all those grounds therefore I must advise your Lordships to reject the amendment.

Lord Bruce of Donington

I am obliged to the noble Lord for his reply. I concede immediately that of course certain documents are already available; but some are not available. There seems no valid reason why the documents and the case filed by the Director General of Fair Trading should not be made public. The noble Lord may think that they will yield but little information.

As regards the documents that have been put forward by the Stock Exchange on the basis of their being confidential, on the basis of their being only used in the case, I point out that if they had been used as exhibits in the case (had the case come to the Restrictive Practices Court and had judgment been given) these documents would have been made public. There does not seem to be any reason therefore why they should not be made public now. Indeed, the noble Lord referred to the criminality of disclosing documents that ought not to be disclosed. If this clause were passed it would cease to be criminal to have them made public because in conformity with the procedure advocated by the noble Lord, if this Parliament passes laws then they become the law although it might be necessary, I willingly concede, to have a separate schedule on the back indicating which particular part of the law had been amended and in what respect.

I do not like—and I do not think that all Members of your Lordships' Committee like—the manner in which all this is evidently going to be hushed up. Nobody will finally know exactly what happened. I do not think that that is good for the country. I do not think that it is good for the reputation of this House. I do not even think that it is good for the reputations of Governments. To the extent to which this amendment does permit the publication of documents not so far published and not so far available to the public, I think that it merits your Lordships' support. I beg to move.

4.39 p.m.

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

Their Lordships divided: Contents, 95; Not-Contents, 118.

DIVISION NO. 3
CONTENTS
Allen of Fallowfield, L.	Irving of Dartford, L.
Amherst, E.	Jacques, L.
Ardwick, L.	Jeger, B.
Attlee, E.	Jenkins of Putney, L.
Aylestone, L.	John-Mackie, L.
Banks, L.	Kilmarnock, L.
Beaumont of Whitley, L.	Leatherland, L.
Beswick, L.	Listowel, E.
Birk, B.	Llewelyn-Davies of Hastoe, B.
Bishopston, L.	Lloyd of Kilgerran, L.
Blyton, L.	Lockwood, B.
Boston of Faversham, L.	Mais, L.
Bowden, L.	Mayhew, L.
Briginshaw, L.	Mishcon, L.
Brockway, L.	Molloy, L.
Brooks of Tremorfa, L.	Monson, L.
Bruce of Donington, L.	Nicol, B.
Caradon, L.	Oram, L.
Carmichael of Kelvingrove, L.	Paget of Northampton, L.
Cledwyn of Penrhos, L.	Peart, L.
Collison, L.	Phillips, B.
Cooper of Stockton Heath, L.	Pitt of Hampstead, L.
Cudlipp, L.	Ponsonby of Shulbrede, L. [Teller.]
David, B. [Teller.]
Davies of Penrhys, L.	Prys-Davies, L.
Dean of Beswick, L.	Raglan, L.
Denington, B.	Roberthall, L.
Diamond, L.	Rochester, L.
Donaldson of Kingsbridge, L.	Sainsbury, L.
Donnet of Balgay, L.	Shackleton, L.
Elwyn-Jones, L.	Shepherd, L.
Elystan-Morgan, L.	Simon, V.
Ennals, L.	Stallard, L.
Ewart-Biggs, B.	Stewart of Alvechurch, B.
Fisher of Rednal, B.	Stewart of Fulham, L.
Fitt, L.	Stoddart of Swindon, L.
Gaitskell, B.	Stone, L.
Gallacher, L.	Strabolgi, L.
Gladwyn, L.	Taylor of Blackburn, L.
Glenamara, L.	Taylor of Gryfe, L.
Graham of Edmonton, L.	Taylor of Mansfield, L.
Grimond, L.	Tordoff, L.
Hale, L.	Underhill, L.
Hanworth, V.	Wallace of Coslany, L.
Harris of Greenwich, L.	Walston, L.
Hatch of Lusby, L.	Wedderburn of Charlton, L.
Howie of Troon, L.	Wells-Pestell, L.
Hughes, L.	Wigoder, L.

NOT-CONTENTS
Airey of Abingdon, B.	Lyell, L.
Alexander of Tunis, E.	McFadzean, L.
Allerton, L.	Mackay of Clashfern, L.
Ampthill, L.	Macleod of Borve, B.
Atholl, D.	Malmesbury, E.
Auckland, L.	Mancroft, L.
Bauer, L.	Mar, C.
Belhaven and Stenton, L.	Margadale, L.
Bessborough, E.	Marley, L.
Blake, L.	Marshall of Leeds, L.
Brabazon of Tara, L.	Merrivale, L.
Caithness, E.	Mersey, V.
Campbell of Alloway, L.	Middleton, L.
Cathcart, E.	Milverton, L.
Chelmer, L.	Molson, L.
Cockfield, L.	Monckton of Brenchley, V.
Constantine of Stanmore, L.	Monk Bretton, L.
Cottesloe, L.	Montgomery of Alamein, V.
Craigavon, V.	Morris, L.
Cullen of Ashbourne, L.	Mottistone, L.
Darnley, E.	Northchurch, B.
Daventry, V.	Nugent of Guildford, L.
Davidson, V.	O'Brien of Lothbury, L.
Denham, L. [Teller.]	Onslow, E.
Ebbisham, L.	Orkney, E.
Eccles, V.	Pender, L.
Ellenborough, L.	Penrhyn, L.
Elton, L.	Peyton of Yeovil, L.
Enniskillen, E.	Porritt, L.
Fisher, L.	Portland, D.
Fortescue, E.	Reilly, L.
Fraser of Kilmorack, L.	Richardson, L.
Gainford, L.	Rochdale, V.
Gardner of Parkes, B.	St. Aldwyn, E.
Gibson-Watt, L.	St. Davids, V.
Glanusk, L.	Saint Oswald, L.
Grantchester, L.	Sandys, L.
Gray of Contin, L.	Savile, L.
Greenway, L.	Selkirk, E.
Gridley, L.	Sharples, B.
Grimston of Westbury, L.	Skelmersdale, L.
Harvington, L.	Soames, L.
Hawke, L.	Stodart of Leaston, L.
Hayter, L.	Sudeley, L.
Hornsby-Smith, B.	Suffield, L.
Hylton-Foster, B.	Swinton, E. [Teller.]
Ilchester, E.	Terrington, L.
Inglewood, L.	Thomas of Swynnerton, L.
Ingrow, L.	Thorneycroft, L.
Killearn, L.	Trefgarne, L.
Kilmany, L.	Trenchard, V.
Kintore, E.	Trumpington, B.
Kitchener, E.	Vaux of Harrowden, L.
Lane-Fox, B.	Vickers, B.
Lauderdale, E.	Vivian, L.
Long, V.	Waldegrave, E.
Loudoun, C.	Whitelaw, V.
Lucas of Chilworth, L.	Wise, L.
Luke, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.47 p.m.

Lord Taylor of Gryfe had given notice of his intention to move Amendment No. 5:

Page 1, line 21, at end insert ("But notwithstanding the above, the Secretary of State shall instruct the Monopolies and Mergers Commission to conduct an enquiry into the practices of The Stock Exchange and to report no later than 31st December 1984.").

Lord Diamond

I hope it will be acceptable to your Lordships' Committee that I move the amendment standing in the name of my noble friend Lord Taylor of Gryfe. He is most anxious to move this amendment and believes that it is important and deserving of the consideration of your Lordships. The slight difficulty under which I labour is that I feel sure that I cannot move it with anything like the distinction of my noble friend—to whom I now give way.

Lord Taylor of Gryfe

I apologise to the Committee for being delayed in the corridors. Your Lordships will be glad to hear that, while I propose to rehearse a little of the background of this Bill, I do not propose to make a Second Reading speech on this occasion. Your Lordships will recall that this Bill arises from the deliberations of the Office of Fair Trading, which over a period of six years examined the rule book of the Stock Exchange and concluded that there were 173 cases of infringement of the law as it then stood.

I agree with the noble Lord, Lord Cockfield, that to have referred this matter to the courts would have meant a long process examining each of these infringements. It would have delayed necessary changes in Stock Exchange practices, and the adversarial atmosphere of the court is perhaps not the appropriate atmosphere to secure changes which depend on general agreement. Therefore, in exchange for the withdrawal from the court the Stock Exchange made certain promises to change, and, as the noble Lord, Lord Cockfield, has indicated, the changes are already taking place rapidly.

The spin-off from some of the provisions that are now made can be read daily in the Financial Times; the mergers, the changes in associations and the alliances between financial organisations. These changes are matters of great public interest. The public has a substantial interest in what is taking place. While we have arranged that there will be a monitoring of these changes provided in what the Government have said, I believe it would be no impediment to these changes if the Monopolies and Mergers Commission were to have the opportunity in the next year—as is provided in the amendment—to examine the process of change and what is happening in the market as a result of the changes that have been agreed.

The noble Lord, Lord Cockfield, has said that we can monitor these changes and discuss them by Parliamentary Question; but I am sure he will readily agree that this is not an adequate way of monitoring substantial changes of great importance. Since there is a very large public interest in what is taking place affecting important financial institutions, I suggest that it might be worthwhile for the watchdog commission, the Monopolies and Mergers Commission, to consider this in connection with industry. References are made regularly to the Monopolies and Mergers Commission where there is some degree of doubt in the public interest. I suggest that what is taking place in the financial sector arising from the Bill might be similarly examined by the commission. I beg to move accordingly.

Lord Cockfield

It may help if I referred briefly to the law on this subject. The restrictive trade practices legislation and the monopolies and mergers legislation are two parallel but rather different régimes. The position is that if an agreement comes under the terms of the Restrictive Trade Practices Act it is thereby excluded from the operation of the monopolies and mergers legislation. This arises as a result of Section 10(1) and (2) of the Fair Trading Act 1973 as subsequently amended and extended. The result therefore of excluding the Stock Exchange agreements from the Restrictive Trade Practices Act is to bring certain of them within the ambit of the Monopolies and Mergers Commission. This is true in the case of stockbroking services. It is not true in the case of stock jobbing because in law stock jobbing is not a service.

While it is true therefore that as a matter of law, once the present Bill is enacted stockbroking will come within the ambit of the monopolies and mergers legislation, it does not follow that a reference ought to be made to the Monopolies and Mergers Commission. That is a matter which can only be decided in the light of the circumstances which exist at the time. Certainly our view is that at present it would be entirely wrong for such a reference to be made. In effect what the noble Lord's proposed amendment would do would be to substitute an investigation by the Monopolies and Mergers Commission for investigation under the restrictive practices legislation. It would simply be to substitute one form of investigation for another.

As I said at Second Reading, the primary reason why we feel that the Stock Exchange should be exempted from the Restrictive Trade Practices Act is that the operation of that Act is preventing and holding up the very desirable process of change. Under the terms of the Bill now the Stock Exchange will be exempted from the Restrictive Trade Practices Act. Change is going ahead rapidly. If there were to be a reference to the Monopolies and Mergers Commission that would bring back again the undesirable situation that we had in the past under which the Stock Exchange was quite unwilling to make any change in its rules or in its practices. The really important point is that we should now give the Stock Exchange every encouragement to go ahead and to remove these restrictive practices, as it has undertaken to do. I must therefore advise your Lordships to reject the amendment.

Lord Bruce of Donington

We on this side of the Committee wish to support the amendment put down by the noble Lord, Lord Taylor of Gryfe. The noble Lord's answer will not do. All he is really saying is that because the Stock Exchange has found it to its own advantage not to take any action so far to bring itself into conformity with the requirements of the Restrictive Trade Practices Act, it is to be allowed to get away with it. All one has to do is to do nothing to gain the support of the Government who say that the very act of bringing matters before the Restrictive Practices Court has held up progress. But I ask the Committee to whose advantage? The Stock Exchange would much have preferred not to have come under the restrictive practices legislation at all. It would much have preferred to have gone its own way as it has up to now, and done handsomely out of it, too.

Last year was a bumper year. Of course the Stock Exchange will do nothing and has done nothing until such time has arrived—which must have been hoped for for a long time—that ultimately there would be a Secretary of State for Trade who would give way. That has been achieved and the noble Lord, Lord Taylor of Gryfe, is quite right in his advocacy that the matter now be referred to the Monopolies and Mergers Commission which, as the noble Lord has willingly conceded, following the passing of this Bill it will be proper and appropriate for it to do, if it is instructed to do so.

Why should it not be instructed to do so? On the basis of the lowest common denominator of argument in this case what has happened in the past four years and the machinations in the minds both of the council of the Stock Exchange and of successive Secretaries of State has so far been hidden from us. Why should these things not be made more public? Why should they not be investigated? What is so sacred about this august institution comprising brokers and jobbers that has for ever to be kept under wraps? Every association could argue the same. Let us say that the Director General of Fair Trading fired a warning shot over the bows of some association somewhere, and said that he thought that that association was infringing the Restrictive Trade Practices Act. The association has a choice of saying that it agrees, and that its members will be good boys and will make some changes. But if they feel that they have a pliant Government behind them, a friendly Government, they will sit back and do nothing in the full knowledge that the Government will then say that the association's inaction has forced its exemption from the provisions of the Act. That is a somewhat bizarre position. I think, with the noble Lord, Lord Taylor of Gryfe, that it is high time some independent body took a look at that. It can do no possible harm.

I suppose that next we shall hear that that will prohibit any agreement because the Stock Exchange is afraid of the Monopolies Commission. I suppose that the next step of the noble Lord will be to move the abolition of the Monopolies Commission on the ground that the Stock Exchange is doing nothing because an inquiry is going on. This is quite likely in view of the Government's existing attitude, which in my view—and I am quite sure that the noble Lord with his logical processes of mind must agree—is quite untenable. Nobody can logically support this. I sincerely hope that he will accept the amendment. If he does not do so then, on behalf of my own party, we shall certainly sustain the noble Lord, Lord Taylor of Gryfe, in his amendment.

5.1 p.m.

Lord Cockfield

The noble Lord, Lord Bruce, has made a large number of statements which are quite insupportable. He says that the Stock Exchange have been allowed to get away with it; that the Stock Exchange have done nothing and that inaction justifies their exemption from the Act. The truth of the matter is exactly the reverse of this. What has happened is that the Stock Exchange, far from getting away with it, have agreed to dismantle the most important of their restrictive practices and substantial progress has already been made.

As the noble Lord, Lord Taylor of Gryfe, referred to the figures that I gave in replying to the debate on Second Reading, perhaps I may repeat them now. There were, in all, 165 restrictions identified by the director general. Of those, he was to challenge 59 as not being in the public interest; although of course the Stock Exchange did not accept that. He was not prepared to challenge the remainder of the restrictions. In other words, out of 165 restrictions, the director general was not prepared to challenge 106. Of the 59 restrictions which were challenged, 52 relate to single capacity, minimum commissions or membership; and those are the three major issues on which the Stock Exchange is now making real progress in dismantling the restrictive practices. That leaves a balance of only seven, six of which concern general regulations and one is an anti tax-avoidance provision to which I think no reasonable objection would be taken—and, if I may add the words, not even by the noble Lord, Lord Bruce of Donington. So that the suggestion that the Stock Exchange has been frozen in its tracks is completely untrue.

The point that I was making and which I will repeat, because this may be the point on which the noble Lord wishes to intervene, is that what is happening is that we have the process of change now going ahead. We want that process of change to make as rapid progress as is possible. We do not want it to be interrupted by another inquiry at this stage. The only other point I make is this. The noble Lord speaks as though exempting the Stock Exchange from the Restrictive Trade Practices Act is something quite exceptional, as if nobody else was exempt from it.

May I read from Schedule 4 of the Fair Trading Act 1973 which lists no fewer than 15 categories of people exempt from the Restrictive Trade Practices Act. The list starts with legal services; and I see the noble and learned Lord, Lord Ellyn-Jones, on the Front Bench opposite. It then goes on to medical services, dental services, ophthalmic services, and so on, right down until we get to architects and accountants—the subject which no doubt interests the noble Lord, Lord Bruce of Donington. And so it goes on and on. There were further exemptions introduced in the order in 1976 and further exemptions in subsequent statutes. There is therefore nothing exceptional on exempting a body or a service from the Restrictive Trade Practices Act. In fact, many others are exempt. The important point is that the exemption should be decided by Parliament, which is exactly what we are doing on the present occasion.

Lord Bruce of Donington

Will the noble Lord answer me one question? If this Bill becomes an Act, the Stock Exchange will be removed from all operations of the Restrictive Trade Practices Act. I put forward a possibility without casting any implications on anybody. Let us say that, under the provisions of Clause 1(1) of the Bill, the Stock Exchange, the Treasury, the Secretary of State and the Bank of England (who still remain) do not arrive at agreement. Let us say, without imputing any bad [...] to anybody, that the Stock Exchange stick on a point. The noble Lord has already given 59 instances on which the Office of Fair Trading intend to proceed in conformity, presumably, with the Restrictive Trade Practices Act. Let us presume for the moment that, for perfectly bona fide reasons—and not for pure cussedness—the Stock Exchange declines to arrive at agreement. It has every right to do so. It can plead—and indeed we have had some overtones to that in the most important speeches made by the noble Lord, Lord O'Brien, and others—the exceptional circumstances which sometimes arise in connection with their financial and investment affairs.

What happens if, due to some special circumstances not envisaged by any party—and I impute no ill-faith—the Stock Exchange says that, in the intervening period of 18 months which elapsed since the passing of the Bill exempting them from the operations of the Restrictive Trade Practices Act, there have been other developments of vital importance to the country's economy, of vital importance to the Treasury, making it imperative that they retain some rights that they had thought perhaps they would be able to give up? Let us assume that.

What then will the Government do? Will they try to invoke the Restrictive Trade Practices Act again? What kind of pressure can they bring to bear? This, I am quite sure, is what the noble Lord, Lord Taylor, conceivably had in mind. I do not seek to probe into it. But, clearly, as a possible safeguard against such a development, it would be wise for the Monopolies Commission to take a look at the whole thing, to investigate and report. I think the noble Lord should be supported.

Lord Cockfield

The point raised by the noble Lord, Lord Bruce of Donington, is a perfectly different one from the one covered by the amendment in the name of Lord Taylor of Gryfe. Lord Taylor's amendment provides for an immediate investigation by the Monopolies Commission and a report no later than 31st December 1984. The circumstances that Lord Bruce is talking about are totally different. We believe that the Stock Exchange will proceed along the lines of the agreement that has been reached. It has been reached in good faith. We believe that it will be fully honoured. We have set up a monitoring process to ensure that we know whether or not it is honoured.

If circumstances should arise at some day in the future when it emerges that serious disagreement arose between the Stock Exchange, the Secretary of State and the Bank of England—and we must hope very much that no such circumstances arise, for we are going ahead at the moment very effectively and making good progress, and I trust that that is welcome on both sides of the Committee—then the Government will have to decide what action to take in relation to those circumstances. At the very beginning I made it perfectly clear that the service of stockbroking, once this Bill is passed, will come under the ambit of the monopolies and mergers legislation. There is no question about that. But what action should be taken is clearly a matter which can be decided by the Government only if and when those circumstances arise, and we hope and trust they never will arise.

Lord Taylor of Gryfe

I should like to emphasise that we on these Benches, in introducing this amendment, are anxious not to impede in any way the process of change in the Stock Exchange. The provisions which the noble Lord outlined on Second Reading are welcome so far as we are concerned; and I realise that some of them have immediate implications, as can be observed daily from the financial press.

There are other aspects of the agreement which will take some time to implement; for example, the single capacity may take a little time to come into effect. I would not have thought that the reference to the Monopolies and Mergers Commission would in any way restrict this process of change. It is not like a mergers reference, in which you immediately have a freeze on negotiations regarding takeover procedures. This would be alongside what is in fact a voluntary agreement.

The Stock Exchange has already voluntarily agreed, in exchange for this Bill, to certain changes of procedure. There is no reason in the world why these changes should not proceed as promised. A reference to the Monopolies and Mergers Commission would not necessarily prevent that, or delay necessary changes. I think it would be a poor excuse if in fact that were to be so. It is not our intention to turn the clock back. The Office of Fair Trading looked at this over a period of six years, and we are not anxious to re-open the entire case in that way. But we do say that there is a substantial measure of public interest in this matter, and its full implications should be looked at by the Monopolies and Mergers Commission alongside the rather restricted area of the monitoring process which will go on.

It is because of the degree of public interest in it that we would wish the Monopolies and Mergers Commission, at least for one year, alongside the changes which are taking place, to have a look at this matter; and it is for that reason, if not for all the other reasons adduced by the noble Lord, Lord Bruce of Donington, in support of his amendment, that we would certainly wish to press this amendment.

5.14 p.m.

On Question, Whether the said Amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 97; Not-Contents, 128.

DIVISION NO. 4
CONTENTS
Airedale, L.	Elystan-Morgan, L.
Allen of Fallowfield, L.	Ennals, L.
Amherst, E.	Ewart-Biggs, B.
Ardwick, L.	Ezra, L.
Banks, L.	Fisher of Rednal, B.
Beswick, L.	Fitt, L.
Birk, B.	Gaitskell, B.
Bishopston, L.	Gallacher, L.
Blyton, L.	Gladwyn, L.
Bowden, L.	Glenamara, L.
Briginshaw, L.	Graham of Edmonton, L.
Brockway, L.	Grimond, L.
Brooks of Tremorfa, L.	Hale, L.
Bruce of Donington, L.	Hanworth, V.
Carmichael of Kelvingrove, L.	Harris of Greenwich, L.
Cledwyn of Penrhos, L.	Hatch of Lusby, L.
Collison, L.	Howie of Troon, L.
Cooper of Stockton Heath, L.	Hughes, L.
David, B.	Irving of Dartford, L.
Davies of Penrhys, L.	Jacques, L.
Dean of Beswick, L.	Jeger, B.
Denington, B.	Jenkins of Putney, L.
Diamond, L.	John-Mackie, L.
Donaldson of Kingsbridge, L.	Kagan, L.
Donnet of Balgay, L.	Kennet, L.
Elwyn-Jones, L.	Kilmarnock, L. [Teller.]

Leatherland, L.	Sainsbury, L.
Listowel, E.	Seear, B.
Llewelyn-Davies of Hastoe, B.	Segal, L.
Lloyd of Kilgerran, L.	Shackleton, L.
Lockwood, B.	Simon, V.
Longford, E.	Stallard, L.
McIntosh of Haringey, L.	Stedman, B.
Mackie of Benshie, L.	Stewart of Alvechurch, B.
Mais, L.	Stewart of Fulham, L.
Mar, C.	Stoddart of Swindon, L.
Mayhew, L.	Stone, L.
Monson, L.	Strabolgi, L.
Nicol, B.	Taylor of Gryfe, L.
Oram, L.	Taylor of Mansfield, L.
Paget of Northampton, L.	Tordoff, L. [Teller.]
Peart, L.	Underhill, L.
Phillips, B.	Wallace of Coslany, L.
Pitt of Hampstead, L.	Wells-Pestell, L.
Ponsonby of Shulbrede, L.	Whaddon, L.
Prys-Davies, L.	White, B.
Roberthall, L.	Wigoder, L.
Rochester, L.	Winstanley, L.
Rugby, L.
NOT-CONTENTS
Abercorn, D.	Killearn, L.
Airey of Abingdon, B.	Kilmany, L.
Alexander of Tunis, E.	Kintore, E.
Allerton, L.	Kitchener, E.
Ampthill, L.	Lane-Fox, B.
Atholl, D.	Lauderdale, E.
Bauer, L.	Long, V.
Belhaven and Stenton, L.	Loudoun, C.
Blake, L.	Lucas of Chilworth, L.
Brabazon of Tara, L.	Luke, L.
Broadbridge, L.	Lyell, L.
Broxbourne, L.	McFadzean, L.
Bruce-Gardyne, L.	Mackay of Clashfern, L.
Caithness, E.	MacLehose of Beoch, L.
Cathcart, E.	Macleod of Borve, B.
Chelmer, L.	Malmesbury, E.
Cockfield, L.	Mancroft, L.
Coleraine, L.	Margadale, L.
Constantine of Stanmore, L.	Marley, L.
Cottesloe, L.	Marshall of Leeds, L.
Craigavon, V.	Massereene and Ferrard, V.
Cranbrook, E.	Merrivale, L.
Cullen of Ashbourne, L.	Mersey, V.
Darnley, E.	Middleton, L.
Daventry, V.	Milverton, L.
Davidson, V.	Molson, L.
De La Warr, E.	Monckton of Brenchley, V.
Denham, L. [Teller.]	Monk Bretton, L.
Dilhorne, V.	Montagu of Beaulieu, L.
Drumalbyn, L.	Montgomery of Alamein, V.
Ebbisham, L.	Morris, L.
Eccles, V.	Mottistone, L.
Elton, L.	Newall, L.
Enniskillen, E.	Northchurch, B.
Faithfull, B.	Nugent of Guildford, L.
Fisher, L.	O'Brien of Lothbury, L.
Fortescue, E.	Orkney, E.
Fraser of Kilmorack, L.	Pender, L.
Gainford, L.	Penrhyn, L.
Gibson-Watt, L.	Perth, E.
Gisborough, L.	Peyton of Yeovil, L.
Glanusk, L.	Portland, D.
Granchester, L.	Richardson, L.
Gray of Contin, L.	Robertson of Oakridge, L.
Greenway, L.	Rochdale, V.
Gridley, L.	St. Aldwyn, E.
Grimston of Westbury, L.	St. Davids, V.
Harvington, L.	Sandys, L.
Hawke, L.	Savile, L.
Hayter, L.	Selkirk, E.
Henley, L.	Sharples, B.
Hertford, M.	Skelmersdale, L.
Hornsby-Smith, B.	Soames, L.
Hylton-Foster, B.	Somers, L.
Ingrow, L.	Stodart of Leaston, L.
Ironside, L.	Sudeley, L.

Suffield, L.	Tryon, L.
Swinton, E. [Teller.]	Vaux of Harrowden, L.
Terrington, L.	Vickers, B.
Thomas of Swynnerton, L.	Vivian, L.
Thorneycroft, L.	Waldegrave, E.
Trefgarne, L.	Westbury, L.
Trenchard, V.	Whitelaw, V.
Trumpington, B.	Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.23 p.m.

On Question, Whether Clause 1 shall stand part of the Bill?

Lord Bruce of Donington

I promise not to detain your Lordships for long in regurgitating any of the arguments which have been used so far, but I think it is wise that the House should realise exactly what are the real implications of passing Clause 1 of this Bill. It affects not only Section 11 of the Restrictive Trade Practices Act but other sections as well. Section 12 of the Restrictive Trade Practices Act enables the Secretary of State statutorily to obtain a whole series of information which ought to be vital to the supervision of the affairs of any institution such as the Stock Exchange. Section 12 of that Act gives him that right and that right is now being taken away. There is no statutory obligation to comply with the sections of that Act or with the Fair Trading Act 1973 which laid down certain conditions. In fact, he is denied the issue of a statutory order which enables him to obtain very vital information, about which there was considerable debate at the time of the passing of the original Act, which was a long time before its consolidation in 1976.

The noble Lord said earlier that it would have been quite easy in the initial stages to have made the Stock Exchange a designated service within the provisions of Section 13 of the Act and, indeed, of a supporting schedule. In the course of the inquiries that I have made since the Bill first came to your Lordships' House—and the Committee will appreciate that individual Members do not have the research facilities that are available as a matter of right, and properly as of right, to Government departments—I have been through the reports of the debates that took place on both the Fair Trading Act 1973 and the Restrictive Trade Practices Act, and I cannot find any representations made by any noble Lord, or by any member of any Government of the time—and these have varied—who has advocated the inclusion of the Stock Exchange among the designated services to which the noble Lord has referred, and who include lawyers like himself, accountants like myself, doctors and so on. Nor, so far as I can find—and I must say that my own researches have had to be limited because of time—can I find any trace of any representations made on behalf of the Stock Exchange to be included among the designated services. I wonder why that did not happen. Nor did it happen at any time during the four years that this has been under review.

Of course, it means that all this has apparently blown up—I put this in parenthesis—since the last election which took place in June. I wonder why it has blown up so late. Section 7 of the Fair Trading Act—and this now no longer applies to the Stock Exchange—refers to two or more persons, who whether voluntarily or not, and whether by agreement or not, so conduct their respective affairs as in any way to prevent, restrict or distort competition in connection with the supply of services of that description, whether or not they themselves are affected by the competition, and whether the competition is between persons interested as persons by whom, or as persons for whom, services are supplied". Hereafter, the Stock Exchange and its members are exempted from those provisions. When the time comes, I think it will be regretted, particularly in view of the fact that there has always been plenty of opportunity for representations to be made for those learned professions of stockbrokers and jobbers to be included in the designated services.

It is not for me to anticipate what the result of those representations might have been, but we could have had the arguments a long time ago and, to use the words of the noble Lord, substantial progress could undoubtedly have been made long before now. There are no new circumstances in the operations of members of the Stock Exchange that could not have been dealt with quite adequately a long time ago.

We cannot part with this clause without referring once again to the intervention into the process of law, after it became established. I shall not rehearse the arguments again, but I am bound to tell the noble Lord that there are circumstances in which this action of intervention could be justified. For example, if a Bill were presented to your Lordships which read substantially in the following terms, your Lordships would understand readily what I mean. If there was a Bill which began: The Employment Acts of 1980 and 1982 shall not apply—(a) to any agreement between members of a trade union, its members and the activities of its members or (b) to any agreement with respect to any of these matters between (i) the TUC and the Secretary of State for Employment and the Confederation of British Industry; and (ii) any proceedings in respect of any such agreement which are pending before the courts at the passing of this Act shall abate", one could understand the expressions of opposition by the party opposite concerning the wanton interference with the law. I cite that merely as an example of what might happen, because the precedent has now been set.

Lord Cockfield

The noble Lord is simply rehearsing all the arguments that he put forward on Second Reading. The Bill has only one operative clause, and that is Clause 1. In effect, therefore, Clause 1 is the substance of the Bill itself. The noble Lord said that the Committee should understand the real implications of accepting Clause 1 of the Bill. The real implications are precisely the same as the implications in the case of any other services which are exempted from the restrictive practices legislation. That includes not only the numerous services which are specified in the 1973 Act, some of which I read out because I thought the noble Lord would be interested, but also a schedule to the 1976 order which exempts a whole range of agreements, none of which is particularly professional. They include, for example, international sea transport, air transport, road passenger transport and the building societies interest rate cartel, none of which can be described as professional activities. There are also exemptions in other Acts. Therefore the position is simply that when this Bill is enacted the Stock Exchange will be placed on the same footing as any other body performing services which are exempted either under the 1973 Act or under subsequent legislation.

I really think that it is unnecessary for me to say anything further. We have gone over these arguments time and time again. There are a number of arguments put forward by the noble Lord, Lord Bruce of Donington, which I find quite astounding. He says that at no time was any move made by the Stock Exchange to demand exemption, while he himself at Second Reading reminded us quite correctly that his right honourable friend Mr. John Smith and my right honourable friend Mr. Nott, as he then was, had both refused to accede to requests by the Stock Exchange. If they refused to accede to such requests, it clearly indicates that such requests were made.

Clause 1 agreed to.

5.34 p.m.

Lord Bruce of Donington moved Amendment No. 6:

After Clause 1, insert the following new clause:

("Duration.

This Act shall cease to have effect on the first day of January 1987 unless resolutions to the contrary are approved by both Houses of Parliament during the three months prior to the first day of January 1987.").

The noble Lord said: The purpose of this amendment is in effect to bring the position back under review after three years from now. If the Stock Exchange, the Treasury, the Secretary of State and all the rest arrive at an agreement within the foreseeable future, on the assumption that the time stated in the amendment is reasonable there does not seem to be any reason why the Act should not come into operation again, if only by way of surveillance. If the noble Lord can guarantee that the agreement which is ultimately reached will get rid of all the 59 instances which he cited at Second Reading and that the result of these voluntary negotiations will be to bring the Stock Exchange within the operation of the Restrictive Trade Practices Act as it now stands, he cannot have any possible objection to the Stock Exchange coming within the ambit of the law if the Act becomes operative again in 1987. If, on the other hand, it means that an agreement will be reached which still contains restrictive practices, anti-competitive practices and all the rest which are repugnant to the Restrictive Practices Court and to the Fair Trading Act 1973, I can understand the noble Lord opposing it.

The amendment is being introduced on the assumption that only time is necessary. The Committee is being given to understand that vigorous and most encouraging progress is now being made. We are given the impression that the Council of the Stock Exchange are hell bent on arriving at an amicable agreement with the Government at the earliest opportunity. In this amendment I have allowed until 1987. Surely the noble Lord cannot object to that. I feel quite sure that he would not like members of the Stock Exchange to be submitted to the indignity of feeling that they were special animals who could operate outside the law as they have always understood it in the past. I am sure that the noble Lord would not wish to inflict that indignity upon them.

Everybody has been acting in this matter, we are assured, in good faith. The noble Lord, Lord O'Brien of Lothbury, or perhaps it was the noble Lord opposite, mentioned the Stock Exchange motto, "My word is my bond". I have every reason to believe this to be so. All the matters about which the Director General of Fair Trading has complained will now be dealt with voluntarily. Everybody will be happy. I am giving three years for it, just to act as a little urge on the way in case things get slightly hesitant from time to time. I am trying to help the noble Lord by imposing some kind of deadline. He might feel that it is necessary to turn his deadly invective on members of the Stock Exchange and say, "Look, unless you make a little more progress, remember that you will be liable again under the Act in 1987. Get on with it, boys".

I do not want to put the noble Lord into a position where he has to nag everybody; he is not like that. If this amendment is passed, it will serve notice on all concerned that there is a final date. I am hopeful, therefore, that the noble Lord will accept the amendment and that it will be unnecessary for me to take the matter to a Division. If for some obscure reason he does not feel so inclined, for quite mysterious reasons which he will doubtless explain in his usual very fluent fashion, I shall of course be greatly obliged but will have to advise my colleagues to support the amendment.

Lord Peyton of Yeovil

As this is the first Committee stage in your Lordships' House which I have attended, I wonder whether I could make just two observations at the conclusion of the debates. Both relate to the noble Lord, Lord Bruce of Donington. First, the noble Lord has told us on a number of occasions, obviously with great sincerity, that he has no desire whatsoever to be offensive to anybody, particularly to the Government and their friends. He then slipped, although I am sure he did not intend to do so, into being very offensive indeed. As a newcomer to your Lordships' House, I take notice of that technique; while I shall, of course, resist the temptation to try to copy so great a master of it as the noble Lord, I shall nevertheless note it.

The other point which I am sure my noble friend who is to answer the debate will have picked up for himself is the fearful danger in which any man might find himself when threatened with the desire on the part of the noble Lord, Lord Bruce of Donington, to help. He threatened my noble friend just now with that form of assistance. I am sure that my noble friend needs no warning from me and no support or help from me—but I will just remind him that those who sup with the devil should take a very long spoon with them.

Lord Cockfield

I am most grateful to my noble friend Lord Peyton of Yeovil for his remarks and also for his warning. On this occasion may I say that I am quite unable for my part to help the noble Lord, Lord Bruce of Donington, and I am not able to give him the satisfaction of accepting his new clause. The effect of the clause would be, first, to subject the agreements of the Stock Exchange to a totally different régime from that which applies to all the other agreements which are exempted from the operation of the Restrictive Trade Practices Act. I do not believe there is any justification for that at all.

We have an agreement for the Stock Exchange which I think is a good agreement. We believe that that agreement will be honoured. There is every indication that it is being honoured. It is being carefully monitored. I have already said that, in the very unlikely event of anything going wrong, the Government would then need to consider what was the appropriate step to take. I am quite unable to go any further than that. To introduce a provision of this sort under which, in effect, you are switching the restrictive trade practices legislation and the Restrictive Trade Practices Court on and off is entirely undesirable.

Lord Bruce of Donington

I will not detain the Committee very long except to say that it would not be necessary to have switched the Restrictive Trade Practices Court on again if the noble Lord had not switched it off in the first instance. I beg to move.

5.42 p.m.

On Question, Whether the said amendment (No. 6) shall be agreed to?

Their Lordships divided: Contents, 63; Not-Contents, 125.

DIVISION NO. 5
CONTENTS
Allen of Fallowfield, L.	Leatherland, L.
Beswick, L.	Llewelyn-Davies of Hastoe, B.
Birk, B.	Lockwood, B.
Bishopston, L.	Longford, E.
Blyton, L.	McIntosh of Haringey, L.
Boston of Faversham, L.	Mishcon, L.
Briginshaw, L.	Molloy, L.
Brockway, L.	Monson, L.
Brooks of Tremorfa, L.	Nicol, B. [Teller.]
Bruce of Donington, L.	Oram, L.
Carmichael of Kelvingrove, L.	Peart, L.
Cledwyn of Penrhos, L.	Phillips, B.
Collison, L.	Pitt of Hampstead, L.
David, B.	Ponsonby of Shulbrede, L. [Teller.]
Davies of Penrhys, L.
Dean of Beswick, L.	Prys-Davies, L.
Denington, B.	Rea, L.
Elwyn-Jones, L.	Rugby, L.
Ennals, L.	Shackleton, L.
Ewart-Biggs, B.	Stallard, L.
Fisher of Rednal, B.	Stewart of Alvechurch, B.
Gaitskell, B.	Stewart of Fulham, L.
Gallacher, L.	Stoddart of Swindon, L.
Graham of Edmonton, L.	Stone, L.
Hale, L.	Strabolgi, L.
Hatch of Lusby, L.	Taylor of Blackburn, L.
Hughes, L.	Taylor of Mansfield, L.
Irving of Dartford, L.	Underhill, L.
Jacques, L.	Wallace of Coslany, L.
Jeger, B.	Wedderburn of Charlton, L.
Jenkins of Putney, L.	White, B.
John-Mackie, L.	Wootton of Abinger, B.
NOT-CONTENTS
Abercorn, D.	Atholl, D.
Airey of Abingdon, B.	Bauer, L.
Alexander of Tunis, E.	Belhaven and Stenton, L.
Allerton,L.	Bellwin. L.

Blake, L.	Mackay of Clashfern, L.
Brabazon of Tara, L.	MacLehose of Beoch, L.
Brougham and Vaux, L.	Malmesbury, E.
Broxbourne, L.	Mancroft, L.
Bruce-Gardyne, L.	Mar, C.
Caithness, E.	Margadale, L.
Campbell of Alloway. L.	Marley, L.
Cathcart, E.	Marshall of Leeds, L.
Chelmer, L.	Massereene and Ferrard, V.
Cockfield, L.	Maude of Stratford-upon-Avon, L.
Coleraine, L.
Constantine of Stanmore, L.	Merrivale, L.
Cottesloe, L.	Mersey, V.
Craigavon, V.	Milverton, L.
Cranbrook, E.	Molson. L.
Cullen of Ashbourne, L.	Monckton of Brenchley, V.
Darnley, E.	Monk-Bretton, L.
Daventry, V.	Montgomery of Alamein, V
Davidson. V.	Morris, L.
De La Warr, E.	Mottistone, L.
Denham, L. [Teller.]	Napier and Ettrick, L.
Dilhorne, V.	Northchurch, B.
Drumalbyn, L.	Nugent of Guildford, L.
Ebbisham, L.	O'Brien of Lothbury, L.
Eccles, V.	Onslow, E.
Elton, L.	Orkney, E.
Enniskillen, E.	Pender, L.
Faithfull, B.	Penrhyn, L.
Fisher, L.	Perth, E.
Fortescue, E.	Peyton of Yeovil, L.
Fraser of Kilmorack, L.	Portland, D.
Gainford, L.	Richardson, L.
Gibson-Watt, L.	Robertson of Oakridge, L.
Gisborough, L.	Rochdale, V.
Glanusk, L.	St. Aldwyn, E.
Grantchester, L.	St. Davids, V.
Gray of Contin, L.	Sandford, L.
Gridley. L.	Sandys, L.
Grimston of Westbury, L.	Savile, L.
Hayter, L.	Selkirk, E.
Henley. L.	Shannon, E.
Hertford, M.	Sharples, B.
Hornsby-Smith, B.	Stodart of Leaston, L.
Hylton-Foster, B.	Sudeley, L.
Inglewood, L.	Swinton, E. [Teller.]
Ingrow, L.	Terrington, L.
Kilmany, L.	Thomas of Swynnerton, L.
Kinloss, Ly.	Thorneycroft, L.
Kintore, E.	Trefgarne, L.
Kitchener, E.	Trenchard, V.
Lane-Fox, B.	Trumpington, B.
Lauderdale, E.	Tryon, L.
Lawrence, L.	Vaux of Harrowden, L.
Long, V.	Vickers, B.
Loudoun, C.	Vivian, L.
Lucas of Chilworth, L.	Waldegrave, E.
Luke, L.	Westbury, L.
Lyell, L.	Whitelaw, V.
McFadzean, L.	Wise. L.

Resolved in the negative, and amendment disagreed to accordingly.

5.50 p.m.

Clause 2 agreed to.

House resumed: Bill reported without amendment.

Lord Cockfield

My Lords, I beg to move that this Report be now received.

Moved, That the Report be now received.—(Lord Cockfield.)

Lord Hughes

My Lords, if this Motion is agreed to, does it not mean that there will be no Report stage on this Bill?

Lord Denham

Yes, my Lords, that is right.

Lord Hughes

I do not think we should accept that.

The Chairman of Committees

The Question is, That this Report be now received?

On Question, Motion agreed to: Report received.