Lords Sitting of 29 April 1986

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

Postal Service: Morning Deliveries
Lord Pender: 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 over the last two years to the latest convenient date what percentage of first daily postal deliveries were made:

(a) before 8.30 a.m.

(b) between 8.30 a.m. and 10 a.m.

(c) after 10.00 a.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, the detailed operation of postal deliveries is the responsibility of the Post Office Board. However, I understand that, while at local level Post Office management closely monitors delivery times, there is no system for monitoring performance nationally.
Lord Pender: My Lords, I thank my noble friend the Minister for that disappointing reply. One would have thought that those were the sort of statistics that the Post Office would carry. Does my noble friend agree that the late delivery of morning mail causes disruption of people's daily lives and creates, in turn, business inefficiency? Does he also agree that the recent cost-cutting restructuring of the postal delivery system is a false economy?
Lord Lucas of Chilworth: My Lords, it depends to some extent on what my noble friend means by "late". For example, in urban areas the first delivery should be made between 7 a.m. and 9.30 a.m. The rural areas normally receive one delivery each day and this can continue until lunchtime or even the early afternoon. There are social consequences for Post Office staff in altering that.
As regards the second part of my noble friend's supplementary question, the reorganisation of the Post Office is not solely a cost-cutting exercise. It is an exercise which the Post Office expects to result in its being rather more cost-effective.
Lord Boyd-Carpenter: My Lords, is it not a reflection on the efficiency of the Post Office Board that, as my noble friend said, it has no machinery for monitoring performance on the important matter of deliveries? Are not the Government responsible for appointing the board?
Lord Lucas of Chilworth: My Lords, I understand that local monitoring is undertaken as an integral part
130
of the responsibilities of local management for the supervision of postal operations in their areas. However, with wide variations in local circumstances it is not appropriate, nor is it useful, to monitor delivery times at national level.
Lord Mackie of Benshie: My Lords, does the Minister accept his noble friend's dictum that the Government have a responsibility for monitoring the Post Office?
Lord Lucas of Chilworth: My Lords, the Post Office is, as the House will know, a body set up by statute whose operational matters are within the control of the board. I can certainly give my noble friend and all noble Lords an assurance that the expressions of disquiet that your Lordships have made on three occasions in the past six weeks will be conveyed to the chairman of the board of the Post Office.
Lord Bruce of Donington: My Lords, is it not the case that under the statute the Government themselves retain the power of general direction to the Post Office? Does he further accept that even though the Government may not concern themselves with day-to-day operational matters, as the noble Lord said, in the final analysis policy must surely remain with Her Majesty's Government?
Lord Lucas of Chilworth: My Lords, that of course is quite right. The matter raised by my noble friend Lord Pender is, as I suggested in my earlier answer, an operational matter for the Post Office.
Lord Broxbourne: My Lords, in view of the imprecisions and uncertainties which seem to surround the important matters of jurisdiction and responsibility in respect of monitoring, would it not be well for my noble friend the Minister to address himself to the old question, "Quis custodiet ipsos custodes?"?
Lord Lucas of Chilworth: My Lords, there is no imprecision as between the Government and the Post Office in this matter.
Lord Tordoff: My Lords, will the Minister ask his noble friend to address the House in English in future?
Lord Jenkins of Putney: My Lords, is the Minister aware that the Post Office has never been as good as it was when under direct ministerial control? Will the Minister do a reverse privatisation, so to speak, and bring the Post Office back under direct control of the Minister concerned?
Lord Lucas of Chilworth: No, my Lords. It is the Government's policy to return to the private sector all those businesses that are currently in the public sector where such opportunity arises, since we believe that they can operate rather more efficiently in that climate than they can otherwise.
Lord Swinfen: My Lords, can my noble friend confirm that the Post Office in this country is more efficient than that in any other country in the world, and at a more reasonable cost?
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend because I can confirm that that is the case. At the same time, I remind your Lordships that the real cost of mails and other postal services is lower than it was 15 years ago.
Lord Bottomley: My Lords, my experience is similar to that of the noble Lord who has just asked a supplementary question. However, does not much depend upon the head postmaster? I used to receive a lot of mail from Middlesbrough and I still do. I am bound to say that it has been regular and I have never had any cause to complain.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord for retailing his experience, which I confirm. In most postal areas postmasters and their staffs are as helpful as they can be. In particular the mail service has increased by 17 per cent., I think, in three years. A huge amount of business is being done, the vast bulk of it to the satisfaction of the consumer.
Lord Wigoder: My Lords, is the noble Lord aware that recently on my garden path the postman delivering my morning mail crossed with the postman delivering my afternoon mail? Is he further aware that when I queried the reason for that I was told that it was due to shortage of staff?
Lord Lucas of Chilworth: No, my Lords, I was not aware of those two facts. I envy the noble Lord having two deliveries in a day, even if they happen to cross.
Viscount St. Davids: My Lords, does the noble Lord agree that the great value in removing the various industries from national control is that there is no longer a need to collect statistics on matters which, though of great interest, are peripheral; and that if we go on trying to collect the different figures which may be relevant, it will be enormously expensive and not to our advantage?
Lord Lucas of Chilworth: My Lords, in most respects I agree with the noble Lord. The Post Office has been at pains not to increase the cost of services, and your Lordships will recall that the cost of second-class mail was reduced. It is a question of cost-effectiveness. Although mail deliveries are nearly reaching the performance target set by the Post Office board, which I think your Lordships will find acceptable, one has to bear in mind the cost to the consumer in providing not only statistics but additional services.
Lord Mackie of Benshie: My Lords, can the Minister tell us how much money and how many staff are being saved by splitting the mail into two categories?
Lord Lucas of Chilworth: Not without notice, my Lords.

Charities: Budget Legislation
2.44 p.m.
Baroness Lane-Fox: 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 estimate they have made of the total extra money that will be received by charities as a result of measures announced in the Budget.
Lord Brabazon of Tara: My Lords, the benefit to charities will depend on the public response to the Budget proposals, but it could be at least £120 million next year and perhaps more.
Baroness Lane-Fox: My Lords, I thank my noble friend for that encouraging reply. May I further ask him whether he agrees that at this time many people are showing a wish to give to what they see as good causes in response to successful fund-raising events? That being the case, does he further agree that the incentive offered in the recent budgetary arrangements will have the advantage of encouraging these people to give more and others to give something?
Lord Brabazon of Tara: My Lords, I agree with the points made by my noble friend. In particular I think she refers to the new payroll deduction scheme, which could be a great success.
Lord Barnett: My Lords, would the noble Lord care to comment on a letter in today's edition of The Times which indicated that many well known charities will be worse off if the legislation remains as it is? I note the Answer that he gave to his noble friend that the cost could be as much as £120 million. I should like to ask him whether he is aware that in the Budget debate the Chancellor estimated that in a full year the cost in loss of tax would be £1 million. If he is right, is it not all the more important that the money should go to genuine charities? Will the noble Lord agree therefore that a new definition of charities should be introduced to exclude establishments such as Eton, Harrow and other public schools?
Lord Brabazon of Tara: My Lords, first let me say that I saw the letter in The Times this morning. I have taken advice on it. It is a fairly complicated issue and I think that there may well be a misunderstanding in it. I am sure that my right honourable friend will take note of the contents of the letter, and I point out that this matter is subject to debate in another place during the passage of the Finance Bill.
As regards the second point raised by the noble Lord, the figure I quoted in my original Answer was the estimated benefit to charities from these proposals, which was £120 million. Regarding the charitable status of public schools, these measures do not allow people to use the payment of fees as a form of charitable status. The legislation would only be applicable to building works or other such things.
Baroness Carnegy of Lour: My Lords, following the last question, may I ask my noble friend whether he will ask his right honourable friend to look carefully

133
not only at the possibility that the taxation of some charities may adversely affect large, important and well known charities, but also at the effect on small ones such as parochial church councils?
Lord Brabazon of Tara: My Lords, I take note of what my noble friend says and I shall indeed ask my right honourable friend to take those effects into account. Perhaps it would be convenient to write to the noble Lord, Lord Barnett, with a copy to my noble friend, giving a summary of the briefing which I received on today's letter in The Times. I think this will help to clarify a number of points.
Lord Lloyd of Kilgerran: My Lords, in view of the answer to the noble Lord, Lord Barnett, is the original estimate of the £120 million that may be available to charities the net sum or is it subject to taxation?
Lord Brabazon of Tara: No, my Lords, it will be the net sum, as the tax has been removed.
The Earl of Halsbury: My Lords, as the only member of your Lordships' House who is sporting an Etonian tie this day, and as I have a grandson at Harrow, may I ask for an undertaking from the noble Lord that those two scholastic establishments will not be singled out for discrimination?
Lord Brabazon of Tara: My Lords, I must declare an interest too as an old Harrovian and also as having a son down for Harrow, and I can give the noble Earl that assurance.
Lord Bruce-Gardyne: My Lords, do not the last question and the question from the noble Lord, Lord Barnett, suggest that the Treasury may have opened something of a Pandora's Box? Is it not probable that there will be considerable problems over demarcation lines regarding entitlement to the VAT concessions and that some of the money will end up in what may appear to your Lordships to be pretty surprising charities? Finally, if the worth of these concessions to the charities is £120 million, can the noble Lord tell us how it happens that loss of tax is only £1 million?
Lord Brabazon of Tara: My Lords, the figure of £1 million was the noble Lord, Lord Barnett's; it was not mine. The net worth to the charities is very much an estimate. As I said in my original Answer, it depends on the response from the public. But the actual Exchequer cost, on that sort of basis, we estimate to be £60 million. On my noble friend's other question about opening a Pandora's Box, I believe that, on the basis that the charitable payroll deduction scheme is limited to £100 a year, it is not likely to have the effect that my noble friend describes.
Lord Barnett: My Lords, will the noble Lord the Minister accept that the £1 million that I quoted was not my figure? It was the Chancellor's in the Red Book at the time of the Budget.
Lord Brabazon of Tara: My Lords, I shall have to look into the figure. I am not quite sure what the £1 million does refer to. It certainly does not refer to any of the figures that I have before me.
Lord Jenkins of Putney: My Lords, as the briefing that the noble Lord has mentioned is likely to be of wide general interest, will he find some way of making it more generally available than to the two Members of your Lordships' House in question?
Lord Brabazon of Tara: My Lords, I have said that I shall write a letter on the basis of the briefing. Naturally, I shall place a copy in the Library, as is the normal practice.

International Tin Council: Immunities
2.51 p.m.
Lord Bruce of Donington: My Lords, I beg leave to ask the first Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they propose to withdraw the immunities extended to the International Tin Council under S.I. 1972/120.
Lord Lucas of Chilworth: My Lords, as hosts to the International Tin Council, the United Kingdom is bound by the headquarters agreement to accord the immunities set out in that agreement.
Lord Bruce of Donington: My Lords, does not the noble Lord realise that the existence of the International Tin Council and indeed the validity of its corporate entity depends upon the degree of integrity of the member governments comprising it? Is the noble Lord aware that the default of most of the members of the International Tin Council has left the British creditors of the ITC in a very sorry condition—a condition in which, owing to the terms of the statutory instrument granting the immunities, there are three kinds of creditor: the first, a series of creditors who arrived at private agreements with the ITC agreeing to a waiver of their immunity; the second, those who had concluded a contract subject to arbitration; and the third, unsecured creditors? Is the noble Lord aware that owing to the refusal of the Government to eliminate the immunity, the provisions of the Insolvency Act relating to the fair distribution of assets among creditors has ceased to have any effect whatever? What do the Government intend to do to redress the unfairness that has arisen?
Lord Lucas of Chilworth: My Lords, I listened with interest to the comments that the noble Lord, Lord Bruce of Donington, made. In answer to the questions that he asked, I would say, first, that the Government are not satisfied, on the basis of breach of the tin agreement or otherwise, that there is any legal justification for withdrawing the immunities. Secondly, that there may have been arrangements between the ITC and some creditors is a matter between the ITC and those creditors. It is certainly not one for Her Majesty's Government.
In regard to the Insolvency Act, the headquarters agreement, as the noble Lord and indeed all your Lordships will know, is the usual agreement when international bodies take up office in any country so as to avoid those provisions. Lastly, in so far as other

135
creditors are concerned, since there are a number of legal actions about, I do not think that it would be helpful for me to make any comment that might prejudice the position of both the Crown and others in any legal proceedings that may flow from that collapse.
Lord Molloy: My Lords, will the noble Lord the Minister not agree that what is causing grave irritation in the tin mining industry in Cornwall is that those involved—management and workers—realise that because of this country sticking to its own SI and to the agreement with the ITC, all that we derive from such honourable adherence is unjustified punishment?
Lord Lucas of Chilworth: My Lords, the noble Lord should, I think, address the first part of his question to me when I answer the second Question on the Order Paper in the name of the noble Lord, Lord Bruce of Donington. As to the wider issue, it was certainly regrettable that some ITC countries refused to participate in the proposed settlement made in March. That is a matter of some regret to ourselves.
Lord Williams of Elvel: My Lords, is the noble Lord able to tell us today exactly what are the obligations of individual member governments under the International Tin Agreement; whether the obligations are joint and several, or merely several; and what is the total potential liability of the United Kingdom Government under that agreement?
Lord Lucas of Chilworth: My Lords, I regret very much that I cannot answer the question of the noble Lord, Lord Williams, with regard to joint and/or joint and several responsibility, since the various advices that Her Majesty's Government have had are not totally in accord. There are different views with regard to that point. The Government's liability is restricted under the agreement to 4 per cent. of the amount involved. Again, at this stage I am not able to tell the House what those liabilities may total since all claims have not yet been registered.
Lord Paget of Northampton: My Lords, does the noble Lord agree that an immunity that can be withdrawn after the event but before implementation is a little bit like an umbrella being let subject to it not raining?
Lord Lucas of Chilworth: My Lords, in 1982, when we entered into the sixth agreement, it seemed the right and proper thing to do. I do not think that it would be helpful were I, with hindsight, to suggest what we might or might not have done, because events themselves have dictated this position.
Lord Bruce of Donington: My Lords, can the noble Lord give the House some indication what further steps the Government propose to take towards persuading those other governments in default to honour their obligations?
Lord Lucas of Chilworth: My Lords, I understand that discussions through diplomatic channels continue in this matter.
Lord Broxbourne: My Lords, in regard to the difficulties of interpretation and the differences arising out of the answer to the noble Lord, Lord Williams, can my noble friend say what is the machinery for resolving these matters? Does it go to the International Court of Justice or is there some built-in procedure for arbitration? What is the machinery?
Lord Lucas of Chilworth: My Lords, the determination of the machinery is in the hands of the litigants.

Tin Mining Industry, Cornwall
2.59 p.m.
Lord Bruce of Donington: My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they propose to take in order to safeguard the future of the tin mining industry in Cornwall.
Lord Lucas of Chilworth: My Lords, the Government have made clear that they are willing to consider applications for assistance towards the cost of projects which will make the mines competitive in a free market for tin.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the industry itself will gain but little comfort from his statement which restricts any aid that may be required to the operation of the appropriate Industry Acts? Is he also aware that what is required in this instance is a substantial injection of funds in order to maintain the employment of over 4,000 people in this industry which is vital to Cornwall and so as to save the Government approximately £25 million a year in expenditure on relief which would otherwise be paid to those people?
Will the noble Lord try treating the tin industry in Cornwall with a modest degree of generosity comparable to the Government's colossal subsidy to agriculture and the expenditure of over £100 million on a minor city bank which happened to get into trouble?
Lord Lucas of Chilworth: My Lords, I am sorry the noble Lord thinks that my original Answer will bring small comfort to the tin mining industry in Cornwall. I repeat—because I should not like anybody to misunderstand—that we are willing to consider any application for assistance which will make the mines competitive in a free market for tin. I do not want to bandy numbers with the noble Lord opposite, but the figure of 4,000 people to which he refers is quite different from what the industry has indicated to my department. It is more likely to be 1,200 miners plus 300 people in peripheral activities and some hundreds in associated areas. That is a long way short of the figure given by the noble Lord.
The tin industry will be accorded all the assistance that we can give, commensurate with its further operations being viable. It is certainly not Her Majesty's Government's policy to provide operating subsidies. Even if that were so, it is unlikely that the

137
necessary European Commission approval would be forthcoming.
Lord Molloy: My Lords, what the noble Lord has just said is well understood in Cornwall by both management and the skilled craftsmen. I shall ask my question now, as the Minister earlier suggested. The workers in the industry are aware that while we adhere to our own statutory instrument with regard to the International Tin Council other people do not, and to them all the promises by the Government to help seem ludicrous if other nations do not play the game. They are also aware that they are now living in an era in which we have the fastest growing unemployment ever in our industry. This point, too, plays an important role and is one of the matters which the Minister ought to consider.
Lord Lucas of Chilworth: My Lords, I think that the question of the noble Lord, Lord Molloy, boils down simply to this: what shall we do when we find that an international agreement is not supported by other countries which are signatories to it? This is a matter to which we shall have to give most careful consideration in the light of events and then take what steps we feel are necessary with regard to international commodity agreements.
With reference to the point about labour let no noble Lord be under any misapprehension that we are as concerned about the growing numbers of unemployed people across the industrialised world and in Europe as we are about those in our own country. The Government's financial and other policies are aimed at, and are succeeding in holding, that position and at making some small dents in it.
Lord Mackie of Benshie: My Lords, does the reply by the Minister mean that he rejects all international commodity agreements which are aimed at protecting large numbers of primary producers against excessive movements in the market? Is it not a fact that the International Tin Agreement failed because the market was not followed and the prices were kept too high? That depressed prices far below what they would have been if the agreement had been managed in a manner appropriate to the market.
Lord Lucas of Chilworth: My Lords, at this stage all I would be prepared to say in answer is that this is a very complex matter. A number of issues are involved. One which the noble Lord mentions is important, but it is by no means unique in terms of the collapse of the Tin Council's operations.
Lord Cledwyn of Penrhos: My Lords, will not the noble Lord agree that if the applications to which he has referred are not granted and the tin mines in this area of Cornwall are closed, that would be a major tragedy for the economy of Cornwall and for the people who would be made redundant as a result of the closures? If that were to be the case, the effect on the economy of Cornwall would be serious. In those circumstances what further steps would the Government take to find work for these people who live in Cornwall, who are Cornish, and who should not move away if they do not wish? What steps will the Government take to rebuild the economy following such a disaster?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Cledwyn, asks a hypothetical question.
Noble Lords: No.
Lord Lucas of Chilworth: My Lords, since we have not yet received claims for assistance—though we understand some are on the way—it would be wrong for me to suggest the outcome of those applications. When the claims have been dealt with might be the right time for the noble Lord opposite to raise his question.
In broader terms the Government have a number of schemes available for assisted areas to help with the relocation of other businesses and the retraining of people. Those schemes will be brought into play if necessary.
Lord Campbell of Alloway: My Lords, would my noble friend the Minister agree that this is a grave situation and an emergency? If he so agrees, could consideration be given to seeking some specific derogation under the Rome Treaty to keep the industry and its workforce viable?
Lord Lucas of Chilworth: My Lords, of course I agree with my noble friend Lord Campbell of Alloway that this is a very grave situation. It arose in October of last year and came to a head in March of this year. Other industries have faced what my noble friend describes as emergency circumstances. The Government will do what they can to resolve those circumstances with the tools which are at their disposal. I do not think that there can be any question this afternoon of seeking derogation of our international responsibilities in a matter of this nature.
Lord Williams of Elvel: My Lords, would the noble Lord accept that his analogy with other industries is quite false and that for over 20 years the tin agreement has been designed to keep the prices in the market different from those which would prevail in the free market? Does he agree that the collapse of the tin agreement—in October, as he rightly said—created a completely new situation which had not been faced by other industries? In the light of that would he not agree that there is a case for some transitional arrangements to allow the Cornish tin industry to adjust to a totally new market situation which has developed only in the last few months?
Lord Lucas of Chilworth: My Lords, in general terms I would agree with what the noble Lord says. I would refer him to my original Answer, which was that the Government have made it quite clear that they are willing to consider applications for assistance towards the cost of projects which will make the mines competitive in a free market for tin. I do not think that I can say any more than that.

Business
The Earl of Swinton: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Glenarthur will, with the leave of the House, repeat a Statement that is to be made in another place on the prison officers' dispute.

139
It may also be for the convenience of the House if I announce that the Committee stage of the Gas Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjournment the Third Reading of the Sex Discrimination Bill will be taken.

Patents, Designs and Marks Bill [H.L.]
3.10 p.m.
Read a third time.
Lord Lucas of Chilworth: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Lucas of Chilworth.]
Lord Lloyd of Kilgerran: My Lords, as the Minister has had such a busy afternoon so far, I am delighted to be able to issue nothing but praise to him and to his officials for the way in which they have conducted this Bill through its various stages in this House. I am also pleased to say that I have been able to persuade the Government to allow about 12 amendments to the Bill. Some of them are minor amendments but many of them will be of use to industry in helping to create wealth and in saving legal costs.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord, Lord Lloyd of Kilgerran, for his remarks. I am sure that the House will join me when I say that the joint effort on the part of the noble Lord and the Government has produced this reasonably satisfactory solution this afternoon.
Lord Bruce of Donington: My Lords, we, for our part, would like to offer our felicitations to the noble Lord on having piloted this Bill through so smoothly. We noted with some anticipation that the Government showed sufficient flexibility in this instance to agree to no fewer than 12 amendments which emanated from the noble Lord, Lord Lloyd of Kilgerran. We sincerely hope that this is an omen for future Bills, possibly of a rather more important and significant nature, and not excluding the one which will go into Committee after these deliberations have finished.
Lord Lucas of Chilworth: My Lords, I am grateful to the noble Lord, Lord Bruce of Donington, for his remarks, and I am grateful to him for what he was able to do during the passage of this Bill, which he suggested himself on Second Reading might be controversial. Undoubtedly its passage was due to his assistance in moving that controversy into an area with which we shall deal much, much later.
As regards other Bills which may come before your Lordships' House and in which both I and the noble Lord may be involved after the Whitsun Recess, I am quite sure that all your Lordships will agree that we shall have to deal with the matter when those Bills come to this House.
On Question, Bill passed, and sent to the Commons.

Gas Bill
3.14 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Belstead.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [The Director General of Gas Supply]:
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 6A:
Page 1, line 11, at end insert—
("( ) The Secretary of State, after consultation with the Director General, shall appoint four Directors with such functional responsibilities as the Director General may from time to time determine.").
The noble Lord said: I beg to move Amendment No. 6A. I make no apology for returning to this matter since the regulation of this monster private monopoly is indeed of paramount importance. Moreover, depending upon the progress of business today, this may be the last opportunity that we shall have of discussing the matter on Clause 1; but we shall have to wait and see.
We all tried from the Opposition Benches last Thursday to impress upon the Government and Members of the Committee opposite that we did not believe that the regulatory provisions in the Bill were strong enough, and that a single person in the office of director general would be in an extremely weak position vis-à-vis the new private monopoly, British Gas plc. The noble Lord, Lord Ezra, tried through his amendment to solve the problem by creating a commission and commissioners with special responsibilities for important sectors of the gas supply business. That was rejected out of hand almost contemptuously by the noble Lord, Lord Gray of Contin. A similar attitude was taken in respect of my own amendment—Amendment No. 4—which I withdrew because I wanted to consider what had been said from all sides of the Committee. Indeed the same cavalier attitude was taken towards the amendment of the noble Lord, Lord Diamond, which sought to appoint separate directors for Scotland and Wales. That was how we were treated.
Members of the Committee on the Front Bench opposite really must realise that we are serious in our concern over the lack of strong regulation. They must understand that we have a duty in this House to revise and improve defective legislation, and that if the Government will not treat our fears and doubts seriously and recognise that we are not prepared to be ridden over roughshod, we shall have to adjust our actions and attitudes accordingly.
We are right to be concerned about the regulatory procedures, because we have an example before us. We have the example of the actions of British Telecom since it has been privatised. We all know that the Director-General of Oftel was quite impotent when

141
British Telecom plc decided that it was in their interests, and the interests of their shareholders, that the price to domestic telephone consumers should be raised outside the RPI, and above the RPI minus X formula. That was the first indication that we had that the Director-General of Oftel would not be able to regulate the telecommunications industry in the way in which we had expected that he would do so.
Lord Bruce-Gardyne: My Lords, I apologise for interrupting the noble Lord but he has made rather a serious allegation about Oftel. Is it not the fact that Oftel did indeed investigate the tariff increase, and that Oftel satisfied itself that the increase was entirely in conformity with the formula laid down in the licence?
Lord Stoddart of Swindon: Oftel may very well have satisfied itself that it was in accordance with the formula; but what Oftel certainly did not do was to convince the rest of us and the public that BritishTelecom plc had not raised prices to domestic customers over and above that formula. Indeed, that was not in accordance with the assurances which were given to my noble friend during the pasage of the Telecommunications Bill through this House. Those are the facts of the matter, and that of course is simply one example, and an example which exacerbates our concern.
We saw yesterday in the Guardian, and perhaps in other newspapers, that British Telecom have decided to end the free repair of emergency telephone equipment. I do not know whether my noble friend Lord Bruce can remember, but I believe that we were given certain assurances in regard to the emergency telephone service while the Telecommuniations Bill went through this House. But now what we find is that in the interests of the shareholders British Telecom have decided to withdraw, out of normal hours, their free repair service of the emergency telephone system.
This of course means that the taxpayer has been had twice. First of all his assets were sold at half price, and, now that they have been sold to BritishTelecom, the taxpayer, through the health service and through the police service, is going to pay, as a result of this particular action, an extra £20 million over and above what we would have expected to pay to a nationalised publicly-owned BT. That is £20 million more out of the taxpayers' pocket and into the pockets of British Telecom, who have done very well, thank you, up to now and are obvioulsy going to do a lot better.
What does this mean in respect of this particular Bill? Assurances were given in another place, I believe, that the free inspection of appliances for the elderly and handicapped living alone would be maintained. There is nothing in the Bill to ensure that it will be maintained. All we have is the assurance of the publicly-owned British Gas Corporation. But there is no assurance that, once it becomes privatised, the service of free inspection of appliances for the elderly and handicapped living alone will continue.
There is nothing in this Bill, and nothing that the director will be able to do, to ensure that that continues. Is that to be the same in respect of the emergency service, which at the present time is free, or is that to be taken away as well? I think all of us on this side of the Committee are right to be concerned about
142
the powers of the director and the proper regulatory control of a privatised British Gas.
The noble Lord, Lord Harris of Greenwich, and my noble friend Lord Ponsonby of Shulbrede both warned the Government Benches last Thursday night that their cavalier attitude was unacceptable. I repeat now that the Official Opposition and all others not on the Government Benches—and perhaps on the Government Benches as well—expect their views and amendments to be treated properly and seriously. I hope that the Government will take that on board.
I withdrew my Amendment No. 4 last Thursday to consider what had been said during the course of the various debates. Having considered that, I have decided to table this amendment to give the Committee and the Government a further opportunity to improve Clause I of the Bill. As noble Lords will see, we propose in our amendment that:
"The Secretary of State, after consultation with the Director General, shall appoint four Directors with such functional responsibilities as the Director General may from time to time determine."
It will be noted that in this amendment we have not sought to tie the director general's hands in relation to the functional responsibilities he allocates to his four directors. I am sure that we could all make suggestions. I am sure that suggestions will be made later in this debate.
For example, the noble Viscount, Lord Torrington, last Thursday when he spoke on Lord Ezra's amendment, said in col. 1301:
"I might have been tempted to be in favour if the breakdown between the duties had been slightly different from the way they were phrased".
Therefore this amendment helps him. In this amendment we have, I hope, met the very point about which the noble Viscount was concerned. I hope that proves the point also that the Opposition do listen to what other people say, and are not hidebound as the Government seem to be.
It would be open, therefore, for the director general to appoint his directors to be in charge of those disciplines which he believed were most relevant and useful to his regulatory function, and there is the added benefit that he would from time to time, as he felt circumstances required, change and reallocate those disciplines. The beauty of the amendment is that, as well as ensuring that the director general does not stand alone between the consumers and British Gas plc, it provides that degree of flexibility which is the essence of up-to-date regulation.
Furthermore, since the Bill and the authorisation are so complicated, the director general can do with some high level support. I say this because it would appear that not even the noble Lord, Lord Gray, who together with his noble friend Lord Belstead, is piloting this Bill through your Lordships' House, really understands the Bill if his reply to a question from the noble Baroness, Lady Burton, is anything to go by. The Committee will recall that the noble Baroness in her comments said at col. 1300 to 1301:
"The Committee will recall that at the moment under the present proposals the gas industry will not be compelled to disclose the profits it makes from the domestic consumers when it shows its accounts. There will be no way of showing how much those profits from the domestic consumers have contributed to some cross-

143
subsidisation, whereas if we had the commissioners which my noble friends have been talking about, we should at least have one who would deal with tariff consumers. I think that should be borne in mind and perhaps when the noble Lord, Lord Gray of Contin, comes to reply he will deal with that particular point, with the transparency of the accounts that will be shown, and say whether or not the profits received from the domestic consumers of gas will be disclosed."
The noble Lord, Lord Gray of Contin, at col. 1308 replied:
"The noble Baroness asked me about separate accounts. We shall be debating that subject at some length on later amendments; for example, there is Amendment No. 68 in the name of the noble Lord, Lord Diamond. However, it is already the case that under Condition 2 of the draft authorisation British Gas will be obliged to publish full information about the profits of the gas supply business.
"In addition, the director will have full ability under Condition 7 to call for any further information that he might consider appropriate. Under Clause 35 of the Bill, the director has the ability to publish as much information as he considers expedient to give to tariff customers. That will ensure that if the director wishes to publish further information about the finances of the industry in the interests of consumers, he will be able fully to do so."
I wonder whether that is correct?
The noble Lord, Lord Gray, referred to Condition 7 of the BGC authorisation, and the director's right to publish information he receives. He implied by his reply that it will be possible for the director to publish the accounts for the tariff customer as distinct from the public gas supply industry as a whole. However, the authorisation in Condition 7 severely limits the director's right to publish some information, and I have no doubt that the noble Baroness had that in mind. In paragraph 1 of Condition 7 the British Gas Corporation is required to furnish accounts along with other information to the director. However, BGC is not required to furnish information if the director is acting:
"(a) under Section 23 of the Act"—
that is, modification by agreement; or,
"(b) under Section 24 of the Act"—
that is, making reference to the Monopolies and Mergers Commission; and,
"(c) under Section 35 of the Act"—
which relates to the publication of information and advice.
3.30 p.m.
In addition, under Section 35 the director cannot publish information which might prejudice the interests of BGC. He cannot publish information under that section. The transparency of accounts for tariff customers cannot be an enforcement matter under Sections 28 to 30, since it is not a condition or requirement under the terms of the authorisation. These powers to investigate complaints under Section 31 are limited to enforcement matters, so the director cannot use that section either.
Given all this it is hard to see what specific assurances the noble Lord, Lord Gray, was giving. Certainly his remark that if the director wishes to publish further information about the finances of the industry in the interests of the consumers he will be fully able to do so simply does not seem to be the case. I have said that to illustrate the complexity of the Bill and to try to show that even the noble Lord, Lord Gray
144
of Contin—who must have studied this Bill day in day out at very great length—does not seem to understand exactly the implication of the Bill and of what replies he is giving in this Committee. I, and I am sure the noble Baroness, Lady Burton, will be interested to have his further answers to the points that I have just raised.
In my view our amendment gives the Committee another opportunity to see that the regulatory regime is adequate or, better still, gives the Government the opportunity to make amends for the brush off they gave us last Thursday, either by accepting the amendment as it stands or by giving an undertaking to consider it seriously between now and Report stage and to come back to the House or to the Committee with their own amendment to achieve what we are seeking in our amendment. I beg to move.
Baroness Burton of Coventry: I should like to add a few minutes to this point. I was glad to hear what the noble Lord, Lord Stoddart, said and I fully support it. In our debate on Thursday when I supported the amendment moved by my noble friends Lord Diamond and Lord Ezra, which the Committee was not able to accept, I tried to explain that I was worried about the domestic consumer in this legislation. I also said that one of my chief worries was not so much what Professor Carsberg had not done in the case of domestic consumers and British Telecom, but over the fact that I thought primarily that the legislation was to blame rather than Professor Carsberg. But I am not so sure now that I hold to that belief.
I should like to give the Committee another example of my worries. I read in The Times today that British Telecom is now proposing to reduce charges to business users holding more than 20 lines. I have no objection to charges being reduced to users of more than 20 telephone lines. What I take exception to is that a statement was then made quite definitely that British Telecom proposed to recoup the expense of lowering the charges to these people with all these telephone lines by increasing the charges to the domestic consumer. That I believe is absolutely disgraceful. I hoped I might have a chance of raising it today so that the noble Lord, Lord Contin, could give me an answer.
I know that concerns British Telecom and not this legislation. As we all know, when the matter arose in the House British Telecom and the Government were able to produce reasons so that if an increase that was too much was added to an increase that was too little and below the mean that was allowed, then the average achieved was permissible. But I do not think that is right; I think that is sharp practice. The sooner that Professor Carsberg, whom I have defended and whom I hope to defend in the future, gets on to that the better. As I understood it, Professor Carsberg did not feel that he could intervene on that aspect until at least a year had elapsed to see whether or not British Telecom was justified.
However, I am now back to this today because as I read the amendment it does not mention appointing commissioners, but it seeks to appoint four directors to help the director general.
If I remember correctly, when I raised on Thursday the issue of the transparency of the accounts—because

145
at the moment British Gas is not compelled to show the profits made from the consumer and thereby prevent cross-subsidisation—the noble Lord, Lord Gray of Contin, told me that, if he so wished, the director general could call for this to be done. I do not think he should call for it to be done; I think it should be in the legislation. Be that as it may, one of the proposed directors could probably attend to that. I am wondering whether the noble Lord, Lord Gray, can comment to the Committee on the attitude of British Telecom (presumably permitted also under the legislation for British Gas) of increasing charges to domestic users to pay for reductions in charges to those who are bigger users.
I also read something else which I thought was particularly bad. It was not only that charges to domestic consumers were to be raised, but apparently the worst blow was to fall on the unfortunate domestic telephones users who do not use their telephones enough. Whether the Minister or the people in charge of British Telecom believe that doing that will make people use them more, I do not know, I do not understand it. But when the noble Lord, Lord Gray of Contin, replies, will he tell the Committee whether he thinks it will be possible for British Gas under this legislation to behave as British Telecom has done, and so to ignore the ordinary domestic consumer so that prices to him continually rise when there is no necessity for them to do so?
Lord Boyd-Carpenter: The noble Lord, Lord Stoddart of Swindon, seemed to be in a rather irritable mood at one part of his speech. As one who listened fairly carefully to most of the proceedings of the previous day on this Committee stage, I thought that his criticisms of my noble friends were wholly unjustified. On the contrary, I thought that my noble friends showed exemplary patience during proceedings which—shall we say?—did not err on the side of brevity, and certainly during one speech, where brevity was not a very conspicuous feature. Therefore I think the noble Lord, Lord Stoddart of Swindon, with his threat that if the Government's attitude did not change he would find it necessary to revise his attitude, was a little difficult to understand. The justification for it is certainly not apparent—at any rate, not to one noble Lord who sat through the proceedings of the previous day.
This amendment is quite narrow in scope, although it has been widened even into discussing the working of another Act. I am intrigued a little at the importance which noble Lords opposite and in the Alliance seem to attach to the mere numbers in the controlling and supervising body. They started last week by going for three commissioners. Now they want one director general and four assistant director generals. Inflation has moved from three to five, which is a rather rapid rate in the course of the week. With respect, it is extraordinarily naïve—I am surprised to observe any naïvety in the person of Lord Stoddart of Swindon—to believe that the mere numbers of people appointed to this directorate, as opposed to what is done in respect of their powers, is of any real significance.
No one believes for a moment that if the Bill stands as it does (and I hope it will) that the director general
146
will be alone. He will have a staff, probably if past form is to be followed, which many of us would regard as excessive in size. These bodies are apt to grow. Whatever else he is, he will not be alone; and to ask, as the noble Lord, Lord Stoddart of Swindon, did, "What can this poor man himself do against this powerful corporation?" is wholly unrealistic.
I ask the noble Lord, Lord Stoddart of Swindon, to think a little further. If the director general is to be provided—he might well have said saddled—with four subordinates all appointed by Ministers, the director general's position is a great deal weaker than it would be if he were left as the sole ministerial appointee. Those of us who have served in public authorities know that the more members of the authority there are who are appointed by the Minister the less is the authority of the chairman or of the director general. I see the noble Lord, Lord Williams of Elvel, shaking his head. I hope he is not going to quote the Price Commission to me, because if he does I shall have quite a lot to say about the Price Commission from which during his chairmanship I suffered a certain amount of boredom—"tedium" is the more courteous word. I suggest that this official, the director general, is going to be in a much stronger position if he is the sole ministerial appointee, with the rest of the staff—and there will be a staff—being his appointees, his subordinates, without any challenge to his authority. Therefore, if the intention of the noble Lord, Lord Stoddart of Swindon, is, as he appears to suggest, that of strengthening the position of this important functionary, I suggest to him with very great respect that he is going wholly the wrong way about it and that the sensible way would be to leave the director general to appoint his own staff.
We certainly want to see a strong character appointed to that post; I wholly agree. We want a man of the highest qualifications and abilities, because it would be a great mistake to suggest that it is only noble Lords opposite or those in the Alliance who are interested in the position of the consumer. We are all immensely concerned with the position of the consumer, but we are not discussing that, on which there is broad agreement of the Committee, but the particular mechanism for providing this protection. I suggest to the Committee that the noble Lord's rather naïve idea that there is safety in numbers is somewhat misleading.
Lord Harris of Greenwich: May I start by saying to the noble Lord, Lord Boyd-Carpenter, who has just resumed his seat, that often I find him a very persuasive advocate even when I do not happen to agree with his conclusion. However, I did not find his speech this afternoon so persuasive. Let me explain why. As I understand it, his argument is that if the Minister has powers to appoint a number of people rather than one, that undermines the position of the principal officer concerned with the matter. That is a curious doctrine.
Let me take two or three examples. I was chairman of the Parole Board. The Home Secretary appointed 50 members of the board. Did I feel that that undermined my position as chairman of the Parole Board? Of course I did not. The Home Secretary appoints the Commissioner of the Metropolitan

147
Police. He also appoints five Assistant Commissioners of the Metropolitan Police and a Deputy Commissioner. Is it seriously to be argued that that undermines the position of the Commissioner of the Metropolitan Police? One has only to go through examples of that kind to see how thin is the basis of the argument we have heard from the noble Lord, Lord Boyd-Carpenter.
Lord Boyd-Carpenter: Will the noble Lord allow me?
Lord Harris of Greenwich: Please.
Lord Boyd-Carpenter: We are concerned here not with an organisation such as those the noble Lord has described but with a board in which it is proposed to appoint a director general. Is the noble Lord seriously suggesting that the position of that director general is going to be strengthened by ensuring that he does not appoint his own subordinates but that they are appointed by the Minister?
3.45 p.m.
Lord Harris of Greenwich: With great respect, the noble Lord has just repeated the point which I have endeavoured to answer. I do not think that that is a persuasive argument, for the reasons that I have cited already. This is constantly done, and if the noble Lord would encourage me to do so I could find plenty more. The director general, or whoever is the principal officer, appointed by a Secretary of State does not feel that he is in some mysterious way undermined because the Secretary of State has appointed others to subordinate positions.
Lord Boyd-Carpenter: I am sorry, but—
Lord Harris of Greenwich: I shall give way in just a second, if I may. That is why I find the argument put by the noble Lord, Lord Boyd-Carpenter, unimpressive. Of course I acknowledge the fact that the noble Lord says, I am sure rightly, that he is concerned about the position of the consumer. Speaking for my noble friends, I am sure that we shall gladly support any proposal emanating from the noble Lord which strengthens the position of the consumer so far as this Bill is concerned. What does concern us—this relates directly to the point made by my noble friend Lady Burton of Coventry—is that in the previous examples where we have transferred power from a public monopoly to a private monopoly the position of the consumer has already been gravely undermined, and we see nothing in this Bill which satisfies us that we have learnt from that experience.
Lord Boyd-Carpenter: The noble Lord did not answer the question I put to him. I did not put to him the question whether the position of the director general would be undermined. I asked the opposite question: whether it would be strengthened.
Lord Harris of Greenwich: To answer the precise point the noble Lord, Lord Boyd-Carpenter, has put to me, I do not think that is the central question. The
148
central question is as I put it: does it undermine the position of the director general for Ministers to appoint these senior subordinates? The answer to that question is: no, it does not.
Lord Taylor of Gryfe: The examples which have just been quoted by my noble friend Lord Harris related to the Parole Board and the Metropolitan Police. With due respect, they are not trading organisations in the way that the Gas Board will be a trading organisation, and I think we might strengthen our argument from these Benches if we quoted the experience of trading organisations such as the British Railways Board and other boards in the nationalised sector, where it is not uncommon for a Minister to appoint a director general or a head of a nationalised industry and make subsequent appointments for consumer interests: director of supplies, finance director, and so on. In my experience in nationalised industries, in no sense did that in any way diminish the responsibility of the director general or the chief executive. So, with due respect to the noble Lord, Lord Boyd-Carpenter, his argument is not supported by the event.
Lord Diamond: I should like to support very strongly the amendment that has been moved so persuasively by the noble Lord, Lord Stoddart of Swindon, and to explain why we on these Benches welcome it as an attempt to do what we ourselves failed to do, which was to persuade the Committee that the present arrangement was wholly unsatisfactory and unlikely to achieve the purposes of the Government.
As the noble Lord, Lord Boyd-Carpenter, has just repeated, the purpose of the Government is to ensure adequate protection for the consumer. That is one of the purposes which arise because you have an existing public monopoly with the protection which that provides being turned into a private monopoly which, by definition, has no protection for the consumer unless it is provided by statute. We are dealing with a statute which provides that very protection. I am glad that we start off on common ground: how can we best achieve the common purpose stated by the Government and by the Opposition parties of protecting the consumer where you have the circumstances which I have described?
The noble Lord, Lord Boyd-Carpenter, has produced a novel argument. Of course, he is a reliable and highly respected Member on the Conservative Benches—highly reliable in the sense that he can always be relied on to get up and produce from the top of his head quite good arguments in support of what he has just heard the government spokesman say. That is a great skill in which he excels, if I may say so.
Lord Boyd-Carpenter: If I may say so, those are highly complimentary observations. But I point out to the noble Lord that I have not yet had the privilege, and neither has he, of hearing what the Government spokesman is going to say on this amendment. I do not know what he is going to say.
Lord Diamond: The noble Lord does know. It is written in the Bill which he has read. The noble Lord said—and if he said it, no doubt it is true—that he was here until five to eleven on Thursday night. Is that

149
correct? There is no answer. He said that he was here until five to eleven last Thursday and heard everything that was then said.
I tried then to put before the Committee arguments which, if he has not heard and if the Committee wishes me to repeat, I shall gladly do so. These were arguments to try to persuade the Committee that what he is saying is wholly novel, wholly unproved and, one might say, on the face of it implausible. It is implausible that one person will act on his own against a chairman and board of high calibre and enormous experience, entrenched in their work and supported by an experienced, long-term staff of high calibre and high remuneration, as befits such calibre. It is implausible that he will be able to stand up and make representations to such a chairman and board the more readily if he is on his own.
I said that that was implausible. What I mean is that I regard it as nonsense. I hope the noble Lord will forgive me using those terms. It is nonsense to suggest that a man is better equipped to cope with that situation on his own than if he has colleagues who are able and who have authority.
Lord Boyd-Carpenter: Will the noble Lord allow me to intervene?
Lord Diamond: The noble Lord has a slight attack of impatience, but I shall give way if he wants me to.
Lord Boyd-Carpenter: The noble Lord has wholly misrepresented me in saying that I suggested that this man should be on his own. On the contrary, I suggested, as he will see if he reads Hansard, that he should have subordinates of high calibre and ability appointed by himself.
Lord Diamond: I know that the noble Lord said that. I heard him. But they are of high calibre and low status. What we are concerned with is people who have the status, or very close to the status, of the director general himself; people who can impress by their ability and by their status; by the number of pips. We are all familiar with that. We do not regard a general as being—well, I shall not pursue it; I have no need. Everybody understands the position. A man of status acting on his own is likely to be strengthened if he has colleagues, experienced and of high calibre, acting with him.
The noble Lord seemed to raise the minor objection that four such directors should not be appointed by the Secretary of State. If he prefers to put down an amendment saying that they should be appointed by the director general, so long as they have that status, we would look at that with considerable care and, indeed, would welcome it. I can well understand why the noble Lord, Lord Stoddart, has drafted the amendment in this way so as to make it the more acceptable to the Government.
Everybody is aware of the fact that there is grave concern about the way these provisions in a previous Bill are proving to be unsatisfactory. The provisions in this Bill, so we are told in the Notes on Clauses, are copied from the provisions in the Telecommunications Bill; the Bill that set up British Telecom. We are therefore entitled to ask whether they
150
are working well. The Committee has already heard that they are not. I am bound to underline what has already been said because it has been said modestly and the whole tragic position has not been put fully.
The noble Lord, Lord Stoddart, said that he had read in the Guardian that the telephone emergency services were no longer to be supplied free; that they would have to be paid for. The noble Lord, as usual, was modest in quoting his authority. His authority was the Guardian. My authority is the spokesman who came on television on the one o'clock programme to explain the view of British Telecom. He said that it was going to do this, and it was going to do it because the powers to do it were included in the prospect us and the public had bought shares on the basis of that prospectus. That is what he said. There is no question about whether it intends to do it, how it intends to do it and the authority that it is claiming for that.
What it is claiming is that it is running a business. It is running a business and it is not concerned with services, not even emergency services. It is running a business. It is not even concerned with the fact that every original shareholder who still holds his shares has made a very substantial profit indeed on paper on his shares if he still holds them. He may very well have sold them at a great profit already.
The representative was not even concerned with a capital profit. That is put on one side. It is taken for granted that there will be a large capital profit and, in addition, that the shareholders should reasonably expect the board of British Telecom to charge for what has never been charged before in respect of emergency services so as to make sure of adding, if possible, to the dividend on top of the capital gain. That is the situation, or part of the situation, which we want to avoid being repeated.
My noble friend Lady Burton, who is an expert in looking after the consumer, said, if I may say so, innocently and in good heart that she had no objection to the contract customers, the non-tariff customers, being charged less. She had no objection to the people with more than 20 lines being charged less. But let us follow that a little further.
Why are they being charged less? Is it for no good reason? Not at all; they are being charged less so as to eliminate competition. That is the purpose. The Telecommunications Act provides some protection in that it allows opposition companies to come into the field and, if they can, compete with large suppliers of the same service. I am talking about the telephone service. That is what is provided for. How does big business get rid of competition? We all know. It is by undercutting the competition mercilessly until they have gone bankrupt. The very big boys are able to do this the more so if they have other customers whom they can charge in order to cover their costs and make a profit out of them in place of the others.
At the back of the mind of British Telecom in starting this battle of reducing the charges to the large, 20-line customers is to eliminate the competition which it is not enjoying. How can it do that? It can do it by charging the small customer. Those are two examples, added to the third one which we all know, inasmuch as every private telephone user is now paying more than he would have paid had telephones

151
not been privatised. The charges have already been increased. So we have three solid cases to put before the Government as to why the Government's desire of protecting the consumer and ensuring some measure of competition will not work, because it has not worked on the same clauses that are being copied and put into this Bill.
It is for that reason that we oppose it strongly and wish to impress on the Committee the need to have not what was called in the other place a "tadpole"—a word which would not fall naturally from the lips of one Member of this Committee. We do not want to have a tadpole attempting to carry out these enormous responsibilities but we want to have, if you like, not a commission, such as every state in the United States has found to be necessary on its experience (and every one is still continuing to do so) but a group of directors with authority and status who could achieve this purpose. This is a solid amendment, and I hope that the Committee will support it.
4 p.m.
Baroness Carnegy of Lour: I did not intervene during the discussions on previous similar amendments, but I listened to them with enormous interest and I have been thinking about them since. It seems to me that in arguing this afternoon for having five directors instead of one on this regulatory body, noble Lords opposite have compared it to the board of British Rail, for example. The noble Lord, Lord Taylor of Gryfe, suggested that because the board of British Rail is appointed by the Government it would be desirable that there should be five directors on this regulatory body in connection with the gas industry, also appointed by the Government.
The noble Lord, Lord Harris of Greenwich, suggested that because members of the Parole Board are appointed by the Government that is an argument for having five directors of this regulatory body, rather than one. We have just heard from the noble Lord, Lord Diamond, the argument in which he seemed to be likening what would be going on in the gas industry to something like a football match, where you had the board against the regulatory body and unless there were plenty of people in both teams it would not work.
The question we are really discussing, it seems to me, is whether there should be a director of gas and his staff, whom he has chosen. We shall see later that the Government are suggesting that the number of that staff should be limited, and there is a mechanism for doing that. His own staff will be backing him up. They will be very senior people, I should have thought, and because they are chosen by the director rather than by the Secretary of State it would not necessarily mean that they would be weak in argument. It seems to me that the parties who are constantly in discussion are telling us that they do not want a lot of appointments by the Secretary of State because they fear that would make them too political; and so to be arguing for five instead of one seems to me to be rather extraordinary. It seems to me to be a perfectly satisfactory arrangement to have a director appointed—able and well paid, with clear, strong duties—and staff whom he has chosen and whose number is controlled. There is
152
surely nothing wrong with that as a managerial arrangement. I should have thought the public would find it very odd if this Committee were to decide to have five directors instead of one on such slim arguments.
Lord Ezra: Noble Lords on the Government Bench opposite must by now surely be aware that the main reason motivating us on this side of this series of amendments is our concern about the efficacy of the regulatory machinery. We are moving into uncharted seas in British industry. As was pointed out in the Second Reading debate, the Government themselves in their manifesto of 1983 said that in privatising it would not be their intention to transfer monopolies simply from the public to the private sector. Apparently they have changed their minds on that score and, they having changed their minds, we must now make absolutely certain that private monopolies are regulated effectively in the interests of the consumer.
We are not necessarily saying that the director general should have four, five or whatever number of directors to support him, whether they are called commissioners or something else. Underlying all these amendments is our grave concern, in this new industrial situation which is being created by this proposed government measure, that too little attention appears to have been paid to the regulatory mechanism. I think it would help us a great deal on this side of the Committee in looking at the public interest—because this is not a political issue but a matter of public interest as regards safeguarding the consumers—if the noble Lord, Lord Gray of Contin, should he be replying to this debate, were to say that the Government accept that there is a serious issue here, that they will consider this matter and will come forward with proposals at a later stage.
The Minister of State, Scottish Office (Lord Gray of Contin): I think we have had a very useful debate this afternoon. Certainly I suggest that it is a much more constructive debate than we had on any of the amendments we discussed on this subject last Thursday. However, I must take issue straightaway with the noble Lord, Lord Stoddart of Swindon, in respect of the inference, if not the actual suggestion, which he made that the Government had not been taking seriously the points of view represented by the Opposition last week. Indeed, I think he said they felt they had been ridden roughshod over, and I must take exception to that. I think we covered about half a dozen amendments during a whole day's sitting; and I feel that my noble friend Lord Belstead, along with myself, listened very carefully to everything that had been said. The mere fact that we did not agree with most of it surely does not indicate that we were not prepared to give due consideration to what was said.
It is a funny sort of world if, because you do not accept an amendment, you are obviously behaving in a cavalier style. Whatever criticisms the noble Lord may have of our Front Bench, I do not think that during my short three years' experience of this Chamber I have ever heard any of our Ministers on the Front bench be other than courteous to those sitting on the Opposition Benches. I rather resent the

153
implication which the noble Lord included in his remarks and I am most grateful to my noble friend Lord Boyd-Carpenter for so quickly seizing upon that point and pointing out the fact that indeed it would hardly have been surprising in the circumstances if Ministers had become a little bit irritable. Sitting on these Benches and looking across at the other side, we saw plenty of irritable faces on that side, over the delay which was taking place throughout the day.
I have again listened very carefully indeed but, you know, there have been relatively few new arguments presented by noble Lords opposite. It has been a rehash of the same arguments, perhaps dressed up a little differently in the hope of attracting the support of some of my noble friends. I think my noble friend Lord Torrington was mentioned, but I doubt very much whether the wording of this amendment is likely to change my noble friend's view very much; and no doubt he will himself consider very carefully what has been said in this debate.
We have already discussed at some length the possibility of a commission or additional directors for Ofgas. The Opposition may feel that it is third time lucky for them. I do not think that they will be lucky because their arguments have not been any better today than they were last week. As I have already said, there is a basic philosophical difference among the sides of the Committee on how to bring about the most effective regulatory organisation. We believe that it is important that the responsibility for regulating the gas industry should rest with one individual, the Director-General of Gas Supply, and it should then be up to him to take whatever steps he feels necessary to achieve the necessary staff distribution.
The director general will be at liberty to give members of his staff responsibilities under him for particular areas. I imagine that that will be the sensible way for him to run his office and his affairs. If he wishes to assign staff to different functional areas or on a geographical basis, that will be a matter for him to decide. He may call the heads of branches "directors" if he wishes. Again, that is a matter for his judgment. The Secretary of State has no need to play a part in that. The director general will also be able to take on the services of consultants if he feels that he needs advice on any particular issue.
As I have said, flexibility is the key. Why four directors, for instance? Flexibility and freedom of action properly go with the responsibility. I reiterate that the final responsibility must rest with the director general.
The noble Lord, Lord Stoddart, made a number of points which I feel I should answer. He referred first to the free repair of telephone emergency equipment and related that to this Bill. He mentioned the withdrawal of the free repair service. I am glad that he did not see fit to draw a parellel with gas, because we have inserted in the authorisation to be granted to British Gas Condition No. 11 which will specifically require the British Gas Corporation to provide a continuous service for dealing with reported escapes of gas and to advertise such a service. That condition, like all conditions of the authorisation, is enforceable by the director general under his powers contained in Clause 28. In addition, Schedule 5, paragraph 13 ensures that
154
a public gas supplier must deal with escapes of gas and make them safe on both its side and the customer's side of the meter without charge.
The noble Lord, Lord Stoddart, also asked me about the publication of information. He argued that it is not possible for the director general to publish information. I do not agree with the noble Lord. I do not think that he has correctly interpreted the provisions of Condition No. 7 of the authorisation. It is possible for the director general to collect the information necessary to ensure that British Gas is adhering to its obligations to avoid undue preference to its tariff consumers under Clauses 9 and 14. It will be possible for the director general to publish whatever information he wishes under the provisions of Clause 35. If the noble Lord looks more closely at Condition No. 7 of the authorisation, he will see that the director general can require British Gas to make reasoned comments on the accuracy of the information which he proposes to publish. I therefore reject completely the criticism made by the noble Lord on that subject.
4.15 p.m.
When the Committee last met we had some discussion on the issues raised by the noble Baroness, Lady Burton. I answered them in considerable detail at the time. The noble Lord, Lord Stoddart, was good enough to include in his speech extracts from Hansard of the exchanges that we had in which the noble Baroness asked me about increases in charges to pay for reductions to business consumers. I can assure the noble Baroness that that will not be possible under the regime that we have proposed because, as noble Lords opposite will no doubt appreciate, the price control formula is designed specifically to control prices in the tariff sector. It does not, as in the case of the BT formula, apply to an average of both industrial and domestic consumers. There is therefore no possibility of pushing up domestic prices while lowering industrial prices so as to keep the average within the limit, as in our case tariff sector prices only are covered. I am glad to be able unreservedly to give the noble Baroness the assurance that she seeks that under our system such changes would not be permitted.
The noble Lord, Lord Diamond, who when we last met gave us the benefit of his researches at some length, contributed to the discussion again today. I do not know whether it has to do with brevity or with whether the points he made today were better, but his succinct delivery was much more impressive, and had I been of such a mind, I might almost have been persuaded by some of his remarks.
The noble Lord of course has the great advantage of having been a Chief Secretary to the Treasury. In that capacity in another place he had the experience of suffering a great many insults from the other side, as is common practice there. I am sure therefore that he will not take it amiss if in the kindest posible way I poke a little fun at him this afternoon. He suggested that the director general will be better equipped to deal with the BGC board on his own. That is nonsense. Schedule 1, paragraph 4 provides:
"The Director may, … appoint such staff as he may determine".
Those appointments will all be Civil Service appointments and will have to be cleared by the

155
Treasury. That is one of the points about which we argued recently. If the director general considers that the best way—
Lord Harris of Greenwich: May I ask the noble Lord a precise question? These are Civil Service appointments to be approved by the First Civil Service Commissioner. Can it be made clear precisely who gives authority for the appointments?
Lord Gray of Contin: The appointments are ultimately all approved by the Treasury. They cannot be made without the authority of the Treasury.
Lord Harris of Greenwich: I am putting a point of some importance. There was a dispute about Mr. Levene's appointment to the Ministry of Defence. Undertakings were given that in the future all appointments of the character of Mr. Levene's would be cleared by the First Civil Service Commissioner. Is that the case here or is it not?
Lord Gray of Contin: Obviously appointments are made by the director general. I hope within the next few moments to be made aware of the answer to the question that the noble Lord has asked. Yes, they are Civil Service Commissioner appointees, but perhaps I can get full particulars for the noble Lord and communicate with him. As I was saying, if the director general considers that the best way to fulfil his functions and duties under the Bill is to appoint certain staff to particular posts with certain specifications, this he can do. If he wants to call upon—
Lord Stoddart of Swindon: Would the noble Lord mind giving way?
Lord Gray of Contin: May I just carry on for the moment? The noble Lord will be speaking again. As regards the various titles which were suggested for different directors, or whatever they may be as laid down in the amendment, the director has the power to appoint deputies. He can call them deputy directors or deputy director generals. In military terms, he can give them as many pips as he likes. It is entirely up to him. Therefore, I cannot accept that the concern of the noble Lord, Lord Diamond, about the director acting on his own is justified. I am not suggesting that the noble Lord does not sincerely hold that view; but I am trying to persuade him that his fear in this regard is not justified.
We have spent a good deal of time on this amendment. In many ways, it is a rehash of what we were talking about last Thursday. I do not think that the Committee will wish me to hold back for very long the anxiety of its Members to come to a conclusion on this matter, and I must ask the noble Lord to withdraw his amendment; or, if he persists in pressing it, I must ask the Committee to reject it.
Lord Bruce of Donington: The noble Lord's venture into the realm of a humorous dig at the noble Lord, Lord Diamond, seems to have misfired a little. Indeed, the answer that he has given in relation to the powers of the director general to appoint staff has, I am afraid,
156
got him into a slightly humorous situation, in that we now know that it is the Civil Service Commission that appoints them; he does not appoint them. He can give them various grades or as many pips as he likes, as the noble Lord put it, but the position will have to be resolved far more authoritatively than that. It is quite clear from what the noble Lord has said, where he has not contradicted himself on the matter, that there is an overwhelming justification for this amendment in that one wants appointments of high-powered people made at a higher level altogether to deal with what is truly a formidable executive board of British Gas.
The situation is rendered all the more humorous by the fact that earlier on this afternoon the noble Lord, Lord Lucas of Chilworth, was kind enough to define the position of government as against the nationalised boards, giving government full power to determine policy but leaving the operations of the particular board or industry affected to those in control of it. This is the perfect situation that has obtained up till now.
Let us observe the position. Here is a gas industry which has been conspicuously successful, as anybody who cares to read Appendix Ito the accounts of British Gas covering the past 10 years will immediately be able to appreciate. There can be no complaint whatsoever about the economic and profitable performance of British Gas, functioning as a publicly owned company with the Minister being given general powers of direction, which undoubtedly the Minister has.
I ask the Committee to consider what has happened. Without all this detailed paraphernalia of the Bill, without all the regulation that is proposed in the various documents that are brought with this Bill, the Government are trying to achieve exactly the same purpose that has been achieved over the past 10 years at least—all for the sake of handing over the capital ownership to private shareholders. It must be one of the most ridiculous circumstances that could ever be laid before the British people. This paraphernalia, this complication, the hours and hours spent in debate, the hours and hours spent in drafting clauses in order to safeguard the public interest and to achieve protection for the British public, which they have had for at least 10 years without any regulatory body at all and which has been achieved purely because of the knowledge of the corporation, which is ultimately responsible through the Minister to Parliament, is completely useless in that respect.
The reason why one wants a more powerful regulatory body is very simple. We on this side, and the public at large, do not trust the Government at all to introduce in good faith regulations or Acts which will in fact, as distinct from theory, protect their interests, and they feel like that for good reason. My noble friend Lord Stoddart has given an example this afternoon of what happened to Oftel and British Telecom; and the point was amplified by the noble Baroness a little later on. But to quote what the British Telecom spokesman actually said reveals the true nature of the dilemma. What the spokesman said was:
"The service that was the free priority telephone repair service for police, fire and ambulance stations and hospitals was previously a drain on BT, but it was absorbed because we were a public corporation. Once we were privatised, we became a company like any other company and all of our customers have to pay the going rate for services."

157
That is exactly the state of affairs that we on this side wish to avoid. We want the regulatory body to be effective, and to be effective it must be manned properly.
We are considering this within the context of the Minister's own Explanatory Memorandum which, at page viii of the Bill gives an idea of what the Government expect to happen in terms of manpower as a result of this Bill. I should like to quote it to the Committee because it is within this context that we consider the Government's real intention of setting up a proper regulatory body. It states:
"It is expected that the staff of the Director General of Gas Supply and the staff of the Gas Users' Council will together number about 80 to 100. The abolition of the existing National and Regional Gas Consumers' Councils will result in the disappearance of about 100 public sector posts. The conversion of the British Gas Corporation to a public limited company may lead to a small reduction in the number of staff in the Department of Energy. There may be a small increase in the staff of the Office of Fair Trading and the Monopolies and Mergers Commission if a large number of matters are referred to them. It is probable that the net effect on public sector manpower will be a slight reduction."
I invite the Committee to consider whether the way the Government were looking at it there is consistent with their determination to have a regulatory body which is propely staffed, not only in terms of numbers but also in terms of quality and rank.
4.30 p.m.
If Members of the Committee care to study the proceedings of the Select Committee on Energy in another place (House of Commons Paper No. 15 published on 15th January last) they will find out the misgivings of this all-party committee. They will find there that the committee is anxious that the director general's department shall have adequate authority. There is the whole question of looking after the Office of Fair Trading aspects of the new plc's activities, a possible reference to the Monopolies and Mergers Commission and certainly duties in connection with the continuity of the policy hitherto carried out by British Gas to buy British supplies wherever possible, which is something British Telecom undertook to do in the early stages.
There are important functions relating to competition, which occupies or should occupy a highly specialised area in the department of the Director-General of Oftel. These merit not merely staff who go through the normal Civil Service Commission and have its approval; they demand that the staff be headed by people of rank, in every way capable of dealing with their opposite numbers in the new British Gas plc. Nowhere is this more necessary than in the finance and accounting field.
British Gas brought forward the suggestion, which was, I think, accepted by the Government—it is so stated in the energy committee report—that once it was privatised it would no longer be required as a plc to produce any more information than is normally required by law under the Companies Acts, as amended by the various other measures that have been brought into the matter by virtue of compliance with the European Community accounting regulations, or to present accounts in any form different from a normal British plc. Hitherto British Gas has produced
158
very informative accounts going far beyond anything that is produced by a plc in the normal way.
Moreover, for regulatory purposes it is necessary not only that this should continue but that it should be enlarged. If the Committee will look at the proposed authorisation, it will find new categories of costs set out under the various conditions in the draft authorisation that do not have any comparable category in even the large and extended accounts which British Gas has been able to produce.
One thing has to be done if there is to be transparency. The published data used by the director general for the purpose of checking whether the authorisation regulations have been carried out must conform with the authorisation in order that everybody may see exactly the basis upon which any price adjustments are made. It will be apparent to those noble Lords who have occupied positions in public life—certainly those noble Lords who have been in commerce or perhaps in large industries—that the accounting requirements set out in the authorisation and their proper checking require people of high status, with fully subordinate staffs to enable the job to be done satisfactorily, particularly as new accounting categories are created and there are areas of ambiguity within the draft authorisation form submitted to the House.
All these considerations add up not to a small director general's department, headed no doubt by a reputable gentleman, but with a small subordinate, albeit skilled, staff. They add up to having a fully effective and powerful organisation ranking in every respect with the executives in British Gas who are their opposite numbers. They need not necessarily have a complete counterpart, one for one, but they require a very high powered body if after this Act has been passed the public of the United Kingdom are to be accorded those safeguards they have now when it is a public corporation. They want to be satisfied that this prosperous and secure state of affairs now, when British Gas is a public corporation, can be guaranteed even after this absurd exercise of privatisation has been carried out. That is why we shall insist on this amendment.
4.36 p.m.
On Question, Whether the said amendment (No. 6A) shall be agreed to?
Their Lordships divided: Contents, 98; Not-Contents, 124.

DIVISION NO. 1

CONTENTS

Airedale, L.

Chitnis, L.

Amherst, E.

Cledwyn of Penrhos, L.

Ardwick, L.

Crawshaw of Aintree, L.

Aylestone, L.

David, B. [Teller.]

Banks, L.

Davies of Penrhys, L.

Barnett, L.

Dean of Beswick, L.

Birk, B.

Denington, B.

Blyton, L.

Diamond, L.

Bottomley, L.

Donaldson of Kingsbridge, L.

Bruce of Donington, L.

Elwyn-Jones, L.

Burton of Coventry, B.

Ennals, L.

Caradon, L.

Ezra, L.

Carmichael of Kelvingrove, L.

Fisher of Rednal, B.

159

Fitt, L.

Mulley, L.

Fletcher, L.

Nicol, B.

Gallacher, L.

Northfield, L.

Galpern, L.

Oram, L.

Graham of Edmonton, L.

Paget of Northampton, L.

Greene of Harrow Weald, L.

Phillips, B.

Grey, E.

Pitt of Hampstead, L.

Hampton, L.

Ponsonby of Shulbrede, L. [Teller.]

Hanworth, V.

Harris of Greenwich, L.

Prys-Davies, L.

Hayter, L.

Rathcreedan, L.

Heycock, L.

Rhodes, L.

Hooson, L.

Ritchie of Dundee, L.

Houghton of Sowerby, L.

Rochester, L.

Hunt, L.

Sainsbury, L.

Hylton, L.

Seear, B.

Irving of Dartford, L.

Sefton of Garston, L.

Jacques, L.

Serota, B.

Jenkins of Putney, L.

Shepherd, L.

John-Mackie, L.

Stallard, L.

Kagan, L.

Stedman, B.

Kennet, L.

Stewart of Fulham, L.

Kilbracken, L.

Stoddart of Swindon, L.

Kilmarnock, L.

Strabolgi, L.

Kirkhill, L.

Taylor of Blackburn, L.

Listowel, E.

Taylor of Gryfe, L.

Llewelyn-Davies of Hastoe, B.

Tordoff, L.

Lloyd of Hampstead, L.

Turner of Camden, B.

Lloyd of Kilgerran, L.

Underhill, L.

Lockwood, B.

Wallace of Coslany, L.

Mackie of Benshie, L.

Walston, L.

McNair, L.

Wedderburn of Charlton, L.

Mais, L.

Wells-Pestell, L.

Mayhew, L.

Whaddon, L.

Mishcon, L.

Williams of Elvel, L.

Molloy, L.

Winchilsea and Nottingham, E.

Morton of Shuna, L.

NOT-CONTENTS

Ailesbury, M.

Gainford, L.

Allerton, L.

Gardner of Parkes, B.

Ashbourne, L.

Gibson-Watt, L.

Auckland, L.

Gisborough, L.

Belhaven and Stenton, L.

Glenarthur, L.

Bellwin, L.

Gray of Contin, L.

Beloff, L.

Greenway, L.

Belstead, L.

Gridley, L.

Bessborough, E.

Hailsham of Saint Marylebone, L.

Blake, L.

Boyd-Carpenter, L.

Harmar-Nicholls, L.

Brabazon of Tara, L.

Harris of High Cross, L.

Braye, L.

Hood, V.

Brougham and Vaux, L.

Hooper, B.

Bruce-Gardyne, L.

Hylton-Foster, B.

Butterworth, L.

Kaberry of Adel, L.

Caccia, L

Kemsley, V.

Caithness, E.

Killearn, L.

Cameron of Lochbroom, L.

Kimball, L.

Campbell of Alloway, L.

Kinnaird, L.

Campbell of Croy, L.

Kintore, E.

Carnegy of Lour, B.

Lane-Fox, B.

Cathcart, E.

Lauderdale, E.

Cayzer, L.

Layton, L.

Chelmer, L.

Long, V.

Coleraine, L.

Lyell, L.

Cottesloe, L.

McAlpine of Moffat, L.

Cox, B.

Macleod of Borve, B.

Craigavon, V.

Mancroft, L.

Cullen of Ashbourne, L.

Margadale, L.

Davidson, V.

Marley, L.

Denham, L. [Teller.]

Massereene and Ferrard, V.

Dilhorne, V.

Merrivale, L.

Drumalbyn, L.

Middleton, L.

Dundee, E.

Milverton, L.

Elles, B.

Montgomery of Alamein, V.

Elliot of Harwood, B.

Morris, L.

Elton, L.

Mottistone, L.

Erroll of Hale, L.

Mowbray and Stourton, L.

Faithfull, B.

Murton of Lindisfarne, L.

Fortescue, E.

Newall, L.

Fraser of Kilmorack, L.

Norrie, L.

160

O'Brien of Lothbury, L.

Sharples, B.

Orr-Ewing, L.

Skelmersdale, L.

Pender, L.

Somerset, D.

Perth, E.

Stodart of Leaston, L.

Peyton of Yeovil, L.

Strathspey, L.

Porritt, L.

Swansea, L.

Portland, D.

Swinfen, L.

Radnor, E.

Swinton, E. [Teller.]

Rankeillour, L.

Terrington, L.

Reay, L.

Teynham, L.

Renwick, L.

Thomas of Swynnerton, L.

Rodney, L.

Todd, L.

St. Aldwyn, E.

Trumpington, B.

St. Davids, V.

Vaux of Harrowden, L.

Salisbury, M.

Vickers, B.

Sanderson of Bowden, L.

Vivian, L.

Sandford, L.

Wolfson, L.

Sandys, L.

Young, B.

Selkirk, E.

Young of Graffham, L.

Sempill, Ly.

Zouche of Haryngworth, L.

Shannon, E.

Resolved in the negative, and amendment disagreed to accordingly.
4.45 p.m.
Lord Brabazon of Tara: I think we have reached a suitable moment to take the Statement. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Prison Officers' Dispute
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, with the leave of the House I shall now repeat a Statement on the prison officers' dispute being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"Mr. Speaker, I will with permission make a Statement on the dispute with the Prison Officers Association.
"The House will recall that I set out the issues in the dispute in my reply to a Private Notice Question from the honourable Member for Liverpool, Mossley Hill, on 17th April. Since then I have twice met representatives of the National Executive Committee of the Prison Officers Association. Following my first meeting, I put to them in writing on 22nd April a package of proposals for resolving the dispute. When I met them again yesterday, POA representatives accepted that my proposals provided a way forward. They undertook in return to consider my request that they call off industrial action in order to allow a resolution on this basis to proceed.
"In the event, the POA NEC declined to go beyond the offer of an undertaking that it would instruct its members not to take action while talks on the basis of my proposals were proceeding. In effect, that amounted to an offer to suspend, but not to call off their industrial action. Their previous undertaking to suspend had proved ineffective and damaging industrial action had taken place despite it. So their position yesterday represented no advance on the position they had taken in talks last

161
week and was unacceptable to me. The Government cannot conduct talks under the continuing threat of further industrial action in this vital public service.
"The association has therefore broken off discussions and announced that it is considering ways of extending its industrial action, which may include strike action. As I make this Statement, it is still unclear what action the POA may take in practice.
"I deeply regret this action by the POA NEC, which shows no regard for the longer-term interests of their members nor, equally importantly, of the prisoners in their charge. The sort of industrial action which we have already seen at Gloucester Prison—where prison officers yesterday took control of the prison and refused to accept the orders of their governor and where they are still refusing to return to normal working—is unacceptable. The Government will take all possible steps both to sustain the right of governors to manage their prisons and to protect prisoners and the public from the consequences of POA action.
"In this context, a circular will be issued tomorrow to the courts containing advice on the implications for them of the dispute. A copy will be placed in the Library of the House. I will consider any further measures which may be necessary in the light of developments.
"Mr. Speaker, I take this opportunity to make a final appeal to prison officers to look at the package of proposals I have placed before them and to judge whether it is worth throwing that away by taking further industrial action. As I have publicly acknowledged on many occasions, prison officers do a difficult and often dangerous job. They deserve to be well paid. But the heavy burden of overtime must be lightened and there must be increased efficiency. Progress towards formal discussions about a range of new systems designed to meet all these objectives was being made when the NEC call for industrial action went out. My agenda for talks represents a positive way forward for prison officers and, indeed, the whole prison service. I very much hope that, even now, prison officers will end their action in order to avoid lasting damage to the prison service and to their own interests".
My Lords, that concludes the Statement.
Lord Elwyn-Jones: My Lords, the House will be grateful to the noble Lord, Lord Glenarthur, for repeating the Home Secretary's Statement. It falls to me to deal with the Statement from these Benches, in view of the professional position of my noble friend Lord Mishcon.
The Statement by the Home Secretary is a grave one, made at a grave moment in our nation's affairs. Surely in the dangerous situation in which we find ourselves—indeed, it is approaching a national emergency—reasonable bridging must take place between the prison department of the Home Office and the Prison Officers Association. Is it not entirely reasonable that the prison department should ask at this moment for the suspension of industrial action while discussions take place on the main issue? Is it not right that there should now be a truce? Indeed, has the
162
Prison Officers Association not offered suspension of industrial action, as the Home Secretary's Statement says? Is not the demand for a total calling off of industrial action unreasonable before it is known what may emerge from the discussions which the association is ready to undertake?
In my submission, no trade union can undertake to accept what is demanded by the Home Secretary and still keep the confidence of its membership at this time, before an offer of participation in discussions. Is it not a fact that over the weekend prison officers were required to give written undertakings, against the threat of suspension, to submit to new conditions of service? Was that the best way of dealing with this critical situation in the circumstances? Does it not make sense for both sides to suspend action pending further discussions between them in the hope that a peaceful formula can be found?
I submit that such a formula is capable of being found and should be found. Unfortunately the whole atmosphere of the discussions has been poisoned by the actions of the prison department and the governor of Gloucester Prison over the weekend. How do matters stand now in that prison? Further, what happened at Leicester Prison this morning, where again a crisis situation seems to have been reached? Has not the situation there also been aggravated by action on the part of the governor and his immediate staff?
In this grave crisis in the affairs of the prison service, and in view of its wider implications for the country as a whole, my plea is for reason to prevail.
Lord Harris of Greenwich: My Lords, I join with the noble and learned Lord, Lord Elwyn-Jones, in thanking the Minister for repeating this Statement. As has been said, it is one of the most serious Statements that has been made in the history of the prison service. I think that we must all recognise that at the outset.
Does the noble Lord the Minister agree that it is particularly regrettable given the fact that there are many fine public servants who work as main grade prison officers and many admirable men who work as governors? Does he further agree that in this particularly difficult situation our support must go to the handful of governors who are having to deal with the extremely difficult situations in many prison department establishments in this country?
I should like to ask the noble Lord whether he is aware that the background to this dispute is the intolerable overcrowding that exists within the British prison system. On Wednesday of last week we discussed this matter. We note that he has indicated that his right honourable friend is contemplating issuing some form of circular which will go out tomorrow to the magistrates' courts, and I assume to the Crown Courts, and that he will put this document in the Library. May I ask him whether a Statement will be made in the House tomorrow, because presumably the circular will be asking magistrates to take a certain course of action as regards sentencing offenders? If that is so, it will be desirable to have some form of Statement made in the House.
May I ask the noble Lord further whether the Goverment are now contemplating using the executive

163
release scheme which has been discussed in this House on a number of occasions and which obviously must be one of the matters that the Home Secretary is now seriously considering? Is he aware that many noble Lords who have had dealings with the prison service over a number of years take the view that this dispute has been boiling up for eight years at the very minimum? Is he aware that one of the problems does not concern the attitude of the national executive of the Prison Officers Association but lies in the constant series of disruptions which have taken place in a number of prisons and which have been called by local branches of the Prison Officers Association? It appears from what he has said that something of this sort happened at Gloucester. Can he say a little more about what indeed did happen at Gloucester Prison?
Is the noble Lord aware that in the extremely difficult situations which obtain in many of our grossly overcrowded prisons, it is absolutely right that the Prison Officers Association should be consulted as closely as possible both by the governors and by the prison department in London? But is he aware also that in the critically difficult situations obtaining in those establishments, many of us believe that the governor must make the final decisions in so far as they concern the disposition of his staff?
Finally, may I ask the noble Lord whether he is aware that everyone is anxious to see this very sad dispute resolved as speedily as possible? Will he take every step to keep the House closely informed?
Lord Glenarthur: My Lords, I am grateful to the noble and learned Lord, Lord Elwyn-Jones, and to the noble Lord, Lord Harris, for their reception of the Statement. Perhaps I may start my reply to the various questions which they have put to me by saying to the noble Lord, Lord Harris, that it is the earnest desire of my right honourable friend, myself and everybody in the prison department, as well as members of the Prison Officers Association, to see this dispute brought rapidly to a close. I agree with the noble and learned Lord, Lord Elwyn-Jones, that it is a very grave matter. I hope that it will be possible one way or another to find a sensible bridge to the problems which exist, but the noble and learned Lord must not underestimate the difficult nature of the divide that has now arisen between us.
As regards the question of the suspension of industrial action which was offered by the POA yesterday, as I explained when I repeated the Statement, that would have meant that talks would have taken place under a continuing threat of further industrial action. This was unacceptable, particularly as the leaders of the Prison Officers Association had said that my right honourable friend's proposals, which were set out in his letter of 22nd April to the POA National Executive Committee, constituted a reasonable way forward. I do not think that it is acceptable for the Government to talk under that sort of duress. It is particularly unreasonable in the light of the fact that we had reached a very similar position only last week and then suddenly we were faced with action at Gloucester just before the weekend.
As for the nature of the dismissals, suspensions or "temporary relief from duty", which is the phrase that
164
is being used in this case, some officers who are in fundamental breach of their duty have been temporarily relieved from duty until they agree to work normally. The staff concerned have been involved, for example, in refusing to accept orders. They have been refusing to man the courts and refusing to let prisoners into establishments. This action is not selective dismissal, as the POA has claimed; nor is it the same as a disciplinary suspension. If staff agree to work normally, they will be reinstated. The sanction is one that is well recognised throughout the Civil Service. There is no question of it being noted in any way that action had been taken. It is a perfectly normal and well accepted procedure.
5 p.m.
The noble and learned Lord, Lord Elwyn-Jones, suggested that the atmosphere had been poisoned by the activities at Gloucester over the week-end. I can perhaps say to the noble and learned Lord, and amplify the point for the benefit of the noble Lord, Lord Harris of Greenwich, that certainly the activity at Gloucester, in particular what has happened since the week-end, is most regrettable. Before the week-end the governor at Gloucester had for three weeks been asking the Prison Officers Association representatives to come to talk to him so that arrangements could be made to meet the budgetary control that has to be maintained by a prison governor of his establishment on the question of overtime. For three weeks he asked them to come and talk to him. For three weeks they refused. In the end he had to take certain steps, not particularly devastating steps, but minor steps, to bring himself back within the budget target.
Since then activities at Gloucester, as the noble and learned Lord and the noble Lord, Lord Harris, know, have become rather more serious. Yesterday prison officers at Gloucester prison refused to man the courts, to escort prisoners to court and to obey the lawful orders of their governor. Not only did their action interfere with the administration of justice; in effect they took control of the prison. That is unacceptable to the Government and, I believe, unacceptable to your Lordships. It is one of the most serious actions, if not the most serious action, that many can remember within the prison service. The prison officers are a disciplined force. That is necessary if we are to maintain administration of justice in the way that we know it.
This morning staff reported for duty and were therefore told that if they wanted to work, they must agree to work normally before they would be allowed inside the prison. They declined to do so. The prison is presently being run by the governor and other governor grades. Twenty prisoners have staged a rooftop demonstration, but the police are standing by and the situation is under control. It was for persistently refusing to undertake the duties involved in conveying prisoners to court that 13 officers at Gloucester were temporarily relieved of duty. I would agree with the noble Lord, Lord Harris, that there are many fine public servants amid the prison officers, and indeed among the governors, who have publicly deplored the action at Gloucester. I join with the noble Lord in adding support for what the governors have to do. It is of course for the governors to manage their

165
prisons and not for the prison officers to manage prisons. That is certainly what the effect of the action at Gloucester could have been.
Your Lordships are, I believe, well aware that we are concerned about overcrowding. That is why we have set about the biggest prison building campaign this century. It is also a matter of concern to staff in prisons that they should be able properly to manage the regimes that exist there. I have to say to your Lordships that among the practices followed in prisons there are many instances of those that are far from flexible. This means quite often that regimes cannot be as comprehensive as we should all like.
As to the circular to the courts that I mentioned just now, the business of the courts will inevitably be disrupted. The circular that goes out tomorrow will ask for magistrates' courts' understanding of what has arisen and will suggest ways of reducing the burden on the police. For instance, the courts might be able to adjourn some cases or to grant bail immediately in others. We shall draw attention to the difficulties and ask the courts to bear them in mind. But we shall not, of course, be seeking to interfere in judicial decisions in any way. The noble Lord, Lord Harris, asked about executive release. Yes, the early release power in Section 32 of the Criminal Justice Act 1982 is intended for use, but only in extreme circumstances. My right honourable friend would not be prepared to use it except in extreme circumstances.
As to the question of the POA generally and manning issues, we have of course made it plain to the association all along that we must consult it. The difficulty, as the noble Lord will be aware, arose over the absolute right to negotiate over manning, and that has never been a feature of any side of public service life. We have said all along that we are prepared to have discussions with the association and I hope come to a sensible arrangement. Failing that, management must have the right to manage. The noble and learned Lord, Lord Elwyn-Jones, having referred to Gloucester, mentioned Leicester. There has been no action at Leicester today.
Lord Brougham and Vaux: My Lords, can my noble friend say whether the view being expressed in Gloucester prison is a national view? Can he also say what was the ratio of prisoners to prison officers about 10 years ago, and what it is today overall?
Lord Glenarthur: My Lords, it is certainly not the case that the action being taken at Gloucester represents a national view. There are prison establishments up and down the country that, so far as I can tell, certainly deplore the action that has been taken at Gloucester, are working perfectly normally and have continued so to work over the last few days. As for the ratio of prison officers to prisoners, the number of staff at the moment is nearly 19,000 and the number of prisoners about 47,000. Over the last 10 years prison officer numbers have increased by about 18 per cent. and prisoners by 12 per cent.
Lord Boothby: My Lords, can the noble Lord say why there has been no comparable trouble in the prison service in Scotland where the main convict prison at Peterhead is in my old constituency? There has been no trouble there.
Lord Glenarthur: My Lords, I am very glad to hear that there has been no trouble there. As to precisely what are the negotiating arrangements with the Prison Officers Association in Scotland, I am afraid I cannot help the noble Lord.
Lord Graham of Edmonton: My Lords, will the Minister reflect that while the prison department manages budgets, governors and prison officers have to manage men—and violent and dangerous men at that? Will the Minister not agree that a ballot held in conformity with the Government's own legislation giving the POA executive a majority of 81 per cent. for industrial action is a powerful mandate? The voice is not the voice of the POA executive; it is the voice of the members of the POA. Will the Minister accept that the offer made by the Prison Officers Association late last night was both statesmanlike and responsible and that his right honourable friend would do well to follow the pattern then set by the prison officers?
Lord Glenarthur: My Lords, I would certainly agree with the noble Lord, Lord Graham of Edmonton, that managing men and managing budgets are all part of a necessary balance that must be struck in the overall management of resources voted by Parliament to the prison service. So it is essential that at the end of any discussion the prison governor is the person who exercises control over the way that the resources are spent. Otherwise, it would be a matter of the POA dictating how budgets are spent. There can be no compromise on that. I agree, however, that ultimately a balance must be struck on all these issues, including work practices.
With regard to the mandate, yes, of course I accept that it is a mandate based upon the voice of the Prison Officers Association. But so far as I know, even at this late hour the Prisons Officers Association national executive committee has not put the letter which my right honourable friend the Home Secretary discussed and which he wrote on 22nd April in front of the membership. However, that is a matter for the executive.
I am all for statesmanslike approaches to these problems and certainly both my right honourable friend and I shall proceed in a statesmanlike way. But with regard to last night's statement by the Prison Officers Association, had we adopted that proposal we should have been placed in precisely the same situation—the noble Lord shakes his head, but I am afraid that this is the way it appears—as we were in last week. Then my right honourable friend said that he would be prepared to discuss the three main items in the letter of 22nd April, and then we suddenly found ourselves faced with the Gloucester issue.
I referred earlier to increases in numbers of prison officers. I said to my noble friend Lord Brougham and Vaux that that was over a period of 10 years. I should have said that it was since 1979.
Lord Rochester: My Lords, will the noble Lord agree that it is important in this House at this crucial time that we should say nothing which would encourage members of the Prison Officers Association to carry on with this industrial action?
Lord Glenarthur: Yes, my Lords; I entirely agree with the noble Lord, Lord Rochester. As we have said, this dispute could have very serious effects not just on the way that prisons are run but also on prison officers, prisoners, and the whole criminal justice system. I hope that we shall all continue to look at it coolly.
Lord Hunt: My Lords, will the noble Lord accept that having listened to the explanation he has given to the House in this critical situation, speaking personally I fully agree with the line the government are taking? I say this with great reluctance because having for many years seen a great deal of the work in our prisons I have always held the highest regard and admiration for the work of prison officers, and I continue to do so. However, I agree that the Government have done the right thing in the particular circumstances.
Having said that, will the noble Lord agree that this critical situation which has arisen is of itself symptomatic of a far more fundamental problem? I know that the noble Lord is fully aware of this, but I make the point nonetheless. It arises from the inappropriate number of offenders who are sent to prison when they would be more satisfactorily and effectively dealt with by other means, and in many cases from the length of prison sentences imposed on those who must go to prison.
Lord Glenarthur: My Lords, I am very glad that the noble Lord, Lord Hunt, feels able to support the line which the Government have taken on this issue. With regard to it being symptomatic of the concern he feels for what he sees as an inappropriate number of offenders being sent to prison, I must say to him that while through appropriate publications and other means we take steps to encourage those who may dispose of offenders not to send them to prison unless they have to do so, it is a matter for the courts to decide whether they send people to prison, and we must provide the places while they do so.
Lord Sandys: My Lords, in rising to support most strongly what my noble friend has said in such a moderate and statesmanlike way, may I ask him about what was mentioned in the Statement relating to the burden of overtime, in particular with regard to average earnings? Can he comment upon the average earnings of prison officers and on the need for overtime, which was mentioned in the Statement and which must clearly be one of the particular points involved?
Lord Genarthur: My Lords, the average earnings of prison officers are about £15,000 a year, of which overtime amounts to about 30 per cent. If the average amount of overtime worked each week is about 16½ hours—which is where the figure stands at the moment—there are a great many officers working far in excess of that; they are working 20, even 30, hours a week on top of a standard 40-hour week. That cannot be in the best interests of either the prison service or the individuals who have to do that amount of extra work.
5.15 p.m.
Lord Harris of Greenwich: My Lords, is the noble Lord aware that there have been recent reports emanating from a member of the prison officers
168
executive suggesting that prison officers in Northern Ireland might be encouraged to join this action? Is he aware that that kind of approach will do the reputation of the Prison Officers Association great damage in this country? It would be an act of ultimate irresponsibility.
Perhaps I may return to one matter which I previously raised with the noble Lord. Will he undertake to keep the House closely informed about this situation? We all recognise the sensitivities of it, but as a meeting of the executive of the Prison Officers Association is taking place as we meet, and as the circular is coming out tomorrow, and there will clearly be a number of developments, will the noble Lord undertake to keep the House closely informed?
Lord Glenarthur: My Lords, with regard to the last request of the noble Lord, my right honourable friend the Home Secretary will bear this very closely in mind. It will be a matter taken forward through the usual channels. But I can promise the noble Lord that yes, we shall bear it closely in mind.
With regard to Northern Ireland, I am aware of that threat. I agree with the noble Lord that it would be extremely damaging if the action were to spread to Northern Ireland. I sincerely hope that it will not do so.
Lord Donaldson of Kingsbridge: My Lords, before we leave this very serious problem may I ask one question? Am I right in thinking that the only difference between the Government and the prison officers is one of suspension and abandonment of strike action? It seems to me a very narrow difference. I should like to say to the prison officers—whose friend I hope I have always been—that they should look at this. It seems to me that there is a way out by saying, "All right, abandonment for the moment, but we shall call it abolition. We can always start it again at any minute. The difference is verbal, and therefore we shall agree". If they would do that, the whole matter could be solved because I believe—this is not a question though it should be—that the kind of proposals that the Home Secretary will make will be acceptable.
Lord Glenarthur: My Lords, if that is an avenue which the prison officers feel that they are able to go down, I agree with the noble Lord that it may be one way forward; I hope that it might be. But if we are faced with suspended action, which may for one reason or another lead to action taking place while talks are going on, and if the kind of action we saw last week when a prison governor was, absolutely rightly, continuing to govern his prison and to look after the finance which had been made available to him by vote from Parliament is to be called into question, serious negotiation cannot take place.
Lord Morris: My Lords, may I ask my noble friend whether he would be good enough to reassure me that Her Majesty's Government will ever defend the right of management to manage, that the prisons be managed by Her Majesty's Secretary of State for the Home Department, and that that right to manage be not usurped by those whom the Home Department employ on our behalf?
Lord Glenarthur: Yes, Lords, I can certainly give my noble friend that assurance. It is a matter which has been stressed regularly over the last few days and it applies particularly in a service such as the prison service which is a disciplined service and which involves many different aspects of our national life. We are aware that prison officers have an interest in the safety and well-being of prisoners and in other issues as well. But governors must have the right to manage.

Gas Bill
5.20 p.m.
House again in Committee on Clause 1.
Lord Diamond Lord Diamond moved Amendment No. 7:
Page 2, line 1, after ("appointment") insert ("or reappointment").
The noble Lord said: I hope that it will be for the convenience of the Committee if I also speak to Amendment No. 12, which is a consequential amendment. It may save a little time if we discuss the two amendments together. The amendment refers to subsection (2) which appears at the very top of page 2 of the Bill and says:
"An appointment of a person to hold office as the Director shall not be for a term exceeding five years".
However, it goes on to say:
"but previous appointment to that office shall not affect eligibility for reappointment".
Therefore, the Bill contemplates reappointment in certain circumstances, but nowhere does it define what the period of reappointment shall be. The first line of the subsection talks about:
"An appointment of a person to hold office",
and defines that as being not for a term exceeding five years. We shall discuss later whether that is an appropriate period.
The simple point which I am making is this. Do the words "An appointment" in the first line of the subsection cover the question of reappointment, or is it not also necessary to refer to reappointment so that there will not be a situation whereby a person is appointed in the first place for an acceptable period and is then reappointed for a far too lengthy period—for example, because there is nothing in the Bill to prevent it? That is the point upon which I wish to receive clarification. I beg to move.
Lord Brabazon of Tara: I hope that I can briefly give the noble Lord the reassurance which he seeks. I assure him that these amendments are not necessary. I am advised that there can be no doubt that the Bill as drafted will apply to the director equally on reappointment or on initial appointment. Thus, under Clause 1(2) any appointment of the director is limited to a maximum of five years, and under subsection (4) any appointment of the director is subject to the terms of appointment under subsections (2) and (3) of the clause.
I quite agree with the noble Lord that it would be entirely undesirable if, having served his original appointment, he could then go on to serve an unlimited further appointment. However, I assure the
170
noble Lord that the Bill as drafted takes account of that point.
Lord Diamond: I am grateful to the noble Lord. If he is so sure about it, I naturally accept his assurance and seek the Committee's leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Hanworth Viscount Hanworth moved Amendment No. 8:
Page 2, line 2, leave out ("five") and insert ("four").
The noble Viscount said: Amendment No. 8 is a simple probing amendment. The director is appointed for up to five years, and one wonders why the period should be five years. A period of that length will cover more than one government and, as the director can be reappointed, there seems no point in having as long a period as five years. I beg to move.
Lord Williams of Elvel: There is one further point which perhaps the noble Viscount has not made. If you take, consequentially, periods of five years, after a long period of time you will reach 25 years, which I understand is the period of the authorisation. I hope that the Minister will agree that it is undesirable for the appointment of any director to be coterminous with the end of an authorisation and that he has to straddle a reauthorisation. That is why we ask the Minister either to clarify that that will not be the case or to accept the amendment.
Lord Gray of Contin: The Committee may not be aware that five years is a standard period for public appointments of this kind. The Director General of Fair Trading and the Director-General of Oftel both have five years as the statutory maximum length of their terms of appointment, as do nationalised industry board members and members of similar bodies. There is no obligation that an appointment be for the full five years, but the period is designed to enable the post-holder to build up expertise in the subject and to provide a level of continuity. A shorter term would be destabilising both for the industry and the staff of Ofgas.
Viscount Hanworth: I am not entirely convinced by the Minister's arguments, but nevertheless I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 9.
Page 2, line 6, after ("by") insert ("six months").
The noble Lord said: On behalf of my noble friend Lady Seear, with whom I have discussed the matter, I rise to move Amendment No. 9. The first two lines of subsection (3) read:
"The Director may at any time resign his office as the Director by notice in writing".
It is as simple as that. The amendment proposes that the notice shall be six months' notice in writing. It seems to us quite impracticable that a new director of adequate qualifications, skill and experience could be found in the market and engaged within a period of less than six months.
As we all know, it takes a great deal of time and nearly always the person most suitable for the job is already in important employment and would most probably have to give three months' notice. Therefore, by the time you have found him and he has given three months' notice, I do not see how you can possibly expect to find a suitable replacement in under six months.
If that is the case, it would be embarrassing—indeed, it would be more than embarrassing, it would leave the consumer unprotected—if there were to be acceptance of notice without any period attached to it, which is what the Bill provides, because in those circumstances, presumably one week's notice would be adequate, or whatever he chose to give. Therefore, it is important that the matter should be clarified and that a minimum of six months' notice should be included in the Bill. I beg to move.
Lord Gray of Contin: I fully appreciate the intention behind the tabling of this amendment; namely, that sufficient notice should be given by an outgoing director to enable a new one to be found and for continuity of his office to be assured. That is a perfectly reasonable aspiration and one which we share.
However, Clause 1 already provides that the director must give notice if he resigns his office. We envisage that the period of notice to be given will be spelled out in the director's terms of appointment. We fully accept the need for continuity in the directorship, which will be important for the stability of Ofgas itself, and we believe that there is no difference of principle between us on this issue. I hope that in the light of that assurance the noble Lord may be prepared to withdraw the amendment.
Lord Diamond: I do not want to press the amendment unduly, but I have difficulty in understanding what the Minister said by way of explanation. After all, the subsection says:
"The Director may at any time resign his office".
It does not say that he may resign his office in accordance with the terms of his employment under subsection (1). It says:
"The Director may at any time resign his office",
and we can all understand the reason for that. It is no use trying to force a person to work who does not want to work any longer. If that is the case, at the moment I cannot see that the anxiety, which I am delighted to find is shared by the Government and by myself, is dispersed by having nothing in the Bill to indicate that one expects a reasonable period of notice. Perhaps the noble Lord the Minister has something further to say on that point.
Lord Bruce of Donington: Is it not the case that what is happening here is that parliamentary counsel simply does not want the clause altered? It is as simple as that. The clause having been written, it is now sacrosanct and must not be amended on any account. Surely the amendment to insert "six months" is perfectly reasonable.
172
If the noble Lord says they intend to incorporate six months within the terms of the service contract, whatever it may be, what is the objection to putting it into the Bill? It seems to be quite proper. It is not an extraordinary provision to have in an Act. Why should the noble Lord hide behind the excuse that there is really no need for it and that it will all be in the terms of the service contract? If we are all of the same mind, why not enshrine it in the statute? There is no harm in it.
5.30 p.m.
Lord Gray of Contin: I think we are all of the same mind, but we take the view that the terms on which the director is appointed should deal with this matter. I suggest to the noble Lord that it would be a mistake to write this into the legislation, because there could be many different reasons for resignation. It would be a pity completely to tie the hands of everybody for ever more by enshrining it in legislation.
The director, for example, might want to resign for reasons of health. There could be other reasons. There could be domestic problems; there could be all sorts of things. It would be a mistake rigidly to enshrine this in the Bill. I am sure that there is nothing of principle between us in this matter. It just is that we take the view that it would be more appropriate to have this included in the terms under which the director is appointed.
We should preserve the flexibility that we have at present. There could be circumstances when the Secretary of State would want to waive a period of six months if there was a good candidate already available and able to follow on. That is just another reason for not enshrining it in the legislation. I think we should make a mistake by doing that.
Lord Donaldson of Kingsbridge: Would the noble Lord accept the word "reasonable" in front of "notice"? That might meet both sides, who agree so completely.
Lord Gray of Contin: The noble Lord has made a constructive suggestion, but, with respect, I still think it would be better to have this included in the terms of appointment of the director rather than have it referred to in the legislation.
Lord Diamond: We are all concerned with having clear legislation. This subsection is as clear as a bell. It says:
"The Director may at any time resign his office as the Director by notice in writing addressed to the Secretary of State".
It fixes no period for that at all. I am bound to ask the Minister whether he would be good enough to say that in view of these representations he will take further advice?
We are all after the same thing. We are not trying to press the noble Lord to do anything that he does not want to do, or that he says the Bill does not want to do. We are all trying to do the same thing. Let us have a good, clear Bill. If he would be good enough to look at that at his leisure and say that he is prepared to do that, then we would withdraw the amendment.
Lord Boyd-Carpenter: I hope that my noble friend will not give that assurance. This amendment is a little more serious than has been suggested. If we make it a statutory condition that the notice must be for six months, then, as I am sure the Committee will appreciate, that means that, even if there is very good reason for the director to go—he may have a disagreement of policy with the Government; he may have the offer of some major appointment elsewhere; he may be becoming unfit because a statutory condition cannot be waived, to be legal notice under the Act, as it will then be, it would have to be six months' notice. On the other hand, as my noble friend said, if it is in the director's contract, then the Minister can waive that in appropriate circumstances. There is a little more in this amendment than had been suggested, and what there is I think is rather bad.
Lord Diamond: The noble Lord has misunderstood me out of his zeal to support the Government. I am not suggesting necessarily these words at all. If the Government prefer the words suggested by my noble friend, "reasonable notice", that is all right too. It is not the case that the Secretary of State cannot get rid of an undesirable director. The next few lines in the Bill provide for that. It says:
"and the Secretary of State may remove any person",
etc. It is not the case that, if you have somebody ready and waiting, it is difficult to arrange for the holder of the office to withdraw even within his period of six months and for the newcomer to be taken on, or preferably for there to be an overlap of a month, as is most regularly done, which helps continuity of organisation and efficiency.
All this is suggested in order to provide for clarity and greater efficiency. I would still hope that, notwithstanding the not very constructive advice from his noble friend, the Minister will say that he will make sure that what he said is right, and that there is no need whatever to alter the wording; and that it provides not what it seems to provide, but what he thinks it provides.
Lord Stoddart of Swindon: I hope that the noble Lord, Lord Gray, will listen to what has been said. This clause is very wide. It says:
"The Director may at any time".
It is not "may resign his office as director", but it is "may at any time". They are the offending words. It has been made clear already by the noble Lord, Lord Diamond, that he could give a minute's notice according to this Bill, and clearly that cannot be satisfactory for an office of such importance as this.
As I understand it the noble Lord, Lord Diamond, is trying to be helpful. He is saying that it should not be expressed in such wide terms in a statute. He is asking the noble Lord, Lord Gray, to come up with some sort of words that would be acceptable. All he is doing is asking the noble Lord to look at it—not reject it out of hand, but look at it before the next stage of the Bill to see whether we can reach an accommodation. Surely we are good natured enough towards each other to accept that simple proposition?
Lord Gray of Contin: I am most grateful to my noble friend Lord Boyd-Carpenter for illustrating much
174
better than I have been able to do the fact that this amendment is really not necessary. All the points that have been made can just as easily be incorporated into the terms on which the director is appointed. I have no doubt about that at all. But I am always reasonable, and the noble Lord has asked me in a reasonable way whether I would look at this again. I am prepared to do that without any commitment whatever. I am almost 100 per cent. sure that I shall come back of the same mind as I am now, but I shall certainly look at it again as the noble Lord suggests.
Lord Diamond: The noble Lord is as courteous as usual, and if he does that he will give us the necessary reassurance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 10:
Page 2, line 7, after second ("State") insert ("after consultation with the appropriate Committee of each House of Parliament").
The noble Lord said: On page 2, line 7, we find:
"the Secretary of State may remove any person from that office on the ground of incapacity or misbehaviour."
We shall discuss "incapacity or misbehaviour" later. What I am concerned about at the moment is the protection that I think would be appropriate. If we accepted the amendment, the clause would read:
"and the Secretary of State after consultation with the appropriate Committee of each House of Parliament may remove any person from that office on the ground",
stated in the subsection. The reason for this is obvious.
One wants a director to feel a maximum of independence in carrying out his duty. Nobody wants him to be a stooge of the Secretary of State. Nobody wants him to be unduly afraid of the Secretary of State. On the other hand, the Secretary of State has a responsibility to Parliament and he must act responsibly before removing any person, for the reasons stated.
Throughout when we have referred to provisions of this kind we have been anxious to ensure that the director has greater status, greater security and greater self-reliance than he has at the moment. As the Bill is drawn, he is rather a lone person, subject, I might almost say, to the whim of the Secretary of State as to his removal. It is a serious matter to remove a person merely on the ground that he was doing his job thoroughly but being a bit awkward and therefore causing pressure; he would be moved from British Gas, as it will then be, on the grounds possibly and only that the regulation was being surprisingly effective.
Some strengthening of the position of the director in that way would be sensible. It is not a great deal. It is nothing more than consultation. It is not determination by the appropriate committee of each House. If he were wise the Secretary of State would no doubt take account of the consultation and of the views of each committee, but he is not bound by them. He is not bound to disclose confidences if he does not want to do so. If it is within his knowledge, and if as a responsible Secretary of State he feels that there is something he cannot disclose in the national interest, he would say so and refuse to disclose it. People would judge accordingly.
The first point I want to make is that we need to strengthen and add to the confidence of the director. This is one way of doing it: to ensure that he is not sacked merely because he is not doing exactly what the Secretary of State would like him to do.
My second point is that in this case I have suggested the words
"the appropriate Committee of each House of Parliament".
If the Minister were to say that he prefers some other form of words or type of consultation, I should be glad to listen to that. It is not the essential point, but in this case it is wiser that there should be consultation with each House of Parliament.
I have no need to deal with the question of the "appropriate Committee" because we discussed that previously. It was decided that the phrase was suitable to cover whatever committee might be in existence at the time. It is better that the director should have the protection of being able to put his case, if necessary, to each House of Parliament rather than to one. The reason for not suggesting only the House of Lords but bringing in the other place as well is that another place is full of Members who are continually being refreshed in their knowledge by constituency contacts and may have a great deal to offer in coming to a wise judgment as to how the consultation should emerge. It is for those reasons that I am making the suggestion. I beg to move.
5.45 p.m.
Lord Bruce of Donington: I hope the noble Lord, Lord Gray of Contin, will see fit to accept this amendment. Ministers are human and are therefore fragile individuals. There are few of us, even in this place in an atmosphere of philosophical serenity, who do not occasionally acquire either justifiably or unjustifiably strong personal irritations and dislikes.
Indeed in one case which has been before your Lordships' House in comparatively recent months we had intense ministerial irritation with Mr. Ken Livingstone, which prompted the Prime Minister, in a fit of intense anger prior to the publication of the 1983 election manifesto, to decide to abolish the GLC as a means of ridding herself of him. This is perhaps an extreme example. I agree that the circumstances were exceptional, but then so is the Prime Minister's temperament! I shall assume that members of the Government are normal individuals, not given to sudden gusts of emotion either of hate or love, but nevertheless human.
Let us say that we have a Minister of State or a Secretary of State who has a director general of this body of Ofgas. Let us say that in his normal social contacts, which are entirely proper, where he mixes from time to time with directors of City institutions and other large investors he hears complaints about Ofgas being much too restrictive and how the City does not see that it will receive its dividends unless the director general has a slightly lighter rein. The Minister ponders these things, he sees the director general and he taxes him with trying to institute too strict a regime. Let us say that the director general, being a robust individual, replies that he completely disagrees with
176
the Minister and all that he is trying to do as director general is to carry out the will of Parliament.
Let us say that a degree of personal tension develops. This might ultimately culminate in the position where a director general might, properly and in the public interest, wish to make certain public remarks about the inadequacy or otherwise of the mandate entrusted to him. Such things happen and have happened many times within my memory of parliamentary life, inside or outside this place, which now goes back some 40 years.
Within that context what does a Minister regard as "incapacity" or "misbehaviour"? Incapacity may cover physical incapacity, mental incapacity or temperamental incapacity or it may be anything else that the Minister chooses to make it. What about misbehaviour? I can understand the word "misdemeanour" because that has a legal connotation. It is a misdemeanour, for example, if one is caught exceeding the speed limit. I believe that that is a misdemeanour. I am not sure, strictly speaking, whether getting a parking ticket is a misdemeanour. But "misbehaviour" may be rather loosely interpreted, bearing in mind the arguments that we have heard so far, particularly applied to the original appointment of the director. We have been assured by the Minister that the greatest possible care will be taken in the selection of what the noble Lord, Lord Gray, or the noble Lord, Lord Belstead, described before as a very high powered individual. It depends on what capacities will be available in the country for this purpose.
The Committee will recall that when the Government were seeking to appoint a new managing director or executive chairman for British Steel, Sir Keith Joseph had to scour the boardrooms of Britain and he could not find one until it was pointed out that Mr. MacGregor was already sitting on the board of British Leyland at the time. There was enormous difficulty in getting one. Surely if there is enormous difficulty in getting one, this will put the Minister very much on his guard. If we are to believe what we see in the programme "Yes, Minister", he will get the advice of the good and the great, the mandarins of Whitehall, who have lists of individuals whom, in certain circumstances, they are doubtless prepared to recommend, and the Minister will exercise his judgment. How can a person selected by the Minister, with the advice of the good and the great and the mandarins, ever be guilty of incapacity or misbehaviour within the broad general terms that are put down here?
In those circumstances I think that the amendment moved by the noble Lord, Lord Diamond, is excellent. All of us in our executive lives, whether we are in business or anywhere else, occasionally like to talk to somebody about a problem. It need not necessarily be with one's own colleague in one's own business or, dare I say it, one's own colleague in the Cabinet; that is, assuming that members of the Cabinet talk to one another, which is sometimes doubtful. It is nice to be able to talk to a responsible body when nobody can reproach you for having consulted it. Who could possibly reproach the Minister for consulting a committee of either House of Parliament? This seems to be a very sensible precaution indeed and I hope the

177
Minister will see the reasonableness of the argument of the noble Lord, Lord Diamond, which I have endeavoured to reinforce. I sincerely hope that the Minister will bend on this particular point, even though he may in these circumstances—I note the look on the face of the noble Lord, Lord Boyd-Carpenter—be urged by his noble friend to do exactly the opposite.
Lord Boyd-Carpenter: The noble Lord, Lord Bruce of Donington, was almost engaging in the art of prophesy. Indeed, there were moments in the course of his speech which were actually relevant to the amendment, though in common fairness I must say there were not very many.
First of all, I should like to ask a question of the noble Lord, Lord Diamond. His amendment refers to an "appropriate committee". what committee of this House has he in mind? I perfectly accept that in another place probably the Select Committee on Energy would be appropriate; but in this House what is the appropriate committee to be empowered to be consulted in this way? The phrase "appropriate committee" has been used several times in opposition amendments on this Bill. I have been puzzled, and now I have the opportunity to ask, as to which committee of this House is deemed appropriate.
Secondly, I should like to ask the noble Lord, Lord Diamond, what happens if the misbehaviour or incapacity arises during the long recess? Are the public to be deprived of the protection of an effective director general because Parliament are not sitting and they may not be sitting for some months? Plainly, even if the incapacity and misbehaviour arise during the Parliamentary Session there will be a certain amount of delay, since parliamentary committees cannot always be assembled straight away. I wonder what the noble Lord suggests on that.
Thirdly, surely there is really nothing in this point at all. If a Secretary of State takes the drastic action of removing, on grounds of incapacity and misbehaviour, a very senior functionary of this sort, the Secretary of State will certainly have to answer for that both in this House and, unless another place has changed very much since I left it, in another place. Therefore, what the noble Lord is really trying to achieve is that this important functionary shall not be removed without Parliament being able to consider the matter.
Lord Stoddart of Swindon: Would the noble Lord give way?
Lord Boyd-Carpenter: Of course.
Lord Stoddart of Swindon: I have been listening very carefully to the noble Lord. Of course, he is quite right that in the removal of a person from office the Secretary of State would have to answer to Parliament. Undoubtedly this matter would be raised. I remember the case of Lord Hall who was dismissed. Parliament certainly had the opportunity to question the Minister, but the gentleman who was sacked never had the opportunity of himself answering to Parliament; he did not have the opportunity of putting his point of view. Lord Diamond's amendment would in fact cover exactly that.
Lord Boyd-Carpenter: I think the noble Lord is over-simplifying the matter. If a public functionary of that sort is sacked it is unlikely that he will remain completely silent. It is unlikely that the press and the media will not ask him for his views and for his justification. It is even unlikely that he may not have friends in one House or another who will be very happy to listen to his case. Therefore, with respect, is he not better placed to argue his case in public in the media or through the aid of friends in this House than in the relative quiet of a Select Committee?
Lord Bruce of Donington: I am grateful to the noble Lord for having given way. Is he saying that the director general who is dismissed because of the provisions of the Bill as they stand at present should have an opportunity only after the event? Why should he not have an opportunity before the event?
Lord Boyd-Carpenter: One reason is that if he has an opportunity before the event there is delay in perhaps an urgent and difficult situation in respect of a functionary, the importance of whom for the protection of the public noble Lords opposite have spent two days arguing in Committee. Now they are apparently prepared to argue for a period in which the person who is guilty of misbehaviour or incapacity is obviously unable to act because he is awaiting a hearing by a Select Committee. As no one knows better than the noble Lord, Lord Bruce of Donington, the practical reality is this: a Secretary of State who makes a bloomer and removes a man who is doing a good job in an important office puts his own office on the line. No one knows better than the noble Lord, Lord Bruce of Donington, that that is so. Therefore, the great safeguard is not only the fact that the Secretary of State will have to answer to Parliament after the event, but also before the event, and before taking a decision, the Secretary of State has to satisfy himself that what he is doing is right, sensible and something he can get away with in Parliament.
Lord Somers: I thought this was a Bill to make the gas industry independent. If that is so, why does it have to go through all the rigmarole of consulting both Houses of Parliament before it does any of its private business? The noble Lord, Lord Bruce of Donington, has persuaded us, in his usual gentle and persuasive manner, that some members may sometimes make mistakes. I do not deny that. One of them made a colossal mistake in introducing this Bill. However, we have it, and therefore we must make the best of it; but if the gas industry is to be independent I cannot see why it should thereafter be bound to all the rigmaroles of parliamentary discussion.
Lord Diamond: Courtesy requires that I should answer the three questions which the noble Lord has put to me; but perhaps I may precede that by answering the points that the noble Lord, Lord Somers, has just made.
The noble Lord, Lord Somers, said—I could not agree with him more—that one of the greatest mistakes made was to introduce this Bill at all. That will find considerable support in many parts of this Chamber. He then asked: why are we taking all this

179
trouble when the theory is that the whole of this body should be independent, and the director should be independent? That is not the case. This is an appointment by the Secretary of State; it is a quasi government department. In fact, I might also leave out the word "quasi" and say it is a government department without a government Minister at the head of it. So there is no question of independence but, as the noble Lord knows—
6 p.m.
Lord Stoddart of Swindon: I think what the noble Lord, Lord Somers, said was that the gas industry should be free. Of course, we are not talking about the gas industry, we are talking about a regulator here. I think the noble Lord would agree and I hope the noble Lord, Lord Somers, would agree, that it is a different matter. The gas industry will be controlled by a board which would be quite separate from the regulatory body.
Lord Diamond: I understand that. I had thought that I had heard the noble Lord, Lord Somers, correctly; but I may well not have done so. But I am sure that I heard the noble Lord, Lord Boyd-Carpenter, correctly. He put to me three questions. He asked me, first of all, which committee was involved when we were talking about "appropriate committee". I am sorry that he has asked me that because he made clear that he was here for the whole of our first day's proceedings, when, of course, I went over this matter, not at great length but at sufficient length, I thought, to explain it.
I explained it by referring to—in the case of the other place—the Energy Committee, which has already considered these matters and made a report—an unhelpful report as far as the Government are concerned because it was a critical report. The Energy Committee is very well equipped to deal with matters of this kind. Therefore, I imagine—but one does not want to limit it in that way; for one wants to leave it to the good sense of the other place—that they would decide to interpret "appropriate committee" in their case as the Select Committee on Energy.
I went on to add that we have two committees which might be satisfactory and might be regarded as appropriate but that it was better to say "appropriate" because, of course, one does not know whether these two committees will continue for all time, they being sessional committees, as I believe. One such committee is the Energy, Transport, Technology and Research Sub-Committee, Sub-Committee L of the European Communities Committee. I explained that that was one committee which this House might regard as being appropriate because it dealt with energy and was well equipped to do so and a number of most distinguished Members of your Lordships' House serve on Sub-committee L.
Lord Boyd-Carpenter: Before the noble Lord leaves that, is he aware that his amendment does not provide for this to go to a sub-committee but to a committee of this House?
Lord Diamond: I am sure that the noble Lord does not want to hold us up on little details of that kind. We are anxious to get on with the Bill. If the noble Lord at a later stage wants to introduce an amendment saying, "For 'committee' read 'or sub-committee' ", we should welcome that. It would be easily disposed of.
There is another committee which I mentioned on a previous occasion, but courtesy requires that I repeat the point. It is the House of Lords Offices Committee, which is well equipped to deal, and does deal, with matters of staff appointments. It is a very large committee; many noble Lords present probably serve on it and it is very well equipped to do that particular job. But I thought, again, that it would be better to leave it to the good sense of your Lordships' House to decide which of those two committees, if they are in existence at the relevant time, should be asked to carry out that function. That is the answer to one of the three questions that the noble Lord asked me.
The second question that he asked me was whether it was not the case that the Minister appoints and, therefore, the Minister has to answer to the other place, as indeed does a Minister in this place too. Of course it is the case that he has to answer; but, as has already been pointed out, the crucial point is that he has to answer after the event. It is of no earthly good when this chap has been sacked for no good reason to be able to get the satisfaction of embarrassing a Minister. What we want is the protection of the consumer and not the embarrassment of a Minister. Therefore, that is no protection whatever because it comes after the event. One wants to have some method of dealing with it before the event.
Then the noble Lord puts forward a very helpful and constructive point. He says, "What if this happens during the Recess?" The purpose of putting down amendments at Committee stage—as nobody knows better than the noble Lord, because he was instrumental in a Bill not very long ago, a mere 40 years, in putting down one or two amendments himself, if I recollect correctly—is to cover the ground, to trawl, to find out which amendments are acceptable to the Government and which are not. The aim is to find out the Government's position and, at a later stage—and in this House, we have two later stages, which is a great advantage for doing a good job in amending a Bill—to put down an amendment which might be accepted by the Government in the light of what they have said at an earlier stage.
So, at a later stage, if the noble Lord cares to come forward or if the Government says, "We are not prepared to accept this amendment without the addition of some protection, such as, 'except such an event occurring during a parliamentary Recess, when the Secretary of State shall have the sole power'", it will be perfectly easy to frame an amendment which will deal with the matter and of course it is a very helpful suggestion that the noble Lord has made. If the Government do not put forward the amendment, I hope that the noble Lord himself will do so.
Those are the answers to the noble Lord's questions and, if I may, I will add just one point about the possibility of difficulties arising. One illustration has been given in the case of the GLC. However, an illustration which comes very much to my mind and

181
which is more easily recollected by all the Members of your Lordships' House, is of course the Westland affair, where the chairman of an aircraft manufacturing company had an interview with the Secretary of State about which there was considerable confusion, to put it at its least. The Secretary of State was extremely wrathful and if he had been dealing with a director instead of a the chairman of another company he would have given him the sack then and there. But he did not. And matters developed and the person who got the sack was not the chairman but the Secretary of State.
It would be unfortunate, would it not? if the Secretary of State lost his temper over something when dealing with the director and gave the director the sack, when a little spare time would have made it clear to the relevant committee of either House that the person who should be sacked was the Secretary of State and not the director. We do not want that history to repeat itself. I am not imagining; I am merely reminding your Lordships of very recent history. It is in those circumstances that I hope that the Minister will be good enough to speak favourably with regard to this amendment.
Lord Sandys: The noble Lord, Lord Diamond, has demonstrated an endearing solicitude for the director general and has taken us into a number of situations which may or may not have endeared themselves to your Lordships. But I suggest that we may look at this situation in a totally different light if we regard it in a field which is a long way from this type of appointment. I suggest that ecclesiastical law may be a parallel, not perhaps a very good parallel but it is a parallel where a bishop, through a committee, appoints a person. He may, if he appoints that person to a freehold, remove him only on the grounds, as stated in the Bill, of incapacity or misbehaviour. The bishop, if he wishes to dismiss that particular incumbent, has regard to the situation and he will do so only on those very grave grounds.
Both the noble Lord, Lord Diamond, and the noble Lord, Lord Bruce, have suggested that the Minister would do so on grounds of personal animosity. There may well be circumstances which have arisen in the past which could be chosen as parallels, but I think that the Committee in examining the Bill may agree with me that grounds of incapacity or misbehaviour are quite clearly stated and quite clearly identified. Therefore I agree wholeheartedly with my noble friend Lord Boyd-Carpenter that this amendment is misguided and inappropriate for the Bill.
Lord Whaddon: On the other hand, I find the case made by my noble friend Lord Diamond sound and convincing. We should be aware that the world we are entering with the new company is something completely new. There is no close parallel at all in British industry up to now. We are handing over to a private company a gigantic monopoly which will have the most dramatic powers over the lives of 16 million (is it?) consumers. We should therefore be extremely careful about the defences we erect for the protection of the public interest.
In an earlier debate I referred to my fear that the industry could come to be like Dracula, digging its
182
fangs into the public's jugular. We are trying to erect a fragile defence and, heaven knows, the director and his staff are in all conscience a fragile defence; a very thin line of garlic flowers that we are putting in the way of this Dracula! But we must be careful to make sure that the Minister, in a fit of pique, is not able to rip away this line of defence. Therefore I would say that there is no direct parallel and we are handing over to a private company an industry which will have potentially devastating effects on millions of ordinary families. We must take every precaution and the greatest care in protecting the public interest. I must say that the case made by my noble friend is utterly convincing, and I feel that this amendment is one which the noble Lord, Lord Gray of Contin, could with dignity accept.
Lord Gray of Contin: I think perhaps I made a mistake on the previous amendment by agreeing to take it back. That seems to have given noble Lords on the opposite Benches the idea that they have an easy pushover here and that—
Noble Lords: No, No!
Lord Gray of Contin:—and that I am going to weaken on issues which are very much more clearly defined. I think I should put them out of pain right at the start by telling them that I have no intention of accepting the amendment. Nevertheless, I realise this is a subject which was debated at considerable length in another place, and I welcome the opportunity of putting on record the Government's position. I know the noble Lord, Lord Diamond, in his persuasive way, gave the Committee the option of going for a number of possibilities when he explained what his amendment seeks to do; but I do not think that he has come up with anything that I would be persuaded by, and I shall now try to set out our position.
The Committee will know that the procedure we have set out in the Bill for the removal of the Director General of Gas Supply follows a well established precedent. Both the Director General of Fair Trading and the Director of Oftel may be removed only by the Secretary of State. It would be entirely unnecessary and inappropriate to single out the removal of the director for consultation with committees from either House of Parliament. We have provided that the Secretary of State has responsibility for the director. As well as being able to remove the director, he receives an annual report from him on his activities. That is laid before Parliament and it ensures that the director is accountable through him to the whole of Parliament.
6.15 p.m.
The noble Lord, Lord Diamond, in his suggestions, made one or two points which I think I should deal with specifically. Perhaps the most important one I want to put right is that the Secretary of State should not be able to remove the director on frivolous grounds. I doubt very much whether any Secretary of State would want to do such a thing anyway, but I take the point. However, I believe we have already provided for this by using in subsection (3) the words "incapacity or misbehaviour". These place stringent and narrow limits on the grounds on which the Secretary of State may remove the director.
Furthermore, the director can, if he disagrees with the Secretary of State's decision (as my noble friend Lord Boyd-Carpenter pointed out very clearly), raise the matter with those who are in a position to have it raised in Parliament. That could, and probably would, happen very quickly indeed. In addition, he has the facility to take the matter to court if he feels sufficiently strongly, and the court will then decide what the circumstances of the case amount to and whether incapacity or misbehaviour can be proved. I submit, therefore, that the director already has the protection in the legislation and that that is the protection the noble Lord seeks to give him; in other words, it is already there.
The arguments which were deployed by the noble Lord, and also by the noble Lord, Lord Bruce of Donington, did nothing to reinforce the position. I had some sympathy with the noble Lord, Lord Somers, when he asked what was the point of carrying out a privatisation scheme and giving British Gas liberty for the future if you are going to introduce an amendment of this sort. I think he probably finds, as many of us do, that some of these arguments tend to be a little repetitive. He probably shares my view that they could perhaps be dealt with a little more hastily, and we could then make progress and move on.
The noble Lord, Lord Sandys, rightly pointed out the weaknesses which he saw in the amendment. Despite the support which was given by the noble Lord, Lord Whaddon, I am afraid that these arguments have done nothing to convince me. On the previous amendment I could see the point that the noble Lord was seeking to make and I agreed to look at it again. The noble Lord emphasised on that amendment that this was not a political matter and that we were acting in the best interests of the public. I tend to feel that in this amendment we have crept back into the political arena a little bit and that the philosophy of noble Lords opposite is becoming more pronounced once again. I cannot be persuaded by this amendment, and if the noble Lord seeks to press it, I must ask my noble friends to vote against it.
Lord Ezra: Would the noble Lord in his definition of "incapacity or misbehaviour" specifically exclude differences of opinion?
Lord Gray of Contin: I think we have to take the definition of those words in the dictionary and work from there. I think that difference of opinion is something quite different, and I would not care to comment further than that.
Lord Stoddart of Swindon: Before the noble Lord sits down, he referred to the philosophy of this side of the Committee. Does he not accept that the philosophy that we are expressing from this side is of greater involvement of Parliament? Does he not agree with that?
Lord Gray of Contin: I am always in favour of the involvement of Parliament, but there is no point in involving Parliament where Parliament has no need to be involved. I see no advantage whatsoever in involving Parliament in this amendment, any more
184
than I did in involving Parliament through the committees suggested by the noble Lord, Lord Diamond, in the amendments we discussed last week.
Lord Bruce of Donington: Before the noble Lord the Minister sits down, I have a technical question. I am most anxious that the noble Lord should not have committed himself, in what he said previously, beyond where he wanted to go. If the Committee's recollection agrees with mine, he said that in the event of the director general being dismissed on grounds of incapacity or misbehaviour he would have a legal remedy in the courts against the Minister. Will the noble Lord confirm that he said that and that that is the case? Will he also say what grounds the director general would have for bringing such a case before the courts?
Lord Gray of Contin: I confirm that it is correct that the director general could have recourse to the courts. The grounds would be a matter for his judgment if he disagreed with the reasons given for his dismissal by the Secretary of State.
Lord Diamond: I want to make clear that I am not talking about incapacity or misbehaviour as they are the subject of two later amendments when we shall be seeking proper clarification and will discuss the matter fully. It is unfortunate that the noble Lord the Minister thought it necessary to bring that point into the argument, because he will then accuse us of repeating it when we come to deal with it again later. On that same tack may I, on behalf of the noble Lords, Lord Sandys and Lord Boyd-Carpenter, reject completely his allegation that they were speaking in order to hold up the business? It is far from that. Both noble Lords had constructive speeches to make. I do not necessarily agree with them but I hope that the noble Lord the Minister will not say that the purpose of a Committee stage is to prevent any Member on his side of the Chamber speaking, just as he cannot prevent us from speaking.
Lord Boyd-Carpenter: Will the noble Lord forgive me?
Lord Diamond: I hope that the noble Lord notices the clock.
Lord Boyd-Carpenter: I am deeply moved by the tribute that the noble Lord has paid me, because after all no one could speak with greater authority on the subject of holding up business.
Lord Diamond: If the noble Lord wants to attribute that title to himself, he must be free to do so.
I wanted to deal with what the Minister called the well-established precedent. He said that the Government were following a well-established precedent. The precedents are the Office of Fair Trading and Oftel. Those are the only cases he has mentioned when he keeps on talking about well-established precedents. There are in fact two, and only two. The Bill is modelled on those two.
The first has a totally different purpose. I am afraid that every time the noble Lord brings in the Office of

185
Fair Trading as a parallel for privatising gas I shall have to remind him of the fact that they have two totally different purposes. It may save time in the drafting of a Bill and save the Government from the necessity of thinking about it when they are rushing through a Bill, merely to take clauses from a previous Bill and slap them in this Bill without any change. Although it may save their energy it is not a great tribute to their sense of responsibility and it does not help us. That example is no precedent whatever.
There is one precedent of a similar character and one only; and that is Oftel. We say time and time again that that precedent is being shown, as we sit here, not to have worked well in the consumers' interests, which is what we are talking about. We are talking about protecting the consumer against this monopoly. That is the Government's line as to what they are trying to do in the Bill.
I am bound to say that there is no satisfactory precedent for the terms of the Bill, as they are put down. I had hoped to receive a much more satisfactory reply. I do not want to hold up the business by suggesting that we should divide. If the noble Lord, Lord Belstead, wants us to divide, we shall accede to that readily. I was proposing not to delay the business and not to seek a Division. After having made clear that this is an important matter to which we shall have to come back, after having carefully read what the noble Lord the Minister has had to say, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 10A:
Page 2, line 8, after ("incapacity") insert (", other than incapacity likely to be of a temporary nature,").
The noble Lord said: I hope that it will save time and be for the convenience of the Committee if, with this amendment, we discuss also Amendment No. 10B. The effect of the two amendments is to make clear that although the Secretary of State at present, acting alone and without any consultation, may remove any person from that office on the grounds of incapacity or misbehaviour, we seek to suggest that it is better to insert that the incapacity should not merely be of a temporary nature and that the misbehaviour should be gross misbehaviour.
I am in the difficulty that I can find nowhere a definition of the words "incapacity" or "misbehaviour". The Bill relies on those two words and yet so far as I can see they are defined nowhere in the Bill. It is left to common sense and Webster's for us to try to find out what they mean. That is not a satisfactory way to legislate. The first questions that I want to ask the noble Lord the Minister are whether there are, first, any definitions, secondly, any precedents. Has the matter been heard in court and defined so that we have some legal precedent on which to go and to tell us where we are? If not, this is slapdash legislation and we do not want such legislation to issue from this Chamber.
I shall refer first to incapacity likely to be of a temporary nature. It would obviously be unfair for a director general to be removed from office merely on the grounds of incapacity which for one reason or another was going to dissipate or disappear in the
186
course of a week or two or a very short period. There would surely be others who could look after the business until he was sufficiently recovered, supposing that the illness was temporary. The clause says merely "incapacity". Nowhere does it say "temporary incapacity". It is therefore open to a Secretary of State who is waiting for an opportunity, for good or bad reasons, to get rid of a regulator, to say, "Ah, he has the 'flu. He has a temperature of 104. He is incapacitated. I will drop him a line terminating his appointment." I do not know what "incapacity" means. It could mean all sort of things. Temporary illness could clearly be included.
I wish to ask the noble Lord the Minister various questions: first, as to legal precedent; secondly, as to definition; and, thirdly, as to whether, as it stands, the clause does not cover temporary incapacity, which would be wholly unjust and therefore should not remain in the Bill.
I now wish to refer to misbehaviour, with which I shall deal shortly because how we act afterwards depends on the reply of the noble Lord the Minister. Again, "misbehaviour" is not construed or defined. I know of no definition in the Bill. I am not aware of any legal precedent, of any case having gone to the courts for a decision as to whether a certain action was misbehaviour. It is therefore sloppy legislation of the kind that, as I have said, we do not want to issue from this Chamber.
6.30 p.m.
So would he please be quite clear as to the meaning of "misbehaviour", and does it include what one would normally regard as gross misbehaviour? Gross misbehaviour is very well understood; but, for all I know, misbehaviour might be all sorts of things. It might be wearing the wrong clothes to go to the office. I do not know what it means, but it may refer to all sorts of trivialities which are wholly inappropriate to exercising power to remove a man from office. Of course, it would give rise to compensation, but that is not the issue. The issue is whether this individual who is charged with this enormous responsibility can feel he has reasonably safe tenure of office, so that he can do his job properly without this sword of Damocles hanging over his head in the word "misbehaviour".
It is no answer to say that if a misjudgment were made by the Secretary of State, the individual could have recourse to the courts. That means that after two years or so he will get some money out of the Government—that is, out of the taxpayer—and in the meantime he has been got rid of and there is no likelihood of him coming back to do the job. So references to appealing to the courts give me no satisfaction whatsoever.
The wise man is the man who arranges his affairs so that he never has to appeal to the courts, and the wise government is the government that arranges its affairs so that it does not have to answer questions in court. If the matter is clear beyond doubt, you do not have to ask a judge to tell you what the legislation means. It is clear on the face of it. I am sure that I have made clear the essential reason for my amendments, and I beg to move the first one.
Lord Belstead: In moving this amendment, the noble Lord, Lord Diamond, has asked whether there is any precedent for the drafting of subsection (3) of Clause 1 which is the subsection that we are discussing at the moment. The answer to that question is that the wording of this subsection is identical to Section 1(3) of the Fair Trading Act. Removal on the grounds of incapacity or misbehaviour is widespread and commonplace for officers in such positions and for board members of nationalised industries. Indeed, I have no doubt that on many occasions when nationalised industries were being set up some 30 years ago governments, of which the noble Lord was a leading member, probably approved this kind of wording for the legislation concerned.
The two words to which the noble Lord is seeking to add qualifying words—namely, "incapacity" and "misbehaviour"—are objective criteria and dismissal on either ground could be challenged in the courts. It is for that reason that there is not a definition. It will be for the courts to decide whether the grounds given by the Secretary of State for dismissal constitute incapacity or misbehaviour.
The noble Lord has had his fun asking me whether I can give a precedent and produce a definition. Let me now throw the ball back to the noble Lord and ask him a little about his amendment. For instance, what is meant by "temporary"? When the Committee stage of this Bill began on Thursday of last week, I was under the impression that it was a stage of the Bill which was temporary. I must say that doubts are beginning to crowd in on me as to whether I was right in that assumption. As to what "gross" may mean, again I am not entirely sure; but what I am certain of is that it would so fetter my right honourable friend the Secretary of State that I think it would render that leg of the grounds on which the Secretary of State could part company with the director almost useless.
I say quite seriously that this part of subsection (3) is genuinely designed to provide the director, when he or she comes to be appointed, with security of tenure during the period of office and thereby to give sufficient independent status to resist interference in the manner in which the director discharges his or her functions. In other words, it was felt that putting in this wording, which is to be found in other legislation, would give the director a free hand, provided that the director was comporting himself or herself properly.
I recognise that these are two amendments which, in a sense, demonstrate the kindness of heart of the noble Lord, Lord Diamond, in that he wants to make the grounds on which the director may be given notice less easy to fulfil. But I really think that they are amendments which are unclear and they would fetter the Secretary of State's power in a way which would not be acceptable to the Government.
Lord Diamond: I find that answer most disappointing and not all that straighforward. I asked specifically for a legal precedent and the noble Lord has not answered that question at all. He quoted two statutory precedents. I spent considerable time explaining to the noble Lord why those so-called statutory precedents were not precedents. Does the noble Lord really want me to go over all that ground again? I explained exactly why, in our view, they were
188
not proper precedents and asked for a legal precedent. It is noble Lord—who holds an important position in the Government—who is bringing forward this legislation. It is his responsibility to explain it and to answer reasonable questions. The reasonable question is about clarity, yet all he does is to ask me: what is "temporary"? It is for the Minister to find out what is temporary. He has the staff. I have none. I have no staff, I have a quarter of an office and yet I am expected to know what is the meaning of "temporary".
The purpose of this stage of the Bill's proceedings is to probe and to find out whether we can improve it. I think we can improve it by making clear the kind of incapacity to which I have referred. For example, a temporary illness strikes me as incapacity. If a man cannot get out of bed for a week and do his job, I would regard him as being incapacitated. Yet I do not regard that as at all a justifiable reason for sacking a man, who in other respects is doing a perfectly good job but has temporarily fallen foul of the Secretary of State.
The noble Lord has not answered the question at all. He has merely referred us to two statutory precedents which for the reasons I have given we do not at all accept as precedents. I do not propose to seek the leave of the Committee to withdraw this amendment, as an example of the unsatisfactory way in which the Government are attempting to avoid their responsibilities in dealing with the Committee constructively and courteously.
Lord Belstead: I think I ought to say that the statutory precedent which I mentioned is on all-fours with the precedent which is in the Bill. The task of the Director General of Fair Trading is the regulation of economic activities, in exactly the same way as the Director General of Ofgas will be regulating the affairs of the gas industry. I do not think I can add to that. It is true that I have not crawled through legal precedents, but I did not realise that I was to have the pleasure of hearing the noble Lord, Lord Diamond, putting the case for the amendment in the way that he has. However, I think I have given a reasonable answer, and certainly I have given a good enough answer to vote against the noble Lord.
6.39 p.m.
On Question, Whether the said Amendment (No. 10A) shall be agreed to?
Their Lordships divided: Contents, 87; Not-Contents, 109.

DIVISION NO. 2

CONTENTS

Airedale, L.

Davies of Penrhys, L.

Ardwick, L.

Dean of Beswick, L.

Aylestone, L.

Denington, B.

Barnett, L.

Diamond, L.

Birk, B.

Elwyn-Jones, L.

Blyton, L.

Ennals, L.

Bruce of Donington, L.

Ezra, L.

Carmichael of Kelvingrove, L.

Falkender, B.

Chitnis, L.

Falkland, V.

Cledwyn of Penrhos, L.

Fisher of Rednal, B.

Crawshaw of Aintree, L.

Foot, L.

David, B. [Teller.]

Gallacher, L.

189

Galpern, L.

Nicol, B.

Gladwyn, L.

Northfield, L.

Glenamara, L.

Ogmore, L.

Gregson, L.

Oram, L.

Grey, E.

Perry of Walton, L.

Hampton, L.

Phillips, B.

Hanworth, V.

Pitt of Hampstead, L.

Harris of Greenwich, L.

Ponsonby of Shulbrede, L.

Hatch of Lusby, L.

Prys-Davies, L.

Heycock, L.

Rea, L.

Houghton of Sowerby, L.

Rochester, L.

Irving of Dartford, L.

Serota, B.

Jacques, L.

Shepherd, L.

Jeger, B.

Stedman, B. [Teller.]

Jenkins of Putney, L,

Stewart of Fulham, L.

John-Mackie, L.

Stoddart of Swindon, L.

Kagan, L.

Taylor of Blackburn, L.

Kaldor, L.

Taylor of Gryfe, L.

Kennet, L.

Taylor of Mansfield, L.

Kilbracken, L.

Tordoff, L.

Kilmarnock, L.

Turner of Camden, B.

Kirkhill, L.

Underhill, L.

Lawrence, L.

Wallace of Coslany, L.

Llewelyn-Davies of Hastoe, B.

Wedderburn of Charlton, L.

Lloyd of Kilgerran, L.

Wells-Pestell, L.

Lovell-Davis, L.

Whaddon, L.

McCarthy, L.

White, B.

McGregor of Durris, L.

Wilson of Rievaulx, L.

McNair, L.

Winchilsea and Nottingham, E.

Mais, L.

Morton of Shuna, L.

Winterbottom, L.

Mulley, L.

Ypres, E.

NOT-CONTENTS

Alexander of Tunis, E.

Halsbury, E.

Allerton, L.

Harmar-Nicholls, L.

Alport, L.

Harris of High Cross, L.

Ashbourne, L.

Hooper, B.

Beaverbrook, L.

Hylton-Foster, B.

Belstead, L.

Kaberry of Adel, L.

Bessborough, E.

Kemsley, V.

Birdwood, L.

Killearn, L.

Blake, L.

Kimball, L.

Boyd-Carpenter, L.

Kinnoull, E.

Brabazon of Tara, L.

Kintore, E.

Braye, L.

Lane-Fox, B.

Brougham and Vaux, L.

Lauderdale, E.

Broxbourne, L.

Layton, L.

Buckinghamshire, E.

Lindsey and Abingdon, E.

Butterworth, L.

Long, V.

Caccia, L.

Mackintosh of Halifax, V.

Caithness, E.

Macleod of Borve, B.

Cameron of Lochbroom, L.

Mancroft, L.

Campbell of Alloway, L.

Margadale, L.

Campbell of Croy, L.

Marley, L.

Carnegy of Lour, B.

Marshall of Leeds, L.

Cathcart, E.

Merrivale, L.

Chelwood, L.

Middleton, L.

Coleraine, L.

Milverton, L.

Colwyn, L.

Monk Bretton, L.

Cork and Orrery, E.

Morris, L.

Craigavon, V.

Mottistone, L.

Craigmyle, L.

Mowbray and Stourton, L.

Davidson, V.

Murton of Lindisfarne, L.

Denham, L.

Onslow, E.

Dilhorne, V.

Orr-Ewing, L.

Drumalbyn, L.

Pender, L.

Dundee, E.

Peyton of Yeovil, L.

Elliot of Harwood, B.

Platt of Writtle, B.

Elton, L.

Portland, D.

Fortescue, E.

Rankeillour, L.

Geddes, L.

Rodney, L.

Gibson-Watt, L.

Rugby, L.

Granville of Eye, L.

St. Aldwyn, E.

Gray of Contin, L.

St. John of Bletso, L.

Greenway, L.

Salisbury, M.

Gridley, L.

Sanderson of Bowden, L.

Grimston of Westbury, L.

Sandys, L.

Hailsham of Saint Marylebone, L.

Sharples, B.

Skelmersdale, L. [Teller.]

190

Stanley of Alderley, L.

Trumpington, B.

Stodart of Leaston, L.

Ullswater, V.

Strathclyde, L.

Vaux of Harrowden, L.

Strathcona and Mount Royal, L.

Vickers, B.

Vinson, L.

Swinfen, L.

Vivian, L.

Swinton, E. [Teller.]

Whitelaw, V.

Thomas of Swynnerton, L.

Windlesham, L.

Torrington, V.

Young of Graffham, L.

Trefgarne, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 10B not moved.]
6.48 p.m.
Lord Diamond Lord Diamond moved Amendment No. 11:
Page 2, line 8, at end insert ("such removal being subject to appeal to an industrial tribunal established under section 128 of the Employment Protection (Consolidation) Act 1978.").
The noble Lord said: In this amendment we are discussing again the power of the Secretary of State to,
"remove any person from that office on the ground of incapacity or misbehaviour".
We tried to get those terms defined and clarified but we have not been able to do so. What this amendment seeks to do is to say that such removal should be subject to appeal to an industrial tribunal.
I know that the Government have stated that an aggrieved sacked director may appeal to the courts. For the reasons I have explained, that is of no real satisfaction. One wants to avoid the necessity of going to court. It is a lengthy and immensely expensive process and it is wholly inappropriate where you are talking about service contracts. Therefore we have established machinery under the Employment Protection (Consolidation) Act which provides for an industrial tribunal to hear cases of unfair dismissal and the like.
If the director in question holds himself to have been unfairly dismissed, he should have the right to go to an industrial tribunal. That is so obviously the case that it is the law of the land, so far as I understand it, that he can go to an industrial tribunal except where his employment is terminated within the first two years of his being appointed. I may be wrong on that. The Minister, I hope, will have been advised about this and will be able to help the Committee. If the Government still take the view that it is their duty to help the Committee in understanding a Bill, they will be able to assist the Committee by saying whether it is true that everyone aggrieved under this subsection could go to an industrial tribunal to have his case considered if he has been engaged for a longer period than two years but not if he has not been engaged for that period. That is the short point. I hope I have made it clear and that the Minister will be able to give us a full answer. I beg to move.
Lord Gray of Contin: The director general of supply is a statutory office created by Clause 1 of the Bill. The person who is for the time being appointed to that office by the Secretary of State is given considerable independence in the discharge of his functions under the Bill. The main terms of his appointment are laid down by the Bill itself and the only grounds on which such a person can be removed from that office are

191
those specified in Clause 1 of the Bill—incapacity or misbehaviour.
Just as with other appointments to such public offices—the Director General of Fair Trading, the Director General of Telecommunications, the chairman and members of nationalised industries, to name but a few—the Secretary of State has to answer to Parliament for his decision to remove the director, and to the courts if an application is made to them in respect of the director's removal from office. In our view, that is the proper method of review and the noble Lord's amendment would introduce what we see as an unnecessary and inappropriate appeal which cannot be justified on earlier precedent or principle.
I hope I have made the Government's position quite clear. I have listened very carefully to the noble Lord, Lord Diamond, but I am not persuaded that what he suggests would be an improvement on what we have decided upon. Therefore, I ask the noble Lord, on reflection, to withdraw his amendment because I am afraid I cannot accept it.
Lord Bruce of Donington: The noble Lord rejected the amendments that were put forward by the noble Lord, Lord Diamond, in his unsuccessful attempts to get some clarity on the phrase "incapacity or misbehaviour". Indeed, he sought further explanations when he tried further to clarify what the Government themselves meant by "incapacity or misbehaviour".
The noble Lord, for reasons he has described and which I shall not repeat—I do not wish to enter into any further argument about them—declined to accept the position put forward by the noble Lord, Lord Diamond. It occurs to me that if the noble Lord the Minister were prepared to accept this amendment it might help to allay the fears that are genuinely held that this office will not carry the clout that it ought to carry. The examples of nationalised industries which the noble Lord quoted as a precedent—but not a precedent within the strict terms referred to by the noble Lord, Lord Diamond; that related of course to precedents established by case law and case decision—are entirely different to those applicable to this particular office. This office is going to be held by a person who is bound to find himself in the centre of conflict. By the very creation of a privatised industry by this Bill, the very act of bringing it forward automatically creates a conflict between the public and the private interests; otherwise there is no necessity for the office at all.
If the new company, run as a private enterprise responsible only to its shareholders, functioned automatically in the public interest then by its very existence as a private industry this entire provision for its regulation would be unnecessary. It is precisely because there is a conflict of interest between the private and public interests that the whole office of director general, and the paraphernalia surrounding it, are created.
That is not the case with the other "precedents"—I use the word in quotes—that have been brought in by the Minister. He said that there is a precedent in the sense that Oftel occupies very much the same position. I
192
prefer to use not "precedent" but "analogous" to the position obtaining of Oftel. But quite clearly there is a conflict. Secretaries of State have their own temperaments. Some of them, incidentally, can express themselves fairly pungently and show their temper fairly pungently. They are not all as rational as people would like to think they are and as their own press makes them out to be. Some of them occasionally go round the bend in expressing their prejudices, their hates and their dislikes. It has not been unknown for them to do that and if the noble Lord wishes I could most certainly, without any fear of offence in this Committee, give examples.
If the noble Lord opposite accepts this amendment it would at least give this particular official the security of going before an industrial tribunal. An industrial tribunal is composed not only of lawyers but people with a certain amount of commonsense who can give a rather more commonsense interpretation, and are likely to give a more commonsense interpretation of "incapacity or misbehaviour" than is possibly the case with the courts. It is not so expensive, it is easier and it does not create public furore. I should have thought that if the noble Lord wished to reassure the Committee and to reassure any appointee to what must be, inevitably, a hot seat, this is the very amendment that the noble Lord should accept, and we should all be very happy about it.
Lord Diamond: I feel very unhappy indeed with the reply from the noble Lord the Minister. Perhaps I may stretch the meaning of an English word to use it in regard to what he said. I prefer to call his reply a statement. He read out his brief. That is fine. Of course we are interested in hearing what his brief said, but I asked him two specific questions to which we had no answer whatever. Those questions are absolutely crucial to the action we must take on this amendment. Is it or is it not the right of every man and woman who is employed to go to an industrial trubunal if they want to argue that they have been unfairly dismissed?
I am not a lawyer and I do not have any of the resources that the Government have. Therefore, I hope we are not going to receive the same answer that we had on the last occasion: "I cannot answer your question because I did not expect you to ask it". I do not know what is the purpose of having unseen, unknown, distinguished and knowledgeable individuals seated in a certain place in the Chamber unless it is to enable noble Lords, on referring to their memory, to find answers to the questions being asked. It applies in this Chamber and in the other place. Therefore, I hope we do not receive that answer again.
My first question was: is it not the right of every individual to appeal to a tribunal, as defined here, if he feels himself to have been unfairly dismissed? I should have thought that by now it was an established freedom of every individual. But the noble Lord has not referred to it at all. He referred to appealing to the courts, which takes much longer, means much more delay, and is much more expensive. It is because on both sides of the Chamber we wanted to rid the courts of the responsibility and the cost of trying cases of this kind that Parliament appointed tribunals to do the job. That is the first question to which we have had no answer whatever.

193
The second question, which I am bound to repeat because the noble Lord did not pay one iota of attention to it, is this: is it not the case that that machinery is available only if a person has been employed for a continuous period of more than two years? That is a simple question. I shall continue talking, if the noble Lord finds it convenient, until his recollection enables him to find the answer. That is the second question that I have asked.
If that is the case, and if it is the right of every man and woman in this country to appeal to such a tribunal when he or she feels aggrieved about the way his or her appointment has been terminated, and if it is also the case that this measure does not apply in the first two sears of the appointment, surely it is up to Parliament to provide for it. If a person is appointed perhaps for only two years—for not more than five years, but perhaps only for two years—is it not right that he should have the same protection provided by statute? I hope that by now the recollection of the noble Lord the Minister has worked and he is able to tell us the answers to those questions.
7 p.m.
Lord Gray of Contin: I shall certainly try to answer the questions of the noble Lord. I did not really require his sarcastic comments to bring me to my feet to do that. He has been a Minister himself and no doubt has had to refer to his "Box" on many occasions in his life. I have read of some of his performances as Chief Secretary to the Treasury and I can tell him that I certainly would not have been happy with his answers on occasion. Nevertheless I shall do him the courtesy which his seniority merits and I shall certainly try to answer the points that he has raised with me.
The noble Lord will recall that the legislation to which the amendment refers was passed by a government of the party opposite in 1978. It did not seek to apply the machinery of industrial tribunals generally to such Crown appointments as the director of Ofgas, and we are simply following that precedent. I am really quite surprised to hear the noble Lord argue for such a change when the legislation that was introduced by a government of which he was a supporter, and indeed I think a member, has been found to work reasonably well.
Let me just remind him, because he may have forgotten some of that legislation, about the purpose of industrial tribunals. The Donovan Royal Commission on trade unions and employers' associations described the purpose of industrial tribunals as being to provide for workers and employers an easily accessible, speedy, informal and inexpensive procedure for the settlement of their disputes.
So far as concerns the question of unfair dismissal, Section 54 of that same Act of 1978 states:
"In every employment to which this section applies every employee shall have the right not to be unfairly dismissed by his employer".
In Section 138 of that Act the right is applied to "Crown employment", which is defined in subsection (2) as meaning:
"Employment under or for the purposes of a government department or any officer or body exercising on behalf of the Crown functions conferred by any enactment".
194
This will have the effect of applying the right to the staff of the director, but the director himself does not come within that definition since he is not employed but is the holder of an office established by statute. We have followed the precedent of the 1978 Act, which I am quite sure has the full support of the noble Lord, and we see no reason to make changes such as the noble Lord suggests. He may not agree with what I have said, but I hope that he will at least agree that I have tried to explain and be helpful to the Committee, as is the duty of a Minister.
Lord Bruce of Donington: Before the noble Lord sits down will he just clarify one point? He says that the director general will not be an employee for the purposes of the particular Act that he cited. Will he inform the Committee under which schedule for income tax purposes his emoluments will be assessed?—because Schedule E concerns emoluments from employment. Will the person be employed or not? If he is employed and his salary is assessed under Schedule E, that surely makes him an employee and therefore brings him within the Act.
Lord Gray of Contin: I should imagine that the noble Lord, as a chartered accountant, has probably much more idea of the answer to that question than I have at this moment. I cannot possibly supply him with the answer. It has nothing whatever to do with this amendment. There will be amendments a little later—probably much later at the rate we are going—which will deal with this subject and we can have that matter clarified at that time. The "troops" will have to be very quick; indeed, they have been jolly quick, and so I can say that different rules apply for tax purposes than for employment law. I shall try to elucidate a little further on that reply in due course, but I suggest that this is what the "Box" normally calls a "holding answer".
Lord Diamond: I should like first of all to thank the noble Lord the Minister for his customary courtesy in giving us a full and very helpful answer. I am only sorry that he did not give it in the first place because then I should not have needed to ask him the question again. Indeed, it is plain to the Committee that had I not stood up a second time, we would not have obtained this most valuable information. I am very grateful to him for it. It makes clear the value of what the Committee is presently engaged in, which is digging into the meaning of an Act to find out whether we are acting justly. Clearly we are not.
We are providing that the staff of the director can appeal on the grounds that the noble Lord made clear—because it is much quicker, cheaper and more certain of natural justice. They will have what is regarded as an essential liberty of the employee who feels himself aggrieved at the way his office has been terminated. Although every such person can appeal under the Employment Protection (Consolidation) Act to an industrial tribunal, the director himself cannot do so. I did not think that that was the case. I thought that he could appeal. I thought his office would be regarded as that of an employee and assessed under Schedule E—and I take the point of the noble Lord. I thought that the director would be regarded as an employee and therefore would be subject to this Act

195
which was passed for the benefit of employees of all kinds. I thought that he would be covered by the Act except for the first two years and that as we were contemplating a case where two years might even be the totality we had to extend the provision.
It is much worse than that. He is not covered by this measure at all. He can be sacked but does not have the right that is granted to every other employee of appealing to an industrial tribunal. It is a right that he should have and, as we discovered through our joint energies, one that he does not possess. It is a right that we ought to incorporate in the Bill.
Lord Stoddart of Swindon: I am much obliged to the noble Lord for giving way. I wonder whether he has considered this point in relation to the status of the director general. We heard earlier this afternoon that his appointment is subject to the Civil Service commissioners. Would that not make him an employee? I wonder whether the noble Lord can help me.
Lord Diamond: I am most grateful. That is the case. It was only discovered, as the noble Lord will recollect, as a result of our deep investigation. The Committee did not know that until it was revealed by question and answer. It has now been clarified. We are aware therefore that there is this importance attached to his appointment. As an ordinary layman, I regard it as employment and the man himself as being an employee. Of course, I do. It never occurred to me when I put down the amendment that the director was not an employee and therefore not entitled to have this right and this freedom that is given to every citizen who is an employee. I am bound to say that this is a right that we should unquestionably insist upon.
Lord Marshall of Leeds: I wonder whether the noble Lord, Lord Diamond, has considered the inhibitions that attend anyone proceeding under the Employment Protection (Consolidation) Act 1978 for what are in effect damages for breach of contract. If he examines those matters carefully, he will find that if one really wants true damages for breach of contract for unfair dismissal, one would be most unwise to limit oneself to the powers and discretions accorded to industrial tribunals. One would have no option but to go to a court, as we know it. I am bound to say in answer to the noble Lord, Lord Bruce of Donington, that the fact that someone may be taxed under Schedule E from the profits of his office or his employment does not automatically, in my view, bring him within the word "employment" for the purposes of the Employment Protection (Consolidation) Act 1978.
Lord Diamond: I always listen with great care and sympathy to what the noble Lord, Lord Marshall of Leeds, says if only for the fact that he comes from Leeds and must therefore be right. Wild horses would not drag out of me the name of my birthplace. What the noble Lord says is very relevant. I am not suggesting in this amendment that he should only have this right. Under the Bill, as it stands, he has the right to appeal to the courts. It does not say so. One does not have to say it either in the Bill or in the amendment.
196
So if the circumstances envisaged by the noble Lord, Lord Marshall, which the Government hope will never arise, did arise, and the Government exercised their power of dismissing a director in such circumstances that considerable damages were likely to arise, and the Secretary of State was therefore guilty of at least a considerable lack of judgment, then the individual in question, the director, could decide whether he wanted to go to the industrial tribunal, with the inhibitions rightly mentioned by the noble Lord, or whether he wanted to exercise his rights and go to the courts. He could do either.
I am not suggesting that the protection of the courts should be removed from the man. Far from it! I am suggesting that in all the circumstances that are likely—namely, that the Secretary of State would not undertake a wholly misconceived act and dispose of the director general in that way but would do something that was perhaps a matter of opinion—the aggrieved director general would feel that he was entitled to go to the industrial tribunal and get the matter quickly put right there, possibly with the right of re-employment, although that is a separate issue. It would be dealt with quickly and inexpensively. Everything that has been said by the Minister and by the noble Lord, Lord Marshall, gives me further encouragement to invite the Committee to incorporate this amendment in the legislation.
Lord Marshall of Leeds: The noble Lord, Lord Diamond, will not have forgotten that "incapacity" or "misbehaviour" are well known words used in regard to contracts of employment. The Committee will, I believe, be aware that "incapacity" means that someone is no longer in possession of his full mental faculties among other things. Maybe he is not in full possession of his physical faculties, rendering him incapable of continuing to perform his duties. "Misbehaviour" is, again, a pretty formal word, well recognised in employment law.
One example is the commission of a criminal offence. These matters are very clear cut. They are not grey, but black and white matters from which dismissal from office flows in accordance with the terms of the contract under which the person in question was originally engaged. There is not much room for argument unless of course the allegation is mischievous. But if the allegation is true, because the man is in a lunatic asylum—to use the old-fashioned word—or because he has misbehaved through being convicted of a criminal offence, those are matters of fact over which there is no argument. In those circumstances, the position is clear cut, in my view, and dismissal has to be expected in those events in every sort of contract of employment that I have ever seen.
Lord Diamond: The noble Lord is right. If the man commits a crime, he will be properly sacked. And if he is put in a lunatic asylum for the obvious reason, he will be regarded as totally unfit to do his job and his employment will be terminated. Of course that is the case. But there are other cases that are not so clear. I have asked for a legal precedent. I have not been given a single one. The noble Lord, Lord Marshall, says that this is all clear and well-trodden ground. I do not know

197
that it is well-trodden ground. I know only that I have asked the Government for a single legal precedent and they have not given one.
I know what the word "incapacity" may mean to the layman. I do not know what it means in law, because I have not been helped by the Government in providing a legal precedent. To the layman, incapacity may be long term or short term. A man rendered incapable for a short time would, I believe, feel aggrieved and want to go to the industrial tribunal and explain that he was incapacitated for the time being, that he was unable to work for a week or two weeks and that he thinks it totally unfair that he should have been dismissed. I believe therefore that this amendment is absolutely essential to protect the employee and the liberty of the subject.
7.18 p.m.
On Question, Whether the said amendment (No. 11) shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 92.

DIVISION NO. 3

CONTENTS

Airedale, L.

Lloyd of Kilgerran, L. [Teller.]

Ardwick, L.

Birk, B.

Lovell-Davis, L.

Bruce of Donington, L.

McCarthy, L.

Carmichael of Kelvingrove, L.

McGregor of Durris, L.

Cledwyn of Penrhos, L.

McIntosh of Haringey, L.

Crawshaw of Aintree, L.

McNair, L.

David, B.

Morton of Shuna, L.

Dean of Beswick, L.

Mulley, L.

Diamond, L.

Nicol, B.

Elwyn-Jones, L.

Northfield, L.

Ennals, L.

Perry of Walton, L.

Ezra, L.

Pitt of Hampstead, L.

Falkender, B.

Ponsonby of Shulbrede, L.

Falkland, V.

Prys-Davies, L.

Fisher of Rednal, B.

Rea, L.

Gallacher, L.

Rhodes, L.

Galpern, L.

Rochester, L.

Gladwyn, L.

Seear, B.

Glenamara, L.

Shepherd, L.

Grey, E.

Stedman, B. [Teller.]

Hampton, L.

Stewart of Fulham, L.

Hanworth, V.

Stoddart of Swindon, L.

Harris of Greenwich, L.

Taylor of Blackburn, L.

Hatch of Lusby, L.

Taylor of Gryfe, L.

Heycock, L.

Tordoff, L.

Houghton of Sowerby, L.

Turner of Camden, B.

Irving of Dartford, L.

Underhill, L.

Jeger, B.

Wedderburn of Charlton, L.

Jenkins of Putney, L.

Wells-Pestell, L.

John-Mackie, L.

Whaddon, L.

Kagan, L.

White, B.

Kaldor, L.

Williams of Elvel, L.

Kilbracken, L.

Wilson of Rievaulx, L.

Kilmarnock, L.

Winchilsea and Nottingham, E.

Kirkhill, L.

NOT-CONTENTS

Allerton, L.

Brougham and Vaux, L.

Alport, L.

Broxbourne, L.

Beaverbrook, L.

Buckinghamshire, E.

Belstead, L.

Butterworth, L.

Birdwood, L.

Caccia, L.

Blake, L.

Caithness, E.

Boyd-Carpenter, L.

Cameron of Lochbroom, L.

Brabazon of Tara, L.

Campbell of Croy, L.

Broadbridge, L.

Carnegy of Lour, B.

198

Cathcart, E.

Merrivale, L.

Coleraine, L.

Middleton, L.

Colwyn, L.

Monk Bretton, L.

Cork and Orrery, E.

Morris, L.

Craigavon, V.

Mottistone, L.

Craigmyle, L.

Mowbray and Stourton, L.

Davidson, V.

Murton of Lindisfarne, L.

De La Warr, E.

Napier and Ettrick, L.

Denham, L. [Teller.]

Onslow, E.

Drumalbyn, L.

Orr-Ewing, L.

Dundee, E.

Pender, L.

Elliot of Harwood, B.

Platt of Writtle, B.

Elton, L.

Rankeillour, L.

Gibson-Watt, L.

Rodney, L.

Glenarthur, L.

St. Aldwyn, E.

Gray of Contin, L.

Salisbury, M.

Gridley, L.

Sanderson of Bowden, L

Grimston of Westbury, L.

Sandys, L.

Harmar-Nicholls, L.

Sharples, B.

Harris of High Cross, L.

Skelmersdale, L.

Hood, V.

Stanley of Alderley, L.

Hooper, B.

Stodart of Leaston, L.

Hylton-Foster, B.

Strathclyde, L.

Kimball, L.

Swinfen, L.

Kintore, E.

Swinton, E. [Teller.]

Lane-Fox, B.

Thomas of Swynnerton, L.

Lauderdale, E.

Torrington, V.

Layton, L.

Trefgarne, L.

Lindsey and Abingdon, E.

Trumpington, B.

Long, V.

Ullswater, V.

Mackintosh of Halifax, V.

Vaux of Harrowden, L.

Macleod of Borve, B.

Vickers, B.

Margadale, L.

Whitelaw, V.

Marley, L.

Windlesham, L.

Marshall of Leeds, L.

Yarborough, E.

Maude of Stratford-upon-Avon, L.

Young of Graffham, L.

Ypres, E.

Melville, V.

Resolved in the negative, and amendment disagreed to accordingly.
7.26 p.m.
Lord Brabazon of Tara: My Lords, in moving that the House do now resume, I suggest that we do not return to consideration in Committee on the Gas Bill until 8.25 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Sex Discrimination Bill [H.L.]
Read a third time.
Clause 1 [Private Households and small undertakings and partnerships]:
The Secretary of State for Employment (Lord Young of Graffham)The Secretary of State for Employment (Lord Young of Graffham) moved Amendment No. 1:
Page 2, line 1, leave out ("such a person's private affairs") and insert ("intimate details of such a person's life")
The noble Lord said: My Lords, this amendment seeks to clarify the new exception for employment in private households which we are introducing in this Bill. The Sex Discrimination Act 1975 excludes all employment in private households from the requirement not to discriminate in selecting employees. The European Court of Justice ruled that this was too wide an exclusion, although it accepted that the principle of equal treatment must give way in some circumstances to the principle of respect for private life.
Clause 1 permits an employer to discriminate in relation to jobs which involve working or living in a private home and which entail physical or social contact with a member of a household, or knowledge of such a person's private affairs, such that there could be reasonable objection to a man, or a woman, having the job.
The phrase "knowledge of such a person's private affairs" has caused concern in your Lordships' House. My noble friend Lady Platt quoted from the Shorter Oxford English Dictionary on "affairs" at Committee stage and argued that the lack of a precise meaning could lead to unnecessary litigation.
The noble Lord, Lord McCarthy, asked what kind of private affairs a householder might have which one sex could reasonably find out about but not the other. He obviously moves in very broadminded circles.
My noble friend Lord Trefgarne explained the kind of situation we had in mind. I believe the disagreement is now about wording rather than the intention. The intention is to protect, for example, a woman who would suffer embarrassment and indignity to think of a man washing and ironing her underclothes or performing other very personal services even if she were out of the house at the time or bedridden upstairs so that there was no physical or social contact.
The new wording I am proposing refers to intimate details of a person's life instead of "private affairs". This is slightly more sharply focused and still close to the European Court's phrase "respect for private life". I hope that it will be acceptable to noble Lords. I beg to move.
Lord McCarthy: My Lords, I thank the noble Lord for his tribute to my broadmindedness. We welcome this amendment so far as it goes. We took the view that there was never any need for the second limb of Clause 1(2) and as a result of that we supported an amendment by the noble Baroness, Lady Platt, at Committee stage to delete the second limb.
We took the view that any justifiable exception to the application of the Sex Discrimination Act to private households was perfectly reasonably covered by the first limb, which refers to the degree of physical and social contact. Nevertheless, I suppose it may reasonably be argued that the effect of taking out "affairs" and inserting "intimate details" probably narrows the effect of this limb and certainly makes it somewhat less confusing. Therefore, we welcome the amendment.
Lord Monson: My Lords, I wonder whether the noble Lord, Lord Young, will assure the House that this amendment is absolutely and unequivocally necessary in order to comply with the EC directive? If it is not unequivocally necessary, I wonder what a Conservative Government, who purport to believe in the freedom of the individual and in the maxim that an Englishman's home is his castle, are doing by further circumscribing in this manner the freedom of the individual to decide whom he or she shall or shall not admit to his or her household.
Lord Young of Graffham: My Lords, with the leave of the House, I wish to assure the noble Lord, Lord
200
Monson, that the amendment we are suggesting is one which I am advised will come within the ambit of the ruling of the European Court, and that is the reason why it is there.
On Question, amendment agreed to.
Clause 2 [Amendments of section 77 of 1975 Act]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton had given notice of his intention to move Amendment No. 2:
Page 3, line 21, at end insert—
("(5A) Subject to the conditions in subsection (5B) below, where in any proceedings a court or an industrial tribunal has declared or otherwise determined that a term of a collective agreement or a rule made by an employer is void, unenforceable or otherwise unlawful by virtue, wholly or in part, of this section, the Secretary of State may refer the collective agreement or the rules of which the term or, as the case may be, the rule forms part to the Central Arbitration Committee constituted under section 10 of the Employment Protection Act 1975, to declare what amendments need to be made to remove any discrimination on grounds of sex and on what the date or dates any such amendments are to have effect, not being in any case earlier than the date of the reference.
(5B) The conditions are:

(a) that the consent to the reference has been notified to the Secretary of State—

(i) in the case of a collective agreement, by an employer or a trade union party to it; or

(ii) in the case of a rule, by the employer who made it or a trade union recognised by him in respect of persons to whom it applies; or

(iii) in either case, by the Equal Opportunities Commission; and

(b) that a period of not less than 90 days has passed—

(i) where no appeal is made against the judgment of the court or industrial tribunal, commencing with the day following the last date on which such an appeal could have been instituted; or

(ii) where such an appeal is made, commencing with the date of the final judgment in the proceedings.

(5C) Where under subsection 5(A) above the Central Arbitration Committee has declared what amendments need to be made then, in so far as the terms and conditions of employment of any person are dependent upon the collective agreement or the rules, whether by way of contract or otherwise, they shall be ascertained by reference to the collective agreement or, as the case may be, the rules as so amended.").
The noble Lord said: My Lords, as my noble friends and I are responsible for Amendment No. 2 appearing on the Marshalled List, it may be proper and courteous if I say a brief word about the difficulty which has overtaken it. We are advised that it is "undesirable"—to use the words of Standing Orders—to move it at Third Reading. In accepting that advice, as of course we do, we should not want your Lordships to think that we had ignored the problems of procedure. Indeed, we had hoped that we had—to use the words of Standing Orders—put down an "issue" which was not the issue that had been determined at a previous stage. However, as it turns out, we were wrong.
What we tried to do at the various stages was to devise a solution—acceptable, if possible, to the Government—through the Central Arbitration Committee for the enforcement of Clause 2. In doing it at this stage we have not succeeded. In our submission it is a matter of interpretation of some importance to your Lordships that this falls within the prohibition of the Standing Orders as to a Third Reading amendment, and it may be something at which your Lordships may wish to look.
We express the hope that the Government will look at something like this amendment in another place, where, after all, many changes will join the changes which have already taken place to the Bill here. In that hope and with that explanation of the considerations that we had in mind, I have expressed the reason why I do not propose to move the amendment.
[Amendment No. 2 not moved.]
Lord Young of Graffham: My Lords, I beg to move that the Bill do now pass. I said at Second Reading that with this Bill the Government were carrying forward their commitment to promote equal opportunities in employment between men and women. During the discussions in your Lordships' House we have heard differing views as to how some provisions should operate and indeed whether some should be omitted altogether. There has, however, been no disagreement over what I would describe as the essence of the Bill—that men and women should be treated equally in employment and that barriers should be removed which hinder either from making their full contribution to the economy.
Noble Lords know that my overriding concern as Secretary of State is to see a reduction in the unacceptably high level of unemployment. If new jobs are to be created, existing work must be done efficiently so that firms can grow and prosper. It is vital that jobs go to the people best able to do them regardless of whether they are men or women. The further measures against sex discrimination in the Bill will help towards this.
The first two clauses of the Bill had their origins in a judgment of the European Court of Justice. The House has already considered the private homes provision today, and I shall say no more about that. I have made it no secret that I do not welcome the obligation to extend the full complexities of sex discrimination legislation to employment in the very smallest firms. I therefore welcome the fact that the European Council agreed in December that priority should be given to action on deregulation in line with views expressed by the United Kingdom Government. We have found a wide measure of support among other European Community member states for reducing the administrative and legislative burdens on business. Meanwhile we have honoured our obligations under the Treaty of Rome by repealing the small firms exemption in the Sex Discrimination Act 1975.
Clause 1 also now contains a parallel provision on partnerships which was proposed by my noble friend Lady Platt. This is clearly a logical extension of the clause and I welcome it as such. Clause 2, on collective agreements and employers' rules, has also benefited from amendment by your Lordships' House. It is clear that noble Lords opposite would have liked further amendment, and that is a point of disagreement between us. But I am confident that the clause will meet our European Community obligations and encourage revision of collective agreements to remove discriminatory terms. It is an improvement, albeit a modest one, to our equality legislation.
202
I turn now to the second half of the Bill. Its main aim is to remove outdated and discriminatory restrictions on the hours women may work in factories. It will allow women in factories to assume their full role in the economy alongside men and also alongside women in other occupations who are not subject to such legal restrictions. The proposed repeal meant that the role of the Baking Industry (Hours of Work) Act 1954 needed to be re-examined. This Act regulates night baking for men only, so repeal of the restrictions on women's hours alone would create an anomaly within the baking industry. The hours of men would be controlled but those of women working alongside them would not. In the light of this we decided that this was the occasion to repeal the 1954 Act.
Putting these proposals into historical context, the 1979 report of the Equal Opportunities Commission had concluded that there was no longer any justification for maintaining legal provisions on hours of work which require men and women to be treated differently. Its overall recommendation was therefore that the legislation should be removed or—where health, safety and welfare demanded it—replaced so that it applies equally to men and women. Extension to women was the Equal Opportunities Commission's preference in the case of the baking Act. Since that time there have been extensive consultations on how best the overall recommendation should be carried forward and in particular on the extent to which restrictions continued to be valuable on grounds of health.
I have been at pains to emphasise in the past that we should not be making these proposals if we believed that there would be any risks involved to health and safety at the workplace. The available evidence on the effects on health of night work and long hours is inconclusive. But there is certainly no reason to think that the effects are different for women than for men. In reality many women in white collar jobs and in factories operating under special exemption orders currently work hours which would otherwise be prohibited by the legislation we seek to repeal. Yet there is no body of evidence that this causes difficulties for these women. The existing legislation, however, entails significant bureaucracy through the exemption order system and this constitutes a further important argument for repeal.
This briefly sums up how the original two clauses in this part of the Bill came about. However, the Bill will now leave this House with three additional clauses. There is a new procedure for the Secretary of State to make "equal protection orders" following reports and consultation. A further new provision incorporates the statutory restrictions that are to be repealed into the existing employee's contract of employment and ensures that dismissal for refusing to accept new hours of work would be treated by an industrial tribunal as automatically unfair. The final new clause imposes on all employers proposing changes in hours a significant new statutory duty in relation to the health, safety, welfare and interests of employees, particularly those with domestic and family responsibilities—and also empowers the Health and Safety Commission to issue a code of practice containing practical guidance on this duty. These clauses now form part of the Bill and will go to another place for consideration there.

203
The Bill is to undergo further changes in another place concerning retirement ages for men and women, which your Lordships will have an opportunity to consider in due course. In the meantime, I hope that noble Lords will agree that the Bill is leaving their House as a modest and welcome measure to improve equal employment opportunities for men and women. I beg to move.
Moved, That the Bill do now pass.—(Lord Young of Graffham.)
Lord McCarthy: My Lords, at the time of the Second Reading the obvious way to epitomise the attitude to this Bill on this side of the House would have been to say that it was a curate's egg of a Bill. The only problem was that the idea that it was a curate's egg of a Bill suggested that it was all mixed up, and it was not easy to say which bits of it were excellent and which bits were not so excellent. But of course this Bill was not quite like that because all the excellent bits were at the top of the egg. As you worked your way down the egg, the egg got worse.
We had no great objection—indeed, we welcomed it so far as it went—to the clause on applying sex discrimination to private households and to small undertakings. It was going in the right direction, even if it was not going quite far enough. We welcomed also the clause on avoidance of sex discrimination in the case of non-legal collective agreements, though we said that it did not go far enough in that we argued that there was no mechanism for effectively enforcing this part of the Bill in a collective way.
The rest of the Bill, we said (and still say) was quite illogical and totally unconnected with the decision of the European Court. It was, in fact, ideologically based, in respect of the provisions for the removal of restrictions on the hours of work for women and, in the baking industry, of the hours of work for men.
It is true that at Second Reading the Secretary of State sought, as I understood he also sought today, to argue that there was a connection between the first half of the Bill and the second half of the Bill. For example, at Second Reading, at col. 1176 of Hansard on 27th February, he said that the restrictions on women's hours restricts working women's employment opportunities, so that in a sense we are adding to the employment opportunities of women by abolishing those restrictions. He said, as he has said today in a rather more qualified way, that of course this part of the Bill was advocated in 1979 by the majority of members of the then Equal Opportunities Commission. However, it has become increasingly clear, as distinguished members and ex-members of the Equal Opportunities Commission have argued during this Bill's passage through the House, that that was not really what the Equal Opportunities Commission in 1979 said at all.
As the noble Lord himself said in the statement he has just made, in respect of the baking industry the solution of the Equal Opportunities Commission was not abolition but extension. It was always clear in the majority report in 1979 that extension was an equally available option to abolition. What the EOC were against in 1979 was discrimination, and they saw
204
extension, as much as abolition, as a way of moving against discrimination.
It also became increasingly clear as the noble Lord went on, and as he said today, that the main reason for this Bill, and the part of the Bill about which the Government are most pleased and most unqualified in their support, is the second aim of the Bill. As the Secretary of State said at col. 1179, also on 27th February, the present legislation,
"stands in the way of modern employers who wish to staff their enterprises with maximum flexibility and efficiency".
In other words, protections for workers—or, as he would say, regulations for workers—are condemned as one more example of Burdens on Business.
That was at the time of the Second Reading. Since then, as the Secretary of State has also said, we have had the Committee and Report stages, and we would argue that at each stage the Bill has been improved. Indeed, in the amendment that the Secretary of State himself put down at Third Reading he has marginally improved the Bill still further. It is still a curate's egg of a Bill. It is still a mixture of the fresh and the stale, the good and the bad, the edible and the inedible; but due to the process of amendment in this House it is a slightly better egg than it was.
7.45 p.m.
Moreover, now it can be said that the good parts of the Bill, the edible bits, pop up throughout the Bill. They pop up as a result of no fewer than six improvements that we have managed to secure during the passage of the Bill through this House. The first was of course the amendment moved by the noble Baroness, Lady Platt of Writtle, and accepted on Report. It included partnerships in the scope of Clause 1.
The second improvement was that something was done today about the second limb of Clause 1(2) of the Bill. Thirdly, in Clause 2 we have passed the amendments advanced in the first place by the noble Lord, Lord Wedderburn, on the application of the clause to applicants for work. That has been accepted by the Government. Most important of all, we have had another amendment moved by the noble Lord, Lord Wedderburn, which has introduced the new concept of the equal protection order. This has been introduced into the body of the Bill as the new Clause 3.
The part of the noble Lord's speech which worried me most was his failure, after mentioning the ways in which the Bill had been changed in this House, to give any indication of how the Government intend to look upon this new concept of the equal protection order when the Bill gets to another place. This will, if it stands in the Bill, make it possible for the Act to serve as an instrument of what the Equal Opportunities Commission wanted to see happen; the Act can serve as an instrument for extending the scope of worker protection in a genuinely non-discriminatory way. We would argue that that was the spirit of the 1979 EOC report. That was the fourth change made in this Bill.
The fifth is only less important because it is more limited: the new Clause 7 which achieves a right of unfair dismissal for existing employees forced to work at night. I would have wished that the noble Lord

205
could have given us some indication of how this amendment is to be received by the Government. I would remind him that this amendment is in line with an amendment the Government introduced in their ill-fated Shops Bill. Therefore it can reasonably be argued that in precisely similar circumstances the Government accept an argument for some kind of acquired rights.
Finally, we come to the new Clause 8 which, as a result of successive attempts at amendment, has achieved the provision of a code of practice to be taken into account when any employer makes substantial changes in hours of work. I should like from my side of the House to pay tribute to the formidable collection of Peeresses, the pride of Baronesses, who have participated on this Bill. Between them they have taken a large part of the argument forward. They have enabled us to pass these six improvements to the Bill: six changes, all of which have improved the quality of the egg.
Yet we must record our failures either to move the Government or to move the House. Four of these are worth recall. The first—and in some ways not that important if the rest of our amendments stand—was the attempt of my noble friend Lord Wedderburn, without success, to make the working of the present Clause 4 more flexible and pragmatic. The second was his attempt to make the Government draw logical conclusions from their previous obsession with ballotamania; to retain the secret ballot provisions in so far as they exist in this field. Again we were unsuccessful. Thirdly, there was the attempt by my noble friend Lady Turner of Camden, helped by the noble Baroness, Lady Platt, to get the protection of the baking Act extended to women. Again, if the amendment we moved, providing for a new concept of an equal protection order, survives, we can argue that that amendment is not all that important or essential.
But the great failure we have had, and the failure that my noble friend Lord Wedderburn would have attempted to redress even now at Third Reading, if we had been able to do so, was the unfortunate, inexplicable, unjustified and ideological refusal of the Government to accept that there should be an effective enforcement mechanism for Clause 2. We tried this repeatedly. We tried in Committee but we failed. Despite the fact that my noble friend Lady Turner argued that there was no effective collective enforcement mechanism; that large numbers of women would not go to the tribunals to enforce their rights under the existing legislation proposals; that there was available and ready the CAC, which could provide an effective collective enforcement mechamism, we were totally unable to persuade the Government. The noble Lord, Lord Trefgarne, who conducted the debate on Second Reading, replied, as the House will remember, by concentrating heavily on the importance of the role of the industrial tribunals.
So we attempted, in returning to this matter on Report, to provide the House with an alternative which allowed the industrial tribunals the first crack of the whip: an amendment which protected the role of the courts and saw the Central Arbitration Committee as a residual stopgap. But I am afraid that on that occasion we had a quite different set of objections from the Secretary of State and, unfortunately, we have not
206
been able to move a similar amendment at Third Reading.
I make three final points about the role of the CAC in the enforcement of this part of the Bill. The first is that it is an experienced body in this field. Until the scope of the CAC was limited by a High Court ruling several years ago it performed an important role in promoting non-discrimination in pay and related areas to the general satisfaction of both sides of industry. It was not simply the trade unions who were satisfied with the work of the CAC in this field. It was generally accepted that it combined the pursuit of non-discrimination with an appreciation of industrial relations realities. Its role in this respect was widely respected in industry. Therefore we are not talking about an unknown system operated by people whose experience and efficacy is in doubt. The distinguished chairman of the CAC knows better than almost anyone in the field how to combine the pursuit of non-discrimination with an appreciation of industrial relations realities.
My second point is that such a role is required to make reality of the rights which lie buried in the heart of Clause 2, especially those relating to indirect discrimination. Many of these rights will not be applied and effectively enforced unless there is an external prod, which is not dependent on individuals, and unless the solutions provided take into account the real problems of the firms concerned.
My third point on this is that if the Government are, as the Secretary of State has said, to deal with the results of the Marshall case then more than ever we shall need a scheme providing the kind of across-the-board approach which the CAC can achieve. Putting the Marshall case right will not be easy. We cannot say that all employers immediately will either introduce age 60 retirement qualifications for men or age 65 retirement qualifications for women. They will wait to see. Some will put some people up to 65 and some people down to 60. Some will be reluctant to move at all. A few will be devious because for them equalisation can have considerable consequences. The removal of discrimination could have serious consequences for employers if it is done in a piecemeal way, which is the only way that it can be done if it is to be enforced by industrial tribunals. Therefore, more than ever some kind of collectivist overall solution that respects back-up principles of collective bargaining and the rule-making necessities of employers must be found because of what the Government have to do in respect of the Marshall decisions.
We beg the Secretary of State, even at this late stage, not to be so ideologically bigoted and not to impose the same old tired individualist solution to the problem of the Marshall case that the Government have sought to impose on problems arising from recent European decisions.
Finally I should like to make one or two final comments on the overall aims of the Bill. At Second Reading the Secretary of State gave us four reasons for the Bill: the removal of discrimination, one; the promotion of opportunity, two; the removal of restrictions on industry, three; and the stimulation of competition in the labour market, four. I asked at Report stage whether these four objectives could be combined in one Bill and what would the

207
Government's priorities be if one or another of these estimable ambitions—we are not against any of them—came into conflict with each other.
I suggest that despite the amendments that have been passed on the Bill, and certainly if they do not survive in their present state in another place, we all know only too well what the Government's priorities are. At the top of the list, removal of restrictions: Burdens on Business. Next, there is the stimulation of competition in the labour market; then there is the promotion of opportunity. Last and least the removal of discrimination. Thus the true measures to remove discrimination in Clauses 1 and 2 arise externally, out of the decision of the European Court, although the Government could have introduced them themselves. We were told when they were introduced by the noble Lord the Secretary of State that they were not welcome or acceptable in every respect. In relation to Clause 1, he found it particularly hard to accept this as his major policy aim was to remove burdensome restrictions from small businesses. We were told—and we have been told again today—that the Government hope that these things that they do in the first half of the Bill will only be temporary so far as small firms are concerned because they are trying to reverse the policy in Brussels. In fact they are only acceptable at all in minimum form and if they are accompanied by the second half of the Bill: namely, the abolition of restrictions, or protections, on women's nightwork and the abolition of restrictions, or protections, on men's nightwork in baking—all this on the formal grounds that neither of these things is applied universally either across industry or to both sexes.
I want to be fair to the Secretary of State. I am not saying that he and the Government do not believe in non-discrimination. I am certainly not saying that covertly they believe in discrimination. What I am saying, and what I think the evidence suggests and the record shows, is that they will pursue the goal of non-discrimination only in ways that do not interfere with, and can be shown to carry forward, their dogma of removing the Burdens on Business. Of course, that means that, whatever the evidence may be, the only way they can carry this forward is by abolition rather than extension. I do not say that when the Secretary of State is good he is very good and when he is bad he is horrid. I say that on the evidence of this Bill when he is good he is forced to be good and when he is bad he enjoys it.
8 p.m.
Baroness Seear: My Lords, I should like to say from these Benches that on the whole we welcome this Bill. We welcome the extension of non-discrimination to small firms and partnerships. I would again underline that this was omitted from the original 1975 legislation only because of administrative difficulties and not because at that time anyone thought there was any good reason for indefinitely excluding the small firm.
I also welcome the change in the outdated form of protection for women workers which was, I think, increasingly becoming a handicap to the development of equal opportunities. In line with the recommendations
208
of the Equal Opportunities Commission, we have always argued from these Benches that what was needed was, where appropriate, common protection for both men and women. That protection would not take the same form as had been reflected in the Factories Acts which had developed over 150 years and were in many ways greatly outdated, but we do not see advance towards the removal of discrimination by the total removal of all protection and therefore regret the fact that we were unable to save the baking regulations.
However, it is to be hoped that with the provision of the code of practice (although I have certain reservations about the proper use of codes of practice) it may be possible to develop through custom and practice which, after all, remain a very powerful force in British industrial relations, the kind of common protection for both men and women which will be in line with the spirit of the recommendation of the Equal Opportunities Commission.
I very much hope, reflecting briefly some but not all the things that were said by the noble Lord, Lord McCarthy, that there is no intention on the part of the Government in another place to remove the improvements which were passed in this House. I think that would be an extremely retrogressive step, and I very much hope that the Government will refrain from taking it. I want to underline, however, what I think is the greatest weakness in this Bill now; that is, the omission of the CAC. To put it bluntly, I am bound to say I think that this is based on an inadequate understanding on the part of the Government Front Bench of how industrial relations really work. The idea, which seems to me to be exceedingly naive, that you can leave the enforcement of this kind of thing to industrial relations is not an approach which would be supported by anybody who has had practical experience of industrial relations on any side of industry. The CAC which, as the noble Lord, Lord McCarthy, has said, is in very high standing and much approved on both sides for the work that it has done is manned—if I may still use that phrase, with apologies to the noble Baroness, Lady Turner—by people of very great experience in the field of industrial relations. This is an opportunity thrown away to get a very good piece of machinery back into place.
Finally, I should like to say to the Government that I very much hope that in the development of equal opportunity between the sexes they are not always going to wait to be told what to do by the European Court of Justice. I find that singularly disagreeable since in 1975 we in this country produced the first piece of sex discrimination legislation of any of the European countries. No legislation of a similar kind had been produced anywhere. I find it very disappointing indeed that we are now trailing behind and reluctantly coming into line when we are forced to do so by the European Court. Surely the Government are capable—or perhaps they are not—of taking their own initiatives in this field. With those reservations we welcome the Bill.
Baroness Platt of Writtle: My Lords, I should like to take this opportunity on Third Reading of the Sex Discrimination Bill to welcome the improvements

209
which have taken place since the original consultation stage. I shall keep my remarks brief. I should like to thank my noble friend the Secretary of State for initiating some of the improvements, notably the inclusion within the legislation of the principle of indirect discrimination and of small partnerships as well as small firms. Those are both very important matters to the Equal Opportunities Commission. Indeed, we believe that today's further amendment will reduce confusion and possibly subsequent litigation.
The majority of the Commission welcomes the general removal of restrictions on working hours and conditions for women, but we are glad that—as we recommended in 1979—safeguards are now included in the Bill; in particular that there is a duty placed on employers when changing substantially the hours of work of their employees, men as well as women, to consider their health, safety, welfare and interests, and to make appropriate provision having regard to the nature and size of their businesses.
In this connection also we welcome the fact that the Health and Safety Commission, after consultation with the European Commission, may make a code of practice containing practical guidance on this duty and that the extent to which an employer has carried out his duty under this provision shall be relevant in determining the reasonableness of his actions before an industrial tribunal.
I am grateful to my noble friend the Secretary of State for retaining this addition in Third reading and trust that it will now be part of the eventual Act. I also welcome the insertion of the provision for the protection of existing workers and I hope that it remains when the proposed Act comes into force. I am also grateful to my noble friend for his undertaking to issue notes of guidance after the passing of the Act, in particular in connection with the voluntary submission of collective agreements to the Central Arbitration Committee and the encouragement of employers' and workers' organisations to renegotiate and remove void terms of agreement to avoid confusion to all concerned.
We look forward to the inclusion of the new clause, or clauses, as a result of the Marshall case which will allow women to continue in public and private employment up to the age of 65 if they so wish. The Government have moved with commendable speed in this matter.
We hope that in the Social Security Bill in connection with the proposed flexible decade of retirement the Government will now take a similar opportunity to set a time scale to a programme of equalising pension ages. Judging from our research that would be a most popular measure and would remove many unfairnesses which frustrate and annoy both sexes. These feelings will become more acute as a result of the Marshall case. I have pleasure in supporting this Bill on Third Reading.
Baroness Turner of Camden: My Lords, as the noble Lord, Lord McCarthy, said, during the passage of the Bill through your Lordships' House there have been some notable improvements made as a result of the amendments that have been successfully accepted
210
here. I hope that when they reach the other place they will continue to remain a part of the Bill; but problems remain, and the main problem I see is that of enforcement. It seems to me that in seeking to put into operation the decision of the European Court the approach taken by the Government has been a minimalist one. In other words, the Government, in presenting the Bill to your Lordships, have done the absolute minimum that seemed to be necessary in order to comply with the European Court judgment. We have improved upon that during the Bill's passage through the House but the issue of enforcement concerns me greatly. Unless there is a reasonable means of enforcing this legislation, I do not think that we shall be held eventually to have adequately complied with the judgment.
As I said earlier during the course of discussions on Report and in Committee, it would be a great pity if we were yet again to be found to be in default of European legislation. The enforcement question is important. I do not want to take up too much of your Lordships' time on this but, as previous speakers have said, the Central Aribtration Committee, of which I happen to be a member, has a substantial record of success in the industrial relations area. When we raised this on Report and in Committee, we were told that the attitude of the Government was that these issues could be dealt with in industrial tribunals. Let me say, as a working trade union official, that this is not an approach that is acceptable when dealing with collective agreements. The tribunal system was established to deal with individuals rather than with collective agreements and the Equal Pay Act acknowledged that when giving the CAC a role in the enforcement of non-discrimination in collective agreements.
The absence of such enforcement machinery will to some extent nullify the thrust of this legislation. Incidentally, I am glad to hear from the noble Lord the Minister that it is intended to introduce legislation to deal with the Marshall judgment. However, may I again ask that a minimal approach should not be taken in relation to Marshall; that we should not do just what is minimal in order to comply with that judgment, because there are other issues involved in addition to proceeding to the same retirement age as men? There is the whole question of pension entitlement and equalisation of pension rights, which is inseparable from the argument about the retirement ages.
When we have legislation to deal with Marshall it would be good to see that the Government had taken note of the desire that there should not be a minimal approach to the European Court judgment but that an attempt should be made to put into operation legislation that would adequately reflect the desire that there should be equal opportunity and equal rights for women and that the legislation should be drafted in terms that will meet those requirements.
Lord Young of Graffham: My Lords, I am pleased to discover at least that I am at the same time both horrid and naive in insisting perhaps on a priority of this Government, which as far as I am concerned will always remain a priority of this Government. It is simply employment. When this Government express concern about the burdens on business they do not do so for any reason other than the effect it has on

211
employment. When the Government express concern about the provisions of some of the amendments which noble Lords opposite and other noble Lords have brought to this Bill, they do so not because they are concerned to promote discrimination. They are concerned to do all they can to eliminate discrimination, but they are concerned to do it in a manner consistent with the growth of employment and of jobs.
I was grateful to the noble Lord, Lord McCarthy, for a catalogue of the amendments proposed and rejected by your Lordships' House. At times I marvel at the wisdom of your Lordships' House. In the light of some of the points made in the debate today, I should like to reaffirm our commitment to repealing the Baking Industry (Hours of Work) Act 1954. Of the two possible courses open to us, repeal or extension of the Act to women, we are certain that repeal is the sensible way forward. It seems pointless to extend the Act at a time when more than two-thirds of the employees in the industry work hours set by collective agreements which bring exemption from the provisions of the Act.
The 1954 Act was introduced not on grounds of health and safety but to resolve the longstanding problems that the industry had in reaching effective agreements on hours of work. The industry now appears to have set its house in order. It is the Government's view that this Act is unnecessary. Hours of work will become a matter for collective and individual bargaining without the statutory underpinning which the Act has provided, as is the position in all other industries.
The noble Lord, Lord McCarthy, asked whether I could elaborate on the Government's approach to the new clauses. These clauses now form part of the Bill and they will go to another place to receive further consideration there. The noble Baroness, Lady Turner of Camden, raised the matter, as did the noble Lord, Lord McCarthy, of the Central Arbitration Committee and the enforcement of Clause 2. I must repeat that individuals who suffer unlawful sex discrimination—and that is the individual workers themselves—already have the right of full redress through the industrial tribunals. They can win compensation of up to £8,000 or two years' back pay. Section 4 of the Sex Discrimination Act 1975 protects the individual against victimisation for bringing a case.
The noble Lord suggested that even where one or more individuals has proved sex discrimination, the employer, possibly aided and abetted by the unions, will do nothing to remedy the situation of others in a similar position. I cannot accept that any sane employer would lay himself open to a string of cases on the same issue when he is not only bound to lose and possibly will have to pay compensation but also very likely will be faced with costs.
This Bill provides that unlawful discriminatory terms of collective agreements will be void, as required by the Equal Treatment Directive. I have said before that I consider that the renegotiation of collective agreements is best left to the parties who make them and who live with them and their consequences every working day. However, if employers and unions want outside help in renegotiation, this is available from ACAS and, if both agree, from the CAC. The Equal
212
Opportunities Commission also has formal powers of investigation if any further back-up is needed. My noble friend Lady Platt raised the matter of Marshall and the retiring age. We issued our consultative document on 1st April and invited responses by tomorrow. A number of interested organisations have yet to respond, but the comments received so far indicate that the Government should go ahead with preparing amendments to this Bill on the lines set out in the document.
Your Lordships will have a chance to debate any amendments made in another place. The Marshall judgment was about sex discrimination in compulsory retirement from work. Not surprisingly, it has set people thinking about the wider issues related to retirement, including state pensionable age. Where responses to the consultative document have touched on pension issues, my department has brought them to the attention of the DHSS. I believe that that fairly deals with many of the issues raised, and I commend the Bill to the House.
Lord McCarthy: My Lords, before the noble Lord sits down, he will agree that he is not without influence in another place, let alone in Downing Street. Is his statement that he marvels at the wisdom of this House any indication that he may recommend that the Government accept that wisdom?
Lord Young of Graffham: My Lords, I was marvelling at the wisdom of the House when it rejected some of the amendments proposed by noble Lords opposite.
On Question, Bill passed, and sent to the Commons.
Viscount Long: My Lords, I beg to move that this House do now adjourn during pleasure until twenty-five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.19 to 8.25 p.m.]

Gas Bill
House again in Committee on Clause 1.
Lord Diamond Lord Diamond moved Amendment No. 11A:
Page 2, line 10, leave out ("and vacate").
The noble Lord said: I beg to move Amendment No. 11A. At the same time I gather it would be for the convenience of the Committee if we were to discuss also Amendments Nos. 11B and 12A. The effect of these three amendments would be that the vacation of office would be distinguished from the appointment to office. Subsection (4) would now read:
"Subject to subsections (2) and (3) above, the Director shall hold office in accordance with the terms of his appointment".
At the end of line 11 there would be inserted a new subsection which would read:
"The Director shall, subject to subsections (2) and (3) above, vacate office in accordance with the terms of his appointment or if called upon so to do by a resolution passed by both Houses of Parliament".
If I may first deal with the words "as such", which is purely a drafting point, the words have been left out in the proposed amendment because I could not see the purpose of putting them in. If the Minister has a good reason for putting them in perhaps he would be good enough to explain it, and that will be that. As to the rest, the wording is devised to create a situation under which the director shall be subject to subsections (2) and (3), as the Bill proposes. He will vacate office in accordance with the terms of his appointment as the Bill proposes, but in addition, as an alternative,
"if called upon so to do by a resolution passed by both Houses of Parliament".
What situation is that amendment intended to meet? It is intended to meet the situation where there has developed what I might call a cosy arrangement between the regulator and the Secretary of State, where the regulation is, in the view of Parliament, not being carried out at all effectively, where the Secretary of State is not prepared to do anything about it and where the director has no reason to resign under his appointment and is not desirous of resigning and yet it appears to both Houses of Parliament that regulation is not being effective.
As we know, the whole purpose of this section of the Bill is to provide machinery under which regulation shall take place in order to protect the consumer against this enormous monopoly. It is already the situation that with regard to Oftel there is widespread criticism in Parliament upon the way in which regulation is proving to be inadequate under the Act. This proposes to give Parliament a say in the way the regulation should be carried out so as to strengthen it.
Again, if, for example, Members of another place are bombarded with letters and calls from their constituents, making it clear that they are suffering (as compared with a situation which would have arisen had there been no privatisation) under the unintended effects of the privatisation measure, and it is made clear that the director is not for some reason or another carrying out his duties in an effective way, Parliament would have the opportunity of intervening.
It is therefore clear that the director general would not only have regard to the Secretary of State who appointed him. There is always the danger when the holder of an office is appointed by the Secretary of State and the renewal of his appointment is subject to the goodwill of the Secretary of State. That is the main point. Where the director general has served four out of the five years for which he is appointed and is required to carry on his duty he will be expecting to seek and be granted reappointment. Who will reappoint him? The Secretary of State, of course. Under what circumstances will he be reappointed? If he keeps his nose clean, and if he does nothing which upsets the Secretary of State.
That is what happens with regard to all such appointments and therefore it is right that there should be some counterbalance to strengthen the desire of the director general to act in accordance with the terms, of the Act and, if there is too cosy an arrangement, to protect the consumer by giving Parliament the right to call upon him to resign. There would be no injustice in that. Parliament would have to be satisfied. Both
214
Houses would have to be satisfied. That means satisfying a great many people with good, objective judgment and experience.
The director general would be protected in that way. If he thought that, in being called upon to resign when in his view there was no incapacity or misbehaviour, he was being improperly treated and if he felt himself entitled to compensation, compensation would be payable under the Act. There is nothing here to remove that right. No injustice is being done. It is merely a method of achieving what we are trying to achieve all the way through Clause 1—to strengthen the power of the director general to regulate in accordance with the Government's wishes.
Lord Belstead: When the noble Lord was moving this group of amendments, he said that Amendment No. 11B would remove the words "as such" and that perhaps the Government would explain the reason for having them in the Bill, if there was one. I shall deal with that point. As I understand the drafting, the director general who is in office at any time should hold and vacate his office as director general in accordance with the terms of his appointment. T hat is the meaning of subsection (4). The words "as such" refer to the office of the director general and are therefore necessary for the proper construction of the subsection. Laymen might think that one could refer to "that office" but the parliamentary draftsman has said "as such". As I understand it, that is the intention of the drafting.
I listened carefully to the noble Lord and I understand the reasons why he moved this group of amendments, but I suggest that the drawbacks of the amendments would outweigh the benefits, as the noble Lord, Lord Diamond, sees them. There are two drawbacks. The amendments fall on the grounds of inconsistency and injustice. With regard to inconsistency, I make the point that we spent a great deal of time before we broke for dinner with noble Lords opposite, and not least the noble Lord, Lord Diamond, seeking to make more secure the director general's tenure of office. That was done in Amendments Nos. 10A, 10B and some other amendments. This amendment would make his office less secure.
I find it hard to accept that the director general should be subjected to the possibility of removal by parliamentary intervention. In saying that of course I realise that he is appointed by the Secretary of State and it is right therefore that if necessary he should also be removed by the Secretary of State, who is answerable to Parliament. In addition to saying that, I think that the amendment is inconsistent—I genuinely think that it is because it runs entirely counter to the amendments to which the noble Lord has spoken previously—and could lead to great injustice. No reason would have to be given by Parliament for intervening. No challenge could be made by the director general. Removal by the Secretary of State on the grounds of incapacity or misbehaviour can, as my noble friend Lord Gray of Contin said some time ago, be challenged in the courts. No right of appeal would be available to the director general against a resolution by Parliament. I feel sure that those omissions are an

215
oversight but, nonetheless, that they are defects absolutely fatal to these amendments.
Lord Diamond: They are not oversights. I draw a great distinction between a decision made by one man—the Secretary of State—and a decision made by two Houses of Parliament. The two Houses of Parliament have the capacity to pass any legislation they choose. That is different from the fiat of one individual who may have the wisdom of Solomon but who from time to time is capable of making an error of judgment.
Moreover, as I have explained, Members, particularly of another place, are continually being refreshed in their knowledge of how the regulation is working on the ground by the contact that they have, daily by correspondence and at least weekly by personal interview, with constituents who are affected by the way in which charges are being made, services are not up to standard, their inquiries are not being dealt with, endless delay and so on.
It is clear that Parliament would act justly. In my view it is not appropriate to give courts the power to set aside the decision of Parliament. They do not do that. They may bring a Minister to account for not having abided by the wishes of Parliament, but it is not for the courts to set aside a decision by Parliament. I have no doubt that by the time such a resolution had been passed by a majority of both Houses every possible aspect of the matter would have been fully aired. There would be no opportunity for people to make a bad judgment through bad temper, haste or anything like that. There are two Houses of Parliament and to get a resolution through two Houses of Parliament the issue has to be clear and acceptable to the majority in both Houses. That is a safe provision and by no means unjust.
I repeat that if the net effect in law of the resolution were that the director general were still entitled to compensation, he would receive his compensation. I agree that he would not get back his office, because in its wisdom Parliament would have decided that it should end.
I agree that there is a superficial inconsistency in the sense that, as the noble Lord the Minister has made clear, so far we have been arguing for strengthening the position of the director general. It enables him to act strongly if he knows that the Secretary of State is not the only person to be considered. He cannot therefore feel that he is safe by having satisfied, in some unacceptable manner, the Secretary of State while his functions are not being carried out in a manner satisfactory to the consumer.
That is the situation. We have to prepare for both sides. We have to cater for the situation that the Secretary of State may want to dismiss a man for no good reason and for the situation that the Secretary of State may be unwilling to dismiss him because he is satisfied with the way things have been carried on. For example, he may not want the new gas company to be put into any difficulty about maximising its profits and, therefore, he may not want the regulation to interfere unduly with the way in which the supply of gas is being carried out. It is easy to imagine
216
circumstances in which there would be too cosy an arrangement between the Secretary of State and the director. Therefore, I think that this is an amendment which is worthy of more consideration than it has been given. It is up to the Committee to make its views known, but I shall leave it at that at the moment.
Lord Bruce of Donington: This amendment by the noble Lord, Lord Diamond, seems to be eminently reasonable. It is essentially a fall-back provision which could be rarely used. As the Committee is aware, the only way of getting rid of a High Court judge, if it be the desire of Parliament, is by a resolution passed by both Houses of Parliament. This remains the ultimate sanction, which clearly would be very rarely used. I am thinking in terms of 10, 20 or 50 years. So far as judges are concerned, to my own knowledge, however imperfect that may be, I cannot remember a case where a judge was removed by a resolution passed by both Houses of Parliament. That is the ultimate sanction. I should have thought, in the circumstances put forward by the noble Lord, Lord Diamond, that this was a very good final long stop provision that ought to be incorporated. I shall not detain the Committee any longer, because the noble Lord has put the position very clearly. For my part I shall support the amendment.
Lord Diamond: The noble Lord, Lord Belstead, does not want to intervene further. That being the case, and as I do not want to embarrass the Government in the way they were embarrassed the other night when it was made evident that they had not even kept the Committee together, I shall not make any challenge. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 11B, 12 and 12A not moved.]
On Question, Whether Clause 1 shall stand part of the Bill?
8.45 p.m.
Lord Stoddart of Swindon: It would be wrong to allow the clause to stand part of the Bill without a few comments from this Dispatch Box about it and about the discussions that we have had up till now. It is true that we are proceeding slowly towards the end of the second day of debate. It is also true that we are about to finalise, one way or the other, whether this clause is allowed to stand part of a Bill which contains 68 clauses and nine schedules. Throughout this debate, all parties on this side have expressed their concern, first, at the weakness of the regulatory system and, secondly, at the manner of appointment to the organisation over which the director general will preside.
We believe that the amendments which we have put before the Committee have been eminently reasonable, and if the Government had said "We understand your point. We understand your worries about this Bill. We understand that we are converting a public monopoly into a private one, and are just as concerned as your are that a private monopoly should be properly regulated, so we are, at least, prepared to have another look at the problem of regulation and at the position of the director general of Ofgas", they

217
would have given this side of the Committee some comfort, but every single amendment has been rejected.
The noble Lord, Lord Boyd-Carpenter, accused me of being irritable. He is quite wrong. I was not at all irritable. I was merely sorry that the Government were not prepared to listen to the amassed experience of this side and at least to consider seriously what had been said. The noble Lord also accused me of being naïve. I do not think I am naïve. It is probably the noble Lord and his colleagues on the Conservative Benches who are being naive in believing that this weak regulatory authority will be able to protect the public interest against a privatised gas monopoly. That is being naïve. But I can assure the noble Lord that I am not at all irritable. I hope that I never get irritable in this Chamber. I so enjoy your Lordships' company and the well informed discussion which takes place, and I sincerely hope that I shall never get irritable.
I do not wish to delay the Committee long, but I have to repeat that we believe that, in the light of the experience we have had with Oftel and British Telecom, our case is proved against this clause which is not strong enough and does not give the director general sufficient support. We shall undoubtedly come back to the matter at some later stage, even if the Committee votes that Clause 1 shall stand part of the Bill. If it does that, I believe that we shall certainly wish to return to the matter. It is an essential, and indeed a central, part of this Bill which, as we all know, is converting a public monopoly into a private one, although the Conservative Party drew attention in its election manifesto to the undesirability of converting a public monopoly into a private monopoly per se, without competition from any other source.
That is what is being done here with weak regulation, and we very much regret that we have been unable from this side to persuade the Government to move somewhat in our direction. We regret it very much. We hope that between now and Report stage—because I imagine that there will be a fair time between now and Report stage—they will read what has been said, they will think and reflect upon what has been said and hopefully will come back in a better frame of mind to accept some of the reasonable suggestions we have made to them.
Lord Whaddon: I also find myself approaching the end of debate on Clause 1 with a certain sadness that the Government have not listened to the sincere worries expressed from this side of the Committee. The position of a monopoly in any type of nation—whether it be capitalist, socialist, communist or whatever—and its relation to the consumer has always been one of profound difficulty. Sometimes, as in the United States, tremendous efforts have been made to break up monopolies to provide a little competition and to try to ensure that the competition produced a fair deal for the consumer.
In other cases, effective competition was impossible because of the technical nature of the industry. Here we have such a natural monopoly where only the faintest trace of competition at the rim can be conceived and where, under whatever shade of government, the consumer must face a natural monopoly. The Government must always answer the
218
question: what are you doing to force this technical monopoly to give a decent deal to the consumer?
I acknowledge that competition can be a great spur in bringing about the lowest prices for consumers, but this is not the case now. How do we protect the consumer from abuses of a private monopoly? It is a grave thing that the Government do. They know they are doing it and they do it from profound conviction that private ownership is inherently superior. But we on this side have our doubts about the Government's dogmatic position and we need convincing that the public are adequately protected.
We know that later in the Bill is a most complex formula for setting the price of gas. It could be written in Sanskrit so far as I am concerned, and we shall require a good deal of explanation as to how it will operate. Noble Lords will surely realise that any private company will seek and find a thousand ways of maximising its profit on behalf of its shareholders, because as a company its duty is to its shareholders. The duty of the Government is to the electorate as a whole and to consumers as well as to companies. I am very scared that the right balance has not been achieved up to now.
We shall be discussing later in the Bill how the setting of the price of gas can be satisfactorily achieved, but as I pointed out briefly to noble Lords opposite, much more than the price of gas is involved. Where a private monopoly is in charge of a huge power sector such as gas it will see the opportunities of reaping very substantial profits, not simply from the supply of gas but from related activities.
I beg Members of the Committee opposite to consider the position of the commercial director of the new company. He will be told by the rest of the board that his job is to sell at the highest profit margin and that his own future, his salary, his perks, his pension and his job will depend on constantly rising profitability. He will tell his sales managers to seek out every opportunity. There are so many opportunities other than the simple supply of the fuel itself when you are supplying a commodity such as gas. It is not a matter just of pumping gas into a large pipe at one end and pumping out through a multiplicity of small pipes at the other. There are gas stoves, gas heaters, gas pokers and gas appliances of all kinds.
What controls will there be on those commodities that will be supplied along with the gas? What controls will there be over the maintenance contracts that will be involved and the thousands of ancillary pieces of equipment that go along with them? There are electronic devices—devices for sitting on the other side of the room and switching a stove on or off without getting out of your seat. There are the activities of the advertising director to persuade housewives that they will not be up to the standard of the Jones's next door if they do not spend another £100 to have the new super stove fitted, The effect on the life of the consumer will be profound. I cannot see that the rights of the average housewife will be adequately protected from the powers of the director of Ofgas as we see them at the moment.
I see enormous potential. I wish I were 20 or 30 years younger and had the opportunity of applying for the position of sales manager or sales director of this

219
huge monopoly. The great lake of profit that is there to be reaped makes one's mouth water. One can imagine that advertising agencies will be waiting to dive into this as soon as the Bill becomes law. But that is not what we are here to do. Having released this monster on the public we have to try to erect some fragile barriers to protect the public. I am sorry to say that up to now Ministers have not attributed the honesty of purpose and the depth of concern which is to be found sincerely on this side of the Committee.
I can appreciate that noble Lords on the Front Bench opposite are well aware that they are reasonable, honest, decent men. Presumably they feel that their colleagues in the Government are also all decent and honourable men and women. But consider this. Will they always be in office? Do they consider that all possible members in the future will be decent, honourable men and women, who will never step outside what is decent, honourable and reasonable? Can they honestly put their hands on their hearts and say so? They have more confidence than I have if they feel that. We should surely now be hammering out laws and regulations which will protect the consumer against every conceivable abuse.
I regret very much that up to now the attitude of the Government has been that any reasonable chap would certainly run a reasonable service under this Bill. I have yet to be convinced that a conceivable scenario of possible future Ministers would not lay the public open to immense abuse. I am very far from convinced on that and I cannot approve Clause 1.
Lord Sanderson of Bowden: Before we leave this clause, I am rather surprised that from the Benches opposite we have heard nothing but talk of monopoly. I understood when I spoke in the Second Reading debate and listened to other speeches that the gas industry was by no means a monopoly. With the price of oil dropping through the floor, electricity is becoming a very real challenge to the gas industry. I was most interested to note also the evidence in the other place to the Select Committee on Energy, from the chairman of the National Gas Consumers Council. When she was asked a question—"Is competition always going to be more effective a friend to the consumer than regulation?"—the answer from her and also from her council was clearly this:
"Yes, this is a Council view and certainly the view of most members of my council … In the end competition helps the consumer".
Up to the meter in the gas industry a natural monopoly exists, but after the meter there is room for competition. We must get this whole question in perspective and realise that the gas industry, although a monopoly as far as the domestic consumer is concerned for the gas, it is by no means a monopoly in the energy field.
9 p.m.
Lord Boyd-Carpenter: No one could accuse your Lordships' Committee of having failed on this Bill so far to pursue conscientiously its duties as a revising Chamber. We have spent very nearly two days on Clause 1 of the Bill and whatever the future may hold, any suggestion, even from the Benches opposite, that
220
we are not an active and effective revising Chamber can be strongly repudiated. I am glad to see the noble Lord, Lord Stoddart of Swindon, despite the declared policy of his party, indicating that he agrees with me on this point.
So much has been said on this clause that I want to add only two observations. First, the noble Lord, Lord Stoddart, seemed slightly to resent the suggestion I made earlier that he had been a little naïve in one or two of his speeches. I think, on reflection, that he was, because most of the amendments which we have dealt with were not going effectively to strengthen the director general. Some of them, if put into the Bill, would have weakened him. Therefore, to accept the plausible arguments which have been put, mainly from the Alliance Benches, to the effect that the director general's role would be strengthened argued a certain lack of knowledge of the way that government works. I did not intend to offend the noble Lord, for whom I have the highest regard, and I hope he will take note of these thoughts for the future.
My second observation is to congratulate my noble friends on the Front Bench if only on their patience. Two days on one clause—an important clause, but perhaps not the most important in the Bill—is a very long time for your Lordships' Committee to spend. I think many Ministers in charge of a Bill in those circumstances might have been tempted to a little irritation. On the contrary, my noble friends appear to have preserved their equanimity throughout. Lest I strain it further, I conclude my observations by warmly congratulating them on that.
Lord Diamond: We cannot let this clause go without expressing our anxieties that it should have been left in the Bill in exactly the same form in which it was first printed for the other place. It has remained unaltered by the other place although there was no guillotine in Committee at this stage, with some four or five sittings on Clause 1.
The clause has been totally unamended in your Lordships' Committee although we have subjected it to careful and thorough examination and have found points that any Front Bench that had any discretion left to it would have found reason to accept or reconsider and amend in some slightly different form. Therefore, we are very dissatisfied that Clause 1 is to remain in the Bill in its original form.
As has been indicated, it is a very important clause. I think it is the most important clause of all. That is why it is put first. In the view of the Government and of the draftsmen it is the most important clause. As we all know from experience, Clause 1 always takes a considerable time to consider in Committee. As the noble Lord, Lord Gray of Contin, was good enough to say when he spoke at the end of our debate on the first amendment, he understood very well that we take much longer when considering Clause 1 of any Bill than when considering, for example, some of the later, less important clauses. That is well understood. We must remember that as we are going through the Bill. The noble Lord commented that we have progressed only as far as the end of Clause 1, but it is only five minutes past nine and there is plenty of time for further and deeper consideration of other parts of the

221
Bill. We shall see how far we get. The statistical ability of the noble Lord is somewhat lacking in making that comment.
This is an important clause because we are dealing with a monopoly which is likely to be the largest in the country. I remind the Committee that it will be much larger and much tighter than the monopoly which existed before nationalisation. There was nothing like an organisation of this kind covering the whole country before gas was nationalised in 1948. The Government are not proposing to return to the status quo ante. In case noble Lords object to foreign languages I shall translate by saying that we are not returning to the position that existed before nationalisation. The Government are proposing to do something far more monopolistic and something which will result in a far tighter monopoly than previously existed.
On what basis are they doing that? As the noble Lord, Lord Boyd-Carpenter, will remember, gas was not proposed to be nationalised out of the blue. It followed a deep and lengthy inquiry by a committee which was specially set up to consider the situation. As far as I recollect, it was the Hayworth Committee. I may be wrong in my recollection but there was a committee which examined the situation and reported in favour of nationalisation as the proper method of dealing with the protection of the public where we had this most important utility operating in the way that gas was operating in those days.
What have the Government proposed in this way? On what are they relying? We all know what they are relying on: they are relying on the need to get their hands on the cash at the earliest possible moment. That is all that is happening. Nobody is arguing that the present set-up is not efficient. Of course it is efficient. So what will happen? The only difference will be as a result of the very powerful commercial pressures which will be applied. We all understand that. In the Alliance we have no objection whatsoever to the private sector of industry. We have sympathy with it and we understand it. It forms a necessary part of the economy and we all know how it works. Indeed, I have been in this field or closely associated with it for over a third of a century. We know how it works and that there are strong pressures to maximise profits. What does that mean here? Quite simply it means a transfer from the consumer, who is the payer, to the shareholder.
We agree about efficiency. The industry is efficient at the moment. If it were left in its present state, it would be more efficient next year and even more efficient the following year. That is the natural development of course. So this Bill is not put forward for the sake of creating an efficiency that is non-existent at the moment. There will be the same input and the same outflow in a situation in which the pressure will be to increase dividends and maximise profits, and what will they fall on but the cost to the consumer? It cannot come from anywhere else. That is the pressure that will be there the whole time.
To try to keep it within bounds, we set up regulatory machinery under Clause 1. The machinery takes the form of one man (with a small staff, with the approval of the Treasury), who is appointed partly by the
222
Secretary of State and partly by the director. So there is one chap to perform the entire task of standing up to the enormous monopoly that will be brought into being by this Bill.
In Clause 1 we have been trying to find some method of strengthening the protection from the abuse of a monopoly. We have tried to do it in all sorts of ways. We have tried to strengthen it by making it a commission instead of one person. We did that on the basis that it had been found to be necessary in every single state of the United States where there is a commission to protect the public against utilities which by their nature have to operate as private monopolies.
The fatherland of private enterprise has no doubt whatever that there must be private enterprise in order for the utility to function, but also that there needs to be very strong protection for the consumer where this private monopoly is allowed. Therefore there are commissions in every single state, as far as I am aware. After all their experience the states continue to use that method of protecting the consumer.
So the first thing we tried was a modest suggestion for only three commissioners—nothing like so large a body for what is a much larger monopoly than the utilities in any individual state of the United States. We made this modest suggestion in order to add some protection for the consumer and to strengthen the regulatory process. It was turned down flat. Then we tried to strengthen the regulator by giving him a relationship with Parliament, at first with the House of Lords only. That proposal was turned down flat in your Lordships' Chamber. I ask the Committee to bear in mind that the Government decided that an appropriate Committee of the House of Lords did not have the ability to do this simple task.
We suggested committees of both Houses, but nothing would be accepted by the Government. I repeat that the Government turned down flat, here as in the other place, any suggestion which would strengthen the regulator. We tried to strengthen the regulatory process in relation to individual nations. We suggested that there might be a director with status and responsibility for Scotland and another director for Wales. At that point one of your Lordships—I think it was the noble Viscount, Lord Torrington, but I may be mistaken—suggested that we ought to consider the regions of England as well. Immediately we said that we should be very glad to consider that suggestion and that if he would put down an amendment to that effect, we would support it.
We have tried in every way possible, having regard to the logic of a situation involving a huge monopoly of this kind, with enormous commercial pressures moving one way only, to strengthen the counter-weight to protect the consumer. None of our proposals has been accepted. We are left with something that is analogous to Oftel. We are left with a kind of Ofgas that is analogous to Oftel at a time when repeated reasons have appeared for being dissatisfied with the way in which Oftel is working and when new reasons are continuing to come frequently to light. One came to light only yesterday. I can therefore have no confidence in this clause. It is a pity that we have to allow it to be passed and made part of the Bill.
9.15 p.m.
I am bound to repeat and expand upon the manner in which a commercial monopoly works when dealing with different categories of consumer. We already know that the private consumer, the tariff consumer, has been put at a disadvantage. According to what we read in the press—we have no reason to doubt The Times report—the gas company is proposing to reduce charges to its contract customers in order to extinguish—no, exterminate is a better word—possible competition. We know that this is not an unusual process. We have only to look at air transport, with which the noble Lord, Lord Boyd-Carpenter, is very familiar, to remind ourselves that the American courts have found that large carriers got together in order to prevent the Laker company continuing in business and that there was a conspiracy, involving damages running into large sums, in which a British company and an American company were jointly responsible. We know that this is the way in which large companies may sometimes work in order to get rid of competition, to drive it out of existence and to try to make it bankrupt.
In the United States—fortunately for those living there—there is machinery and a government department to protect the consumer, to detect, wherever it exists, this kind of monopoly and to try to prevent the worst abuses of it. We do not possess that in this country. That is why we have tried in every possible way to bring into the Bill something that would strengthen the protection of the consumer and strengthen the regulatory process. This has been denied to us, and we have now to decide what to do about it.
My recommendation to your Lordships' Committee is that this matter should be brought up again at a later stage. There are so many issues involved that we shall not wish to be denied the full right to examine them and to repeat the arguments at a more appropriate hour of the day. All I would suggest now, should this be convenient to the Committee and if everyone has said all that they wish to say, is that we allow the clause to pass notwithstanding that we are wholly, but wholly, opposed to it.
Lord Gray of Contin: We have spent nearly two days talking about Clause 1. We have had a wide variety of reasons given in support of many amendments and groups of amendments. We shall all probably remember the first clause of the Bill as the Diamond clause. It has given the noble Lord, Lord Diamond, the opportunity to prove, if proof were even needed, his political virility. The noble Lord has done so with acclaim. I hope that it has not tired him out too much. There is a long way to go. So far as I can see, looking at the faces across from me, I do not believe that his performance has been greeted with much enthusiasm on the Opposition side. As Ministers, however, we appreciate the amount of research and hard work that have gone into the contributions that the noble Lord has made. It was a pity, I thought, that the noble Lord spoiled it with the clause stand part debate when he gave us a resumé in great detail of all the things he had done during the past two days.
224
However, I should like to correct one point of detail. He suggested that yesterday I had said that I felt it was essential, and indeed I fully accepted, that Clause 1 of a Bill would take a very long time. What I said when I was winding up the first amendment was that I raised no objection to the first amendment to the Bill being similar to—as I think the noble Baroness, Lady MacLeod, suggested—a Second Reading debate all over again, because that is often what happens. But I did have hope that after that first amendment—which took three hours—we should have made some progress. The progress, I must remind the House, is abysmal. I hope that we shall be able to condense our remarks rather more than we have done up until now and show the other House that we can be a very efficient revising Chamber without taking endless time over each little part of the legislation.
I thought that tonight my noble friend Lord Sanderson—in a short but very effective contribution on Clause 1 stand part—summed up pretty well what many of us on this side of the Committee feel about the whole matter. My noble friend highlighted that there is a lot of room for competition after the British Gas Corporation is relieved from its obligations under the equivalent of a nationalised situation. The noble Lord opposite may laugh—and I cannot think what he is laughing at and I doubt whether he knows—but in any case I accept his sense of humour, which deserted the noble Lord for a long time this afternoon when others were enjoying the joke. However, that is beside the point.
The noble Lord, Lord Stoddart of Swindon, made one of his characteristic contributions, always to the point, factual and succinct, and I am grateful to him for giving that lead to his side. I hope that it will be followed as we proceed through the debate.
Of course my noble friend Lord Boyd-Carpenter, who has made such an important contribution to the debate we have had upon Clause 1 stand part, was as ever apt in his remarks. On behalf of my noble friend Lord Belstead I should like to thank him very much indeed for the kind things which he said about our tolerance during the last two days.
We have listened very carefully to all that has been said. I mentioned a little earlier that the noble Lord, Lord Diamond, must not feel too disappointed that we have not seen fit to accept any of his amendments. We listened very carefully to those which he moved, those moved by the noble Lord, Lord Ezra, and those moved by the official Opposition. I agreed to take one point back and to have a look at it again, but we were not persuaded by the arguments.
We believe that in this clause the appointment of the director and the establishment of an Office of Gas Supply is one of the key aspects of the Bill. Wide-ranging powers have been provided for the director in the Bill and those will ensure adequate regulation of the gas supply industry. Under arrangements provided for in Clause 1 the director and his staff will accumulate great expertise and knowledge of their subject.
We believe that it is vital for the protection of consumers' interests, for public confidence in the privatised British Gas Corporation and for ensuring long term security and the availability of gas supply in

225
Great Britain that this Bill becomes law and that we move forward in a momentous step into the future for the British Gas Corporation.
The Bill provides a system of checks and balances to ensure that the director has sufficiently secure tenure of office to enable him to act in an independent manner, but it also places on him duties and constraints to ensure that he is responsible and sensible.
I believe that Clasue 1 is obviously one of the most important clauses in the Bill. We have considered it in great depth and it goes forward unamended because we have not been persuaded that the arguments which have been put forward—and I am not criticising the way in which they were put forward or the arguments themselves—merited acceptance and the amendment of the clause which I hope will remain Clause 1 of the Bill when its passage is completed.
With those few remarks, I am very pleased to support the Motion, That Clause 1 stand part of the Bill.
Lord Bruce of Donington: I want to expedite the progress of the Bill, and therefore I intervene only because the noble Lord permitted himself to say that so far as we are concerned—and I am now talking for the official Labour Opposition—it appeared to him that the amendments put forward by the noble Lord, Lord Diamond, did not command our support or enthusiasm. I would therefore wish to disabuse him of that idea. The noble Lord, Lord Diamond, has acted in the best traditions of this House in seeking to ventilate and to define the various matters to which the country as a whole expect us to devote some detailed attention. He has performed a very admirable function.
For our part, we think that Clause 1 of the Bill exposes the Government's nakedness. It is all very well for the noble Lord to whistle to keep up his own courage in what he knows is a miserable Bill for a miserable purpose—a Bill which achieves no useful end so far as the country is concerned. He is entitled to do that and I would not wish to take away from him his moment of euphoria, which I can assure him over the next months will become dissipated as it becomes apparent to the people of this country as a whole that the Government have no ideas and are completely discredited.
I shall not take the matter further because I wish the Bill to proceed. However, I wish the noble Lord to be disabused. So far as we are concerned and so far as progress has been made, we entirely support the very considerable effort that the noble Lord, Lord Diamond, has made to try to ventilate the obscure corners of the Bill.
We hope that we shall not be accused by the Government of not having made our own constructive contribution towards what the nation expects of the official Opposition.
Lord Diamond: Before the Question is put, there is one further question that I should like to address to the Minister and I think that it would be best to put it to him at this stage. It is entirely up to the Committee whether I raise the question at this stage or later, but
226
in my view it is best raised now. I preface my remarks by thanking the noble Lord, Lord Bruce of Donington, for what he has just said.
The point I wish to raise is this. If anybody looks at this Bill they will find it impossible to discover the duties of the director. It is as simple as that. In Clause 4 there is a fairly detailed description of the manner in which he shall exercise his functions. It says that he shall have:
"a duty to exercise the functions assigned to him by this Part in the manner which he considers is best calculated"—
and then a full description of the manner is given in paragraphs (a), (b), (c) and (d).
However, where do we find the duties? We have to read through the whole Bill and pick out individual clauses where reference is made to the duties of the director. Those of us who had the good fortune to be supplied by the department with an annex attached to the Notes on Clauses know that the duties of the director are referred to in a large number of clauses. They are not exhaustive. It is merely some of them.
Would it not be of assistance to those who have to work to this Bill when it becomes an Act to include either a schedule or an annex setting out which sections refer to the duties of the director general? It is not a difficult matter. It has been done in large part already, but that is merely for the benefit of those of us who have to speak to the Bill. It is not necessarily a regular part of every Bill, but the noble Lord himself has said that this is a most important clause.
9.30 p.m.
The duties of the director are crucial to the containment of monopoly and the safeguarding of the consumer. He has a number of duties. I am sure the point I am making is clear. I am only asking whether the Minister will be good enough to bear in mind that it would be convenient for those who have to operate under this Bill when it becomes an Act if there were some reference in this part of the Bill—and I think it ought to go in Clause 1—to an annex or schedule to be incorporated in the Bill.
It need not be exhaustive. It could include the usual phrase "Without prejudice to the generality of the foregoing". It could set out for the benefit of all of us the various sections and subsections. That would enable people to have a good idea of the totality of the director's duties. I leave that with the noble Lord in the hope that he will think that that is a constructive idea and give it some thought in the days ahead.
Clause 1 agreed to.
Schedule 1 [Director General of Gas Supply]:
Lord Diamond Lord Diamond moved Amendment No. 13:
Page 64, line 4, leave out from ("as") to end of line 5, and insert ("are currently paid to the Deputy Secretary of the Department of Energy.").
The noble Lord said: I believe that it would be convenient to take also Amendment No. 14, which refers to the same point.
Page 64, line 4, deals with the payment to the director of,
"such remuneration, and such travelling and other allowances, as the Secretary of State with the approval of the Treasury may determine".

227
What the amendment seeks to put in its place is remuneration and expenses such as,
"are currently paid to the Deputy Secretary of the Department of Energy".
The reasons behind that amendment are fairly obvious. In the first place, it is less embarrassing and less difficult to fix remuneration for individuals rather than having a category which you do not have to do other than follow. The category is the obvious one of a Civil Service, because this is a department which is deemed to be a government department, and as we have had confirmed only today the director general will be a civil servant.
As I understand it, it is well within the philosophy of the Government that they should turn most of these similar appointments into categories for which remuneration and other allowances can be fixed in that way. I seem to recollect a statement to this effect during the debate on this Bill in another place, but I may be wrong about that. I understand that it is the Government's wish, in a general way, naturally, to avoid the complications, awkwardness and embarrassments of fixing individual remuneration for individual people: tie it down to a category, and you know where you are.
The category I suggest is that of civil servant and the point of the category seems reasonable to me, but it is not crucial or critical regarding this amendment. I have suggested that the rate of remuneration should be such as is paid to the deputy secretary in the Department of Energy. Why the Department of Energy? That is the most obvious department because it is related to this matter and is the sponsoring department of the gas industry. Why the Deputy Secretary? I regard the permanent Secretary as having wider responsibilities than the director general and so the natural conclusion would be one step down to the deputy secretary. One does not know what he is paid; it does not matter. But it is aligning responsibilities with other responsibilities in such a way as to give a sense of justice and fairness without extravagance or excessive economy and everybody should be happy about it.
This is a reasonable amendment and I hope the Government will give us an idea of their reaction to it: first, that it is within their general philosophy that appointments of this kind should be lined up with Civil Service appointments; secondly, that the appropriate department would be the Department of Energy; and thirdly, and by far the least important of all, that a point should be chosen which is comparable to that paid to the deputy secretary. I beg to move.
Lord Stoddart of Swindon: I should like to say a few words on this amendment. I have to tell the noble Lord, Lord Diamond, that I am in some difficulty with his amendment. The reason is because when I asked the noble Lord, Lord Belstead, for certain information last Thursday evening he was either unable or unwilling to let me have it. He has not let me have it today, or indeed before today. I said:
"Before the noble Lord sits down, earlier I asked him a number of questions. May I repeat them? I asked if the director was to be full or part-time"—
228
a relevant question, I should have thought the Committee would think—
"I do not think that we have had an answer. Will he be expected to devote the whole of this time to looking after the interests of gas consumers, or will his contract allow him to have directorships or jobs other than the directorship of Ofgas".—[Official Report, 24/4/86; col. 1361.]
I asked whether the noble Lord could give some suggestion of the salary that the Government had in mind for the director. I also asked the noble Lord to explain why be believes, if he does so believe, that the regulatory regime set out in this Bill is as strong as the one set out for the telecommunications industry. We need to know the answers.
The amendments of the noble Lord, Lord Diamond, show clearly that we need to know those answers. We have not yet had those answers. We do not know what status the Government intend to accord to the director general. We do not know what relationship there is likely to be between the salary, expenses and what-have-you of the director of Ofgas and the chairman of British Gas plc. I insist that the relationship is important because it will be seen by the world at large that the salary and remuneration of the director of Ofgas will indicate exactly what his position is and how important the Government see him as a regulator. Indeed, it will indicate what sort of power he is likely to have in relation to the general manager or the chairman of British Gas plc.
The noble Lord, Lord Diamond, has chosen a particular grade in the Civil Service. I believe that for a person of the calibre that we should like to see as director general of Ofgas that is not good enough. I think the noble Lord and I were surprised to learn that this appointment was going to be subject to the Civil Service Commissioners. We expected somebody who was going to be extra-special, a person of very high calibre. We now find that he is going to be subject to the Civil Service Commissioners. That in itself tells the story.
Within that context, the amendment of the noble Lord, Lord Diamond, is relevant, but I do not believe it should be relevant because I think this man should be of a much higher calibre. I mean no disrespect to deputy secretaries. They are very able people, there is no doubt about that; but this is a special job. There are not going to be several deputy secretaries; there is going to be only one director general of Ofgas. This is going to be a special appointment, and I do not think it would be right that he should be seen as having the position and status of a deputy secretary. I am in this difficulty and the Committee is in this difficulty because of what we heard earlier, that the appointment is to be subject to the Civil Service Commissioners.
I do not know whether the noble Lord, Lord Diamond, will put this to the vote. I hope that he will not and that he will agree with me that we need more information; we need the answers to the questions we have asked about the salary and status of the director general before we can press any amendments. I hope the noble Lord understands my difficulty and I hope he realises that I understand his difficulty as well. He was right to put these amendments down because they enable the Committee to probe this matter, to question the Government and ask them to come clean

229
about the director general and how they relate him to his regulatory function over British Gas plc.
With those words, having merely given my thoughts to the Committee and being unable to go further because of lack of information, I shall sit down. I hope that the noble Lord will not press his amendments but that they will enable the Government to give us more information—indeed, the information which we need to consider this Schedule and the rest of the Bill in a proper manner.
Lord Brabazon of Tara: I think on all sides of the Committee we are concerned that the director should have the necessary status to have authority in carrying out his functions, but this cannot be achieved by reference to his pay and conditions alone. As we have already indicated, a number of considerations will be taken into account in appointing the director, not least matters relevant to his experience in relation to his functions under the Bill. It is the Government's intention that he should be appropriately rewarded. There is nothing in the existing paragraphs 1 and 2 of Schedule 1 which prevents that. As presently worded, the paragraphs give us the necessary flexibility to determine what may be an appropriate salary.
I should like to make the point that, while the staff of Ofgas are to be civil servants, the director himself will not be a civil servant. He will be the holder of an office established by statute. I do not believe that the noble Lord is right in saying that there was a statement that such officials should be linked to Civil Service grades during the passage of the Bill in another place. Certainly I have not been able to trace that statement this evening.
9.45 p.m.
The Government believe that the most important question is to get the right man to do the job, as no doubt noble Lords opposite agree. It is for this reason that we do not wish to have the hands of the Secretary of State tied to a particular grade of civil servant but to leave flexibility to make the best possible choice. The noble Lord, Lord Stoddart, mentioned the Civil Service Commission. Although the permanent staff of the director will be approved by the Civil Service Commission, the director himself will not. He is an appointed officer and not a civil servant. I hope that clarifies that point.
We believe that the schedule as drafted is flexible to enable the establishment of a strong and effective Ofgas and that the Director General of Ofgas should be chosen and not tied to a particular grade; but we must have the power to choose the right man to do the job.
Lord Taylor of Gryfe: I welcome the statement just made by the Minister with regard to getting the right man. The Minister is familiar with the kind of salaries that are now being offered in the supervisory authorities under the Financial Services Bill who have a relatively small responsibility compared to the vast responsibilities of this man. They are simply supervising a small sector of financial services. I very much support the Minister in saying that if he is going to get the right man for this important function it may be necessary to go beyond the Civil Service grades.
Lord Bruce of Donington: I can understand the desire of the Minister to have a degree of flexibility. There has been some flexibility in the privatised industries. One finds, for example, that Sir George Jefferson of British Telecom, somewhat surprisingly immediately the company became privatised, without a meeting of the ordinary shareholders (because the AGM has not yet taken place) and not with the voice of the ordinary shareholder, suddenly had his salary raised by some £6,000. If that was communicated to him before privatisation, I have no doubt that it would have softened his mind somewhat towards the desirability of privatisation.
I can quite understand the desire of the noble Lord to have a degree of flexibility. I observe from the accounts of British Gas for 1984–85 that at least two of the directors are earning between £45,00 and £50,000 per annum. This is all right. The corporation is going to be privatised under the provisions of this Bill. Perhaps the noble Lord will give us some idea of the extent to which the chairman's salary is going to be raised immediately after privatisation; because quite clearly it will be decided before, because the ordinary shareholders, the capitalist democracy, to put it in the noble Lord's terms, will not have an opportunity of meeting until one year later. It would be useful therefore if we had some idea of the salaries now proposed and on offer to the existing chairman of British Gas, shortly to become British Gas plc.
This is of some relevance when one comes to consider the misgivings put forward by my noble friend Lord Stoddart of Swindon. Like him, I am in instinctive sympathy with the idea put forward by the noble Lord, Lord Diamond, that the salary of the director should be stabilised by reference to a certain rank in the Civil Service. The noble Lord, Lord Diamond, has put it at deputy secretary, but I do not think he stands on that particularly; what he wants is some degree of stability. It would be useful now to know whether the Government intend to relate it to a specific grade, to put the matter clearly in the public mind beyond all possibility of undue financial rewards being offered by them to carry forward the purposes of their own miserable Bill. There is a powerful argument for having the salary stabilised in advance so that it is not manipulated subsequently. I sincerely hope the noble Lord will be able to reassure us on that point.
However, the Committee will not have forgotten that the noble Lord still has not answered the question put forward by my noble friend Lord Stoddart. Why is the Minister so reluctant 10 say whether or not the appointment will be full-time? The question has been put to the Government Front Bench in specific terms on at least three occasions and on each occasion the Government have avoided answering. The noble Lord, Lord Stoddart, asked quite specifically not only whether it would be a full-time job but also whether the person appointed would be permitted to hold other directorships and have other interests as well. That question is quite capable of an easy and honest answer. All the Government have to do is to say, "We are not sure of the position at the present time", or, "We believe that if he has existing directorships, he should be entitled to hang on to them". They can be quite frank. The question was asked in the first instance about whether it is to be a

231
full-time appointment. That has been put three times as a direct question to the Government Front Bench and each time they have evaded it.
I turn to the second point, about whether the director will be permitted to hold other directorships. It is no sin to do this; there must be many noble Lords, mainly on the opposite side of the Committee, but possibly straying over on to this side, who hold many directorships of one kind or another. Why do not the Government say what they have in mind? I am quite sure that they wish to be frank about this. The noble Lord, Lord Gray of Contin, has been extremely amiable and honest about these matters and I should not wish to pass any different observations about his two colleagues. They are all honourable men; why can they not come clean about it? If they do not do so, we are bound to come to the conclusion on this side of the Committee that the suspicions in the mind of the noble Lord, Lord Diamond, are well founded and that, even if we do not agree with the particular grade that he has specified, we should at least fix some grade so that the Government cannot wriggle further.
Lord Brabazon of Tara: The Government are certainly not trying to wriggle anywhere, let alone further. I can give the noble Lord the answer for which he has been waiting, having asked the question three times. It is, yes, indeed, the director of Ofgas will be full time. Whether or not he will be allowed to hold any outside directorships I cannot say at this stage. I suppose it might be said that if he does hold outside directorships, he cannot possibly be full time. I believe, from all our considerations of the Bill so far, that it will be a 24-hour-a-day, seven-day-a-week job; but no doubt the noble Lord will hold that against me—
Lord Bruce of Donington: No.
Lord Brabazon of Tara: The noble Lord, Lord Stoddart, asked whether there was any relationship between the proposed salary of the director of Ofgas and that of the chairman of British Gas. In addition, the noble Lord, Lord Bruce of Donington, asked how much the chairman of British Gas would receive after privatisation. That of course would be entirely a matter for the shareholders of British Gas. I do not think that there is anything I can say on that point at the moment. Again, I feel it necessary that there should be sufficient reward for the responsibilities that he now has and will take on.
Lord Bruce of Donington: Does the noble Lord appreciate that at the moment of privatisation, when the shares are put on sale to a small proportion of the public—they will go mainly to the institutions—and are taken up, the possession of the shares at that time
232
does not give the shareholders any right to determine the chairman's salary? The chairman's salary cannot be decided by the shareholders as such until the company's following annual general meeting, which would normally take place 15 months later.
Clearly the chairman must start with a salary. At the time that the changeover takes place, the shareholders are Her Majesty's Government. They are the shareholders who will decide what the salary will be, because nobody else can decide.
Lord Marshall of Leeds: The noble Lord may be misdirecting himself, because the person who will be the chairman of a nationalised industry which is about to be privatised will be appointed by the Government to hold office during the transitional period after privatisation. If the noble Lord looks at Clause 57(3), he will find that:
"During the transitional period section 1 of the 1972 Act shall have effect …
(2) The Corporation shall consist of—
(a) a chairman appointed by the Secretary of State".
That Chairman will not hold office after what happens in Clause 57(2) because there the Secretary of State may:
"after consulting the Corporation and the successor company, dissolve the Corporation on a day specified".
Any chairman who is appointed will hold office only until the Secretary of State dissolves the corporation in accordance with Clause 57(2). The privatised gas company, or whatever one calls it, will then be a public limited company and its directors will have the right, if they so desire, to appoint a chairman other than the one appointed by the Secretary of State. He will hold office until he is re-elected at the first annual general meeting of the privatised industry.
Lord Bruce of Donington: I am most grateful to the noble Lord, who has confirmed my point, I am obliged to him for his perspicacity and for reading Clause 57. It was most kind of him.
Lord Brabazon of Tara: I am grateful to my noble friend Lord Marshall of Leeds for his explanation. I am sorry that I fell for the invitation of the noble Lord, Lord Bruce of Donington, to discuss the salary of the Chairman of the British Gas Corporation, because after all we are discussing the possible salary of the director general of Ofgas. The noble Lord made a point about relativity. I have already said that I do not accept it as such. I feel, as the noble Lord, Lord Taylor of Gryfe, correctly said that we must have the flexibility necessary to ensure that we can get the right person to fulfil that important duty. I therefore urge the Committee not to accept the amendment moved by the noble Lord, Lord Diamond, and tie the salary to that of a Deputy Secretary.
10 p.m.
Lord Stoddart of Swindon: May I ask the noble Lord one simple question? I shall perfectly well understand that he may not be able to tell us the proposed salary of the chairman of the board. But does he think that by the time we reach Clause 57 he will be able to tell us what the salary of the chairman of British Gas plc is likely to be during the transitional period?
Lord Brabazon of Tara: If we ever reach Clause 57, I hope very much that somebody may be able to enlighten the noble Lord. But I am certainly holding out no promises at this stage.
Lord Diamond: Unfortunately, I did not hear the whole of that exchange. What I was going to ask the noble Lord the Minister was whether he would be good enough to give us some information at this stage, so that we can turn the matter over in our minds and know how to deal with it when we get to the later stages of the Bill. It has been made absolutely clear—and the noble Lord, Lord Marshall of Leeds, has reinforced it—that the interim chairman will be appointed by the Government. Therefore, the Government must know what range of salary they have in mind for that individual.
The noble Lord the Minister has said that that is not immediately relevant to discussing the salary of the director general. With the greatest respect, it is immediately relevant. The director general will have to stand up to the chairman. The director general will protect the public against any possible excesses by the gas company, which is represented by the chairman. He is the chief officer and speaks for the gas company. He will be meeting the chairman time and time again, and everybody knows that the size of the respective remunerations is part of the bargaining strength of the parties to a negotiation.
Their salaries are known to one another. They are public property and are not private, both so far as the chairman is concerned and certainly so far as the director general is concerned. The salaries are known to one another and it is part of the negotiating set-up that the respective salaries are taken into account. So I am saying to the noble Lord that, far from being irrelevant, it is directly relevant to the consideration of what level of remuneration should be paid to the director general.
It would be very helpful if he could tell us at this stage, first, what the Government have in mind with regard to the interim chairman of the gas company, because the Government will appoint him. Secondly, and of equal importance, can he tell us what level of remuneration they have in mind for the director general? I do not know what this is, but it is entirely within the Secretary of State's decision, as approved by the Treasury, and it must have been discussed by now. It will come out, so why on earth not help us by telling us now what it will be? That will be very helpful in enabling us to understand how the Government are proposing to give effect to this Bill.
Thirdly, can he tell us what is the present level of remuneration of a deputy secretary at the Department
234
of Energy? I am quite prepared to admit that this may not be the right level. I have explained how a probing amendment was put down in order to elucidate the situation and to elicit the facts. That is the function of a Committee stage. By comparison, I should also like to know what level of remuneration will be paid to the director general himself. We shall then have some idea of what we are talking about. These matters are public property and I do not understand why there should be any hesitation in disclosing them. I hope that the Minister has the information with him.
Lord Brabazon of Tara: I have already answered the noble Lord's first question and, as I said, I do not know how much the new chairman of British Gas plc will be receiving. At the present time, I think that the chairman of British Gas gets in the region of £50,000 a year. I may be wrong and I do not have a copy of the annual report before me. The noble Lord, Lord Bruce of Donington, has, and he will put me right if I am wrong.
The present salary of a deputy secretary in the Department of Energy is between £40,000 and £42,000. It is very close to that in any case, although it may not be precisely that figure. I am surprised that the noble Lord, Lord Diamond, did not know that amount when he put down his amendment. It seems a peculiar amendment to put down without first of all checking what a deputy secretary is paid. But still, that is for the noble Lord. Therefore the comparison at the present time between a deputy secretary in the Department of Energy and the chairman of British Gas would, I imagine, be unfavourable in terms of the amendment of the noble Lord, Lord Diamond.
As to the proposed salary of the director general, I can only repeat what I have already said. We shall look for the correct man. It will be a question of finding the best possible candidate and negotiating on that basis. But to be tied now to an absolutely firm limit as to what we can pay him would put us in an extremely difficult position if we wanted to get the best man, which I think on all sides of the Committee we agree we do.
Viscount Torrington: I wonder whether the noble Lord, Lord Diamond, would seriously consider that the possession of a salary similar to that of the present chairman of British Gas alone would be sufficient to allow that man to negotiate on equal terms with the present chairman.
Lord Diamond: That is the whole purpose of putting down the amendment. I am grateful to the noble Viscount because that enables me to explain what I have already explained. I must repeat it because the Minister did not take on board why we put down these amendments and what we are seeking to ascertain. It is not a question of my having no idea of what a deputy secretary earns. That is not the position. I thought—and the noble Lord has confirmed this with regard to the staff but not with regard to the director general—that the Government were taking the view that it would save a lot of trouble if these appointments were aligned with Civil Service appointments. So far as

235
the staff is concerned, having said that they are to be appointed by the Civil Service Commission, that ends all argument. They are to be civil servants paid on Civil Service grades, so there is no problem about that. The only question arose over the director himself.
I suggested that the appropriate level might be, at all events for consideration, a deputy secretary for the reasons which I gave to the noble Lord the Minister—namely, that it seemed to me that the permanent secretary had responsibilities wider than the director general. If you are to have a happy and contented state of affairs within the Department of Energy, you have to have regard to responsibilities and levels of remuneration, and the Department of Energy might have felt disposed to advise the Secretary of State that the appropriate category was a deputy secretary. I am not tied to that. I agree entirely with what has been said by various noble Lords who have been good enough to contribute to this debate that this is a probing amendment to find out what the appropriate level might be and what is the view of the Government.
We now know that the view of the Government is that the director general should not be a civil servant. Although he is the head of a government department, he should not be regarded as a civil servant or be tied to any Civil Service grade. He should be paid such amount as the Government think they ought to pay him when they come to it in order to get the best man for the job. We do not object now that we know what the situation is. They want to get the best man for the job and then fix probably what is the market price for such a man. That is a very helpful answer and makes putting down the amendment worth while.
Lord Bruce of Donington: Before we part with this amendment, can the noble Lord supply us with a little further information? Can he inform the Committee whether the Government have yet advertised the position, whether they have approached a recruitment agency and whether they have taken any active steps towards filling this appointment?
We can understand the nervousness of the Government that they might fall before the Bill comes into operation and therefore might not be prepared to take the risk of committing themselves to a director general. However, on the assumption that the Government can keep up their courage and believe that they will continue in office for a while, will the noble Lord inform us whether they have yet started to search? If the noble Lord consults a former Secretary of State for Industry—Sir Keith Joseph—he will find that he had enormous difficulty at one time in making a very senior appointment. It took him ages of agonising in order to be able to achieve his purpose and much soul-searching before he finally made his decision. Can the noble Lord inform us whether the Government have yet started on the process of selection, as that will be of enormous assistance to us?
Lord Brabazon of Tara: I am grateful to the noble Lord and I can assure him that all on this side of the Committee hope to be here for a little while longer yet and that we are not panicking in any way.
236
My right honourable friend the Secretary of State has taken steps to fill this appointment and will make an announcement in due course.
Lord Whaddon: Perhaps the noble Lord can enlighten me on one small point. The director general is to have a salary which is to be fixed later. His staff will have Civil Service rates and remuneration and, presumably, Civil Service pensions. As we all know, two of the great reasons for being in the Civil Service are security of tenure and the inflation-proof pension. Those are great perks which cannot be matched by any private industry.
We are to have this new public company which will be acting as do other public companies and presumably giving high salaries to its board. But it is extremely unlikely that it will be giving complete inflation-proofed pensions. However, we have this anomalous creature, the director general, half way between private industry and civil servant who will be paid a salary to be determined and presumably with some equivalence to private industry. I should like to be clear on whether or not his pension will be inflation-proofed as a civil servant. If not, how will the pension be calculated?
Lord Brabazon of Tara: I think that is a question which the noble Lord should address to the potential director general to see what terms he can negotiate with my right honourable friend the Secretary of State.
Lord Diamond: We are very grateful to the noble Lord the Minister for the information that he has given. I think he could easily assist us a little further without prejudicing the situation. He has made clear that the first steps have already been taken in advertising this position; I am referring to the position of director general. Therefore, the Government must have taken the usual steps of discussions between departments including the Treasury, if I may say so, and if my recollection serves me aright. They will have taken steps to agree upon the level of remuneration or the kind of remuneration at which they are aiming. Perhaps the noble Lord can give some indication, without prejudicing the position, of what is the precise figure that is being offered, on the basis of the exact qualities of the candidate who comes forward. Perhaps he can give an indication between two figures of what he has in mind. That would be very helpful indeed. I do not know whether the noble Lord is able to do that, having regard to what he said about an advertisement having already been placed.
Lord Brabazon of Tara: I do not think that I said an advertisement had been placed, as such. I said that steps had been taken. I cannot at this stage give any further information than I have already given.
Lord Diamond: We are grateful to the noble Lord for the information that he has given. It has made discussion on this amendment worthwhile. We will come back to it at the appropriate clause in the Bill. No doubt by that time further steps will have been taken and the Government will not be so coy about

237
disclosing what is a matter of public interest and very relevant to the consideration of the Bill. In the meantime, if I am not anticipating any further contributions from colleagues (which I do not want to stop unnecessarily prematurely), I shall seek the Committee's leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 14 not moved.]
10.15 p.m.
Lord Diamond Lord Diamond moved Amendment No. 15:
Page 64, line 13, leave out from ("State") to end of line and insert ("after consultation with the appropriate Committee of each House of Parliament.").
The noble Lord said: This amendment refers to paragraph 3 of Schedule 1, which states:
"If, when any person ceases to hold office as the Director, it appears to the Secretary of State … that there are special circumstances which make it right that he should receive compensation, there may be paid to him a sum by way of compensation of such amount as may be so determined"
with the added precaution:
"If… it appears to the Secretary of State with the approval of the Treasury".
For reasons that I shall explain on a later amendment, the words "with the approval of the Treasury" are inappropriately placed. With the permission of the Deputy Chairman of Committees, I shall seek to discuss that as a separate amendment. What we are discussing at the present time is the amendment which says that this payment of compensation is to be made,
"after consultation with the appropriate Committee of each House of Parliament".
We know that compensation is a very sensitive matter indeed. It is sometimes known as a "golden handshake", and the amounts can vary enormously. The guess that every employer has to make as to the kind of compensation to which an individual employee may be entitled if he goes to the court to seek it is a very difficult guess indeed. All sorts of figures are given. The formula is very difficult to come by and there are different formulae in different circumstances. The matter of compensation is therefore a very wide one indeed.
It will be very difficult for the Secretary of State on his own to fix the appropriate amount of compensation for the special circumstances which make it right that the person should receive compensation. He will be subject to very severe criticism not only from Parliament but perhaps from the Public Accounts Committee and others if he makes a serious misjudgment. It would be far better, to protect himself and his office, to protect the public purse and to provide for a good sense of justice, if he were aided by having the views of Parliament with regard to the amount of compensation. That is why the amendment proposes that there should be,
"consultation with the appropriate Committee of each House of Parliament".
We are only talking about consultation. It is not for Parliament to decide or to initiate or to have the final say. It is for the Secretary of State to do that, but it is for him to take the wise and sensible precaution of
238
bringing Parliament into his thinking and obtaining Parliament's views. It is a simple, straighforward and wise amendment. I beg to move.
Lord Bruce of Donington: We on these Benches should like to support the noble Lord in this amendment. Paragraph 3 of Schedule 1 is a little curious. It says:
"If, when any person ceases to hold office as the Director, it appears to the Secretary of State… that there are special circumstances which make it right",
etc. Earlier on this evening (or was it late afternoon?—a sense of time begins to elude one as time passes)—
Lord Belstead: Indeed!
Lord Bruce of Donington: I am so glad that I have the noble Lord with me on that. His sense of vagueness corresponds almost to my sense of precision.
Earlier on we were discussing the circumstances of the termination of the director's employment by reason of incapacity or misdemeanour. We had a long discussion about that, and tried to make a change. I am very curious to know the circumstances envisaged by the Government when drafting paragraph 3, which begins:
"If, when any person ceases to hold office"
It does not necessarily mean, "ceases to hold office at the termination of engagement"; otherwise, those words would have appeared.
Paragraph 3 states:
"If, when any person ceases to hold office as the Director, it appears to the Secretary of State … that there are special circumstances".
Can the noble Lord give the Committee some idea of the circumstances in which the director ceases to be the director where incapacity or misdemeanour are not involved or where the termination of his contract by the normal expiration of time does not apply? What are the circumstances in between? In opposition, bearing in mind the record of the Government on this and other matters, one is entitled to approach this schedule with a degree of scepticism appropriate to the circumstances. Am I right in saying that this paragraph could not be used to induce a director to depart at a time when the Secretary of State found it perhaps convenient that he should depart, and that the paragraph would not apply in circumstances such as might conceivably be envisaged as taking the following form of informal conversation? The Secretary of State might say to the director: "Look, old boy, I should like you to leave now. I cannot really make public the reasons I want you to leave, but, believe me, I am being leaned on to get rid of you because your appointment does not altogether suit the people with whom my party is in political contact. Can we do a deal whereby you vacate office under special circumstances and I award you a certain amount of compensation?"
I am well aware that noble Lords opposite are honourable men who would not themselves contemplate the kind of coversation that I have imagined for the purpose of making a contribution to the debate. But they must agree that there is a possibility, in which they would themselves never be

239
involved, of these circumstances arising. Bearing in mind the power of the good and the great in Whitehall and the necessary collusion of the Treasury in such a device by the Secretary of State to rid himself, if necessary, by the payment of money, of the services of the director, do we really think that another great department of state should be involved? The relationship between departments of state is not always as harmonious as we are given to imagine. The sordid Westland affair took the lid off that. We had departments of state in opposition to one another. I am given to understand that the noble Lord, Lord Diamond, who was a distinguished Minister at the Treasury, will also inform us that the Treasury was not always at one with other departments. Would it not be better—
Lord Diamond: I apologise for interrupting. The noble Lord could have used the words, "was practically never".
Lord Bruce of Donington: I am very much obliged to the noble Lord. Would it not be better under the circumstances envisaged in paragraph 3—which are themselves unique in that special circumstances are nowhere defined—for a third party to be called in on the lines proposed in the amendment submitted by the noble Lord, Lord Diamond?
I have quite an open mind about this. If the Government can give me good reason to believe that the existing paragraph should stand as it is and provide adequate explanations—instead of having explanations dragged out of them after the three or four separate efforts which have to be made normally in the course of this Bill—I am prepared to let the pararaph go forward as it is. But I am bound to say that the noble Lord, Lord Diamond, has put forward a case that ought to be answered, and I hope that it will be answered in the spirit in which he modestly submits his amendment to the Committee.
Lord Ezra: I share the uncertainty expressed by the noble Lord, Lord Bruce, as to the significance of paragraph 3. The preceding paragraph, paragraph 2, makes due provision for providing pension or other arrangements on the retirement or death of the incumbent. This is normal for any such appointment. What seems rather abnormal is what is said in paragraph 3. I therefore hope that the noble Lord in replying will elucidate the circumstances which could lead to this special compensation, presumably in addition to whatever was provided for in paragraph 2.
Lord Gray of Contin: This is another probing amendment and I am happy to try to help noble Lords by trying to answer some of the queries which they have raised.
The Committee are aware that there are well established precedents for the way in which compensation may be paid in such circumstances. I believe that it is right that the Treasury should approve any such payment, as it does all such government payments. It is right that such payments should be scrutinised and the Treasury is the appropriate body to perform that scrutiny. We have provided that the
240
Secretary of State has responsibility for the director, and, as I explained in answering a previous amendment, as well as appointing and removing the director, he receives an annual report from him on his activities which is also laid before Parliament. This ensures that the director is accountable through him to the whole of Parliament.
The noble Lord, Lord Diamond, in talking about compensation asked me some questions. The Secretary of State will have the ability to seek internal advice from the Civil Service on the level of any compensation needed; or indeed if he thinks that it would be right to seek external advice from an expert consultant on such matters, he has that alternative available to him. He will in any event need the approval of the Treasury under paragraph 3. I believe that this provides the appropriate protection for the Secretary of State.
The noble Lord, Lord Bruce, was making suggestions as to how and when paragraph 3 might be appropriate and asked me what situation the Government had in mind. This also caused concern to the noble Lord, Lord Ezra, who drew attention to the fact that in paragraph 2 of Schedule 1 it is spelt out that:
"there shall be paid such pension, allowance or gratuity to or in respect of him on his retirement or death, or such contributions",
and so on. But paragraph 3 is broadly drafted because it is well nigh impossible to imagine the number of circumstances which could lead to the situation where the director might have to resign, or might decide that he wished to resign, and where in such circumstances it would be appropriate that a contribution to a pension would be the right action to be taken.
I do not believe that there need be anything underhand about such a payment. I am sure that no Secretary of State would engage in the type of "leaning on" practices which the noble Lord suggests. However, in any event that certainly is not what the clause was designed for; the clause was designed and drafted to take care of those sometimes unpredictable circumstances which arise and under which the director could be compensated. The circumstances may involve health or they may be physical or mental. One can think of many reasons.
10.30 p.m.
Lord Diamond: I am grateful to the noble Lord for giving way. Of course we can all imagine the different circumstances. However, the noble Lord said earlier that there were various precedents. Therefore, I assume that he has in mind particular cases where particular amounts of compensation were paid. Will he give us some indication of the type of circumstances where compensation has been paid in this kind of situation?
Lord Gray of Contin: No, I certainly cannot do so. The noble Lord seems to expect Ministers and their advisers to have at ready hand an enormous amount of information. I shall certainly seek to get the information for the noble Lord, and to make it available to him. However, I am afraid that I cannot provide him with that information at the drop of a hat. I am doing my best to be helpful to the noble Lord in explaining

241
possibilities regarding paragraph 3 of the schedule. However, as I have indicated, it is widely drafted, and it is widely drafted for the very reason—
Lord Whaddon: The noble Lord has very graciously offered to provide the information. The information requested by my noble friend is not unreasonable under the circumstances. We cannot be expected simply to accept arguments put forward without substantiation. The noble Lord has rightly said that he will make it available, but as a constructive Opposition we are obliged to ask for substantiation in the way in which my noble friend has done.
Lord Bruce of Donington: If the noble Lord is not going to reply to that point, perhaps I may reinforce what the noble Lord, Lord Diamond, and the noble Lord, Lord Whaddon, have said. The terms of paragraph 3 are quite explicit and the noble Lord has had due notice of the amendments that were put down to it. His department at least must have been on notice as regards the type of questions that would be asked. I would be very surprised indeed if the noble Lord were not properly briefed on any questions that might conceivably arise from consideration of paragraph 3.
The noble Lord, Lord Diamond, asked a very simple question: what are the special circumstances? The noble Lord excluded—and I immediately accept his exclusion—the kind of scenario which I put to him as a possibility. I immediately accept his assurance that paragraph 3 would not be used in those kind of circumstances to "lean out of office" what was deemed to be a recalcitrant director general, and to pay him some money to get rid of him. The noble Lord has given me that explicit assurance which I accept.
However, there are special circumstances. I do not know who drafted this particular paragraph. Civil servants may have drafted it or it may have been the individual child of the noble Lord himself or of somebody else in the department. However, normally speaking it would be somebody like the permanent secretary or the under-secretary who produced the draft and they who would have had some circumstance in mind.
On the assumption that the scenario which I laid before him is incorrect—and, as I have said, I accept that—what are the special circumstances? It really is no good to come to the Committee and say, "Well, there are all kinds of special circumstances, but I really cannot enumerate them to the Committee. I have several precedents that I am willing to quote". The Government must have some idea as to the purpose of this clause. If the noble Lord comes clean about the purpose, which I sincerely hope he will, we can pass on speedily to the next amendment.
Lord Gray of Contin: I think if the noble Lord passed on speedily to anything, it would be an accident. However, I take his word that his intention is good.
Lord Bruce of Donington: That does not do you any good, you know.
Lord Gray of Contin: I am not accepting that criticism from the noble Lord. I made suggestions as to one or two of the possibilities under which paragraph
242
3 of the schedule might be used, but I indicated that it was broadly drafted because there could be many other situations in which it could be used.
The noble Lord became a little confused. What the noble Lord, Lord Diamond, asked me was not for further examples under which it could be used. In my initial statement I had said that there are well established precedents for the way in which compensation may be paid in such circumstances, and the noble Lord, Lord Diamond, asked me whether I could give him some of the precedents. I have indicated to the noble Lord that I cannot at the moment give him those precedents, but that I shall have this question examined for him and I shall in due course write to the noble Lord and let him know some of these precedents. Of course I shall make sure that the noble Lord, Lord Bruce, receives a copy of the letter.
Lord Bruce of Donington: I am obliged.
Lord Diamond: We are grateful to the noble Lord the Minister for the helpful way in which he has indicated that he will disclose these precedents so as to enable us at a later stage in the Bill to make an assessment of whether the public interest is being properly protected, and indeed the interest of the director general as well. That is one of the reasons why I was pressing that question at this point.
The noble Lord is likely to find out from the advice he is given that the answer is a wide one; that on different occasions the amounts of compensation vary enormously. It is a difficult task to get specific advice as to what a particular compensation in a particular set of circumstances is likely to be. Therefore, I still think that there will be added protection both for the Secretary of State and for the director general himself if this amount of compensation is not decided until the appropriate committee of each House of Parliament has been consulted.
It is a short process. It is a helpful process. It does not add any particular burden on to the Secretary of State that he should merely consult the appropriate committee. I am still of that view, but we shall come back to it. I want to leave the matter wide open so that we can come back to it when we know a good deal more, and we shall know a good deal more when the Minister has been good enough to honour his undertaking, as I know he will, to drop me a line, and of course place a copy in the Library so that it is available for everybody who is interested. Until that time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 16:
Page 64, line 16, leave out from ("as") to end of line and insert ("the Secretary of State with the approval of the Treasury may determine.")
The noble Lord said: Several of your Lordships have already said what a curious paragraph this paragraph is. This is a particular curiosity to which I want to draw the Minister's attention in the hope that he will feel that the new drafting which emerges from the amendment I am moving helps to clarify the meaning of this paragraph, and is therefore not only helpful to the Government but acceptable to the Minister.
I draw the Committee's attention to the extraordinary language of this paragraph:
"If, when any person ceases to hold office as the Director".
That is all right. The point on which I am anxious to have the Minister's close attention is what continues after that:
"if it appears to the Secretary of State with the approval of the Treasury".
That is totally unintelligible to me: the Treasury has to approve before something can appear to the Secretary of State! I do not know what that means. In my six years of office as Chief Secretary to the Treasury I never sought to insist on my approval before a Secretary of State had an appearance before him; never! I suggest to the noble Lord that although one approaches the drafting of a paragraph with immense caution and modesty, there is no meaning that I can see as it is presently drafted.
What is intended is clear and what is intended could remain clear simply by adopting the amendment. It would then read:
"If, when any person ceases to hold office as the Director, it appears to the Secretary of State that there are special circumstances which make it right that he should receive compensation, there may be paid to him a sum by way of compensation of such amount as the Secretary of State, with the approval of the Treasury, may determine".
That is where the Treasury comes in, to approve the payment, not to approve the thinking process of the Secretary of State or some appearance before the Secretary of State either in the daytime or nighttime.
I suggest that the present drafting is quite unintelligible and the amendment I am suggesting, modestly, with knowledge that one is not a draftsman and that the Government have the most expert draftsmen at their disposal, would make sense. It would make the provision legible and intelligible, and, above all, it would provide exactly what the Government have in mind. I beg to move.
Lord Bruce of Donington: The logic of what the noble Lord, Lord Diamond, has said is so obvious that it is quite unnecessary for me to elaborate on it further. I hope that the noble Lord the Minister will accept the amendment in the interests of his department and of clarity.
Lord Whaddon: I am looking forward avidly to hearing what reason the noble Lord may find to refuse this amendment.
Lord Brabazon of Tara: I am grateful to the noble Lord for bringing this to the attention of the House. I assure him that the amendment as drafted is not necessary. It seeks to bring in another reference to the Secretary of State and the Treasury in relation to the determination of compensation when the director ceases to hold office. But this is already provided for by the reference to
"as may be so determined",
which he seeks to delete and which refers back to the Secretary of State with the approval of the Treasury earlier in the paragraph. The additional reference is,
244
therefore, unnecessary, as I think anyone looking more closely at it will agree. I therefore hope that the noble Lord will agree to withdraw the amendment.
Lord Diamond: I say as kindly as I can that the noble Lord has failed completely to take on board the point of the amendment. We are not in conflict on the substance of it. There is no issue between us on what is proposed. It is merely the way that it is described. I repeat that it is not a question of anything additional being said. It is nothing to do with that. The whole thing has to be taken together so that it will read, as I have already indicated:
"If … it appears to the Secretary of State … that there are special circumstances … there may be paid … a sum by way of compensation of such amount as the Secretary of State with the approval of the Treasury may determine".
The Secretary of State determines it. That is what is intended when the paragraph says,
"it appears to the Secretary of State".
The Treasury has to approve it. That is what the paragraph intends when it says,
"with the approval of the Treasury",
but it has placed those words,
"with the approval of the Treasury"
alongside,
"appears to the Secretary of State".
I can only repeat that that is sheer nonsense:
"if … it appears to the Secretary of State with the approval of the Treasury".
It is not the appearance that the Treasury needs to approve; it is the payment that the Treasury needs to approve.
I hope that the noble Lord, if he has not fully understood what I have said (it is rather late in the evening) will at all events look into this matter and in order to draft an intelligent paragraph give it full consideration, take advice and come back on it at a later stage.
10.45 p.m.
Lord Bruce of Donington: I sincerely hope that the noble Lord will do that. If the noble Lord will depart from his brief and look at it from a commonsense point of view, and listen to what the noble Lord, Lord Diamond, has said, he will see the force of what the noble Lord, Lord Diamond, has put forward. Logically the noble Lord, Lord Diamond, must be right. There can be no other explanation.
We do not want to hold up the proceedings on the Bill, but this is really inviting a continued argument over what has now become a matter of pure semantics so far as the noble Lord is concerned. Quite clearly the noble Lord, Lord Diamond, is absolutely right, and it would be correct for the Government to be graceful in these circumstances and acknowledge that the wording of this particular paragraph is a considerable mistake and is, in fact, meaningless.
Lord Brabazon of Tara: I certainly do not agree that the paragraph is meaningless. I find myself in a certain amount of confusion over the amendment of the noble Lord, Lord Diamond, because the noble Lord has just read out to the Committee how he would see the

245
paragraph if we agreed to his amendment. It appears to me that in the second line of paragraph 3 he would leave out the words,
"with the approval of the Treasury".
Nowhere does it say that in Amendment No. 16, which is what we are presently discussing. He goes on to the end of paragraph 3 and leaves out,
"as may be so determined"
and inserts the words,
"the Secretary of State with the approval of the Treasury".
That is the amendment to which I have just spoken. I cannot see where, in his Amendment No. 16, he leaves out the words,
"with the approval of the Treasury"
in the second line of the paragraph. Perhaps he can put me right.
Lord Diamond: I am grateful. I shall certainly respond to that invitation. I hope that the noble Lord has the same Marshalled List as I have. The amendment which I read out is No. 16:
"Page 64, line 16, leave out from ("as") to end of line".
I do not know, but I think this is one of the amendments about which I was advised there was a misprint and it was not put forward as I drafted it. Perhaps I may make it absolutely clear—it is clear from my own copy of the Bill—that in paragraph 3 I have eliminated the words,
"with the approval of the Treasury"
from line 2 and put them in where they properly belong, as the amendment indicates. This amendment has to be taken together with Amendment No. 15. If the noble Lord will look at Amendment No. 15 it says:
"Page 64, line 13, leave out from ("State") to end of line".
That is to say, leave out the words:
"with the approval of the Treasury".
The two go together in that sense. That is the answer to the noble Lord's question. That is where it says: "Leave out the words".
Lord Brabazon of Tara: I find myself in a little difficulty. We have already discussed Amendment No. 15 and the noble Lord has withdrawn it. We had a discussion on the aspect about consultation with the appropriate committee of each House of Parliament. I must suggest to the noble Lord that I have answered Amendment No. 16, as I see it on the Marshalled List. If the noble Lord wishes to come back with an amendment at a later date in the form in which he would like to see it, then perhaps we can have the opportunity of discussing that amendment then.
Lord Diamond: I see the difficulty that the noble Lord is in. I think that it is perfectly plain what amendment is required. I think that it is perfectly plain from the Marshalled List which words are to be left out, which correspond exactly with the argument that I have put before the Committee as to how this paragraph should read. I think it would be infinitely better if the words are so set out. I should be grateful if, in the meantime, the Minister would be good enough to consult his advisers as to how this paragraph
246
3 should be re-drafted. Certainly on my part I shall come back to it if necessary if the Government do not wish to put down an amendment. Meanwhile, I seek leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 16A:
Page 64, line 16, at end insert—
("In the event however that such determination has taken place without consulting the appropriate Committee of each House of Parliament then the amount of such compensation shall be such as Parliament, on the recommendation of the Secretary of State, shall approve by affirmative resolution of each House of Parliament.")
The noble Lord said: I do not know whether it is the desire of the Committee that I should move this amendment at this late hour but I am very happy to do so. This amendment strengthens the position which we have previously discussed. I had hoped in moving an earlier amendment that the Government would see the wisdom of suggesting that the Secretary of State, before arriving at a very difficult decision—namely, the amount of compensation payable in undefined circumstances—should consult the appropriate committee of each House of Parliament. The Government have not thought fit to accept that amendment. Therefore, this particular amendment takes that unfortunate eventuality into account and says:
"In the event however that such determination",—
that is, the determination of the compensation.—
"has taken place without consulting the appropriate Committee of each House of Parliament"—
which is the position that we have now reached—
"then the amount of such compensation shall be such as Parliament, on the recommendation of the Secretary of State, shall approve by affirmative resolution of each House of Parliament."
The Minister will notice that the recommendation is the recommendation of the Secretary of State. Therefore there cannot be, and there would not be by the rules of the other place, any question of either House approving expenditure unless it had been initiated by the Government. There it is, the Secretary of State recommending to Parliament what the amount of the compensation should be. Normally, once that has been done Parliament is then asked to approve by an affirmative resolution of each House.
The wording, as indeed may be the case with the wording of all my humble amendments, may be totally inadequate for the purposes of the statute, but it can easily be put right. The meaning of it is, I hope, perfectly clear: that, in the situation we have now reached on this Bill at the Committee stage, the compensation shall be decided upon by a recommendation of the Secretary of State himself, with his knowledge of all the circumstances, and shall be approved by an affirmative resolution of each House of Parliament, and of course each House would have to be made aware of the circumstances before it decided on that approval. I beg to move.
Lord Gray of Contin: I do not think any of us would really be surprised to see this amendment, following the debate on the earlier amendments to Clause 1 on 24th April; but we have already established in the

247
earlier debate that the appropriate involvement for Parliament is in the principles of the Bill's provisions rather than in the details of their execution.
Thus, it is unnecessary and inappropriate to establish a mechanism for consultation with the appropriate committee of each House of Parliament on matters such as the compensation to be paid in the event of the director ceasing to hold office, with all the delays which the affirmative resolution procedure would entail. The Secretary of State will be responsible for the director's appointment and it is appropriate that he should make a recommendation as to the level of compensation to be paid should the need arise.
Since the approval of the Treasury must be obtained, the appropriate restraining influences will be at work, as the noble Lord, Lord Diamond, will well recall from his days at the Treasury.
Mention has already been made of the heavy workload of Parliament, particularly in another place, and, in my view, it would be foolish to add to it where that is clearly unnecessary. I have been consistent, as has the noble Lord, Lord Diamond, in my opposition to the methods which he has suggested in several amendments about the appropriate committees in Parliament being involved in this procedure. I cannot accept the amendment and I suggest to the noble Lord that he should withdraw it.
Lord Bruce of Donington: The noble Lord has been a little churlish about his rejection of this particular amendment. He must be aware, even though it does not apply in your Lordships' Chamber, that normally speaking a debate in another place does take place on the Vote and there are a certain number of Supply Days allocated, as the noble Lord knows perfectly well, for the debating of specific subjects. I would not go along, and I told the noble Lord so quite frankly, with the application of this amendment to both Houses of Parliament. I would myself confine it to the other place only, rather than to both Houses; but the noble Lord will understand that the submission of this determination to another place would give the other place an opportunity to ventilate the whole question of the compensation and the circumstances in which it was awarded. I should have thought that the noble Lord would not have found that altogether unreasonable. I repeat that, from my own standpoint, I should prefer it to apply exclusively to the other place, but I support completely the concept that has been put forward by the noble Lord, Lord Diamond.
11 p.m.
Lord Harris of Greenwich: I was not, if I may say so, wholly persuaded by the noble Lord, Lord Gray of Contin, in his speech a few moments ago. Perhaps he will not be surprised to hear that: nevertheless I do not really think that we finally determined the question of the position of Parliament on this matter. We discussed the narrow issue on a previous, quite important, debate about whether in fact Parliament should be in some way involved in the appointment process. We are talking here of something wholly different. And when the noble Lord, Lord Gray of
248
Contin, rests his argument on the terrible weight of business in the House of Commons in particular, I should perhaps like to remind him—he was not a Member of this Chamber at the time—of a speech which I remember well, made by the noble and learned Lord the Lord Chancellor, then in opposition. He spent an immense amount of time, rightly in my view, telling us of the number of pages of the statute book that had been filled during successive Sessions of Parliament.
The noble and learned Lord's argument was that Parliament was being given far too much to do. I thought that what he said had substantial support on both sides of the House. I do not think that the argument adduced by the noble Lord—that at the moment the House of Commons has an immense amount of business before it—is an argument in principle against this amendment. It is an argument that can be used in the Home Affairs Committee or the Legislation Committee to reduce the amount of legislation (some of it favoured by departments) which hangs around year after year. If some of that legislation were not introduced, the public interest would probably be safeguarded. I cannot see any reason of substance constantly to oppose proposals of this kind merely on the grounds of the weight of legislation which the Government wish to introduce in the House of Commons.
Lord Gray of Contin: I am interested in the noble Lord's participation in our debate. I remind him that that was not the only reason that I gave for rejecting the amendment. I do not think that he has been present throughout our proceedings and therefore he would not have heard the various arguments that I deployed on different occasions when we were discussing amendments similar to this one. I do not take issue with him. I agree that the House of Commons is overworked, but much of that is self-inflicted, just as to a large extent our work here is self-inflicted when we spend nearly two days discussing Clause 1 of a Bill. But that is a matter for the Committee.
If I were in charge of business in this House—I hope that my noble friend is listening—I should be sitting here until six o'clock tomorrow morning and I should do so every time until we made progress on the Bill. I belive that—
Lord Harris of Greenwich: Will the noble Lord—
Lord Gray of Contin: I shall give way to the noble Lord in a moment. There are so many Members of this House who are former Members of another place and I believe that it is the only thing they understand. It is the way that we were brought up. If we have to resort to such tactics now and again to discipline ourselves to argue our case more succinctly, it is no bad thing. I am glad to see the noble Lord, Lord Diamond, nodding his head. I always find him persuasive in his argument, but on this occasion I do not.
Lord Harris of Greenwich: I noted what the noble Lord said. He told us that in the sad event of the noble Lord, Lord Denham, no longer being the Government Chief Whip in this House he, as his replacement,

249
would be an enthusiast for a series of all-night sittings. We take note of his view. But I am sure that when he occupies, as clearly it is his ambition so to do, the position in this House of the noble Lord, Lord Denham, he will at the same time ensure that the Government keep a quorum here, because last Thursday night they were saved by the Opposition. We did not have the good fortune to have the noble Lord, Lord Denham, with us on that occasion. I think that the noble Lord, Lord Gray, was with us and he will recall that we kept the Bill going. If we had kept our Members out of the Division Lobby, the Committee would have been adjourned automatically. So, when we have these all-night sittings for which the noble Lord is apparently hungering, perhaps he will ensure at the same time that when those sittings take place he will have at least 30 of his own supporters in the Chamber.
Lord Gray of Contin: I acknowledge what the noble Lord has said. Thirty all!
Lord Diamond: I am grateful to the noble Lord the Minister for the attention he has given to this amendment and I am sorry that he has not been able to meet us further than he has done. Perhaps I may first say to the noble Lord, Lord Bruce of Donington, that of course I understand his reason for preferring the affirmative resolution of the other place to the affirmative resolution of both Houses, because it is the other place that is primarily concerned with a financial matter of this kind. Nevertheless, it would be breaking very new ground indeed to have an affirmative resolution made by one House alone, and I suspect that many Members of the Committee would feel that it was not paying sufficient regard to the experience and wisdom of your Lordships' House, which has a special position with regard to affirmative resolutions, which, as we know, are not covered by the Parliament Act. So that is the reason why as a first shot, but only as a first shot, I drafted the amendment on the lines that the Secretary of State would recommend and that an affirmative resolution of each House would approve.
I do not think that the noble Lord, Lord Gray of Contin, is relying very strongly on the situation, which is undoubtedly the case, that the other place has more to do than it can do effectively, but we should not lose hope. The other place has recently adopted the best possible method of giving itself more time by throwing out a Government Bill on Second Reading. That relieves it of the necessity of covering the Committee stage, Report stage, Third Reading—the lot. I do not know how much time the other place has saved itself in that way. If the Government had had a little prescience, a little judgment and a little wisdom and had not brought in the Bill at all, it would have saved this House an enormous amount of time as well, and in addition it would have saved the Government's nerves and their own time.
So we must not lose hope. There are ways, which may not always prove acceptable, in which they could achieve a greater saving of time. In fact, if this Bill were to meet the same fate as the Shops Bill has done, there would be rejoicing all over the country. But as there is no chance of that, and as the Minister has not been
250
able to give us any hope at all on this amendment, to which we shall clearly want to come back, I had better safeguard the position by seeking the Committee's permission to withdraw it.
Amendment, by leave withdrawn.
Lord Denham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Dyfed Bill [H.L.]
Referred to the Examiners.
House adjourned at nine minutes past eleven o'clock.