Lords Sitting of 9 December 1986

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

Education: Quality of Service in Brent
Lord Harris of Greenwich: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the Secretary of State for Education and Science is satisfied with the quality of the education service of the London Borough of Brent.
Baroness Hooper: My Lords, no. The Government are most concerned about the quality of the education service provided by the London Borough of Brent. Consequently, my right honourable friend the Secretary of State for Education and Science has caused a special inspection to take place in accordance with his duty under Section 77 of the Education Act 1944. He will give careful consideration to the position in the light of HMI advice and will follow it up as appropriate.
Lord Harris of Greenwich: My Lords, is the noble Baroness aware that many of us are grateful to her for that profoundly satisfactory Answer? Is she further aware that, with regard to the position of Miss McGoldrick, she is now being proceeded against by the local authority by way of some form of disciplinary action, despite the fact that counsel for the local authority undertook to the Master of the Rolls that it would not dismiss her? Is she also aware of the case of Mr. Gwyn Powell, head of a department at Willesden College of Technology, who again is being proceeded against by the local authority and faces precisely the same charge as Miss McGoldrick? Is she aware that many of us regard this as no less than a shabby farce and the sooner the Secretary of State takes vigorous action to deal with that abuse of power by a local authority, the happier we shall all be?
Baroness Hooper: Yes, indeed, my Lords. In connection with Miss McGoldrick, my right honourable friend was not satisfied with the authority's initial statement of its reasons for holding a disciplinary hearing. He asked the authority to provide immediately a more detailed explanation, which has now been received. He is considering whether further action would be appropriate. With regard to the case of Mr. Gwyn Powell, my right honourable friend is concerned about press reports, which, if accurate, paint a most deplorable picture. Officials in his department have asked the authority for the facts of the case, and that matter in turn will be pursued.
Lord McIntosh of Haringey: My Lords, is the noble Baroness aware that the Opposition welcome the Answer she gave to the main Question, welcome the special inspection which she has announced and agree with what has been said about the abuse of power by the council of the London Borough of Brent?
Baroness Hooper: My Lords, I thank the noble Lord for his question. The speed with which the inspection programme has been mounted is clear evidence of the Government's concern. We acknowledge that the Labour Party, in the shape of its Leader, of its spokesman for education and of its spokesman for local government, has expressed its grave doubts over the McGoldrick affair.
Baroness Cox: My Lords, is my noble friend aware that there is currently an acute shortage of teachers in Brent but that Brent is refusing to advertise those posts in The Times Educational Supplement but is advertising them in Marxism Today, which is the journal of the Communist Party of Great Britain? Does she think that that method of advertising posts is likely to produce the best teachers for our schools in Brent?
Baroness Hooper: My Lords, we are aware of the position. Authorities are free to advertise where they want, but Brent's refusal to advertise in a widely read publication because of its political stance on an unrelated dispute is to be condemned. It is placing dogma before the needs of children. The recent Education (No. 2) Act gives increased powers to governing bodies on the recruitment of teachers, and we hope that they will use them.
Lord Taylor of Blackburn: My Lords, is the noble Baroness aware that there are 104 education authorities in England and Wales and that the majority are good, first-class authorities, doing a splendid job under difficult circumstances?
Baroness Hooper: Yes, my Lords, but that is a little away from the main Question.
Lord Renton: My Lords, is my noble friend aware that this local authority has policies which are calculated to destabilise our society, with very serious effects for the rising generations? Although I greatly welcome the steps which the Government propose to take, can she give us some idea of when we are likely to see the outcome of those steps?
Baroness Hooper: Yes, my Lords. The programme of inspections began in mid-November. Her Majesty's Inspectorate is talking, among others, to advisers, teachers, parents and community groups, formally and informally, collectively and individually. This will continue until February, when it is expected that the report will shortly follow.
Lord Somers: My Lords, in view of the very large increase in salary which the council has recommended for the said professor, as well as back payments, can the noble Baroness say where the money is coming from? Is it coming from the local ratepayers?
Baroness Hooper: My Lords, I am not sure that I entirely take the noble Lord's point. If he is asking about the salaries of teachers, the financing comes from the local authority.
Lord Orr-Ewing: My Lords, is my noble friend aware that Willesden College was at the edge of my constituency and has—
Noble Lords: Order!
Lord Orr-Ewing: My Lords, I said "was", not "is". Is my noble friend further aware that the college has had a high reputation for a long time and that Mr. Powell, with his 11 years of service there, has made a notable contribution to that reputation? Is she also aware that the habit of hard Left councils taking such action is spreading and has recently occurred in Nottingham? In view of an education Bill coming before this House after it has been through another place, is there a possibility that a provision could be added to it to discourage and prevent such occurrences?
Baroness Hooper: My Lords, the last part of my noble friend's supplementary question is indeed a new point. I hesitate to commit the Government but I shall certainly pass on those remarks to my right honourable friend the Secretary of State. I can, of course, assure my noble friend that we are well aware of the situation at Willesden College of Technology, as well as the other incidents to which he referred.
Lord Harris of Greenwich: My Lords, will the noble Baroness undertake in respect of the case of Mr. Powell, which is causing widespread concern, to ask her right honourable friend to do his best to ensure that a Statement about this case is made before both Houses rise for the Christmas Recess?
Baroness Hooper: My Lords, I shall certainly convey the noble Lord's request to my right honourable friend, but, as I said, so far the department has only press reports to go on and the time between now and the recess is short.
Lord Alexander of Potterhill: My Lords, does not the noble Baroness agree that the tragedy for the education service started roughly 15 years ago? For 25 years, following the Education Act 1944, there were no party politics in education and the service made great progress. The tragedy now is that party politics seems to be more important than the education of our children.
Baroness Hooper: My Lords, as I said, the question of placing dogma before the needs of children is extremely reprehensible.

Building Industry: Black Economy Report
2.45 p.m.
Lord Graham of Edmonton: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
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The Question was as follows:
To ask Her Majesty's Government whether they have any observations to make on the report by the Federation of Master Builders entitled The Rise and Rise of the Black Economy.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, the Government have received a copy of the report by the Federation of Master Builders and have noted its recommendations.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister for at least noting the recommendations. Will he accept that among the strongest opponents of the black economy are bodies like the Federation of Master Builders, which object very strongly on behalf of their tax-paying members? Will the Minister recognise that a modest easement of the tax regime, including VAT being paid on essential repairs and maintenance, could act as a stimulus to the whole building industry? Does not the Minister further agree that, more importantly, it could lead to greater employment and to greater training facilities in the building industry?
Lord Brabazon of Tara: My Lords, I am glad that the Federation of Master Builders is opposed to the black economy. So, too, are the Government. As to any easing of the VAT regime, that is of course a matter for my right honourable friend the Chancellor of the Exchequer. I am sure that he will have studied this aspect but we have no plans at this stage to make changes.
Lord Dean of Beswick: My Lords, I too am grateful for the Answer. However, is not the Minister aware that this is only one of many reports indicating the situation in the building industry? Builders termed "cowboys" are totally abrogating their responsibilities —responsibilities which have to be legally carried by registered builders. Is the Minister aware that in the report which is the subject of this Question it is calculated that the Treasury is losing £7 billion a year by that type of builder evading all forms of tax—corporation tax, income tax—and any other form of payment to the Government? Bearing in mind that both the building industry in total, including private builders and trade unions, are wholly opposed to that, there must be some urgency in dealing with the situation.
Lord Brabazon of Tara: My Lords, the Government are attempting to deal with the situation. Extra Revenue staff will be redeployed to tackle evasion. We plan an increase of around 1,500 in that sphere. We have recently announced plans to deploy an additional 240 officers for VAT control and investigation duties. That brings the total additional staff deployed over the past four years to more than 800, so the Government do take this matter seriously.
Earl Ferrers: My Lords, can my noble friend say how the inspectors who are to be appointed can chase up VAT evaders when such people are paid in cash?
Lord Brabazon of Tara: My Lords, if a person is paid in cash, that of course is difficult to check on. However, in that situation, I should point out that, where a person buys supplies from shops, if he is not registered for VAT the VAT is, in fact, collected.
Lord Mellish: My Lords, is the noble Lord aware that master builders are few and far between in this industry which is famous for the man, the boy and a bucket? That is why any question of state ownership for the industry is absolutely ridiculous.
Lord Brabazon of Tara: My Lords, I think we agree with the noble Lord that this is a difficult problem to tackle.
Lord Gibson-Watt: My Lords, is my noble friend aware that so far as grants for the renovation of houses are concerned, the Government might do well to look into the methods by which the local authorities are not empowered to insist that the tender submitted is carried out by the original builder? This is a sphere where the Government might be able to help.
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend. That is a point I had not appreciated. I will certainly draw the attention of my right honourable friend to that aspect.
Lord Winstanley: My Lords, is it not time that we looked again at the disregard figure in relation to supplementary benefit and other benefits so that some people could do a small amount of work and earn a little money without infringing the law?
Lord Brabazon of Tara: My Lords, that suggestion goes a little wider than the Question on the Order Paper. It certainly goes a little wider than the brief I have been given this afternoon. However, I will certainly bear it in mind.
Lord Graham of Edmonton: My Lords, if the Government accept the premise upon which this report has been prepared—that the Treasury is being deprived of an estimated £7 billion—can the Minister indicate that the Government will urgently discuss with building employers (although it is not restricted only to building) what ideas they have to eliminate this drain upon the national purse?
Lord Brabazon of Tara: My Lords, I am not necessarily able to accept the figure of £7 billion that has been quoted. Obviously, the fact that it is the black economy about which we are talking makes it very difficult to give any kind of figure. Estimates vary from as high as 144½ per cent. down to as little as 3½ per cent. of the gross domestic product. However, as I said in my original Answer, we have received the report to which reference has been made and we have noted its recommendations.
The Earl of Onslow: My Lords, is the black economy not incredibly encouraged by the fact that the lowest rate of tax and national insurance in this country is 50 per cent. higher than the highest rate in the United States? If a tax regime produces numbers of that kind, it is bound to produce a black economy
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should we not get our tax regime right before we start worrying about the black economy?
Lord Brabazon of Tara: My Lords, certainly, all of us on this side of the house wish to get the rate of taxation down.

Telephone Coin Boxes: Vandalism
2.50 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will encourage the police to co-operate more closely with British Telecom in detecting and apprehending thieves who attempt to break open the coin boxes of public telephones.
The Minister of State, Home Office (The Earl of Caithness): My Lords, police forces already work closely with British Telecom to detect and apprehend those who seek to steal from the cash boxes of public payphones. In the first six months of 1986, 500 prosecutions were brought against persons alleged to have committed offences involving theft from or damage to public payphones.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that welcome reply. Is he aware that telephones in rural areas are tempting to thieves and vandals but that these are the telephones which more than most are needed by local communities?
The Earl of Caithness: My Lords, equally, inner-city telephones have proved to be a temptation to vandals. One of the factors that British Telecom is trying to emphasise at the moment is the value of the public payphone system to the local community.
Lord Parry: My Lords, has the Minister ever considered siting these telephones not in isolated boxes but in public utility buildings which are paid for already by the taxpayers and accessible to them?
The Earl of Caithness: My Lords, I am sure that British Telecom considered that point, but I shall make sure it is made aware of the noble Lord's comments.
Lord Airedale: My Lords, is part of the answer to this problem an extension of the cashless society through the phonecard system which is being urged upon us by British Telecom and in which no coins are involved?
The Earl of Caithness: My Lords, I wish that the answer was as simple as that. However, I am able to tell the House that the number of phonecard telephones which have no cash boxes is increasing steadily and currently stands at some 5,000.
Lord Mishcon: My Lords, will the noble Earl tell us whether he is aware of any research that is taking place in order to make the pay boxes much more secure than

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they are now? Does he agree that at present they are a temptation to those who perpetrate these crimes and break into them? Is there room for research into this?
The Earl of Caithness: My Lords, I understand that considerable research has taken place, and the results are appearing in the building of booths in a new style and the introduction of equipment that is more resistant to vandalism. Important new features of payphones are improved lighting, open plan design, tough construction materials and telephones which report automatically when cash boxes need to be emptied. The research is paying dividends.
Lord Mishcon: My Lords, will the noble Earl note that he has embarrassed me totally by his reply.
Lord Campbell of Croy: My Lords, further to the question put by the noble Lord, Lord Mishcon, is my noble friend aware of a case in point, which is the phone box near my home in a rural area of Northern Scotland that clearly had been attacked with nothing less than a crowbar and the whole coin box removed?
The Earl of Caithness: My Lords, the amount of vandalism varies from area to area and from person to person.

Metropolitan Police Band
2.53 p.m.
Baroness Sharples: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the Metropolitan Police Band is to be disbanded.
The Earl of Caithness: No, my Lords. Following a recent scrutiny of the band, the commissioner has decided that it should remain in being but that changes should be made to its organisation, use and staffing, with the aim of improving value for money.
Baroness Sharples: My Lords, I thank my noble friend for that encouraging Answer. Am I to understand that the band will eventually consist entirely of civilians, and if so will they be in mufti or in uniform? Morever, will there be sufficient publicity generated by the band to encourage members of the ethnic minorities to join the police force?
The Earl of Caithness: My Lords, the band will be in uniform. I am sure that the Metropolitan Police will make sure that the positions in the band are widely advertised so that ethnic minorities and others can take part.
Lord Elwyn-Jones: My Lords, can the noble Earl say what new use is contemplated for the Metropolitan Police Band?
The Earl of Caithness: My Lords, it will concentrate more on community events and will spend less time on commercial engagements.
Lord Mishcon: My Lords, may I take the opportunity to ask whether the band is occasionally heard by schools so that the pupils learn to respect the police and like them, as they should do?
The Earl of Caithness: My Lords, I am extremely grateful to the noble Lord for that question because at the moment the band plays at community events, schools and charity concerts, as well as on ceremonial occasions. We wish to encourage that side of the use of the band. As the noble Lord rightly said, it is important that our children become used to the police and see them in all their forms. This is a particularly good PR exercise for them.
Lord Sandys: My Lords, although I recognise the merits of the Government's proposals in saving police manpower, can the Minister say whether it is intended that membership of the band will entail being a member of Equity in the future, and will that create problems?
The Earl of Caithness: At the moment, my Lords, I cannot answer my noble friend but I shall write to him once I have looked into the matter.
Lord Annan: My Lords, when the noble Earl says that it is moving toward becoming more of a community band does he mean that it will no longer be an oompah band but a steel band?
The Earl of Caithness: My Lords, I am sure that that strain in music will also be played by the police band.

Business of the House
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, that Standing Order 38 (Arrangement of the Order Paper) be dispensed with on Thursday 18th December to enable the Motion in the name of the Lord Nathan to be taken before the Second Reading of the Local Government Act 1986 (Amendment) Bill.—(Viscount Whitelaw.)
On Question, Motion agreed to.

Family Law Reform Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I rise to move the Motion standing in my name on the Order Paper. The purpose is to take Schedule 2 before Schedule 1 and the reason is that Schedule 1 is a Keeling Schedule and any changes in Schedule 2 will have to reflect themselves in Schedule 1.
Moved, That it be an instruction to the Committee of the Whole House to whom the Family Law Reform Bill has been committeed that they consider the Bill in the following order—

Clauses 1–34,

Schedule 2,

Schedule 1,

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Schedule 3,

Schedule 4,—(The Lord Chancellor.)

On Question, Motion agreed to.

Criminal Justice (Scotland) Bill [H.L.]
2.57 p.m.
The Minister of State, Scottish Office (Lord Glenarthur): My Lords, I beg to move that this Bill be now read a second time.
It was last spring that my right honourable friend the Secretary of State for Scotland gave a public undertaking that measures similar to those introduced in England and Wales in the Drug Trafficking Offences Act 1986 would also be introduced for Scotland. I was conscious when I introduced that Bill to your Lordships that it received unanimous support; and I am grateful for that. My right honourable friend's announcement drew similar approval, both from those dealing with the consequences of drug abuse and from those with an interest in criminal justice. I am glad to be able to bring this Bill before your Lordships at this early stage in the Session. Although the Drug Trafficking Offences Act does have limited application to Scotland, this Bill fulfils our promise to act after thorough consideration of the sometimes complex provisions needed to deal with these issues in the context of Scots law.
The most substantial and important feature of the Bill is the part enabling the courts to confiscate the assets of convicted drug traffickers. The Bill also includes a new provision to help Customs officers detect drug smugglers. Ever since the enactment of the 1986 Act earlier this year we have seen an alarming new development in the techniques used by drug smugglers. I am referring to the techniques of concealing drugs within their bodies. This has forced us to consider how best to counteract the bizarre lengths to which smugglers will go. This Bill demonstrates that our determination to act on drugs is undiminished. We have also taken the chance to make a limited number of more minor but positive reforms of criminal procedure.
Your Lordships have rightly been much preoccupied in recent years with the drugs issue. We have had to consider a range of demands presented both by our need to pursue effectively those who trade in drugs and to educate, particularly the young, about the awful harm which they may do to themselves by drug abuse. As parents, many of us have worried about how our own children might respond to the availability or offer of drugs. We are all sadly too familiar with the appallingly destructive effects which drugs can have on families, where despite all their love and care, parents find their children being drawn into drug experimentation without understanding the enormous risks they take. What some young people might think of as a lighthearted frolic can lead to disaster, degradation and death.
As I said, we all found common cause and a most encouraging spirit of common concern when we debated the 1986 Act last Session. Those debates revealed a powerful desire on all sides of your Lordships' House to see that the powers available to
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the courts in sentencing drug dealers would demonstrate unequivocally that those evil men could never hope to gain from such criminal activities. I hope that the same spirit of mutual concern will underlie debates on this Scottish Bill.
In Scotland, it is generally thought that drugs are first an urban problem; but the extent to which drugs offences now occur throughout the country is a measure of the spread of the dealer networks which this Bill is designed to combat. In 1985, 3,047 persons were proceeded against for drugs offences in Scotland with cases occurring in every single district and islands authority except Orkney. For every person proceeded against in the four main cities, Edinburgh, Glasgow, Dundee, Aberdeen, there was another elsewhere in Scotland. But, if we look more closely at the figures of those against whom proceedings were taken for supplying drugs or for possession with intent to supply, we find a different picture. These offences, covered by Sections 4(3) and 5(3) of the Misuse of Drugs Act 1971, are very heavily concentrated in certain areas. The four cities, taken with Renfrew and Stirling, accounted for just under 70 per cent. of the 302 such cases in 1985. It is natural that these dealers will be found in greatest numbers nearest to the largest concentrations of people. It is in such areas that there are a greater number of opportunities to launder the proceeds of crime. They provide many more outlets for recirculation of the money into businesses, property, leisure projects and other investments.
This Bill will make such personal assets of whatever nature and wherever situated liable to confiscation by the courts on conviction. It is my hope and belief that the major dealers will be much less likely to pursue their trade once they realise that the consequence of being caught includes not only a lengthy prison sentence, but the forfeiture of everything they have gained from their trafficking.
Government action in the longer term has been concerned to reduce demand for drugs. This requires the co-operation of a whole range of agencies—police, Customs and Excise, teachers and those in the health services. As well as reducing the total demand for drugs, by making the consequences of using drugs clear to all through education, we must do all we can to choke off the supply.
Through their judgments on drugs cases in recent years the Scottish Judiciary has shown equal concern over drug dealing. They have viewed such charges as among the most serious with which they have to deal. Of the 234 persons convicted on supplying charges in 1985, 172 received a custodial sentence, 67 were sentenced to five years or more. Such severe sentences are a reflection of the widespread concern about drug trafficking. They mirror society's outrage at those who seek to exploit for personal gain the cruel dependency on drugs which these people carefully foster. This Bill will add considerably to the sentencing options available to the High Court of Justiciary when determining a convicted drug trafficker's fate.
While it forms the major part of the Bill, I think I have said enough in general terms about the problems of drug traffickers and I should now like to deal with the major elements of the Bill itself.

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The core of the Bill lies in Clauses 1 to 7 which deal with confiscation orders. The High Court, on the motion of the prosecutor, is to be empowered when sentencing a drug trafficker to order the confiscation of the proceeds of his crimes in addition to whatever other sentence it considers appropriate in the case. There is a statutory presumption that the convicted person's whole estate and everything that has passed through his hands in the past six years represents the proceeds of trafficking. The onus of proving that this is not so rests on the accused. Any sales or transfers of property to relatives or friends at less than full value will fall to be considered by the court. This power should make it even more clear to drug traffickers that they will find it very hard to protect their illgotten gains.
The Court of Session will have the power to appoint and direct the work of an administrator who will manage and realise the offender's property to fulfil the terms of the confiscation order. These are functions given to the receiver under the 1986 Act; but as there is no common law on receivers in Scotland it is necessary to spell out the administrator's powers on the Bill.
Clauses 8 to 12 anticipate the obvious reaction of a drug trafficker to being charged by allowing the prosecution to apply to the Court of Session for a restraint order. Such an order will freeze the trafficker's assets until the whole proceedings have been completed, and so prevent him from putting any of his assets beyond the reach of any confiscation order which may be made as part of the sentence. The restraint order is a very necessary pre-emptive device.
Two specific new criminal offences are created by the Bill. Both are designed to ensure that those who associate themselves with this heinous trade even in an ancilliary capacity will find themselves open to severe punishment. Clause 38 makes it an offence to prejudice any drug trafficking investigation; for example, by tipping someone off that he is under investigation. Such complicity will be punishable by up to five years' imprisonment. An even more unforgivable crime is committed by those who use their professional skills to aid a drugs dealer to hold on to the proceeds of his crimes. The prospect of a prison sentence of up to 14 years provided for by Clause 39 should make all such persons stop and think before they offer any such help.
Where a confiscation order is made but not met in full by an offender, he will be liable to an additional term of imprisonment in default. This term will be served consecutively to any other sentence imposed and could be as long as 10 years for default on a sum of over £1 million. The drug dealer therefore faces the prospect of a very long period behind bars and the loss of everything he had—a harsh but well-deserved fate.
Indeed, when taken together the measures which apply against drugs dealers represent probably the most severe range of sentencing options for statutory offences in Scots law. This is right and proper. The threat to the wellbeing of Scottish society posed by the activities of drugs dealers is deadly serious. We intend to meet that threat with a full and rigorous response.
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Part II of the Bill deals with a number of miscellaneous matters. First, it provides Customs officers with powers to detain those suspected of certain Customs offences. Two separate powers are involved—a general six hours detention power and a specific power designed to enable Customs officers to meet the particular problems associated with the investigation of those suspected of smuggling drugs concealed in their bodies. The general power follows a recommendation of the Keith Committee in its report on the enforcement powers of the revenue departments. An inadvertent consequence of an amendment to the terminology of existing Customs legislation, made in the Police and Criminal Evidence Act 1984, left Customs officers in Scotland without the power of detention. Clauses 44 and 45 will remedy this. More importantly, Customs officers have a key role to play in preventing and detecting the importation of illegal drugs. In a country such as Scotland, with a long coastline and a well developed and growing network of international air routes, there is a great need for the specialist skills and intelligence network of the Customs and Excise.
The detention power proposed in Clause 46 of the Bill deals with those who seek to smuggle drugs into the country by swallowing small quantities of controlled drugs in containers such as condoms or by concealment in their body orifices. The Bill provides that those suspected of smuggling drugs in this way can be detained for 24 hours on the authority of a senior Customs officer and for up to a further seven days on the authority of a sheriff. This should allow time in most cases for evidence of internally smuggled drugs to become available which would enable a suspect to be charged.
Of the remaining items in Part II of the Bill, there are two which I should perhaps explain. Clause 47 simplifies the procedure for arranging sittings of the High Court and abolishes the concept of High Court "circuits." I say abolishes the "concept" because there is no intention to alter the practice of the court of hearing cases outwith Edinburgh, only to remove the limitations on the court's jurisdiction when it is sitting outwith Edinburgh. There have been occasions when a particular sitting on circuit has not been fully used and this at a time when High Court sittings in other towns, geographically near at hand, are severely congested.
The provision in the Bill allows more flexibility in indicting cases to sittings in the first place, and, where unforeseen difficulties arise, makes it possible for the prosecution to apply for cases to be reallocated to other sittings of the High Court, subject, of course, to the judge giving both parties an opportunity to be heard. The measure will not significantly affect the workload of the courts. It will, however, introduce a greater flexibility and efficiency into the conduct of High Court business and a speedier disposal for those cases which benefit.
Clause 49 is designed to afford a remedy in cases where the defence agent cites the procurator fiscal as a witness in a trial, thereby preventing his attendance in court until after his evidence is given. This has resulted in fiscals having to spend an entire trial outside the court but on hand to give evidence without ever being called. The clause provides discretion for the court to allow the fiscal, or other witnesses, to be present.

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The other items in Part II of the Bill will, I trust, also be welcomed as minor but constructive improvements in criminal law and procedure. For a Bill of this length—55 clauses—the two schedules are commendably short and. I think, and hope, uncontroversial. I should like to draw your Lordships' attention, however, to one item in Schedule 1 which I think will be particularly welcomed on all sides. That is the proposal to reduce to six months from one year the minimum length of a probation order. This will allow the courts greater flexibility in the use of probation orders and provide a further disposal appropriate to less serious offences.
I should touch, I think, on something not yet in the Bill, which I propose to bring forward at Committee stage by way of government amendment. We have decided, in the light of our consideration of the relevance to Scotland of the Roskill Report on Fraud Trials, that my noble and learned friend the Lord Advocate should be given new general investigative powers on the lines of those proposed in the Home Office Criminal Justice Bill for the Serious Fraud Office in its investigations into fraud cases. We are clearly anxious to pre-empt the possibility that criminals operating in England and Wales might simply transfer the locus of their activities to Scotland to avoid the effects of new Home Office legislation. I should add that there may be other amendments, depending on the outcome of consultation. I am afraid that I am not yet in a position to give details.
The Government believe that effective law and order depends for its success on public co-operation. That is in part secured by ensuring that the public's expectations of criminal justice are fulfilled. In this process it is essential to ensure that Parliament can preserve that vital balance which weighs the detection and conviction of the guilty against interference with the rights of the innocent individual and the public at large. It is sometimes necessary to tilt the balance against the suspect when the crimes are of a particularly destructive nature. Parliament, in such circumstances, acts consciously in favour of the victim and innocent people generally. Few would deny that Parliament has a fundamental duty to protect the community and particularly our young people from one of the greatest evils of our time, and those who promote it.
This Bill should be seen as part of a much larger picture, one which requires the integration of a whole range of legislative and practical initiatives. This single element in that picture shows our resolve to pursue ruthlessly those responsible for creating and feeding demand for a wholly obnoxious product. Those who profit from the misery of broken families and the ruined health of young people must understand that they face loss of liberty and the loss of everything which their wicked trade has enabled them to obtain and enjoy. I urge your Lordships to support it, and beg to move.
Moved, That the Bill be now read a second time.—Lord Glenarthur.)
3.16 p.m.
Lord Morton of Shuna: My Lords, in general, the provisions of this Bill are wholly acceptable to the
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Opposition. We are, of course, wholly in favour of any measures that will cut down drug trafficking and the use of drugs in the country. In so far as the Bill gives additional powers to investigate and to confiscate the profits of drug trafficking, we are wholly in favour of it. The only word of warning I would give is a fairly minor one. If we increase the penalty of imprisonment too much, it may reach the stage where it is difficult to obtain a conviction when juries say, "We know that this person is going away for so long", the burden of proof somehow seems to go up. We have not yet reached that stage with drugs, but I think it appropriate to give the warning.
It is interesting to note that the Government intend to bring in powers in relation to fraud trials, and subject, of course, to seeing them, we welcome that. However, it raises a difficulty, because the Bill will run parallel with the Criminal Justice Bill in another place. The fraud provisions of the Criminal Justice Bill are in Committee in another place. How will we ensure that they link up with the fraud provisions coming into this Bill and that they do not clash at some point?
The Government's attitude in this regard is shown by what has happened. To my recollection, we started dealing with the problem of confiscation or penalising of drug traffickers' profits in the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985. That was obviously a holding measure. In debate, I suggested that there was no reason why confiscation should be restricted to drug trafficking. It could relate to highly profitable crimes as well, because people who engage in drug trafficking frequently have other interests, such as robbery, fraud and all sorts of serious criminal activities. Instead of that, the Government produced the Drug Trafficking Offences Bill which became an Act in July of this year. That Act applies to England and Wales and contains provisions to enable property to be followed to Scotland and confiscated.
This Bill broadly provides for Scotland what the Drug Trafficking Offences Act provided for England and Wales. However, it is far from clear in this Bill that there is power to follow and catch up with the Scottish drug trafficker, if I may use that expression, and his property in England. It is not clear that there is complete reciprocity between the Drug Trafficking Offences Act and this Bill, and there should be. The Criminal Justice Bill, which is under consideration in another place, takes the confiscation of criminals' profits a stage further. It deals with confiscation of profits of highly profitable crimes. But that will not apply to Scotland. Why not? Is it not appropriate that the penalties we are imposing on offences should run together and not leapfrog each other in this way?
The Criminal Justice Bill—as opposed to the Bill we are discussing—has 128 clauses of which 44 apply to Scotland. It is far from clear that the easiest and most convenient way to proceed is to have a Criminal Justice (Scotland) Bill and a Criminal Justice Bill going through the Houses of Parliament at the same time if the Criminal Justice Bill is not purely an English Bill but also a Scottish Bill. I am far from clear why the Government consider it wrong to make provision for the power at this stage to take the assets of bank robbers in the same way that we take the assets of drug traffickers. If it is right to do that in England, why is it wrong in Scotland? Should we not take the

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opportunity of providing Scotland with the same powers to take profits either from drug trafficking or other crimes, to put all these powers in one Bill and to obtain the same result? Otherwise, I suspect that this House will have a Criminal Justice (Scotland) (No. 2) Bill in six months' time making provisions to take the profits of profitable crime following the measures in the Criminal Justice (England) Bill—if I may so refer to it. It is surely not beyond the power of the draftsman to add to the references to drugs the words "highly profitable crime".
We are told, rightly, that the Criminal Justice (Scotland) Bill follows the Drug Trafficking Offences Act. Section 35—the section relating to investigations—gives power to investigate with a warrant from the sheriff, which applies only to Scotland. Section 27 of the Drug Trafficking Offences Act begins,
"A constable or, in Scotland, the procurator fiscal may, for the purpose of investigation into drug trafficking, apply to a Circuit judge or, in Scotland, the sheriff".
The Scottish investigators—the Customs and Excise, the police or the procurator fiscal—apparently are to be given no power to go to an English judge to ask for a warrant. Is it really suggested that Scottish drug traffickers do not go over the Border and that there is no way of dealing with this?
The noble Lord the Minister referred to Clause 38 of the Bill in relation to prejudicing offences. It states,
"Where, in relation to an investigation … an order has been made or has been applied for … a person who, knowing or suspecting that the investigation is taking place, does anything which is likely to prejudice the investigation".
What is meant by "does anything"? Section 31 of the Drug Trafficking Offences Act does not use the words "does anything" but refers to "makes any disclosure". Presumably—but perhaps this is not an irrebuttable presumption—there is some purpose in the change. It is one thing to make a disclosure which prejudices—to "tip somebody off" in the Minister's words. One would want to penalise that kind of activity. However, the words "does anything" are so vague that almost anything might be prejudicing an investigation.
I can recall a case where the Crown relied very strongly on a very reluctant witness who married the suspect. Will she be prosecuted under this Bill for marriage, because certainly marriage "does something". It certainly prejudiced the investigation because she became an incompetent witness for the Crown. Under Clause 38 one would appear to be able to prosecute for that.
If one compares this Bill with the Criminal Justice Bill, quite apart from the question of fraud trials and the penalties on the profits of non-drug offences, there are other aspects which seem peculiar should changes made in England not be applied to Scotland. For example, Clause 71 of the Criminal Justice Bill changes the aspects of compensation orders and, quite rightly in my view, enables a court in a suitable case to make compensation orders for payment of funeral expenses in respect of a death arising from the offences. That was previously prohibited. It is not being provided for Scotland. Why not? Why should there not be similar powers in relation to compensation orders in certain circumstances connected with road traffic offences?
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It appears to me that if the Government took a closer look at their two Bills, they could fit them together and produce a better Bill for Scotland which we should welcome.
On the minor changes in the circuits and sittings of the High Court, I would wholly agree that the concept of circuits is totally out of date and should be dropped. But a caveat must be added. It would be possible under Clause 47 to have any crime tried at any place. One would require an assurance, or possibly an amendment, to suggest that it must be convenient as regards the place of the crime or convenient to the accused. One can see a situation where, if the Crown were not getting convictions for one reason or another. say, in Glasgow, they might want to take all their High Court trials in Wick. That might discourage some people from giving evidence. I would suggest that it is a highly important part of the jury trial system that the jury should be drawn from people who are resident in the area where the main crime has been committed. It is important that if there are to be switches of trials at the last minute this is done in a way that does not cause prejudice to the accused by forcing a change of his counsel or solicitor. If it is right that a prosecutor can apply to transfer a case to another place, as is to be provided under these measures—with which I agree—I suggest that there should also be a right for an accused to apply to the court for the case to be transferred. There are rare cases where he or she may feel for some reason that it is grossly inappropriate that the case should be tried where the Crown is suggesting.
The need for the provision is the lack of courtrooms in Glasgow. Glasgow High Court has existed for well over 100 years. It has two courts. It has for the past 10 years needed five or six courts. I understand that there are now proposals to divide the court horizontally to produce four courts. There is space behind the building that will not exist for ever, but at present it seems to be available space on which to build where additional courts could be built without doing anything to damage the building, which has a good facade. If the Government do not act now we may be in a position where, in five or ten years' time, we have made changes in the High Court building in Glasgow and there is no space to expand further.
I urge the Government—I hope that when the Lord Advocate comes to speak he can do this—to assure us that they will make adequate provision of courts, because to have only four courts, which I understand is the proposal, simply will not be enough.
On the whole, therefore, with the criticism of lack of provision and of the way that England and Scotland appear not to march together but have to march out of step, I welcome the Bill as far as it goes. I regret only that it does not go further.
3.32 p.m.
Lord Wilson of Langside: My Lords, although I share the concern of the noble Lord, Lord Morton of Shuna, for the health of the law of Scotland, I do not propose today to follow him into the more detailed criticisms of some aspects of the Bill and some of the problems of legislating for Scotland. I express the hope that in particular the Lord Advocate and the many lawyers in and around the Scottish Office will give due weight to these criticisms.

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To some extent I think it has to be said that some of the problems that arise are inherent in the treaty into which we entered in 1707, but that is another story. We on these Benches welcome the Bill, and we are indebted to the Minister for the careful and clear presentation of its provisions and terms. I will not add to the torrent of rhetoric on the subject of the problem of drug trafficking, into which many in the Palace of Westminster are occasionally tempted to enter whenever the subject arises. It is generally accepted that it is one of our major national problems, along with much of the rest of the world.
I think that it is also generally accepted that one of the principal ways in which the machinery of law enforcement can make an impact on this problem is by getting at the pushers. This is part of the conventional wisdom. One of the most effective ways—again I think that it is part of the conventional wisdom—in which one can get at the pushers is by getting at their pockets and making sure, so far as it is possible to do so, that they do not benefit from their ill-gotten gains in the trade. While there are many problems to be dealt with in this context on the demand side, in terms of supply I think it is generally accepted that effective provisions for the confiscation of their illgotten gains are a good thing.
One of the principal questions that has arisen as this dreadful problem has grown over quite a number of years is whether the response of the government machine under successive Governments has measured up to the nature of the growth of the problem. The point is that this is an international problem. In this context, I should like to ask the Minister this question. Is the co-operation between the law enforcement agencies of different countries adequate to the problem, and, if not, do the Government propose to improve matters in that direction?
This question was in part inspired by two reports—I am sure that the Minister has been referred to this—in the Observer of last Sunday, which throws some light on the inadequacy of the measures that are taken to deal with the problem internationally. The headline on the front page of that edition of the newspaper states:
"Unmasked: Drug baron who got away".
The front page article opens with this observation:
"The Observer can today identify one of Britain's biggest drugs traffickers".
The article then names him and continues:
"who is at large and living in Surrey".
The heading on the centre page is:
"Heroin trail to the squash club".
The first paragraph states:
"To the lawyers and accountants who frequent the West Surrey Squash Club in Walton-on-Thames, in the stockbroker belt of Surrey. John Humphries is just another player, albeit one of the club stars".
It goes on to say:
"he … has been one of Britain's biggest traffickers in the drug".
I dislike as much as anyone else the business of trial by newspaper, but this is a very detailed and disturbing report. In the course of the report—this is what prompts my question to the Minister—it is stated:
"But now the DEA"—
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that is, the American Drugs Enforcement Agency
"believing that he has been alerted to its operation, is discussing with British Customs and Excise the possibility of his extradition".
As I say, I dislike the business of trial by newspaper, but this is a quite remarkable report. If it is substantially true I should like to know—and we are entitled to know—why it has taken so long for the American department and our own Customs and Excise to proceed further in the business of extradition when newspapers can uncover this kind of situation.
The next question I ask is: if this kind of thing can happen without effective action taken, will the provisions of the Bill be sufficiently effective to claw back the French chateau, Krugerrands and gold bars in the Swiss vaults, being the articles with which the court was concerned in Operation Julie in 1978?
I do not say this in any party sense at all, but because of the failure of successive governments to face up to the real and international nature of this drug trafficking problem, I am concerned with whether the proposals in this Bill, while we welcome them, will be adequate to deal with the situation. I wonder whether the Minister can reassure us as to the vigour with which the Government will monitor and pursue, and ensure the pursuance of, the new powers which are being given to the law enforcement agencies. That is all that I want to say on the matter. Beyond that we welcome the other provisions in the Bill.
There is one question I should like to ask the noble and learned Lord the Lord Advocate when he replies. The Customs and Excise in Scotland are being given additional powers. How does their strength today compare with what it has been in the past? Has the strength of the Customs and Excise been increased to cope with the growth of this problem? It would be very interesting to know the answer to that because it would help to convince us that the Government are serious about making a real impact on the problem of drug trafficking.
3.44 p.m.
Lord Ross of Marnock: My Lords, the Government are to be congratulated on bringing this Bill forward. There will be no question of battling with the noble and learned Lord the Lord Advocate in respect of this Bill. It will be a matter for joint concern to ensure the Bill is right in relation to the importance of the subject. Let us not underestimate the importance of the subject.
We are spending so much money, and we congratulate the Government on what they have been doing in relation to education—that is, bringing it home to people that drugs kill. We are dealing with people who have actually been caught, tried and convicted. We are dealing with the merchants of misery. We know what they are, and we know how the public look on them. If anything, we in this House and those in the other House are behind public opinion in this respect: the public are way ahead of us. I should not be at all surprised it' any ordinary member of the public on looking at the Bill and reading the first 46 clauses was amazed that it takes so much complex legislation to do what the public would say in one sentence. In the old Scottish way of legislation it would probably comprise about one paragraph: take the money from them; let them not profit from the misery and ill-health that

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they create. It is amazing that in this Bill we have 46 clauses designed purely to do that and to do it right. I hope that we have it right. I was amazed when my noble friend Lord Morton of Shuna told me that they are now applying the same 46 clauses and more to taking back from people who profited from serious crime—bank robbers, those who commit fraud, train robbers and the like—the profits from their enterprises. We have not done it in Scotland, and it is practically the same kind of thing.
The draftsmen in Scotland have been busy working with those in England to ensure that what they are doing is successful if those people move the proceeds. or the fruit of their labours, from England into Scotland. I think there are 128 clauses in the English Bill and 44 of them apply to Scotland. Could they not at the same time have drafted the Scottish Bill to do the same thing, and then we would have had a real Criminal Justice (Scotland) Bill? The Criminal Justice part of it amounts to very little; it is really the Misuse of Drugs (Scotland) Bill. With the saving of the time of the civil servants, the draftsmen and of this House and the other House, we could have been marching with England in relation to that aspect of it as well.
Setting aside the failures of the Government properly to organise the legislation and to do the right thing at the right time and coming down to the actual Bill, I do not think that we have much cause for complaint.
I am a simple man and am not like my noble and learned friend a lawyer. I read Clause 6 and see words like this:
"(2) For the purposes of subsection (1) above, the circumstances in which a person is to be treated as making a gift shall include those where he transfers an interest in property to another person, directly or indirectly, for a consideration significantly less (in this subsection referred to as 'consideration A') than the value of that interest at the time of transfer (such value being in this subsection referred to as 'consideration B'); and section 5 of this Act shall in such a case apply as if the value of the gift when received were the amount by which consideration A is exceeded by consideration B and as if the value referred to in sub-paragraph (ii) of subsection (5)(b) of that section were determined in accordance with
the formula—
C(B-A)/B
There we have a little bit of algebra. C has never been mentioned. I presume the horizontal line means that (B-A) is divided by B. Then we see that A is consideration A—we never thought of that! B is consideration B. That is real insight! C is described as "what the value so referred to would be had the gift been an outright gift". They should have told us that at the start and we should all have understood what the formula was.
Surely to goodness we could have left that to the court to decide instead of including an incomprehensible formula at this point in the Bill?
It is those kinds of matters that make me wonder whether anyone other than a lawyer in the Scottish Office reads through these provisions before they come here. I am sure that the noble Lord, Lord Glenarthur, is the inventor of the provision, although he never mentioned it. I thought that this prize piece of legislation came straight from him as the new wind rushing through the Scottish Office. However, if it did not come from him—and I think that he rather agrees with what I have said about it—then let us square the
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matter and get rid of this kind of nonsense in Scottish legislation. The Scottish draftsman has been listening too much to the English.
The noble Lord, Lord Glenarthur, did not mention confiscation. I know that it will be difficult; but we are dealing with people who have been convicted of drug trafficking. I worry more than slightly about the question of implicative gifts—gifts out of the proceeds to friends or relatives. In other words, they can protect themselves. We shall need to be very careful about the matter now that they know that the provisions will apply in Scotland as well as in England, because they will take the opportunity to get rid of their proceeds.
I point out to the noble and learned Lord, Lord Wilson. that I do not think we are dealing with small pushers, although they are included in the legislation. Some of them may be wealthy or have amassed wealth out of these activities. However, we are dealing with people who do the illegal importing and exporting. We are dealing not only with the people who produce the stuff, but also with the people who supply the stuff. We are dealing with people who may be part of a conspiracy—a whole ring. That is the important aspect. Therefore, we must be careful that we take all the powers necessary to get at the money in Great Britain and also, if possible, outside Great Britain.
I should like to ask about cash which is hidden in external places. Do we have any proper coverage in respect of that matter? We must remember that we shall not spend all that much money on it. We do not expect great success. We shall spend £500,000 and we expect to get back £300,000.
I heard mention today of supplying over 1,000 more inspectors for the Inland Revenue to deal with VAT and people engaged in the black economy. My noble friend Lord Graham of Edmonton will remember the Question that he raised. In my view, the black criminal activity merits a little more than £500,000. I hope that success in getting at the proceeds which those involved have been using over the past six years or more will amount to more than £300,000. We are speaking of a handful of people. It will be a very considerable job for the Crown office, for the police and certainly for the Customs. In my view we should deal with the matter properly.
When a gift is made to a person for charitable purposes, it must not he pursued. It cannot be brought back. However, I do not like Clause 6(4) which says:
"In subsection (3) above, 'charitable purpose' means any charitable, benevolent or philanthropic purpose whether or not it is charitable within the meaning of any rule of law".
That could provide scope for escape from the intentions of Parliament. It is difficult in Scotland because we do not have the Charity Commission. We do not have the same definitions and it has caused trouble in the past. Is that the reason for the wording that has been used? We shall need to ask the Government whether they are sure that the provision cannot be a loophole for very clever people who are dealing, and spending, in millions to protect themselves.
Another matter which was not mentioned by the noble Lord, Lord Glenarthur, concerns restraint orders. We must have restraint orders. Otherwise, there would be an invitation for people to get rid of

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their money and hide it. A restraint order can be made,
"at any point from 28 days before the Procurator Fiscal applies for a warrant in respect of a suspected drug trafficker until the conclusion of the proceedings".
This refers to a person who has not been charged. All the other provisions in the Bill deal with people who have been convicted. However, as regards this provision, we are dealing with someone who is only suspected. Before he is arrested and before he is tried, a restraint order can be made, freezing his business. One can put a stop to his business or to his dealings in cash through the banks and everything else. It is a very dangerous provision.
We shall be taking up in Committee the question of what happens if the person is eventually not proved to be a drug trafficker. A great deal of damage can be done to a person's business if his assets are frozen for the whole length of a trial and probably for some time afterwards. I gather however that the suggestion is that there should be compensation only if there is negligence on the part of an officer of the law. Presumably the noble and learned Lord the Lord Advocate will be responsible for the trial and so on. It will probably be worth looking at that point.
There is one other matter about which I am more than slightly worried. It concerns Clauses 38 and 39 which deal with offences. Clause 38 is entitled "Offence of prejudicing investigation". Subsection (3) says:
"A person guilty of an offence …

(a) on conviction on indictment, to imprisonment for a term not exceeding five years …

(b) on summary conviction, to imprisonment for a term not exceeding six months".

There is fair rein in those provisions. The matter can be left at that: five years for conviction on indictment and six months for summary conviction. However, we must remember that the procurator fiscal has decided whether the matter will go for summary trial or to the High Court.
Clause 39 is entitled "Offence of assisting another to retain the proceeds of drug trafficking." Subsection (5) says:
"A person guilty of an offence … shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding fourteen years …

(b) on summary conviction, to imprisonment for a term not exceeding six months".

That does not ring true, does it? I know that there are limitations upon summary sentences. However, I do not think that that provision is right. If someone goes for summary conviction, he will be liable to imprisonment for a term not exceeding six months but if he is convicted on indictment he is liable to imprisonment for a term not exceeding 14 years. Indeed, I am reinforced in that view especially when, under the previous clause on conviction on indictment, he is liable to a term not exceeding five years and on summary conviction to a term of imprisonment not exceeding six months. We shall have to look at that matter.
I have also looked at Clause 49 of the Bill which deals with procedure. I was surprised that nothing was said about it. It says,
"The court may, on an application by any party to the proceedings, permit a witness to be in court during the proceedings".
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That is not usual in Scotland. It is a very considerable departure from Scottish procedure. Indeed, it was generally accepted that a witness could be completely discounted and not heard if, by any chance, he had been present at trials and heard other witnesses and other proceedings in the court. What is the reason for this? If there is a decision by the court that the witness could be appearing in court before he or she has given evidence, what is the reason for this departure from this long-accepted rule of Scottish law?
On the whole I do not think that we disagree with the Bill. Certainly we do not disagree with its purpose. But let us not overrate the Bill. The real matter that will stop these people is the surety that they will be caught. We only do this after they are caught. We only do this after they are convicted. We have to stop them before they get that far. The surety that they will be caught means building up the police force, building up our Customs forces, and I entirely agree with the powers that were given there, though I think there is a slight mistake in the Bill at one point.
I always like to leave the Scottish Office to look for their mistakes. I always like to leave them one. It makes them read the Bill again if I say there is a case of omission in respect of the powers of the Customs officers. I am not going to say what it is. Read it. The one way to guarantee that the civil servants will read the Bill is for me or somebody else to say that there is a mistake in it. I want them to read the Bill and I want the Ministers to read the Bill, particularly the clause I quoted.
We are dealing severely with the consequences of being caught. But the Minister spoke of the bizarre lengths to which people will go to smuggle drugs. What is that related to? It is because there is so much money in the misery they create. They are not concerned about the misery. They are concerned about the money. This is the market theory: there is money to be made; let us supply what is wanted. This is one of the unacceptable faces of the market economy. From that point of view we should also look at the whole question of strengthening the police force as well, and those parts of the police force which have the awful job of trying to catch these people, so that with this Bill we can then deal with them.
4.4 p.m.
The Lord Advocate (Lord Cameron of Lochbroom): My Lords, I am extremely grateful to the three noble Lords who have spoken on this matter, and for the obvious warmth of the welcome they have given to the Bill in general. From the matters that they have raised, I look forward to an interesting Committee stage on the Bill.
Perhaps I may deal first with the points made by the noble Lord, Lord Morton of Shuna. Obviously I take note of what he has said about the effect that too great penalties may have on the discovery of crime, but I was glad to note that he accepted that in this Bill we have not gone beyond the limit. In parenthesis, while dealing with the question of offences, I assure noble Lords that the offences of what I might term "laundering" and "prejudice", the ones to which the noble Lord, Lord Ross of Marnock, has just referred, are in fact a mirror of the provisions in the English Bill

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in the sense that the penalties provided for there will be likewise found in this Bill.
The next point to which the noble Lord, Lord Morton, referred was the question of the amendment that my noble friend indicated he would be bringing forward in due course with regard to the Roskill Committee powers which are to be found in the Home Office Bill. Certainly there should be no problem of a clash with the Home Office on their provisions for implementation of those provisions of the Roskill report. Clause 2 of the English Bill applies to Scotland to enable the serious fraud office to pursue English investigations in Scotland. Our amendments to this Bill will extend, as necessary, to England and Wales to enable the Lord Advocate to pursue Scottish investigations in England where that is necessary.
The next point that the noble Lord opposite raised was in regard to confiscation of profits; that is, profits generally. I have to say that it is not the intention of the Government to include in the Bill an extension of the confiscation procedures as is to be found in the current English Bill. Your Lordships may recollect that some little time ago the matter of the general question of the confiscation of proceeds of crime was remitted to the Scottish Law Commission by my right honourable friend who is now the Secretary of State for Defence.
That remit came to a halt when the provision under the Law Reform (Miscellaneous Provisions) Bill were brought forward. My right honourable friend the Secretary of State in fact intends to refer the whole question of confiscation of proceeds of crime again to the Scottish Law Commission to enable full consideration to be given to the issues in the light, first of all, of some experience of the operation of the Drug Trafficking Offences Act 1986, and indeed of the operation of this Bill, before determining whether, and in what form, legislation may be required. I think your Lordships understand that we have separate systems. The way in which we have to go about matters is necessarily different, and that is clearly demonstrated by the terms of the Bill before the House today.
Another point that the noble Lord put to me was in regard to what he said were 44 clauses of the Home Office Bill which apply to Scotland. It is always with a certain degree of hesitation that I correct the noble Lord. It is true that there are clauses in that Bill which apply throughout the United Kingdom. That means that they apply to Scotland as well as to other parts of England and Wales.
Those clauses deal with two principal matters: first of all, extradition. The provisions on extradition in the Bill presently in another place are to apply in both Scottish and English jurisdictions. But it would be extremely wasteful to have the same provisions in both Bills. Furthermore, there is a more practical point. Foreign governments are used to what is called the one-door approach in dealing exclusively with the Foreign and Commonwealth Office on extradition questions. The new provisions in the Bill will merely continue this long-accepted system of handling extradition questions.
Another part of the Bill will deal with the Criminal Injuries Compensation Scheme. That again of course operates on a Great Britain basis, and has done since
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its inception. As I think the noble Lord opposite well knows, it draws its membership from both sides of the Border, and the scheme takes full account of the law of Scotland, for instance, in relation to civil law damages actions and the level of awards made in Scotland.
The essential elements of the present arrangement, which is non-statutory, are retained in the new statutory scheme. Clearly any separate Scottish scheme would have to duplicate the provisions of the Bill (which I suggest would be pointless) or, if it did not, would lead to differences in scope, operation or administration which could result in unfairness to claimants. Accordingly we concluded that there was no justification for the inclusion of separate provisions in a separate Scottish Bill.
The only other part of the Bill which is at present in another place that is common to England, Wales and Scotland is that which deals with the increase of maximum penalties for certain firearms offences. Again the view has been taken that since the statutes which create the offences extend to both sides of the border, the changes which increase the maximum penalties would more appropriately be found in that statute rather than having the matter rehearsed again in the present Bill.
The next point that the noble Lord put to me related to investigations. That was in regard to Section 27 of the Drug Offences Act 1986. I think perhaps the answer to that might be found in Schedule 2 to the present Bill, where noble Lords will find that there are certain words to be repealed because the provisions have been taken into this Bill. Obviously the noble Lord may wish to consider this more appropriately at Committee stage.
I note what the noble Lord said about compensation orders and the terms of Clause 38. The noble Lord, Lord Ross of Marnock, made remarks about the phraseology of the legislation. In particular he pointed to Clause 6. Obviously these are matters we shall return to in Committee. I certainly look forward to the debate at that time, as no doubt the noble Lord opposite does as well.
The noble Lord, Lord Morton, also raised a question about the enforcement of Scottish orders in England and Wales. The position is that this is to be covered in the Bill which is presently in another place and will be added by way of government amendments. The reason the provision is not in the present print of the Bill before another place is that that Bill was introduced before this Bill and therefore could not provide for enforcement of provisions which had not yet been laid before Parliament. I assure noble Lords that there is no question of any gaps in the cross-Border enforcement provisions in either direction.
The last point which the noble Lord. Lord Morton, made was in relation to circuits. I want to make it clear that we are not departing, as my noble friend said at the start, from the very important principle that has always been behind prosecution and trial in Scotland—that it is to take place before a local jury. The noble Lord will know that there are provisions which allow an accused in certain circumstances to secure removal of a trial from one place—I think it is to Edinburgh, which has been regarded as the home of the High Court—where there is prejudice. I shall be

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interested in any matter which may be raised on this at Committee stage.
The noble and learned Lord, Lord Wilson of Langside, made some general points about the importance of international co-operation in dealing with drug trafficking. I say from personal knowledge that within the Commonwealth there is an acceptance of the necessary mutuality of co-operation to bring this trade to an end, and that, as the noble and learned Lord will know, is extended into the international field generally. I assure your Lordships that the Bill is just one instance of the vigour and clear intention of the Government to pursue this wicked trade and to eradicate it.
One indication of the importance that we set by international co-operation is to be found in Clause 29, which provides for enforcement within the United Kingdom of external orders:
"made for the purpose of recovering payments or other rewards received in connection with drug trafficking or their value".
Noble Lords will understand that so far as this Bill is concerned it can only be contained within the jurisdiction of Scotland, but I assure your Lordships that it is an earnest of our intention that there should be the fullest mutual co-operation between states to secure that these wicked men do not profit from their trade.
So far as the matter which the noble and learned Lord asked me about—namely, the newspaper report—obviously I have no knowledge of this and I should therefore be extremely cautious about making any more than a general comment, which is that extradition depends on a request by a foreign government and thereafter on the tracing and apprehension of the alleged offender, leaving aside the question of the provision of the necessary documentation. What the noble and learned Lord said in the debate will be noted by those who are intimately concerned with the matter.
The noble and learned Lord also asked me specifically a question in relation to the strength of Customs and Excise personnel in Scotland. On 30th November of this year some 2,018 staff were deployed in Scotland. Of these 508 were employed on Customs work—that is to say, working at airports, ports or inland—and concerned with the control of passengers and the import and export of freight. I cannot specify the proportion of such staff whose duties include the detection of drug smuggling, I am advised by Her Majesty's Customs and Excise. That indicates clearly the importance that is placed on this work within the Government.
I now turn to the helpful remarks made by the noble Lord, Lord Ross of Marnock, in relation to charity. Obviously we want to discuss this at Committee. I take the point that he made; it is perfectly valid. Equally we want to consider the point he made—again I respect the force of it—in relation to what is called the suspected drug trafficker. No doubt noble Lords will want to consider the equivalent provisions in English legislation.
The noble Lord also raised a point about Clause 49; that is to say, dealing with witnesses remaining in court. I think that my noble friend gave an explanation as to why that was. There has been a practice of the defence citing the procurator fiscal as a defence witness
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and not calling him. The result is that he has to remain outside the courtroom and is simply wasted. There is a very considerable supposition that it is done specifically for that reason.
This is a general provision. It may be applied both to the Crown and to the defence. If the court is satisfied on cause shown—and that can be done in the civil courts, as the noble Lord, Lord Morton, knows—the person who has been cited as a witness may remain in court during the course of evidence. I do not anticipate that this would be any more than exceptional.
I am grateful to noble Lords for their reception of this Bill. There is one point which before I resume my place I should deal with, because the noble Lord, Lord Morton, raised it this afternoon. I am aware that he raised it last night on another matter and that I did not reply at that time. My right honourable friend the Secretary of State is considering proposals for the justiciary buildings. Obviously, work has been done on the original proposals and they have been amended. All that I can say is that discussions have been held with interested parties and further consideration at present is being given as to how best to improve the facilities available to the High Court in Glasgow. I note what the noble Lord said today and yesterday evening.
I again join with my noble friends in supporting this Bill.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Restrictive Trade Practices (Services) (Amendment) Order 1986
4.22 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth) rose to move, That the draft order laid before the House on 18th November be approved. [2nd Report from the Joint Committee.]
The noble Lord said: My Lords, this order withdraws the exemption from the Restrictive Trade Practices Act of certain agreements to which the parties are building societies or building societies together with the Treasury. The agreements concerned are those relating to the raising of funds or the making of loans or to the rates of interest charged to borrowers or to be paid to shareholders or depositors.
The main practical effect of the order will be to require that existing and future restrictive agreements between building societies about the rates of interest charged or to be paid to borrowers or investors must be furnished to the Office of Fair Trading and entered upon a register. The Director General of Fair Trading will then consider whether the restrictions in those agreements are of such significance as to call for investigation by the Restrictive Practices Court. If there are no significant restrictions, the Secretary of State, acting on a representation from the Director General, can give a direction that the agreement need not be referred to the court. Otherwise, unless the agreement is terminated or the restriction in it is abandoned, it must be referred to the court for judgment as to whether or not the restrictions are contrary to the public interest.
The Restrictive Trade Practices Act has applied in this way to interest rate agreements between banks in Great Britain since services generally were brought within the scope of the Act in 1976. The Act was extended to Northern Ireland banks at the end of 1985. The decision not to apply similar rules to interest rate agreements between building societies was taken in 1976 when building society lending was subject to a system of guidelines. These guidelines were agreed between the Government and the Building Societies Association and they were implemented through agreements between the societies.
With the discontinuation of the guidelines system in 1980, the original justification for the building societies exemption ceased to apply. The Government therefore indicated in 1984 in their Green Paper on the building societies that they proposed to withdraw the exemption when their new general legislation for building societies took effect. This in practice was the Building Societies Act 1986, which comes into force in January 1987. As the parallel exemption for agreements between the societies and the Treasury also has its origins in the discontinued guidelines system, it too has ceased to serve a useful purpose and can he withdrawn.
The Government believe that it is wholly appropriate that these exemptions from the Restrictive Trade Practices Act should be withdrawn at this time. The building societies in recent years have faced widespread competition from banks in the mortgage market, and the 1986 Building Societies Act, to which I have referred, will ensure that within certain constraints and subject to careful prudential supervision, the societies can return this competitive challenge in the field of unsecured lending.
It is appropriate therefore that the banks and the building societies in future should be subject to the same competition disciplines. Indeed, faced with an increasingly competitive environment, the building societies have already moved gradually from their traditional method of establishing interest rates. In 1983 the societies' association abandoned its longstanding practice of recommending interest rates in favour of a system of advisory rates. By 1985, the association had also ceased to publish advisory rates, and more recently it has agreed that the practice of collective discussion on interest rates followed by an agreed statement of intent should also be discontinued.
I might add that this order is not likely to result in any substantial change in the way that the building societies currently determine interest rates. It is a modest measure which will do no more than add the weight of restrictive trade practices legislation to the moves away from collective decision-making on interest rates which, I should add, the building societies have already made.
It will also help to ensure that building societies continue to set interest rates competitively to the advantage of consumers and it will place the building societies and the banks on an equal footing under existing legislation. As I say, it is a modest piece of legislation which undoubtedly will be of benefit to consumers. I beg to move.
Moved, That the draft order laid before the House on 18th November be approved. [2nd Report from the Joint Committee.]—(Lord Lucas of Chilworth.)
4.30 p.m.
Lord McIntosh of Haringey: My Lords, I must confess that my deepest suspicions are aroused when a Government Minister says that something is a modest measure. So often have we found in the past that modest measures carry within them unexpressed or unexplained disadvantages. It is therefore necessary to go behind the very lucid explanation (for which we are most grateful) given by the noble Lord.
I had some difficulty in doing this because the Fifth Standing Committee on Statutory Instruments which considered the order reported to another place on 4th December but the minutes of the proceedings of the committee have not yet been printed. It may be my inexperience in these matters, but I should have thought that it would be desirable for the minutes of the Standing Committee to be available to Members of your Lordships' House if we are going to consider these matters with the seriousness that they deserve.
However, in the absence of that it has been necessary for me to go back to the 1976 order, to look back then at the Restrictive Trade Practices Act 1976 and to look at the Fair Trading Act 1973. I confess that I did not go back so far as the Restrictive Trade Practices Act 1956. I take from all these the lesson that our economy is moving from a manufacturing economy of goods, which is what was provided for in the 1973 Act, to very substantially a service economy, which is what was provided for in the 1976 order.
I take the point the noble Lord makes about the specific reasons which no longer apply for the exemption of building societies. I also accept his assurances that this is now necessary and desirable in order to put the building societies on the same footing as the banks, with whom, since the enactment of the Building Societies Act 1986, they are now competing. In other words, the order proposed appears to be in line with the views of those of us on this side of the House who take an interest in these matters, and we welcome it wholeheartedly.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord, Lord McIntosh of Haringey. He will appreciate of course that minutes of Standing Committee proceedings are completely outside any area of influence that I might have, and I resist the temptation to enter into the wider debate that he just momentarily invited me to enter. I very much welcome the noble Lord's acceptance of the order as being helpful and beneficial to consumers.
On Question, Motion agreed to.

Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment No.2) Order 1986
4.32 p.m.
Lord Beaverbrook: My Lords, I beg to move that the draft Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment No. 2) Order 1986, which was laid before the House on 25th November and

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which has been considered by the Joint Committee on Statutory Instruments, be approved.
This order disapplies certain provisions of the Rehabilitation of Offenders Act in relation to the senior management of building societies. Both the Financial Services Act and the Banking Bill currently in Parliament contain similar provisions. It was first planned to introduce these provisions by amendment to the Building Societies Bill which Parliament approved in the previous Session. In view of the pressure of time on the Bill, however, it was decided to take the alternative course of making the disapplication by an order under the 1974 Act.
The order will make it possible for building societies and their supervisory body, the Building Societies Commission, to inquire about and take into account spent convictions for certain offences in assessing the suitability of an individual to hold a senior position in a building society. Such information can then be relied upon in any decision by the Building Societies Commission to impose conditions on the authorisation of a society or to revoke or to refuse to grant such authorisation. It may also be relied on in the grounds for a society's decision not to appoint or to dismiss an officer of the society; and it would be admissible evidence in any appeal against such decisions.
The order is fairly complex because in framing the disapplication we have carefully balanced two obligations. It is important that regulatory bodies charged by statute with maintaining high standards of probity in the City should have the power to carry out effective scrutiny of the fitness of senior executives. It is equally important, however, that this should not go so far as to run counter to the fundamental intentions of Parliament in passing the Rehabilitation of Offenders Act. The disapplication has therefore been restricted in its scope so that it affects only individuals in the upper echelons of building societies, and then only where certain types of offenders are concerned.
The order relates only to individuals who are directors or officers of a building society. The term "officer" is defined in the Building Societies Act 1986 and means any director, chief executive, secretary or manager of a society. The term "manager", too, is defined in the Building Societies Act as an individual employed by the society who is under the immediate authority of a director or a chief executive. In concentrating on the senior management of societies we have followed the approach taken in the Banking Act 1979 and also in the Financial Services Act. To extend the disapplication to less senior employees would deprive an unreasonably large number of people of the protection they enjoy under the Rehabilitation of Offenders Act and, as their activities would be properly supervised by senior staff, we do not think this is justified.
The order will enable questions about spent convictions to be put by the Building Societies Commission as the supervisory authority for building societies and by societies themselves. But only spent convictions for "relevant offences" would need to be disclosed. These are defined as offences of fraud or other dishonesty and offences under legislation relating to building societies and other commercial
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institutions. These are the types of spent conviction which may be material to judgments about an individual's suitability to be involved in the running of a building society. Other offences which are not so relevant to maintaining confidence in financial institutions would be outside the scope of this order, and ex-offenders would continue to have the protection of the Rehabilitation of Offenders Act. Again, this restriction is in line with the one which applies in the Financial Services Act and is to be found in the present draft of the Banking Bill which is now before Parliament.
The House will see, therefore, that the order has been drafted so as to strike a proper balance between the need to protect investors in building societies by strengthening regulation and the need to maintain the integrity of the Rehabilitation of Offenders Act by protecting rehabilitated persons from unreasonable prejudice. The provisions of the order are analogous to those which apply to banks under the Banking Act to be amended by the Banking Bill and to other financial institutions which fall within the terms of the Financial Services Act. I commend it to the House on that basis.
Moved, That the draft order laid before the House on 25th November be approved.—(Lord Beaverbrook.)
Lord Mishcon: My Lords, I am so glad, and I believe that your Lordships will be as well, that the Minister took such care in explaining the draft order to us. Incidentally, I wonder whether the noble Lord would kindly check whether he is right or whether my note is right. I believe he said that the order was laid on 25th November, whereas I have a note before me which says that it was laid on 2nd December. Although this matter is not of great moment, I think the record at least ought to be correct.
I said that I was glad, and indeed grateful to the noble Lord, that he took such care in explaining the order because Parliament debated long and hard when the Rehabilitation of Offenders Bill (which became an Act in 1974) came before this House and another place. It was revolutionary. It decided that there should be spent convictions. It decided that in order to enable people to rehabilitate themselves after they had paid their penalty for their wrong doing they should, with certain very limited exceptions, be enabled to do so.
The House may remember that one of those exceptions was that if on a conviction there was a custodial sentence in excess of 30 months. That was an exception, and indeed any subsequent conviction after any such custodial sentence was inflicted upon somebody also was an exception to the Act. But it was a broad general policy of great humanity and great common sense in the work of endeavouring to rehabilitate those who had erred but had paid their penalty.
When we come to consider the building society legislation and the financial services legislation, we shall be dealing with people who are in charge in many cases of the lifelong savings of citizens of this country. A duty falls upon Parliament to ensure with the greatest caution that, in all the regulatory processes that are now obligatory in regard to building societies and financial institutions covered by the Financial

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Services Act, people in authority—I underline the words "people in authority"—are properly vetted before appointments are made and before authorisations of a vital nature are given.
The noble Lord the Minister said very properly that one had to deal with balances in this matter. Here we are with the principle of the Rehabilitation of Offenders Act 1974 and our duty to the public. I believe that the Government have that balance about right because they have limited the exceptions to ones of fraud and other dishonesty and offences very relevant to and connected with both building societies and financial institutions. They are limited, too, to those who are in senior positions supervising the funds involved. This exception does not cover the minor employees in those institutions.
I think that this is a correct order. I believe that we shall always want to watch with great attention the exceptions that are made to the policy that Parliament so wisely and so humanely enacted in 1974. We shall be doing our duty both to that Act and to the public if we give this order a safe passage.
Lord Harris of Greenwich: My Lords, I join the noble Lord, Lord Mishcon, in saying that the House will obviously approve of this order. It is right to look from time to time at this question of disapplication. I speak only because I was involved as Minister when the Rehabilitation of Offenders Act came forward as a Private Member's Bill in 1974. It is always a temptation to follow the noble Lord, Lord Mishcon, down Memory Lane on this matter. I am bound to say that it was one of the worst drafted Private Member's Bills that it has been the misfortune of this House to consider. The principle behind the measure had been approved by the previous Conservative Government and was approved by the incoming Labour Government.
I think everybody sees the enormous advantage of doing everything possible to rehabilitate the offender and to avoid damage to him in subsequent years by the disclosure of some minor conviction many years before. But there are problems about it. One of them was addressed by the noble and learned Lord, Lord Diplock, as soon as the Bill arrived here. As the Bill was then drafted newspapers would not have been able to disclose that people who were trying to obtain substantial sums of money from the public were convicted fraudsters. The Bill was substantially amended in this House. As a result, it is a far more worthwhile piece of legislation.
I join the noble Lord, Lord Mishcon, in saying that we have constantly to ask ourselves whether we are satisfied that people doing work of a sensitive character have their antecedents scrupulously examined. As we all know, there have been a number of occasions when, inadvertently, this legislation has had damaging consequences. There have been changes as a result, but there is no point in assuming that the Act has had entirely beneficial consequences. It has not. Nevertheless, the central purpose of the 1974 Act was admirable. However, I repeat the point that it is necessary for us constantly to ask ourselves whether from time to time we should proceed by way of further disapplication procedures. This is such an occasion,
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and I think that the order should be supported by the House.
Lord Beaverbrook: My Lords, I am most grateful to the noble Lords, Lord Mishcon and Lord Harris. I am especially grateful to the noble Lord, Lord Mishcon, because, as is often the case, I find that he is correct and that I am incorrect. By way of explanation I should say that the order was withdrawn on 25th November and laid again on 2nd December.
As I have explained, it is inevitable that there will be a conflict between the need to ensure high standards of probity in building societies and the need to maintain the protection conferred on ex-offenders by the 1974 Act. I believe that we have found the right balance on a difficult matter. I beg to move.
On Question, Motion agreed to.

Misuse of Drugs Act 1971 (Modification) Order 1986
4.45 p.m.
Lord Beaverbrook Lord Beaverbrook rose to move, That the draft order laid before the House on 13th November be approved. [2nd Report from the Joint Committee.]
The noble Lord said: My Lords, your Lordships will know that the Misuse of Drugs Act 1971 is the means by which the production and supply of dangerous drugs is prohibited except to those properly authorised. From time to time it is necessary to have an order such as the one we are considering today, in order to modify—usually by adding to—the list of "controlled drugs" as they are called in the Act. This need may arise either in order to prevent particular drugs from being misused in this country or to enable the United Kingdom to meet certain international obligations. The present order proposes that several new drugs or groups of drugs should become controlled drugs. The order has been laid with the full agreement of the Advisory Council on the Misuse of Drugs and following consultations with the relevant trade and professional organisations. Some of the new drugs would be controlled for domestic reasons while others would be controlled in order to fulfil international obligations.
On the domestic side, many of your Lordships will be aware that one of the risks to this country arises from a relatively new and especially dangerous group of drugs which has been identified in the United States. I refer to the so-called "designer drugs", a term associated with uncontrolled chemical derivatives of the controlled drugs fentanyl and pethidine. Unscrupulous chemists in the United States of America found they could easily and cheaply manufacture drugs which fell outside the definition of any controlled drug in United States legislation but were every bit as liable to abuse as heroin, the drug they were designed as substitutes for. In some cases these designer drugs may be anything up to 2,000 or even 3,000 times as potent as heroin. Some addicts are reported to have died from unintentional overdoses of these drugs, thinking they were taking a form of heroin, and others have developed the symptoms of Parkinson's Disease owing to the presence of toxic by-products in the manufacturing process.
I am pleased to be able to say that so far these drugs are not a problem in this country. But they could all too easily become one. If that were to happen, the consequences for drug misusers and society as a whole could be disastrous. Although the parent drugs, fentanyl and pethidine, are themselves controlled drugs here, many of their dangerous derivatives are not, and the advisory council has, quite sensibly, recommended their control as a precautionary measure.
There are too many of these derivatives to name individually, so we have been advised instead to include broad chemical definitions of them in the Act. However, two particular fentanyl derivatives, carfentanil and lofentanil, are individally named in the order, so that we can allow for their legitimate therapeutic use in related statutory instruments which would be laid later on. In view of the extremely dangerous nature of the designer drugs, we propose to include them in Class A in the Act which is the strictest of three available classifications. As a result, persons convicted of serious offences would face sentences up to and including life imprisonment.
The proposal to control the other nine drugs contained in the order arises from the United Kingdom's obligations as a party to the United Nations 1971 Convention on Psychotropic Substances. To fulfil our international obligations and to promote international co-operation, which is so vital in the fight against drugs, we need to provide controls which correspond to those which the convention applied to these drugs earlier this year. Although these drugs are abused elsewhere, they are not a problem in the UK and, since they are far less dangerous than the designer drugs, the advisory council has recommended their inclusion in the Act as Class C drugs.
I shall say just a few words about each of them. Cathinone and cathine are stimulant drugs found in the leaves and stems of the khat plant which grows in some East African and Middle Eastern countries and is widely chewed to produce a euphoric sensation. Fenethylline and fencamfamin are also stimulants, which are available for therapeutic use.
Fenproporex, mefenorex and propylhexedrine are all anti-obesity drugs and, in addition, the inhalant form of propylhexedrine is used as a nasal decongestant. Pyrovalerone has a number of medical applications including the treatment of asthma. Finally, I am pleased to say, there is N-ethylamphetamine, another stimulant, about whose therapeutic uses we know little.
Subject to the completion of certain statutory procedures, the measures I have outlined today would come into operation on 1st April 1987. We shall ensure that those concerned with controlled drug manufacture, sale, prescribing and dispensing are fully advised as to the implications of the new controls well before the operative date. I commend the changes proposed in the draft order to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 13th November be approved. [2nd Report from the Joint Committee.]—(Lord Beaverbrook.)
Lord Mishcon: My Lords, I congratulate the noble Lord on his learned exposition of this order. I thought he showed an expertise which many of us greeted with some surprise. It was a very deep expertise on a very difficult matter. As I said, we are grateful to him.
I suppose that the introduction of this order, with the explanation we have had, is a little frightening. It is a reminder that drugs which have been a blessing in so many cases can also be the reverse of that and have some very frightening by-products. It is a factor which not only doctors and chemists have to bear in mind but, equally, the lay patient when he receives, too easily perhaps on some occasions, the advice that it would be rather useful if he or she took a drug.
I repeat, the benefits of medicine are manifold and we are grateful to those who dispense it, but one should bear in mind some of the things we have heard this afternoon with a view to ensuring that we do not believe that drugs are necessarily a total blessing. They should be looked at with some amount of caution.
There is not the slightest doubt, having heard the explanation given by the Minister, that these drugs are dangerous and ought to be put into the categories to which he referred. I am sure it is right to say that this order should receive the sanction of this House.
Lord Beaverbrook: My Lords, I am most grateful to the noble Lord. We are continuing to give the highest priority to measures to tackle drug misuse. As I said, our strategy involves action on a number of fronts aimed at reducing both the supply of and the demand for all drugs. This order extends the number of drugs that are covered by legislation.
On Question, Motion agreed to.

European Assembly Elections Regulations 1986
4.54 p.m.
The Earl of Caithness The Earl of Caithness rose to move, That the draft order laid before the House on 18th November be approved. [2nd Report from the Joint Committee.]
The noble Earl said: My Lords, the regulations have been considered by the Joint Committee on Statutory Instruments, which made no comment.
They are intended to replace the European Assembly Elections Regulations 1984, which apply the provisions in the Representation of the People Act 1983 and subordinate legislation to assembly elections in Great Britain, with or without modifications. If the regulations are approved by your Lordships tonight, the Home Secretary will make them in the middle of this month so that they can come into force on 1st January next year, subject to the exceptions listed in paragraphs 2 to 5 of Regulation 2. After that date electors will be able to apply for an absent vote under the new law for any European Assembly election which is due to be held on or after 16th February 1987. The need for these regulations stems from the Representation of the People Act 1985, which amended the 1983 Act.
Perhaps I may speak to some of the regulations in a little more detail. Regulation 5(1) applies the provisions of the Representation of the People Acts

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1983 and 1985 listed in Schedule 1. Of the many changes made, perhaps the most significant is the application of sections of the 1985 Act which will enable the new absent voting provisions in those sections to apply to assembly elections. This means that overseas electors, and people who cannot reasonably be expected to vote in person at the polling station at a particular election, will now be able to qualify for absent votes at such elections under these provisions.
Regulation 5(1) and Schedule 1 will also increase the deposit at assembly elections from £600 to £750. This was fixed at its present level in 1979 and would have to be increased to £1,080 to restore it to its former value. However, we have decided to make a more modest increase to avoid causing the minority parties any unnecessary financial hardship, while maintaining the principle of raising the deposit periodically to preserve its effect.
Regulations 5(2) applies the provisions of the Representation of the People and the Representation of the People (Scotland) Regulations 1986 listed in Schedule 2. These prescribe, inter alia, the requirements to be fulfilled by applicants for absent votes and the closing date for applications. Regulations 5(4) and 5(5) and Schedule 3 are based on similar provisions in the parliamentary regulations made in June and provide for the conduct of any assembly election which is combined with a parliamentary or local government election. Regulations 5(11), 6 and Schedule 4 to these regulations enable the same form to be used for the appointment of a proxy at assembly, parliamentary and local government elections.
A reasoned amendment has been tabled by the noble Lord, Lord Banks, seeking an undertaking from the Government on a uniform system of election. The amendment is very much wider than the scope of these regulations, since under Section 3 of the European Assembly Elections Act 1978 the method of election provided by the regulations has to be by simple majority. Therefore the 1978 Act would have to be amended before any change could be made. As to the possibilities of change, your Lordships may already be aware that the Council of Ministers resolved in 1984 that efforts should be renewed to reach agreement on a unified electoral procedure in time for the 1989 general election. We hope that agreement can be reached. However, the initiative rests with the European Parliament, which still has to submit proposals for a uniform procedure to the Council of Ministers. The Government will rightly decide on their attitude when they have proposals to consider.
These regulations make essential changes to take account of the 1985 Act and will enable holidaymakers and overseas electors to qualify for an absent vote at the next assembly elections in June 1989. I beg to move.
Moved, That the draft order laid before the House on 18th November be approved. [2nd Report from the Joint Committee.]—(The Earl of Caithness.)
5 p.m.
Lord Banks Lord Banks rose to move, as an amendment to the above Motion, at the end to insert ("but that this
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House calls on Her Majesty's Government to give an undertaking that when the European Parliament have agreed a uniform system of elections and presented it to the Council of Ministers, they will support such a system in principle and not veto the specific proposal on the grounds that it provides for representation on a proportional basis.").
The noble Lord said: My Lords, we on these Benches support the regulations in general. As we have been told by the noble Earl, these regulations apply the provisions of the Representation of the People Act 1985 to elections to the European Parliament. However, we regret that the reference to Rule 17 on page 19 of the regulations indicates no change for the moment in the electoral system, and nor did the introductory remarks of the noble Earl.
On page 38, where the regulations deal with the ballot paper, the phrase is used,
"Vote for one candidate only".
That would appear to rule out the adoption of any preferential system of voting where electors mark their ballot paper in order of preference for the various candidates. Of course it would not rule out all proportional systems since some only require one party or candidate to be voted for.
However, the explanatory note on page 49 of the regulations, referring to elections to the European Parliament—and indeed the noble Earl also said this—states:
"Such elections are conducted in accordance with the simple majority system of elections".
So the Government appear to be proceeding on the assumption that there will be no change. I hope that when the noble Earl comes to reply he will assure us that the Government make no such assumption—I do not think that was clear from his introductory remarks—and that they have an open mind about the possibility of change in the electoral system. If the noble Earl can give us that assurance, at least it will be one step in the right direction so far as we are concerned.
The House will be aware that we on these Benches believe that the case for change is very strong indeed. In March 1977, which is nine and a half years ago, I had the privilege of introducing into this House a Bill that was designed to ensure that elections to the European Parliament from the United Kingdom should be by proportional representation with a single transferable vote, as is the case in Northern Ireland. The House gave a Second Reading to that Bill but did not proceed further with it.
In the course of that Second Reading debate I pointed out that, because of the large constituencies that are inevitable in the elections to the European Parliament, with the first-past-the-post system of elections it would be possible for the party leading in the opinion polls to obtain a grossly disproportionate share of the seats; and of course that is what happened in 1979 when the Conservatives, with 50 per cent. of the votes, took 77 per cent. of the seats, receiving a bonus of more than 50 per cent.
In 1984, although it was by no means representative of the way in which the votes were cast, the result was more balanced and closer for the Conservative and

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Labour parties. If that result is broken down into regions one finds, for example, that in Home Counties North, Home Counties South and the South-West the Conservative Party had 100 per cent. of the seats although their vote in each region was little more than 50 per cent.
In the debate which took place over nine years ago I also said that a minority party using the first-past-the-post system for elections to a European Assembly could poll a significant number of votes and obtain no representation at all, and of course that happened both in 1979 and in 1984. In 1979 the Liberals polled 13.1 per cent. of the votes but achieved no seats in the European Parliament, whereas in the same election the Free Democratic Party in Germany, under a proportional system, with half that number of votes obtained four seats in the European Parliament. In 1984 the Alliance polled 19.5 per cent. of the votes and obtained no seats in the European Parliament—one-fifth of the votes but no seats in Parliament as a consequence.
Clearly, that is grossly unfair to some 2½ million voters in this country and I cannot understand how anyone can justify a system which produces such a result. Proportional representation has been adopted in Northern Ireland where it is felt essential in order that substantial minority opinion should be represented. I believe that in the interests of democratic government it is every bit as important that substantial minority opinion should also be represented adequately in England, Wales and Scotland. I believe that could be achieved by the adoption of a proportional system for the whole of the United Kingdom. Indeed, had my Bill become the law of the land nine and a half years ago, the anomalies to which I have referred would not have arisen.
All our partners in the European Community have a proportional system and it is noteworthy that the turnout for European elections both in 1979 and in 1984 was markedly higher in those countries than in the United Kingdom, with the exception of Northern Ireland where a proportional system is in operation. That is true even of Denmark where enthusiasm for the EC has been more limited. The argument often advanced against proportional representation for Westminster elections—(and incidentally it is an argument with which I do not for one moment agree) that proportional representation will not provide a satisfactory basis for strong government does not arise so far as concerns European elections because no government is formed from the European Parliament.
One further point which I think is very important indeed is that distortion of the result from Britain distorts the balance of parties in the European Parliament with many consequences for the Members of that Parliament. The electoral system that we have in the United Kingdom is a matter of concern to other Members of the Parliament as well as to voters in this country. Article 138 of the Treaty of Rome states:
"The Assembly shall draw up proposals for elections by direct universal suffrage in accordance with a uniform procedure in all Member States.
"The Council shall, acting unanimously, lay down the appropriate provisions, which it shall recommend to Member States.".
I understand that at the moment the position is that a committee of the Parliament on which all parties are
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represented is likely to agree a set of proposals in the near future. It will then put those proposals to the Parliament and if the Parliament agrees they will be presented to the Council of Ministers.
We know that the Parliament will eventually present proposals to the Council and it seems that this may happen in the fairly near future; so although these regulations proceed on the basis of no change, before very long the Council of Ministers is likely to be presented with proposals for a uniform system. The strong likelihood is that the proposals will involve a proportional system, which in turn will involve change if adopted in the United Kingdom.
This amendment does not oppose the regulations. The passing of the amendment would not prevent the regulations from coming into force. The amendment does not bind the Government to anything; but the passing of the amendment would call on the Government positively to support the concept of a uniform system of election while not being committed to any particular uniform system. It would call on the Government not to oppose proportional representation in principle while not committing them to any particular system of proportional representation.
The House will realise that we on these Benches would like to go much further than that; but we feel that if the House makes these modest demands and the Government accept them—in other words, if they were to decide to support a uniform system in principle and make it clear that they were not opposed in principle to proportional representation—a sane and sensible step would have been taken toward a fairer system of representation for British electors in what is likely to become an increasingly important forum. I beg to move.
Moved, as an amendment to the Motion, at the end to insert ("but that this House calls on Her Majesty's Government to give an undertaking that when the European Parliament have agreed a uniform system of elections and presented it to the Council of Ministers, they will support such a system in principle and not veto the specific proposal on the grounds that it provides for representation on a proportional basis.")—(Lord Banks.)
The Deputy Speaker (Lord Wells-Pestell): My Lords, the original Motion was that the draft European Assembly Elections Regulations 1986 laid before the House on the 18th November be approved; since when an amendment to the Motion has been moved in the terms set out on the Order Paper. Therefore the Question I now have to put is, That this amendment be agreed to.
5.9 p.m.
Lord Maude of Stratford-upon-Avon: My Lords, since I do not wish to tread on more toes than I need to this afternoon, for the purposes of this debate I am prepared to suspend my suspicion that this discussion is all rather irrelevant and a waste of time, not only for the reasons which were hinted at by my noble friend Lord Caithness but also in order to make the large assumption that in fact it really matters who is elected to the European Assembly. If one makes that assumption, presumably it is also important how the Members are elected.

1107
What is at issue in the debate on this amendment is not how Members get elected to the European Assembly; it is a propaganda exercise and a trial balloon to secure a precedent for the introduction of some form of preferential or proportional representation into the electoral system of Great Britain. Perhaps it is the only hope which may one day enable a Liberal politician to get into a Cabinet and one which the Liberal Party feels might enable it to secure a balance of power in the long term and to be a part of every government for a long time to come.
Such an assumption would be overoptimistic because the Liberal Party should study with care the fate of the German liberals. If a party has been a member of a coalition of both major parties for long enough, that party would become associated with everything unpopular that governments of either party have done for many years. The German liberals have suffered the results of such a coalition.
The obvious aim of the amendment, if it is carried and if its proposals are brought into effect, is to produce a precedent which may introduce a preferential or proportional element into the electoral proceedings for another place in this country. The reasons against that have been rehearsed over and over again.
We have heard a great deal about the principle of fairness; namely, that it is fair that a party which obtains, for example, 20 per cent. of the votes should get something like 20 per cent. of the seats. However, fairness is a highly subjective concept. What appears to be fair to one group of people may appear unfair to another group. Furthermore, fairness has nothing to do with the need to produce a sound and stable government. The purpose of any successful electoral system is that it should produce sound and stable governments and not weak and fluctuating coalitions which vary with every wind of change at every election.
The arguments against preferential or proportional representation are quite strong. They are rendered even stronger by the fact that their advocates can never agree on exactly what system they want to adopt. As Cromwell once said when asked how he would like to reform the English Church:
"Sirs, I know what I would not have, but not what I would".
This has always been the argument of those who support some form of proportional or preferential representation in elections to the British Parliament. It will be difficult to make this case convincing until agreement is reached on what actually is wanted.
From time to time some agreement appears to be reached—for example on a modification of the German list system. That problem with list systems is that in the last resort it is not a question of democratic selection and election by people of this country but a fiddle in the headquarters by managers of party machines in drawing up the lists and virtually deciding who shall be elected and who shall continue to be elected; and this virtually abolishes the necessity for by-elections. The list system would not appeal to the people of this country.
We have heard about opinion polls which say that people do not think it is fair that this or that should
1108
happen. It is possible to get the answer one wants from an opinion poll according to the phraseology of the question. If the British people were to be asked whether they wanted an electoral system which may result in us having to wait more than six months after an election before a government could be formed, as happened in Holland some years ago, or whether they wanted a situation where there would be some 40 governments over a period of 20 years, as it was in Italy, they would certainly indicate that that was not what they wanted.
Looking at the history of the electoral system in this country and the experiences of other countries, one finds that our system of direct representation produces fewer hung Parliaments and more periods of sound and stable government than any alternative system that has been in use anywhere else. Therefore, the onus is definitely on the advocates of electoral change to prove that what they are proposing could not—not just "might not", my Lords—make things worse and also that it definitely would—not just "might"—improve the situation. They have never been able to prove this fact convincingly, nor do I believe that they ever will.
I do not believe that it matters greatly who gets elected to the European Parliament. I believe that this exercise is simply a trial balloon to get the idea of proportional representation in our own elections off the ground. We should not waste too much time on it. I hope that your Lordships will reject the amendment moved by the noble Lord, Lord Banks, and move to more interesting and important business.
5.19 p.m.
Lord Gladwyn: My Lords, as a former Member of the European Parliament and as one of the presidents of the European Movement, I feel that I ought to put my personal views on record. It appears to me extraordinary that a Government who profess to be "European" in outlook should, in effect, decline to accept in advance any proposals for universal suffrage in the European Parliament in accordance with a uniform procedure in all member states if such proposals should include election by some form of proportional representation.
As my noble friend Lord Banks pointed out, the European Parliament still has ample time before the next elections to agree on such a procedure and to submit its proposals to the Council of Ministers for approval, in accordance with the established practice. The Government should now consider what their attitude will be if, as may be confidently predicted, this procedure embodies some kind of proportional representation. Unless the Government change their view, the next elections to the European Parliament in 1989 will in any case be held by some kind of proportional representation in every single one of the member states of the Community with, it would appear, the exception of the United Kingdom, minus Northern Ireland.
So I trust that the House will now go on record as condemning the continued intention of Her Majesty's Government to exclude from representation in Strasbourg 20 per cent., it might even be 30 per cent., of the voters of this country, which is what will happen if present policies prevail.

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As we know from the results of the vote in the other place in 1977, to which my noble friend Lord Banks referred, a large number of Members of Parliament in the two larger parties, including some seven members of the present Tory Administration, voted in favour of proportional representation for European elections. Presumably they have not changed their views since then. Now, therefore, is surely the time to urge the Government to change their own attitude and thereby to take seriously the European Parliament as a body which should represent all shades of opinion in the Community.
I seem to recall that in 1977 one reason given for not agreeing to proportional representation in the United Kingdom for the European elections—a point referred to by the noble Lord, Lord Maude—was the fear that if it were accepted for the EC, it would inevitably, one day, be adopted for elections to the Westminster Parliament. That may well still be a fear.
A large number of people, perhaps a majority, in this country wish proportional representation to prevail in Great Britain despite the arguments advanced against it by the noble Lord, Lord Maude. But it is absurd to maintain that the one would be a precedent for the other. The political set-up in Strasbourg is totally different from that which prevails at Westminster. Strasbourg is primarily a debating chamber with limited powers. It is in no way designed, as is the other place, to have the final say on political matters.
Consequently, we can only assume that Her Majesty's Government's continuing opposition to proportional representation for European elections is proof of the basically anti-European nature of the present Administration. I am sorry to say that, but it is what I think. It is all very well to be in favour, as they always proclaim, of the emergence of some kind of economic entity thus facilitating freedom of trade. We are all in favour of that. But it is only one objective, doubtfully realisable in default of the emergence of some kind of political entity—not, of course, a federation in the normal sense of the word but rather a body which will stand on its own feet in what is now a dangerous world.
I repeat therefore my hopes that your Lordships will urge the Government to rethink their present policy on proportional representation, thus encouraging our many friends in Europe to believe that the Government are at last taking the "European Idea" seriously and are no longer, in effect, contending that Britain is a large offshore island with a rather special position as a leading member of the Commonwealth and is not therefore the exact equivalent of the larger democracies across the Channel whose individual wealth per person and whose gross domestic product generally are now, alas, considerably greater than our own. With that final thought, I recommend the adoption of the amendment moved by my noble friend Lord Banks.
5.24 p.m.
Lord Harris of Greenwich: My Lords, I think that it is a common ground that these amendments are unobjectionable. There is an increase in the level of
1110
deposit, referred to by the noble Earl, Lord Caithness, and the extension of the franchise to overseas electors, as provided in the main legislation, the Representation of the People Act 1985. So far there is common ground.
In another respect, the regulations are deeply objectionable. Page 49 of the explanatory memorandum which relates to the regulation states:
"Such elections are conducted in accordance with the simple majority system of elections".
That applies to elections in England, Wales and Scotland but not in Northern Ireland. Curiously, the noble Lord, Lord Maude of Stratford-upon-Avon, glossed over Northern Ireland. If it is so dangerous to create a precedent, as he made out, how surprising it is that we have a completely different electoral system in Northern Ireland for the assembly elections.
Lord Maude of Stratford-Upon-Avon: My Lords, the answer is simple. It all goes back to a piece of chicanery carried out by Lloyd George in 1916 to defeat the pretensions of Sinn Fein.
Lord Harris of Greenwich: My Lords, that answer may satisfy the noble Lord, but I suspect that it satisfies no one else. We all know why we have a separate electoral system in Northern Ireland, and so does the noble Lord. We have it because of the serious public order situation that has arisen there. The moral is therefore clear. If there are widespread disturbances and substantial loss of life, the Government are prepared to devise an electoral system that ensures that the minority is represented, but if there is civil tranquility in no way are they prepared to ensure that we have a fair electoral system. As my noble friend Lord Gladwyn pointed out, many members of the Conservative Party take a view strongly different from that of the noble Lord.
In 1977, the other place voted on the regional list system, and the number of members of the present Government who voted for it is interesting. We have Mr. Peter Walker, Mr. George Younger, Mr. Kenneth Baker, Mr. Heath of course, as we would no doubt have expected, Mrs. Chalker and Mr. Rifkind, the Secretary of State for Scotland. Of course Mr. Hurd, the Secretary of State for the Home Department, has made clear his position on electoral reform on a substantial number of occasions. On that occasion Mr. Hurd said that the first-past-the-post system should apply to the first set of elections and that we should then move on to proportional representation. His words were:
"as one who actually favours electoral reform in this Kingdom and who has spoken and voted for it accordingly".—[Official Report, Commons,1 3/12/77; col. 318.]
Despite those admirable words, the Home Secretary has been unable to persuade the majority of his colleagues to favour the policy which he advocated on that occasion and others. As he, with his firm support for British membership of the European Community knows, we are not at the moment fulfilling, and do not in my view intend to fulfil, our obligations under the Treaty of Rome.

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As my noble friend Lord Banks pointed out a few moments ago, Article 138 of the treaty, to which we adhere, makes the position wholly clear:
"The Assembly shall draw up proposals for elections by direct universal suffrage in accordance with a uniform procedure in all member states. The Council shall, acting unanimously, lay down the appropriate provisions which it shall recommend to member states.".
Until now of course movement on that has been blocked. We know who has blocked it. It has been blocked by the present British Government. We know that a committee of the European Parliament is likely to recommend a form of election based on proportional representation. Again, the British Government show no sign of changing their position, and nothing said by the noble Earl, Lord Caithness, earlier suggests that they have had any change of heart on that matter.
As a country we must ask ourselves how great a price we are prepared to pay for continuing to oppose a fair electoral system in this country. I know the strength of feeling of many who oppose proportional representation for election to the House of Commons. The noble Lord, Lord Maude, made his position on that matter quite clear.
However, we are not talking tonight about a system of election to the House of Commons, where it is necessary, as he has argued, for governments to attempt to achieve a stable working parliamentary majority. We are talking about the European Parliament, where there is no government, and therefore this central argument against proportional representation falls to the ground. The Government therefore have to find a new case in some way to justify their position. We have not yet heard any compelling argument to suggest why we should on this occasion once again totally ignore the solemn treaty obligation that we are under.
Let us remind ourselves what happened the last time we had elections for the European Parliament. The Conservative Party had the support of approximately 41 per cent. of the vote and obtained 45 seats in the Parliament. The 41 per cent. of the vote secured just 58 per cent. of the seats in the European Parliament. The Labour Party obtained 36 per cent. of the vote and 41 per cent. of the seats. The Alliance obtained approximately 20 per cent. of the vote and not a single seat. I believe that this is a caricature of representative democracy.
However, the main Act which has led to the changes that we are discussing tonight is called the Representation of the People Act. Representation of the people?—I should have thought that is precisely what it is not. The two Front Benches will of course go cheerfully into the Division Lobbies tonight arm in arm because they agree on this matter. The old monopoly of the two Front Benches has a great deal of interest in this matter. Yet it is the cause of decent and honest democratic representation that I believe is damaged by conduct of this kind.
On a number of occasions abuses have occurred because of the foolish distortions created by our present electoral system in this country. Noble Lords opposite have been quick, and on many occasions right to denounce this when they have seen the abuse
1112
of power by unrepresentative minorities in local government. We have had this situation in the case of the Inner London Education Authority, where this House voted against proportional representative. The two Front Benches of course once again voted together. What was the result? It was a wholly unrepresentative massive Labour majority, despite the fact that they secured the support of the minority of people of London on that occasion.
The noble Lord, Lord Maude, tonight talked about the need for sound and stable government. That is an admirable principle. I wonder whether he applies that to the London Borough of Brent. We have a stable majority there. I am not quite sure that it is too sound, but it is stable. The abuses of power which are taking place in local authority after local authority in this country are caused by a situation where either a majority on the council has minority support or where the majority is grossly inflated by our electoral system. One sees the McGoldrick case in Brent and a whole range of other cases of this kind in local government.
Many people outside this House—despite the scepticism of the noble Lord, Lord Maude, about public opinion polls—believe there is something wrong about an electoral system that creates such a result. That belief no doubt motivated this House to support the Bill of the noble Lord, Lord Blake, last Session, when the Government discovered that they would not be able to oppose it successfully in this House. Therefore they did not oppose it but simply blocked it when it reached the House of Commons.
Tonight, I believe we have the opportunity to register our vote in favour of a fair and honest system for the European Assembly. I very much hope that the House will take the opportunity of so doing.
Viscount Massereene and Ferrard: My Lords, I was under the impression when we passed the European Communities (Amendment) Bill during the last session, which brought in the Single European Act, that as we have now debased our sovereignty we have no power. If the Council of Ministers decides the system of election that all countries in the EC will have, surely no British Government will have the power to block what the EC now decides on choosing a system of election.
Lord Harris of Greenwich: My Lords, the noble Viscount will find the noble Earl, Lord Caithness, eager to reply to this point. The fact is that it requires the support of the British Government in the Council of Ministers if there is to be a change in the electoral system. It is as simple as that.
5.37 p.m.
Lord Mishcon: My Lords, on the list of speakers your Lordships will see the name of the noble Lord, Lord Underhill. I ask for the indulgence of the House to speak in his place. I should explain that the noble Lord was extremely anxious to participate in this debate. However, he is a member of the Standing Committee on the Pilotage Bill. Your Lordships will remember that that is an experiment in convenience for the House. Possibly this afternoon noble Lords will have seen how convenient it is, at least for certain Members of your Lordships House, and possibly how

1113
disturbing it may be. That may be a factor that we shall weigh up on our judgment on this experiment in due course.
I want to make quite clear at the very outset that we on these Benches support the regulations and, as the noble Lord, Lord Harris, seems to have anticipated, we oppose the amendment. I was very interested in the consistency on proportional representation when I noted, on looking at the list of speakers, that there were seven speakers and the Alliance—so implicit is their belief in the justice of proportional representation—had put three out of the seven speakers into their own ranks.
Lord Harris of Greenwich: My Lords, why not?
Lord Mishcon: My Lords, why not? It merely accentuates the fact that some people, in putting their point of view, wish to represent it three times out of seven. That is not my idea of proportional representation, but I may be absolutely wrong.
Lord Diamond: My Lords, will the noble Lord give way? Will he explain what there is to prevent 70 people putting their names down to speak on this Motion if they wish? How is one to know in advance what the total speakers' list will be?
Lord Mishcon: My Lords, I thought it was on grounds of humanity that 70 speakers did not put their names down to speak in this debate.
The noble Lord, Lord Harris, was as usual extremely frank with the House. He started off by saying that he was talking only about representation in the European Parliament and that nobody had any idea, if there were proportional representation there, of invoking that as a precedent for our own elections in this country to our own Parliament. If the noble Lord had finished his speech there, I am so much an admirer of his sincerity that I should have taken that for granted. He then went on bitterly to attack the lack of proportional representation in our local authorities and at Westminster. I thought that possibly the validity of the point he was making previously was a little lost on me. If he wants to talk about local authorities and local government, something in which I was privileged to take part for over 20 years in London government, I should say to him—and I say it frankly to your Lordships—that if local authorities were given the powers that they ought to have and the means to carry out those powers, and attracted the type of person whom we used to attract in order to carry out the proper membership of those local authorities, maybe the polls at local elections would be greater, and maybe that is the way in which undesirable management of certain local authorities—I mention no names—might in fact be unseated.
Having said that, I intend to be very brief. There is no doubt that, should the amendment be passed, it is from the point of view of the Alliance—who I am sure believe in its validity—merely a precedent, merely the thin end of the wedge. I say that and I say it quite frankly, looking straight at the Alliance Benches, which I observe are full for the first time that I can remember for many a long day, even on important
1114
issues nationally. I remember the noble Earl, Lord Caithness, expressing his regret only the other day when we were debating a matter of terrorism and I rose from these Benches in order to support the Government on what I thought was an important national issue. We both looked at those Benches and found them completely empty. There was not one person there to speak on that urgent matter, and I regretted it.
But I say—and it seems to me to be extraordinary—that I can remember the noble Lord, Lord Diamond—the very able, if I may so, and much respected leader of the Social Democrats—gracing the Benches of the Labour Party. I can remember the noble Lord, Lord Harris of Greenwich, a Minister who certainly had the great respect of this House, sitting on these Benches, and the noble Lord, Lord Mayhew, having ministerial office in the Labour Party. They spoke in Parliament very often and attended annual conferences of the Labour Party where discussion is free and resolutions are many—some of us think all too many. I will sit down immediately to be corrected if any one of those three noble Lords, who spoke so eloquently from the Alliance Benches this afternoon, can tell me that I am wrong in thinking that not on one occasion were they ever heard to speak about the virtues of proportional representation when they were members of the party to which I am privileged to belong.
Lord Harris of Greenwich: My Lords, the noble Lord is obviously not aware that the Labour Government actually proposed a regional list system, and Ministers voted for it in the House of Commons. He appears not to understand what happened when this legislation came before Parliament.
Lord Mishcon: My Lords, I was not talking about regional representation; I was talking about proportional representation either at Westminster or in the EC. If I find that any one of the noble Lords whom I mentioned spoke in Parliament—
Lord Tordoff: My Lords, I think that the noble Lord is under a misapprehension. The regional system, which was discussed before the European Parliament, is a form of proportional representation.
Lord Mishcon: My Lords, it may very well be a form of proportional representation. It certainly is not the form of proportional representation that I understood was being advocated this afternoon.
Baroness Seear: My Lords, we have explicitly said that we are not advocating any particular form this afternoon.
Lord Mishcon: My Lords, something tells me that I ought to move on to my next point!
There remain the following two issues. I shall be brief, and then I shall sit down. It seems that I have the support of the Alliance Benches at least on one aspect of my speech. The first—and it has already been mentioned—is that stable government is the sort of government that the people of this country want. They do not want a wishy-washy compromise (as it always

1115
is) mixture of parties, which is the inevitable result of proportional representation. If people, apart from quoting what happens in other countries in Europe, will merely look at the history of those countries that have proportional representation, they will indeed envy the people of this country the system that they have. I equally say that it is for a British Parliament to decide on the way in which British elections will be held.
It is on both those grounds that I hope the House will oppose the amendment.
5.46 p.m.
The Earl of Caithness: My Lords, I am grateful to the noble Lords, Lord Harris of Greenwich and Lord Mishcon, for welcoming the draft order before your Lordships. The fact that those were the only comments made on it leads me to agree very firmly with my noble friend Lord Maude of Straford-upon-Avon who said that the reasoned amendment is nothing but a balloon that is raised at every opportunity by the Liberal Party and that it will do that given any opportunity. But we must learn to tolerate that.
If I may comment further on the reasoned amendment, as I said in my opening speech, the initiative in providing a uniform electoral procedure rests with the European Parliament, which must submit proposals for such a procedure to the Council of Ministers. The present position is that the Political Affairs Committee of the Parliament produced a report last year, but it has never been debated by the Parliament. Our understanding is that the text of the report is still under consideration, and we do not know when it will be debated.
The traditional method of voting in this country is the simple majority system. It is well understood and has many advantages, which my noble friend Lord Maude elucidated and on which I do not intend to elaborate in this debate. The noble Lord, Lord Banks, said that all other countries in the Community had proportional representation. Indeed, other countries use various methods of proportional representation. However, I must draw your Lordships' attention to the fact that it would be a mistake to think that, just because they all use some sort of proportional representation, there is no obstacle to a uniform system except our attachment to simple majority elections.
Other countries have their own difficulties. There are particularly strong differences of view among other member states on whether the franchise should be given in the country in which a person is resident or in the country in which he is a national. The noble Lord, Lord Harris of Greenwich, says that the United Kingdom Government blocked the progress towards uniform elections. The proposals were submitted by the European Parliament in 1982 and discussion in the Council of Ministers took place in 1983 to 1984.
The discussions in the Council of Ministers are confidential, and I am not going to confirm or deny whether we were the country that blocked it. I would only draw your Lordships' attention to the remarks that I made about the difficulties that other countries
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are having in agreeing a uniform system. We will play our part, as doubtless will the other countries, in looking at any proposals that may be submitted to the Council when they are submitted. The noble Lord, Lord Banks, asked whether there will be the possibility of change. Of course, when a government are as tolerant, as caring and as considerate as this Government there is always the possibility of change.
My noble friend Lord Massereene and Ferrard queried whether, now that the Single European Act has been enacted, this has changed the position and whether unanimous decision was still needed or majority voting should take place. Unanimous decision is required by the Council of Ministers in this instance under the Treaty of Rome.
I am grateful to all noble Lords who have taken part in the debate. I welcome the short tribute paid to the draft order before us and I am grateful for the welcome that it received. With regard to the balloon raised by the Liberal Party, and in particular by the noble Lord, Lord Banks, I fear it has fizzled out.
5.50 p.m.
Lord Banks: My Lords, the noble Lords, Lord Gladwyn and Lord Harris of Greenwich, have amplified my opening remarks with a wealth of argument and therefore I can be brief. I regret that the Government do not see their way to supporting this amendment. However, it does not bind the Government to anything. They could heed the amendment if it were passed or they could resist it, as they please. I believe that if it were passed it would be an important expression of opinion by this House.
The noble Lord, Lord Maude, made an interesting speech. I do not know how far we should take it seriously. There was a good deal of knock-about political stuff in it but not much about proportional representation for Europe or a uniform system of election for Europe. There was a good deal about the dangers of PR for Westmister and that seemed to be what was causing the noble Lord a good deal of concern. Indeed, it was also causing the noble Lord, Lord Mishcon, a good deal of concern.
I do not understand the argument that if a case is proven in a particular instance it somehow or other may become the thin end of the wedge for something else, and therefore must be resisted, however powerful the arguments in its favour. Why should there be any extension beyond PR for Europe unless it was wanted? If it proved so successful and if it worked so well that people felt it ought to be brought into the rest of the system, surely noble Lords would not wish to resist that. There is no reason at all, if Parliament is set against it, why it should be translated from Europe to our internal elections.
The noble Lord, Lord Maude, spoke about fairness. Of course we are concerned about fairness. I emphasise that it is not just fairness for parties, although I think that is quite important; it is fairness for electors, and that is far more important. People are denied representation because of the way in which the system works at the present time. They are denied any representation. That is a serious point and I hope noble Lords are fully seized of it.

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The noble Lord, Lord Maude, said we cannot agree on a system. We are agreed on a system on these Benches. We should like, if we could have our way, to have proportional representation by the single transferable vote, as already operates for Europe and in part of the United Kingdom—Northern Ireland. We are prepared to give and take with our Community partners in seeking to arrive at a proportional system which all can support. It might not be precisely what we would prefer but we certainly know what we would prefer.
The noble Lord, Lord Maude, said that we must move on to more important matters. I thought that that was an illuminating statement. It revealed a rather strange set of priorities. There are apparently more important matters in a democracy than ensuring that there is proper representation for the people who vote. I should have thought that that was the basic issue and the one about which we should be more concerned than anything else. To talk about more important matters seems to me to be a very strange set of priorities indeed.
The noble Lord, Lord Mishcon, raised the question of stable government. I am not sure whether the noble Lord was clear as to precisely what we are discussing this evening. No government would be formed from the European Parliament. The noble Lord also thought that we were advocating this evening in our amendment a particular form of PR. Of course we are not.
The noble Earl, Lord Caithness, in what I must say I thought was a rather pompous phrase, spoke about the balloon which I was supposed to have sent up. However, I thought he mixed his metaphors a little when describing its fate. Why should this matter not be raised? What is there so apparently disreputable in raising a matter which involves great issues of principle and which deals with the fundamental principle on which our democracy is based—that people should be represented, that there should be no taxation without representation and that that what goes on in Parliament should be based on the votes of the people? What is the point of holding elections if at the end, after going through all the bother of it and counting the votes, the result does not bear any very clear relation to the way in which people have voted? There seems to be no sense in that all.
The amendment calls on the Government to do two things: first, to support a uniform procedure in principle, as laid down by the Treaty of Rome; secondly, to declare that they are not opposed to PR in principle. I was glad that the noble Earl, Lord Caithness, spoke about the possibility of change. I hope that even now the Government may change their mind, display the flexibility about which he spoke and see that it is right that a declaration along those lines should be made by the Government, stating that they want a uniform procedure and are not opposed to PR in principle. 1 very much hope that the House will support the amendment.
5.56 p.m.
The Deputy Speaker (Lord Wells-Pestell): My Lords, the original Motion was that the draft European Assembly Election Regulations 1986 laid
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before the House on 13th November be approved, since when an amendment has been moved in the terms set out on the Order Paper. The Question I now have to put is that the amendment be agreed to.
5.57 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 51; Not-Contents, 154.

DIVISION NO. 1

CONTENTS

Airedale, L.

Hylton, L.

Amherst, E.

Kennet, L.

Annan, L.

Kilmarnock, L.

Avebury, L.

Lauderdale, E.

Aylestone, L.

Lloyd of Kilgerran, L.

Banks, L.

McGregor of Durris, L.

Bessborough, E.

McNair, L.

Blake, L.

Mayhew, L.

Bonham-Carter, L.

Monson, L.

Buckmaster, V.

Ogmore, L.

Craigavon, V.

Reay, L.

Darcy (de Knayth), B.

Ritchie of Dundee, L.

Diamond, L.

Robson of Kiddington, B.

Donaldson of Kingsbridge, L.

Rochester, Bp.

Esher, V.

Rochester, L.

Ezra, L.

Rugby, L.

Falkland, V.

Seear, B.

Foot, L.

Simon, V.

Gladwyn, L.

Stedman, B. [Teller.]

Grey, E.

Tordoff, L. [Teller.]

Grimond, L.

Vernon, L.

Hampton, L.

Walston, L.

Hanworth, V.

Whaddon, L.

Harris of Greenwich, L.

Winstanley, L.

Henderson of Brompton, L.

Winterbottom, L.

Hooson, L.

NOT-CONTENTS

Abinger, L.

Denham, L. [Teller.]

Aldington, L.

Derwent, L.

Alexander of Tunis, E.

Dundee, E.

Allerton, L.

Elliott of Morpeth, L.

Arran, E.

Elwyn-Jones, L.

Beaverbrook, L.

Faithfull, B.

Belhaven and Stenton, L.

Fanshawe of Richmond, L.

Beloff, L.

Ferrers, E.

Belstead, L.

Forbes, L.

Birdwood, L.

Fortescue, E.

Blease, L.

Fraser of Kilmorack, L.

Blyth, L.

Gallacher, L.

Boston of Faversham, L.

Galpern, L.

Brabazon of Tara, L.

Gibson-Watt, L.

Briginshaw, L.

Gisborough, L.

Brooks of Tremorfa, L.

Glanamara, L.

Broxbourne, L.

Glenarthur, L.

Butterworth, L.

Graham of Edmonton, L.

Buxton of Alsa, L.

Gray of Contin, L.

Caithness, E.

Greenway, L.

Cameron of Lochbroom, L.

Gridley, L.

Campbell of Alloway, L.

Grimston of Westbury, L.

Carmichael of Kelvingrove, L.

Hanson, L.

Carnegy of Lour, B.

Harmar-Nicholls, L.

Carnock, L.

Harvington, L.

Cathcart, E.

Hemphill, L.

Colville of Culross, V.

Hesketh, L.

Constantine of Stanmore, L.

Heycock, L.

Cork and Orrery, E.

Hives, L.

Cox, B.

Home of the Hirsel, L.

Crawford and Balcarres, E.

Hylton-Foster, B.

Cullen of Ashbourne, L.

Inglewood, L.

David, B.

Ingrow, L.

Davidson, V. [Teller.]

Irving of Dartford, L.

Dean of Beswick, L.

Jeger, B.

1119

Kaberry of Adel, L.

Renton, L.

Kinloss, Ly.

Rhodes, L.

Kinnaird, L.

Rodney, L.

Lane-Fox, B.

Ross of Marnock, L.

Lawrence, L.

Russell of Liverpool, L.

Layton, L.

St. Davids, V.

Llewelyn-Davies of Hastoe, B.

Salisbury, M.

Lloyd of Hampstead, L.

Saltoun of Abernethy, Ly.

Long, V.

Sanderson of Bowden, L.

Lucas of Chilworth, L.

Sandford, L.

McAlpine of Moffat, L.

Scanlon, L.

McFadzean, L.

Selkirk, E.

Macleod of Borve, B.

Sempill, Ly.

Manchester, D.

Serota, B.

Mancroft, L.

Shannon, E.

Marley, L.

Skelmersdale, L.

Massereene and Ferrard,V.

Somers, L.

Maude of Stratford-upon-

Stoddart of Swindon, L.

Avon, L.

Strabolgi, L.

Merrivale, L.

Strathclyde, L.

Mersey, V.

Strathcona and Mount Royal,

Mishcon, L.

L.

Molson, L.

Sudeley, L.

Morton of Shuna, L.

Swinfen, L.

Mottistone, L.

Teynham, L.

Mountevans, L.

Thorneycroft, L.

Mowbray and Stourton,L.

Torrington, V.

Moyne, L.

Tranmire, L.

Murton of Lindisfarne, L.

Trefgarne, L.

Napier and Ettrick, L.

Trumpington, B.

Newall, L.

Tryon, L.

Nicol, B.

Underhill, L.

Oram, L.

Vaux of Harrowden, L.

Orkney, E.

Vickers, B.

Orr-Ewing, L.

Vivian, L.

Parry, L.

Wells-Pestell, L.

Penrhyn, L.

Westbury, L.

Phillips, B.

Whitelaw, V.

Polwarth, L.

Williams of Elvel, L.

Ponsonby of Shulbrede, L.

Wolfson, L.

Prys-Davies, L.

Young, B.

Rankeillour, L.

Ypres, E.

Reigate, L.

Zouche of Haryngworth, L.

6.5 p.m.
Resolved in the negative, and amendment disagreed to accordingly.
On Question, Motion agreed to.

European Assembly Elections (Northern Ireland) Regulations 1986
6.6 p.m.
The Earl of Caithness: My Lords, I beg to move that the European Assembly Elections (Northern Ireland) Regulations 1986, a draft of which was laid before the House on 19th November, be approved.
Moved, That the draft order laid before the House on 19th November be approved. [2nd Report from the Joint Committee.]—(The Earl of Caithness.)
Lord Diamond: My Lords, before these regulations are passed without a word, will the Minister be good enough to explain to people such as myself who do not fully understand what is happening, what kind of voting is proposed for Northern Ireland in the Motion that he is putting before the House?
The Earl of Caithness: My Lords, in view of the knowledge that the noble Lord possesses I am surprised he does not know, because the matter was discussed at some length by his noble friend Lord
1120
Harris of Greenwich earlier this afternoon. The regulations that we are now discussing are similar to the ones that we have just discussed and voted on conclusively.
The European Assembly Elections Act 1978 provided for Northern Ireland a form of single constituency, returning three representatives under the single transferable vote system of proportional representation. Therefore the Northern Ireland regulations differ from the Great Britain regulations in respect of the provisions dealing with the procedures for voting and for the count.
On Question, Motion agreed to.

Parliamentary Constituencies (Wales) (Miscellaneous Changes) Order 1986
6.8 p.m.
Lord Beaverbrook Lord Beaverbrook rose to move, That the draft order laid before the House on 16th July be approved. [31st Report from the Joint Committee.]
The noble Lord said: As your Lordships know, the parliamentary boundary commissions have powers to conduct reviews of constituency in the years between their major reviews of all the constituencies in the country. Since the last general review of constituency boundaries, which was implemented in 1983, the local government boundary commissions have been making changes to local authority boundaries. As the parliamentary boundary commissions use ward boundaries as their building blocks for creating constituencies, this has meant that in some places local government boundaries and parliamentary constituency boundaries are now different, causing inconvenience and confusion to electors, returning officers and political organisations alike.
The Parliamentary Boundary Commission for Wales has accordingly reviewed the boundaries of nine constituencies in north and mid-Wales, and has recommended changes which will bring the separate local government and constituency boundaries into alignment. Except in one case, the commission decided to make the minimum change necessary to align the boundaries. The exception concerns the community ward, Eglwysbach, which is presently divided between two constituencies with a small part lying in Meirionnydd Nant Conwy and the larger part in Conwy. The commission considered that Eglwysbach had stronger ties with Meirionnydd Nant Conwy than with Conwy and therefore recommended that the larger part of the community ward, 1,018 electors in total, should be transferred to Melrionnydd Nant Conwy.
The commission published its draft recommendations in the summer of 1985, and five representations were received. One resulted in a local inquiry being held about the transfer of Eglwysbach. The assistant commissioner who held the inquiry decided that the commission had judged the situation rightly and upheld its proposals. Another four representations were received, three of which supported the proposals although one suggested a change of name for one constituency. The fourth suggested much more wide-ranging changes in the Wrexham area which the

1121
commission rejected. The commission published its final proposals on 16th July, and no representations have been received by the Home Secretary.
The form of the order before your Lordships' House is similar to the two English interim review orders approved in the past year. Article 2 substitutes the constituencies in the schedule for the existing constituencies created by the Parliamentary Constituencies (Wales) Order 1983. Article 1(2) provides for the order to come into operation 14 days after it is made, and for the new boundaries to take effect at the next general election. Any by-election held in the meantime will be held on the existing boundaries. I commend this draft order for implementing the commission's recommendations in full.
Moved, That the draft order laid before the House on 16th July he approved. [31st Report from the Joint Committee.]—(Lord Beaverbrook.)
Lord Mishcon: My Lords, my only comment is that I am deeply grateful that the Leader of the Opposition and my noble and learned friend Lord Elwyn-Jones were not present during the pronunciation of some of the parts of Wales.
Lord Beaverbrook: My Lords, I would not be inclined to disagree with that view.
On Question, Motion agreed to.

Medicines: Parallel Imports Policy
6.12 p.m.
Lord Northfield Lord Northfield rose to ask Her Majesty's Government what further action they propose to protect patients from the potential dangers of parallel-imported medicines; and what action they will take to recover windfall profits being made by pharmacists on such medicines and to protect the United Kingdom industry from erosion or returns on its successful products.
The noble Lord said: My Lords, in putting this Question this evening I again declare an interest as an adviser in the pharmaceutical industry. So called parallel importing occurs mainly because medicine prices are held artificially low by direct state control in some EC member states. Trade across boundaries, profiting from the ability to buy in some countries at these low prices, has mushroomed in recent years and has been legitimised by a rather curious ruling of the European Court of Justice. A new breed of traders thus sells these imports over here to wholesalers and pharmacists at prices below those which apply here under the United Kingdom price regulation scheme—the PPRS, as it is called.
In order to reduce dangers arising from this trade the Government have introduced a regulating system based on registration of companies engaged in it, together with a system of product licensing, the aim being to make sure that such parallel imports have no clinically significant differences from the medicine that is authorised for sale in the United Kingdom. Problems, however, arise, and dangers too; and I have given notice to the Minister of the issues I want to raise under the three headings in my Question.
Let us take first dangers to patients. Parliamentary Answers given to me in the summer filled me with considerable alarm. I was told that 28 companies hold parallel-import licences. I was told that two companies, I think mainly wholesalers, were being prosecuted for infringements; another eight were being considered for prosecution; and no fewer than 16 more were being investigated or considered for prosecution. This suggests that there may be some less than reputable elements at work in this trade. I hope that the Minister for a start this evening will tell us the up-to-date position and comment on the figures as well.
I suspect that the selling of unlicensed imports—that is, the ones which have not had a licence under the United Kingdom regulation system—accounts for a substantial proportion of these possible infringements leading to prosecution. I have seen market research findings by a reputable organisation and they estimate that as much as one-quarter—one-quarter, my Lords—of parallel imports sold to pharmacists may be unlicensed. Is the Minister able to confirm this alarming figure?
Again, and referring these companies, how can we be certain that if—as sometimes proves necessary—there is need to recall a batch of a particular medicine, the companies are well enough run and regulated for their records to indicate where particular batches have been sold? If, as is quite likely, some of these companies go out of business as quickly as they have mushroomed, particularly if price changes abroad, or exchange rates, suddenly make the trade unprofitable, how in heaven's name will batch recall be able to work in respect of stocks still on the shelves if the firms and the records have all disappeared? This holds considerable dangers for patients.
I am bound to say that the inspection system used to check on infringements is woefully inadequate, and I hope that the Minister is going to announce tonight some strengthening of it. The DHSS does not even have its own inspectorate. It has to rely on inspectors of the Pharmaceutical Society, and I understand that they are mainly responding to complaints from the public, or infringements uncovered by United Kingdom pharmaceutical manufacturers, rather than making any systematic inspections.
Can the Minister say how many are engaged on this work—I gather it is only a handful—and whether I am right in saying that most pharmacists will not be regularly inspected, given the numbers involved? Inspectors of the Ministry of Agriculture, Fisheries and Food are the ones actually used to draw up cases when infringements are suspected. They have to interview the companies concerned. Can they really do this adequately when they have the whole normal range of their duties to perform for MAFF? I repeat that the system is patently and dangerously inadequate—a handful of inspectors—with consequent dangers to patients.
Patients are being put at risk by this trade. Repackaging, for example, when the parallel imports have been brought in can and does lead to vital information being left off the package after translation from a foreign language. In a letter of 16th October the Department of Health itself has warned that some

1123
importers are tempting pharmacists and wholesalers to take incompletely labelled packs by offers of extra discount. This shows that a great deal of less than reputable activity is going on.
Again, the bio-availability—that is, the medical effects—differs in the case of some products from the product normally on sale in the United Kingdom. Patients have had epileptic control altered by substitution of an unlicensed product. Erroneous information supplied with inhalers has led patients to believe that a product was suitable for acute asthmatic attacks when the product was only prophylactic. Imported tablets of the wrong strength have been dispensed. Leaflets in foreign languages have been found with packs of pills. Batch numbers on the blister strips of pills—they are the ones inside the pack—do not match the batch number of the outside of the pack.
I have here three letters from one pharmaceutical company alone giving information about infringements in respect of a product sold in such diverse areas as the Wirral, Wigan and Maidstone, and all constituting a potential hazard for the patient. Counterfeiting of outside packaging has been found, and I am left wondering whether there is also a counterfeiting of drugs or, at least, a dispensing of substitutes that are not actually authorised. Do we have to wait for something dreadful to happen to patients before all this danger is cleared up?
Finally, there is the whole area of product liability, on which I hope the Minister will comment. How is the patient going to be protected if, in the case of a claim of harmful effects of some product, the manufacturer can show that the product was not manufactured for or authorised for sale here in the United Kingdom? What is the remedy for the patient? This raises considerable concern in my mind.
I see that the Association of Pharmaceutical Importers—those are the parallel importers—are seeking a judicial review hoping that a substitution of products can be authorised where the same product under a different name can be dispensed. I hope the Government will resist this in the courts with all their power. This is the thin edge of a very big wedge, going right against the detailed safeguards in the United Kingdom system. The sanctity of doctor-prescribing would be undermined in one blow and goodness knows where that would lead.
I turn now to the second part of my Question. I hope the Minister will confirm that at present this trade at low prices confers no benefit on the National Health Service because it results in no savings of NHS costs. This is because the pharmacist is reimbursed for the ingredient cost of a prescription at the United Kingdom, and not at the parallel-imported, price of the preparation. There is no adjustment downwards for the cheapness of his purchase. He can save 30 per cent. or so by using parallel imports and make a windfall profit at the expense of the taxpaper. This scandal must be stopped.
The Government have had one major method of stopping the abuse outlawed by the courts. Can we please be assured that another method is imminent? After all, the figures are substantial, for the importers concentrate on the most dispensed products. Let me
1124
put some figures to this. Has not the global excess reimbursement been of the order of £100 million plus in the last few years; namely, about £20 or £30 million per annum being made as windfall profits illicitly out of the National Health Service? Is that not the sort of figure that equals, for example, the net capital expenditure of a health authority? Do we not need to think of what better use this money could be put to if this shocking abuse were stopped? I am surprised that it has not attracted more attention. It is a pure, flagrant waste of government funds.
Per pharmacist the figure is also significant. I know that only about a quarter of pharmacists use parallel imports and most pharmacists are reputable. But the average per pharmacy is some thousands of pounds per annum and those dealing in parallel imports in the last four years may have benefited to the extent of £40,000 or £50,000, depending on the size of their businesses, all in windfall profits.
Some scheme reflecting accurate reimbursement must be found. I hope the Minister will confirm that the DHSS will not meet this problem by reducing average reimbursement across the board on all prescriptions, for that would push more and more pharmacists into using parallel imports to cheapen the supply, reduce the costs and hold their profits. Hitting everybody to entrap a few cannot in any circumstances be justified.
I turn finally to the effects upon the United Kingdom pharmaceutical industry of this parallel importing. The countries which keep medicines at artificially low prices, and are thus the source of parallel imports into the United Kingdom, are in the main France, Belgium, Italy and Greece. Generally their price controls, in contrast to prices regulated in the UK under the price regulation scheme (the PPRS), make little or no allowance for research and development costs of a product. That is why the prices are held low in those countries. Parallel importers concentrate on the fastest selling, highest value medicines.
It is generally accepted that this small number of really large selling medicines form the principal economic framework to support the R&D expenditure of the major companies. Parallel imports therefore threaten the life blood of a successful research-based company by depriving it of necessary funds to support R&D. Purchasing these products manufactured on the Continent transfers manufacturing capacity and jobs from the United Kingdom to those low priced countries. Manufacturing to a total of £80 million to £90 million per annum is being lost to the United Kingdom by these means.
The European Commission is trying to face up to the problem. It has published a draft directive on transparency of pricing, aiming to force countries to show how controlled prices are arrived at. It has also published a memorandum from which I quote. It states:
"Although at the present time there is little evidence that parallel imports pose a significant threat to the research-based industry, there is a risk that in the long-term, the policies of those member states who wish to encourage the development of the pharmaceutical industry will be undermined by large-scale parallel importing".
It is clear whose side the Commission is on. But it goes on to suggest that countries generally in Europe should adopt a price regulation scheme, rather like our own, concentrating on profits rather than the control of the prices of medicines, and also that the price control system should give adequate support to research and development costs. I hope that that has been taken fully on board by the Government.
I hope that the Minister will assure us that the Government support the Commission in putting open pressure on other member states to apply realistic pricing. This is in no way similar to the trade in motor cars; the situation in which buyers can sometimes buy cars more cheaply in Belgium and import them over here. There is no price control on motor cars. It is a free market. But the parallel import system in medicine arises because there is price control in some countries.
The quixotic ruling in favour of the trade by the European Court of Justice results, as the NEDO working party on pharmaceuticals has just reported in its paragraph 89, in endorsement not simply of free circulation of goods,
"but also free circulation of (potentially) illegal pricing methodologies".
I hope the Minister will agree with this stricture of NEDO and the views of the Commission.
Finally, in all the circumstances I was deeply surprised to see that in a recent speech the Parliamentary Under-Secretary to the Department of Health and Social Security, the noble Baroness, Lady Trumpington, said:
"Licensing has ensured the acceptable safety of the trade"—
a highly doubtful statement in the light of what I have been revealing this evening. She went on to say that parallel importing is,
"a part of life in the European Community".
Such a statement, virtually encouraging the trade, should not have been made, in my submission. What is needed instead is firm support for the Commission in its efforts to get realistic and fair price controls (where price controls exist) so that the trade ceases, with relief from all the problems I have outlined today.
The United Kingdom's pharmaceutical industry has a very good record. Its exports give an annual surplus of £850 million to our balance of trade. It employs 70,000 to 80,000 people. It spends some £500 million per annum on research and development. It deserves support to get rid of this basically piratical trade, and not, as we have heard from the noble Baroness, Lady Trumpington, acceptance that the trade must continue.
6.29 p.m.
Lord Prys-Davies: My Lords, my noble friend Lord Northfield returns tonight to a basic issue raised during the Committee Stage of the Patents, Designs and Marks Bill last April. The House must be grateful to my noble friend for the series of detailed questions he has addressed to the Government. I shall deal in turn with each of the three separate parts of the main Question. First, there is the issue of what further action the Government propose to take to protect patients from the potential risks to health from parallel-imported medicines. I will not traverse the ground
1126
again. We have been adequately reminded by my noble friend of the numerous circumstances in which patients can be exposed to considerable danger from imported medicines. The control over the importation of medicine and the safety of medicine are basically provided for in the Medicines Act 1968. Section 7 of that Act provides that no person shall import any medicinal product except in accordance with a product licence. The Government, in recent years, have introduced a product licence (parallel-import) which has to be obtained in relation to the importation of medicines.
The necessity for control having been recognised, we want to know how the department has been coping with the scheme of product licensing. How effectively is the scheme being implemented? My noble friend has asked a number of questions, and I should like to pose a few additional questions of my own. Does the department know how many medicinal products are known to be imported to this country without a product licence? Is that known?
Will the Minister tell the House how many applications for a product licence are currently being considered by the department and are awaiting a decision? Can the Minister go further? Can he tell us how thoroughly scrutinised is an application for a product licence? I ask that question because there is an impression that an application for a licence in practice is treated as if it were a licence. Is there any ground at all for that impression?
Will the Minister also tell the House how many complaints have been received by the DHSS since 1982 about alleged unlawful manufacture or sale of medicine that should have been subject to the product-licence scheme? My noble friend has mentioned the number of companies which have been prosecuted for importing medicine without a licence. Will the Minister confirm that those figures are correct?
I turn now to the second part of the Unstarred Question, namely, what action the Government propose to take to recover the windfall profits made by pharmacists from parallel imported medicine. My noble friend has described how windfall profits arise if a pharmacist dispenses the cheaper parallel imported product but claims reimbursement from the DHSS on the basis that he has dispensed the more expensive UK product. The price differential is of the order of 25 per cent. to 50 per cent. That should not happen.
The price differential is substantial. My noble friend has indicated that the imported drug costs from about 25 per cent. to 50 per cent. less than the UK brands. Is my noble friend's estimate correct that the NHS has overpaid retail pharmacists dispensing parallel imports the sum of £100 million to £120 million since 1982. And is my noble friend correct in estimating that some phamacists who are dealing in parallel imports may have benefited over the last four years by as much as £40,000 or £50,000.
If these figures are correct—we believe that they approximate to the true position—it is difficult to see how a pharmacist can innocently claim reimbursement at the higher level. One would have thought that such activity almost certainly constitutes a criminal offence of obtaining money by deception, fraud or

1127
forgery. There is only one answer to that problem. The pharamacists who claim reimbursement at the higher level should be detected and prosecuted.
Again, I should like to put come questions to the Minister. Will the Minister inform the House how many prosecutions there have been since 1982 for deception, fraud or forgery? Can he also inform the House how many cases there have been where the department has been able to recover windfall profits and what was the total amount recovered? If a substantial part of this £100 million to £120 million overpayment has not been recovered—we suspect that it has not—that is a sad neglect of the department's obligation to the NHS. Of course, if the department pleads that it is without the resources to check the validity of the claims, that is a sad commentary on Government manpower policies.
I come to the last part of the Unstarred Question, namely, what action the Government will take to protect the UK industry from the erosion of returns on its successful products. I found this to be more complex. It is a controversial issue. Specifically, it is about the degree of protection which would be given, not to all pre-1978 patents, but to a group of pre-1978 patents which were given an extension of four years by the Patents Act 1977, from the sixteenth year to the twentieth year of their lives. At the same time this was recognised to be a compromise solution. I have found it to be a complex issue, and I well recall the noble Lord, Lord Hunter of Newington, with his great experience and authority, asking in the course of a debate in your Lordships' House on 20th February 1985 whether we had too many research-based companies in the UK and whether we did not require high-quality companies that confine their business to generic drugs.
The noble Lord, Lord Hunter, did not offer an answer to the questions which he had posed. But it was his judgment, and I pay it great respect, that this area should be examined and that it should be planned. My noble friend Lord Northfield has developed a robust case for giving the relevant pre-1978 patents full protection until the end of the twentieth year or if (by implication, I suppose) such protection is not available from the Government, then of making it lawful for the Comptroller of Patents to impose whatever limitations he thinks fit on the licences of right when granting the licence.
It is fair to point out that the extent of the Comptroller's discretion to impose limitations on the licence are still uncertain. My noble friend has not referred to the case of Gist-Brocades v. Generics which came before the Judicial Committee of your Lordships' House fairly recently. Two noble and learned Lords considered that he could impose whatever terms he thought fit in the circumstances. One noble and learned Lord disagreed with that view, while two noble and learned Lords reserved their judgment. So there is uncertainty about the discretion which is vested in the Comptroller of Patents.
My noble friend Lord Northfield considers the licence of right, which can be granted during this four-year extension, to be a mischief—an enormous mischief—which puts the British pharmaceutical
1128
industry at a disadvantage compared with the industries of competitive countries, depriving it of adequate remuneration to fund research which can lead to the development of new and successful drugs of benefit to mankind.
That, briefly and in essence, is the case advanced by my noble friend and also by the Association of the British Pharmaceutical Industry. But there is another side to the case. There is an opposing view, which remains unconvinced that additional patent protection is required during the four-year period with which we are concerned tonight. That opposing view naturally is being advanced by the Association of Pharmaceutical Importers who want to keep the licence of right and also want the minimum of limitations to be imposed upon an individual licence. It would argue that there is no guarantee that greater patent protection will necessarily mean that a patent-holder will plough back the profits into research and development in the United Kingdom, or indeed at all. That will depend very much upon the individual company.
It also argues that, in the national interests of the United Kingdom, the National Health Service should have access to cheaper drugs and medicines which are available, or which could be available, by virtue of the licence of right. It further argues that we in this country require highly qualified companies, which will confine their business to generic drugs, as well as the research-based companies. I should also remind the House that an Early. Day Motion, tabled in the other place a few days ago, is critical of what it describes as excessive profits at the expense of the nation's health.
Those are basically the opposing arguments. We are in sympathy with the broad principle that home-based industry should receive an adequate return in relation to its products in order to ensure continuity of research. Indeed, my noble friend Lord Ennals has often made that point in your Lordships' House. Britain needs a strong pharmaceutical industry. We do not want to kill that goose. But it is also in the public interest—and this I assert as a health spokesman on this Bench and also as a taxpayer—that drugs and medicines supplied for the national health should be supplied at reasonable prices. So there could be a conflict of interest here. One has to balance the benefit to the patent-holder of pharmaceutical products against any detriment to the National Health Service as the purchaser of drugs and medicines.
I go back almost to where I began. During discussion at the Committee stage of the Patents, Designs and Marks Bill last April, the noble Lord, Lord Lucas of Chilworth, said that the Government were prepared to introduce legislation to protect what he described as "useful patent life". If that remains the Government's view, will the Government, as the custodians of the National Health Service, also bear in mind the need to safeguard the interests of the National Health Service?
Perhaps I might draw the attention of the Minister to a possible helpful provision to be found in Section 41 of the Patents and Designs Act 1949—that Act having been repealed by the Act of 1977. That section placed on the Comptroler of Patents a duty to ensure, among other matters, that medicines, were available

1129
to the public at the lowest price consistent with the patentees deriving a reasonable advantage from their patent right. The proposed patents protection legislation, if it is to be introduced, should also contain a safeguard for the National Health Service possibly along the lines of section 41, if that is allowed by Community law. It appears to us that that is the only means whereby we can reconcile the different national interests to which I have referred.
6.46 p.m.
Lord Hesketh: My Lords, I should like to thank the noble Lord, Lord Northfield, for opening this short debate. A number of important questions have been raised and I hope that in passing on some of my very newly-acquired knowledge I may be able to put minds at rest. I arrived armed with a veritable array of confetti for the debate today and before dealing with my speech proper, I should like to deal with some specific points that were raised during the debate that are not contained in my speaking notes. The subject is complicated enough as it is, without making it more difficult for your Lordships to understand.
However, before covering those points I should like to say two things which I feel are relevant. First, I heard the phrase, "piratical trade" I think that is a little strong. A free market in Europe by definition means that products of all kinds (including medicines) are going to cross borders. Another point of which I took note was hearing efficient purchasing described as "fraud". Again, I think that is a little rich.
I shall now move to the other points that have been raised and then I shall deal with the speech itself. The noble Lord, Lord Northfield, pointed out certain cases, in particular I believe he was referring to an anti-epileptic drug and its application. We know that on certain occasions there have been errors; but it is also true to say that parallel imports have been blamed where in fact they are not to blame and the complications were due to reasons which had nothing to do with them.
There is the policy of reimbursing the pharmacists. I am informed that there are certain pharmacists who on principle have not used parallel imports. It is felt that they should not suffer as against those who have used such imports. As many of your Lordships will be aware, parallel imports are in fact a phenomenon of the 1980s, and in the 1970s we were actually parallel exporters. At this moment a new survey is being conducted in order that we can respond to this problem. The results of that survey are just about to reach the Government and therefore there will be a new basis on which we might hope to resolve this problem.
The noble Lord, Lord Northfield made a point concerning counterfeiting. We have evidence, and I shall come to it later, with regard to counterfeiting of cartons and leaflets, but we have no evidence with regard to the product. I think possibly the noble Lord was referring to the Ventolin saga, which concerned the counterfeiting of the packaging but not of the product itself.
Lord Northfield: My Lords, I did not say that it was the packaging.
Lord Hesketh: My apologies, my Lords.
It was said that a quarter of all parallel imports are unlicensed. There is no basis on which to confirm or deny this figure, but 80 per cent. of applications are now dealt with, and all allegations of unlicensed trading are investigated.
The noble Lord, Lord Prys-Davies, referred to the number of applications that had been received and to the licences granted and refused. The figures are that since May 1984, 3,155 applications have been received; 1,500 licences have been granted and 722 refused. Applications returned or withdrawn numbered 312. The balance outstanding is 571. We are now getting on top of the problem.
Lord Prys-Davies: My Lords, was there a backlog of applications?
Lord Hesketh: My Lords, perhaps I may move on to the next point on applications treated. Importers have been warned that an application is not a licence. They will be pursued if they make that foolish error.
Finally. I was asked how many complaints we have received about parallel imports. We have investigated 38 allegations of unlicensed trading in 1986. That can include multiple complaints involving the same product.
As far as licensed parallel imports are concerned there should be no question of danger to patients. These are all medicines which have been licensed in other European Community states in accordance with EC requirements. I shall be saying more about the action we are taking to stamp out the trade in unlicensed medicines, but in general the safeguard is that we would expect pharmacists to ensure that they only dispense UK licensed products.
We must put this into context. Parallel importers are concerned with a nucleus of a small number of the most frequently prescribed and generally more profitable products, perhaps some 200 out of a total product range of more than 10,000. The trade in parallel imports is difficult to quantify but figures that have been suggested put it at substantially less than £100 million per year. This should be compared with some £2,600 million for the UK pharmaceutical industry output as a whole. I shall also explain the efforts that are being made to deal with the remuneration for retail pharmacists in relation to the discounts offered by parallel importers. Finally, I shall have a few words to say about the effect on the UK pharmaceutical industry.
As noble Lords are aware, parallel importing of medicinal products occurs when medicines are purchased at a relatively low price in one country for sale in another. They compete with identical, or virtually identical, products already being marketed there, often by the same manufacturer. Products are cheaper in the exporting country usually because of local price regulation systems and currency fluctuations. In the 1970s the UK was a parallel exporter.
By the early 1980s, medicinal products were being parallel imported into the United Kingdom on a substantial scale and without adequate controls. The Government therefore decided to introduce a scheme,

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based on the EC recommendations, for the licensing of parallel-imported medicinal products. The scheme took effect on 16th May 1984 and required that a parallel import product licence should be held by anyone marketing medicinal products in the United Kingdom after that date. The scheme is kept under review and various changes have been made since it came into operation. For example, the accession of Spain and Portugal to the European Community from 1st January 1986 brought further problems especially in relation to certain UK patented products where the UK patent holder could seek to prevent imports. We have co-operated with the Association of the British Pharmaceutical Industry to produce lists of the patented products and their Spanish and Portuguese names which have been circulated to parallel import licence holders.
Parallel import product licence applications cover a very small number of products, but there are multiple applications involved, as each importer wishes to handle the same basic range of high volume products. Once the initial decision has been made that an import is acceptable, subsequent applications can be processed on a mirror image basis. There are, however, still some applications outstanding from the start of the scheme. A relatively small number of officials in the licensing authority is concerned with parallel imports—basically one medical assessor, two pharmaceutical assessors and a small administrative section—but none of these is devoted exclusively to parallel import work. There are 250 staff in the medicines division of the department and 20 medicine inspectors under the department's control. Parallel import applications are not given preference to UK company applications.
As the regulatory authority under the Medicines Act, the health Ministers are concerned to ensure the safety, quality and efficacy of all medicines sold or supplied in the United Kingdom; and subject to that proviso, they are neither for nor against parallel importing. They are, of course, bound by EC regulations to facilitate the free movement of goods between member states. The position therefore is that the great majority of parallel-imported products available to UK pharmacists should be licensed products. As such they should present no health hazard as they have been licensed on the basis of information supplied by other regulatory authorities and/or manufacturers as to their equivalence to the UK licensed product. Products come mainly from France and Belgium and to a lesser extent from Italy, Greece, Denmark and Holland. Labelling and patient information must be in English.
It would also be wrong to suggest that licensed parallel imports are inferior in quality. All Community member states are required to follow a common procedure in marketing authorisations for medicines. Overseas manufacturers of pharmaceutical products intended for the UK market must in general comply with conditions which equate to those applicable to UK manufacturers. We have ensured that community pharmacists have up-to-date information available to them as to the products which have been granted licences. Monthly lists of such products have been published throughout this year. For the future we
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would suggest that the presence of a product licence number indicates the product's status; if no number is quoted it can be assumed that it is.unlicensed and should therefore be reported to the department for consideration of prosecution. When I say "community pharmacists", I am referring to what could also be known as the local chemist, in case anyone thought it was something to do with Europe-wide pharmacists.
Currently we are investigating 20 parallel importers for various offences mostly involving trading in unlicensed products and labelling or assembly irregularities. Two parallel importers have been prosecuted and convicted. Other prosecutions are pending. There is difficulty in securing evidence strong enough to support a criminal prosecution. A recent encouraging trend is a tendency for the more responsible parallel importers to complain to the department and supply evidence as to the activities of other importers.
Lord Northfield: My Lords, is that not alarming? There are only 28 registered parallel importers and the noble Lord has just said that more than 20 of them are being investigated for possible infringements and possible prosecution.
Lord Hesketh: My Lords, the number of importers is 31 rather than 28. As I said earlier, the vast number of cases concern irregularities to do with packaging or labelling. It could be said that we are doing a very good job in pursuing so many.
Controls over unlicensed products entering the country would require a check on all incoming vehicles. This is not practicable. In any case it is not an offence to import from the European Community and hold in store medicines licensed in a Community country. Close liaison is maintained between the enforcement branch of the department, medicines inspectors and inspectors of the Pharmaceutical Society and investigation officers of the Ministry of Agriculture, Fisheries and Food and Customs and Excise.
Both the UK pharmaceutical industry and parallel importers have at various times been critical of the handling of parallel-imported medicines. On the one hand, the UK industry has suggested that there was no need to set up a scheme and the UK could have invoked the provisions of Article 36 of the EC Treaty to avoid this. They also argue that licences should not have been issued for products bearing certain UK trade names and that the scheme has been too liberal and favours parallel imports at the expense of UK products.
Our scheme is based on the European Commission's recommendations and we have taken great pains to ensure that licences are only granted where the information available to us suggests that the parallel-imported products are equivalent to their UK licensed counterparts. As for product names on licences, the department's guidance to parallel importers states that it is for the applicant to ensure that he is entitled to use any name applied for. As to favouring parallel imports, the scheme has been modified in the light of revised advice from the European Commission and 53 appeals against refusals of licences.

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On the other hand, the Association of Pharmaceutical Importers has been equally critical of the department's apparent tardiness in dealing with applications, the unnecessary restrictions inherent in the licensing scheme, and unwarranted zeal in enforcement action. It is also at this time seeking judicial review action in respect of the department's instructions to pharmacists which it is alleged discriminate against the dispensing of parallel imports. If somebody is criticised by both sides it suggests to me that broadly the system is operating fairly. I have already said that the UK licensing authority is neither for nor against parallel importing.
I now turn to the question of what the noble Lord, Lord Northfield, refers to as windfall profits being made by some retail pharmacists. He will be aware that when this problem first came to light in 1983–84, the Government introduced a scheme designed to complement the existing reimbursement arrangements by taking into account the very high discounts which had become available in the market. This was the high discount endorsement scheme. Unfortunately this scheme was found to be in breach of Article 30 of the EC Treaty by both the High Court and the Appeal Court.
Since that time, the department's legal advisers have been considering the full implications of that judgment on the existing arrangements for reimbursing retail pharmacists. One thing that is certain is that any new scheme which may be introduced in the future must be seen by all to be fair and must be seen to be fully meeting our legal obligations in both Europe and the United Kingdom. I can assure noble Lords that no decisions have yet been taken on any new scheme.
One of the major problems facing us is that despite the fact that parallel imports have been with us for some time—and, before that, parallel exports were the problem—very little factual information on the extent of their usage exists. Let us be quite clear that not all pharmacists use parallel-imported medicines in their NHS dispensing. It is necessary, I think, to put the problem in perspective. Various estimates have put the value of the trade at between £40 million and £100 million. This has to be compared with a total drugs bill in the region of £1,800 million. That is not to say that the Government are being complacent. The results of inquiries are expected shortly. Once they are available, the Government will be considering as a matter of some urgency what action may be taken to curb any excess profits being made by pharmacists under the existing reimbursement arrangements.
We have been discussing this evening a problem affecting the pharmaceutical industry in this country. In doing so, I believe it is important that we should remind ourselves that this is a successful industry—successful both in terms of the quality of its products and in terms of the industry's economic success. Of the £1,800 million NHS spending on medicines, some £1,200 million was for medicines supplied by UK-based pharmaceutical companies who also exported medicines in 1985 to the value of £1,440 million. Those figures surely speak for themselves. In 1985, the pharmaceutical industry in the UK produced total medicine sales, home and abroad, of more than £2,600 million, with a positive
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balance of trade of very nearly £850 million. Noble Lords will surely agree that this is indeed a success story.
One does not of course wish to dismiss or minimise the effects of parallel imports for the UK pharmaceutical industry. But I believe it is important that we should keep this question in perspective, and I hope the figures which I have quoted will help us to do that. The cost of research and development figures prominently in the cost of the pharmaceutical industry. The UK industry's current spending on R&D is more than £500 million per annum. The importance of this element is taken into account in the prices of medicines supplied to the NHS, which have built into them a specific provision for R&D support currently running at more than £300 million a year.
In conclusion, I would emphasise that it is wrong to suggest that patients are at risk from licensed parallel-imported medicines. In some cases these are made in the same factories as supply the UK products; in others from sister companies to the same formulae. The UK licensing authority has devised a licensing scheme to control parallel imports, and now that it has absorbed the initial flood of applications I would suggest it is well on the way to ensuring that only licensed products are marketed in this way. The department will follow up all allegations of unlicensed trading and will consider prosecution action where the evidence warrants this.
As for the effect on the UK pharmaceutical industry, I know it would have preferred us not to set up a parallel-import scheme. We had, however, to honour our obligations as an EC member state. As for windfall profits by some pharmacists, I have indicated the action in hand to deal with this.
I am grateful to the noble Lord, Lord Northfield, for raising this subject today. It has been an interesting and well-informed debate. I also thank the noble Lord, Lord Prys-Davies, for his most valuable contribution. If, in the interests of brevity, I have failed to answer all the points raised I hope that noble Lords will forgive me. I shall of course write to noble Lords to correct the situation.
Lord Hacking: My Lords, before the noble Lord sits down perhaps he will allow me to intervene because I believe there is a weakness in one of his arguments. If I understood the noble Lord the Minister correctly, he said that both the customer and the industry would be protected from some of the consequences of the matters on which the noble Lord, Lord Northfield, addressed us by the adoption of a common procedure for the marketing of medicinal products.
However, does this not focus into a problem which exists not only in this country but in other countries within the EC? I refer to the abridged application procedure. Before panic sets upon the Minister because he cannot find a tab in his brief headed "abridged application procedure", may I tell him briefly that this is a procedure under which second applicants for a product licence are relieved, in part or in whole, from producing with their application experimental and biological studies or preclinical, clinical and laboratory studies in support of their application. The result of that is that a second

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applicant can pick up a canister of pills from the chemist, break down the constituents of it, and possibly without even having to produce comparative data, then make his application for a product licence either in this country or the EC. If that is right—
Baroness Nicol: My Lords, will the noble Lord give way? I think it is the custom of the House that when intervening in an unscheduled manner, the intervention should be kept short. I am sure the noble Lord will bear that in mind.
Lord Hacking: My Lords, I am sorry if I am making a rather long intervention. I apologise to the House and to the noble Lord, Lord Northfield, for not being able to make my intervention at an earlier stage in the proceedings.
All I put to the Minister, which arises out of one of the points he was making in his submission, is that a weakness lies in this proposed "common procedure" that he is speaking about because of the use in this country and in other EC countries of the abridged application procedure. If it would be easier for the Minister to reply to me in writing, I shall be happy to receive his reply in that way.
I therefore direct two questions on the abridged procedure. Is reference made to the original applicant's clinical and other data when considering the second application, and, if so, to what degree? If the Minister could reply in writing, it would certainly assist.
Lord Hesketh: My Lords, I am sure that it will come as no surprise to the noble Lord that I shall be writing to him rather than answering him at this time.
Lord Northfield: My Lords, before the noble Lord finally sits down, I wonder whether I may ask him to be sure to write to me about the points I raised about the EC; namely, that the EC Commission needs support in pressing through its view that research and development expenditure should be included in the pricing of pharmaceuticals by other countries and that some order should be brought into the whole system of comparative pricing so that, one hopes, parallel importing will fade away. I should be grateful if he would write to me about that.
Lord Hesketh: My Lords, the noble Lord's point is taken, and I shall be writing to him.
House adjourned at eleven minutes past seven o'clock.