Gas Bill

HL Deb 29 April 1986 vol 474 cc212-50

House again in Committee on Clause 1.

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 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 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 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 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 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 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 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 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 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.

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 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 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 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". 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"— 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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, 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 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 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 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 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 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, 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 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.