Lords Sitting of 2 April 1985

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Ely.

Antarctica and the Antarctic Treaty
Baroness Sharpies: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on the future of Antarctica.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, Antarctica is the only continent which has remained free from military tension and confrontation, and where international co-operation has developed and prospered. This is largely due to the effective operation of the Antarctic Treaty which has kept military conflict out of the area, set aside sovereignty disputes and claims, promoted scientific research, and protected the environment. A quarter of a century after the signature of the treaty, nations continue to accede. We remain convinced of its value and will continue to uphold it.
Baroness Sharples: My Lords, I thank my noble friend most sincerely for that very encouraging report. Does my noble friend agree that Britain shows great interest in the future of Antarctica? Will she also agree that the nearly £1 million raised in this country for the In the Footsteps of Scott Expedition, led by my stepson Robert Swan, and in which the nephew of the noble Baroness is also involved as photographer, shows what this country feels about Antarctica?
Baroness Young: My Lords, yes. I can confirm to my noble friend that we support wholeheartedly the Antarctic Treaty for the reasons that I have given; and yes I think that the expedition which is taking place is very interesting and important.
Lord Shackleton: My Lords, perhaps I may wish the stepson of the noble Baroness, Lady Sharples, all luck in his journey to the South Pole, going the hard way and pulling his sledge—I always used dogs and that was much easier. May I ask the noble Baroness whether she would arrange for the recent report to the Secretary-General of the United Nations on the workings of the Antarctic Treaty which was requested by certain nations who were critical of this treaty to be made available? Is she aware that now that 32 nations of the world have acceded to the treaty it is unquestionably the safest and best means of conserving the Antarctic and preventing undesirable exploitation? Will she note the fact that among those nations which have acceded are the Soviet Union, the United States of America, Poland, Britain, the Argentine, China, India and Papua New Guinea—indeed, the greater part of the world? Will she confirm that there has been some ill-advised
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criticism of what is the most successful treaty for peace that we have seen since the war?
Baroness Young: My Lords, I would entirely confirm what the noble Lord, Lord Shackleton, has said about the Antarctic Treaty which, as I have already indicated, we wholeheartedly support and believe to be most valuable, and which we wish to see continue. With regard to the Secretary-General's report, we have welcomed this because we feel it presents an accurate picture of the treaty workings, and it demonstrates the value and benefits of the Antarctic Treaty. The document appeared in mid-November 1984, and if it is not in the Library I am sure that a copy could be made available.
Lord Gainford: My Lords, can my noble friend the Minister say whether there is any information yet as to when any of the resources of Antarctica might be able to be tapped, if that is possible? Will Britain be able to be among the first in such a project?
Baroness Young: My Lords, I assume that my noble friend is referring to the minerals regime. The latest round of negotiations on that subject took place in Rio de Janeiro between February and March of this year, but the conclusion of the establishment of a regime is still some way off.
Lord Kennet: My Lords, can the noble Baroness confirm that so successful is the peaceful aspect of this treaty that Britain and Argentina continued to meet at meetings of the treaty organisation all the way through the war in 1982, and of course since, when they have not been able to meet in any other context?
Baroness Young: My Lords, yes, it is true that both Britain and Argentina are signatories to the treaty, and that there is scientific co-operation betweeen the parties to the treaty.
Lord Harmar-Nicholls: My Lords, is there not a lesson to be learnt from the glowing account that my noble friend has been able to give about Antarctica? That is perhaps because of the absence of people. Most troubles in the world are due to people.
Baroness Young: My Lords, it may well be, as my noble friend says, that that is one reason; but I think the serious reason is that all countries which have acceded to the treaty believe that this is an opportunity for scientific research, for the conservation of the environment of the Antarctic and for keeping it free from any military intervention. All of them are pledged to this end.
Lord Shackleton: My Lords, would the noble Baroness agree that it is a lesson for the world that although Antarctica is populated by people, they are all scientists? In regard to the question about the development of resources, is she aware that in the opinion of most experts—and the British have probably the best and most experienced scientific team—it will be many years before there will be any exploitation and that it is to be hoped that the Antarctic could be preserved entirely for conservation?
Baroness Young: My Lords, I would of course share the sentiments of the noble Lord about both scientists, and geographers, as I am married to a scientist and I am the daughter of a geographer. Regarding United Kingdom activities in Antarctica, we believe very much in the work of the British Antarctic Survey. They provide a British presence in the British Antarctic territory and conduct a very valuable scientific programme there.
Lord Shackleton: My Lords, as the father of the noble Baroness was my tutor at Oxford I hope she thinks that he did a good job.
Baroness Young: My Lords, it entirely depends on the questions which the noble Lord asks me!
Lord Kennet: My Lords, as there is no one but geographers and scientists at the North Pole either, would it not be a good thing if the civilised nations soon began to think about an international treaty to conserve the environment of that antipode?
Baroness Young: My Lords, I believe that even the noble Lord, Lord Kennet, would think that this was quite wide of the Question concerning the Antarctic.

Artificial Limbs: Importation by NHS
2.43 p.m.
Baroness Masham of Ilton: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make it possible for the NHS to import German artificial limbs for NHS patients.
The Earl of Caithness: My Lords, we have set up an independent working party, under the chairmanship of Professor Ian McColl, to review the services provided through artificial limb and appliance centres in England. We expect that its report will indicate any advantage there might be from the wider provision of artificial limbs and components made overseas.
Baroness Masham of Ilton: My Lords, I thank the Minister for that reply. Is he aware that some of the sockets made in Germany out of soft plastics relieve pain, and would he therefore not agree that a little competition within the market is a good thing?
The Earl of Caithness: My Lords, I am aware of the point concerning, sockets which relieve pain. British sockets relieve pain equally as well as German sockets. Yes, I think that competition is healthy.
Baroness Lockwood: My Lords, is the Minister aware that it is widely felt that the socketry skills in German artificial limb-making are superior to British skills? Since pain from an ill-fitting socket is one of the greatest difficulties which wearers of artificial limbs have to overcome, does the Minister not think that this matter is one of some urgency? Is he aware also that German artificial limbs are available under the
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National Health Service in Scotland and Northern Ireland but apparently not in England?
The Earl of Caithness: My Lords, in answer to the noble Baroness's first point, yes, some sockets can be ill-fitting, but this is probably due to wrong alignment and wrong fitting in the first place. We are taking steps to correct this in this country.
Lord Wells-Pestell: My Lords, is it not a mistake to have a committee merely to look into what is available in England without at the same time exploring what is available—which may be better—in other countries?
The Earl of Caithness: My Lords, I believe I am right in saying that the committee can consider a number of matters, including the wider provision of artificial limbs and components made overseas.
Lord Ennals: My Lords, while welcoming the reference made by the noble Earl to the establishment of the working party, I support the point made by my noble friend Lord Wells-Pestell, that the working party should consider every form of artificial limb. Will the noble Earl confirm that there are no difficulties about the importation of these particular devices from Germany? Will he confirm also the point made in an earlier Question, that these same artificial limbs from Germany are provided under the National Health Service in Scotland? Would it not be wrong to discriminate against England and Wales in this respect? Finally—
Lord Denham: No, my Lords. Too long!
Lord Ennals: Finally, my Lords, and without any disrespect to contractors such as Hangers, does the noble Earl not agree that it is most important to provide the best possible service, the most comfortable service, to those who have been disadvantaged by losing their limbs?
The Earl of Caithness: My Lords, I agree with the noble Lord that we should provide the best fitting service, and that is why arrangements are in hand to establish a prosthetic training school at Roehampton. It is due to open in May of this year. As to the importation of artificial limbs, a company operating from a member state of the European Community should meet no obstacles to selling its products in this country which British manufacturers do not experience.
Baroness Masham of Ilton: My Lords, is the Minister aware that we are a very big exporting nation in this field? If our products are as well made as possible, then might we not be able to export even more?
The Earl of Caithness: My Lords, it is to be hoped that that will be the case.
Lord Rugby: My Lords, may I ask the Minister if it is not the case that the Germans plastics industry is more advanced than our own? They may have a better plastic for this particular application. Perhaps that is something that could be looked into, because their

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artificial limbs do offer a better fit and are more comfortable than those produced in this country.
The Earl of Caithness: My Lords, I will pass on the noble Lord's remarks.

Police: War Duties Training
2.48 p.m.
Lord Inglewood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps are taken to train police officers of all ranks with regard to their responsibilities in the event of conventional air attack upon the United Kingdom.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, police war duties training already takes account of the effects of conventional air attack as advised by the Home Office. In addition to courses run by the police themselves, at both force and regional level, senior officers may attend seminars and courses at the Civil Defence College.
Lord Inglewood: My Lords, I thank my noble friend for that very satisfactory Answer. I should like to ask him whether he can confirm that these are not just paper plans, but that there are real things happening in this training. Further, will he confirm that, where there are no special confidential issues, the police can be an integral part of the whole plan, and not just have their own special plans?
Lord Glenarthur: Yes, my Lords. The Home Office and the staff officers to the regional police commanders regularly review the content of police civil defence training courses and the advice in the Emergency Services Circular No. 4 of 1979, as revised in 1983, to include the effects of conventional attack.
Lord Elwyn-Jones: My Lords, can the noble Lord enlighten us about the "real things" which are said to be happening in this field? This fills some of us with a certain amount of alarm and despondency.
Lord Glenarthur: My Lords, the noble and learned Lord need not feel alarmed or despondent; these are prudent measures to take.
Lord Gladwyn: My Lords, might it not be preferable for the Government to consider the constitution of some kind of home guard to cope with such emergencies; and should they not consider also the possibility of a parachute attack on these islands?
Lord Glenarthur: My Lords, there is of course the Home Service Force, but I think the noble Lord's question goes wide of the Question on the Order Paper.

Southern Lebanon: Israeli Military Action
2.50 p.m.
Lord Chelwood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what reports were received about the scale and consequences of Israel's "Iron-fist" military actions in Southern Lebanon and whether the Government's recent refusal in the United Nations to condemn them has been correctly interpreted.
Baroness Young: My Lords, we have received reports from Her Majesty's embassy in Beirut and are also aware of reports produced by the Lebanese Government, international relief organisations and the news media. In the recent debate in the United Nations Security Council we made clear our concern about these reports and our view that the Israeli forces in Lebanon must respect international law. We abstained on the draft resolution because it offered nothing to promote early Israeli withdrawal or to improve the situation in Southern Lebanon in the future.
Lord Chelwood: My Lords, is my noble friend aware of the view that Britain's abstention has done something unfortunate—that it has damaged our reputation as a trusted peace-broker in the Arab-Israeli dispute, particularly in moderate Arab eyes? In particular, I should like to ask how we are meant to square our outright and immediate condemnation of the shocking offence in South Africa a couple of weeks ago with our failure to condemn a similar instance on the same sort of scale that has occurred in Lebanese territory as a direct result of the declared policies of Israel. Is there one rule for South Africa at home and another for Israel abroad?
Baroness Young: My Lords, we have deplored the appalling violence and have said that violence and counter-violence solve nothing but only add to the tragic suffering of civilians. As regards the Security Council debate, our representative at the United Nations explained our over-riding concern that the debate should contribute to the breaking of the appalling cycle of violence in Southern Lebanon. But the Lebanese draft resolution was unhelpful; it offered nothing to promote early Israeli withdrawal or to reduce tension, and contained no constructive, forward-looking elements.
Lord Shinwell: My Lords, can the noble Baroness say why it is necessary or desirable to condemn the State of Israel for seeking to ensure its security? Is she aware—no doubt she is—that in recent months the State of Israel has lost more than 600 soldiers? It does not do that sort of thing for fun. It does it in order to protect itself against a possible enemy. There are several enemies in the Arab states and, apparently, one or two in this Assembly, I regret to say. If the noble Lord, Lord Chelwood, who often raises this matter and who seems to hate the very name of the State of Israel—
Noble Lords: Order, order!
Lord Shinwell:—is so anxious to help in the matter, why, instead of talking, does he not go there and join his friends in the PLO and do a bit of fighting?
Baroness Young: My Lords, we have welcomed Israeli assurances that they will withdraw their forces from the Lebanon and we look for their early, orderly and complete withdrawal. At the same time, we have deplored the violence in Southern Lebanon.
Lord Mayhew: My Lords, is the noble Baroness aware that this "Iron-fist" policy involves indiscriminate shooting at civilians and sometimes the killing of women and children? Is she aware that the Government's excuses for not condemning this at the Security Council were wholly unconvincing and brought no credit on themselves or the country?
Baroness Young: My Lords, the answer to the first part of the noble Lord's question is, yes, we are aware of the violence, and I have stated our reasons for our abstention at the United Nations.
The Earl of Onslow: My Lords, is my noble friend aware that the Israeli action in killing women and children has fanaticised the Shiah Moslems of Southern Lebanon in a way that, until the Israeli invasion, was not actually thought possible? Is my noble friend further aware that the Israeli behaviour, far from protecting their own security, as suggested by the noble Lord, Lord Shinwell, has in fact damaged that security by the paranoid and ruthless reaction to perfectly innocent civilians in somebody else's territory? Furthermore, can my noble friend possibly imagine what would happen if we behaved in Dundalk like the Israelis behave in Lebanon?
Baroness Young: My Lords, I hope that I have made it quite plain in what I have said that we have already condemned the appalling violence in Southern Lebanon. We believe that violence and counter-violence will solve nothing and will only add to the tragic suffering of civilians. I think I would rather not be drawn into my noble friend's other suggestion.
Lord Glenamara: My Lords, will the noble Baroness condemn and reject the suggestion of the noble Lord, Lord Chelwood, that there is any comparison between South Africa and Israel? Will she not agree that Israel's only concern is to live in peace and security so that its villages and farms in Northern Galilee can go about their business without being fired upon from over the border? Will she be very wary indeed about giving any kind of support to the Shi'ite fanatics who are simply the tools of Iran, whose purpose is to de-stabilise the whole of the Middle East.
Baroness Young: My Lords, as the noble Lord will know, the British Government's policy is to ensure Israel's right to exist; but I think I have fully explained our policy with regard to Israeli troop withdrawal in Southern Lebanon.
Lord Kennet: My Lords, the noble Baroness said that our reason for not voting on the recent United Nation's resolution was that it contained nothing to help Israel withdraw. Can she please tell the House
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what it is that the Government think that resolution ought to have contained, or could have contained, which would have made it easier for Israel to withdraw?
Baroness Young: My Lords, I do not think this is the proper forum for speculating about what might or might not have been in the United Nation's resolution. What we want to see, of course, is the early, orderly and complete withdrawal of Israeli troops.
Lord Caradon: My Lords, in view of the suffering and bloodshed on such a widespread scale, caused by the invasion, will the Minister assure us that our Government will give every support to the efforts of the United Nations to restore and maintain peace in the Lebanon and bring some comfort to those who have suffered so very severely?
Baroness Young: Yes, my Lords. We admire UNIFIL's peace-keeping efforts under difficult circumstances. We already make a substantial financial contribution to this end and provide logistic support from Cyprus.
Viscount Buckmaster: My Lords, does the noble Baroness not agree that what is required is a total withdrawal, not only military but also political—in fact, a total disengagement by Israel from every facet of Lebanese life?
Baroness Young: My Lords, I have stated the British Government's position on this matter. We look for an early and complete withdrawal of Israeli troops.
Lord Annan: My Lords, does the noble Baroness not agree that however unwise it was for the Israeli Government to advance beyond the Litani River in defence of her own kibbutzim which were being attacked from Lebanese territory, and however wrong the actions of Prime Minister Begin and Mr. Sharon in taking the advance right up to Beirut, nevertheless the Government's action in abstaining on this resolution was the right one in that it accepts that there is neither right nor wrong in many of these questions in the dispute between Israel and her neighbours?
Baroness Young: My Lords, I agree with the noble Lord, Lord Annan, that it is a very complex situation. I hope that I have set out very fully the reasons why the Government felt that it was right to abstain on that resolution.
Lord Shinwell: My Lords, may I put another question?
Noble Lords: Order!
Lord Shinwell: Thank you very much, my Lords. Has it occurred to the noble Baroness and other Members of your Lordship's House that, in the event of this country having to face aggression, we shall be compelled to do in retaliation things much worse than anything Israel has ever done? To talk about the action of Israel in comparison with others is talking in the most futile fashion. In any event, it will not be of any value. If the Middle East question is to be solved the

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only people who can solve it are the Arab states themselves. If they can agree among themselves—
Noble Lords: Order!
Lord Shinwell: My Lords, if Israel could agree with the Lebanon, if Iraq could agree with Iran, and so on, there might be a solution.
Baroness Young: My Lords, we condemned the Israeli invasion in 1982. We continue to urge an end to the occupation with the minimum of delay. We believe that delaying the full withdrawal may damage the long-term Israeli and Lebanese interests in a peaceful border.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the European Council in Brussels on 29th and 30th March. This will be followed by my noble friend Lord Brabazon of Tara who, again with the leave of the House, will repeat a Statement on the Channel fixed link.
Lerwick Harbour Order Confirmation Bill
Read a third time, and passed.
Luton Borough Council Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Insolvency Bill [H.L.]
3.1 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be futher considered on Report. —(Lord Lucas of Chilworth.)
On Question, Motion agreed to.
Clause 88 [Construction of Part II]:
The Lord Advocate (Lord Cameron of Lochbroom)The Lord Advocate (Lord Cameron of Lochbroom) moved Amendment No. 150:
Page 69, line 26, leave out ("Schedule 19 to the 1985 Act") and insert ("Part I of Schedule 5 to this Act and "preferential creditor" shall be construed accordingly")
The noble and learned Lord said: My Lords, Clause 88(3) provides a definition of various terms and phrases that are used in Part II of the Bill which relates to corporate insolvency. A "preferential debt" is there defined as:
"a debt listed in Schedule 19 to the 1985 Act".
I have explained to your Lordships that all debts which are afforded preferential status in insolvency proceedings, whether in winding up or in bankruptcy,
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will under the amendments which have already been made and which will be detailed further in Schedule 5 to the Bill be taken together. This amendment merely reflects the new approach which is being adopted dealing with preferential debts and replaces the reference to Schedule 19 to the 1985 Act with a reference to Part I of Schedule 5 to the Bill which will then apply both to a winding up and a bankruptcy. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 151:
Page 69, line 43, leave out from ("if") to end of line 2 on page 70 and insert ("it passes a resolution for voluntary winding up or an order for its winding up is made by the court at a time when it has not already gone into liquidation by passing such a resolution.")
The noble Lord said: My Lords, in various places in Part II of the Bill reference is made to a company "going into liquidation". This amendment simply clarifies for the purposes of Part II the date on which a company "goes into liquidation" where a winding-up order is made against a company which is already being wound up voluntarily. In the case where a resolution for a voluntary liquidation has been passed prior to the court making a winding-up order, the date of the liquidation will be the date the resolution was passed. In the absence of a prior resolution for a voluntary winding up, the effective date of the liquidation will be the date the court makes a winding-up order. I beg to move.
On Question, amendment agreed to.
Schedule 4 [Amendments of 1985 Act]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 152:
Page 163, line 1, at end insert—
("10A.—(1) Section 196 (payment of debts out of assets subject to a floating charge) shall be amended as follows.
(2) In subsection (2), for the words from "the relevant" to "payments" there shall be substituted the words "section (Preferential debts) of the Insolvency Act 1985 and Schedule 5 to that Act (read with Schedule 3 to the Social Security Pensions Act 1975)".
(3) For subsections (3) and (4) there shall be substituted the following subsection—
"(3) For the purposes of this section Schedule 5 to the said Act of 1985 and Schedule 3 to the said Act of 1975 shall each have effect as if—

(a) references to the relevant date were references to the date of the appointment of the receiver or the taking of possession as mentioned in subsection (1) above; and

(b) references to the company going into liquidation were references to the appointment of the receiver or the taking of possession as so mentioned." ").

The noble and learned Lord said: With permission, my Lords, I shall also speak to Amendments Nos. 153, 348 and 351.
Amendment No. 153: Page 163, line 21, at end insert—
("12A. In subsection (3) of section 463 (effect of floating charge on winding up) for the words "section 614(2)" there shall be substituted the words "section (Preferential debts) of the Insolvency Act 1985.".
12B. In subsection (6) of section 464 (ranking of floating charges) for the words "section 614(2) (preferential debts in winding up)" there shall be substituted "section (Preferential debts) of the Insolvency Act 1985.

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12C.—(1) Section 475 (priority of debts) shall be amended as follows.
(2) In subsection (2), for the words "the provisions of Part XX relating to preferential payments" there shall be substituted the words "section (Preferential debts) of the Insolvency Act 1985 and Schedule 5 to that Act (read with Schedule 3 to the Social Security Pensions Act 1975)".
(3) For subsections (3) and (4) there shall be substituted the following subsection—
"(3) For the purposes of this section Schedule 5 to the said Act of 1985 and Schedule 3 to the said Act of 1975 shall each have effect as if—

(a) references to the relevant date were references to the date of the appointment of the receiver under section 469(6) or 470(5); and

(b) references to the company going into liquidation were references to that appointment.".").

Amendment No. 348: Clause 202, page 155, line 14, leave out ("11 and ") and insert ("10A to")
Amendment No. 351: Clause 202, page 155, line 24, leave out ("paragraph") and insert ("paragraphs 12A to").
Amendments Nos. 152 and 153 are intended to have the same effect, except that the former applies in England and Wales in relation to Section 196 of the 1985 Act and the latter, by virtue of Sections 463, 464 and 475, to Scotland. Amendments Nos. 348 and 351 are consequential.
The purpose of the amendments is straightforward. They again form part of the package of amendments designed to modify the status of preferential debts. It is intended of course that Schedule 5, by virtue of amendments which we later propose, will replace Schedule 19 to the Companies Act 1985, and this will lead to harmonisation in the list of debts attracting preferential status as between insolvency and bankruptcy.
It is also necessary to amend the sections of the Companies Act to which I have already referred to apply the provisions of Schedule 5 into receivership and to specify that the relevant date for the purpose of that schedule is the date of the receiver's appointment, or, in England and Wales, that the relevant date is the date on which the chargeholder takes possession of the charged assets. No change is intended in the way in which preferential status is imported into receivership.
I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 153:
[Printed above,]
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 154:
Page 163, line 34, at end insert—
("14A. In sections 512(3), 515(5), 518(2), 622(7) and 624(7) (being provisions which refer to regulations under section 664), for the word "regulations" there shall be substituted the word "order".").
The noble and learned Lord said: My Lords, with your Lordships' permission, I shall also speak to a number of other amendments, those being Amendments Nos. 168, 248, 258, 262, 275, 280 and 323.
Amendment No. 168: Page 166, line 2, at end insert—
("28A.—(1) In subsection (1) of section 664 (power to alter monetary limits), for the words "regulations in a" there shall be substituted "order made by".
(2) For subsection (2) of that section there shall be substituted the following subsections—
"(2) No order under this section increasing or reducing any of the money sums for the time specified in section 512(2), 515(3) or 518(1)(a) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.
(3) A statutory instrument containing an order under this section, other than an order to which subsection (2) above applies, shall be subject to annulment in pursuance of a resolution of either House of Parliament." ").
Amendment No. 248: Schedule 5, page 167, line 43, leave out ("the prescribed amount") and insert ("such amount as may be prescribed by order made by the Secretary of State").
Amendment No. 258: Page 169, line 17, leave out ("(3)").
Amendment No. 262: page 169, line 37, at end insert—
("(5) An order under paragraph 6 of Part I of this Schedule may contain such transitional provisions as may appear to the Secretary of State necessary or expedient.
(6) An order under the said paragraph 6 shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
Amendment No. 275: After Clause 184, insert the following new clause:
("Orders prescribing monetary limits.
.—(1) The Secretary of State may by order prescribe amounts for the purposes of the following provisions of this Part—

(a) section 103;

(b) section 155(3);

(c) section 159(2) and (3);

(d) section 163(2);

(e) section 165(1); and

(f) section 166(2);

and references in this Part to the amount prescribed tar the purposes of any of those provisions, and references in those provisions to the prescribed amount, shall be construed accordingly.
(2) An order under this section may contain such transitional provisions as may appear to the Secretary of State necessary or expedient.
(3) An order under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
Amendment No. 280: Clause 186, page 144, line 40, after ("means") insert ("(subject to section (Orders prescribing monetary limits) above)").
Amendment No. 323: Schedule 9, page 191, line 17, column 3, at end insert ("and the words "and paragraph 12 of Schedule 19" ").
These amendments are closely connected to Amendment No. 154. The purpose of this group of amendments is to achieve a rationalisation of various monetary limits contained in the Bill and in the Companies Act 1985.
At present certain sections of the Companies Act refer, in connection with relatively minor matters, to specified monetary limits. It is necessary to amend these sums from time to time to take account of changes in monetary values and they may at present be altered by regulations pursuant to Section 664 of the 1985 Act. Such regulations require affirmative resolutions by virtue of subsection (2) of that section. However, the provisions in Part III of the Bill governing procedures for personal bankruptcy, which are comparable to these Companies Act provisions, will be alterable by a statutory instrument, subject to the negative resolution procedure.
To ensure compatibility between the bankruptcy and winding-up codes, the proposed amendments to Schedule 4 provide that the money sums specified in

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Sections 622 and 624 of the Companies Act and in paragraph 6 of Schedule 5 to the Bill will, in future, be alterable by the Secretary of State by order made by statutory instrument which will be subject to the negative resolution procedure. The sums specified in Sections 512, 515 and 518 of the 1985 Act will be alterable by order, but, in view of their importance, and in line with the corresponding provisions in the Bill, they will be alterable by order subject to affirmative resolution.
The clauses of the Bill listed in Amendment No. 275 all contain the monetary limits which are under the Bill as drafted to be prescribed in the rules. It is considered that these, too, would be more conveniently dealt with by the Secretary of State in an order made by statutory instrument, as they are now under the existing provisions of Section 1 and Schedule 1 to the Insolvency Act 1976.
The remaining amendments are purely consequential on these main amendments. My Lords, I beg to move.
Lord Bruce of Donington: My Lords, I am grateful to the noble and learned Lord for having explained these various amendments and their association one with another. However, I observe that at the conclusion of Amendment No. 275, to which the noble Lord has referred, it says that the statutory instrument
"shall be subject to annulment in pursuance of a resolution of either House of Parliament".
That seems to be something rather new that has crept in here, because normally under the negative resolution procedure the provisions go through both Houses, or should go through both Houses. Can the noble and learned Lord explain why the normal negative resolution procedure should not be followed in these cases? Will he also explain why some should go through under the positive resolution procedure—that is to say, by approval of the instruments—and others should be by negative resolution procedure? Will the noble and learned Lord explain why he thinks that some should still continue to go by the rules? It seems that we are adopting three different methods here without having any particular distinction or any explanation for the order of priority accorded to these various instruments to which the noble and learned Lord has referred.
Lord Cameron of Lochbroom: My Lords, with leave, perhaps I should answer simply to say that, as I think I explained in what I said at the outset, there is a division made in the use of resolutions of the House by virtue of the importance, or lesser importance, of the limits in the places where they occur. The matter of the limits which are presently prescribed in the rules is of course being brought back to be dealt with by the Secretary of State under an order made by statutory instrument.
So far as the question of the procedures of both Houses is concerned, obviously I can say no more. I understand these instruments will go through both Houses. This is simply a matter of drafting, and, as I think the noble Lord opposite has already indicated, it is a method of drafting which has been employed elsewhere. I trust that that will at least give some
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explanation of the points which were raised by the noble Lord.
Lord Bruce of Donington: My Lords, I am grateful to the noble Lord. This is not a matter with which your Lordships should be troubled. It is a matter of detail which we can safely leave for consideration in another place.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 155:
[Printed earlier: col. 52.]
The noble and learned Lord said: My Lords, perhaps I may deal with Amendments Nos. 155 and 156. Amendment No. 155 has already been considered, and I therefore beg to move it now.
Lord Bruce of Donington: My Lords, I accept the position that the noble and learned Lord has set out in respect of Amendment No. 156. It might perhaps be for his convenience to note that Amendments Nos. 157 to 166 have already been considered.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 156 to 165:
[Printed earlier: cols. 52–53.]
The noble and learned Lord said: My Lords, I am grateful to the noble Lord, Lord Bruce. With the leave of the House, perhaps I may now deal with Amendments Nos. 156 to 165 en bloc. May I explain that they arise out of Amendment No. 21?
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 166:
[Printed earlier: 1/4/85, col. 53.]
The noble and learned Lord said: My Lords, my noble friend Lord Lucas dealt with this when speaking to Amendment No. 93. I beg to move.
On Question, amendment agreed to.
3.15 p.m.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 167:
Page 165, line 5, leave out paragraph 24.
The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 130, as an amendment consequential upon that matter. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 168:
[Printed earlier: col. 125.]
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 154.1 beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 169:
Page 166, line 10, leave out paragraph 31.
The noble and learned Lord said: My Lords, paragraph 31 of Schedule 4 to the Bill provides that where a winding-up order is made immediately upon the discharge of an administration order the relevant date for the purpose of calculating any preferential claims payable in the liquidation is to be the date of the making of the administration order and not the date of the winding-up order. Following the harmonisation of both individual and corporate insolvency codes as regards preferential debts in Schedule 5 to the Bill, the reference to the relevant date in this instance in Schedule 4 is to be deleted and it will be re-stated in Schedule 5 by way of Amendment No. 253.
Amendment No. 253: Schedule 5, page 168, line 10, at beginning insert—
("In this Schedule "the debtor"—

(a) in relation to a winding up, means the company which is being wound up; and

(b) in relation to the distribution of a bankrupt's estate, means the bankrupt.

(2) In relation to a company, the references in this Schedule to the relevant date are references—

(a) where the company is being wound up by the court and the winding-up order was made immediately upon the discharge of an administration order, to the date of the making of the administration order;

(b) in a case not falling within paragraph (a) above where the company is being wound up by the court and had not commenced to be wound up voluntarily before the date of the making of the winding-up order, to the date of the appointment (or first appointment) of a provisional liquidator or, if no such appointment has been made, to the date of the making of the winding-up order; and

(c) in a case not falling within paragraph (a) or (b) above, to the date of the passing of the resolution for the winding up of the company.

(3) ")
That being so, and taking this amendment along with Amendment No. 253, I beg to move.
On Question, amendment agreed to.
Clause 95 [Decision of creditors' meeting]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 170:
Page 75, line 37, at end insert—
("(9) In this section "preferential debt" means any of the debts which in the distribution of a bankrupts' estate are, under section 145 below and Schedule 5 to this Act (read with Schedule 3 to the Social Security Pensions Act 1975), to be paid in priority to all other debts, and "preferential creditor" shall be construed accordingly.
(10) For the purposes of this section Schedule 5 to this Act and Schedule 3 to the said Act of 1975 shall each have effect, in relation to a debtor who is not an undischarged bankrupt, as if—

(a) references to the relevant date were references to the date or the interim order made with respect to his proposal; and

(b) references to the debtor being adjudged bankrupt were references to the making of that order.")

The noble and learned Lord said: My Lords, Clauses 92 to 100 of this Bill allow debtors to enter into voluntary arrangements with their creditors as an alternative to bankruptcy. The debtors' proposals will have to provide for the payment of certain creditors in priority to others and the proposed amendment stipulates that these preferential debts will be the same as in a bankruptcy. The amendment also specifies that the relevant date for these dates is the date of the interim order, which, as noble Lords may recall, is the
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order made by the court to afford the debtor time and protection from his creditors while his proposals are formulated. I beg to move.
On Question, amendment agreed to.
Clause 99 [Preliminary.]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 171:
Page 79, line 17, after ("is") insert ("domiciled in England and Wales, is").
The noble Lord said: My Lords, with permission, I shall speak also to Amendment No. 173, which makes a minor drafting amendment to Clause 99.
Amendment No. 173: Page 79, line 27, leave out second ("a").
Section 4(1) of the Bankruptcy Act 1914 enables the presentation of a bankruptcy petition against a person who is domiciled in England and Wales. That ground is not presently included in Clause 99. Representation has been made that if a debtor domiciled in England and Wales incurs debts but nevertheless remains abroad for more than 12 months he can avoid an attempt by his creditors to recover their claims through bankruptcy proceedings. We agree that the clause is too restrictive. This amendment therefore reintroduces the domicile ground for the presentation of a bankruptcy petition to enable creditors to pursue their claims where the debtor, though domiciled in England and Wales, seeks to avoid his creditors by remaining abroad.
We carefully considered amendments tabled during Committee, which would have lengthened the period of residence and business qualifications under this Clause from one to three years. However, we have concluded that the reintroduction of a domicile ground will be sufficient to restore the scope of the Bill to that of the present legislation. In addition, the term "carrying on business" has been construed widely by the courts and even if a debtor's business has ceased some years before he is still regarded as carrying on business for the purposes of bankruptcy jurisdiction so long as debts of the business are still outstanding in England and Wales. We therefore feel that no lengthening of the period of 12 months is necessary.
Amendment No. 173 makes a minor drafting improvement to the Bill, in that Clause 99(3) expands upon the meaning of the expression "carried on business" as used in Clause 99(2). This is concerned with the concept of carrying on business generally rather than the carrying on of a business. The purpose of the amendment is to achieve consistency between subsections (2) and (3) of Clause 99. I beg to move.
On Question, amendment agreed to.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 172:
Page 79, line 19, leave out ("twelve months") and insert ("three years").
The noble Lord said: My Lords, the noble Lord, Lord Lucas of Chilworth, in talking on Amendments Nos. 171 and 173, has touched on the gound that is dealt with in this amendment. He seems to think that the change in the domiciliary rules is quite satisfactory and that the time should remain at 12 months. I venture to suggest that this is still a matter of some legal dubiety and that it would be far better to extend

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the period of 12 months to three years. Indeed, this is what the amendment seeks to do. It extends the time during which a bankruptcy petition could be presented against a person who had left this country from one year to three years. A director of a company who has left the country when the company collapses and who is later found guilty of wrongful or fraudulent trading or misfeasance often cannot be made bankrupt because his liability is not established until more than a year after his departure.
I would venture to give a degree of personal experience in matters of this kind. When one investigates the affairs of a company that has gone into liquidation, particularly where there are allegations of fraud, the allegations are not always justified but frequently they are. They warrant detailed investigation. When a liquidation takes place, anyone who investigates the state of affairs of a particular company or indeed the conduct of directors is usually confronted with crates or tea-chests full of documents, often all muddled together. One has to examine them without enlightenment from people who could explain the various documents to the investigators because they have long since departed.
In practice, therefore, the investigation of a company, based as it is upon a minute examination of the various documentation that is left behind, takes a very long time. In some cases, it has to be accompanied by detailed investigation, often involving the investigator, who feels perhaps that this is work more traditionally associated with the role of a private detective, in simply finding our what the director has done or is alleged to have done. This often needs interrogation and a whole series of personal inquiries which, in my experience, particularly where the direcor has gone abroad, takes rather longer than a year even with the best will in the world and even with the use of the most competent staff to carry out detailed investigative work.
In my personal experience, a year is not always adequate. I do not believe that there is anything to be lost by extending the period in respect of a director, in these circumstances, who goes abroad. In the small and fair district of Marbella in Spain, there will be many smiling faces if this amendment is resisted by the Government. This is not a contentious political matter. I suggest most earnestly that the Government accept the amendment that I have ventured to lay before your Lordships and that, so far as I am capable, I have explained to you. I beg to move.
Lord Denning: My Lords, I support the amendment. We now know what happens in this country. People may be fraudulent or they may be competent in getting hold of other people's assets. They do not stay in this country to face the music. They fly abroad, to Spain of wherever it may be, to try to escape the consequences. One may find left behind all sorts of files, documents and papers whether in the director's office or hidden elsewhere. It may well take more than a year to catch up with them. There is no reason whatever why the period should not be extended. The time should not be limited to 12 months. Even if it takes three years, one should try to catch up with them. I certainly support the amendment.
Lord Lucas of Chilworth: My Lords. I touched upon this during our short discussion on the previous amendment. I said that we had carefully considered an amendment put down at Committee stage, which was identical to this. We concluded that the reintroduction of the domicile ground now achieved by Amendment No. 171 that had been removed from the Bill by virtue of the repeal of the 1914 Bankruptcy Act would be sufficient to restore the scope of that Bill to the present legislation.
In addition, as I previously mentioned, the term "carrying on business" has been construed widely by the courts and even if a debtor's business has ceased some years before, he is still regarded as carrying on business for the purposes of bankruptcy jurisdiction so long as debts of the business are still outstanding in England and Wales. The relevant judicial authorities for this wide interpretation of the expression "carrying on business" are to be found in the 1950 case of Theophile v. the Solicitor-General and the 1962 case of Re Bird.
I bow very much to the experience of the noble Lord, Lord Bruce of Donington, and always pay heed to what the noble and learned Lord, Lord Denning, has to say. For a moment, however, I should like to turn to the example that the noble Lord, Lord Bruce of Donington, gave. Even though a director had been out of the country for more than a year, we consider that, in many cases, the director will remain domiciled in England and Wales and still therefore subject to the bankruptcy jurisdiction. We feel that there is no necessity for a lengthening of the 12-month period. But, in the circumstances that have been raised by both the noble Lord and by the noble and learned Lord, I am prepared to have a further look at the matter to see if any lengthening of the period will add anything at all to the extension of jurisdictional grounds already achieved by the insertion into the clause of Amendment No. 171.
We have received representations from interested parties on this and similar points in connection with Clause 99. We shall be happy to review the present clause. With that assurance, I hope that the noble Lord will feel able to withdraw the amendment this afternoon.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for his consideration of the matter. Perhaps while he is considering it, he may take into account some potential cases—I cannot refer to them in any other terms—of certain members of leading insurance syndicates who have gone abroad and no prosecution has yet been brought against them despite questions that have been asked in the House. Will the noble Lord give consideration to the question whether already, since two years have elapsed since their association of operations, if bankruptcy proceedings were brought against them, they could possibly succeed if the existing clause remains in operation? I invite the noble Lord to consider that among other things when he gives consideration to the amendment. In the meantime, in view of the noble Lord's assurance, I ask the leave of the House to withdraw the amendment.
Amendment, by leave, withdrawn.
3.30 p.m.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 173:
[Printed earlier: col. 130.]
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 171 earlier. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 174:
Page 79, line 36, at end insert—
("(5) The court shall have a general power, if it appears to it appropriate to do so on the grounds that there has been a contravention of the rules or for any other reason, to dismiss a bankruptcy petition or to stay proceedings on such a petition; and, where it stays proceedings on a bankruptcy petition, it may do so on such terms and conditions as it thinks fit.").
The noble Lord said: My Lords, it may for the convenience of the House in dealing with this amendment that I also speak to Amendments Nos. 176 to 180.
Amendment No 176: Clause 101, page 82, line 13, leave out subsection (5).
Amendment No 177: Page 81, line 39, leave out ("Without prejudice to subsection (5) below").
Amendment No. 178: Clause 103, page 82, line 36, at beginning insert ("Subject to subsection (5) below,").
Amendment No. 179:Page 82, line 37, leave out ("make a bankruptcy order unless") and insert ("not make a bankruptcy order if").
Amendment No. 180: Page 83, line 8, leave out ("shall") and insert ("may").
These amendments amend Clauses 101 and 103, and are closely connected. They are desirable to ensure that the court in dealing with all bankruptcy petitions which come before it is given the necessary discretion to dismiss the petition or to stay the proceedings if it thinks it appropriate to do so. Such a discretion is conferred on the court at present by Clause 101(5) of the Bill, but only in the case of a creditor's petition. Under Clause 99, however, petitions may be presented not only by creditors but by the debtor himself. Furthermore, petitions can be presented for default in connection with a voluntary arrangement under Chapter I of Part III of the Bill. We consider it important that the court have the necessary discretion in all these cases.
Amendment No. 180 also makes it clear that in any case where the court would not feel it appropriate to make a bankruptcy order it is not to be under an obligation to refer the debtor to an insolvency practitioner for consideration of the prospect of a voluntary arrangement. The court will be entitled to use its discretion in making such a referral. I beg to move these amendments.
On Question, amendment agreed to.
Clause 100 [Creditor's petition]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 175:
Page 80, line 7, after ("payable") insert ("to the petitioning creditor, or one or more of the petitioning creditors,").
The noble Lord said: My Lords, the provisions of Clause 100(2)(b) as they presently stand could be
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interpreted to mean that as long as a creditor is aware of other debts which, aggregated with his own, equal or exceed the bankruptcy level, then he may present a bankruptcy petition, irrespective of the fact that his claim does not amount to the requisite sum. The other creditors need not join in the petition. We do not consider it desirable that a creditor should be able to petition in respect of another's debt. This is not in accordance with the existing law, whereby petitioning creditors may only petition in respect of their own debts. The relevant provision is to be found in Section 4(1)(a) of the Bankruptcy Act 1914. These amendments clarify the position and restate the substance of the present law. I trust therefore that they will be acceptable to your Lordships.
On Question, amendment agreed to.

European Council 29–30 March
3.35 p.m.
The Lord President of the Council (Viscount Whitelaw): My Lords, with the leave of the House, I shall now repeat a Statement on the European Council which is being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement about the European Council held in Brussels on 29–30 March, at which I was accompanied by my right honourable and learned friend the Foreign and Commonwealth Secretary. I have arranged for the conclusions of the council to be placed in the Library of the House.
"This European Council effectively completed the negotiations for the entry of Spain and Portugal into the European Community. The Treaty of Accession will soon be submitted to the twelve national parliaments for ratification, opening the way for the entry of Spain and Portugal on 1st January 1986.
"The terms are very satisfactory for the United Kingdom. In particular, there will be quicker dismantling by Spain in the early years of its high tariffs on certain industrial goods, including cars, to the benefit of the United Kingdom exporters. There will be no detriment to our fishing industry: no reductions in the important quotas available to British fishermen and no new access for Spanish fishing boats to the North Sea fishing grounds. There will be a full opportunity for the House to consider these points when the Act of Accession is presented for ratification.
"The European Council also agreed on the financing of what are called integrated Mediterranean programmes over a period of seven years to help the Mediterranean member states adjust to the effects of enlargement on their own economies. A total additional amount of 1.6 billion ecu [about £950 million] will be made available for these programmes. As a result of the Fontainebleau agreement, the United Kingdom financing share will be some 7 per cent. less than £10 million a year. The poorer Mediterranean areas will also benefit

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from the structural funds and from 2.5 billion ecu of loans from the European Investment Bank.
"We had a full discussion of the economic situation with particular reference to the creation of enterprise and jobs and the achievement of a single large market by 1992. In the course of this I proposed, first, that the European Council should cut the burden of bureaucracy on businesses by reducing the number of existing Community rules and regulations; and should scrutinise any proposed new community legislation with regard to its effect on business. Secondly, we were all greatly concerned to moderate labour costs and remove restrictive practices, especially with regard to new technology.
"The United Kingdom's initiative was widely welcomed in the European Council and is reflected in the conclusions. The Commission has been asked to follow it through.
"We also broadly endorsed the first report of the Committee on Citizens' Europe. This contains a number of specific proposals for easier movement across frontiers, higher travellers' allowances, right of residence linked to proof of adequate resources, easier arrangements for road transport, and mutual recognition of qualifications, all of them designed to bring advantages to individual citizens. With regard to frontiers, I made absolutely clear the need to maintain strong controls against drugs, terrorism and illegal immigration; also that the completion of the single internal market does not imply tax harmonisation.
"The Council agreed the text of the revised decision on the own resources of the Community and I am arranging for copies to be made available in the Library. It will be submitted to national parliaments for ratification. This text provides for new own resources generally to be available from 1st January 1986. It also puts into law the Fontainebleau arrangements for abating the United Kingdom's contributions by reducing the amount of VAT paid over to the Community. It also includes the United Kingdom's 1,000 million ecu abatement for 1984, which will become available after ratification of this decision and without waiting for any general increase in the Community's own resources.
"The European Council discussed the measures to strengthen technology in the Community, in particular through mutual recognition of industrial standards and the opening up of public procurement to competitive tender from firms across the Community.
"We also discussed East-West relations, welcoming the opening of the Geneva negotiations, and exchanged views on the Middle East, Latin America and South Africa, where we expressed grave concern about recent events.
"This European Council marks the conclusion of a period of important decisions in the European Community: agreement on the entry of Spain and Portugal; agreement on the implementation of the favourable budgetary arrangements for the United Kingdom negotiated at Fontainebleau: agreement on the Integrated Mediterranean Programmes;
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progress on the environment, including the recent agreement on vehicle emissions; and the launching of an initiative truly to open up the common market and to reduce the burdens on business as a means of stimulating the creation of more jobs.
"It is a particular source of satisfaction to us all that 40 years after the end of the Second World War the European Community has further demonstrated in this impressive way its capacity to resolve its problems and move forward in a spirit of partnership and co-operation."
My Lords, that concludes the Statement.
Lord Elwyn-Jones: My Lords, we are grateful to the Leader of the House for repeating the Prime Minister's Statement. We on these Benches welcome in principle the enlargement of the European Community and we wish Spain and Portugal all success in their membership of it. However, if we are to proceed with realism, a number of important questions arise which I venture to suggest are not clarified in the Statement.
Is it not the case that both Spain and Portugal are far poorer than the other EEC countries? Will not that fact in due course accentuate the financial difficulties that we already face as a result of our own membership of the Community? As regards the 1,000 million ecus, which I take it is the old 600 million—the much heralded figure about which we have heard before—and the rebate which was promised to Britain at Fontainebleau, is it not now conditional upon a general agreement to increase the EEC's own resources and ultimately tied to our own increasing payments? In the long run, therefore, will we not be paying for our own rebate ourselves?
Will not enlargement of the EEC increase the already runaway spending on agriculture which already takes up 74 per cent. of the budget? The Statement is totally silent on this critical matter. Is there any guarantee that that percentage will be reduced in the 1985 budget? Will the grain, butter and other food mountains continue to grow while the world's starving millions continue to die of hunger?
The Statement is wholly silent, except once by inference, on unemployment. What practical steps were proposed and will result from the summit meetings about the overwhelming problems of European unemployment? Is it not now the case that there are almost 14 million people out of work in the EEC and that about two in every five of them are young men and women under 25 years of age? Why have we had only vague and, indeed, totally non-commital statements from the summit meetings about this matter?
As half of Europe's top 15 poorest regions are in the United Kingdom why were we not able to extract special help for them as other countries, such as Greece, were able to do for their impoverished regions?
Finally, on a constitutional matter, will the Leader of the House clarify the developing position on majority voting in the enlarged EEC?
Baroness Seear: My Lords, we on these Benches also wish to thank the Leader of the House for repeating the Statement and to congratulate the Government very warmly on the conclusion of the negotiations to

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get Spain and Portugal into the Community. There were signs that that might be unduly delayed and all true Europeans will receive with the greatest delight the fact that the Community is to be enlarged in this way.
It seems to me that we tend to take rather lightly the great achievement of drawing into a democratic community in Europe two new members both of whom not so very long ago would not have been able to take their place in a democratic community. Politically, this is a great and most desirable achievement. We on these Benches take the view that these political considerations—considerations, after all, which inspired the founders of the European Community—are of much greater importance than the minor issues, important though they are in their own place, which have been raised from the Labour Benches. Not for one moment do I deny the importance of the unemployment issue; of course I do not do so. We on these Benches have always given it the greatest attention. However, we believe that the developments that are now coming forward as a result of this will, in fact, in the longer run give very considerable help to the unemployed if we are prepared to take advantage of a genuine common market—and we have waited far too long for the Community to become a genuine market.
We welcome the opening up that is promised as a result of these negotiations. In particular, we should like to impress the importance of removing the obstacles to transport, which is one of the matters which has held up the economic benefits of the Community. We are very glad indeed that it has been possible to make the fishery arrangements such that the very long, drawn-out and difficult negotiations which had been completed relatively recently, and which have satisfied our fishermen, have not been disturbed. That in itself is a very considerable achievement. We welcome very much the speeding up of the recognition of qualifications throughout the Community.
All these matters will help very considerably indeed with employment issues. Perhaps we may hope that this is the end of the phase in which there has been a great deal of rather niggling and quarrelsome negotiation, and the beginning of a new phase of a strong Community able to advance the interests of all its members, and that that will have a political as well as an economic aspect. Perhaps as a start we may ask the Government yet again to reconsider whether it is not time to become a full member of the EMS. We hope that the Government will give favourable consideration to a much wider use of majority voting without which the Community cannot become a reality.
Viscount Whitelaw: My Lords, I am grateful to the noble and learned Lord, Lord Elwyn-Jones, and to the noble Baroness, Lady Seear, for their comments on the Statement. Both the noble and learned Lord and the noble Baroness welcomed the enlargement. I do not think that I would be unduly churlish if I said that I thought that the welcome of the noble Baroness was somewhat more full-hearted than that given by the noble and learned Lord, and I understand that completely. The noble Baroness said that the enlargement was a great achievement. I believe that it is. No
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one—and here I would accept what the noble and learned Lord has said—would imagine that this can be achieved without a considerable number of problems because, of course, it is true that the integration of Spain and Portugal into the wider Community, bearing in mind the particular economies of Spa in and Portugal, will create problems. However, that is all the more reason for saying that it was a great achievement to have reached an agreement at this stage on the enlargement, and an agreement, as the noble Baroness, Lady Seear, has said, which safeguards the position of our fishermen, which I think is extremely important in connection with Spain. I am grateful to the noble Baroness for what she said.
I also note that she said that she hoped this was the end of quarrelsome and tiresome negotiations. I think I can say to her that certainly the arguments that my right honourable friend the Prime Minister and my right honourable and learned friend the Foreign Secretary have conducted over the recent negotiations have borne fruit in that Britain's position has been properly safeguarded, and I would agree with her in hoping that we can look forward to a more constructive period in the future, now that I think that one is entitled to say that some of the very fair requirements of this country have indeed been met.
As for our membership of the EMS, I am always instructed that it is correct to say on behalf of the Treasury that we will join at the most appropriate time; and I am sure that that is the right thing to say. In regard to the majority voting, I am grateful for what the noble Baroness said about qualifications. At this stage, I have nothing more to say about majority voting.
The noble and learned Lord, Lord Elwyn-Jones, suggested that Spain and Portugal were far poorer. But I think the arrangements with Spain, particularly in regard to her exports to this country and the opportunities we shall have to get into the Spanish market, are important for this country, particularly for the motor industry. There is certainly the problem of Portugese agriculture, which will have to be phased in over a longer period. I do not think that anyone denies that that is indeed arranged in the agreement.
In relation to the runaway expenditure on agriculture, one of the problems over recent times—almost more than anything else—has certainly been the problem of the Mediterranean countries. This, to some extent at least, is taken care of in the agreement. The noble and learned Lord referred to the position on unemployment. I think it is fair to say that my right honourable friend the Prime Minister made clear many of the needs which in Europe are required to be met to provide a more successful employment position for all the countries concerned; that is reflected in the Statement and indeed in the Community.
The noble and learned Lord referred to the United Kingdom's position and its benefits from the Community's structural fund. I think it is fair to point out that over the past year the regional fund, for example, has contributed £1,236 million to the United Kingdom. The social fund has contributed £1,245 million to the United Kingdom. The commitment to the United Kingdom in 1984 for the social fund is £352·8 million, and for the regional fund £371 million. These are surely important figures, and I am

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sure that the noble and learned Lord will agree that they are very valuable.
Lord Boyd-Carpenter: My Lords, I should like to ask my noble friend one question arising out of what I know the House realises is an historic Statement and one which is of particular appeal to some of us in as much as it brings into the Community Portugal, our oldest ally. My question relates to the problem posed by the size—larger, I understand, than that of the whole of the rest of the Community put together—of the Spanish fishing fleet.
My noble friend was explicit that the Spanish fishing fleet would not be allowed to fish in the North Sea. Can he clear up whether other important fishing grounds for the British fishing industry, such as those off the West Coast of Scotland or off South-West England, will be open to the competition of this enormous fishing fleet? In particular, could he say what waters are being opened to the Spanish fishing fleet which were not opened to them prior to the conclusion of this agreement?
Viscount Whitelaw: My Lords, I believe I can go some way to satisfy my noble friend, though perhaps not the whole way. I understand that the Spanish vessels will be subject to strict limits on the number of boats-150 actually fishing at any time. There will be strict reporting and monitoring requirements, and access only to those species controlled by TAC and quota under the CFP for which Spain receives quotas under the EEC/Spain fisheries agreement. I understand that these refer to some fish with which I am not particularly well acquainted: hake, monk, megrim and anchovy. There will be no access to the North Sea. All this is to endure for the full duration of the CFP; that is, until 2002.
The Irish box—this is why I cannot go further for my noble friend—the exclusion zone, including the Irish and Celtic seas, is to last for 10 years. British fishing effort is not to be affected. Arrangements for Spanish fishing are to be reviewed in 1993 after existing mid-term review of the common fisheries policy in 1992, but no change will take place without the council's agreement. I think that, looked at on the whole, although it may not satisfy my noble friend in all particulars, this represents a pretty satisfactory agreement from the point of view of our fishermen.
3.55 p.m.
Lord Bruce of Donington: My Lords, will the noble Viscount, at some time—not necessarily this afternoon—publish the calculations, the actual figures, which lead to the statement he has made that as a result of the Fontainebleau agreement less than 10 million extra expenditure a year will be incurred by the Treasury in respect of the admission of Greece? In order that the matter may be reviewed in its correct perspective and in view of the fact that, as he has now said, matters are settled, will he publish a revised Treasury estimate as to what the total net burden on the British taxpayer will be for the year 1985, following not only these negotiations but the Fontainebleau agreements, so that we all know exactly where we stand financially and may judge whether or
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not we are getting, to use the Government's own words, value for money?
Will the noble Viscount confirm that owing to the provisions of Article 2 of the Fontainebleau agreement it will no longer be possible to apply the Luxembourg convention veto on agricultural expenditure? In view of the application now of the qualified majority it will be quite impossible for the United Kingdom to exercise any decisive influence in the control of agricultural expenditure in the Community.
Viscount Whitelaw: My Lords, on the first two points that the noble Lord raises about publishing various figures, of course I shall consult with my right honourable friend the Chancellor of the Exchequer, but if the Statement made by my right honourable friend the Prime Minister says,
"As a result of the Fontainebleau agreement, the United Kingdom financing share will be some 7 per cent., less than million a year",
I would hope that in fact the noble Lord would accept that.
I can only tell your Lordships that it has been put in my right honourable friend's Statement. The noble Lord will probably know as well as I do, in regard to Governments, that something would not be put in the Statement unless it had been extremely carefully checked. Therefore, I do not see why it should be reinforced by another statement of the finances. As for the noble Lord's second point, I cannot answer that. I am sure it is a trick question. I think the greatest answer, in answer to trick questions—
Lord Stoddart of Swindon: Tut, tut.
Viscount Whitelaw: My Lords, the noble Lord "Tut, tuts", but the fact of the matter is that a detailed question about qualified voting and all the rest is of course a trick question, and I have been long enough in this game not to respond to trick questions.
Lord Broxbourne: My Lords, in regard to the constitutional point raised at the end of the questions put by the noble and learned Lord opposite will my noble friend confirm that any substitution of majority voting for unanimity would require amendment of the treaty in respect of the articles which call for unanimity, and that that would require the appropriate procedures prescribed by the treaty?
Viscount Whitelaw: My Lords, I understand that my noble friend, who is a great expert in these matters, is quite correct. That is the position, as I understand it, and it has certainly been reinforced by my noble friend's statement.
Lord Lloyd of Kilgerran: My Lords, perhaps I may presume to preface my two simple questions to the noble Viscount the Leader of the House by supporting the congratulations offered by my Leader on these Benches to the noble Viscount and to the Prime Minister on this Statement. However, so far as I understood it, the Statement referred, perhaps indirectly, to two important matters relating to restrictive practices, and the noble Viscount said that the observations and the initiative of the United

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Kingdom delegation were well recognised and supported in these matters.
Secondly the Statement referred, perhaps generally, to the strength of technology. I had the privilege of being a member of an EEC working party know as CORDI WP 6, in which we considered the difficulties arising from restrictive practices arising from Articles 85 and 86 of the Rome Treaty. I fully realise that I have not given notice to the noble Viscount of my questions for, unhappily, I did not previously know the contents of the Statement. But there was this reference to restrictive practices, and restrictive practices have a very important impact upon international trade in the Community at present. The committee on which I had the privilege to serve made certain recommendations in referring to the strength of technology. I was a founder member of a parliamentary information technology committee on the matter, and strength of technology is of great importance to the industry of this country. Perhaps the noble Viscount may be able to satisfy me in due course if not today, on these highly important matters of concern to the industry of the United Kingdom.
Viscount Whitelaw: My Lords, I am grateful to the noble Lord. I can best satisfy him by repeating what the Statement said about the strength of technology:
"The European Council discussed the measures to strengthen technology in the Community, in particular through mutual recognition of industrial standards and the opening up of public procurement to competitive tender from firms across the Community".
That goes some way towards recognising both the points that the noble Lord has made.
Lord Lloyd of Kilgerran: My Lords, I am much obliged to the noble Viscount.
Lord Bruce of Donington: My Lords, I must apologise to the noble Viscount for coming back again on this, but he did not answer either of my questions. My questions were not trick questions, unless the Government would like to revise their definition of a trick question by defining it as a question that "we do not want to answer".
The noble Viscount, as a distinguished Member of Her Majesty's Government, knows well the detailed contents of Article 2 of the Fontainebleau agreement. If he does not, he ought to; if he does, he ought to be able to inform the House. Moreover, unless there is anything particularly suspicious about the £10 million figure which he gave, what is the objection to publishing the calculation?
Viscount Whitelaw: My Lords, on the second point that the noble Lord made, I said that I would discuss with my right honourable friend the Chancellor of the Exchequer whether it was necessary to publish any more. It is fair to say that if the Statement says in categoric terms that that is the position, quite frankly, it is the position. I shall read it again:
"As a result of the Fontainebleau agreement, the United Kingdom financing share will be some 7 per cent., less than £10 million a year".
That is a pretty categoric statement. I cannot prove it, and, if I may humbly say so to the noble Lord, nor can he; but if that is what is said in the Statement, it is plain
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and clear and I do not think it should be questioned. However, if any further information can be provided, naturally I will discuss it with the Chancellor of the Exchequer.
On the other point, I think that I answered my noble friend Lord Broxbourne very plainly about the majority voting and unanimity, which is what I understood the noble Lord was asking about. If it was not, I am sorry, but I thought I made it clear that that was exactly the position as stated by my noble friend. I still do not quite see what further the noble Lord requires of me. If I was a little flippant in saying that it was a trick question, I would say that I have over a period of time become used to questions about particular articles and the rest being at least in the nature of showing that the questioner knows more about it than does the answerer, and in this case it may very well be true.

Insolvency Bill [H.L.]
4.5 p.m.
Consideration of amendments on Report resumed.
Clause 101 [Proceedings on creditor's petition]
The Deputy Speaker (Lord Aberdare): My Lords, the next two amendmens have been printed the wrong way round. The next amendment I have to call is Amendment No. 177.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 177:
[Printed earlier: col. 133.]
The noble Lord said: My Lords, I spoke to this amendment when we were discussing Amendment No. 174. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 176:
[Printed earlier: col. 133.]
On Question, amendment agreed to.
Clause 103 [Proceedings on debtor's petition]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 178 to 180:
[Printed earlier: col. 133.]
On Question, amendments agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 181:
Page 84, line 2, leave out from ("court") to end of line 10 and insert ("that, on any grounds existing at the time the certificate was issued, the certificate ought not to have been issued.").
The noble Lord said: My Lords, the court has a general discretion under Clause 103(6)(b) whether or not to issue a certficate of summary administration to a bankrupt even though he satisfies the criteria under Clause 103(6)(a.) In other words, even though the bankruptcy debts are less than the small bankruptcies level and the debtor has not been made bankrupt or made a composition with his creditors in the previous

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five years, the court may still not issue a certificate of summary administration if it considers it inappropriate to do so.
Because of this general discretion of the court in issuing a certificate it seems to us, on looking again at the grounds on which the court may revoke such a certificate, that the court should be given a wider discretion in deciding whether to revoke the certificate. This will ensure that the court is not unduly restricted in exercising its discretion to revoke a certificate. Under Clause 103(7) of the Bill as it stands at present the court may revoke only on the specific grounds set out in Clause 103(7)(a) and (b.)
Under the clause as it is proposed to be amended the court will be able to revoke a certificate of summary administration for any grounds existing at the time the certificate was issued, both general and specific, if it considers that the certificate ought not to have been issued. We consider it important that the court should be able to take such matters into account when deciding whether to revoke the certificate. This amendment achieves that objective. I beg to move.
On Question, amendment agreed to.
Clause 105 [Period of bankruptcy]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 182:
Page 85, line 3, after ("(3)") insert ("and section 106").
The noble Lord said: My Lords, with this amendment, with the leave of the House, I should like to speak also to Amendments Nos. 183, 187, 188 and 189, which can then be considered as a whole.
Amendment No. 183: Page 85, line 9, leave out ("and") and insert—
("(aa) in a case in which a certificate has been issued under section 103(6) above and has not been revoked, by the expiration of the period of twelve months beginning with the commencement of the bankruptcy; and").
Amendment No. 187: Clause 106, page 85, line 26, after ("above") insert ("or subsection (1A) below").
Amendment No. 188: Page 85, line 27, leave out ("five") and insert ("three").
Amendment No. 189: Page 85, line 28, at end insert—
("(1A) In a case to which paragraph (b) of section 105(2) above applies, if the court is satisfied, on the hearing of the petition or the application of the official receiver made at any time before the discharge of the bankrupt, that the conduct of the bankrupt (whether before or after the making of the order) has been such as to make it inappropriate for him to be discharged as provided by that paragraph, the court may direct that the bankrupt shall not be discharged except by an order of the court under subsection (1) above.
(1B) In a case to which paragraph (b) of section 105(2) above applies and unless a direction has been given under subsection (1A) above, the bankrupt may on the hearing of the petition or at any time thereafter apply for an order that he be discharged from the bankruptcy.
(1C) The court may on an application under subsection (1B) above make an order discharging the bankrupt if it is satisfied that the bankruptcy was not caused or substantially contributed to by any improper or imprudent conduct or want of care on the part of the bankrupt and that it is appropriate in the circumstances that he should be discharged, and the court may under this subsection make an order discharging the bankrupt immediately after the commencement of the bankruptcy.").
The noble Lord has just been giving us an example of the mind of the Government in giving further flexibility to the courts. These amendments are in the
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continuing tradition, of which the Government have given an example this afternoon, of giving more flexibility to the courts as to the timing of discharges. The effect of the amendments is as follows. Where a certificate for summary administration is issued under Section 103(6)—that is to say, a small bankruptcy order made on the debtor's petition—the period for automatic discharge is reduced to one year.
Even in the case of first bankruptcies, there are occasional cases—an example is the case of one Stern—in which it would be offensive to public notions of justice to allow an automatic discharge. The new subsection 106(1A) therefore allows the court to order that, in the exceptional cases, even a first time bankrupt should not be automatically discharged. In my view it is unlikely that the number of cases in which such an order was sought or made would be enough to add significantly to the costs of bankruptcy administration.
Conversely, there are cases in which bankruptcy has been brought about by circumstances outside the bankrupt's control and he does not deserve to be disqualified at all. To cover such cases, new subsections (1B) and (1C) allow applications for discharge in non-fault cases to be made before the expiration of the automatic period, and will even make it possible in a particularly clear case for instant discharge to be ordered, the effect of which will be to vest the bankrupt's assets in the trustee for distribution among the creditors but to excuse the bankrupt from the disqualifications suffered by an undischarged bankrupt. Logically, there may be considered to be a case for going even further and making instant discharge the norm unless the official receiver establishes blameworthy behaviour by the bankrupt. This would bring bankruptcy into line with the position of company directors following the rejection of the Government's proposals for automatic discharge. This would involve a radical departure from previous practice, however, and we are therefore proposing a more modest change in the law.
The amendments also reduce the minimum period before second bankrupts can apply for discharge to three years. Even second bankruptcies can vary considerably in blameworthiness, and there will be some cases in which discharge after three years would be appropriate. I sincerely hope the Government may give consideration to these matters and agree to the amendment that I now beg to move.
Lord Lucas of Chilworth: My Lords, I was preparing to respond to the noble Lord, Lord Bruce, with regard to this series of amendments by inviting your Lordships to consider at the same time my own Amendments Nos. 184 to 186, since there is a relationship here.
Amendment No. 184: Page 85, line 10, leave out from second ("the") to end of line 12 and insert ("relevant period.
(2A) Subject to subsection (3) below, the relevant period for the purposes of subsection (2)(b) above is—

(a) where a certificate for the summary administration of the bankrupt's estate has been issued and is not revoked before the bankrupt's discharge, the period of two years, beginning with the commencement of the bankruptcy; and

(b) in any other case, the period of three years beginning with the commencement of the bankruptcy.")

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Amendment No. 185: Page 85, line 15, leave out ("paragraph (b) of subsection (2)") and insert ("subsection (2)(b)")
Amendment No. 186: Page 85, line 17, leave out ("period specified in that paragraph") and insert ("relevant period")
The amendments which the noble Lord, Lord Bruce of Donington, has down are identical to those which were moved during the course of our Committee discussions. At that time I undertook to consider the question of accelerated discharge for bankrupts subject to a certificate of summary administration. The Government's amendment on this subject appears in the Marshalled List at No. 184. In fulfilling this undertaking that I gave we have put down these amendments which, in part, I believe, take care of the points that the noble Lord, Lord Bruce of Donington, has raised.
As the House will probably recall, the certificate may be issued under Clause 103 only where the person concerned has presented his own petition for bankruptcy, where he has not been subject to any other bankruptcy procedure or any voluntary arrangement within the previous five years and where his unsecured liabilities do not exceed the small bankruptcies level. It is expected, incidentally, that this will be fixed initially at £15,000. The principal purpose of this certificate of summary administration is to ensure that the bankrupt whose liabilities are not large does not go through the full rigours of bankruptcy in terms of a probing investigation by the official receiver unless circumstances show this to be warranted. Clause 115(6) therefore allows the official receiver discretion in the exercise of his investigatory powers where a certificate is in force. Certificates are likely to be issued mainly in respect to what one might call the consumer debtor or the small businessman, and, as I indicated during our considerations in Committee, the Government accept that such persons will normally deserve an earlier chance of rehabilitation in the form of the removal of the disabilities of bankruptcy.
Amendment No. 184 therefore secures the automatic discharge from bankruptcy of such a person after two years rather than three years, provided his certificate of summary administration has not been revoked. Amendment No. 185 ensures that the official receiver will in a case of accelerated discharge still be able to intervene under Clause 105(3) to have the court suspend the operation of the automatic discharge provisions if the bankrupt fails to co-operate in the proceedings. Amendment No. 186 makes a minor drafting improvement to Clause 105(3).
4.15 p.m.
The existing subsection (2)(a) of Clause 105 ensures that the accelerated discharge provisions will not operate in any case where the person concerned has been an undischarged bankrupt at any time in the previous 15 years, notwithstanding that a certificate may have been issued in the current bankruptcy. Such a person will in all circumstances be obliged to apply to the court under Clause 106 to obtain his discharge. The amendment that was originally proposed in Committee and the amendments which are now proposed by the noble Lord, Lord Bruce of Donington, set the shortened period at 12 months.
We have given that period very full consideration and have decided that 12 months would be too) short a period—and for very similar reasons to those given by my noble and learned friend the Lord Advocate when he spoke on this subject during the Committee stage of the Bankruptcy (Scotland) Bill. It is unlikely in most cases that the administration of a bankrupt's estate will be completed within a year. Furthermore, a bankrupt can have the bankruptcy annulled at any stage of the proceedings if he enters into a voluntary arrangement with his creditors. The acceptance of such an arrangement by creditors will normally indicate that the bankrupt has made a real effort to ensure that more assets, probably in the way of voluntary payments from future income, become available for his creditors. Apart from considerations of general acceptability, too short a period of automatic discharge will tend to discourage bankrupts from attempting such voluntary arrangements.
In addition, we retain the view that a discharged bankrupt should normally be given a completely fresh start, so far as this is possible; and that any income payments order made in respect of a first-time bankruptcy under Clause 135 should therefore cease on his discharge. If discharge were allowed after one year, creditors would receive little benefit from any income payments order. Therefore, we feel that a two-year period is appropriate for the accelerated discharge provisions and that Amendments Nos. 184 to 186 secure a positive and worthwhile advantage for the bankrupt with small liabilities while at the same time protecting the interests of creditors.
So far as the remainder of the amendments that have been proposed by the noble Lord opposite are concerned, I spoke at some length in Committee on the policy adopted by the Government in relation to discharge from bankruptcy. We believe that policy achieves a fair balance as regards the imposition of disabilities, on the one hand, and rehabilitation, on the other. I do not want to go into all these matters again although I should be quite happy to do so if your Lordships wish. I would merely repeat that we are satisfied that the new discharge procedure forms an integral and vital part of the revised bankruptcy code. It represents a clear step forward from the outdated thinking of the past.
I think that the noble Lord opposite may want to give some consideration to what I have said in connection with the amendments that I have put down, which, to a degree, argue against some of his own. I would quite understand if he so wished, but I would ask him whether, while undertaking that further consideration, he could accept what I have said and withdraw his own amendments.
Lord Campbell of Alloway: My Lords, may I ask my noble friend, before he sits down, whether in effect subsection (1C) of Lord Bruce of Donington's amendment, with its engaging and attractive elasticity, will in effect operate under excellent conditions or proposed conditions, subject to the 12 months' period?
Lord Lucas of Chilworth: My Lords, I am very sorry that I cannot tell my noble friend Lord Campbell of Alloway the answer to that, just at the moment anyway.
Lord Bruce of Donington: My Lords, I am most grateful for the reply of the noble Lord to the amendments which I have ventured to lay before your Lordships. It is indeed quite true that in his own amendment the noble Lord has gone some way to meet the points that I ventured to make in Committee. In fact, may I say to the noble Lord, for the sake of economy of time, that following his reply to the amendment that I have moved it will be unnecessary for him to enlarge further upon his own amendments and that we can take those at the same time without further argument upon them.
I can detect a relaxation of the Government's attitude towards the reliefs that it may be thought desirable to give a bankrupt in more advantageous circumstances and, to some extent, the noble Lord has met the original anxieties. I still maintain the view that there is no reason at all why the court should not be given the greater degree of flexibility which I have suggested. But this matter has been thoroughly ventilated in Committee and discussed here again this afternoon. No doubt it will receive the attention of those in another place as and when your Lordships dispose of the Bill by performing their own duties here. In the circumstances, I ask your Lordships' leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 183 not moved.]
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 184, 185 and 186.
[Printed above.]
The noble Lord said: My Lords, I have already spoken to Amendments No. 184 to 186. I beg to move these amendments en bloc.
On Question, amendments agreed to.
[Amendments Nos. 187 to 189 not moved.]
Clause 107 [Effect of discharge]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment 190:
Page 86, line 37, leave out ("has the same meaning as in the Magistrates' Courts Act 1980;") and insert ("means domestic proceedings within the meaning of the Magistrates' Courts Act 1980 and any proceedings which would be such proceedings but for section 65(1)(ii) of that Act (proceedings for variation of order for periodical payments);").
The noble Lord said: My Lords, Clause 107 re-enacts, with modification, Section 28 of the Bankruptcy Act 1914. This provides that certain debts are not released on a bankrupt's discharge. Clause 107(5) provides that a bankrupt's discharge will not release him from a debt that arose under an order made in domestic proceedings. This will normally be an order relating to the maintenance of a spouse or child. Therefore the bankrupt, though discharged, is still legally liable to pay amounts due under such an order.
The purpose of Clause 107(5) is to afford protection to persons who benefit financially under the terms of such an order but who, both under the present law and under the Bill, cannot prove in a bankruptcy. The reason they cannot prove is because the very wide discretion of the courts in making, varying and enforcing such orders means that these matrimonial
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debts, if I may so call them, are incapable of valuation. Because these debts are not provable in the bankruptcy, it is obviously crucial that the bankruptcy's discharge should not release him from the obligation to pay them. It would clearly be quite inequitable if maintenance creditors were treated differently, depending on whether the amounts owed to them were outstanding under an original or a varied order. This amendment is associated with Clause 107 and ensures that all maintenance orders, whether original or varied, are treated in the same manner. I therefore commend the amendment to your Lordships. I beg to move.
On Question, amendment agreed to.
Clause 111 [Restrictions on proceedings and remedies]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 191:
Page 89, line 24, leave out ("against") and insert ("in respect or).
The noble Lord said: My Lords, in moving Amendment No. 191, I shall with the leave of the House, speak to all three amendments to Clause 111: that is, to 191, 192 and 193.
Amendment No. 192: Page 89, line 28, leave out ("creditor of the bankrupt") and insert ("person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy").
Amendment No. 193: Page 89, line 30, leave out ("any bankruptcy") and insert ("that ").
The first is a minor drafting amendment. It is more accurate, in the context of the Bill, to speak of a bankruptcy petition being presented "in respect of" an individual rather than "against" him. The other two amendments, Nos. 192 and 193, have a substantive effect. Under Sections 7 and 9 of the 1914 Bankruptcy Act, at present only those creditors whose claims are provable in the bankruptcy proceedings are restricted from taking or continuing other proceedings after the presentation of the bankruptcy petition or after the receiving order is made.
However, some claims are not provable in a bankruptcy. In particular, one thinks of the maintenance claims which, as I have just mentioned, are not provable because of the wide discretion of the courts in making and enforcing maintenance orders. Where creditors have no right to prove in the bankruptcy proceedings, it would be inequitable to remove also their right to commence or continue other legal proceedings against the debtor. The amendment therefore restores the present position under the 1914 Bankruptcy Act in applying the restrictive provisions of Clause 111 only to those creditors who have a provable claim in the bankruptcy proceedings. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 192 and 193:
[Printed above.]
The noble Lord said, my Lords I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Clause 113 [Receivership pending appointment of trustee]:
The Deputy Speaker: Amendment No. 194: there is a printing error in this amendment. In the second line after the word "estate" there should be inserted the words "under this section".
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 194:
Page 91, line 9, at end insert—
("(2A) The official receiver while acting as receiver or manager of the bankrupt's estate under this section shall take all such steps as he thinks fit for protecting any property which may be claimed for the estate by the trustee of that estate.")
The noble Lords said: My Lords, I am grateful to the noble Lord on the Woolsack for drawing your Lordships' attention to the correction that should be made. If I may, in dealing with this amendment, I will also speak to Amendments Nos. 202, 203 and 265, since they are closely connected.
Amendment No 202: Page 93, line 43, after ("official receiver") insert ("and in the case of any property that may be claimed for the bankrupt's estate by the trustee of that estate")
Amendment No. 203: Page 93, line 44, leave out ("their protection") and insert ("the protection of those things or that property.")
Amendment No, 265: Clause 148, page 117, line 13, leave out from ("things") to end of line 14.
All these amendments are necessary to ensure that the official receiver has adequate powers when acting as receiver or manager after a bankruptcy order has been made but before a trustee has been able to take up office. They similarly ensure that a trustee can take steps to protect property which may be claimed for the bankrupt's estate under Clauses 133 and 134 of the Bill. The amendments will enable the official receiver or a trustee to take the necessary protective action when he believes that any property which, although not part of the bankrupts estate, could be claimed for the benefit of creditors under Clauses 133 or 134 and may be at risk.
It might be helpful if I were to explain quite briefly the type of property which may be claimed for the bankrupt's estate under Clauses 133 and 134. Clause 133 enables the trustee to claim property acquired by the bankrupt after the date of the bankruptcy order. Clause 134 enables the trustee to claim valuable items which are necessary to the bankrupt for domestic or business purposes and to replace them with less expensive equivalents. Property which may be acquired by the trustee under either of these clauses may be in the possession of the bankrupt between the date of the bankruptcy order and the coming to office of a trustee. As such property does not form part of the bankrupt's estate until claimed by the trustee, it would not fall within the range of property in respect of which the official receiver is entitled to take protective action under Clause 113 as this is presently drafted.
4.30 p.m.
The official receiver may nevertheless be of the opinion that protective action is necessary pending the appointment of a trustee in order to ensure the preservation of the property or its value until such time as a trustee is appointed and is in a position to consider whether or not to claim it. The amendments proposed to Clauses 113 and 117 will provide the official receiver with the powers appropriate to ensure that such property is protected. When the trustee takes
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office he is allowed a certain time to consider whether he will or will not claim property for the estate under these two clauses.
In connection with after-acquired property, the trustee may of course be making such decisions at any time during the trusteeship as and when property is acquired by the bankrupt. It is therefore appropriate that a trustee should have powers similar to those proposed to be given to the official receiver to take appropriate steps to ensure that property which he may claim for the estate is properly protected pending his decision. The amendment to Clause 148 achieves this.
I feel sure that the House will agree that the interests of the bankrupt's creditors should be fully protected and that both the official receiver and the trustee should have powers sufficient to ensure that property that may be claimed for the benefit of the estate is not disposed of or misused before it is so claimed. I think that that is a fairly straightforward and rather detailed explanation of the purpose of these two amendments. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 195 and 196:
[Printed earlier: 1/4/85, col. 102.]
The noble Lord said: My Lords, I spoke to Amendments Nos. 195 and 196 when I was dealing with Amendment No. 134.
On Question, amendments agreed to.
[Amendments Nos. 197 to 200 not moved.]
Clause 117 [Duties of bankrupt in relation to official receiver]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 201:
Page 93, line 38 leave out ("including") and insert ("except").
The noble Lord said: My Lords, I should like at the same time to speak to Amendment No. 223.
Amendment No. 223: Clause 136, page 105, line 38, leave out ("including") and insert ("except").
The effect of these two amendments is to preserve legal professional privilege for documents in the possession of the bankrupt. A privilege, while sometimes inconvenient, is an important guarantee of liberty and should be removed only for compelling reasons. We do not think that a sufficient case has been made out for over-riding the right of privilege in the case of bankruptcy. I beg to move.
Lord Denning: My Lords, I should like to oppose this amendment. We all know that communications between a client and his solicitor are privileged; that is, they are not to be disclosed to a court or to anyone else except by the permission of the client. When you are considering a bankruptcy and a trustee in bankruptcy is concerned, in investigating the affairs the trustee ought to have possession of all relevant documents.
For instance, let us suppose that the bankrupt has had letters to and from his solicitor about a certain deal. It may go very far to show whether it was an honest deal or whether it was with intent to deceive or

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defraud creditors; or to give a preference to one over the other—in other words, these privileged documents, in the ordinary way of privilege, ought to be available to the trustee in bankruptcy so that he can investigate very properly all the deals and transactions of the bankrupt himself, remembering always that the trustee is equally under the seal of confidence. He cannot disclose them or do anything of that kind about them, but he can look at them for the purpose of investigating the deals and goings-on of the bankrupt. So I would be in favour of the clause as it stands, which would include those documents, and not in favour of the amendment.
Lord Lucas of Chilworth: My Lords, during the debate at Committee stage it was said that legal and professional privilege should be removed only for the most compelling reasons. In our view such reasons exist where the official receiver and the bankrupt's trustees are carrying out their duties. It is vital that the official receiver has access to all documents and matters relevant to a bankrupt's affairs for the purpose of his investigation.
No less vital is that the bankrupt's trustees should have a similar access so that he can maximise realisations for the benefit of creditors. I am strengthened in my resolve in this matter by the support which was given to the Government by the noble and learned Lord, Lord Denning, at the Committee stage, and which support we have again received this afternoon. I therefore invite the noble Lord opposite to withdraw his amendments.
Lord Bruce of Donington: My Lords, after the compelling words of the noble and learned Lord, Lord Denning, I simply have no alternative but to withdraw this amendment. I am certainly not a member of the legal profession, although I am very fond indeed of the law. But I cannot pretend to understand all its intricacies. It is really open to me, in the light of the noble and learned Lord's observations, to apologise for having produced the amendments at all. I think he let me down very lightly indeed, and in those circumstances I ask the leave of the House to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 202 and 203.
[Printed earlier: col. 149.]
The noble Lord said: My Lords, I spoke to Amendments Nos. 202 and 203 with Amendment No. 194. I beg to move both these amendments.
On Question, amendments agreed to.

Channel Fixed Link
4.38 p.m.
Lord Brabazon of Tara: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Transport. The Statement reads as follows:
"I would like to make a Statement about the Channel Fixed Link.
"The House will know that in November 1984, I met the French Ministers responsible for transport to discuss the possibility of a fixed link across the English Channel. At that meeting we reaffirmed the willingness of the British and French Governments to take whatever steps might be necessary to facilitate the construction of a fixed link between the U.K. and France within the framework of the European Transport network. We agreed that this project, for which essential political guarantees would be provided, should be financed without support from public funds or Government guarantees against commercial or technical risks and on the basis of conditions prevailing on the international financial markets.
"We also agreed to establish a working group of officials of both Governments to draw up guidelines to potential promoters, in order to give them a clear understanding of the requirements of the two Governments on, for example, safety and the environment, the undertakings the two Governments would be prepared to give, and of any constraints affecting commercial exploitation.
"At the meeting on 29th November between my right honourable friend the Prime Minister and the French President, these decisions were confirmed, and it was decided that officials would be instructed to report to Ministers by the end of February.
"Officials delivered their report on 28th February, and on 20th March we held a further meeting with the French Ministers to agree the final texts of the guidelines and to decide certain further points. In particular, we agreed that the closing date for proposals would be 31st October, and that the two governments would aim to reach a decision around the end of the year, on which proposal, if any, they consider should be enabled to go ahead. We also agreed that we should begin contingency work now on those elements of the Treaty which would be common to any form of link chosen.
"I have placed copies of the guidelines—or, to give them their proper name, the Invitation to Promoters—in the Vote Office.
"In saying this, I do not want honourable Members to think that we have prejudged the issues. When they have had time to study the guidelines they will recognise my concern to ensure that there is adequate public consultation, that environmental, social and employment impacts are fully appreciated, and that the financial conditions are fully met. All these matters will be carefully considered before the two Governments arrive at a decision.
"Mr. Speaker, I cannot yet tell whether a fixed link will be built across the Channel or not. What I can say is that the private sector now has a unique opportunity. We have reached full agreement with the French on the conditions which the promoters must meet. I wish the promoters well in this great endeavour".
My Lords, that concludes the Statement.
Lord Carmichael of Kelvingrove: My Lords, I thank the Minister for repeating this Statement to the House and for providing an opportunity to question the

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Government on one or two matters. The Minister will be aware that there has always been contention from all parts of the House, among all parties, over the whole question of a Channel tunnel link. Many of us from the North, in particular, have always supported the idea of a link, principally because of the ease with which rail traffic would be able to go from the North right into the heart of continental Europe.
I have one or two questions to put to the Minister. With regard to the protection of the environment in the South-East of England, in paragraph 12.43 of the guidelines it is suggested that land in the South-East and in south-east Kent already acquired by the Government will of necessity be conceded to the promoter. That land was secured by the previous Channel tunnel company, and from them by the Government when the previous scheme was aborted. That was done under the special procedure legislation of another place for a specific purpose. Is there a possibility that the specific purposes could be challenged if any drastically new scheme were to be introduced under the new conditions of the Invitation to Promoters? Is there a possibility that the whole question could be opened up again, thus causing much longer delay than there was before and which would otherwise not be the case?
I accept that the Minister has not said that there will necessarily be a tunnel or a fixed link, but it is important that we should have some idea of a possible completion date, however approximate. The reason I raise this particular point is because the Port of Dover will be entering a period of great difficulty and uncertainty. Dover has carried the bulk of the traffic across the Channel for the past 2,000 years or more. I know that Dover is very concerned over the question of what will become of its investment.
If there is a fixed link, I have no doubt that Dover will be able to maintain a good share of the growing traffic across the Channel or will be able to diversify to other ports. But if the Channel link is built, will the Government be willing to help the Port of Dover in the saving of jobs and in the saving of that port's heavy investment, if traffic should fall drastically because of the new fixed link?
Also, what will happen if the fixed link is started but not completed for some reason? It will be remembered that in our earlier debate on this subject it was pointed out that new technology is always highly suspect. For example, the Humber Bridge was started at a cost of £19 million but was finished at a cost of £72 million. The suggested cost of a Channel bridge is in the region of £5,000 million. If the same rate of escalation occurred in this case, I doubt whether any consortium would be capable of carrying such a figure and therefore Dover would suddenly be left with the problem of handling an enormous amount of traffic.
Can the Minister provide any reassurance to the Port of Dover as to what would happen in such circumstances? Even during the construction of the link and the early days of its operation would Dover suddenly be dropped as a major port or would it be given any interim help by the Government?
Lord Taylor of Gryfe: My Lords, for the second time this afternoon we on these Benches should like to congratulate the Government on their Statement. We
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are delighted that there is a sense of urgency and commitment in the Statement which has been repeated. Those of us who have been examining the question of a Channel tunnel link for some time were a bit concerned as to whether there would be a firm commitment this afternoon or whether we would be watching the re-run of an old film. But there is a commitment that a decision will be made by the end of this year, and that is progress.
It will be recalled that Napoleon discussed this matter in 1803 and that a Colonel Bowman dug one mile of Channel tunnel in 1880. Unfortunately, just as we felt that progress was being made, a Labour Government unilaterally departed from the concept of a Channel tunnel with consequent disastrous effects on Anglo-French relations. I am glad that those relations are now sufficiently well established to bring to the proposition some sense of reality.
We welcome the political guarantee contained in the Statement. I assume the political guarantee means that if contractors and hankers spend a lot of their time and energy preparing a scheme, and then that scheme is departed from by the politicians and by the Government, then there will be reimbursement to those people who have spent their time and money as a result of their assumption that the proposition was going forward.
We welcome the Statement for a number of reasons. First, it strengthens our commitment to Europe, in which we believe very strongly. Secondly, it involves increased investment in the British infrastructure, for which many of us have been campaigning recently. Since 40 per cent. of our exports are now to Europe, this link can make a useful contribution to British industry. Finally, the link would create jobs in the manufacturing and contracting industries in Britain, which are presently depressed. For all those reasons we very much welcome and support the Statement
As the mandate will presumably be awarded in anticipation of legislation—because there is a suggestion that the mandate will be awarded after the decision made at the turn of the year—may I ask the Minister whether there will be necessary discussion with environmental and other groups? In the light of previous consultations with environmental and other groups, may I have an assurance from the Government that the proposal will not be unduly delayed by such necessary considerations?
Perhaps I may also echo the hope expressed in the Statement that the contracting industry and the financial institutions together with their French partners—because we must recognise that this is a Channel tunnel and not a British contract—will grasp the opportunities implied in the Statement, so that we may live to see the reality of this proposition.
Lord Brabazon of Tara: My Lords, I should like to thank the noble Lords, Lord Carmichael of Kelvingrove and Lord Taylor of Gryfe, for their reception of the Statement. I shall deal with their questions as best I can. The noble Lord, Lord Carmichael of Kelvingrove, mentioned the land conceded, referred to in paragraph 12.43. This means that it would be the subject of a concession agreement; it would not simply mean "given". It is a precise use of the word "conceded", I am told. The noble Lord also

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asked about the date of completion and its effect on Dover, and he wondered whether the Government will be able to give any assistance to Dover. It would be extremely difficult to say at this stage when the date of completion will be. As was said in the Statement, promoters are invited to complete their proposals by 31st October.
The two Governments would then, it is hoped, decide on a proposal by early next year or around the end of this year. There would then have to be legislation in this Parliament. I think that that answers the question raised by the noble Lord, Lord Taylor of Gryfe. There would need to be a hybrid Bill and that would involve consultation with interested parties in the area. This is covered in paragraph 12.4 of the invitation. Consultation would have to take place and anyone,
"whose interests or rights are injuriously affected would be given the chance to voice their objections to a Parliamentary Select Committee by petitioning against the Bill; and it is no part of the Government's intention to constrain that right".
However, we go on to say to the promoters that,
"it should be noted that the more effective the informal consultation carried out by the promoters with local authorities, expert bodies and other interested parties in advance of the Bill's Committee hearings, the greater the likelihood of a smooth passage for those hearings".
I think that covers that point.
As regards the effect on Dover itself, that would very much depend on the scheme chosen. The 1982 Anglo-French study group report pointed out that a massive increase in total traffic was expected by the year 2000. I should have thought that if the link goes ahead, the impact on employment will be favourable for the Dover area. We also believe that it is quite possible that there will be room for both ferries and the link to cope with the increased demand.
The noble Lord, Lord Carmichael, specifically asked what would happen if the link was started but not completed. This is set out in paragraph 16.52 of the guidelines and, briefly, says that we,
"will require the promoters, taking account of the international standards in force at the time, to clear promptly all abandoned or unserviceable structures in the Channel so as to ensure the freedom and safety of navigation".
They would, of course, have to prove their financial ability to do that, whether through insurance or otherwise, before we accepted a proposal.
The noble Lord, Lord Taylor of Gryfe, asked what political guarantees we would give against the Government making a decision which would stop the project going ahead after the promoters had started. These are clearly set out in the first chapter, and I think the noble Lord will find the answer there.
I think that that more or less covers all the points which both noble Lords raised. I should just like to add, as the noble Lord, Lord Taylor of Gryfe, said, that our relationships with the French througout these proceedings have been extremely good and we hope that they will continue in that way and see the conclusion of this project.
Lord Ferrier: My Lords, is my noble friend aware that there is a large body of opinion which, anxious as we are for a permanent link with France, feels that there are two aspects—a rail link and a road link.
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Arising from something said in the debate on the Motion last week of the noble Lord, Lord Somers, concerning the railways, is my noble friend aware of the fears that many of us have about the vulnerability of a rail link? We feel that if there is an ultimate decision not to build a rail link and to confine the project to roads, we must not have British Rail involved in planning expenditure. There will be a vast amount of planning if all the rail traffic is passed through a Channel tunnel. British Rail should not be involved in expenditure which would be fallible in the event of the vulnerability of a rail link being tested by time.
Lord Brabazon of Tara: My Lords, I thank my noble friend for his question. I make it absolutely clear that it will be up to the promoters to decide whether they wish to include a rail link in their proposals and, therefore, it will be up to the promoters and British Rail to negotiate the extent of British Rail's involvement. That would be subject to British Rail's involvement being on a strictly commercial basis and applying the tests which we already do to British Rail's investment programme.
Lord Howie of Troon: My Lords, is the Minister aware that this Statement will be very warmly welcomed by the construction industry, which has been very hard pressed for the past several years, sometimes almost to the point of despair? Can he go a little further in response to the question put by my noble friend, Lord Carmichael, on when the project might be completed by giving us an informed guess about when it might be started, which is probably more important at the moment? Secondly, in view of my noble friend's remarks about new technology and his fears about escalating costs, can the Minister reassure my noble friend by reminding him that the technologies involved in the fixed link are, in fact, extremely well understood by the construction industry and are not new at all? If there is an escalation of costs, it will not be for that reason.
Lord Brabazon of Tara: My Lords, I do not know whether or not to be tempted into giving an estimate of when building could start. As I have said, proposals are to be completed by 31st October, with the end of the year for our decision. There is then the question of legislation which, as I have mentioned, would have to pass through both Houses. The French, of course, will have their own legislation. Perhaps it will be in two years from now. As regards completion, of the three schemes which one has heard have been proposed, I think the shortest construction period is about four-and-a-half years, and another scheme would take about seven years to complete. I am sure that the noble Lord, Lord Carmichael, took note of the remarks of the noble Lord, Lord Howie of Troon, regarding the construction industry.
Lord Somers: My Lords, does the noble Lord agree that the issue of road versus rail means that a road link would involve the difficulty of ventilating the tunnel, whereas an electrified rail would ventilate itself?
Lord Brabazon of Tara: My Lords, I thank the noble Lord, Lord Somers. That would be a problem, but it is, of course, for the promoters to decide how to cope with it.
Lord Ezra: My Lords, I should like to be associated with the welcome which other noble Lords have given to the Statement and to be particularly associated with the remarks of my noble friend Lord Taylor of Gryfe. It is an essential feature of the Statement made by the two Governments that this project should go ahead without support from public funds or Government guarantees. It is, therefore, all the more important that there should be a minimum of constraint on commercial exploitation, because otherwise viable propositions could not be put forward. In that connection, I put two questions to the noble Lord.
First, it is said in the document Invitation to Promoters that,
"United Kingdom, French and European Community law will apply to the project, particularly as regards abuse of a dominant position and anti-competitive practices".
This will have to be clearly defined in relation to a major project of this kind which, by the very nature of things, will be operated by a single company.
Secondly, later on it is said that:
"The Governments will reserve to themselves certain rights not affecting the conduct and operation of the Link",
and they may wish to have a preferential holding in the companies as finally set up. Here also I think that a degree of clarification is required before reasonable proposals cart be put forward by commercial enterprises.
Lord Brabazon of Tara: My Lords, as to the noble Lord's first point, I think that it is worth quoting from the proposals regarding competition and market freedom:
"The construction and operation of the Link at the promoters' own risk and in the absence of Government financial guarantees, will be matched by freedom within the framework of the respective national laws of the countries for the promoters to decide their own commercial policy, tariffs and the type of service to be offered. Within this framework the Treaty will guarantee the freedom of tariffs".
Regarding the noble Lord's question as to the various articles of the Treaty of Rome which apply to the competition rules for transport by rail, road and inland waterway, I think that that would apply to a company exploiting its dominant position, for instance, to put ferry companies out of business by predatory pricing. That, I think, would be the meaning of that.
The noble Lord asked me another question which I am afraid I cannot answer at the moment. We shall take the point closely into consideration, but I cannot give him an answer at the moment.
Lord Mulley: My Lords, I also should like to thank the Minister for the Statement and to welcome it. As the Minister who introduced the abortive legislation previously, may I say how difficult it is to get a hybrid Bill through both Houses of Parliament? I hope that there is a way to reduce that lengthy process. Secondly, if British Rail were to be fully associated with the project, I think it would be welcomed in many quarters. Most of the problems of the hybrid Bill were concerned with objections to the projected route of the railways in this country. There are also problems, if British Rail are to profit from the tunnel, of its being able to carry goods right through the country, without having to transmit them from one set of wagons to another.
Lord Brabazon of Tara: My Lords, I thank the noble Lord. I take note of what he says about hybrid Bills. I do not think that there is much that I can say at the moment that might speed the legislation through Parliament other than to record the good will, on the whole, which the Statement has received in this House. I hope that that will help its progress. I have, I hope, already covered the point about British Rail. As I say, it is for the promoters to decide whether to include a rail link.
Lord Harmar-Nicholls: My Lords, although there is nothing wrong with the Statement—indeed, it sounds a good Statement—all the schemes that have been mooted over the past seven or eight years have intimated that there would need to be an element of Government guarantee; some think that it should be greater than others do. Has it been made clear to the people who will be likely to be putting in their schemes by the end of the year that there will be no Government guarantee at all? That is not in keeping with the various suggestions made in the past when schemes have been submitted for general approbation.
Lord Brabazon of Tara: My Lords, I can assure my noble friend that the only guarantees that the Government would give would be of a political nature; there would be none of a financial nature.
Lord Carmichael of Kelvingrove: My Lords, may I thank the Minister particularly for clearing up the point about the hybrid Bill? That was the point I was making about Cheriton. I am sure that he will return frequently to the question of the new technologies. I listened with hope rather than conviction to what my noble friend Lord Howie of Troon said. On the question of hybridity and the collapse of the previous Bill, I think that it is rather important that we should realise that it was not, as the noble Lord, Lord Taylor of Gryfe, said, a total unilateralist decision by the Labour Government. In earlier debates the reason for the collapse of the previous Bill was spelt out clearly. I shall send the noble Lord, Lord Taylor, references which show that a body with which he had a great deal of involvement at the time had a great deal to do with the fact that the Bill did not get through.
Lord Denham: My Lords—
Lord Taylor of Gryfe: My Lords, I must just say one word—
Lord Denham: My Lords, I think that we are getting a little out of order here. The rule is that on a Statement brief comments are allowed and questions for elucidation. If it comes to differences between more than one noble Lord being settled on the Floor of the House, I think that that is a little difficult. I wonder whether we can possibly turn to the next business.
Lord Taylor of Gryfe: My Lords, since I was referred to a moment ago—and I am not continuing a political discussion—I point out that my reference to a unilateral decision was in relation to the French. It was a unilateral decision of Her Majesty's Government. That is all I said.
Lord Denham: My Lords, I would hope that we can now carry on. I am sorry that the noble Lord felt that he had to add that.

Insolvency Bill [H.L.]
5.5 p.m.
Consideration of amendments on Report resumed on Clause 117.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 204:
Page 94, line 7, at end insert—
("(3A) Subsection (3) above shall apply to a bankrupt after his discharge.").
The noble Lord said: My Lords, the purpose of this amendment is to make it quite clear that the duties of a bankrupt in relation to the official receiver, in terms of supplying information and co-operating in the proceedings, continue after his discharge. This is the position under the law at present. The new subsection inserted by this amendment has an equivalent effect to that of Clause 148(3) of the Bill, which re-enacts the relevant part of Section 26(9) of the Bankruptcy Act 1914 and provides that the bankrupt's duty to co-operate with his trustee continues after discharge. I beg to move.
On Question, amendment agreed to.
Clause 122 [Appointment of trustee by Secretary of State]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 205 and 206:
[Printed earlier: 1/4/85, col. 53.]
The noble Lord said: My Lords, I spoke to Amendments Nos. 205 to 208, inclusive, yesterday when we were dealing with Amendment No. 21. I beg to move Amendments Nos. 205 and 206.
On Question, amendments agreed to.
Clause 123 [Special cases]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 207 and 208:
[Printed earlier: 1/4/85, col. 53.]
On Question, amendments agreed to.
Clause 124 [Removal of trustee and vacation of office]:
Lore Lucas of Childworth Lore Lucas of Childworth moved Amendment No. 209:
Page 97, line 33, leave out ("his") and insert ("the bankrupt's").
The noble Lord said: My Lords, this is a technical amendment which corrects a possible ambiguity in Clause 124(1). It is possible that the relevant meeting of creditors mentioned in that subsection could be construed to mean a meeting of the appointed trustee's creditors. This obviously is not the case. The meeting of creditors referred to in this section is that of the bankrupt's creditors and this amendment therefore makes that clear beyond doubt. I beg to move.
On Question, amendment agreed to.
Clause 125 [Release of trustee]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 210 to 213:
[Printed earlier: col 84.]
The noble Lord said: My Lords, when dealing with Amendment No. 110, I spoke to Amendments Nos. 210 to 213. I beg to move these amendments en bloc.
On Question, amendments agreed to.
Clause 127 [Control of trustee by creditors etc.]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 214 to 217:
[Printed earlier: col. 53.]
The noble Lord said: My Lords, when we were discussing Amendment No. 21 I spoke to Amendments Nos. 214 to 217 applying to clause 127, and at the same time I spoke to Amendments Nos. 218 to 220 attached to Clause 128. With the leave of the House, I beg to move Amendments Nos. 214 to 217 en bloc.
On Question, amendments agreed to.
Clause 128 [Exercise by Secretary of State or court of functions of supervisory committee]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 218 to 220:
[Printed earlier: cols. 53–54.]
On Question, amendments agreed to.
Clause 130 [Liability of trustee]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 221 and 222:
[Printed earlier.]
The noble Lord said: My Lords, I spoke to both these amendments when we were dealing with Amendment No. 134. I beg to move.
On Question, amendments agreed to.
Clause 136 [Acquisition by trustee of control]:
[Amendment No. 223 not moved.]
Clause 138 [Charge on principal residence]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 224:
Page 107, line 7, leave out ("an interest in").
The noble Lord said: My Lords, in moving Amendment No. 224 I should like to speak also to Amendments Nos, 225, 226 and 231.
Amendment No. 225: Page 107, line 9, after ("spouse") insert ("or an interest in such a residence").
Amendment No. 226: Clause 139, page 107, line 30, at beginning insert ("Subject to section (Sale of bankrupt's principal residence) below").
Amendment No. 231: After Clause 139, insert the following new clause:
("Sale of bankrupt's principal residence.
.—(1) Subject to subsection (4) below, the trustee shall not sell any property consisting of the principal residence of the

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bankrupt or of his spouse or former spouse or an interest in such a residence without an order of the court.
(2) If the court is satisfied that in all the circumstances (including any hardship which refusal of the order might cause to any creditor of the bankrupt) such an order or its immediate enforcement would cause undue hardship to any dependant of the bankrupt the court may dismiss or stay the application or may suspend the operation of the order for such time and on such conditions as it thinks fit.
(3) The court may on making an order under subsection (1) above direct the trustee to apply some part of the proceeds of sale in purchasing another residence for occupation by the dependants of the bankrupt (with or without the bankrupt).
(4) Subsection (1) above shall not apply—

(a) to a sale of the principal residence of the bankrupt if at the time of the sale no dependant of his is residing there; or

(b) if the trustee is satisfied that the purchaser intends to make the property available for continued occupation by the dependants of the bankrupt residing there (with or without the bankrupt).

(5) In this section—
"dependant" means a spouse or former spouse or any other member of the family of the bankrupt.").
Amendments Nos. 224 and 225 are amendments to Clause 138. Amendment No. 226 is an amendment to Clause 139. Amendment No. 231 is a new clause which I propose to your Lordships should be inserted after Clause 139. The first three of these amendments are paving amendments for the main new clause for which I invite your Lordship's consideration. They give effect to the recommendations of the Cork Committee, in paragraphs 1114 to 1131 (to which I shall return presently) that no sale of a bankrupt's family home—and I am emphasising the term "family"—should be possible without an order of the court. No order would be required if the bankrupt is living alone or if the sale is to someone such as a relative who is willing to allow the bankrupt's family to remain there.
5.15 p.m.
Subsection (3) is intended to cover a case where the family is living in a home which is large or more expensive than it needs to be but to whom homelessness would cause serious hardship. Your Lordships are invited to agree with the observations of the Cork Committee that the consequences of homelessness may be so disastrous that the creditors should not necessarily be given priority over the bankrupt's dependants. This particular new clause and the circumstances surrounding it perhaps show how unfortunate it is that the House was not afforded an opportunity of debating the Cork Report, published over two years ago. The sections dealing with this aspect of the matter were put in very plain but very cogent terms.
I should like to quote to your Lordships paragraph 1114 of the recommendations of the Cork Committee. It was a committee that had the opportunity of considering the impact of bankruptcy, not merely on the bankrupt himself but also on those who, in most cases—except perhaps in the case of a wildly extravagant wife; or maybe the term should be "wildly extravagant spouse"—had any connection with the failure of the bankrupt financially and who, in old circumstances, were subjected to very severe pressures from outside.
I should think the lot of the spouse of a bankrupt has to be experienced to be truly realised. It comes, and
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must always come—here we are dealing with the wife—after she has borne the transmitted anxieties of the person going bankrupt over a period of years or perhaps over only a short time—maybe months. She is a person who has borne the anxiety of the continued financial decline of the husband upon whom she has depended and who has been afraid not only of the financial consequences of a possible failure but also of the social implications that are inherent in the reduced civil status and the reduced status within society of the person who has gone bankrupt. If, added to those anxieties and those disabilities, the wife or the family are faced with eviction from the family home as a result of the bankruptcy, then the results can be very hard indeed.
As the Cork Report said, in paragraph 1114:
"The house in which a debtor is living with his wife and family (or, more often, the residual value of such a house after the repayment of the mortgage debt) is frequently the major asset of a consumer debtor and may also be the major asset of a sole or partnership trader".
At paragraph 1115 it continues:
"A shortage of domestic accommodation throughout the country has been a persistent feature, certainly of the post-war years. Houses for rent are particularly scarce. Most people (other than those who are tenants of a local authority) find it necessary or financially advantageous to buy freehold or long leasehold property. Prices are high"—
they can say that again—
"and loans on mortgage—a necessity for most—not always readily available. Changing houses is therefore not easy, and to buy a house without the proceeds from the sale of another is even more difficult".
I shall not continue to read the rest of the paragraphs which follow that because I have already endeavoured to describe them, however inadequately, in brief terms.
However, the Cork Committee went on to say that it had to bear other considerations in mind; and very properly so. At paragraph 1118 it says:
"It would be clearly wrong to allow a debtor or his family to continue to live in a lavish style at the expense of the debtor's creditors for an extended period. Nevertheless considerable personal hardship can be caused to the debtor's family by a sudden or premature eviction, and we believe it to be consonant with present social attitudes"—
we are talking perhaps of years ago—
"to alleviate the personal hardships of those who are dependent on the debtor but not responsible for his insolvency, if this can be achieved by delaying for an acceptable time the sale of the family home. We propose therefore to delay, but not to cancel, enforcement of creditors' rights".
It goes on in later paragraphs, in particular paragraph 1131, to set out the various considerations which, in its view, ought to be borne in mind by the courts when deciding what ought to be done in particular circumstances.
I do not propose to say very much more on this amendment, save to commend it to your Lordships with as much force of feeling as I can muster for the occasion. It is a matter that far transcends any party boundaries. I sincerely trust that your Lordships may be able to view it in that sense. The clause proposed may not be perfect. It is designed in conformity with the general sentiments that the noble Lord, Lord Lucas of Chilworth, has been kind enough to enunciate from time to time concerning flexibility. It has been deliberately drawn wide in order to give the

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maximum liberty, the maximum scope for consideration by the courts; so I hope it will not be faulted on that account.
Over recent years your Lordships will remember—I trust with approval if not with affection—the changes in this aspect of the law, though in a different field, for which the noble and learned Lord, Lord Denning, has been responsible. Your Lordships will recall the relief that has been given as a result of the profound and telling judgments he was able to deliver many years ago, covering this kind of situation which arises from time to time. In the hope that the noble Lord opposite will not seek too much to fault the formal structure of the clause but will, with the remainder of your Lordships I trust, lay the whole thrust of his proposed action behind it, I commend the amendments to your Lordships.
Lord Denning: My Lords, I should like to support this group of amendments. My noble friend has been much too kind in what he has said about me. As your Lordships know, this Bill, for the most part, is dry, abstruse, and to most of us quite unintelligible. So the attendance of your Lordships has been very sparse. However, in this clause and in the amendments, we get to the human side and to the social side which your Lordships should, as a whole, consider most seriously.
The clause deals with one aspect of the matrimonial home. In my time in the Court of Appeal we have had to consider who owns the matrimonial home. Previously, it was in the name of the husband. Even though the wife had lived there and had helped with all the outgoings and so on, she had no interest at all in it. Then, by a serious of decisions, we realised the present position whereby the wife often contributes financially to the deposit. She goes out to work and her earnings help to pay the mortgage instalments, the housekeeping and all the rest. She has contributed in money and often through her services in the home to the value of the matrimonial home. In those cases, even though the home was legally in the name of the husband, the courts have held that the husband was a trustee for both of them and that the wife, in most cases, had an equal share in the home in equity. Although the home was in the husband's name, the wife had an equal share and interest in it.
The clause realises that and deals with the situation in which the wife has an interest in the home—a half, a third or a quarter—so that when the husband goes bankrupt, he cannot, or the trustee cannot, turn her or the children out. The home remains there for their occupation. It is for the court eventually to say whether or not it should be sold and the trustee in bankruptcy, if it is sold, gets the husband's share. That in quite properly dealt with in Clause 138. The Cork Committee recognises that. The amendments deal with the entirely different position where the wife has not contributed to the building society instalments or in any other monetary way. She has been there as a good wife in the house bringing up the children. The house is in the husband's name. He goes bankrupt. What is the position? According to the law as it stands, the trustee in bankruptcy can evict the wife and her family for the benefit of the creditors, sell the house and use all the money for the creditors.
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Let me tell you, my Lords, the legal history of how this has come about. The very first case with which I was concerned years ago involved a husband with a house in his name who deserted the wife and left her there with an invalid child. He went off with another woman and brought proceedings in the courts to evict his wife and their invalid child. The law, as most people thought, was that he had a right to do it. But, as the judge of first instance, I held that it was the duty of the husband to provide a roof over the wife's head. It was, I said, within the discretion of the court whether or not to order the wife out. I held—I am glad that this has always been affirmed—that the husband had no right to turn his wife out. His duty was to provide a roof over her head.
In the next case, the husband transferred the house into the name of his new mistress who sued to get the wife out. We did not allow that either. The third case is one that effects our present proceedings. The husband went bankrupt. The trustee in bankruptcy sought to evict the wife and children. It was the important case of Bendar v. McWhirter over which I presided. We held in that case that the trustee in bankruptcy could not turn the wife out automatically. But the court had a discretion. It could say that the creditors were not to step in now and that the matter should be postponed to allow the wife to find other accommodation. Everything was to be done to allow her to stay there for the time being and for the trustee not to come in at that stage. That was Bendar v. McWhirter.
Unfortunately for the law I think and unfortunately for the country the House of Lords, judicially, in a later decision, said that we were wrong and that the trustee in bankruptcy could turn out that wife and children. Similarly, a bank could turn out the wife and children. Lady Summerskill introduced a Bill at once, and that became the Matrimonial Homes Act 1967, which gave protection in nearly all cases, affirming our earlier decision in respect of the wife and the children. The trouble was that Section 4(5), I think, of that Act said that even though the wife had a charge on it, that did not operate against the trustee in bankruptcy. The trustee in bankrupty could still turn out the wife. Even though she was perfectly innocent and had nowhere else to go, she could still be turned out. Was that just? The Cork Committee, in a special chapter on the family home, considered this and decided virtually upon a position that would restore the decision in my court in Bendar v. McWhirter saying that the trustee in bankruptcy cannot automatically turn out the wife. The house may be in the husband's name and the wife has no interest in it, but still the trustee in bankrputcy should not turn her out simply for the sake of the creditors. Paragraph 1120 of the Cork Report states that,
"we consider that any new Insolvency Act should confer on the Court a specific power to postpone a trustee's right of possession and sale of the family home. In exercising this power the Court should have particular regard to the welfare of any children of the family and of any adult members of the family who are ailing or elderly. Giving this power to the Court will, we hope and expect, serve to support the natural inclination of the usually sympathetic trustee, and to protect the debtor's family in those cases where lack of sympathy with, or anger at, the debtor produces unfortunate and undeserved consequences for his family".
5.30 p.m.
There it is. The amendments which my noble friend has proposed are dealing with the great housing shortage of the day. If the matrimonial home is the sole asset of a couple, and if the husband goes bankrupt, is the trustee in bankruptcy to be able to turn the wife out? The Cork Committee said: not automatically; let the court have a discretion; let it be postponed until a convenient time; let the house then be sold, and perhaps some of the proceeds can be used to buy another, cheaper house. It is not an automatic eviction of the wife, but a discretion of the court to postpone it until a convenient time and then, in due course, let the creditors have their share.
I would suggest that the Cork Committee made this recommendation itself. As I read them, the amendments do carry out those recommendations, and I hope they will have the support of the House.
Lord Milverton: My Lords, I hope Her Majesty's Government will be able to support the amendments of the noble Lord, Lord Bruce of Donington, and his new clause. I shall be very happy to support them. This is human and decent, showing compassion for persons, including dependants, who are unfortunate enough to find themselves in that position. I wholeheartedly support these amendments and the new clause, and I hope Her Majesty's Government will be able to see their way to do so as well.
Lord Rochester: My Lords, I had not intended to speak on this occasion, having taken no active part in the proceedings on this Bill, but I say from these Benches that I have been influenced by the speech of the noble Lord, Lord Bruce of Donington, and particularly influenced by the speech of the noble and learned Lord, Lord Denning. Like other Members of your Lordships' House, I very much hope that the Government may see fit to accept this amendment.
Lord Lucas of Chilworth: My Lords, I am in fact going to ask the noble Lord, Lord Bruce of Donington, to withdraw his amendments, and I shall explain why. It is not purely because they are drafting amendments, and I think that when I have given an explanation he will probably accede to my wish in this matter. Your Lordships will probably remember that these amendments are similar in substance to those that were moved in Committee, and your Lordships will probably recall that in Committee I expressed sympathy with the aims of those amendments. Indeed, I appreciate very much the terms in which the noble Lord, Lord Bruce of Donington, has moved his amendments this afternoon.
At the Committee stage I expressed the view that serious thought had to be given to striking the correct balance between the creditors and the bankrupt's family. I then undertook to examine the matter more closely to see whether a more appropriate balance between the various interests could be achieved. We have been examining this matter, and we have formed the opinion that in view of the fundamental importance of the subject we should like to seek the views of major bodies and others who have shown an interest in the matter, both in the consultations of the
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review committee's report and, indeed, the Government's White Paper. We are in the process of preparing a very short and very simple consultative document, which I anticipate will go out within the next two weeks. We are going to invite representations on that consultative document, to be with us by the end of June of this year. In that way, we feel that the Government can give proper consideration to all the views that may be represented to us, and that the Government's reponse to those views could be put into amendments which will of course have to be dealt with while the Bill is in another place.
In this way we feel that the Government will be enabled to bring forward amendments in the light of informed opinion from a number of bodies, as well as to take into proper account the views that have been expressed by your Lordships this afternoon. There is a force of feeling. It has been expressed, I think, under the general heading, "The human side of this Bill". The noble and learned Lord, Lord Denning, put it very succinctly, and my noble friend Lord Milverton and the noble Lord, Lord Rochester, added their comments to those which were outlined by the noble Lord, Lord Bruce of Donington.
I think, this is a matter on which all your Lordships and the Government are agreed that firm guidelines for a court would be desirable. We wish to ensure that the amendments that are brought forward are as fair and as well balanced as possible. I can put it this way: we are inclined to make haste slowly, though not all that slowly. I think I said, in regard to our consultation document, that we were anticipating responses by the end of June. In fact, I meant the end of May, since we want to get our amendments to the other place while the Bill is there; and no doubt it will be there in June and July.
I appreciate that your Lordships may very well be disappointed with what I have to say, since any amendment would not be brought forward while the Bill is before your Lordships' House. There will be ample opportunity for your Lordships to comment upon those amendments when the Bill returns to your Lordships' House from another place, though I appreciate that such consideration has limitations because of the nature of the way in which we conduct our business following the consideration of a Bill in another place. Nevertheless, I think that what I should like to offer as some small recompense is that I undertake to advise your Lordships by way of a letter to those of your Lordships who have taken part in this afternoon's debate—of course, a copy will be placed in the Library—so that you may be aware of what the Government are intending to do by way of response. I shall also ensure that your Lordships have a copy of the consultative document.
I think there is no fundamental difference between our thinking and that of noble Lords who have spoken; it is perhaps just a question of the method by which we achieve what, as I have said on previous occasions, is the right balance. With that undertaking, I would ask the noble Lord, Lord Bruce of Donington, to withdraw his amendments.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for his response. I must say—and I hope I may have some measure of support

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from your Lordships—that I was somewhat surprised to learn from the noble Lord that the Government want more time to consult with interested parties. I noted that the noble Lord, particularly in his concluding remarks, concurred with the general spirit that quite evidently pervades your Lordships' House on this matter.
The Cork Report has been out since June, 1982; it has been available for Government consideration for a long time. If the Government had really wanted to consult, what better method is there of consultation than to have the Cork Report itself, including these clauses, debated in one or both Houses of Parliament? That is the finest way in which to do it; that is the way in which the British democratic institutions work. Another place and this place are not only the legislative sections of Parliament; they are the two public forums in the Unitd Kingdom in which issues of great public importance can be debated and to which public interest can be directed. They exist as public forums in order that the nation as a whole may be aware of the issues that are being debated either in another place or here. They are not merely a closed club in which one can debate in semi-secrecy or semi-confidentiality, with the public excluded.
One of the reasons I personally have always insisted on the validity of the second Chamber—your Lordships' House—is precisely that it is a public forum which attracts the wide interest of the public. Therefore, what better method of consultation has there been than to have all these issues, including the particular one that we have debated this afternoon, become the subject of public discussion?
I do not in any way query the sincerity of the noble Lord when he says—and I am bound to say, just mildly reproachfully, at the eleventh hour or maybe the eleventh-and-half hour—that the time has now come for wider consultation. I appreciate the sincerity of purpose that obviously animated the noble Lord, and indeed the Government in offering that solution. The solution which I am going to propose to your Lordships certainly does not exclude that. Indeed, it may reinforce the arguments that perhaps may need to be re-stated in another place when the Bill goes there.
I had the honour for some time to be a Member of another place and as a result of that I have the facility of wandering quite freely in all parts of another place, except the Chamber itself. I would be less than frank with your Lordships if I refrained from disclosing to you that I have had very wide discussions about this particular clause not only with Members of my own Party but also with Members of the Party opposite with whom in this connection I am on extremely friendly terms. Therefore, I am quite convinced in my own mind that another place will not take a different view from this place.
I want this Bill when it goes from this House to be this House's Bill. I want this House to express the view that it can collectively form on the substance of the Bill and in particular on this clause. If another place or if the Government have later views on this matter which are illuminated by the further inquiries that they are able to make, it lies within their power in another place, in view of the great majority that they possess,
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to amend anything which comes from your Lordships' House.
I do not in any way impugn the sincerity of the Government or the intentions of the noble Lord, Lord Lucas of Chilworth. However, I want the Bill to carry your Lordships' imprint on it when it goes from this place. Notwithstanding the undertaking given by the noble Lord, I fear that in the interests of this House as well as in the interests of the public at large, whose interest may be attracted towards it, I must ask your Lordships in all parts of the House to support the amendments which your Lordships have afforded me the opportunity of moving this afternoon, if necessary in the Division lobbies. I beg to move.
5.45 p.m.
Lord Boyd-Carpenter: My Lords, before the House comes to a decision, I want to ask my noble friend a question which may affect the way in which some of your Lordships will react if the matter is put to a Division. I hope that I understood my noble friend to be promising, without specifying, that there would be an amendment or certain amendments put into the Bill in another place. If such amendment—even one—is put in, your Lordships will have a chance to consider it when it comes back to this House. However, if there were to be no amendment the opportunity for your Lordships to consider the matter would not arise. Therefore, I wonder whether my noble friend, with the leave of the House, would clarify the position. It may be due to my imperfection of understanding, but I did not understand whether he was saying that there would be consultations and there might be amendments or that there would be consultations which would result in at least one amendment. Perhaps my noble friend will clear up the matter.
Lord Lucas of Chilworth: My Lords, with the leave of the House, I am very willing to clear up the question which my noble friend Lord Boyd-Carpenter has put to me. Perhaps I may say that there is no feeling of the eleventh-and-a-half hour on the part of the Government. I gave an undertaking during the Committee stage when these matters were put fairly forcefully by the noble Lord, Lord Meston.
As we proceeded with our thinking on this matter we came to the conclusion then, notwithstanding what had been said to us as a result of the Government's White Paper, but most particularly as a result of what had been said in your Lordships' House, that we should consult wider. The more we discussed the matter, the more important it became. This is a direct response to what your Lordships said during the Committee stage.
It takes some little while even in the best of well-run departments of state, to get out a short, concise, consultative document. The notice of our intention to do this has already brought response. As a result of the responses which we expect we shall receive by the end of May in consideration of what your Lordships have said in the House this afternoon I have given a firm undertaking—this is the point which my noble friend wants to know—that amendments will be tabled to take care of that response. I thought that I had made a generous offer for further consultation with your

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Lordships in regard to the documents and in regard to receiving anything that anybody would like to say on this matter. I have given that firm undertaking. The Government will respond by way of amendment. I ask the House to support me in that undertaking and to support my request to the noble Lord opposite to withdraw his amendments.
Lord Mottistone: My Lords, not having spoken before, perhaps I may intervene for a moment. It seems to me that if these amendments were taken to a Division and were lost, it would do the cause with which the House as a whole agrees harm rather than good. If there is any doubt in the Government's mind after they have had their consultations as to exactly how they might frame the amendment that my noble friend the Minister has said he will definitely put down in another place, if the consultations show a balance that is too even and this discussion we have just had is not taken to a Division, one can perhaps suggest that the Government would take full account of what has been said from these Benches by my noble friend as well as by others in making their decision. If, on the other hand, it is taken to a Division and it is defeated, and it is an even balance, the Government might not pay quite so much attention to what we have said in this House as they otherwise would.
Lord Bruce of Donington: My Lords, I am grateful to the noble Lord. I do not wish in any way to impugn the undertaking that the noble Lord has given. If the noble Lord intends, following consultation, to effect certain changes in the Bill that goes from your Lordships' House he will undoubtedly do so, and he may well do so within the spirit of our discussions this afternoon, although he said that my final decision as to what should be done must await the consultations which he anticipates are going to be taken by the end May.
As I say, I do not wish to impugn the Government's intention in any way, but I do not see that it can deflect the Government's final course whatever decision is made this afternoon. If the amendments that I have suggested are incorporated in the Bill, then the Government will review them and will review the whole structure of the Bill in the light of the consultations which are going to take place. If the Bill, as it leaves your Lordships' House, does not meet the result of their consultations, they will amend it. All I wish to do is to give this House an opportunity to send the Bill from this place in conformity with its wishes. We shall all, I think, vote in this matter without offence to anyone and according to the dictates of our individual consciences. It is to those consciences that I now appeal.
5.53 p.m.
On Question, Whether the said amendment (No. 224) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 116.

DIVISION NO. 1

CONTENTS

Ardwick, L.

Birk, B.

Avebury, L.

Blease, L.

Aylestone, L.

Blyton, L.

Beaumont of Whitley, L.

Boston of Faversham, L.

170

Bottomley, L.

Lloyd of Kilgerran, L.

Briginshaw, L.

Lockwood, B.

Brockway, L.

Longford, E.

Brooks of Tremorfa, L.

Mackie of Benshie, L.

Bruce of Donington, L.

McNair, L.

Carmichael of Kelvingrove, L.

Milverton, L.

Chitnis, L.

Molloy, L.

Collison, L.

Mulley, L.

Davies of Leek, L.

Nicol, B.

Dean of Beswick, L.

Northfield, L.

Denning, L.

Oram, L.

Elwyn-Jones, L.

Phillips, B.

Ewart-Biggs, B.

Pitt of Hampstead, L.

Ezra, L.

Ponsonby of Shulbrede, L. [Teller. ]

Fisher of Rednal, B.

Gallacher, L.

Rea, L.

Galpern, L.

Rhodes, L.

Glenamara, L.

Rochester, L.

Graham of Edmonton, L.

Ross of Marnock, L.

Gregson, L.

Shepherd, L.

Grey, E.

Shinwell, L.

Hampton, L.

Stedman, B.

Hanworth, V.

Stewart of Fulham, L.

Harris of Greenwich, L.

Stoddart of Swindon, L [Teller.]

Jeger, B.

Kagan, L.

Taylor of Blackburn, L.

Kennet, L.

Taylor of Mansfield, L.

Kilmarnock, L.

Tordoff, L.

Kinloss, Ly.

Wallace of Coslany, L.

Kirkhill, L.

Walston, L.

Lawrence, L.

White, B.

Leatherland, L.

Winstanley, L.

Listowel, E.

Wootton of Abinger, B.

Llewelyn-Davies of Hastoe, B.

NOT-CONTENTS

Airey of Abingdon, B.

Hailsham of Saint Marylebone, L.

Alexander of Tunis, E.

Allerton, L.

Harmar-Nicholls, L.

Ampthill, L.

Hemphill, L.

Atholl, D.

Henderson of Brompton, L.

Auckland, L.

Holderness, L.

Belhaven and Stenton, L.

Hornsby-Smith, B.

Belstead, L.

Hylton-Foster, B.

Boardman, L.

Inglewood, L.

Boyd-Carpenter, L.

Ingrow, L.

Brabazon of Tara, L.

Kaberry of Adel, L.

Broxbourne, L.

Lane-Fox, B.

Bruce-Gardyne, L.

Lauderdale, E.

Buckinghamshire, E.

Lindsey and Abingdon, E.

Caithness, E.

Long, V.

Cameron of Lochbroom, L.

Lucas of Chilworth, L.

Campbell of Alloway, L.

McFadzean, L.

Campbell of Croy, L.

Macleod of Borve, B.

Carnegy of Lour, B.

Mancroft, L.

Cathcart, E.

Margadale, L.

Chelwood, L.

Marley, L.

Coleraine, L.

Marsh, L.

Constantine of Stanmore, L.

Marshall of Leeds, L.

Cork and Orrery, E.

Maude of Stratford-upon-Avon, L.

Craigavon, V.

Cullen of Ashbourne, L.

Merrivale, L.

Davidson, V.

Mersey, V.

De La Warr, E.

Montgomery of Alamein, V.

Denham, L. [Teller.]

Mottistone, L.

Dilhorne, V.

Munster, E.

Drumalbyn, L.

Murton of Lindisfarne, L.

Dundee, E.

Noel-Buxton, L.

Ellenborough, L.

Nugent of Guildford, L.

Elles, B.

O'Brien of Lothbury, L.

Elliot of Harwood, B.

Onslow, E.

Elton, L.

Orkney, E.

Faithfull, B.

Orr-Ewing, L.

Ferrier, L.

Pender, L.

Fisher, L.

Peyton of Yeovil, L.

Fortescue, E.

Portland, D.

Fraser of Kilmorack, L.

Rankeillour, L.

Gainford, L.

Reay, L.

Glanusk, L.

Renwick, L.

Grimston of Westbury, L.

Rodney, L.

171

Romney, E.

Teviot, L.

St. Davids, V.

Teynham, L.

Selkirk, E.

Trefgarne, L.

Sharples, B.

Trumpington, B.

Skelmersdale, L.

Tryon, L.

Somers, L.

Vaux of Harrowden, L.

Stockton, E.

Vickers, B.

Stodart of Leaston, L.

Vivian, L.

Strathcarron, L.

Ward of Witley, V.

Strathspey, L.

Westbury, L.

Sudeley, L.

Whitelaw, V.

Suffield, L.

Windlesham, L.

Swansea, L.

Young, B.

Swinfen, L.

Young of Graffham, L.

Swinton, E. [Teller.]

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 225 not moved.]
6 p.m.
Clause 139 [General powers of trustee]:
[Amendment No. 226 not moved.]
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment Nos. 227 and 228:
[Printed earlier: 1/4/85, col. 54.]
The noble Lord said: My Lords, when we were dealing with Amendment No. 21 I spoke also to Amendments Nos. 227 and 228. I beg to move these two amendments.
On Question, amendments agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 229:
[Printed earlier: 1/4/85, col. 54.]
The noble Lord said: My Lords, it might be for the convenience of the House if I speak also to Amendment Nos. 232 and 233:
Amendment No. 232: Clause 144, page 114, line 33, leave out ("Subsection (4)") and insert ("Subsections (4) and (4A)").
Amendment No. 233: Page 114, line 34, leave out ("it has") and insert ("they have").
These amendments are desirable to retain the flexibility provided by the law as at present. The Government appreciate that although in the great majority of cases the trustee in bankruptcy should obtain the sanction of his committee as required by Clauses 139 and 144, there will be occasions when he needs to act quickly, but where it would be impossible to obtain the necessary sanction in time; for example, where it is necessary to maintain a business as a going concern to the ultimate benefit of the creditors. These amendments recognise that such situations may arise, but provide that the committee can sanction such action by the trustee only where it is satisfied that the trustee has sought its sanction without undue delay and that the trustee had to act urgently in the matter. The inherent jurisdication of the courts to give retrospective permission where the trustee has acted without the sanction of his committee is also preserved by these amendments. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 230:
[Printed earlier: 1/4/85, col. 54.]
The noble Lord said: My Lords, I spoke to Amendment No. 230 while we were discussing Amendment No. 21. I beg to move.
On Question, amendment agreed to.
[Amendment No. 231 not moved.]
Clause 144 [Manner of distribution of estate]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 232 and 233:
[Printed above.]
On Question, amendments agreed to.
Clause 145 [Priority of debts]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 234:
Page 115, line 35, leave out ("given any priority in bankruptcy") and insert (", in the event of bankruptcy, to have a particular priority or to be postponed.").
The noble and learned Lord said: My Lords, this is a technical amendment to Clause 145 which establishes the priority of claims in a bankruptcy. Other provisions of the Bill (for example, Clause 157) and of other Acts (for example, Section 3 of the Partnership Act 1890) can also affect priority. Consequently Clause 145(7) expressly preserves the effect of those other provisions.
Representations have been made that the use of the word "priority" in Clause 145(7) means that the subsection may apply only to provisions in other Acts which advance the priority of a particular claim and not provisions such as Section 3 of the Partnership Act 1890 to which I have referred which defer rather than advance claims.
The purpose of the amendment is merely to make it absolutely clear that other statutory provisions which alter the order of priorities in a bankruptcy whether by advancing or by deferring the order of payment of certain claims are not prejudiced by the provisions of Clause 145. I beg to move.
On Question, amendment agreed to.
Schedule 5 [Preferential debts]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 235:
Page 166, line 20, leave out paragraph 1 and insert—
("1.—(1) Sums due at the relevant date from the debtor on account of deductions of income tax from emoluments paid during the period of twelve months next before that date, being deductions which the debtor was liable to make under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn), less the amount of the repayments of income tax which the debtor was liable to make during that period.
(2) Sums due at the relevant date from the debtor in respect of such deductions as are required to be made by the debtor for that period under section 69 of the Finance (No. 2) Act 1975 (sub-contractors in the construction industry).").
The noble and learned Lord said: My Lords, in moving this amendment I should like, with your Lordships' permission, to speak also to certain other amendments to Schedule 5, these being Amendments Nos. 236 to 247, 253 to 257, 259 to 261 and 264.
Amendment No. 236: Page 166, line 35, leave out ("bankrupt") and insert ("debtor")

173
Amendment No. 237: Page 166, line 40, leave out ("bankrupt") and insert ("debtor")
Amendment No. 238: Page 167, line 8, leave out ("bankrupt") and insert ("debtor")
Amendment No. 239: Page 167, line 11, leave out paragraph 3.
Amendment No. 240: Page 167, line 16, leave out ("bankrupt") and insert ("debtor").
Amendment No. 241: Page 167, line 18, leave out ("bankrupt") and insert ("debtor").
Amendment No. 242: Page 167, line 21, leave out ("bankrupt") and insert ("debtor").
Amendment No. 243: Page 167, line 26, leave out ("bankrupt") and insert ("debtor").
Amendment No. 244: Page 167, line 30, leave out from ("Any") to ("Schedule") in line 31 and insert ("sum which is owed by the debtor and is a sum to which").
Amendment No. 245: Page 167, line 32, leave out from ("premiums") to end of line 35 and insert ("applies").
Amendment No. 246: Page 167, line 38, leave out ("bankrupt") and insert ("debtor").
Amendment No. 247: Page 167, line 39, leave out ("his") and insert ("the debtor").
Amendment No. 253: [Printed earlier: col. 129.]
Amendment No. 254: Page 168, leave out lines 12 to 27 and insert—

(" (a) where at the time the bankruptcy order was made there was an interim receiver of the debtor's estate appointed under section 112 of this Act, to the date on which the interim receiver was first appointed after the presentation of the bankruptcy petition; and

(b) in a case not falling within paragraph (a) above, to the date of the making of the bankruptcy order.").

Amendment No. 255: Page 168, line 42, leave out ("bankrupt") and insert ("debtor").
Amendment No. 256: Page 168, line 46, leave out ("bankrupt") and insert ("debtor").
Amendment No. 257: Page 169, line 2, leave out ("bankrupt") and insert ("debtor").
Amendment No. 259: Page 169, line 19, leave out ("a bankruptcy") and insert ("his employer going into liquidation or being adjudged bankrupt").
Amendment No. 260: Page 169, line 28, leave out ("bankrupt") and insert ("debtor").
Amendment No. 261: Page 169, line 32, leave out ("bankrupt") and insert ("debtor").
Amendment No. 264: Transpose Schedule 5 to after Schedule 2.
Certain of these amendments fulfil the substance of a commitment which I gave in Committee that the Government would bring forward amendments to abolish the preferential status of assessed taxes and local rates. As I explained in dealing with certain earlier amendments, the opportunity has also been taken to propose a number of technical changes to improve the format of the Bill and to secure harmonisation of corporate and personal insolvency provisions in priority of debts. There are a number of consequential amendments therefore which flow from this exercise, a number of these being those which I ask leave to speak to in addition to the present amendment.
I assure your Lordships that they are all technical in nature and will improve the Bill considerably. I hope your Lordships will accept that it is the most sensible arrangement that practitioners should have to refer to only one Act to discover the law relating to preferential debts in insolvencies. I also take this opportunity to assure Scottish practitioners that the Government intend to propose in another place amendments to the Bankruptcy (Scotland) Bill which will produce an
174
almost identical set of rules for use in sequestrations in Scotland.
If I may now deal with the amendments briefly, I should be willing, if your Lordships wish, to explain the effect of each amendment in detail, but first I shall deal with the principal matter which gives rise to this series of amendments. That is the acceptance by the Government of the case for the abolition of preference of the so-called assessed taxes and also for local rates. The present amendment and Amendment No. 239 fulfil that undertaking. The additional amendments are, in the main, to secure the harmonisation in Schedule 5 of the two types of insolvency, corporate and personal, by substituting the word "debtor" for the word "bankrupt", which is used in Schedule 5 only in relation to personal insolvency.
The result of your Lordships accepting these amendments, if you do so, is that the only preferential debts remaining in an insolvency will be those set out in Schedule 5 to the Bill as amended. Your Lordships will recall that so far as the so-called collector taxes were concerned, taxes such as PAYE and VAT, I announced in Committee that the Government wished to have the benefit of the views of your Lordships before reaching a final view. However, I think I made it clear at that time that the view of the Government, as then advised, was that the present 12-month period for these taxes should remain. In the course of the debate in Committee noble Lords on both sides of the Chamber shared that view while others dissented.
Having considered the various arguments, the Government have come to the conclusion that the period of preference for the collector taxes ought to remain at a full year. The nature of PAYE and sub-contractors' deductions (which are dealt with in the amendment we are dealing with at the moment and the next following part of the amendment) are quite different from that of other taxes, as was recognised by a number of noble Lords from all parts of the Committee. It was widely recognised that what was in question was money that does not, and never did, belong to the employer. It is money that he is required by law to deduct from his employees' wages and to hold, as it were, in trust for the Crown. Why should he then be permitted to divert these funds to meet his own debts so that, to the extent of the diversion, other creditors will have benefited at the Crown's expense?
Similar considerations apply to other monies collected on behalf of the Crown. In the words of Cork, it cannot be right that statutory provisions enacted for the more convenient collection of the revenue should inure to the benefit of private creditors. Given the significant difference between taxes collected on behalf of the Crown on the one hand, and the employers' own tax debts on the other, it could reasonably be argued, as I indicated in Committee, that there should be no limitation of the preferential status accorded to the former class of tax liability, that is to say, the collector taxes. However, in conformity with the law as applied to assessed taxes, it was decided to limit the period of preference to a maximum of 12 months. As your Lordships are aware, that is a position which has obtained for some considerable time.
By reducing the preferential period to less than 12 months, pressure would inevitably be placed on the

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revenue-collecting departments to review their collection procedure. This would be particularly necessary, for instance, in the case of PAYE and national insurance contributions, both of which (as your Lordships will be aware) are based upon an annual return. Accordingly, there is no reconciliation of the amount due by an employer and the amount paid by him until after the submission of the annual return at the end of the tax year. If a reduced period of preference were to be introduced, then inevitably both departments would have to consider introducing checks on employers' schemes more frequently than on an annual basis in order that they might protect their rights to claim outstanding arrears in the event of an employer becoming insolvent. That, as noble Lords will realise, would in turn affect the employers and would inevitably increase their administrative demands and the related costs of doing so—and that at a time when Government are seeking to reduce the administrative pressures upon employers in general and small businesses in particular.
6.15 p.m.
As has been said on a number of occasions, the Crown is not in a position of being able to choose its debtors. If an individual or a company takes on employees, then PAYE and national insurance contributions must be deducted as laid down by law. The opportunity for indebtedness thus exists whether or not the revenue collecting department regards the employer as credit worthy. So far as VAT is concerned, on reaching a certain level of turnover a person has a statutory requirement to charge tax on supplies and to account for that tax to the Customs. Customs and Excise, like other revenue-collecting departments, cannot therefore choose their debtors, and it is limited in the measures that it can take to secure its debts.
I think it is generally accepted by most people, including Sir Kenneth Cork, that it is right for the Crown to have a degree of preference for the collector taxes. Indeed, as I have said, on one view the logic of the arguments for retaining preference for these collector taxes might lead one to say that Crown preference there should be unlimited. The Cork Committee gave no reasoning for their conclusion that the present 12-month period was excessive. Their recommendation that the limit should be reduced in general to three months was based entirely on the interval between returns for various taxes; but, as Cork himself recognised, the interval is not always as little as three months. In any event, I would suggest that the interval between returns is not a logical basis for limiting the liability to account for collecting periods.
Certain amendments at Committee stage suggested a period of six months. As I have already indicated, 12 months is the present rule and a rule which has been present for some considerable time. I suggested in Committee that it is for those who seek to move on to some shorter period to justify the need for such a change. By accepting the principle behind the amendments moved in Committee that assessed taxes should no longer receive preference, the Government recognised the arguments put forward in this Chamber and made a substantial concession. I would suggest
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that no substantive argument has been made out for reducing the period of preference any further than that at which it presently stands. So it remains the Government's view that the present limited preference for the collector taxes is justified in both principle and in degree. I beg to move.
Lord Bruce of Donington: My Lords, I am most grateful to the noble and learned Lord for having moved the various amendments that he has described to your Lordships. The House will be grateful that he has, at any rate, honoured in part the assurance that he gave in Committee about proposed amendments to Schedule 5. It is quite easy to see from the length of time that the noble and learned Lord devoted to the position of Crown preference, particularly in regard to the taxes collected on behalf of the revenue or Customs and Excise, that those are the aspects upon which the Government feel weakest. If they had felt strong, they would not have devoted all the time and argument along the tortuous path about not being able to choose their debtors and sums collected on behalf of the public, and so on. In other words, methinks they have protested too much about this.
It is not as though they always held the same view. Had there been a consistency between what the noble Lord said this afternoon and, for example, what the Chancellor of the Exchequer has said, there would be some case for it. But in another place, only a few months ago, his right honourable friend the Chancellor of the Exchequer was claiming that he could not very well tamper with VAT because in practice it was used as working capital by the firms which became liable for it. I must say that it is either working capital or it is not, and the noble Lord knows perfectly well that in both cases, when it suits the Government, they say, "You have the use of the money, you are using it as working capital and therefore it would be against the stimulus we would like to give to small businesses to make collection more restrictive than it is". The argument has been used in another place by the right honourable gentleman the Chancellor of the Exchequer.
The Cork Committee considered this matter in great depth and came to the conclusion that the period ought to be reduced. I believe most of your Lordships considered that a three months' limitation would probably be appropriate in the circumstances. It is well known that one of the greatest hardships that is endured, on a firm going into liquidation or an individual partnership going bankrupt, is endured by the unsecured creditors. When a business ceases, as it normally does in these circumstances, of course the assets of the concern are no longer valuable as a going concern, and no benefit can inure to the creditors by virtue of the business being sold as a going cencern. When the "chop" comes down the assets are valued at break-up value, and what happens in the event is that unsecured creditors very rarely get anything at all by the time the debenture-holders and other preferential shareholders have proved their claims. Indeed, one of the results of the very welcome concessions that have been made by the noble Lord is that slightly more win now become available for the general body of creditors. Bearing in mind that the principal conclusions of the Cork Committee were that so far as

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is feasible in a bankruptcy or liquidation the claims of creditors should abate pari passu, then of course the concessions that have been made, welcome though they are, are comparatively miniscule.
In common with many of your Lordships, I have received representations from local authorities concerning the abolition of the preferential statements of rates. In common with your Lordships, I have had to weigh the claims of the individual as a consumer and the individual as a creditor against the individual as a ratepayer; and it is very difficult to arrive at a balance. I have come to the conclusion, on the basis that you cannot ill-treat a local authority because that is a body, and you can only ill-treat the people who are comprised within the local authority, treating them as individuals, that a fair balance has been struck as between those competing interests by the abolition of the rates preference; although, as I say, I have had many eloquent testimonies to the contrary from local authorities.
I had rather hoped that the Government were going to go much further than they have gone, but the concessions that the noble and learned Lord has been able to offer on behalf of the Government are a step in the right direction. They will marginally increase the amount available for the general body of creditors in a liquidation or a bankruptcy, and I trust that the House will support them.
Lord Mottistone: My Lords, I came in yesterday on Amendment No. 130, and I do not want to repeat exactly what I said then. But now, after having heard the full argument of my noble and learned friend the Lord Advocate, I want to thank him very much for the good points he has advanced for us. I saw his argument about PAYE. I am not so convinced about VAT. It may be a collector tax, but it is a business tax rather than a tax on individuals. If PAYE is not passed on, in the end the individual person will be found out by the Revenue and they will get back at him; so it will be more difficult for the individual person. But in regard to VAT, I would not be so sure. However, I think I shall have to await advice from the CBI on this whole package of amendments. As I said in connection with Amendment No. 130, there is a possibility that I may come forward with some refinement to improve the generosity of the Government as evidenced by my noble and learned friend's moving of this amendment.
Lord Noel-Buxton: My Lords, I should like to take this opportunity to record my thanks to the Government and to my noble and learned friend the Lord Advocate for these amendments to Schedule 5, which have fulfilled the assurances that were given in response to the amendments moved by me in Committee. Of course I should like the period of 12 months to be reduced to six months, as I said in Committee, but I take my noble and learned friend's point that it is for those who seek to change the status quo to show why it should be changed. I am only sorry that the Government have not been persuaded but, on the other hand, I find my noble and learned friend is very persuasive. I suppport these amendments.
The Earl of Selkirk: My Lords, I, too, should like to thank the noble and learned Lord the Lord Advocate
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most warmly for fulfilling fully the promise he made during the course of the Committee stage. He says that this is the simplest way to do it. I cannot say that reading the amendments constitutes simple reading in any circumstances whatever. In fact, I had the utmost difficulty in finding what on earth the Government really had done.
I, too, am very sorry that he has not accepted a shorter period than 12 months. He says that administratively it is easier to take the 12 months on which income tax is based; but of course insolvency does not take place to coincide with any financial year whatever, and it may be for quite a different period that the income tax has to be collected. I should have thought it would be just as easy in these circumstances to make it six months rather than 12 months. I do not think that the argument that this is administratively easy is correct; but I thank the noble and learned Lord for what he has done even though it may not be all that we should have liked to see done.
Lord Denning: My Lords, may I say one word? I always thought that VAT was really in the nature of working capital when it is collected. It is not really a collector tax at all. I would agree with the noble Lord, Lord Mottistone, and others that if we could do something about VAT and not allow that a preference, it would be a good thing. But, still, one ought to be very thankful for even small mercies; so on the whole one would not object to this.
Lord Cameron of Lochbroom: My Lords, I am very grateful to those noble Lords who have spoken. The noble Lord opposite said I had honoured in part the assurance I had given. I think that to he fair to me and to him perhaps a reading of the Hansard report would indicate that I had honoured the assurances I gave both in full and also in relation to the fact that I was prepared to hear.
Lord Bruce of Donington: My Lords, I wish to withdraw that immediately. They have not met my expectations in full but I do completely withdraw my observation. The noble and learned Lord has in fact honoured his promise and I would not like it to be thought otherwise.
Lord Cameron of Lochbroom: My Lords, I am most grateful to the noble Lord for that very generous withdrawal. I shall make only one point in relation to the matters which he raised. I do not dispute that the Cork Committee considered the matter of Crown preference in great depth. I think the point that I made was in relation simply to their recommendation as regards the shortening of the timescale. I made the point—and I still do—that they do not provide reasoning there. I have put before your Lordships the reasons why the Government have stayed firm on that matter notwithstanding the blandishments which noble Lords—and, indeed, my noble friends Lord Mottistone, Lord Noel-Buxton and Lord Selkirk—have stated in their responses to what I have said. I would add that I am most grateful to them for the attitudes which they have adopted in this matter. I do not know whether my noble friend Lord Mottistone feels that it is appropriate in the light of

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what has been said today to seek to make any further suggestions, but I hope it has been made quite clear the principle on which the Government are standing in making these amendments.
6.30 p.m.
There is one minor matter which I should have brought to the attention of the House when I stood up to move this amendment. I should have drawn to the attention of your Lordships the last line of Amendment No. 235. Your Lordships will observe that, as it appears on the Marshalled List, the word at the beginning of that line should be "sub-contractors" as opposed to "b-contractors". With that, I commend this amendment and the others consequential upon it to your Lordships.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 236 to 247:
[Printed earlier: cols. 172–3.]
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 248:
[Printed earlier: col. 126.]
The noble and learned Lord said: My Lords, this amendment was spoken to by me in relation to Amendment No. 154. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 249:
Page 167, line 44, leave out sub-paragraph (2).
The noble and learned Lord said: My Lords, for the convenience of the House, I shall speak to this amendment and also to Amendment No. 250.
Amendment No. 250: Page 168, line 5, leave out from ("the") to end of line 6 and insert ("debtor has been terminated, whether before, on or after that date.
(3A) So much of any sum owed in respect of money advanced for the purpose as has been applied for the payment of a debt which, if it had not been paid, would have been a debt falling within subparagraph (1) or (3) above.").
In speaking to these two amendments perhaps I may also make reference to Amendment No. 251, set down by the noble Lord, Lord Bruce of Donington, which is of course an amendment to Amendment No. 250.
Amendment No. 251 [As an amendment to Amendment No. 250]: Leave out the proposed sub-paragraph (3A).
Amendments Nos. 249 and 250 are technical amendments which form part of the amendments to harmonise and modify the list of debts which attract preferential status in the event of insolvency. Their purpose is to clarify and preserve the preferential status of debts owed to employees in respect of holiday pay.
In revising the list of debts which attract preferential status in the event of insolvency, the opportunity was taken in Schedule 5 to deal with a deficiency which appeared in the way in which Schedule 19 to the 1985 Act was drawn. Schedule 19 provided that amounts owed and unpaid in respect of holiday pay during the
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12 months immediately preceding insolvency would, within limits, be preferential where the employees' employment was terminated "by or by the effect of" the insolvency of the employer. Doubts were expressed, however, as to the adequacy of this wording in protecting the preferential status of such debts when an employee is dismissed a short while after the date of insolvency, and it has been argued that such a dismissal might not be "by the effect of" the insolvency of the employer.
The Bill as introduced attempted to close this potential loophole in paragraph 6(3) of Schedule 5, which now establishes the preferential status of accrued holiday pay. Nevertheless, it has continued to be felt that Schedule 5 does not entirely remove uncertainty as regards preferential status. Accordingly, the amendments which are now proposed are to remove any doubts on this subject.
I should add that the second amendment relates to a matter which was also the subject of consideration by the Cork Committee and by the Scottish Law Commission. In the Cork Report careful consideration was given as to whether subrogated preferential rights should continue to exist in a winding up; and, if so, whether they should be extended to bankruptcy. A majority of the committee came down in favour of both those propositions.
The Scottish Law Commission, I am glad to say, when considering the matter of bankruptcy in Scotland and also looking at the same questions, came to an identical conclusion. The recommendation was given effect to in the Bankruptcy (Scotland) Bill, which of course is now in another place. It will be found in paragraph 6(2) of Schedule 3 to that Bill.
I appreciate, as the Cork Committee pointed out, that the arguments are finely balanced in connection with this matter. On the one hand, it is argued that the banks, knowing that their rights are well protected, advance money to traders for the purpose of paying wages, and by so doing enable some businesses to keep going for longer than they ought. That, of course, is to the detriment of other creditors in the meantime. But the counter argument—the one which found favour with both the Scottish Law Commission and the Cork Committee—is that it is desirable that banks and other lending institutions should be encouraged to advance money to traders to pay wages at critical periods, particularly when the continuation of the business concerned hangs in the balance. If such funds could not be advanced in the knowledge that in the event of a subsequent formal insolvency any related claims could rank preferentially, then the potential lenders might well be discouraged from making the advances in cases particularly where such funds were desperately needed to enable a business to turn the corner, and thus lead to the early and unnecessary demise of businesses which could have been saved.
It is for that reason that the second amendment is proposed in the general context of the technical amendments to cure doubt about the effectiveness of the preference in relation to holiday pay. I beg to move.
On Question, amendment agreed to.
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, if the noble and learned Lord the Lord

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Advocate would care to move Amendment No. 250 formally, we can proceed to deal with the amendment to it.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 250:
[Printed above.]
The Deputy Speaker: My Lords, I call Amendment No. 251 as an amendment to Amendment No. 250.
Lord Bruce of Donington Lord Bruce of Donington moved, as an amendment to Amendment No. 250, Amendment No. 251:
[Printed above.]
The noble Lord said: My Lords, with the permission of the House, I should like to deal with Amendments Nos. 251 and 325 together.
Amendment No. 325: Schedule 9, page 191, line 36, column 3, at end insert—
(" In Schedule 19, paragraph 13.").
This amendment and the sections of the Cork Report that deal with the matters which the noble and learned Lord has outlined this afternoon have given me much cause for anxiety. It has been most difficult for me to make up my mind as to which of the arguments, to which the Cork Committee has given equal weight, is decisive.
I have to say that after listening to the noble and learned Lord and re-reading portions of the Cork Report, I have come to the conclusion that the noble and learned Lord is right and that I am wrong. His balance of argument is far more valid than the one that I was about to adduce. To save myself the embarrassment of putting forward an argument in which I no longer believe, I beg the leave of the House to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
On Question, Amendment No. 250 agreed to.
[Amendment No. 252 not moved.]
The Deputy Speaker: My Lords, I understand that Amendments Nos. 253, 254, 255, 256 and 257 are consequential.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 253 to 257:
[Printed earlier: col. 173.]
The noble and learned Lord said: My Lords, it is the case that these amendments are consequential on Amendment No. 235. I beg to move.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 258:
[Printed earlier. col. 126.]
The noble and learned Lord said: My Lords, spoke to this amendment with Amendment No. 154. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 259 to 261:
[Printed earlier: col. 173.]
The noble and learned Lord said: My Lords, these amendments are consequential upon Amendment No. 235. I beg to move.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 262:
[Printed earlier: col. 126.]
The noble and learned Lord said: My Lords, this amendment is consequential on Amendment No. 154. I beg to move.
On Question, amendment agreed to.
[Amendment No. 263 not moved.]
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 264:
[Printed earlier: col. 173.]
The noble and learned Lord said: My Lords, this amendment is consequential upon Amendment No. 235. I beg to move.
On Question, amendment agreed to.
Clause 148 [Duties of bankrupt in relation to trustee]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 265:
[Printed earlier: col. 149.]
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 194. I beg to move.
On Question, amendment agreed to.
Clause 149 [Second bankruptcy]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 266:
Page 118, line 34, leave out ("comprised, or") and insert ("which is, or by virtue of section 134 above is").
The noble Lord said: My Lords, this amendment is proposed to Clause 149 of the Bill, which is concerned with the situation where a further bankruptcy order is made against a bankrupt who has not yet been discharged from earlier bankruptcy proceedings. The clause establishes how the debts and assets of the earlier proceedings are to be dealt with in the subsequent bankruptcy.
Under Clause 149(7) certain property "comprised or capable of being comprised" in the estate at the time of the first bankruptcy is not comprised in his estate for the purposes of the second bankruptcy. The purpose of the amendment is to make clear what is meant by property "capable of being comprised in the bankrupt's estate". It provides that the property referred to is that which a trustee may claim under Clause 134 of the Bill; that is, property which is on the face of it exempt from the bankrupt's estate under Clause 109(2) because it is necessary to him for his domestic or business purposes. However, the trustee may, within 42 days of acquiring knowledge of the

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property, or such longer time as the court may allow, claim it for the estate and provide a less expensive replacement.
The purpose of this provision is I think self-evident in that it would not be right to allow a bankrupt to retain an expensive antique table, while recognising at the same time that a table of some sort is necessary for normal domestic purposes.
Where a second or subsequent bankruptcy follows a first, it is obviously right that if the first trustee is still considering action under Clause 134 (and it may be that he has only recently become aware of the property concerned) the matter should proceed unaffected by the second bankruptcy; the property involved being something which the bankrupt actually owned at the time of the first bankruptcy order. With that explanation, I beg to move the amendment.
On Question, amendment agreed to.
Clause 152 [Extortionate credit transactions]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 267 and 268:
[Printed earlier: 1/4/85, col. 104.]
The noble Lord said: My Lords, when moving Amendment No. 139 I spoke also to these two amendments. I beg to move.
On Question, amendments agreed to.
Clause 165 [Obtaining credit]:
6.45 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 269:
Page 132, line 37, at beginning insert ("Subject to subsection (4A) below").
The noble Lord said: My Lords, with the leave of the House, I should like to address myself to this amendment and also to Amendment No. 271:
Amendment No. 271: Page 133, line 18, at end insert—
("(4A) The bankrupt is not guilty of an offence under subsection (1) above if—

(a) he obtains credit for the purpose of acquiring any such property as is mentioned in section 109(2) above;

(b) at the time he obtains such credit he has reasonable cause to believe that he will be able to repay such credit and any interest thereon in accordance with the terms on which the credit is provided; and

(c) he has complied with his obligations as to the repayments of such credit and interest or if he has failed to do so, such failure is not caused wholly or in part by any improper or negligent act or omission of the bankrupt.").

These amendments endeavour to deal with the situation of the possible granting of credit in very reasonable amounts to a bankrupt. The present situation on the right to obtain credit is in practice, in an increasingly credit-orientated society, the most serious of the disabilities suffered by a bankrupt. The Cork Committee proposed no relaxation of the present rule. Your Lordships may refer to paragraphs 1840 to 1851, but the argument in paragraph 1844 seems to us to be rather circular.
The deception involved is not—as the Cork Committee suggested—failing to disclose facts which
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might lead to the refusal of credit (which may, for example, include the fact that the borrower has just obtained his discharge) but failing to disclose facts which the borrower is legally required to disclose. The real justification for the restriction on credit is to prevent the bankrupt from getting into further trouble by borrowing money to spend for non-essential purposes.
I invite your Lordships to consider that it may be reasonable to allow a bankrupt to obtain necessaries on credit without disclsure, provided that he reasonably believes he can repay the credit, and either does so or is prevented from doing so by reasons (such as illness) which are outside his control. I beg to move.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord, Lord Bruce of Donington, for explaining so explicitly the purpose behind his amendments. While I am not unsympathetic to the position in which the undischarged bankrupt may find himself in this context, I have to say that, for a number of reasons, I am not able to accept these amendments.
The principal purpose of Clause 165, which reenacts the substance of Section 155 of the Bankruptcy Act 1914, is to protect the potential supplier of credit. That person is entitled to know what sort of risk he is taking—and the fact that the person applying for the credit is an undischarged bankrupt is something that the potential supplier of credit will wish to take into account when considering the application.
Of course, there is nothing to stop him from agreeing to supply credit to an undischarged bankrupt, and I am sure that in reaching such a decision he will take into account the type of considerations to which the noble Lord has referred in proposing these amendments. But the supplier of credit should reach that decision in full knowledge that he is dealing with an undischarged bankrupt who previously failed to manage his financial affairs.
A further purpose of Clause 165 is to dissuade an undischarged bankrupt from being tempted into engaging in the sort of credit transactions which may have led to his insolvency in the first place. I would ask your Lordships to bear in mind that most bankrupts will, under the Bill, be discharged after three years or, under the new provisions for accelerated discharge, after two years.
I feel that these amendments would remove an important protection for the suppliers of credit and indeed might encourage undischarged bankrupts to over-extend themselves in the management of their necessarily limited resources. The prescribed amount under Section 155 of the Bankruptcy Act 1914 stands at present at £50 and has done so since it was increased by the Insolvency Act 1976. This and the various other monetary sums in the insolvency code will be reviewed prior to the new legislation coming into force so that they can be set at a level more appropriate to the present day. To some extent, that might take care of what the noble Lord seeks to introduce into the Bill.
Having said that, and in inviting the noble Lord to withdraw his amendment, there is perhaps one other thing I should like to say. I believe this is the last amendment that the noble Lord, Lord Bruce of Donington, is to move during this stage of our

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proceedings. It is certainly the last of his amendments, he may be happy to know, to which I shall be responding. I should like to take this opportunity of thanking the noble Lord for his courtesy in the past couple of days in what has been—and I use his words—something of a marathon. I appreciate, as does my noble and learned friend the Lord Advocate, that he has not had the benefit of a number of his noble friends who, unfortunately, had to be absent from the country. I compliment the noble Lord on his patience and fortitude.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for his very kind remarks which, I can assure him, are deeply appreciated. I reciprocate by saying that having a disputation with him in these circumstances has been a pleasant experience from which I have learned greatly and for which I am deeply indebted to the noble Lord. I thank him very much.
I am very pleased that the noble Lord has indicated that at a later stage regulations will be published which possibly vary the amounts of permitted credit to a bankrupt in the circumstances I have described. I am reassured by this because we are increasingly living in a credit card era. I must confess that I have not yet accustomed myself to it. I much prefer to pay my way as I go, but that is now old-fashioned. Possibly the noble Earl, Lord Stockton, if he were in the House today, would appreciate those sentiments; but perhaps there are those among us who are more modern in outlook. I am glad that there is to be flexibility. I completely accept the noble Lord's explanation and ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 270:
Page 132, line 37, leave out ("is") and insert ("shall be").
The noble Lord said: My Lords, this is a drafting amendment only. All the other clauses which deal with bankruptcy offences provide that where certain events have taken place the bankrupt shall be guilty of an offence, but in Clause 165 the term used is that the bankrupt is guilty of the offence. This amendment merely removes the inconsistency. I beg to move.
On Question, amendment agreed to.
[Amendment No. 271 not moved.]
Clause 174 [Power to appoint special manager]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 272:
Page 139, line 32, leave out from ("shall") to end of line 34 and insert—

("(a) give such security as may be prescribed;

(b) prepare and keep such accounts as may be prescribed; and

(c) produce those accounts in accordance with the rules to the Secretary of State or to such other persons as may be prescribed.").

The noble Lord said: My Lords, Clause 174 is concerned with the appointment of a person to be the special manager of the business or property of a bankrupt. Under subsection (5) the special manager is required to produce accounts to the Secretary of State.
Under the provisions of Clause 174 special managers will in future be appointable not only, as at present, on the application of the official receiver but also on the application of a trustee. Where the special manager is appointed on the application of a trustee it will not necessarily be appropriate for the accounts to be produced to the Secretary of State. Your Lordships will see that in Clause 70(5)—the corresponding provision for winding up—the special manager is required to produce accounts to the Secretary of State or to such other persons as may be prescribed. The proposed amendment achieves the same result where a special manager is appointed under Part III of the Bill. I beg to move.
On Question, amendment agreed to.
Clause 175 [Re-direction of bankrupt's letters etc.]
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 273:
Page 139, line 39, leave out ("telemessage") and insert ("telegram").
The noble Lord said: My Lords, this amendment is necessary as the term "telemessage" does not cover conventional telegrams which are still sent and received internationally. I understand that the term "telegram" is an omnibus term which covers both conventional telegrams and telemessage telegrams. The term "telemessage" would, therefore, be unduly restrictive. Moreover, we have been informed that "telemessage" is in fact a registered trademark of British Telecom and it would therefore be inappropriate to have it in the Bill. I beg to move.
Lord Bruce of Donington: My Lords, I entirely support the amendment. It is quite clear that new is not always best.
On Question, amendment agreed to.
Schedule 6 [Provisions capable of inclusion in individual insolvency rules]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 274:
[Printed earlier: 1/4/85, col. 54.]
The noble Lord said: My Lords, I spoke to this amendment when discussing Amendment No. 21. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 275:
[Printed earlier: col. 126.]
The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 154. I beg to move.
On Question, amendment agreed to.
Clause 186 [Interpretation of Part III]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment Nos. 276 to 278:
[Printed earlier: 1/4/85, col. 93.]
The noble and learned Lord said: My Lords, for convenience I seek leave to move these amendments en bloc. These amendments were spoken to in relation to Amendment No. 131.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 279:
Page 144, leave out lines 37 to 39.
The noble and learned Lord said: My Lords, this amendment was spoken to in relation to Amendment No. 170. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 280:
[Printed earlier: col. 126.]
The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 154. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 281:
After Clause 187, insert the following new clause:
("Parliamentary disqualification.
.—(1) Where a court in England and Wales or Northern Ireland adjudges an individual bankrupt or a court in Scotland awards sequestration of an individual's estate, the individual shall be disqualified—

(a) for sitting or voting in the House of Lords;

(b) for being elected to, or sitting or voting in, the House of Commons; and

(c) for sitting or voting in a committee of either House.

(2) Where an individual is disqualified under this section, the disqualification shall cease—

(a) except where the adjudication is annulled or the award recalled or reduced without the individual having been first discharged, on the discharge of the individual; and

(b) in the said excepted case, on the annulment, recall or reduction, as the case may be.

(3) No writ of summons shall be issued to any lord of Parliament who is for the time being disqualified under this section for sitting and voting in the House of Lords.
(4) Where a member of the House of Commons who is disqualified under this section continues to be so disqualified until the end of the period of six months beginning with the day of the adjudication or award, his seat shall be vacated at the end of that period.
(5) A court which makes an adjudication or award such as is mentioned in subsection (1) above in relation to any lord of Parliament or member of the House of Commons shall forthwith certify the adjudication or award to the Speaker of the House of Lords or, as the case may be, to the Speaker of the House of Commons.
(6) Where a court has certified an adjudication or award to the Speaker of the House of Commons under subsection (5) above, then, immediately after it becomes apparent which of the following certificates is applicable, the court shall certify to the Speaker of the House of Commons—

(a) that the period of six months beginning with the day of the adjudication or award has expired without the adjudication or award having been annulled, recalled or reduced; or

(b) that the adjudication or award has been annulled, recalled or reduced before the end of that period.").

The noble and learned Lord said: My Lords, with the permission of the House I shall speak also to Amendments Nos. 295, 301, 303, 304, 318, 338, 341 in part and 352 in part.
Amendment No. 295: Page 177, line 17, leave out ("the expiration of five years from").
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Amendment No. 301: Page 178, line 46, leave out ("the expiration of five years from").
Amendment No. 303: Page 179, line 16, at end insert—
("The Recess Elections Act 1975
19B. In section 1(2) of the recess Elections Act 1975 (which defines certain expressions used in that Act), in the definition of "certificate of vacancy", for the words from "the relevant bankruptcy enactment" to the end of paragraph (b) there shall be substituted the words "section (Parliamentary disqualification) (6)(a) of the Insolvency Act 1985".").
Amendment No. 304: Page 179, line 32, leave out ("the expiration of five years from").
Amendment No. 318: Page 186, line 33, leave out ("Part III of Schedule 9 to this Act") and insert ("Parts III and IV of Schedule 9 to this Act (so far as they so relate)").
Amendment No. 338: Page 194, line 22, at end insert—

("34 & 35 Vict. c. 50.

The Bankruptcy Disqualification Act 1871.

The whole Act.

35 & 36 Vict, c. 58.

The Bankruptcy (Ireland) Amendment Act 1872.

Sections 41 and 42.

46 & 47 Vict. c. 52.

The Bankruptcy Act 1883.

In section 32, in subsection (1) paragraphs (a), (b) and (e), in subsection (2), the words from "with" to "appeal" and subsection (3).

Section 33(1).

In section 34 the words from "guardian" to "vestry".

53 & 54 Vict. c. 71.

The Bankruptcy Act 1890.

Section 9.")

Amendment No. 341: Page 194, line 26, at end insert—

("1975 c. 45.

The Finance (No. 2) Act 1975.

In section 71(6), the words "section 30 of the Finance Act 1952."

1975 c. 66.

The Recess Elections Act 1975.

In section 1(2), the definition of "the relevant bankruptcy enactment" and the word "and" immedately preceding it.

1976 c. 24.

The Development Land Tax Act 1976.

Section 42.")

Amendment No. 352: Page 155, line 26, leave out from ("of") to ("does") in line 28 and insert ("this section and of—

(a) section 187(8);

(b) section (Parliamentary disqualification);

(c) so much of section 201 and Schedule 7 as relates to enactments which extend to Northern Ireland; and

(d) so much of section 201 and Schedule 9 as relates to the Bankruptcy Disqualification Act 1871, the Bankruptcy (Ireland) Amendment Act 1872 and the Bankruptcy Act 1882,")

I should like to make clear that although there are certain connected amendments—namely, Amendments Nos. 288 and 289—I will speak to those separately.
7 p.m.
The noble Lord, Lord Mishcon, drew to the attention of your Lordships during Committee the difference between the law of Scotland and the law of England and Wales in the matter of the disqualification period for a bankrupt Peer from sitting in your Lordships' House. Equivalent differences also exist in relation to members in another place and in connection with other public offices. This was in fact something of which the Government were aware and which they intended to bring before your

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Lordships for consideration. That is the purpose of the present amendment.
Under the law of Scotland a Peer or Member of Parliament is disqualified from normal House activities during his bankruptcy but is eligible to be elected to, or to sit, as the case may be, and vote in the House immediately upon his discharge from bankruptcy. On the other hand, a person subject to the bankruptcy laws of England and Wales and Northern Ireland is not so eligible for a further period of five years after his discharge; a similar disqualification period applies to members of other public offices—for instance, local authorities, land drainage boards and local valuation panels.
The Cork Committee recommended the abolition of the extended disqualification period of five years in relation to all public offices. The committee considered that the period was unduly long and that once discharge has been granted it should be accompanied by full civil rehabilitation. The Government agree with the Cork Committee and Amendments Nos. 295, 301, 304 and 338 implement that recommendation.
They will allow a bankrupt on discharge to become a justice of the peace or a member of a local valuation panel, a local authority or a land drainage board, either in cumulo or separately.
The amendments which are grouped with this amendment have the added benefit of replacing various United Kingdom legislative provisions relating to disqualification by one provision. Amendments Nos. 318, 338, 341 in part and 352 are purely consequential.
I would add that the authorities of both Houses have given considerable assistance in the drawing up of these amendments for which we are most grateful.
This is an important matter and one which directly affects this House, and I look forward to hearing the views of your Lordships. I beg to move.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble and learned Lord for explaining this new clause. It is one which filled me with alarm when I first saw it. In fact, I woke up in the middle of the night thinking about it because it mentioned the rights of sitting in or voting in the House of Commons. I wondered how the other place would take it if we started legislating for what happens there; so I was very worried about it. First thing this morning I sought counsel with the Clerk of the Parliaments, who patiently explained the position to me and said that my fears about any kind of ill feeling arising between the two Houses as a result of our initiating the legislation here were entirely groundless. I was very relieved. He also explained the work that had been done on this, not only by the noble and learned Lord and his department but also by my noble friend Lord Mishcon. With my anxieties finally at rest, I have much pleasure in inviting the House to support the Government on this amendment.
Lord Raglan: My Lords, I wonder whether I may ask the Lord Advocate a question. He mentioned that already holders of public offices and others are disbarred from those offices by virtue of bankruptcy. I
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think he said that. I should like to ask him whether this amendment is bringing the House of Lords and the House of Commons into line with those rules or that legislation and whether up until now we have been exempt.
Lord Cameron of Lochbroom: No, my Lords. The point was that a Scots Peer made bankrupt could return to this House and sit and vote in it immediately he had received his discharge. His fellow Peer in England and Wales, and an Irish Peer who sat in this House (though he would do so, I suppose, as an English Peer), would have to get his discharge and then wait five years. No doubt there were good reasons historically for the difference in this arrangement between the peerage of Scotland and the peerage of England and Wales.
The matter was considered by the Cork Committee and it took the view that there was no good reason why Peers, and, indeed, the holders of other offices, including membership of the other House, should not receive civil rehabilitation, as it is called, as soon as discharge had been given to bring them into line with the peerage of Scotland.
Lord Raglan: My Lords, why then are Peers and Members of Parliament specifically mentioned rather than the holders of other public offices?
Lord Cameron of Lochbroom: My Lords, the provision concerning the holders of other offices arises in other amendments which are taken with this.
Lord Boyd-Carpenter: My Lords, I hope that my noble and learned friend has not exhausted his right to reply. I rose as quickly as I could to ask him two questions about the new clause. First, I must confess that having read and re-read subsection (2), I find it extraordinarily difficult to understand. It appears to be an exception to the cesser of a disqualification. Although I am sure that it is pellucidly clear to my noble and learned friend, I must confess that my conning of it has not been wholly successful.
My other question is a more general one. No doubt it is proper to take such steps as the new clause proposes in the case of bankruptcy. Of course it has been in somewhat different form the law for some considerable time. Can my noble and learned friend refresh my memory and perhaps that of the House as to how those disqualifications compare with what might be regarded as the analogous situation in which either a Peer or a Member of the House of Commons is convicted of a serious criminal offence? Are we treating them more severely when they go bankrupt or is the treatment the same?
The Earl of Selkirk: My Lords, I should like to thank the noble and learned Lord for amending what really is Clause 200 which I thought was quite unsatisfactory. I should like to ask two questions. First, I agree with what my noble friend Lord Boyd-Carpenter said. I cannot understand subsection (2). It starts by saying:
"Where an individual is disqualified under this section, the disqualification shall cease … except where the adjudication is annulled".

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That seems to me to be a non sequitur. I may be quite wrong in saying that.
There is one other point. There is no provision here for informing the House when anyone goes bankrupt. I do not see why that should happen and the House should remain ignorant of it. I should have thought that some procedure should be there. There may be something later which I have not read, but I should have thought that everything should be contained as neatly as possible in this one clause.
Lord Cameron of Lochbroom: My Lords, I shall endeavour to answer the questions put. If I may deal first of all with the last question which my noble friend Lord Selkirk put to me, I think that the answer may be found in Clause 200, which provides that:
"If a peer of the United Kingdom … or any other lord of Parliament is adjudged bankrupt the court shall, as soon as practicable, cause the adjudication to be certified to the Speaker of the House of Lords",
so the matter is immediately brought to notice.
Perhaps almost the last person who should be called upon to construe an Act of Parliament is a lawyer. I think I have to say that I was not responsible for drafting this amendment. It was drafted by responsible parliamentary counsel. What I understand this to mean is simply that one starts with subsection (1), which is the adjudication of bankruptcy or the sequestration of the individual and the disqualification. It may be that that order of disqualification is then annulled—that is, it ceases to have effect—in which case that disqualification immediately flies off. Therefore it is really providing for the case where there is an annulment, or recall or reduction of the original disqualification, in which case the disqualification shall cease. I understand that perhaps it might at first blush appear convoluted, but I trust that at least by my taking my noble friends through the road it has become a little more clear, perhaps not clarus luceo but as near to it as I can make it.
I was asked what I can only call in cricketing parlance a rather hot one by my noble friend Lord Boyd-Carpenter. The answer is that I cannot tell him just now and I shall write to him on the matter. Since I think the matter is of some interest and importance to the House, I shall take care to see that the letter goes into the Library.
Perhaps I should correct one matter. I said to my noble friend Lord Selkirk that Clause 200 is the appropriate place to find the matter. I am reminded that of course by this amendment it is incorporated in subsections (5) and (6) of this new clause. The certification to the Speaker of the House provision was originally found in Clause 200. It is now found at the end of this new clause. It is all brought together.
The Earl of Selkirk: My Lords, I thank my noble friend. Is there any use in asking him whether that clause could be clarified a little? It is quite simple to say that when an individual is disqualified under this section the disqualification shall cease "when he is discharged". I think that that is what is meant. The other matters are to me extremely complicated. I do not know what "recalled or reduced" means, if it does
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not mean the same as annulled. I should have thought that a simple explanation would be very advantageous.
Lord Cameron of Lochbroom: My Lords, I have taken on board what my noble friend has said. I should only say this. The words "annulment", "recall" and "reduction" involve different legal processes and legal remedies and are obviously used for a particular purpose. Obviously, note will be taken of what my noble friend has said. If anything can be done to make it easier, I am sure that that will be done.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 282:
After Clause 187, insert the following new clause:
("Power to inspect Land Register etc.
. After section 112A of the Land Registration Act 1925 (inspection in connection with criminal proceedings) there shall be inserted the following section—
"Inspection in connection with insolvency.
112AA.—(1) If an official receiver, the liquidator or adminstrator of a company or the trustee of a bankrupt's estate—

(a) applies to the registrar for permission to make an inspection under this section in relation to a person specified in the application or to property so specified; and

(b) gives the registrar an appropriate certificate,

the registrar shall permit him to inspect and make copies of and extracts from any register or document kept in the custody of the registrar so far as it relates to the person or property so specified.
(2) In subsection (1) above "appropriate certificate" means a certificate that there is reason to believe that the register may contain information which would be of assistance to the person giving the certificate in the carrying out of his functions as official receiver, as liquidator or adminstrator of a company or as trustee of a bankrupt's estate.
(3) In this section—

(a) references to an official receiver are references to an official receiver for the purpose of the Insolvency Act 1985 or the Companies Act 1985 or a person acting as a deputy to such an official receiver, and

(b) references to the trustee of a bankrupt's estate include references to a permanent or interim trustee in the sequestration of a debtor's estate in Scotland." ").

The noble and learned Lord said: My Lords, it may be convenient if I discuss this amendment along with Amendments Nos. 292, 339, and 349.
Amendment No. 292: Schedule 7, page 174, line 25, leave out sub-paragraph (5) and insert—
(" (5) In section 112 (general provision as to inspection of register and other documents) for the words "section 112A" there shall be substituted the words "section 112A and 112AA".
(6) In section 112A(1) (inspection in connection with criminal proceedings) for the words "a chief officer of police or an official receiver" there shall be substituted the words "or a chief officer of police".").
Amendment No. 339: Schedule 9 page 194, line 24, at end insert—

("15 & 16 Geo. 5. c. 21.

The Land Registration Act 1925

Section 112A(4)").

Amendment No. 349: Clause 202, page 155, line 18 at end insert—
(" ( ) section (Power to inspect Land Register etc.);").
These amendments implement the substance of the recommendation contained in paragraph 794 of the Cork Committee Report. It may be helpful if I explain something of the background to the amendments.
Generally speaking, the land register in England and Wales can only be inspected by a third party with the permission of the registered owner of the land. There are only a few limited exceptions to this general rule. Where an insolvent company or individual has disposed of property and either the official receiver, for investigative purposes, or the person administering the estate wishes to obtain information about the property, there can, as indeed was recognised by the Cork Committee, be considerable problems. It is particularly the case that, where dubious transactions have occurred, information may not be forthcoming, either from the persons concerned or from the records of the insolvent company or the bankrupt individual.
These amendments provide that the official receiver, trustee, liquidator or administrator will be able to apply to inspect the land register in relation to a person or property specified in the application. The application will be supported by a certificate which must state that the applicant has reason to believe that the estate which he is administering may have an interest in the property or may have a cause of action against the registered owners related to the property. In the opinion of the Government this power will enhance the official receiver's investigative ability and assist trustees, liquidators and administrators in their expeditious administration of the insolvent's estate for the benefit of creditors.
The amendments tabled to Clause 202 and to Sections 112 and 112A of the Land Registration Act 1925 are consequential upon this main amendment. The only one to which I should otherwise refer your Lordships specifically is Amendment No. 349, which refers to inspection of the land register in England only, although such inspections can equally be made by Scottish trustees, liquidators or administrators. The land register in Scotland of course is open to public inspection and equivalent provisions are therefore not required. I beg to move.
Lord Bruce of Donington: My Lords, we on this side of the House entirely support the insertion of the new clauses.
On Question, amendment agreed to.
7.15 p.m.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 283:
After Clause 188, insert the following new clause:
("Amendments of Employment Protection (Consolidation) Act 1978.
.—(1) Section 122 of the Employment Protection (Consolidation) Act 1978 (employee's right on the insolvency of his employer to be paid certain debts out of the Redundancy Fund) shall be amended as follows.
(2) For subsection (2) (date for determining debts payable out of Fund) there shall be substituted the following subsection—
"(2) In this section 'the relevant date'—

(a) in relation to arrears of pay (not being remuneration under a protective award made under section 101 of the Employment Protection Act 1975) and to holiday pay, means the date on which the employer became insolvent;

(b) in relation to such an award and to a basic award of compensation for unfair dismissal, means whichever is the latest of—

(i) the date on which the employer became insolvent;

(ii) the date of the termination of the employee's employment; and

(iii) the date on which the award was made;

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(c) in relation to any other debt to which this section applies, means whichever is the later of the dates mentioned in sub-paragraphs (i) and (ii) of paragraph (b)."

(3) For subsection (4) (debts to be treated as arrears of pay) there shall be substituted the following subsection—
"(4) For the purposes of this section, the following amounts shall be treated as arrears of pay, namely—

(a) a guarantee payment;

(b) remuneration on suspension on medical grounds under section 19;

(c) any payment for time off under section 27(3) or 31(3) or 31A(4);

(d) remuneration under a protective award made under section 101 of the Employment Protection Act 1975;

(e) statutory sick pay, payable under Part I of the Social Security and Housing Benefits Act 1982."

(4) In subsection (7) (reasonable payments to apprentices and articled clerks), for the words from "section 34" onwards there shall be substituted the words "section 157 of the Insolvency Act 1985 (effect of bankruptcy on apprenticeships etc.), whether as originally enacted or as applied to the winding up of a company by rules under section 86 of that Act".
(5) In subsection (9) (provisions applying on appointment of certain officers) —

(a) after the words "a liquidator," there shall be inserted the words "an administrator,"; and

(b) for the words from "'liquidator,' and" onwards there shall be substituted the words "'trustee', in relation to a composition or arrangement, includes the supervisor of a composition or scheme proposed for the purposes of, and approved under, Chapter I of Part III of the Insolvency Act 1985".").

The noble and learned Lord said: My Lords, with the leave of the House, with this amendment 1 shall speak to Amendments Nos. 305 to 308.
Amendment No. 305: Schedule 7, page 180, line 16, leave out sub-paragraph (3).
Amendment No. 306: Page 180, line 34, leave out from beginning to (" 'trustee' ") in line 37 and insert—
("In section 123 (payment of unpaid contributions to occupational pension scheme)—

(a) in subsection (4), for the words "section 121(2)" there shall be substituted the words "section 122(4)";

(b) In subsection (6)—

(i) after the words "a liquidator" there shall be inserted the words "an administrator"; and

(ii) for the words from "'liquidator'; and" onwards there shall be substituted the words" ").

Amendment No. 307: Page 180, line 44, leave out ("section 145") and insert ("sections (Preferential debts), 145 and 157").
Amendment No. 308: Page 180, line 45, after ("1985") insert ("and any rules under that Act applying the said section 157 to the winding up of a company; and").
This relates to Section 122 of the Employment Protection (Consolidation) Act of 1978 and the debts that employees can claim from the redundancy fund if their employer is insolvent. Among other debts, employees can claim back pay and holiday pay outstanding at the "relevant date". For these debts the relevant date is defined as the date of the employer's insolvency or the date that the employee's job ended, whichever is the later. This has meant that some of the unpaid wages and holiday pay which receivers, and indeed liquidators, have been able to pass on to the redundancy fund, accrued after the date of their appointment. In other words, they have been able to use the redundancy fund to finance or underwrite their decision to continue trading. Clearly, this is not the purpose of the legislation and the effect of the first two subsections of this new clause will prevent this practice. Back pay and holiday pay accrued up to and including the date of insolvency only will now be payable under the provisions.
Subsections (3) and (4) of this new clause deal with a technical point and a consequential amendment which do not alter the basic provisions in any way.
Subsection (5) brings the 1978 Act into line with this Act which introduces an alternative insolvency mechanism—the administration order. This amendment adds the administrator to the list of "relevant officers" who act on behalf of the Secretary of State in assessing, verifying and agreeing employees' claims. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 284:
After Clause 189, insert the following new clause:
("Amendments of County Courts Act 1984
.—(1) the County Courts Act 1984 shall be amended as follows.
(2) In section 112(4)(b) (minimum amount which must be owed to creditor presenting, or joining in, a bankruptcy petition while administration order is in force), for "£400" there shall be substituted "£1500".
(3) In subsection (1) of section 115 (execution while administration order is in force if debtor's property exceeds £10 in value), for "£10" there shall be substituted the words "the minimum amount".
(4) After subsection (1) of the said section 115 there shall be inserted the following subsection—
"In subsection (1) above 'the minimum amount' means £50 or such other amount as the Lord Chancellor may by order specify instead of that amount or the amount for the time being specified in such an order, and an order under this subsection shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament." ").
The noble and learned Lord said: With the permission of the House, it will be convenient if I also speak to Amendment 350.
Amendment No. 350: Clause 202, page 155, line 19, leave out ("190") and insert ("(Amendments of County Courts Act 1984)").
The new clause to be inserted into the Bill by this amendment amends two monetary limits in the County Courts Act of 1984. The first limit to be raised is that in Section 112(4) of the Act which provides that a creditor can only present a bankruptcy petition against a debtor whose estate is subject to an administration order if, among other things, the debt on which the petition is founded exceeds £400.
The County Courts Act is a consolidation. Section 112 re-enacts an earlier section in the Administration of Justice Act of 1965, and the entry relating to it in Schedule 1 to the Insolvency Act of 1976. Due to an accident of timing, on the very day on which the County Courts Act came into force the Insolvency Proceedings (Increase of Monetary Limits) Regulations 1984 were made which sought to raise the £400 limit to £1,500. Because the regulations sought to amend the old provision in the Administration of Justice Act 1965 and not its replacement in the County Courts Act 1984, the amendment never took effect.
The purpose of the amendment now before your Lordships is to give effect to what was the intention of the 1984 regulations. I should stress, however, that any future alteration in the limit in Section 112 will be by regulations under Section 112(7) which are subject to affirmative resolution.
The other section of the County Courts Act which it is proposed should be amended is Section 115. This
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empowers the county court registrar to issue execution against the goods of a debtor who is subject to an administration order where his property does not exceed £10 in value. This sum has remained unchanged since 1883. The amendment will increase that sum to £50 which is considered a more appropriate figure in 1985. It also enables that figure to be amended in the future by the Lord Chancellor by order. Any such order will be subject to the negative resolution procedure.
Amendment No. 350 is consequential and includes the new clause among those provisions of the Bill which do not extend to Scotland, since the relevant provisions of the County Courts Act do not so extend. I beg to move.
On Question, amendment agreed to.
Clause 194 [Insolvent partnerships]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 285:
[Printed earlier: 1/4/85, col. 12.]
The noble and learned Lord said: My Lords, this amendment was spoken to by my noble friend Lord Lucas with Amendment No. 2. I beg to move.
On Question, amendment agreed to.
Clause 195 [Insolvent estates of deceased persons]:
Lord Cameron Lochbroom Lord Cameron Lochbroom moved Amendments Nos. 286 and 287:
[Printed earlier: 1/4/85, col. 12.]
The noble and learned Lord said: My Lords these amendments were spoken to by my noble friend Lord Lucas under Amendment No. 2. I beg to move.
On Question, amendments agreed to.
Lord Taylor of Gryfe Lord Taylor of Gryfe had given notice of his intention to move Amendment No. 287A:
After Clause 195, insert the following new clause:
(" Powers of the Secretary of State to make regulations in respect of prepayments etc.
.—(1) With a view to protecting the interests of unsecured creditors in a winding up, the Secretary of State may make regulations making provision as to the manner in which companies are to be required to hold prepayments, advance payments or deposits received from customers in respect of uncompleted orders.
(2) Without prejudice to the generality of subsection (1), regulations under this section may—

(a) specify the type of company to which the regulations are to apply, whether by reference to the identity or nature of such companies, the type of trade or business which they carry on or the type of orders in question;

(b) make different provision according to the amount of a prepayment, advance payment or deposit;

(c) make provision for the holding of prepayments, advance payments or deposits in separate bank accounts;

(d) make provision for the transfer of such prepayments, advance payments or deposits from separate bank accounts on completion of a customer's orders;

(e) require the keeping of such records and books of account as may be specified;

(f) provide for exemptions from any provision of the regulations;

(g) otherwise make different provisions for different circumstances or provision relating only to specified circumstances; and

197

(h) contain such incidental and supplemental provisions as the Secretary of State considers appropriate.

(3) No regulations may be made under this section unless a draft of the regulations has been laid before and approved by a resolution of each House of Parliament.
(4) A person who contravenes any regulation made under this section shall be guilty of an offence and shall be liable—

(a) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both;

(b) on conviction or indictment, to imprisonment for a term not exceeding two years or a fine or both.").

Lord McNair: My Lords, in the absence of my noble friend Lord Taylor, I wish to say that unless some noble Lord wishes to speak, it is my intention not to move the amendment.
[Amendment No. 287A not moved.]
Clause 200 [Peers and Members of Parliament]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 288:
Page 154, line 13, leave out subsection (1).
The noble and learned Lord said: My Lords, if it is convenient, I should like also to speak to Amendment No. 289.
Amendment No. 289: Page 154, line 20, at end insert ("or peerage. (2A) Proceedings under Part Ill of this Act may be commenced or continued in relation to a person notwithstanding that he has privilege of Parliament or peerage.").
Section 128 of the Bankruptcy Act 1914 provides that if a person having privilege of Parliament commits an act of bankruptcy, he may be dealt with under the Bankruptcy Act as if he did not have such privilege. Clause 200(2) of the Bill only partially re-enacts Section 128 in providing that the privilege in relation to powers of arrest conferred by the Bill shall not be exercisable.
We consider it desirable for the avoidance of doubt for this amendment to be made to the Bill so that the full exemption from privilege conferred by Section 128 continues under the new bankruptcy code contained in Part III of the Bill relating to Peers as well as to Members of Parliament. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Loch broom Lord Cameron of Loch broom moved Amendment No. 289:
[Printed above.]
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 290:
After Clause 200 insert the following new clause:
("Crown application.
. For the avoidance of doubt it is hereby declared that this Act hinds the Crown so far as it affects or relates to the following matters, namely—

(a) remedies against, or against the property of, companies or individuals;

(b) priorities of debts;

(c) transactions at an undervalue or preferences;

(d) compositions or schemes approved under Chapter I of Part III; and

(e) discharge from bankruptcy.").

The noble and learned Lord said: My Lords, the new clause inserted in the Bill by this amendment is a reenactment of Section 151 of the Bankruptcy Act 1914,
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as that section was construed in the 19th century case of re Thomas. Because of the application under the present law of certain provisions of the Bankruptcy Act to the winding up of companies and because the Bill deals with both corporate and individual insolvency, the provisions of Section 151 also relevant to companies are included in the new clause.
To the extent that provisions are not listed in the new clause, the well established principle of law will continue to apply; namely, that the Crown will be bound by such provisions if by necessary implication from the nature of the provision it should be so bound. I beg to move.
On Question, amendment agreed to.
Schedule 7 [Consequential amendments]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 291:
Page 172, line 31, at end insert—
("The Small Dwellings Acquisition Act 1899
.—(1) The Small Dwellings Acquisition Act 1899 shall be amended as follows.
(2) In section 3(5) (conditions affecting house purchased by means of advance), for the words "being administered in bankruptcy under section one hundred and twenty-five of the Bankruptcy Act, 1883" there shall be substituted the words "falling to be administered in accordance with an order under section 195 of the Insolvency Act 1985".
(3) In section 7(3) (suspension of condition as to residence), for the words "is administered in bankruptcy under section one hundred and twenty-five of the Bankruptcy Act, 1883" there shall be substituted the words "falls to be administered in accordance with an order under section 195 of the Insolvency Act 1985".").
The noble Lord said: My Lords, this is another technical amendment which adds a further consequential amendment to Schedule 7. The Small Dwellings Acquisition Act 1899 contains references in Section 3 and Section 7 to Section 125 of the Bankruptcy Act 1883. That section was consolidated in Section 130 of the Bankruptcy Act 1914, which is now to be replaced by Clause 195 of the Bill. This amendment updates the references in the Small Dwellings Acquisition Act. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 292:
[Printed earlier: col. 192.]
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 293:
Page 176, line 3, after ("insolvency)") insert—

("(a) in paragraph (a), for the word "become" there shall be substituted the words "been adjudged"; and

(b)").

The noble Lord said: My Lords, this is a minor technical amendment to Section 68(6) of the Agricultural Holdings Act 1948. It substitutes a reference to a person becoming bankrupt with the more precise reference to his being adjudged bankrupt. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 294:
[Printed earlier: 1/4/85, col. 54.]
The noble Lord said: My Lords, I spoke to this amendment when we were dealing with Amendment No. 21. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 295:
[Printed earlier: col. 187.]
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 296:
Page 177, line 30, at end insert—
("The Transport Act 1968
13A. In section 86 of the Transport Act 1968 (transferability of operators' licences), for the words "bankruptcy or liquidation of" there shall be substituted the words "or bankruptcy of the holder or, in the case of a company, or the holder going into liquidation, of an administration order being made in relation to".").
The noble Lord said: My Lords, in moving this amendment, I should also like to speak to Amendments Nos. 297 and 311.
Amendment No. 297: Page 177, line 48, at end insert—
("(aa) in paragraph (c) of that subsection, after the words "winding-up order" there shall be inserted the words "or an administration order";").
Amendment No. 311: Page 182, line 22, at end insert—
("The Public Passenger Vehicles Act 1981
26A. In section 19(3)(a) of the Public Passenger Vehicles Act 1982 (holder of PSV operator's licence to give notice of bankruptcy etc.), after the word "estate" there shall be inserted the words "or the making of an administration order under Chapter II of Part II of the Insolvency Act 1985 in relation to the holder".").
All of these are minor consequential amendments. They are required to introduce into the Transport Act 1968, the Road Traffic Act 1972 and the Public Passenger Vehicles Act 1981 references to the new administration order procedure set out in this Bill, in addition to the references already in those Acts to existing insolvency procedures. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 297:
[Printed above.]
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 298:
Page 178, line 8, leave out ("For subsection (8) of section 5") and insert ("In section 5(8)").
The noble Lord said: My Lords, with permission, I shall speak also to Amendments Nos. 299, 300 and 331.
Amendment No. 299: Page 178, line 10, leave out from ("bankruptcy)") to end of line 14 and insert ("the words "without notice of an available act of bankruptcy" shall be omitted.").
Amendment No. 300: Page 178, leave out lines 23 to 27 and insert—
("(c) in subsections (5) and (6), the words "without notice of an available act of bankruptcy" shall be omitted.").
200
Amendment No. 331: Schedule 9, page 193, line 10, column 3, leave out ("Section 5(9)") and insert—

("In section 5, in subsection (8), the words "without notice of an available act of bankruptcy" and subsection (9).

In section 6(5) and (6), the words "without notice of an available act of bankruptcy".").

The noble Lord said: My Lords, this group of amendments make further consequential amendments to the land charges Act 1972. Paragraph 16 of Schedule 7 to the Bill already makes a number of changes to the Land Charges which are consequential on the abolition by the Bill of the concepts of acts of bankruptcy and receiving orders. Under Sections 5(8) and 6(5) of the Land Charges Act, as amended by paragraph 16, a purchaser will be deemed to have notice of a bankruptcy petition and a bankruptcy order if it is registered. These proposed amendments make further consequential changes to the Land Charges Act to provide that petitions and orders which are not registered shall not bind a purchaser of a legal estate in good faith for money or money's worth. I beg to move.
On Question, amendment agreed to.
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendments Nos. 299 and 300:
[Printed above.]
On Question, amendments agreed to.
7.30 p.m.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 301:
[Printed earlier: col. 188.]
The noble and learned Lord said: My Lords, I spoke to this amendment on Amendment No. 281. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 302:
Page 179, line 16, at end insert—
("The Social Security Pensions Act 1975
("19A.—(1) In section 58 of the Social Security Pensions Act 1975 (under which Schedule 3 to that Act has effect for giving priority in bankruptcy etc. to certain debts) after the word "effect" there shall be inserted the words "for the purposes of Schedule 5 to the Insolvency Act 1985 (preferential debts)"; and Schedule 3 to the said Act of 1975 shall be amended as follows.
(2) In each of paragraphs 1, 2(1) and 3(1), for the words from the beginning to "included" there shall be substituted the words "This Schedule applies to".
(3) In the said paragraphs 1 and 2(1), for the words "date of the relevant event" there shall be substituted the words "relevant date" and, in the said paragraph 3(1), for the words "the occurrence of the relevant event" there shall be substituted the words "a person going into liquidation or being adjudged bankrupt".
(4) In paragraph 4, for the words from "event'," to "that Act" there shall be substituted the words "'date' has the same meaning as in Schedule 5 to the Insolvency Act 1985".").
The noble and learned Lord said: My Lords, the introduction of this new paragraph is necessary for the

201
following reasons. Schedule 3 to the Social Security Pensions Act includes certain debts relating to contributions to occupational pension schemes and state scheme premiums among the debts which by virtue of Section 153 of the Social Security Act 1975 are priority debts. This structure is no longer appropriate because Schedule 5 to the Bill will consist of a list of preferential debts. Also, Schedule 3 to the Social Security Pensions Act refers to a "relevant event"—which in personal insolvency cases usually means a receiving order or death—but this is no longer appropriate because the Bill is drafted in terms of "bankruptcy orders" rather than "receiving orders" and "the relevant date" rather than "the relevant event". I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 303 and 304.
[Printed earlier: col. 188.]
The noble and learned Lord said: My Lords, I beg leave of the House to move these amendments together. They were spoken to under Amendment No. 281.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 305 to 308.
[Printed earlier: col. 194.]
The noble and learned Lord said: My Lords, with the leave of the House I beg leave to move these amendments together. They were spoken to with Amendment No. 283.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 309 and 310:
[Printed earlier: 1/4/85, col. 54.]
The noble and learned Lord said: My Lords, with the leave of the House I beg leave to move these amendments together. They were spoken to under Amendment No. 21 by my noble friend Lord Lucas of Chilworth.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 311:
[Printed earlier: col. 199.]
The noble and learned Lord said: My Lords, this amendment was spoken to with Amendment No. 296. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 312:
[Printed earlier: 1/4/85, col. 54.]
The noble and learned Lord said: My Lords, this amendment was spoken to by my noble friend Lord Lucas under Amendment No. 21. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 313 and 314:
Amendment No. 313: Page 182, line 42, leave out ("in subsections (1) and (2)") and insert ("—
(a) in subsection (1),").
202
Amendment No. 314: Page 182, line 44, at end insert ("; and (b) in subsection (2), for the words "section 663 of the Companies Act" and the words "section 614 of, and Schedule 19 to, the Companies Act" there shall be substituted, respectively, the words "section 86 of the Insolvency Act 1985" and the words "section (Preferential debts) of, and Schedule 5 to, the Insolvency Act 1985" ").
The noble and learned Lord said: My Lords, Amendment No. 313 is a consequential amendment to the amendments I spoke to in relation to Amendment No. 235. I beg to move Amendments Nos. 313 and 314 en bloc.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 315:
Page 183, line 4, at end insert—
("(2A) In section 102(8) (claims for rent where goods seized in execution), for the words "section 35 of the Bankruptcy Act 1914" there shall be substituted the words "section 155 of the Insolvency Act 1985".").
The noble and learned Lord said: My Lords, this is a technical amendment. Section 192(8) of the County Courts Act 1984 contains a reference to Section 35 of the Bankruptcy Act 1914. Section 35 will be repealed by the Bill and replaced by Clause 155. This amendment makes the necessary consequential amendment to the County Courts Act. I beg to move.
On Question, amendment agreed to.
Schedule 8 [Transitional provisions and savings]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 316 and 317:
Amendment No. 316: Page 184, line 6, leave out ("paragraph 11 or") and insert ("paragraphs 10A to").
Amendment No. 317: Page 184, line 24, leave out ("paragraph") and insert ("paragraphs 12A to").
The noble and learned Lord said: My Lords, these amendments refer to receivers and managers in England and Wales and receivers in Scotland, and are consequential upon Amendments Nos. 152 and 153, which have already been discussed. I beg to move.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 318:
[Printed earlier: col. 188.]
The noble and learned Lord said: My Lords, this amendment was spoken to with Amendment No. 281. I beg to move.
On Question, amendment agreed to.
Schedule 9 [Repeals]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 319:
"Page 189, line 28, column 3, leave out ("entry relating to section") and insert ("entries relating to sections 467(4) and (5) and ").
The noble and learned Lord said: My Lords, Schedule 24 to the Companies Act 1985, which is affected by this amendment, lists various offences under that Act. Two of the offences relate to acting as a receiver by a body corporate or Scottish firm, and by an undischarged bankrupt. The provisions in Clauses 1 and 2 of the Bill will render these entries in the

203
Companies Act 1985 redundant because it will be an offence for anyone other than an individual, and for an undischarged bankrupt, to act as insolvency practitioners. It is in order to effect the necessary repeals to the Companies Act 1985 that this amendment is brought forward. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 320:
Page 189, line 39, column 3, leave out lines 39 to 41.
The noble and learned Lord said: My Lords, this amendment was spoken to under Amendment No. 56. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 321:
[Printed earlier: 1/4/85, col. 54.]
The noble and learned Lord said: My Lords, this amendment was spoken to with Amendment No. 21. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 322:
Page 190, line 51, column 3, leave out ("Section 612") and insert ("Sections 612 to 614").
The noble Lord said: My Lords, with the leave of the House I will speak also to Amendments Nos. 324, 328, 329, 332 to 337, 340 to 347.
Amendment No. 324: Page 191, leave out lines 34 and 35 and insert ("Schedules 17 to 19.").
Amendment No. 328: Page 191, line 49, column 3, leave out from ("and") to end of line 57 and insert ("59 of the Insurance Companies Act 1982.").
Amendment No. 329: Page 192, leave out lines 48 and 49.
Amendment No. 332: Page 193, leave out lines 18 and 19.
Amendment No. 333: Page 193, leave out lines 27 to 30.
Amendment No. 334: Page 193, line 31, column 3, leave out ("Section 2.").
Amendment No. 335: Page 193, leave out lines 37 to 44.
Amendment No. 336: Page 193, leave out lines 54 to 58.
Amendment No. 337: Page 194, leave out lines 4 to 15.
Amendment No. 340: Page 194, line 25, column 3, at end insert—
("Section 153. Schedule 18.").
Amendment No. 341:
[Printed earlier: col. 188.]
Amendment No. 342: Page 194, line 27, column 3, leave out ("Section 10.") insert—
("Sections 1 and 2. Section 10. Schedule 1.").
Amendment No. 343: Page 194, line 27, at end insert—

("1978 c. 44.

The Employment Protection (Consolidation) Act 1978.

Section 121. In section 125(2, paragraph (c) and the word "and" immediately preceding it.")

Amendment No. 344: Page 194, line 29, at end insert—

("1980 c. 42.

The Employment Act 1980.

In Schedule 1, paragraph 15.

1981 c. 62.

The Betting and Gaming Duties Act 1981.

Section 30.

1982 c. 24.

The Social Security and Housing Benefits Act 1982.

In Schedule 3, paragraph 12.

1982 c. 46.

The Employment Act 1982.

In Schedule 3, paragraph 3.

1983 c. 53.

The Car Tax Act 1983.

In Schedule 1, paragraph 4.

1983 c. 55.

The Value Added Tax Act 1983.]

In Schedule 7, paragraph 12.").

Amendment No. 345: Page 194, line 34, column 3, leave out ("entry relating to section 10(1) of") and insert ("entries relating to the Social Security Act 1975, to sections 2 and 10(1) of, and Schedule 1 to,").
Amendment No. 346: Page 194, line 36, column 3, at end insert ("and to the Employment Protection (Consolidation) Act 1978.").
Amendment No. 347: Page 194, line 36, at end insert—

("1985 c. 00.

The Reserve Forces (Safe-guard of Employment) Act 1985.

section 13.")

Schedule 9 contains the repeals which are consequential upon the Bill. The amendments tabled to Schedule 9 reflect the repeal of certain enactments as a consequence of the package relating to preferential debts, if I may so call it. I trust your Lordships will be content if I do not describe them in detail at this hour, but I would be happy to do so if any of your Lordships have any queries on them. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 323:
[Printed earlier: col. 126.]
The noble and learned Lord said: My Lords, this amendment was spoken to with Amendment No. 154. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 324:
[Printed earlier: col. 203.]
The noble and learned Lord said: My Lords, this amendment was spoken to with amendment No. 322. I beg to move.
On Question, amendment agreed to.
[Amendment No. 325 not moved.]
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 326:
Page 191, line 39, column 3, leave out ("497(8)") and insert ("497(7)").
The noble and learned Lord said: My Lords, this amendment corrects an error in Schedule 9. The reference to Section 497(8) of the 1985 Act in line 39, column 3, on page 191, should read, "Section 497(7)". I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 327:
[Printed earlier: col. 54.]
The noble and learned Lord said: My Lords, this amendment was spoken to with Amendment No. 21. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment Nos. 328 and 329:
[Printed earlier: col. 203.]
The noble and learned Lord said: My Lords, I beg to move Amendment No. 328 together with Amendment No. 329. They were spoken to with Amendment No. 322.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 330:
Page 192, line 55, at end insert—

("1965 c. 25.

The Finance Act 1965

In Schedule 10, paragraph 15(1).").

The noble and learned Lord said: My Lords, this amendment repeals a provision in the Finance Act 1965 which provides that, in a bankruptcy, capital gains tax and corporation tax have the same priority as income tax. This was originally restated in paragraph 1(1) of Schedule 5 to the Bill, but of course that paragraph has now been removed by amendment. As a consequential amendment—and no more—I ask your Lordships to accept this amendment. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 331:
[Printed earlier: col. 200.]
The noble and learned Lord said: My Lords, this amendment was spoken to with Amendment No. 298. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendments Nos. 332 to 337:
[Printed earlier: col. 203.]
The noble and learned Lord said: My Lords, with the leave of the House, I beg to move Amendments Nos. 332 to 337 inclusive en bloc. These amendments were spoken to under Amendment No. 332. I beg to move.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 338:
[Printed earlier: col. 188.]
The noble and learned Lord said: My Lords, I spoke to this amendment under Amendment No. 281. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 339:
[Printed earlier: col. 192.]
The noble and learned Lord said: My Lords, I spoke to this amendment under Amendment No. 282. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 340:
[Printed earlier: col. 203.]
The noble and learned Lord said: My Lords, I spoke to this amendment under Amendment No. 322. I beg to move.
On Question, amendment agreed to.
7.45 p.m.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 341:
[Printed earlier: col. 188.]
The noble and learned Lord said: My Lords, I spoke to this amendment under Amendment No. 281. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved amendments Nos. 342 to 347:
[Printed earlier: col. 203.]
The noble and learned Lord said: My Lords, with the leave of the House I shall move Amendment No. 342 together with Amendments Nos. 343 to 347 en bloc. The amendments were spoken to in relation to Amendment No. 322. I beg to move.
On Question, amendments agreed to.
Clause 202 [Short title, commencement and extent]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 348:
[Printed earlier: col. 125.]
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 152. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No 349:
[Printed earlier: col. 192.]
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 282. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 350:
[Printed earlier: col. 195.]
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 284. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 351:
[Printed earlier: col. 125.]
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 152. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 352:
[Printed earlier: col. 188.]
The noble and learned Lord said: My Lords, I spoke to this Amendment with Amendment No. 281. I beg to move.
On Question, amendment agreed to.

Helsinki Agreement: Ottawa Conference
7.48 p.m.
Lord Bethell Lord Bethell rose to ask Her Majesty's Government what discussions they have had and what proposals they will make to the meeting of human rights experts in Ottawa in May within the framework of the Helsinki agreement.
The noble Lord said: My Lords, I welcome the opportunity at this late hour to introduce a short debate about the forthcoming meeting in Ottawa within the process of the Conference on Security and Co-operation in Europe of experts in human rights. I feel that this is an appropriate time to raise this matter and to invite my noble friend the Minister to suggest how the problem will be approached in Ottawa in a few weeks' time, and to indicate some of the thinking of the department responsible.
I believe that many of us enter upon this spring of 1985 with high hopes—hopes which I trust will turn out not to be mere wishful thinking. We have been through a period of paralysis in our relations with the Soviet bloc over a number of years, and we have watched in particular a deterioration in the human rights performance of the Soviet Union and her East European allies.
It is not surprising, therefore, that in a whole realm of other areas—military, trade and scientific contact—there has also been a deterioration in East-West relations. That is why the Helsinki process is so important. Many of my friends—and in particular I have in mind my friends who have been forced to leave the Soviet Union—take an extremely sceptical view of the Helsinki process. Indeed, they believe that our countries should renounce it since it has been comprehensively violated by the Soviet bloc. I find, while I sympathise with their frustration, that I cannot agree with them on this point. I believe on the contrary that we should do our best to enforce Helsinki, and I hope that my noble friend will be able to confirm that that is the positive, constructive attitude with which her representatives will be going to the Ottawa meeting.
It would seem to me that there can be no better confidence-building measure—to take a phrase from the military side of Helsinki—than for the Soviet bloc to demonstrate, both at Ottawa and in various decisions taken in that context, that she genuinely intends to improve the human rights record of her country and that of her allies. I predict that the Soviet representative in Ottawa will, as he did in Madrid and in Belgrade, fall back on Principle VI of the agreement and insist on the prohibition of interference in other countries' internal affairs. This is a frequent cry from the Soviet Union in recent years; an insistence on the sovereignty of nations, and a rejection of any approach that comes from any other country on the ground that it constitutes an improper, illegal interference.
However, I hope that my noble friend will be able to confirm that she will not see Principle VI as a bar to raising human rights issues at the Ottawa meeting. She could, if she wished, refer to Principle X of the final act under which the participating states undertake to fulfil in good faith their obligations under international law; both those obligations arising from the generally
208
recognised principles and rules of international law, and those obligations arising from treaties and other agreements. She could point out that among those treaties and other agreements there is of course the universal declaration of human rights of the United Nations and the two covenants which derive from it.
I hope therefore that she will be able to persuade the conference, with the help of our allies, that raising matters of human rights is not an interference. Indeed I must congratulate the Government and those of our allies in having to some extent established this idea, since otherwise we may take it that there would not be the meeting in Ottawa at all. The fact that we are able to sit down with representatives from the Soviet bloc and discuss human rights is in itself a significant achievement.
I would indicate only certain headings which I hope the Government will raise at the meeting. The first is that of the monitors; the individuals in Eastern Europe who have tried to check the human rights performance of their Governments. In the Soviet Union many of these, after some months of hindered activity, were arrested and sentenced to long terms of imprisonment. We have in mind in particular the case of Anatoly Shcharansky who is still serving a 12-year sentence on a charge of treason caused by the fact that he tried to monitor the rules under which Jewish citizens of the Soviet Union were allowed to leave.
I trust that the Government will suggest to the other signatory states that it should be possible for individuals in all our countries to make appeals to verifying bodies—I have in mind either the United Nations or the International Commission for the Red Cross—that individuals who make such appeals should not be penalised thereby; and that this should be incorporated in an addendum to the final act, or an amendment to Principle VII which guarantees human rights. We cannot of course invite the Soviet Union to change its system but we can make certain constructive proposals.
Before I leave the matter of interference in internal affairs I should like to point out that Principle VI in fact concentrates mainly on the question of violent interference in internal affairs of other countries. It invites signatory states to refrain from any form of armed intervention, or threat of such intervention, against another participating state. Therefore, this principle on which Soviet representatives have relied at so many of these conferences was, I would suggest, mainly aimed at violence. This is confirmed in the final paragraph of the principle when states agree to refrain from direct, or indirect, assistance to terrorist activities.
I hope that the Government will point out that the fundamental human right is the right to life, and that terrorism is a vicious threat to this human right of life, and that in this country, the United Kingdom, serious attacks on this human right have been carried out by groups from the Provisional IRA and other extremists in Northern Ireland, and that some of these groups have received indirect assistance from the Soviet bloc.
I do not have in mind so much the supply of arms and training, although there may be some evidence of that of which I am not aware, but I have in mind in particular inflammatory statements and writings in the

209
Soviet media which tend to glamorise and glorify terrorists who carry out atrocities in this country. I trust that our representative will point out that this sort of inflammatory behaviour by the Soviet Union is indeed a serious attack on human rights here and a disgraceful violation of Principle VI.
I turn now to the question of religious activity. Here I would at the outset ask my noble friend to confirm that she will take into account the extremely valuable work carried out in this area by Keston College in Kent, which monitors the situation of Christian believers in the Soviet Union. We know that the Soviet Union will protest that freedom of religion is guaranteed under the Soviet constitution. I remember Mr. Gorbachev saying precisely that a few weeks ago when he was in this building.
It was not possible to question him closely on the matter at that meeting, and I think that our representative in Ottawa will find that while of course the state cannot easily control the thoughts of citizens and therefore the inner beliefs of citizens, it can and does control the practice and the behaviour of citizens and their rights to assemble for religious worship. It can punish citizens who allow their children to be baptised, and often does, and this is one of the curses of Soviet behaviour.
It can restrict the use of churches and other places of worship, and punish people who assemble for worship in non-recognised buildings. It can punish what it calls unregistered groups, and that applies to a number of religious denominations of minority sects; and it can make unavailable Bibles and certain other objects which are essential to religious worship. I hope that as an addendum to Principle VII we can add a little more detail at the end of the Ottawa meeting and spell out precisely what the freedom to practise a religion means. I hope that some of the complaints that I have mentioned will be recalled in this context.
The situation of Jewish believers in the Soviet Union is worse than that of Christian believers. Though perhaps it is a slightly different issue, I mention the problem of Jews in the Soviet Union who wish to emigrate. I hope that this question will be raised, and that my noble friend will be able to confirm that it will be. In 1979 more than 51,000 Soviet citizens of Jewish origin were allowed to emigrate from the Soviet Union. Shortly after that a clampdown was imposed. In 1983 the figure had shrunk to 1,300, and last year the number of Jews allowed to leave the Soviet Union was reduced to a mere 896. The situation of the others who have applied for exit permits and have been waiting for them, in some cases for more than 10 years, is extremely serious. Having applied, as many did, during the years when a large number of permits were granted, they now find themselves in a state of limbo, usually dismissed from their work, ostracised from society and unable to live a normal life. This carries on year after year. I hope that in conjunction with our allies we shall press this on the Soviet representative and indicate that some progress on this matter is essential if we are to see a new spring in relations between East and West.
A small point before I leave this area is that I have had representations made to me by Jewish constituents in North-West London that the Post Office in this country is refusing to make complaints about the non-delivery
210
of letters to Jewish citizens of the Soviet Union, even registered letters: that books, letters and other small objects are not being delivered to addresses in the Soviet Union, and that, although the British Post Office has the right to raise complaints at international meetings of post offices, it is reluctant to do so. I understand that my noble friend may require notice of that question, but I hope to have an answer from her in due course.
As regards the Jewish religion, there are severe restrictions on the use of the Hebrew language and the manufacture of ritual objects. There is a similar problem with Soviet citizens of German origin. The restriction on their emigration has worsened in recent years as East-West relations have declined. I hope that, together with our German allies within the European Community and NATO, we will raise the matter. The figure was 1,017 in 1983. In 1984 only 655 were allowed to leave.
Co-ordination among the Ten is essential if we are to achieve a successful result in Ottawa. I trust that my noble friend will be able to indicate what steps have been taken to co-ordinate a plan of campaign with the other Nine. I also hope that she can tell us what provision is made for parliamentary participation in the meeting, both from the national Parliaments and from the European Parliament. We hope also that she will be able to raise some individual cases. I should have thought that this would be an ideal area for co-ordination among the Ten or among the NATO allies, although I think we should be wary about involving Turkey in this since Turkey's record on human rights has, I personally believe, been faulty in recent years. The Foreign Office will have a list of individuals on its books which it raises from time to time with the Soviet Union and with other Soviet bloc countries—spouses who are unable to meet, people who are unable to visit relatives, and so on. It would be useful to present a co-ordinated list of such cases and to discuss this within the Ten.
I believe, therefore, that this is a very important conference, and I feel sure that the Government will tackle it with the care and importance that it deserves. It is, one might say, the last remaining thread in communications between East Europe and West Europe on this important area of human rights. Personal interventions with the Soviet authorities on this point are hard to make and are usually dismissed out of hand. In recent years I have written several hundred letters to the Soviet Ambassador in London on individual cases. Never have I had a single reply to any of these letters. The normal rules of diplomatic courtesy are not observed by the Soviet Union.
In Ottawa we have a chance to raise these matters with the Soviet bloc countries. I suggest that it is important, not only to the individuals in Eastern Europe but to public opinion in this country. We must urge the Soviet Union to understand that the Helsinki process is extremely important; that it must be taken as a whole and not just in different parts; and that public opinion in the United Kingdom insists on a serious approach to human rights.
8.8 p.m.
Viscount Buckmaster: My Lords, I indeed welcome this debate so ably introduced by the noble Lord, Lord

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Bethell. My only concern is that I had hoped that a subject of this importance would have attracted a number of noble Lords, and that my modest contribution would be eclipsed by the far weightier offerings of other noble Lords who would speak. However, I find that I am the only speaker "above the line".
I shall deal with one aspect only, but it is a very important one in the context of human rights: that is the situation of the Hungarians in Transylvania which, as your Lordships' probably know, was handed over to Romania after the First World War by the Treaty of Trianon. In speaking in this way I shall be breaking a rule which I made when I first started speaking in your Lordships' House only to speak of subjects of which I have personal knowledge. I must admit that my knowledge of Eastern Europe is very scanty. However I am, as many of your Lordships know, deeply concerned about human rights problems throughout the world and the problems of Transylvania, which have been given considerable prominence in the British press: in The Times, the Sunday Times and the Economist. These problems represent an important facet of the global human rights picture, even though they are far less terrible than the human rights violations which are taking place in Africa, in Chile and in other parts of the third world with which I am much more familiar. But of course all these areas are outside the scope of the Helsinki Agreement to which we must bend our attention this evening. I can assure your Lordships that some of the information that I present, apart from that which has been culled from the press, has been provided by someone who probably knows more about Transylvania and the situation there than anyone else in this country.
Over the past 60 years, the Romanians have imposed all sorts of restrictions on the Hungarians living in Transylvania, who number about 2½ million. These restrictions were directed initially against banks, against industrial enterprises, against agriculture and commerce. Then, something like 200,000 civil servants were ordered to go back to Hungary for refusing to sign certificates of allegiance to the Romanian Government; although the families of these civil servants had lived in Transylvania for a great many years. But it was, in fact, the Hungarian uprising of 1956 which led to the present wave of persecution and this really stemmed, as far as one can judge, from the Romanians' fear of a resurrected Hungarian nationalism threatening Romania's territorial integrity.
Against this threat—an imagined threat it was I think—the Romanians took a ferocious stand. The persecution was and is most apparent in the sphere of education. I can quote only a very few examples. In the Babes Bolyai University only 7.9 per cent. of the students can be Hungarians although the proportion in the country is nearer 12 per cent. And that figure applies to each faculty separately. Then there are the Romanian attempts to suppress the Hungarian language, which seem to have been very successful. Indeed, few young Hungarians now can study in their own language and there is not a single Hungarian secondary school in Transylvania; there are only Hungarian departments in the Romanian gymnasia
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where there are a few Hungarian teachers. And, moreover, the teaching of the Hungarian language has been largely eliminated from the universities.
Even more disturbing it seems to me is the attempt to "Romanise" (if one may use such a word) young Hungarians. Magyar names are a distinct stigma for teenage Hungarians; so that those young men who wish to become doctors, for example, or professional men of another kind, those who wish for a university place, and indeed in many cases even those who wish to get enough food to enable themselves to exist, have in many cases to swallow their pride, change their names, join the Communist Party and marry a Romanian. Even if some of the Hungarians who have been persecuted manage to escape to Budapest, there is no automatic right of residence for them there. Indeed, when they arrive in their mother country, many of them are told to return to Romania as soon as possible.
So I find it hard to equate the attitude of the Romanian authorities with the feeling of the Helsinki Agreement to which of course Romania, like Hungary, was a signatory. Perhaps I could draw your Lordships' attention particularly to Principle VIII of that agreement, which reads:
"Participating states will respect human rights and fundamental freedoms, including the freedom of thought, conscience, religion or belief, without distinction as to race, sex, language or religion".
But however tragic the persecution of the Hungarians in Transylvania may be, it surely pales into insignificance compared with what is being done, for example, to the Tamils in Sri Lanka, the Ndebele in Matabeleland, part of Zimbabwe, and also to the ethnic Rwandese in Uganda. But I shall not dwell on those aspects. So may I express the hope that the noble Baroness the Minister will be able to assure the House that this very important situation, these disturbing violations of human rights in Transylvania, will be taken into full account at Ottawa. May I end also by saying that in my view Her Majesty's Government should regard the problems of the third world human rights violations as being in a totally different sphere and therefore worthy of greater concern.
8.17 p.m.
Lord Oram: My Lords, the importance of the Unstarred Question that the noble Lord, Lord Bethell, has asked this evening rests not only on the significance of the Helsinki Final Act itself but, as I think he suggested, on the inter-relation of the Helsinki process and the nuclear disarmament talks, and on East-West relations in general. Therefore, if we can, through the proceedings at Ottawa, make more of a success than we have been able to achieve hitherto in the implementation of those solemn undertakings which were entered into 10 years ago, that will not only be a real step forward in its own right but, I suggest, it would help, if only in a small way, to create an East-West atmosphere more favourable for the success of the Geneva talks themselves.
I ask myself: what are the chances at Ottawa of that increased success? If that question had been asked in the early 1980s, during the Madrid Conference, nothing but a gloomy answer could have been given; because, as noble Lords will recall, much of the long-drawn-out proceedings of that conference consisted of

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bitter confrontation and mutual denunciations. Therefore, one certainly hopes that it is possible to do better this time. I believe that it is. I certainly hope that it is. Let us remember that the series of post-Helsinki conferences are intended, or were intended when they were planned, as opportunities for all the nations of Europe to meet together on an equal basis to reach a consensus rather than majority votes, and to conduct discussions of a different and hopefully more constructive kind than the usual exchanges between East and West.
As the noble Lord, Lord Bethel], suggested, East-West relations have indeed been at a very low ebb in recent times. This has been partly, I would suggest, because of excessive rhetoric from both President Reagan and our Prime Minister in approaching Soviet affairs, partly because of the breakdown of the nuclear arms talks which occurred as a Soviet reaction to the West's deployment of cruise and Pershing missiles, and partly, I suggest, also because for a long period now there has been a lack of initiative by successive ailing octogenarian or septuagenarian leaders on the Soviet side; and the combined effect of all these factors has been the grinding to a halt, almost, of the machinery of interchange between East and West.
The question that is now arising, and which may well be answered at Ottawa for good or for ill, is whether what I have called the Helsinki process can provide that element of lubrication which can help the wheels of that machinery to turn again. We must not expect miracles or a sudden major change in the situation. At Ottawa, I suggest, we must work and be content to achieve only modest elements of progress. It is of course the issue of human rights, which is the major subject to be discussed in Ottawa, that was so contentious in Madrid. It will be difficult, but important, to get away from that atmosphere of confrontation, and hope to take matters forward in a better spirit.
I recall that when, last July, the noble Lord, Lord Bethell, asked a Question for Written Answer about the Soviet implementation of the Helsinki Act, he received from the noble Lord, Lord Trefgarne, a long, detailed and generally depressing Answer about what had been going on; and, of course, this evening the noble Lord, Lord Bethell, has added his own analysis and chronicle of that depressing scene. In my view—and he drew attention to this—particularly depressing is the refusal by the Soviet Union and the East European countries to allow their citizens to emigrate and 10 travel. That has been relieved only very occasionally by individual concessions in response to special pleas. For example, we have had a happy response to the Foreign Secretary's plea in Moscow recently; and my right honourable friend the Leader of the Opposition in another place also made a special plea and had a successful response.
But are we, I wonder, to any degree entitled to indulge in the optimism I am seeking? There are, I think, some gleams of light. During the Madrid Conference it was the Korean air disaster which dominated the scene for quite a while. In contrast, recently there has been the sad shooting of an American officer in East Germany. I suppose that was potentially a dangerous flashpoint which might have marred the discussions at Ottawa, but it seems that
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moderation has been the keynote of the discussions of that unfortunate event.
I think we can look with some hope, although it is too early to be sure, to changes in Soviet policy consequent upon the election of Mr. Gorbachev as successor to Mr. Chernenko. Our Prime Minister is on record as saying that he is a man with whom she could do business. I believe that struck a very good note when he was over here, and I only hope that that spirit expressed by the Prime Minister in that sense can spread to the discussions at Ottawa.
Above all, let us recall that the nuclear arms talks have started at Geneva again, and the very willingness to talk is a great improvement on the earlier East-West atmosphere. Perhaps it will be said that these gleams of light, as I have called them, are feeble and are an insubstantial ground for optimism. That may well be so, but I hope that as our delegates in Ottawa approach the important discussions that will take place there our Government and our delegates will look in good faith for all possible evidence of a willingness to get together, and that our Government will be putting forward positive proposals to ensure the more effective implementation of the Helsinki Final Act. Let us hope that the tenth anniversary of the signing of the Helsinki Final Act, which will occur, I think, in August of this year, may be seen as one step in the direction of peace. I believe that in our approach to Ottawa that is not too euphoric a note to strike.
8.27 p.m.
Baroness Young: My Lords, I am grateful to the noble Lord, Lord Bethell, for putting down the Question which has inspired the short but interesting debate that we have had this evening. He is something of a specialist in this field. It is therefore natural that his words are listened to with care and respect.
The noble Lord has drawn attention to what can only be described as a significant landmark in the history of the CSCE. The experts, meeting on human rights is to be the first of its kind in the 10 years since what has come to be known as the CSCE process began. From the beginning, we have made clear that we regard the CSCE as having the prime aim of relating policy to people. In bringing together such a variety of subjects within a single document the signatories of the Helsinki Final Act were, in our view, indicating that these matters were all pieces of the same puzzle and one of the pieces was respect for human rights and fundamental freedoms, including the freedoms of thought, conscience, religion or belief for all, without distinction as to race, sex, language and religion.
The Madrid follow-up meeting in 1983 scored an important first, by agreeing for the first time to a comprehensive series of expert-level meetings, as well as a full follow-up meeting in Vienna in November 1986. These expert meetings encompass many of the important areas covered by the Helsinki Final Act. Security is currently under discussion at Stockholm; the peaceful settlement of disputes was discussed at Athens last year; and culture will be discussed in Budapest in November. Human affairs will be taken at two different meetings. Human rights, as enshrined in Principle VII, will be considered at Ottawa.

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Human contracts, which will come under Part III of Helsinki, will be discussed in Berne in April next year. It is important to bear this distinction in mind. While there will obviously be some overlap, family meetings and reunification, marriage between citizens of different European states, freer travel, youth exchanges and so on will be for Berne rather than for Ottawa. I hope, therefore, that your Lordships will excuse me if I do not address these in any detail this evening, although obviously the points that have been raised in this debate have been noted.
It is clear from the results of Madrid that the West, at any rate, is determined that the CSCE process should be active on all fronts; that advance in one area should not be at the expense of a reverse in another. This balanced approach is something we shall be seeking to maintain in the way we conduct the Western case at Ottawa. The various elements which are covered by Principle VII at Helsinki—civil, political, economic, social, cultural rights and freedoms; the right to practise a religion of one's own choice; equality of minorities before the law; the right of the individual to know and act upon his rights and duties—are all fundamental to Western society. They are the assumptions on which democratic societies are based. In speaking at Ottawa, therefore, the representatives of Western democratic governments will be working from similar positions of principle.
A number of the other participants at Ottawa will be representatives of countries with ideas very different from our own. The assumption underlying the Communist system, as it exists in Eastern Europe and the Soviet Union, is that the interests of the party and state are paramount. Within this, the interests of the collective are infinitely greater than those of the individual. But the fact is that we all agreed at Helsinki that, however different our systems of government, we would respect the human rights and fundamental freedoms set out in Principle VII. That is the commitment we all made.
It is our view that this has not happened in practice in the majority of the Eastern bloc countries. And I should like to assure my noble friend Lord Bethell that we do not hesitate to point this out. The existence of Principle VII gives us the locus to raise these matters in contacts with East European and Soviet representatives. Last December, the Foreign Secretary and the Prime Minister both made clear to Mr. Gorbachev that human rights are, and will remain, a matter of concern in this country. Reference was made to Helsinki, and individual cases were cited.
We have brought such matters to the attention of senior representatives of all the countries concerned, regularly and with emphasis. The fact that our representations have been rejected regularly will not prevent us from continuing to make them. It is the fact that Western leaders have kept up steady pressure in this field that has produced the results we have seen—never, admittedly, more than a few drops of water from a large bucket but nevertheless of great importance to the individuals concerned.
These are matters which must be addressed at Ottawa. If the meeting is to consider, "Questions concerning respect for human rights and fundamental
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freedoms in all their aspects as embodied in the Final Act"—these are the words of the mandate agreed at Madrid—then an examination of the record of implementation is clearly a part of this. Another part must be a careful consideration of ways in which the terms of the commitments might be better clarified so as to encourage fuller implementation in the future.
The meeting is only six weeks' long. Even with good will on all sides it will be difficult to get down to a serious discussion, including new texts, if time is wasted on confrontational polemics. This will certainly not be our intention, nor that of our partners and allies. We will, however, tackle the subject directly and in as much detail as time permits.
The mandate defines Ottawa as a meeting of experts. And to reflect this, the Government have chosen Sir Anthony Williams, a former diplomat who latterly led our delegation to Madrid and who therefore has long and detailed experience of the CSCE, to lead the delegation to Ottawa. He has also subsequently served as a member of the United Nations Human Rights Commission, so his credentials on the subject matter of the Ottawa meeting too are well known in the international community.
The approach of the UK delegation will be workmanlike and frank. We do not believe that the awkward and contentious issues can be swept under the carpet. We must be open and clear about the points on which we disagree with the East, but equally sincere in working for a concrete outcome to the meeting, not simply an exchange of vituperative artillery fire.
The noble Lord, Lord Bethell, asked me a number of quite specific questions. First, he asked me about monitoring groups. It is a sad reflection on the Eastern fear of anything unofficial or critical of their governments that human rights groups in Eastern Europe are so repressed. Many individuals with an interest in human rights matters drew encouragement from the signing of the Helsinki Final Act, the best known of these being various Helsinki monitoring groups set up in the Soviet Union, all of which have since been forced into silence. The case of Anatoly Shcharansky, a founder member of the Moscow Helsinki monitoring group, has been raised regularly with the Soviet authorities.
The noble Lord also asked me about the question of terrorism and Soviet support of the IRA. May I make plain that the Government's position on terrorism has, I hope, been made abundantly clear in this House and in many other fora. Your Lordships will need no reminding of the suffering that has taken place in Northern Ireland. Although Soviet propaganda generally stops short of commending acts of terrorism, their attitude to Northern Ireland and its problems is completely out of tune with that of Her Majesty's Government and the Irish Government and is not conducive to the peaceful settlement of this issue.
My noble friend also asked me about religious freedom, and he indicated instances of religious persecution and discrimination. I need hardly say that the Government deplore such activities. The East Europeans and the Soviet Union, whatever the atheistic tenets of Communism, will argue that there

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are large numbers of officially sanctioned congregations. They will refer to the substantial numbers of practising believers in most of these countries. Difficulties arise, they will say, only when people disobey the rules and refuse to apply to register that congregation or to submit to some similar bureaucratic procedure.
But in arguing for such official religion they not only involve the state directly in something which should surely be a matter for the individual, but they contradict at least the spirit of the very clear commitment agreed at Madrid:
"To ensure the freedom of the individual to profess and practise, alone or in company with others, religion or belief acting in accordance with the dictates of his own conscience".
To us the matter is clear, and it will remain firmly on the agenda of points to raise with the East.
My noble friend also raised a specific point about the Post Office. We have made clear our views on the restrictive Soviet regulations covering what may or may not be sent by mail, directly to the Soviet delegation at the Hamburg Universal Postal Union conference last year. I am not aware, however, of complaints that the British Post Office is not following up on the non-delivery of registered mail. If instances are documented, I shall gladly bring those to the attention of the appropriate Government department.
The noble Viscount, Lord Buckmaster, raised a very specific point. I think that on this occasion it would be wrong for me to do more than note what the noble Viscount said about Transylvania. That said, I shall certainly bear in mind the points that he raised and the problems of ethnic minorities inside Europe at Ottawa.
Finally, my noble friend Lord Bethell raised a question about including parliamentarians in the British delegation. I would not deny that there are parliamentarians with expertise on human rights and international negotiating experience. However, it has not been our practice to expand our delegation in this way in the past, and for reasons of both precedence and of course economy I would be reluctant to break with past practice. However, perhaps I may say to my noble friend that I have taken note of the points he has raised and I shall look at them carefully when I come to read Hansard tomorrow.
My noble friend also raised the question of whether or not the delegation should include Members of the European Parliament. As I am sure he will understand, that is a question for discussion with the Presidency which will no doubt take account of the practice at Madrid and other follow-up meetings of experts.
I can, however, confirm to my noble friend who asked a question about consultation with our allies and partners that we have, indeed, been in discussion with our allies and partners about the meeting, and have established some useful common ground on the Western attitude to the general conduct of the meeting with which the United Kingdom attitude, which I stated earlier in my remarks, is fully congruent. But there has been some discussion of areas in which new proposals might be put forward.
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I am sure your Lordships will understand that I am not in a position now to make known what partners have suggested on an exploratory basis, and I cannot predict what the Ottawa meeting will agree to consider. The short time available and the fact that the CSCE decisions are always taken by consensus, and therefore must proceed by agreement between all participants, create obvious limitations.
I should like to confirm again that our approach will be to work to avoid adding empty platitudes to Principle VII. We shall try to identify what will necessarily be small areas where improvements can be realistically sought without at the same time endangering or limiting the wider commitment which already exists. Indeed, the latter may have been honoured more in the breach, but it is vital to preserve at least the agreed yardstick of Helsinki against which we have the right to measure the actions of all signatories.
In the year of the Geneva nuclear arms talks and of a new general secretary of the CPSU—better known in this country than some of his predecessors—it is understandable that there should be some hopes of progress in East-West relations and for tangible results. This point was made by the noble Lord, Lord Oram.
I fully share that hope, but I must qualify it. Results will come slowly and they will not come without a modicum of East-West confidence. In seeking better relations between this country and the Soviet Union and its allies, we are working for better mutual understanding. Such an understanding is the foundation stone of greater confidence where there is the political will on both sides to build on it.
At Ottawa, too, we shall be dealing with issues of trust and confidence. One of the points we shall be trying to get across is that human rights is an area where some significant moves by the Soviet Union and its allies would do more to foster a greater sense of trust among the public at large in the West than almost any other. It is in this sense that the subjects under discussion at Ottawa relate to the wider issues of stability and security.
We are conscious, therefore, of the importance of this meeting. I can assure your Lordships that we shall treat it with the seriousness that it deserves.

National Heritage (Scotland) Bill
Returned from the Commons with the amendments agreed to.

Bournemouth Borough Council Bill [H.L.]
Returned from the Commons with amendments; the amendments considered and agreed to.
House adjourned at eighteen minutes before nine o'clock.