Lords Sitting of 17 February 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 Lincoln.

Royal Assent
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Education (Amendment) Act,

Australia Act,

Poole Borough Council Act,

Berkshire Act,

British Railways Act.

"Jane's Defence Weekly": Article
2.36 p.m.
Lord Jenkins of Putney: 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 comment on the article by Yossef Bodansky in Jane's Defence Weekly alleging Soviet intelligence infiltration among those women camped at Greenham Common.
The Minister of State for Defence Support (Lord Trefgarne): My Lords, we do not comment on specific reports of this nature. We are, however, aware of the threat which could be posed in a time of crisis or war by enemy special purpose forces operating in this country. Your Lordships will recall that Exercise Brave Defender last September was designed specifically to test our plans for the defences of vital installations against such a threat.
Lord Jenkins of Putney: My Lords, would the noble Lord not agree that the spreading of false stories does more harm than good; harm not only to those about whom it is spread but harm also to those who are seeking to defend the country in a proper way? Having regard to the good reputation hitherto of Jane's Defence Weekly, would it not be a good idea if it was to admit that on this occasion it had been misled and that it had reported a totally false story by a journalist known to be given to science fiction, backed by detail that is completely spurious? In all these circumstances, would not a withdrawal and an apology be a good idea?
Lord Trefgarne: My Lords, that is really, I believe, a question that should be addressed to the proprietors of the magazine concerned. I do not think that I can help the noble Lord further.
Lord Campbell of Croy: My Lords, can my noble friend think of any information that Soviet intelligence can obtain by joining these campers that it does not know already? Can it be that it is studying at close quarters the theory of unilateralism since this is a doctrine unfamiliar to it not espoused or practised by the Soviet Government? Is that making it worth its while to brave the squalor and discomfort? Or is this just a case of alarmism and seeing Reds in the nettle beds?
Lord Trefgarne: My Lords, the only advice, I believe, that I can offer anyone visiting these establishments is to have a good bath afterwards.
Lord A vebury: My Lords, would one be able to recognise these ladies by the presence of snow on their boots?
Lord Trefgarne: My Lords, I do not know about that. But this week it might be so.
Lord Hatch of Lusby: My Lords, even if the Government do not make a practice of commenting on such stories, will they accept that this is a piece of disinformation which has been either deliberately or carelessly planted in a well known journal?
Lord Trefgarne: My Lords, as I have said, we do not comment on specific reports of this nature. If I were to follow the path that the noble Lord suggests, I might be doing just that.
Lord Peyton of Yeovil: My Lords, is it not rather appropriate that that question should have come from the noble Lord opposite who, after all, is no amateur when it comes to disinformation?
Lord Mayhew: My Lords, does not the noble Lord recall the successful infiltration by the KGB of his own Ministry, of the Foreign Ministry, of MI5 and of MI6? Why does CND worry about being infiltrated? It is a highly respectable experience.
Lord Trefgarne: My Lords, the noble Lord is allowing his imagination to run away with him.
Lord Graham of Edmonton: My Lords, if there is not a shred of evidence to back up this story, why does not the Minister say precisely that?
Lord Trefgarne: My Lords, because, as I have now said twice or three times, we do not comment on specific reports of this kind.
Lord Molloy: My Lords, we have heard statements from Mr. Shcharansky, Senator Kennedy and many other prominent allies to our cause who say that this is the best time ever for a good relationship between President Reagan and Mr. Gorbachev. Therefore, is it not a good thing that the Government should dismiss silly things said about this incident and also say properly and profoundly that we hope that this ridiculous behaviour, brought to our notice so capably by my noble friend Lord Jenkins of Putney, will have no damaging effect on future discussions?
Lord Trefgarne: My Lords, I doubt that anything I could say in response to this question would have any effect upon the relations between Mr. Gorbachev and President Reagan.

Coal Industry: Output and Productivity
2.41 p.m.
Lord Orr-Ewing: 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 output and productivity in the coal industry are fulfilling expectations.
Lord Brabazon of Tara: My Lords, the coal industry is making a magnificent recovery following the miners' strike, with output and productivity levels exceeding expectations for the year.
Lord Orr-Ewing: My Lords, I thank my noble friend for that excellent news. Will he say how much has been ploughed in by the Government and taxpayers in capital investment since 1979; how this compares with the amount provided by the Labour Government during their five years of rule prior to that; and how the productivity increase at that time matches the productivity increase that has now occurred?
Lord Brabazon of Tara: My Lords, this Government have invested nearly £4·9 billion at September 1983 prices in the coal industry since 1979. That is 60 per cent. higher in real terms than in the preceding five years under the Labour Government. As to productivity, the latest figures available for December 1985 show record levels of over 3 tonnes per shift, higher than has ever been achieved before. I understand that in the previous years to which my noble friend referred productivity actually fell marginally.
Lord Ezra: My Lords, in view of the excellent news which the Minister has given us about progress in the coal industry at the present time, can he assure the House that care will be taken in the substitution of oil for coal in power stations due to the present perturbations in the oil market?
Lord Brabazon of Tara: My Lords, that is primarily a matter for negotiation between the National Coal Board and the Central Electricity Generating Board in the first instance. It is too early to be certain how long these low oil prices will remain, and until we have a clearer idea of that I think that we shall have to wait and see.
The Earl of Lauderdale: My Lords, can my noble friend confirm that, with the voluntary departure from the industry in the past 18 months of some 35,000 men who have taken voluntary redundancy, over-manning is now at an end and the Coal Board is now aiming at a coal price which would work out at about 18p per therm, comparable with other sources of energy in the country?
Lord Brabazon of Tara: My Lords, with regard to the latter part of my noble friend's question, I do not have with me a figure of the coal price per therm. However, in answer to the first part of my noble friend's question, I can say that the output now is very nearly the same as it was in 1983–84, with a reduction in the workforce of some 40,000 people.
Lord Stallard: My Lords, will the noble Lord the Minister accept that I am not one of those who think that this was simply an inspired Question? In fact, we all welcome the good news that the Minister has been able to announce this afternoon. But is the Minister in a position to put a breakdown of the figures, district by district, in Hansard? Should we not all be pleased that the normal negotiating procedures for payments and conditions have now been restored between management and unions, as opposed to the policy of confrontation that was initiated at Cortonwood?
Lord Brabazon of Tara: My Lords, yes, indeed; we should be pleased by that. I should be happy to put down a summary of the output by region. Perhaps if the noble Lord would put that down in the form of a Written Question I could provide him with those figures.
Lord Morris: My Lords, is my noble friend aware that in the East Kent coalfields of Betteshanger and Tilmanstone the output has increased by some 60 per cent? Both those coalfields were threatened with closure some months ago. Would my noble friend care to comment as to why this might be so?
Lord Brabazon of Tara: My Lords, yes, indeed. I congratulate the two pits in Kent for having achieved this 60 per cent. output improvement between September and November. The area still faces problems in achieving profitability, but as my noble friend reminds us they have been reprieved from closure at any rate for the time being.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that I and the Opposition Front Bench also welcome the improvement in productivity to 3·2 tonnes per man shift? But is he aware that Mr. MacGregor has now upped the target figure to five tonnes per man shift and is threatening, if that figure is not reached, to close more collieries? Does the noble Lord agree that that is hardly the best way to get improved productivity and good industrial relations within the coal industry?
Lord Brabazon of Tara: My Lords, in answer to the noble Lord, I think I said earlier that with the fall in oil prices, although it was too early to tell what the impact of those would be, it is obviously essential that productivity should continue to increase in the coal industry if coal is to remain competitive with other forms of energy. I am sure that the noble Lord would agree that lower energy prices for our industry would be a most valuable contribution to the economic performance of this country.
As regards Mr. MacGregor's "threats"—as the noble Lord puts them—I did indeed read the article in the paper last week. I think that it would be best if I said no more about that at the moment.
Lord Tordoff: My Lords, in the light of the interesting results of the National Freight Corporation, which were in the paper this morning, does the noble Lord think that greater employee participation in the coal industry might increase productivity even more?
Lord Brabazon of Tara: My Lords, I think that goes a little wide of the Question. Of course the salaries or wages of coalminers include quite a reasonable element of productivity bonus in them.
Lord Orr-Ewing: My Lords, can my noble friend say how the 3·2 tonnes per man shift compares with other deep-mined coal in other countries? Are we now up to the standard or are we still rather below the standard of our competitors in this field?
Lord Brabazon of Tara: My Lords, in answer to my noble friend, I am afraid that I do not have comparative figures for overseas countries. I shall endeavour to find out if such figures exist and perhaps write to my noble friend if those figures are comparable at all.
Lord Molloy: My Lords, does the Minister agree that, in view of the figures he has announced, two things will now follow: the substantial import of coal from many other foreign countries will now be reduced and pits which are threatened will now be reprieved?
Lord Brabazon of Tara: My Lords, yes, indeed. I hope that the import of coal will be able to be reduced if our own mining industry is mining very much more. Regarding the future closure of pits, it is inevitable that pits cannot go on for ever. At the same time that we are closing pits we are also investing large amounts of money in opening new ones.

Unemployment: Rural Communities
2.48 p.m.
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what initiatives are being taken to combat long-term unemployment in rural communities.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, the benefits of our financial and enterprise policies are being reflected in new job opportunities in both urban and rural communities. In addition, many of the 230,000 places on the Community Programme are being used to help long-term unemployed people in rural areas, particularly through the farming and countryside initiative launched earlier this month.
Lord Gainford: My Lords, I thank my noble friend for that Answer. Has he information as to how this incentive scheme will work, particularly in Scotland?
Lord Young of Graffham: My Lords, yes. I understand that my right honourable friend the Secretary of State for Scotland is considering how the
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community programme might best be used to provide help for the long-term unemployed in rural areas in Scotland, and hopes to announce his intentions in the near future. The present farming and countryside initiative applies only to England.
Lord Grimond: My Lords, is the fact that the noble Lord the Minister is replying to this Question a sign that he is primarily responsible for diversity of employment in rural areas, which is exceedingly necessary? If so, can he tell us what is the role of the Ministry of Agriculture, Fisheries and Food, and whether both in England and Scotland the Government intend any redistribution of responsibility in this area?—because it is certainly very necessary indeed that, with the fall in the number employed in agriculture, other employment should be encouraged.
Lord Young of Graffham: My Lords, no; I am replying to this Question because my primary responsibility concerns measures to help the long-term unemployed, whether they be in urban or in rural areas. The farming and countryside initiative is a joint initiative between the MAFF, the Department of the Environment, my own department and of course the Manpower Services Commission. The initiative is looking at ways in which the long-term unemployed can find work and also help the countryside, either by improving the environment or perhaps by looking towards new projects which will benefit tourism and recreation, nature trails, local amenities or the conversion of buildings for local amenity use.

Company Shares: Beneficial Ownership
2.51 p.m.
Lord Williams of Elvel: 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 take powers to discover where necessary the beneficial ownership of shares in public and private companies.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, powers already exist in the Companies Act 1985 for the Secretary of State to investigate the ownership of any public or private company where it appears to him that there is good reason to do so. Public companies may also require disclosure of the beneficial ownership of their shares.
Lord Williams of Elvel: My Lords, I thank the noble Lord for his reply. Will he not agree that the powers in the Companies Act which he has just cited are rather blockbuster powers, and that a mechanism is required to discover the real ownership of shares such as may determine, for instance, the outcome of the Westland case, or where holdings may be built up in strategic industries by and through nominee names?
Lord Lucas of Chilworth: My Lords, I cannot agree with the noble Lord, Lord Williams, in the first part of his supplementary question. In response to the second part, we believe that the provisions of the Companies Act are quite sufficient to establish those facts where necessary.
Lord Bruce of Donington: My Lords, will the noble Lord inform the House whether, in view of the fact that he has indicated that the Government themselves have powers to investigate the beneficial ownership of shares, any member of the Government knew prior to the last meeting of Westland who were the real shareholders behind the six beneficial ownerships described, owning between them at that time some 20 per cent. of the Westland share capital?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Bruce of Donington, has asked me the very wide question, "Did any member of the Government know?" I do not know, my Lords. I have not discussed with all members of the Government, so I would not know. However, certainly the information given by the Stock Exchange on 11th February provided the principal disclosed shareholdings in Westland, and at the extraordinary meeting of shareholders on 12th February Sir John Cuckney announced that there were holdings by nominees.
Lord Bruce of Donington: My Lords, is the noble Lord aware that that answer is thoroughly unsatisfactory? Is he further aware that there is a very widespread view, which I share, that the Government did in fact know the identity of those who were beneficially interested in the shares to which I refer?
Lord Marsh: My Lords, will the Minister not agree that if a significant shareholding in Westland had been held by the staff of Westland—whose judgment has been consistently superior to that of many other people involved in this particular saga—this fiasco might have been avoided? In the light of this experience will he not further agree that, in the case of another defence contractor shortly to be privatised (and I declare an interest), every encouragement should be given to the employees of Vickers Shipbuilding who want the opportunity to invest their own money in the company for which they work and who will therefore presumably take a commercial view, a view which was frequently absent from some of the strictures in the last saga?
Lord Lucas of Chilworth: My Lords, I am grateful to the noble Lord, Lord Marsh, for posing that question. As the House will know, it is part of the Government's policy to enlarge the shareholding, and particularly worker participation, in all private companies. It is also encouraged in nationalised companies where they are returned to the private sector, and is to be welcomed.
Lord Hatch of Lusby: My Lords, will the noble Lord recall that last week, in answering a similar question to that put by my noble friend Lord Bruce of Donington this afternoon, his noble friend said that I had misunderstood his statement and that the Government did not have powers to reveal the
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shareholdings in the case of Westland? Will the noble Lord also agree that his noble friend told me and the House that Sir John Cuckney would make a statement before the vital meeting last week? Sir John Cuckney did not make a statement revealing who the six shareholders were. Is the Minister now saying that the Government could have discovered who those shareholders were but did not do so before the crucial meeting at which the decision was taken?
Lord Lucas of Chilworth: My Lords, I do not believe that my noble friend misled the noble Lord. On 11th February, Sir John Cuckney issued a notice under Section 212 of the Companies Act 1985, which is to require an investigation by a company of interests in shares. The noble Lord will know that that Act provides for there to be a period of response of five days. At the same time Sir John Cuckney said that he would make that knowledge public when it was available to him. The company having taken that action, there was no point in the Government taking similar action.
Lord Jenkins of Putney: My Lords, is the noble Lord not aware that there are many people, including some of those sitting behind him, who would regard it as entirely unsatisfactory for an important decision relating to the Government's defence policy to be determined by who can acquire the shares in a company at a particular time? In view of this, will he not agree that this raises the question whether it is appropriate for companies holding a strategic position in our defence industry to be privately owned?
Lord Lucas of Chilworth: My Lords, I think that the question of defence interests is a little wide of the Question on the Order Paper, which concerns beneficial ownership. I think that my noble friend the Minister of State at the Ministry of Defence answered that aspect quite adequately last week.
Lord Diamond: My Lords, is the noble Lord aware that the question of the defence of this country is very much in the minds of many of us on all sides of the House? Does the noble Lord recollect that quite recently in their search for cash the Government proceeded to sell to the private sector large sections of the defence-contracting industry, and defended it on the grounds that the Government could protect the national interest in relation to the possible transfer of shares to foreigners? Is the noble Lord now satisfied—and I am sure that this is the question which is in the minds of very many of us—that the powers which the Government have work fast enough to prevent industries which are vital to the defence of this country passing into foreign hands, or partly so, before he is aware of it?
Lord Lucas of Chilworth: My Lords, at all times the Government have consideration of the defence of the nation very much in the forefront of their mind. When giving consideration to matters of shares, we believe that the provisions of the Companies Act, the Fair Trading Act and the Industry Act are sufficient in this regard.
Lord De Freyne: My Lords, basically I speak for myself, but will my noble friend not agree that those who work in that particular company have always gone for something in which they believe? If they believe in it, they believe in this country, and I hope we all go along with that.
Lord Lucas of Chilworth: Yes, my Lords, I think I agree with my noble friend's thinking in this matter, that the workpeople in all our companies are interested in their own companies and their own companies' massive contribution to the well-being of the economy of this country, of which they are members.
The Earl of Halsbury: My Lords, is not the sudden conversion of the noble Lord, Lord Jenkins of Putney, to an interest in the defence of this country a case of finding Saul among the prophets, and ought we not to welcome it accordingly?
Lord Lucas of Chilworth: My Lords, the matter of the noble Lord's conversion is, I think, more of a matter for him than for me.
Lord Jenkins of Putney: My Lords, as my name has been mentioned, will the noble Lord permit me to say that I have been interested in the defence of this country ever since the last war?

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Lucas of Chilworth will, with the leave of the House, repeat in the form of a Statement an Answer which is to be given in another place to a Private Notice Question on BL subsidiary companies.
This will be followed by my noble friend Lord Trefgarne who, again with the leave of the House, will repeat in the form of a Statement an Answer to a Private Notice Question in another place on severe weather fuel payments.

Gull Island Protection Bill [H.L.]
3.1. p.m.
Read a second time, and committed to an Unopposed Bill Committee.

River Humber (Burcom Outfall) Bill [H.L.]
Read a second time, and referred to the Examiners.
Bromborough Dock Bill [H.L.]
Read a second time, and referred to the Examiners.

Procedure of the House
3.2 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that the First Report from the Select Committee on Procedure of the House be agreed to.
May I briefly refer to two items in the report. The first is Item 1: Form of Motions for Papers. Your Lordships will recall that last July there was considerable criticism in the House on the original recommendation from the Procedure Committee on this matter, and I agreed to take it back to the committee. The delay in returning to the House has been due to the difficulty in reaching agreement within the committee.
Considerable efforts were made to find a compromise, but in the end, after two long meetings, a Division took place—a most unusual event in the Procedure Committee—in order to arrive at a decision. An alternative report proposed by the noble Lord, Lord Boyd-Carpenter, was rejected by 17 votes to two, and the present report was agreed to with the noble Lord, Lord Boyd-Carpenter, dissenting.
The committee now recommend that the present convention that Motions are worded unprovocatively and avoid tendentious language should be continued, and so recorded in the Companion to Standing Orders. In so doing, the committee recognised that Lords tabling Motions may wish to highlight a particular aspect of the subject, but the resulting text should not amount to a statement of opinion or the demonstration of a point of view. I would emphasise that this is exactly the same procedure as applies to Questions. The committee draw attention to the fact that when it is desired to seek a definite conclusion, if necessary on a vote, then a Resolution and not a Motion for Papers should be tabled.
May I say a word briefly on the second item, Linked Amendments. The recent change in procedure whereby linked amendments are printed together when first spoken to and reprinted in Hansard when moved has proved unsatisfactory. The Editor of Hansard explained to the committee that this new practice had greatly increased the work load on her editorial staff and has resulted in errors and delays. The committee therefore recommend that we should revert to the previous practice and that amendments should be printed at the point at which they are moved. I beg to move.
Moved that the First Report from the Select Committee be agreed to.—(Lord Aberdare.)
Following is the report referred to:
1. FORM OF MOTIONS FOR PAPERS
On 3rd July 1985, the House referred back to the Committee item 1 (Form of Motions for Papers) and paragraph 2 of item 4 (Ministerial Statements) of the Second Report of last Session from the Committee for further consideration (Official Report cols. 1186–98). In the Third Report of last session they reported further on the question of Ministerial Statements and this was agreed to by the House on 27th November 1985. After another meeting the Committee have agreed the following report on the form of motions for papers.
Item 1 of the Committee's Second Report of last Session proposed, in the light of the increased party political activity in the House, that in future motions for papers should be worded in such

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fashion as the Lord who initiates the debate thinks fit, with the proviso that they should be phrased in such a way as to avoid the risk of a division.
The Committee have reconsidered their previous recommendation in the light of the criticisms expressed in the House on 3rd July. At present there is no specific guidance in the Companion to Standing Orders on the form of motions for papers. Nevertheless the unwritten convention of the House has long been that the wording of such motions should be, so far as possible, short and couched in terms avoiding provocative or tendentious phraseology. The character of such motions has not been understood to inhibit Lords from advancing controversial points of view in the course of debate. Motions worded provocatively, or containing a partial statement, or which only state one side of a question run the risk of attracting amendment or even of being taken to a division, contrary to the guidance given in the Companion that debates on motions for papers should not conclude in a vote.
The Committee recognise, nevertheless, that in some cases Lords tabling Motions for Papers may wish to highlight a particular aspect of a subject to which they wish the House to give special attention. The Committee regard this as an appropriate course provided that the text does not amount to a statement of opinion or the demonstration of a point of view. The Committee recommend that this guidance should be embodied in the Companion and that the advice of the Clerks should be accepted by Lords tabling Motions, as at present laid down in the Companion page 48 in the case of Starred Questions, Questions for Written Answer and Unstarred Questions.
Where it is desired that the House should reach a definite conclusion on a matter, if necessary on a vote, the proper procedural course will continue to be to table a motion for a resolution, which can with propriety incorporate statements of opinion and the demonstration of a point of view.
2. LINKED AMENDMENTS
The Committee have reviewed the new procedure whereby linked amendments are printed together in the Official Report when first spoken to, and are thereafter reprinted, if agreed, at the point in the proceedings at which the amendment is agreed. This was agreed to as a permanent feature of the procedure of the House in the Second Report of last session agreed to on 3rd July 1985.
The Editor of Debates has drawn attention to the implications for Hansard of this new procedure, especially at the end of last session when the House had to consider exceptionally long and complicated legislation, such as the Transport and Insolvency Bills. In the case of these two Bills, the number of amendments spoken together which were subsequently agreed to were so great that the new procedure could not be carried into effect without disproportionate duplication and unacceptable delays in the production of Hansard. As it was, the editors had to stay on up to 4 hours after the rising of the House, and much earlier cut-off points were required at the Printers' insistence.
The new procedure has the added disadvantage of leading to delay in the production of the bound volumes of Hansard. The keeping of the records of the House has been complicated and the risk of error increased.
The Committee recommended that the new procedure should be discontinued and that the House should revert to the previous practice whereby amendments are only printed in the Official Report at the point at which they are moved.
3. STANDING ORDER 38
The Committee have considered the terms of Standing Order 38 (Arrangement of the Order Paper), which governs the Order of Business on the Order Paper, and which provides that, subject to certain exceptions, notices appear in the order in which they are tabled, but that on all sitting days except Wednesdays, Bills, Measures and Affirmative Instruments take precedence. The practice of the House is to take motions first on Wednesdays, but this is not reflected in the Standing Order in its present form.
To remedy this, the Committee recommended that Standing Order 38 should be amended by the addition of the following new sub-paragraph:—
"(4A) On Wednesdays, notices of Motions shall have precedence over notices and orders relating to Public Bills, Measures and delegated legislation.".
Lord Boyd-Carpenter: My Lords, as the noble Lord the Chairman of Committees has referred to some of
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the discussions—he would agree, rather prolonged discussions—in the Select Committee on Procedure, and mentioned some part that I had sought to play in them, perhaps your Lordships will allow me to offer some brief comments before you decide on an issue which I believe is of some general importance to the House.
In the first place, I would emphasise that there was no difference of opinion in the committee on the general question that Wednesday Motions for Papers should not end in a Division. There was complete agreement on that. The difference lay in the extent to which it was desired to limit even the temperate and moderate expression of opinion in the terms of the actual Motion.
Those of us who took the view that it would be helpful for the Motion to give some indication of the line of argument which is to be taken were agreed wholly with the majority that the language used must be temperate and unprovocative, and therefore in the extreme degree unlikely to provoke a Division. I am not sure that your Lordships will appreciate that the substance of a Motion for Papers is for papers.
Your Lordships may recall the not unfunny incident when Lord Woolton was leading this House some years ago. Great man that he was, he was not particularly interested in matters of procedure. He therefore accepted a Motion for Papers, leaving for the officials of the House the great problem of what they did then. With their usual versatility they rose to the occasion. They filled up a van with a lot of obsolete government publications and dumped them at the private residence of the noble Lord who had had the misfortune to move the Motion which he had not intended to be carried.
Therefore, the risk of a Division on a Motion for Papers would appear to be exiguous unless really violent language is used. As your Lordships will be aware, in the last two or three years there has been a quite considerable move away from the rather neutral form of words to a moderate indication of the kind of matters which the proposer of the Motion wants to bring forward. But it is important that on none of those occasions was there even a hint of anybody wishing to force a Division. Therefore, those of us who argued for some expression of view in the Motion did so on the basis that really it did not seem that we were risking anything by way of a Division.
What is the argument the other way? The words of the report—which I do not think the noble Lord the Chairman of Committees quoted—say that the committee regard this as appropriate,
"provided that the text does not amount to a statement of opinion or the demonstration of a point of view".
A Motion which really complies with that must, in the nature of things, be somewhat insipid.
It would certainly have ruled out a great many of the Motions which this House has, I think successfully, debated on Wednesdays on a Motion for Papers. I have my noble friend Lord Home's permission to refer to one that he moved on 23rd April last, and which those of your Lordships who were present will recall resulted in a highly successful, extremely interesting, and not uninfluential debate. The Motion read:

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"to call attention to the desire of Britain and other western democracies to seek better relations with the Soviet Union"—
that, in brief, applies—
"and the obstacles which continuing Soviet exploitation of economic and social problems in developing countries and intervention in the internal affairs of other countries have placed in the way of obtaining this objective, and to move for Papers".—[Official Report, 23/4/85; cols. 1012–3]
I think your Lordships have to accept that if we go to what is suggested in this report then Motions of that character will be plainly outside the rules.
There are two disadvantages in that. I can put them briefly. One is that if the Motion does not contain, as that of my noble friend Lord Home did, an indication of the line which the proposer intends to take, then those of your Lordships who may be interested either for or against that proposition have no warning of the likely way the debate will go. Although the mover, as has been said again and again, is free to say what he likes when he speaks, he will not have given that advance warning, and those of your Lordships who, if they knew what the debate would be about, might like to attend either to support or to oppose would be denied that opportunity.
Secondly, and this I appreciate is a slightly more sensitive point, there is the effect on the media. If the media do not know, roughly, what will be raised and have some idea of the type of debate it will be, they may not attend either in the form of television or in the presence of our friends in the Press Gallery. This is of importance to your Lordships' House because the House must remember that it is not an institution wholly without its critics or wholly without its dangers. I understand that its abolition is still the declared policy of one great party in the state and, if your Lordships' House has less impact than it might on public opinion through the media, the public will be given less chance to understand the high quality of our debates and, to some extent, your Lordships' House will forfeit some of that public esteem which is likely in a crisis to help to protect its continued existence. For that reason, I should very much regret this.
I want to ask the Chairman of Committees for an interpretation of one part of the report which was not, as he will appreciate, fully discussed in the Select Committee, whose deliberations he has referred to. That is:
"The Committee recommend that this guidance should be embodied in the Companion and that the advice of the Clerks should be accepted by Lords tabling Motions."
I should like an interpretation of the word "should", which, as the noble Lord the Chairman of Committees has said, appears in others of our rules of procedure. Does it mean—as in ordinary parlance it does—that the advice of our learned and distinguished Clerks is obviously of great value, that anyone who does not seek their advice in such matters is very foolish and that they should certainly seek it and weigh it seriously? Or does it mean that the decision as to the appearance on the Order Paper of a Motion depends upon the agreement of the Clerks?
That is a crucial question because if the latter interpretation, in whole or in part, is valid, then we are going quite a way towards setting up what we have always sought to avoid—that is, having a Speaker with the power of giving rulings in this House—and we shall
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have departed from the good principle that in the ultimate the noble Lord tabling a Motion must take full and undiminished responsibility for it and therefore must be free in the ultimate to table it in his own words, in accordance with his own wishes and to take responsibility if your Lordships do not like it. In other words, under these proposals is the agreement of the Clerks to be a condition of the appearance of a Motion on the Order Paper? If it is, I should regret it greatly, because we are so well served by our splendid body of Clerks and quite obviously such a situation would drag them unwillingly and unhappily into controversy and perhaps into criticism. I hope my noble friend will be able to answer that question when he replies, if others of your Lordships take part in the debate.
3.15 p.m.
Lord Shackleton: My Lords, since it was on an amendment that I moved on a previous occasion that this matter and also the rights of Back Bench Peers in relation to Statements was referred back to the Committee, I should first say that I entirely accept that the noble Lord, Lord Boyd-Carpenter—who perhaps for tactful reasons decided not to oppose my amendment on that occasion, thinking that it was better discussed in Committee—should have deployed his case so forcefully and, on the whole, fairly. However, I disagree with certain of his remarks. The purpose of neutral Motions is that we should be in our manners in this House very different from that in another place. We do not use the Order Paper in this House for expressions of opinion, which is the normal practice in the House of Commons, where Motions are constantly put down just to put people's opinions on the record.
As the noble Lord, Lord Boyd-Carpenter, fairly said, this is something which leads to difficult questions of interpretation. Some of your Lordships may think that this has some of the qualities of a mediaeval schoolmen's discussion and that the difference between us is not all that great. But there is a distinction which became very apparent in the two lengthy sets of discussions that we had in the Committee on Procedure. The reason the noble Lord, Lord Nugent, and I felt so strongly was that, first, we had sought to restrict the expression of opinion in certain other areas, especially in relation to Starred Questions, and we felt (and I feel very strongly) that if a Motion is not put down in fairly neutral terms, it invites not only the possibility of a vote against but, more probably, an amendment. I could have suggested amendments which my noble friends and others might have moved to the Motion of the noble Lord, Lord Home. This would be undesirable and would lead us into confusion. Furthermore the argument that the noble Lord, Lord Boyd-Carpenter, used—that the wording of a Motion gives advance knowledge to the press and to the television authorities that there will be a pretty lively debate—is a particularly undesirable reason to give. If a noble Lord wishes attention to be drawn to something that he intends to raise, it is open to him to talk to the Lobby. But that is not a sufficient reason for us to change our practice. On the last occasion I expressed the view that I thought that we

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ought not to change our procedures without a very thorough-going consideration such as we had in 1971. That is still my view.
I hope therefore that your Lordships will accept the views of the Committee on Procedure and that we shall retain our existing practice. It is a fact that this House has perhaps become more contentious in recent years, but the one thing that I believe all your Lordships would wish is to avoid anything that leads us to having a Speaker to rule on our proceedings and we should find ourselves with endless points of order. Although this is not a major issue, I believe it helps to clarify the position so far as concerns the Clerks. I hope therefore that until we decide consciously to change our procedure we stick to our existing standards of behaviour in your Lordships' House.
Lord Nugent of Guildford: My Lords, as the noble Lord, Lord Shackleton, has just mentioned my support for the line he has taken, both in the House and in the committee, I feel I should add one word to what he has already very lucidly said, which exposes the view that he and indeed the majority of other noble Lords took in the Committee on Procedure in the lengthy discussions that we had.
I think we all recognised the force of the observations of my noble friend Lord Boyd-Carpenter. After all, he is perhaps the most distinguished and most able debater in the House. Therefore anything that in any way limited the remarkable contribution that he makes here would be a grave loss to the House and the last thing that any of us would want to see. Thus we really took this very seriously in trying to meet his point of view, a point of view which I am sure would be shared by many people, and yet preserve the normal custom of the House and the important points that are involved in this issue.
I feel that I should not add to those. The noble Lord, Lord Shackleton, has admirably dealt with them. However, I should deal with the last point that my noble friend Lord Boyd-Carpenter made, when he asked what was the role of the Clerk in regard to the word "should": that noble Lords should take the advice of the learned Clerk when drafting their motions. Page 48 of the Companion, to which my noble friend the Lord Chairman of Committees has referred, I think makes plain that, although noble Lords should take the advice of the learned Clerk, at the end of the day it is the responsibility of the noble Lord himself what he puts on the Order Paper. Then it is for the House, if the House does not like it, to take the appropriate action, so that constitutional position is unchanged.
There is here a significant practical point which has been worked out with immense care over recent years to try to meet our needs; that is, that when there is a point of order, either on Motions or on the form of Questions, it is most desirable that we should be able to take it as a House of Lords issue and not as a partisan affair. If there is no independent professional advice available for the House at the time the issue is raised in the House, as it has been once or twice, it is difficult and confusing for the House to take an objective view as to what the issue is.
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It therefore follows that if there is a defined obligation on the Clerk to give advice and on the noble Lord to take it, if then a noble Lord proceeds in the House, in the face of that advice, to put down either a Question or a Motion which is out of order, then if the matter is raised in the House it is obviously of the greatest possible help to noble Lords on all sides to know that this was the dispassionate, professional advice. Therefore if a point of order is taken on this particular issue, everyone knows that it is founded, as far as can be, on an objective judgment.
It is for that reason that the particular machinery has been brought in and the learned Clerk given a particularly onerous duty. After all, he is the Clerk and adviser to each one of us impartially and is as helpful as he can be to all of us. Nevertheless, this is his role in this particular way. It can be seen that it plays a vital part in helping us, as a House, to continue to keep order in the way we wish to, without important matters of order becoming matters of party controversy. I think this is an important point. Of course, that is one of the reasons it is necessary to define with come precision the criteria which are to guide the Clerk. Otherwise it would be quite impossible for him to give the advice that the House wishes.
Those are some of the thoughts lying behind this convention, which I think is of great importance to us and of great value in maintaining the kind of atmosphere, the kind of freedom, to which we are accustomed and, at the end of the day, maintaining the principle that each one of us, each noble Lord, is himself responsible for keeping the order of the House.
Lord Home of the Hirsel: My Lords, perhaps I may say a word. I think that I was probably guilty last year, according to the ruling that the Lord Chairman of Committees now reads out. There was a dilemma. I did not want to be provocative on Russia's practices. If I moved a resolution, it seemed to me that there was a danger that the debate would become difficult and controversial. I therefore deliberately chose a Motion and deliberately made my Motion for Papers as innocuous as I could make it, and got away with it. I of course support the Lord Chairman's ruling now. However, I think that with a little ingenuity we can probably still have put down as a Motion matters which are comparatively non-controversial.
Baroness Hylton-Foster: My Lords, perhaps I may repeat a suggestion I made at the committee; that is, that some of us feel that a Wednesday should be treated as a special day. It should be quite possible to have both an informative and an interesting debate, covering many different points of view, without provoking a Division, unless of course a resolution has been tabled. In that event the situation would be different.
Lord Aberdare: My Lords, I think that the House has heard very clearly expressed the issues that were before the committee. My noble friend Lord Boyd-Carpenter, whose views I respect, together with the sincerity with which he puts them forward, has very ably put together today the same expressions of opinion that he voiced in the committee. At the same

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time the noble Lord, Lord Shackleton, and my noble friend Lord Nugent of Guildford have equally well summarised the arguments that induced the committee to put their present report before the House.
The only question I was asked directly by my noble friend Lord Boyd-Carpenter has in fact been answered by my noble friend Lord Nugent of Guildford. I can only repeat that ultimately the decision lies with the noble Lord who puts down the Motion. Although it is obviously desirable that the advice of the Clerk should be accepted, just as it is or should be in terms of Questions, it is ultimately the responsibility of each one of us what actually goes on the Order Paper. I beg to move.
On Question, Motion agreed to.

Taxation and Male/Female Equality: ECC Report
3.28 p.m.
Baroness Serota Baroness Serota rose to move, That this House takes note of the Report of the European Communities Committee on Income Taxation and Equal Treatment for Men and Women (1st Report, 1985–86, H.L. 15).
The noble Baroness said: My Lords, I beg to move the Motion standing in my name. I do so with some diffidence and not a little trepidation, as it is the first occasion on which I have had the responsibility for presenting such a report to the House for debate.
Following so able and well-regarded a chairman as the noble Lord, Lord Seebohm, is no easy matter, especially as I speak on the difficult and sensitive issues that the report raises as some of the many people who, as we say in the first paragraph of the Select Committee's report, find the subject of income tax systems both complex and forbidding. But the subject is obviously a very important one, affecting all our lives very directly—sometimes even painfully! And it is linked, in the context of our inquiry, with another matter of wide public interest and concern; namely, the question of the equality of treatment of men and women in our society. Moreover, it so happens that the committee's consideration of these matters, stemming from what is in fact a discussion document, issued by the European Commission, has come at a particularly opportune time for the United Kingdom, when arrangements for personal taxation have been under review by the Government for some time and when the need for radical change in the present system is now widely accepted. The Select Committee were therefore in no doubt that their report should be drawn to the attention of the House in view of the important questions it raises.
To assist the committee in handling the complexities of the subject, Mr. Nicholas Moms of the Institute of Fiscal Studies acted as our specialist adviser, and I should like, on behalf of all of the members of the sub-committee, to take this opportunity to thank him for the invaluable advice and guidance he gave us throughout the inquiry. We are all also greatly indebted to our Clerk, Mr. Lionel Rutterford, for his constant help and support. I must also express the
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thanks of the committee to all those individuals and organisations who submitted evidence, both written and oral, during our many sessions.
As I have said, the European Commission document, the Commission memorandum to the Council on Income Taxation and Equal Treatment for Men and Women, is essentially aimed at promoting discussion and encouraging member states to review their arrangements for personal taxation within the general context of the Community's firm and long-standing commitment to the promotion of equal treatment for women. I must stress here that the document is solely concerned with earned income from employment and not with the taxation of unearned income. The memorandum makes no specific proposals on the characteristics of the taxation systems which individual member states should adopt.
As we point out in Part 2 of our report, the Commission have been taken to task by both the European Parliament and by the Economic and Social Committee for not having come forward with firm proposals and a draft directive on equal treatment in fiscal legislation. The memorandum, very usefully in my view, surveys the taxation systems of the member states and analyses the ways in which these systems exhibit direct or indirect discrimination against women. Its concept of indirect discrimination is an important one, and I shall return to it in a few moments.
The Commission conclude that a system of "totally independent" taxation of earned income is to be recommended from the viewpoint of achieving equal treatment of husband and wife. As we note in the report, however, there does seem to be a deal of confusion about just what is intended by "totally independent" taxation. I hope that, if it does nothing else, our report will serve to clarify understanding of these complicated matters.
There is no doubt that many taxation systems do discriminate against married women and that the system in the United Kingdom must be among the most objectionable from this viewpoint. As stated in the memorandum—and quoted in paragraph 7 of our report—one can assume that the various systems of income taxation in member states are not the result of any deliberate discrimination against married women, but of the historical fact that married women were regarded as economically dependent upon their husbands, in whose name property was held and income received. The position in the United Kingdom in this context is succinctly conveyed by a comment we received in evidence (and I quote):
"A distinguished judge and legal historian announced, in the 18th century, that in marriage husband and wife are one, and the husband is that one".
As recently as 1970, Section 37 of the Income and Corporation Taxes Act of that year provided that the income of a married woman shall be deemed for income tax purposes to be her husband's income and not hers; but in society today, when the role of married women in the economy has radically changed, this provision is now widely regarded as objectionable in principle and even offensive to many. Other aspects of the system that cause concern stem from this basic position. For example, the system discriminates in not requiring husbands to divulge information about their

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income, whether earned or investment, to their wives, whereas wives enjoy no such right. I shall return to this question of privacy shortly.
There is no need for me to catalogue further the deficiencies in our taxation system; these are generally recognised and now widely accepted, not least by the Government themselves. In 1980, the Government published a Green Paper The Taxation of Husband and Wife, the relevant aspects of which are referred to in Part 3 of the report. The foreword by the then Chancellor pointed to the growing criticism of a taxation system which takes no account of the enormous changes that have occurred over the last hundred years or so in the economic status of women, and particularly of married women. The Green Paper accepted that the time was ripe for a review and discussed the various options, including a move to a new system of mandatory independent taxation.
It must be said that there then followed a long period during which, so far as the outside world could discern, nothing further seems to have happened, and no analysis of the views of interested organisations has so far been published by the Government. But we point out in our report that there is an analysis on record undertaken by the Institute for Fiscal Studies of the responses that were received to the Green Paper, a large majority of which were in favour of a change to a mandatory independent taxation system. But in his Budget speech last year the Chancellor announced that another Green Paper on personal taxation was to be issued later in the year. In fact, this second Green Paper has yet to materialise, and I hope that the noble Lord the Minister who is to reply to the debate will be able to give the House some firm information today on when it will finally appear.
The fact that we are in this position in the United Kingdom with regard to tax reform naturally affected our inquiry. If there had been no clear commitment by the Government to change and no indication of the Government's thinking, we could have done little more than highlight the objections to the present system from the viewpoint of equal treatment and urge upon the Government, rather as the Commission has done, the merits of independent taxation. As it is, we felt hound to consider how far the new system that is apparently to be proposed by the Government, so far as this had been defined, meets the Community's stated aim of equal treatment. Specifically, we felt bound to examine the system of fully transferable allowances which the Government now seem to favour. Indeed, much of the evidence we received during the course of our inquiry was concerned with this topic.
The idea of transferable allowances certainly has attractions. In such a system, every adult would receive the same, single allowance. A husband whose wife was not working could set her allowance as well as his own against his earnings. The same thing would happen the other way round: a wife supporting her husband could use his allowance. The system would thus be symmetrical as between spouses; there would be no direct discrimination against women. The committee, however, after careful consideration, concluded that there would be substantial indirect discrimination against women in any such system.
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This arises because of the very different position of women in society—the fact that, generally, husbands are the main earners in families and that the paid employment of wives is much more likely to be interrupted, not least of course by having, and caring for, children. Certain effects of transferable allowances would therefore, in practice, bear unequally on men and women. A husband supporting his non-earning wife would enjoy her single allowance. But this would mean that if his wife were to take up paid work every pound of the additional income she contributed to the family would be taxed at her husband's marginal rate. The committee received convincing evidence that this would act as a significant disincentive to married women seeking paid employment.
There is another aspect of this disincentive effect. A wife starting employment would expect to enjoy her allowance but it would first have to be recovered from her husband; and he would then suffer a reduction in his take-home pay. Some witnesses expressed great concern that many husbands would resent this reduction and would put pressure on their wives not to take up paid employment. The committee felt that this interaction between the tax affairs of husband and wife which would be caused by transferability would be difficult for many people to understand and could well lead to discord between spouses. The committee agreed with the view of the Equal Opportunities Commission, given in evidence, that such a system could not be regarded as truly independent taxation.
We are here touching on the delicate relationships between married couples on financial matters, and the committee received disquieting evidence on this subject. Many wives still do not know how much their husbands earn—and many who think they do know believe the amount to be less than it is. Often, it appears, increases in a husband's earnings are not fairly shared with his wife. We were particularly indebted to Dr. Hilary Land for her written evidence on these points. All this is no doubt reflected in the concern about privacy to which I referred earlier. I am sure that all noble Lords will agree with me that it is sad that privacy between spouses about their financial affairs should still be seen as such an important issue. However, we must deal with things as they are. The Equal Opportunities Commission commented that lack of privacy under the present taxation arrangements was "one of the sources of most intense criticism" they had received. But the scope for privacy would be little better with fully transferable allowances. Where a wife earned less than the single allowance—and it must be remembered that there will be many such women since the great majority of working wives are in part-time, low-paid employment—the husband would know her earnings from the effect upon his own of the recovery of her allowance.
Another factor that emerged from the evidence—particularly that from the Inland Revenue Staff Association—is that because of the interaction that would occur between the tax affairs of husband and wife with transferable allowances, the administration of any such system would be far more complex and certainly more expensive to operate. This is, of course, not an equality-of-treatment issue but it is

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clearly an important public consideration in the choice by Government of any system to be adopted in the future.
It was for all these various reasons that the committee unanimously concluded that the balance of argument was firmly against the introduction of transferable allowances although we were all well aware that this conclusion might well be controversial. The idea that the tax system should support marriage—currently exemplified by the married man's allowance which would, in effect, continue with transferable allowances—is deeply embedded in our thinking. It was with this in mind that the committee comment in their report that the issue of transferable allowances provides a crucial test of the strength of the commitment to equality for women.
We all still tend to think in terms of the "traditional" family. A view expressed in the evidence from several bodies was that the system should not encourage wives to take up paid employment. But we must recognise the great changes that have taken place in our society, particularly in recent decades. The fact is, as we say in paragraph 7 of our report, that the traditional family, rightly or wrongly, is no longer the norm. In 1982, for example, the number of married men with working wives substantially exceeded the number with wives not in paid employment. Against this background and the trends in this direction, it seems more appropriate to assert that the system should not discourage wives from working. At the end of our analysis, therefore, we agree with the principal conclusion of the Commission that the aim of equal treatment is best served by a system of totally independent taxation of earned income.
I had hoped to deal briefly with three further points to which we all attach great importance; but in view of the time and the fact that a number of your Lordships are waiting for the business that follows, I will simply confine myself to saying that the questions of child benefit and payment of child care allowances, questions of child care expenses and the very complex but important issue of how to deal with investment income were all matters to which we gave very careful consideration. I know, however, that several noble Lords, and particularly members of the sub-committee who are going to take part in this debate a little later today, will be dealing with these issues and will deal with them from their experience and in far greater depth than I can at this moment of time.
I will only conclude by expressing my personal thanks to all the members of the sub-committee for their patience and courtesy and for the way in which they applied their knowledge and experience to this very difficult topic. We all hope that the Commission's memorandum and our report on the issues it raises will be fully taken into account by the Government in framing their proposals. I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Income Taxation and Equal Treatment for Men and Women (1st Report, 1985–86, H.L. 15).—(Baroness Serota.)

British Leyland Subsidiary Companies
3.42 p.m.
Lord Lucas of Chilworth: My Lords, it may be for the convenience of the House if I repeat in the form of a Statement an Answer being made in another place in relation to British Leyland. The Statement is as follows:
"The aim of the Government and of the BL board is to secure an internationally competitive United Kingdom commercial vehicle industry, and to improve the long-term prospects for BL's constituent businesses.
"As I informed the House on 3rd February, discussions are at an advanced stage between BL and General Motors in respect of Leyland Trucks, Land-Rover, Freight Rover and certain related overseas operations. Discussions are also taking place with the Laird Group about the future of Leyland Bus.
"I can confirm to the House that, of the companies that are willing to have their interest in the businesses made public, Lonrho are in contact with BL concerning Land-Rover and Freight Rover; Aveling Barford have expressed an interest in Land-Rover and Leyland Bus; and Volvo have expressed an interest also in Leyland Bus. Proposals for a management buy-out are also expected to come before the board.
"As my right honourable friend the Prime Minister confirmed in the House on 11th February, the other proposals will be considered on their commercial merits in relation to the future of BL as a whole".
My Lords, that concludes the Statement.
Lord Bruce of Donington: My Lords, we on this side of the House are grateful to the noble Lord for having repeated the Statement, which we are afraid does not take us very much further. The noble Lord will recall that on the last occasion when I had the pleasure of questioning him on the matter he was not, even at that stage, prepared to say whether the various deals he had in mind were going to be mergers or take-overs. Today what he has said is that there are a number of companies which are interested in taking over the Land-Rover interests, the buses and so on. Previously there was Volvo. Now there are Lonrho and Cammell Laird. If all these various companies are competing so hard to acquire these various interests, why on earth are the Government trying to get rid of them? Are they not interested? Is the noble Lord aware that the impression given by the Government all the way through this business is that they are prepared to put great sections of British industry up for auction?
Is the noble Lord further aware, and will he convey to his colleagues, that it is known today that General Motors, who were interested in Range Rover, are on the Stock Exchange at this time busily acquiring shares in Jaguar because they want to build up their ultimate control of that company? When is this sordid business going to stop? When are the Government going to take very seriously their responsibilities as trustees of the

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British public and of the British taxpayer? If they have not got the capability of doing that, why can they not find those who have?
In the meantime, is the noble Lord aware that his Statement will do nothing to allay the very grave anxieties in the West Midlands at the present time which have been increasingly expressed by the employees of all the companies concerned? In view of that, will he take steps to ensure that this matter is taken before the full Cabinet on Thursday next?
Lord Diamond: My Lords, may I, on behalf of these Benches, say how very much we appreciate the courtesy of the Minister in repeating the Answer to the Private Notice Question asked in another place? I wish I could go further and thank him for the content of the information he has given, but, alas! one cannot do that because we are no wiser now than we were before.
The noble Lord will remember that I myself pressed him—and I was not by any means the only one—when he was making a Statement a few days ago to say whether the intention of the negotiations was to achieve an amalgamation, by which I had in mind the kind of partnership which helped both partners, or whether what he had in mind was a take-over which merely removed from the Government the responsibility for producing further cash, if that was necessary in the interests of the company. It is not right to say that we got no answer at all, because the Minister was very clear in saying that he was not going to say one word more on that topic. We are still in the same situation.
A great deal of interest is expressed in these sections of Leyland. We now know, of course, that the heart of Leyland is secure: the Government have rapidly backed off that ridiculous, unpatriotic, uncommercial and irresponsible idea because we all know that volume car business is central to the economy of any industrial country. We are delighted that the pressure, mainly from our own Back Benches, has meant that the Government rapidly backed off that one. So what we are now dealing with are peripheral, very important, activities which are not central to the business itself. Please can we be told what is in the Government's mind with regard to these? The information that the Minister has given so far is totally inadequate. We must look forward and see what is the protection for the employees in this industry, and by that I mean not only in Leyland, but in the industry as a whole.
So far as car manufactures are concerned, the figures are now very clear and the position is well established. Whereas when the industry was in wholly British hands one had above 90 per cent. of an individual car being made in this country, now that Ford, General Motors and so on have taken over the proportion has been reduced to somewhere below 40 per cent., and in one case to 22 per cent. That is the situation in which all those in the allied parts of the industry are interested. We had a most valuable speech, I might almost say without discourtesy, by the noble Lord, Lord Lucas, on the occasion of the last question and answer session which brought this out very strongly.
So can we be told, first, what the Government are doing to secure the future employment of all those
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engaged in the industry as a whole in relation to these negotiations? Are the Government seeking merely to get rid of their financial responsibilities? One can understand that if finance is continually required, the business needs looking at. You have to look at some method whereby you improve the business so that the continual call for finance ceases to be made. Is the noble Lord purely concerned with that, or is he doing what we hope he is doing, which is to see that by arrangements of a partnership kind made either with employees and management—which we would naturally prefer—or with other interested manufacturers who have commmercial outlets, the position of this company will be improved to the extent that more of these units will be made and sold in larger parts of the country, with greater employment therefore resulting both for the direct employees and for the employees in allied industries? Those are the matters with which we are particularly concerned, but I am sorry to say that we are really no wiser now than we were when the matter was last raised.
Lord Lucas of Chilworth: My Lords, the Statement which I have made is, as I am sure noble Lords will appreciate, in response to a Private Notice Question. It was, as I said earlier this month, the intention of the Secretary of State for Trade and Industry to make available to Parliament any new issues that arose, and that is exactly what my right honourable friend has done.
The noble Lord, Lord Bruce of Donington, will recall that we made it abundantly clear that British Leyland would be returned to the private sector as soon as was possible, and that is exactly what is being done. The noble Lord, Lord Diamond, asked what the Government are doing to secure the long-term future. At the beginning of my Statement, I said that it was the aim of the Government, and indeed of the British Leyland board,
"to secure an internationally competitive United Kingdom commercial vehicle industry, and to improve the long-term prospects for BL's constituent businesses".
It is against that background that the conversations are taking place not only with General Motors but with others whose identity I have made known this afternoon.
Your Lordships will recall that I said last week that in the commercial vehicle field there is a worldwide over-capacity. There is a loss in both General Motors and British Leyland on their commercial vehicle activities. General Motors have come along with a number of proposals. Subject to certain assurances being given, it was our intention, with the advice of the British Leyland board, to accept those proposals. Since that time other companies have entered the field. Due consideration will be given to those proposals which they are making to the British Leyland board and we will take note of what they have to say in regard to that.
As regards the point made by the noble Lord, Lord Diamond, about overseas interest in our motor manufacturing industry, all I can remind your Lordships about is that both the Ford Motor Company and General Motors have been operating in this country for a great many years with great success. General Motors have given an assurance that they will

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raise their local content to 60 per cent.; Peugeot, the newest entrant, have said 65 per cent.; and then comes the Ford Motor Company, in that order. At the end of the day it is the wish of the Government to secure for the motor vehicle industry a viable internationally competitive industry, through which will be secured the jobs of those who are employed in that industry.
Baroness Fisher of Rednal: My Lords, coming from the West Midlands, I must say that what the noble Lord has said this afternoon is no encouragement to that part of the world. It seems amazing that in the second month of this Industry Year the Government are having detailed talks—the noble Lord said they are at an advanced stage—about selling off our manufacturing capacity. The noble Lord must realise that the West Midlands, which had the largest manufacturing base in the country until it was destroyed, again finds itself in a difficult position. Surely it is hypocritical of the Government to have an Industry Year and, at the same time, to be selling off parts of industry.
The noble Lord said that component parts will still be manufactured in this country. As the noble Lord, Lord Diamond, said, British Leyland have a high reputation in the field of components and up to 90 per cent. of the components they buy are manufactured in this country. I can tell the noble Lord of two very large factories that were closed down three years ago when Vauxhall and Ford decided not to use the components they were manufacturing, with the result that 3,000 jobs were lost there. I must say to the noble Lord that his words this afternoon give no encouragement for the employment prospects of not only the Midlands but elsewhere in this country.
4 p.m.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Baroness for her views, which I do not share, since a number of different views emanate from the West Midlands. People there know very well the grave danger which the industry is in at the present time, particularly with over-capacity throughout Europe. The fact that the West Midlands find themselves in a difficult position again is unfortunate and regrettable. It is certainly a result of the world and, more particularly, the European position. I should perhaps say that Industry Year is, of course, an initiative by the Royal Society of Arts and not of the Government. In fact, it is an awareness campaign rather than a direct campaign.
With regard to British Leyland's local content, the noble Baroness with her knowledge of the West Midlands will appreciate that British Leyland has undertaken a number of associations with overseas companies—notably Honda, in regard to research and development and some manufacturing processes; and with European companies such as VW and Audi and also Peugeot with regard to gearbox and transmission design and production—so British Leyland itself knows the importance of collaboration and of joining in one form or another with other companies in order to reduce the extraordinarily high cost of further development in various products.
With regard to the noble Baroness's question concerning the component manufacturers in relation
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to Vauxhall Motors and the Ford Motor Company, however harsh it may sound one must ask the question: why did those two companies place component procurement in other places? The answer is that the other places were more competitive. That is what this motor industry is about—it is highly competitive—and it is British Leyland's wish as well as that of the Government to ensure that there is a continuing company particularly in the truck business, which is why the company has encouraged discussions with a number of companies to see how best this long-term viability may be sustained.
Lord Maude of Stratford-upon-Avon: My Lords, is my noble friend aware that there is really not much point in a company using 90 per cent. of British components if the end result is that it cannot hold its share of the market and has to rely on continuous subsidies from the taxpayer? Surely the answer is to find somebody who can manage this company profitably and successfully and ensure the future of the jobs there?
Lord Lucas of Chilworth: My Lords, I am most grateful to my noble friend who puts the matter so much more succinctly than I was able to do so in my earlier remarks.
Lord Mackie of Benshie: My Lords, I hope that the noble Lord will not abandon entirely the patriotic stance which one might expect from the Conservative Party. I trust that when the alternatives come up and when they are studied, instead of losing heart, selling to the highest bidder and getting out, they will study the fact that British enterprise has made a job of a number of companies (and indeed of nationalised industries) and will not turn tail and run away. It is no good saying that the alternatives will be studied by the board of British Leyland because the Government own the company and therefore they will take the final decision.
Lord Lucas of Chilworth: My Lords, I can assure the noble Lord that the Government have no intention of abandoning any stance, least of all that of procuring for the British-based motor manufacturing industry a continuity of production, a continuity of employment, a continuity of competitiveness in the European and world markets. It is those interests which are in the forefront of our minds; not necessarily the highest bidder.
Lord Marsh: My Lords, can the noble Lord give the House some indication of how much public money has been placed in British Leyland so far in an unsuccessful effort to keep it independent?
Lord Lucas of Chilworth: My Lords, in the past 10 years some £2.3 billion of public money has been put into British Leyland through all its companies. Guarantees of loans under the Varley Marshall understanding amount to another £1.5 billion, which is not an inconsiderable amount of money to support a British-based industry.
Lord Shepherd: My Lords, does the noble Lord understand that there is some concern when he speaks

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of the Government and the board of British Leyland having a common interest? It may be a common interest, but can the noble Lord give an assurance that the board of British Leyland will be free to make its own commercial decisions in this matter and that there will be no question of directions by the Government to the board that would in any way proscribe its acting commercially in reaching a decision?
Secondly, can the noble Lord give an assurance that so far as concerns the Government, all the new approaches that have arisen will be more than just taken note of by the Government, that they will be most actively considered, that there is no question that there is to be a commitment for the sale to General Motors, and that all the new people who have come forward shall have a free and fair opportunity to make their bids for the purchase of these parts of the organisation if that is what the board of British Leyland decides is right and proper to do?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Shepherd, asks a number of questions. It is for the board of British Leyland to consider what is in the best interests of its company and recommend to the Government, who are after all on behalf of the taxpayer the principal shareholder, what it thinks is in that company's best interests. It is for the Government as trustees to ensure that the best interest of the country, the employees and indeed the future is taken account of in reaching a decision. Noble Lords will I hope forgive me for repeating this, but in the case of the proposals of General Motors one would be looking for the satisfaction of a number of assurances with regard to those matters and others before the Government gave any approval.
With regard to new approaches, bearing in mind what I have said, it would be in the best interests of the company and indeed of the Government on behalf of the taxpayer to ensure that those new approaches received all and proper consideration; and I think that I can give the noble Lord that assurance.
Lord Williams of Elvel: My Lords, will the noble Lord confirm that the opening offer price made by General Motors for the commercial vehicle division was zero on the grounds that if there were any value in the business it would be eroded by the cost of redundancies which it estimates at £400 million? Furthermore, will the noble Lord tell the House who are the professional advisers acting for the Government and for British Leyland in this matter?
Lord Lucas of Chilworth: My Lords, I do not agree with the noble Lord, Lord Williams of Elvel, that there was a zero figure attached. General Motors and British Leyland joined together in discussions to ensure the viability of a commercial truck industry. In those discussions British Leyland made it clear that the long-term interests were served by the proposals which have been made fairly clear, and fairly clear publicly. I am not, I regret to say, able to answer the noble Lord's other question, purely and simply because I do not know the answer.
Lord Hatch of Lusby: My Lords, the noble Lord has not yet answered the question put by my noble friend Lord Bruce of Donington. Is it not the case that British Leyland was taken over by the Government originally when the private sector was found to be incapable of sustaining it? Is it not also the case that British Leyland has been a success story since it was taken over by the Government, even if not as much of a success story as Renault in France, supported by the French Government? In view of its record and the forecast that its fortunes are now on the upturn, will the noble Lord answer the question put by my noble friend Lord Bruce of Donington? If all these private companies are so anxious to buy into British Leyland, why is it that the Government are not anxious to retain that national industry? Are the Government not interested in the future of British industry? Are they prepared to see this country as the only major industrial country without any indigenous motor car or motor vehicle industry?
Lord Lucas of Chilworth: My Lords, I am not prepared this afternoon to look back over 15 years.
Baroness Jeger: Why not, my Lords?
Lord Lucas of Chilworth: My Lords, because I do not believe that looking back over 15 years as to the reasons why British Leyland required the support of the taxpayer through government funding would be very helpful in meeting the challenge of the mid-1980s and 1990s.
That there has been a remarkable turnaround in the attitudes of and, to some extent, the success of British Leyland there is no doubt. However, at the end of the day the truck division has been losing millions of pounds quite consistently. It has lost something like £60 million a year for the past three years and a loss of around the same kind of figure is forecast for 1985. That is what the Statement is about: the bus and truck side of British Leyland.
Whether there is an upturn in the division's fortunes is perhaps debatable. Although it has achieved a somewhat larger share of the declining market for trucks, nevertheless that share still shows considerable losses. In regard to the noble Lord's final question, as to why it is that a number of companies are now coming forward wanting to buy various parts of the division and why the Government go along with that line, we made it clear when we came to office that it was our long-term intention to return that company to the private sector as soon as that was possible. It is now being made possible by offers from a variety of companies. We shall take advantage of offers that take into consideration those interests that I have outlined on more than one occasion this afternoon and which I outlined last week. If those interests can be satisfied then we shall go ahead with out declared policy. That is consistent.
Perhaps I may now reply to the noble Lord, Lord Williams of Elvel, as the answer to his particular question has come to hand. Baring's are advising Her Majesty's Government and Hill Samuel are advising British Leyland.
Lord De Freyne: My Lords, we are talking about the motor industry and about industry in general. We brought Mercedes here and we brought Volkswagen here. They were built here. I was one of the people who started that. We built it up and it was a big industry. Now what do we have? Nothing. Why do we not join with them? Why do we not go together—
The Lord President of the Council (Viscount Whitelaw): My Lords, I must interrupt my noble friend, and I apologise for doing so. The House will appreciate that we have a very important debate before us. A large number of Members will be taking part in that debate, which, if I may humbly say so, was most admirably introduced by the noble Baroness, Lady Serota. Members wishing to take part have been waiting a long time, and there is another Answer to a PNQ to follow. I believe that the House will wish to consider how soon we may move on to the other de bates.
Lord Diamond: My Lords, perhaps I may ask for clarification of something that the Minister was kind enough to say in reply to a question of mine. I refer to the point that when General Motors took over Vauxhall, the proportion of British content in the cars manufactured dropped from 90 per cent. to about 22 per cent. The Minister has told the House that he is now making some kind of arrangement whereby 66 per cent. or some similar percentage of British content will be assured for the future. Can the Minister tell the House, first, how that is to be achieved; secondly, what steps have been taken to make possible an offer by the management—that is, by the management and the employees—for the purchase of that which it is proposed to sell? Finally, can the Minister assure the House that a statement will be made by the Government before any decision is taken on those matters?
Lord Lucas of Chilworth: My Lords, I thought that I had answered the noble Lord, Lord Diamond, last week, but I am happy to repeat that General Motors truck production has something of the order of 80 per cent. local content. That company has given an assurance of 60 per cent. local content. That company has given an assurance of 60 per cent. local content in regard to its car production in the United Kingdom. It is on target to achieve that figure this year. That was the assurance given last year.
So far as a management buy-out is concerned, due consideration commensurate with the interests I earlier described will be given to any proposal. In regard to a statement, I regret that I cannot give the noble Lord, Lord Diamond, the assurance he seeks. However, I have a feeling that matters of moment will be brought to the attention of Parliament one way or another.
Lord Bruce of Donington: My Lords, in view of the answer given by the noble Lord the Minister to his noble friend Lord Maude of Stratford-upon-Avon, will he make it clear that the Government have no criticism to offer of the existing management of British Leyland? It might be inferred from the Minister's assent to the implications of the question put by his noble friend that he associates himself with the
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criticism therein implied. Will the Minister also say whether it is the view of his department—or of the Government, if they know about it—that there is an over-capacity in the production of Range Rovers and Land-Rovers?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Bruce of Donington, does trespass. He is putting words into my mouth. I answered my noble friend properly and fully in complimenting British Leyland on its recent success but at the same time saying that it has a long way to go in what is a hard and very competitive industry. I do not think that I should alter what I said earlier.
Lord De Freyne: No, my Lords. May I just—
Viscount Whitelaw: No, my Lords.

Severe Weather Fuel Payments
4.18 p.m.
Lord Trefgarne: My Lords, with your Lordships' permission, I should like to repeat in the form of a Statement the reply to a Private Notice Question on severe weather payments being given in another place by my honourable friend the Minister of State for Social Security. The Answer is as follows:
"The main help for claimants in meeting their heating costs are the scale rates which cover normal living expenses. In addition, there is an extensive range of heating additions which give further help; for example, for all householders over 65 and families with a child under five. Expenditure on these additions totalled some £400 million in 1984–85—£140 million more in real terms than in 1978–79.
"The regulations also provide for single payments to claimants who have extra fuel costs arising from exceptionally severe weather. Last winter, decisions were handled using trigger points based on meteorological office information. The system was widely criticised and was ruled invalid by the social security commissioners last autumn. In the light of this, the chief adjudication officer issued further guidance on the handling of claims.
"It is for the independent adjudication officers in each locality to decide whether there has been a period of exceptionally severe weather and to determine subsequent claims. I understand that some designations have been made and that others are under consideration".
My Lords, that concludes the Statement.
Baroness Jeger: My Lords, may I ask the Minister how the Government are working out the standards of coldness and severity? What is happening in various areas of the country where there are different weather conditions? How are people—for example, old ladies in a top back room—able to get some conditional help? I have been reading all the reports and I cannot understand how the Ministry is working out what is "cold" and what is "hot". It is very important that people should know how the Government are working out the whole situation.

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I appreciate the difficulties of the noble Lord the Minister, but what is to happen about people who do not receive electricity bills which they can send to the department and who are buying coal or putting money into meters? How can they get all the help they need? How are the Government making absolutely sure that they are reducing the number of people who die from hypothermia? Is the position as reported in one newspaper that an officer puts his head out of his window and says, "It feels cold", and that means someone will receive payment? Or is there some other way in which the Government are trying to reduce the number of deaths from hypothermia?
Lord Kilmarnock: My Lords, we on these Benches thank the Minister for repeating the Answer to the Private Notice Question. It is of course true that severe weather payments made under the old scheme received considerable criticism because the trigger could work at, say, minus 3 degrees in Plymouth but it would have to be minus 12 degrees in Scotland. However, what we have now appears to be worse. According to yesterday's Sunday Times, the adjudicators have complete discretion. Those people who pay in advance through slot meters or who buy solid fuels cannot claim. People with minimal savings cannot claim and people who have set aside an insufficient amount may be accused of improvidence.
Therefore, not simply relying on the press, I looked al the circular and found some extraordinary facts. The onus of proof lies on the claimant. In referring to a period of exceptionally severe weather the period is not defined. "Exceptionally severe" is not defined. The judgment is entirely subjective by the adjudicating officer. Claimants who pay for fuel in advance, as the noble Baroness said, will usually have already met the cost of additional fuel when their claims are made, so they do not qualify. But what is the position if the money they would normally spend on food, clothing or other basic requirements is used to buy that fuel in advance? That has not been considered.
Surely it is wrong that people who may die from cold that same night can be sent away to dig up old bills to convince the adjudicating officer of the justice of their claim. Surely no one is going cap in hand for extra fuel money unless they are in desperate circumstances. Would it not be better to save lives first and look at the bureaucratic mechanism when the crisis is over?
Finally, can the noble Lord answer three questions? What is the evidence to date of deaths from hypothermia during the present cold spell? What measures are the Government taking in the present emergency, which is expected to last, I understand, for another 10 days? Do the Government intend to revise the rules for the future, and if so, how? For example, will the Government bring amendments forward in this House when the Social Security Bill currently in Parliament comes before your Lordships?
Lord Trefgarne: My Lords, perhaps I may be allowed to answer both the noble Lord and the noble Baroness. Nobody disagrees that the present provision has some difficulties and that is why it has already been announced that the whole matter is being looked at,
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not only in the light of the difficulties which were earlier apprehended but in the light of the commissioners' decision referred to in the Answer. We propose to reassess the situation further during the current winter, following the operation of the scheme that we now have.
The noble Baroness, Lady Jeger, referred to the shortcomings of the present system. The commissioners made clear that decisions were a matter for judgment by local adjudication authorities in the light of their local knowledge. The chief adjudication officer has therefore issued further guidance on the handling of these claims. This covers such matters as the designation of a period of exceptionally severe weather, assessment of extra costs incurred and reviews of decisions made last winter.
On the question of hypothermia, which was raised by both the noble Baroness and the noble Lord, even though deaths where hypothermia is recorded as an underlying cause represent only a tiny fraction of all deaths among elderly people, this is a matter of considerable concern. We fully recognise the miseries that cold can inflict on older people and the general effect of it on their health. For this reason we have greatly increased the amount of help given with heating costs; and I mentioned some of the figures in the original Answer. The money which goes into them at present will be included in the income support scheme proposed in the social security review.
Lord Stallard: My Lords, we have not of course read the circular or seen the notes on guidance, but certainly we welcome the recognition by the department of the problems raised originally by Child Poverty Action, the Citizens' Advice Bureaux, Age Concern, Care of the Aged, and others. To that extent we should pay tribute to those voluntary organisations who waged that campaign because there were gaps in the old system. We fear, as do the organisations involved, that there are still going to be gaps and we need assurances on some of the questions already raised by the noble Lord and my noble friend who have already spoken.
First, it seems to me that the HEO—the higher executive officer—acting as an adjudication officer seems to have complete discretion and we are not sure as to how he exercises it. For example, does he take the wind factor into consideration when considering the coldness of a particular area? I heard this morning on the weather forecast that this wind can reduce today's temperature of minus 3 degrees to minus 12 degrees. That is a great difference to someone who is living in a draughty, dilapidated old house or in a high-rise block of flats. Are such factors taken into consideration or does the officer ignore them? I should like to know, because it is relevant to many people living in such circumstances.
We need another assurance, as the noble Baroness said in her remarks. Will the Government consider mounting a campaign—on the lines of selling British Telecom shares with full-scale advertisements in national newspapers—to inform pensioners that before they pay for fuel in advance, either in slot meters or for solid fuel, they should check whether they are entitled to some kind of assistance from the DHSS? At the moment, if they have paid in advance

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it is deemed that they could therefore afford it, even if they could not and certainly cannot in the new circumstances. They do not then receive payment.
That is not so complicated to those of us who know about it, but there are many pensioners and other people who ought to be receiving this payment who do not understand that they may be forfeiting assistance if they have paid in advance either through a slot meter or by purchasing solid fuel. I should like the Minister to give a reply on that.
We know that only people who are on supplementary benefit will receive assistance; others will not. There are many thousands of pensioners who, for a number of reasons which we in this House all know about, are entitled to claim supplementary benefit but do not. I believe it is a third of all pensioners. There are others, living on the limit, in owner-occupied houses which are in a bad state but which they cannot afford to repair, who ought to be assisted in this cold weather. I should like to know if that situation will be reviewed? Could we extend it beyond people who are immediately on supplementary benefit to cover the others?
Finally, can we have an assurance that in fact no one in any of those categories—pensioners, sick people, disabled people or people with young families—will be worse off as a result of these new notes of guidance than they were previously?
4.30 p.m.
Lord Trefgarne: My Lords, I certainly hope that nobody will be worse off, as the noble Lord puts it. Indeed, under the new arrangements, which I emphasise are a matter for local adjudication officers and not for the Government, I hope that the system will work better than it did last year when it came under such criticism, particularly from the Social Security Commission.
On the question of publicity, which the noble Lord also raised, it will be a matter for local officers to publicise it as they think fit, depending upon the particular problems in their local areas; but certain steps are being taken to do that, notably with a supply of leaflets which will be available.
I should also like to deal with a couple of points which were raised earlier about the question of savings. Anybody with less than £500 can claim payment, that is, of course, if the local adjudication officer has decided that a period of exceptionally severe weather has occurred. On the question of people who buy solid fuel or paraffin or who pay by slot meter, it is not true to say that they cannot avail themselves of this benefit. Any claimant can claim. Those who pay in advance can go to their local social security office during the period of exceptionally severe weather if they need to do so; other claimants should wait for their quarterly bills.
Baroness Jeger: My Lords, I really must ask the noble Lord whether he knows what life is really like? He says that people who have put money in the slot meter can find out something about this benefit and get some money back. This is not what life is like. I must tell the Minister that some people who will be sitting tonight in a top back room will be absolutely
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freezing and much colder than he is, but they are afraid to put any money in the meter. He will say, "Oh well, they can claim it back some other time", but this is not what life is like. In this period of very cold weather does the noble Lord think it is possible for the poorest people to deal with it by putting money in the meter when it means that they cannot spend it on anything else? I am not being unfair to the noble Lord. I just think that he does not know what life is really like for the poorest and coldest people.
Lord Trefgarne: My Lords, I should perhaps make it clear that the poorest and coldest people, as the noble Baroness refers to them, are of course those who are already receiving supplementary benefit and a heating addition, which will range from £2.20 up to £5 or so, depending on the particular circumstances and the kind of house in which they live. When the particularly severe weather comes, they will now be entitled, where the local adjudication officer so decides, to the additional payment. If they are living in a house which is fitted with a slot meter for example, they can go immediately to their social security office and get the additional payments to which they are entitled.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that many people with experience of social security administration regard this problem of the very poor during extremely cold conditions as being almost the most difficult practical problem facing the administration of social security because of its changing incidence and, as has already been pointed out, because of the fact that the exact level of the thermometer is by no means conclusive as to whether or not hardship is being caused? In the light of that situation, will my noble friend, in the consideration which he and his right honourable friend are giving to this matter, study the practice and procedure of the old National Assistance Board some 25 years ago which worked extremely well through the very cold winters of 1958–59 and 1962–63?
Under this procedure a designated local officer of experience had a very wide measure of flexibility and discretion, and I think that on the whole those who were poor in those days will confirm that they dealt with the situation really extremely well. In this respect I ask my noble friend if he will consider reverting, so far as possible, not to the quite different constitutional position but to the actual practice of the old National Assistance Board?
Lord Trefgarne: My Lords, I suspect that my noble friend was responsible for the arrangements to which he referred and I can assure him that the new flexibility to which I have referred in the original Answer is of course moving in the direction to which he has pointed. But I think that everybody agrees that the present arrangements, and particularly the arrangements that applied last year, are less than satisfactory. That is why this additional study is taking place and why I hope that by this time next year a better system will exist.
Lord Kilmarnock: My Lords, I apologise for intervening again, but since the noble Lord assured me that those who make payments in advance by slot meter or by buying solid fuel are not necessarily

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excluded, I should like to read a few lines from Circular No. S.48/85:
"Claimants who pay for fuel in advance (e.g. by slot meter or the purchase of oil, coal, logs etc.) will usually have already met the cost of additional fuel when their claims are made. The provisions of regulation 3(2)(a) will not be satisfied as there will not be a need at the date of claim. There will not be an entitlement to a single payment under regulation 26".
I am sure that the noble Lord inadvertently gave me the assurance that he did, which is not in fact quite in line with that statement. I wonder whether he or his colleagues in the DHSS are prepared to take a look at it?
Lord Trefgarne: My Lords, as I understand it the eligibility for these special payment arrangements to which I have referred occurs when the claimant goes to replace his fuel stocks after a period of exceptionally severe weather; but if I have misunderstood the arrangements, and I confess I might have done, I shall hasten to reply to the noble Lord.
Baroness Fisher of Rednal: My Lords, at the present moment the local authorities are publicising the need for elderly people to keep up their heating and make quite sure that they make all possible contact with the social security department. It worries me that perhaps in the future with the Local Government Bill local authorities will not be able to do that and neither will the Government be bothered to tell people. That is something which is of serious concern and I hope that the noble Lord the Minister will himself take that on hoard when local authorities cannot undertake this task and publicise the need to get in touch with the social security.
What worries me particularly is the mention of £500. Perhaps noble Lords in this House will not appreciate it fully, but there are a lot of elderly people who are saving to pay for their own funerals and £500 is just about the amount of money that they think is necessary to see that they go out of this world with what they would call dignity. I feel sure that when the Government chose the figure of £500 it was something which went deep to the heart of many elderly people, because they have to dig into money which they knew very well they would not replace.
When I hear the noble Lord, Lord Boyd-Carpenter, speaking about how it will be done in different areas and how it will be for local decision, it worries me very much indeed because we shall then return to the same controversy: "Why should we have it in that area regardless of the temperature?" Therefore I ask the noble Lord if he will put the notes of guidance in the Library so that we ourselves are able to make sure that we have understood them and can pass on the information to those people who come and ask us about it.
Lord Trefgarne: My Lords, I understand that the notes of guidance are already in the Library.
Baroness Jeger: My Lords, I thank the noble Lord for his co-operation, but I find it very difficult to follow what he has said in view of the number of complaints that I am receiving. I am told that in the Library we
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have some statement but I am not sure whether that goes round all the local offices.
Lord Trefgarne: My Lords, if I may interrupt, what are in the Library are the notes of guidance issued to local offices.
Baroness Jeger: My Lords, I thank the noble Lord. I am not totally ignorant about what is going on in the big wide world. I find that there is a problem about the heating allowances. I am not unaware of the work of local officers. Some of them are told that they have to put their heads out of the window to feel how cold it is. I meet old ladies living in top flat rooms who never go out and who have no means of knowing how cold it is except that they feel cold. I mean this in no partisan way, but I do not honestly believe that either side of the House has worked out how to deal with the cold climate. The only solution is that everyone should have sufficient social security to enable them to pay for their fuel. We should not need to have this separatism of somebody paying for their gas and somebody paying for their electricity. We should be giving an income to people so that they can attend to their own needs and to keeping warm.
I leave these matters with the noble Lord. I know that he is sympathetic. It is absolutely impossible to go on with the present situation. I hope that he is able to say that the Government intend to look at this matter again. We cannot continue with a situation in which some poor people do not know how to apply for help or can only apply for help according to where their house is or the area in which they live. This is absolutely ridiculous. I hope that the noble Lord will be able to help us.
Lord Trefgarne: My Lords, I can only say again that we are continuing to consider the provision very carefully in the light of the commissioners' decision and will re-assess the situation in the light of its operation this winter.

Taxation and Male/Female Equality: ECC Report
4.43 p.m.
Debate resumed.
Baroness Robson of Kiddington: My Lords, may we return now to the debate that we started quite a long time ago? I should first like to thank the noble Baroness, Lady Serota, for so ably introducing the report on the equal treatment of men and women in taxation. I should also like to thank her very much for the fair and competent way in which she chaired what was a very difficult committee. The subject is complex. The noble Baroness was a superb chairman of our committee. I should also like to join her in thanking our legal adviser and our clerk for their able support. Without them I do not think we would have produced a report.
I feel particularly privileged to have been allowed to be part of this committee. All through my political life I have been interested in the rights of women in the eyes of the law. Although I am a Liberal I have not

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been a women's-libber, but I have been tremendously interested in the position of women in the eyes of the law. Since the war that position has improved enormously. In the eyes of the law practically all barriers have been removed except in taxation law. Taxation law is tremendously important for women. As my noble friend Lady Seear has often said in this House, if we do not use to the utmost the capabilities of women to contribute to the economic life of this country, we are losing, as a nation, altogether. I believe that the tax laws in this country and in other countries of Europe have operated against women taking the greatest opportunities offered to them in society. I believe therefore that this report is tremendously important.
Last week and over the weekend various articles appeared in the press about the Government's proposed second Green Paper, which it is assumed will be published at the time of the Budget. Those articles implied that the Government are likely to favour transferable allowances between husband and wife. The comments by the press seemed to indicate that the Government were in favour of this particular system because it would act as a check against women flooding the labour market. I hope sincerely that at the end of the debate the noble Lord, Lord Brabazon of Tara, will be able to say that this is pure speculation on the part of commentators in the press and that it is not the intention of the Government.
However, your Lordships' committee was very conscious of how essential it was, in looking at this problem of equal taxation between men and women, to introduce a system that would not penalise women who decided that their way of life—a very responsible way of life—was to stay at home to run their own families and to look after their children. This is a difficult subject on which to come to conclusions. On the other hand, taxation law, as such, should not be used as a means of influencing family life. It is the right of every citizen irrespective of sex to be treated as an individual in his or her own right.
If the aim is to influence family life, the present system of taxation is certainly the wrong way to go about it. If a couple are both earning a substantial income it pays to live together rather than to marry. This is particularly true of people with unearned income. It is therefore a great pity that the present memorandum does not deal with unearned income. Although one can understand the Commission's reservations on the subject because of the differences between the law of property in the various member states, it is sad that this subject has to be excluded from the memorandum. Equality of treatment of unearned income is the only way—together with the equal treatment of earned income—to put women in the position of having equal rights. Although the memorandum does not mention unearned income, that is no reason in our view why our own Government should not look at this problem at the same time as the equality of treatment of earned income.
I was absolutely staggered to learn from our witness from the Law Society that even the signing of a marriage contract in this country would carry hardly any weight in the case of dispute at the time of divorce proceedings. I repeat that taxation should never be a
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consideration in people's minds when they are deciding whether to marry or not. Therefore, we must create a fair system between the sexes.
Again, under our present law, there are certain encouragements in the law for marriages to take place at a certain time. I do not know whether your Lordships have noticed how many marriages take place in the month of March. This has nothing to do with spring in the air or any of those matters, or a young man's fancy turning to love. It is purely to do with a married man's allowance. If one gets married before 5th April one gets a whole year's allowance, having kept one's wife for only five days. I ought to know—my husband, an accountant, married me on 30th March. All these anomalies exist because we do not have equal treatment for men and women.
We tried to look at the subject from the point of view of fairness, of being able to understand the tax laws, and the cost of administering the law. The noble Baroness, Lady Serota, has already referred to our discussions with the Inland Revenue Staff Federation. It became very clear that the introduction of transferable allowances would create great problems not only for the Inland Revenue but, above all, for individual couples. As your Lordships know, it is possible under our present tax system to have separate assessments. But this is such a complicated subject that if one has a good accountant he will advise one not to go in for separate assessments because his bills will be enormous in trying to work it out.
The other option is that of separate taxation but that is also extremely complicated and may need to be changed from year to year to work out whether it still pays to have separate taxation. This creates an enormous amount of work for the Inland Revenue and adds to the administrative costs. To change this to a system of transferable allowances does nothing to simplify the system either for the Inland Revenue or for individual married couples. In fact, it would probably complicate the issue because conditions could change at any time during the year. Even the Government's own 1980 Green Paper admits that thousands of extra revenue staff would be needed because so many women are part-time workers where wages can vary considerably from month to month, and consideration has to be given to how much of the allowance should be transferred back and forth.
In any change in the tax laws of this country and in Europe we must look for a system which is easily comprehended by the ordinary citizen and, at the same time, is the least complicated to administer. In the view of your committee only equal treatment for men and women achieves these aims.
One of the conclusions of the committee, conclusion No. 5—which deals with child care allowances—is an issue on which I personally wish we had been able to go a little further. I shall try to give your Lordships an example of why I feel that child care allowances for working mothers are essential to enable them to go out to work. Take a young qualified woman doctor who gets married and has two or three children and stays at home until the children are school age. Then she feels, conscientiously, that as a trained professional woman she should go back to working life. This doctor decides to go back on a half-time basis so that she can still look after her children. However, hers is the kind of

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profession which does not have set hours. One is likely to work occasionally in the evenings, at other times in the mornings, and sometimes at night. It is therefore essential to have someone to help with the children when she is not there. She is penalised in two ways. She is taxed on top of her husband's taxed income; and she has to pay for the child care out of net income. There is nothing much left, and not much encouragement for well-qualified, professional women to go back to work.
We all need these women in society. When we hear so often, for instance, that we are terribly short of nurses and that there are a lot of married nurses who do not go back to work, I am sure the major reason is that they are not in pocket by doing so, and sometimes are almost out of pocket. I commend that the Government look very seriously at a change in tax laws in this connection.
It seems to me that this memorandum from the Commission offers a marvellous opportunity to solve the problem of inter-relationship between tax allowances and social security support for the carers in our society, who are mostly women—women looking after children, the elderly or the handicapped—through the establishment of a properly integrated system of taxation and social security. My noble friend Lord Banks—probably the leading expert in this House on this matter—will, I hope, enlarge on this aspect of the report.
I sincerely hope that the Government will look at this report and also at the possible changes in our social security and taxation systems so that we may have a fairer system in Britain.
4.56 p.m.
Baroness Platt of Writtle: My Lords, may I also express gratitude to the noble Baroness, Lady Serota, for initiating this debate on the Select Committee report on equal treatment for men and women in the matter of taxation which arose from their consideration of the European memorandum on the subject. There is no doubt in my mind that the questions of equal opportunities and taxation are closely interrelated and of considerable importance. During its lifetime the Equal Opportunities Commission has consistently received complaints about the lack of equality in taxation and demands for support in putting the situation right. At present there is hope in the air in the United Kingdom and throughout Europe due to the memorandum.
The Sex Discrimination Act was passed in Britain with all-party support in 1975. It has been in operation just 10 years. During that 10 years the Equal Opportunities Commission has done a great deal of positive, patient and professional work building up considerably greater awareness of the importance of equal opportunities in our national life, in the fields of education, employment and the provision of goods, facilities and services. There is far more consciousness of the whole subject today, but we still- have a long way to go.
Two-thirds of women of working age are in the labour force. Women form 44 per cent. of the working population. Two-thirds of women at work are married. The proportion of married women in the
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workforce has risen from under 4 per cent. in 1921 through 12 per cent. in 1951, to 26 per cent. in 1981. During the period when their children are small or at school they are likely to have a period working part time and approximately 45 per cent. of women in employment work part time. Ten years after the Equal Pay Act came into force women's gross hourly earnings stand at nearly 74 per cent. of men's and this proportion has remained virtually static for some years. We are in a period of rapid change, but in terms of equal opportunities and equal pay we still have a long way to go.
In working for equal pay, as we are enjoined to do by Parliament under the Act, it is clear that we must also work for equal taxation between men and women so that their pay packets are affected equally by their taxes. Otherwise the equality given with one hand is taken away by the other by the time the pay packet gets home. The Commission, as did the Select Committee, welcomes the memorandum of the European Commission on equal taxation which is largely consistent with the approach that the EOC has adopted during its lifetime.
We have always taken the view that a repeal of Section 37 of the Income and Corporation Taxes Act was the pre-requisite of a non-discriminatory taxation system. It states that,
"A woman's income shall for any year during which she is a married woman living with her husband be deemed for income tax purposes to be his income and not her income".
In its place we favour a system of individual taxation, or disaggregation, in which individuals are treated as persons in their own right, whatever their sex and whether or not they are married. We are very conscious of the difficulties involved, but we have always insisted that the principle of disaggregation should cover both earned and investment income. We feel in all justice that you cannot treat married women as equals half of the time and as dependants for the other half of the time.
Another consistent thread running through the Commission's policy is our wish to see the abolition of the married man's allowance, which we understand is to be a proposal in the Chancellor of the Exchequer's Green Paper later this year. Up to the Second World War women were often actively prevented from continuing employment after marriage, and certainly the idea of their economic dependency on their husbands was widespread.
Today, women's life styles are very different and the single event of marriage was shown clearly in the Department of Employment report of 1984 by Martin and Roberts, Women's employment in the 1980s, to have no effect on whether women were economically active, although it did influence whether they worked full or part-time. Therefore, married couples themselves have adopted this kind of lifestyle as a matter of individual choice, and when one looks around society it makes sense. The early years of marriage are expensive, with the purchase of house and furniture, and two incomes enable the young couple to establish themselves more comfortably.
Various inequalities arise on marriage, some favouring the married couple and some not. There have been several improvements, including the dispensation that the Inland Revenue do now

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generally write to the wife about her tax, but it is still fundamentally wrong that under British law at present:
"A married woman's income shall … be deemed for income tax purposes to be his income [her husband's] and not her income".
It really is inconceivable in this day and age that that should be right. My noble friend Lady Elles, a member of the European Parliament, described it in a letter to The Times last summer as "a tax on morality".
The young woman who, perfectly capably until that point, has been looking after her own tax affairs, suddenly finds that she is no longer responsible for them, and that they must be submitted through her husband. While, as the system stands, she has no right to know the details of her husband's affairs, and, indeed, may not want to, she finds that she must open up every detail of her affairs to him. That is a considerable intrusion of privacy, or worse. A friend of mine, involved in a professional partnership, where she was paid substantial sums by clients, prudently invested half for the partnership so as to be prepared to pay tax and obtain interest thereon at the same time. Some years later her husband was challenged that he had not declared his wife's investment income!
If for some reason the wife obtains relief from tax, these sums are repayable to the husband—a considerable source of embarrassment at the least. In the case of deserted wives, or those in the process of obtaining a divorce, it may be a most serious and expensive disadvantage. The hardships are always worst at the lowest levels of income. Effects of this sort are archaic and need radical reform as soon as possible. There is no doubt of the support they would receive. Our postbag and the newspapers and magazines have been full of pleas for change.
In the Chancellor's Budget speech last spring he made it clear that he, too, wishes to see everybody,
"male or female, married or single, having the same tax allowance, and that married women will have the possibility of complete privacy and independence in their tax affairs".
As the Treasury press release states, there will need to be a transitional period during which it could be phased in to allow couples to adjust to the changes. There are always winners and losers in any changed situation. All this we shall consider, as the Equal Opportunities Commission, when the promised Green Paper comes out this spring.
Another feature of the suggested new arrangements is that of transferable allowances on a voluntary basis between spouses, and we certainly welcome the Chancellor's use of the word "spouses"—husbands and wives. For the present the Equal Opportunities Commission has decided to delay comment on this aspect of the new proposals until we see it in full detail and know how it is proposed to carry it out, as the late Mrs. Finley clearly stated in her evidence to the Select Committee.
The House of Lords Select Committee has come out against transferable allowances and there will, no doubt, be a debate on the matter here today, but as far as the EOC is concerned, for the present we shall not comment.
Another problem which has arisen this year in the United Kingdom is the decision last year to start imposing a tax on the provision of workplace nurseries. The EOC objected very strongly to this on a
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number of occasions, and particularly on the imposition of the tax retrospectively. I am pleased to say that the idea of retrospective tax was withdrawn, but we still disagree with the principle of taxing workplace nurseries. As we said in our evidence to the Chancellor, workplace nurseries are just as necessary to parents and their children as sports and canteen facilities, and the imposition of tax could reduce the number available. They are of great assistance to working parents and may be absolutely necessary to single-parent families.
If as a result of changes in the overall tax position between men and women generally there is fiscal money to spare, which seems likely, I can foresee that the Commission would like to see a substantial proportion of it diverted to increases in child benefits to the person caring for the children, as there is no doubt that the largest single factor influencing women's economic activity is the arrival of children—and the Select Committee is of a similar view. That allocation would make a substantial contribution to the economics of a household where the wife or husband gives up work to look after small children, or could help the family to provide childcare if both parents continue at work. Today that period is shorter than it ever was, at about four years for each child and seven years overall.
The presence of children and the younger their ages also affects women's decisions as to whether to engage in full-time or part-time work. Increases in child benefit for children under 16 to the parent looking after the child would undoubtedly assist these women and their families, probably during their most expensive period when family incomes are most stretched.
In the years to come the EOC would like to see the responsibility for childcare shared more equally between husbands and wives. The period in which women today give up work to look after small children can have a fundamental effect on lifetime careers. However, the question of how childcare is to be reconciled with parents' careers must be decided responsibly by the parents themselves on behalf of their children. Careers and parenthood and the welfare of the next generation are nevertheless all vital matters, both to their families and to the future health and prosperity of our nation.
The Commission has always maintained that the decision of married women as between staying at home and returning to paid employment in the labour market is not a matter which should be determined by the taxation system. These decisions are individual decisions, and the tax system should be neutral with regard to them, as indeed the European memorandum recommends. The Commission thinks it undesirable that the tax system, whether overtly or covertly, should force women to seek paid employment when they do not wish to do so; and it regards it as equally objectionable were the tax system to act as a deterrent to those married women who wish to return to the labour market.
The Commission feels, as does the Select Committee, that the European memorandum and the proposed changes in United Kingdom taxation present a good opportunity for consideration of the

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whole question of tax allowances for childcare, which could also help the growing number of families with parents pursuing dual careers.
In conclusion, the Commission has every reason to welcome the memorandum of the European Commission. All the evidence supports the continuation of the long-term trend of increasing numbers of women combining domestic and work responsibilities—sometimes at severe personal cost to themselves. The Commission would submit that it is the task of wise legislators to recognise when millions of individual men and women have begun to move in a particular direction, and the choice before Government and Parliament is whether to ignore or to assist those individual choices which go to the making of a social trend. The memorandum of the European Commission is a powerful and persuasive reminder of the direction in which the Commission believe this nation ought to be moving, and, like the Select Committee, we hope it will be carefully considered by the Government in formulating their proposals for changes in our tax system. I am grateful to the noble Baroness for initiating this debate.
5.10 p.m.
Lord Allen of Abbeydale: My Lords, as a male member of the sub-committee responsible for the report we are considering this evening, I too should like to pay my tribute to the noble Baroness, Lady Serota, for the way she guided us through the maze and for the way she has introduced the report this evening. I should also like to add my thanks to our specialist adviser and the clerk. They even seemed to know their way through the processes of the EC and the European Parliament. We were indeed fortunate to have their help.
On a personal note I should like to say how pleased I was to see that the Front Bench speaker from the Labour Benches tonight is the noble Baroness, Lady Turner of Camden. Some time ago we were colleagues on the Occupational Pensions Board, and I think we very rarely fell out.
As the noble Baroness, Lady Serota, explained, although we were looking at the EC memorandum it was really inevitable that we should find ourselves involved in the complicated issues to be covered in the forthcoming Green Paper. The view that they are indeed complicated is borne out by the fact that the Government's own Green Paper of 1980 is to be followed up not by legislation but by yet another Green Paper, which is already running well behind the timetable originally envisaged. It is perhaps no bad thing that our modest report should have come out first, and that we have this opportunity for an exchange of views not on tax reform as such but on the removal of inequality between men and women.
The noble Baroness, Lady Serota, has already covered very clearly the main thrust of the report, and all I want to do is to add footnotes, as it were, on just two aspects. The first is the problem of administration, on which the noble Baroness, Lady Robson of Kiddington, has already touched. I suppose that an ideal tax system is one which is simple to collect and cheap to administer, but alas this is very much easier said than done.
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I have always found my own tax inspector helpful and prompt. Indeed, there have been times when I could have done with a little more delay in being told how much I had to pay. But from all that one reads this is not the universal experience. There must be something in these accounts one reads in the financial press of mounting delays and shortages of staff, and it must be right to pause before introducing arrangements which put additional burdens on to the staff. There is not much point in pursuing a scheme, whatever its merits, if not enough people are there to administer it.
I think that all of us on the sub-committee were conscious of the fact that moving over to a system of fully independent taxation would mean more individual returns and more people getting involved in exchanges with the tax inspectors. But I think it is fair to say that this extra burden would impinge mainly in the interim introductory period, and that once the changeover had been effected the system should be manageable given the computerisation of PAYE.
But the prospect of fully transferable allowances so far held out by the Government is quite a different story. If a married woman goes in for short spells of employment interspersed with periods at home—which cannot be all that unusual—and is able to transfer the unused part of her allowance to her husband when she is not working but takes it back each time she starts another job with an effect on his tax liability, the results could indeed be pretty chaotic.
We can speculate only up to a point, as we do not yet know the details of what the Government have in mind, or indeed whether they are still set on a system of fully transferable allowances, but if to counter the sort of difficulty I have been touching on they were to suggest that the option whether or not to transfer the allowance could be taken only on one occasion in the tax year, I doubt whether people would accept this as fair. Anyway, sorting out at the year's end all the under-payments and over-payments could itself be both difficult to carry through and difficult for the taxpayer to understand. The administrative complications of any system of transferable allowances that I can think of, even if introduced gradually over a period of years, seem to be somewhat formidable.
My second point related to investment income. It is an issue, as has been explained, on which the EC memorandum is silent. That paper is concerned only with questions of pay and work. But it is an issue which kept coming into the evidence, and I do not think it can simply be left on one side. It does not make for much sense to go for greater equality and greater privacy of earned income and then do nothing about investment income.
Although it is a phrase which conjures up a picture of a spouse with a handsome income from shares and property, the fact is that there are a great many wives with a nest egg all of their own. It might consist of earnings from a job before marriage; it might even consist of little bits tucked away from the housekeeping; or it might be that small, long-awaited legacy from a loving aunt. Whatever it is the husband has to know about it, and it is taxed at his top marginal rate.

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At present it is not all that easy to see any consistent principle as regards the treatment of a married couple compared with that of two single people living together. If you take the two single people, the woman does not pay tax on her investment income at the man's top marginal rate; they both get the full capital gains allowance, and they can get mortgage interest relief on up to £60,000. A married couple, on the other hand, have only one capital gains allowance and mortgage interest relief on a maximum of £30,000. As against that, the losses of one spouse can be set against the gains of the other; there is no capital transfer tax to pay on transactions between them, and no capital transfer tax for one spouse to pay when the other dies.
If one tackled some of these anomalies by extending fully independent taxation to investment income, however, and married couples were nevertheless left free to distribute their investments between them in the way best calculated to keep the tax bill down, the exchequer would lose quite a lot of money—probably some hundreds of millions of pounds—and these savings would go to the rich. At the same time, the thought of restricting by statute the movement of investments between spouses is singularly unattractive. One suggestion is that CTT should be applied on the movement of money between spouses, but it is difficult to reconcile applying CTT to gifts during lifetime with a complete absence of liability to CTT on death—Heaven forbid that that concession should be done away with.
It is hardly surprising that no European country, so far as I know, has gone in for fully independent taxation of investment income. The 1980 Green Paper, however, interestingly enough, floated the possibility of following a compromise, adopted in Sweden, whereby each spouse is allowed a slice of investment income which is taxed individually and then income above this slice is aggregated. The Green Paper went on to remark sagely that such an arrangement could not be defended on grounds of fiscal principle and that political or social arguments would have to be found to justify it. It is a device which would take care of the small nest egg. I believe that my noble friends sitting on the SDP Benches see considerable merit in it. I do so myself, although I realise that it would add to the complexities of administration.
But that is straying a little far from the EC memorandum. All I seek to do this evening is to underline the conclusion in our report that this is not an issue which can be totally divorced from the consideration of earned income and then forgotten. We hope that it will be fully explored in this forthcoming Green Paper.
One final point: I said earlier that one feature of the ideal tax system was that it was simple to collect and cheap to administer. Another is that it is easy to understand, but that, for us, seems to be a prospect equally remote. I am only too conscious that I may have got it wrong here and there in my remarks this evening, but if I have displayed ignorance I can comfort myself with the thought that I shall be in the company of several millions of my fellow citizens.
5.23 p.m.
Lord Houghton of Sowerby: My Lords, this is a very unusual debate for your Lordships' House because
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only very infrequently, and in conditions of extreme nervousness, do we debate fiscal matters. It is unusual because the Motion was introduced by my noble friend Lady Serota in a speech which would have done credit to a Chancellor of the Exchequer in another place for its lucidity and its comprehension of a difficult and complex problem.
The point is that we are debating this matter on a side wind, so to speak. We are not discussing taxation but discrimination against women in taxation: that and that alone. It enlarges the whole scope of our survey of a tax system, that it is the particular matter of women and equality between men and women and between women and women in the taxation system that we are concerned with tonight.
I congratulated my noble friend Lady Serota on the skill of her opening statement and I congratulate the Select Committee for its report. We are very well served by our Select Committees in this House. We are obliged to this one especially for presenting the matter so clearly and for coming to such positive conclusions on the matters it was considering. I have discussed this question in various places and in different ways for many years. I am very happy to feel that we are very close indeed now to getting rid of one of the blemishes on our tax system.
How degrading for women the institution of marriage has been through the ages! It is an appalling story when one comes to review the history of women and particularly the enslavement and humiliations of married women. What we are considering today is one of the indignities left in the system. Many of these have been removed over the centuries and probably most of them in the last 50 or 60 years. This removes one of the indignities in the lives of married women which many of them resent most deeply.
Within my own time in another place I heard a junior Minister complain that when she wrote to the tax inspector about her own taxation the reply was sent to her husband. When she was entitled to a tax refund and she argued it out with the Inland Revenue the money was sent to her husband. Your Lordships can find that part of the story in Appendix 2 of the Green Paper of 1980 which you have before you. Not until 1978 did a revolutionary Labour Government give instructions to the Inland Revenue that when they had letters from married women about their own tax they were to reply to the taxpayer, to the woman and not to her husband. In the same year they were instructed, regarding any matter arising on their own taxation, to write direct to married women and not to their husbands. Yet the rule made in 1806 about a wife's income being reckoned and taxed as part of her husband's profits is still there. One wonders what women have been doing since they got the vote 50 years ago.
As secretary of the Inland Revenue Staff Federation for 38 years I had to deal with many matters affecting women in the public service and in relation to taxation. This was part of my work for the removal of handicaps and indignities inflicted upon women. Taxation and social security were excluded from the legislation on sex discrimination. That was a pity at the time. I was there. To have included them would have been very complicated, controversial and difficult at that time. But we excluded them on the

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same ground as the Church: the time was not then ripe for removing all the handicaps on women in those three areas. Probably we are getting nearer to it now, but I congratulate the noble Baroness, Lady Lockwood, particularly as the first chairman of the Equal Opportunities Commission, for the persistence of that commission in dealing with a matter which, strictly speaking, was not within the scope of the Sex Discrimination Act.
I am glad also to remark on the pleasure I have in seeing my noble friend Lord Plant, my successor as secretary of the Inland Revenue Staff Federation, a signatory to the report of the Select Committee, in full tradition of the work that we jointly carried on for so long.
In looking, at the issues immediately before us, I think we have to pay full regard to what the Chancellor of the Exchequer said, at column 795, in his Budget statement on 19th March last year. He very clearly revealed his own mind, for he said that he was in favour of having one single standard personal allowance for all persons, irrespective of sex, irrespective of marital status. However, he said that he was also in favour of the facility of transferring the whole or part of an unused personal allowance in the hands of the wife to the husband, if she did not require it as a set-off against her own tax. That is called transferability. He further said:
"The aggregation for tax purposes of a wife's earned income and Investment income"—
I emphasise, and investment income—
"with her husband's would end, thus removing what has become an increasing source of resentment among women".
As I read that, the Chancellor last year felt personally in favour of a clear-cut separate taxation of men and women, married women and single women, leaving only the transferability, from a woman to a husband or from a husband to a wife, of any unused portion of personal allowance. That is the position I fully expect to find in its place in the next White Paper that is published by the Government, unless the representations that have been made since then have convinced the Chancellor to change his mind. He did indeed say:
"The Green Paper will set out full details of the proposals I have just outlined, as a basis for public discussion".
That was last year and that was the Green Paper we were led to expect we were going to have last year. It is the one we still await and it is the one we expect to receive on Budget day. This will be the revelation of the Government's mind, and quite clearly it points to the system that I have just described.
It seems to me, then, that we can probably come to the point of this debate fairly quickly if we feel that we are all agreed that the weight of evidence and the state of mind of the Chancellor is in favour of ending the married man's allowance. If that is our starting point, and if the next stage is to accept that a personal allowance will attach to every person irrespective of marital status, with no addition to be made for a married man, ending the old system and starting with the new—if that is where we are, then we have to consider: what after that?
Would it be only for earned income that the transferability would take place? Would it be only for
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earned income that separate assessment would take place? Or would it extend into the field of investment income? This is a very important matter to consider. To what extent does the complete separation and independence of the tax of a person go? The Chancellor says that in relation to earned income and investment income, the whole lot, a clear cut shall be made.
The European Commission has been concerned only with earned income. The report of our own Select Committee in those terms of reference leaves the question of investment income for further consideration. I would say there can be no dodging that issue. Whether or not the European Commission is concerned with earned income and only earned income, I think we have to be concerned with the whole question of discrimination for tax purposes and the declaration of the independence of the individual as a taxpayer in his or her own right. That means going the whole way.
We cannot regard the tax system as a social service. It has been the tendency over many years to regard the tax system as part of our social as well as part of our economic policy, in that allowances which have a social purpose have been put into the tax system. Take child allowance; take disablement allowance; take dependent relative allowance, at one time the insurance relief, and so on. There are a whole collection of personal reliefs in the tax system which have a social purpose as well as being an attempt to adjust the burden of tax to the strength of the shoulders which have to bear it.
I think one can go too far in that direction. Whether in cash or in kind, the social services should take care of as many social purposes as possible. Indeed, on one occasion, and one occasion only within my recollection, the tax system rid itself of a social purpose. That was by discontinuing the child relief and leaving that entirely to the social services. Child relief went out of the tax system and child endowment went into the social services for the first child, with a tax free allowance for the child or children. That is what we have today. For many years the child relief in the taxation system and the family allowance in the social services system ran in double harness, chafing against each other, each making for complications in the adjustment of one or the other, until eventually a clean slate on that matter was presented and was generally regarded as the fair way of dealing with it.
So, in other respects, the social services can take on matters which are of social importance and are not strictly speaking taxation matters. A purpose of taxation is to avoid hardship. It is not to carry refinement of the burden of taxation on the shoulders of the individual to the nth degree. Otherwise one would have to bring into the tax system many matters that are not taken into account at all. In fact, some features of our tax system are of purely historical origin. They are there for no particular purpose at all except that they were there many years ago and they have been exploited and turned to modern use. Mortgage interest relief is a case in point. The relief for premiums on insurance policies, which had been in the system for many years, was eradicated because of its use for tax purposes. It became quite intolerable from the Chancellor's point of view. Thus I think there

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are firm lines of principle to be adopted, as regards both taxation and social services, if we can only find them, define them and cling to them. In this matter I think we have a very firm principle indeed.
I do not shrink from including investment income in the division between husband's and wife's taxation affairs. I need not go into the details of this because I am sure that in your Lordships' House there will be very many examples of taxation of a husband's income from investment income of the wife which lead to all sorts of financial problems in the relations between husband and wife in those cases. But it is quite contrary, in my view, to the eradication of the discrimination that we are trying to get rid of to keep investment income still in the system as reckonable as the husband's income. I do not see how we are really getting rid of the discriminatory element that the European Commission want us to get rid of unless we go the whole way and do so. We should cut the knot and have no tie whatever between the tax affairs of husband and wife.
That is the only clear principle that we can find. Then we can deal with the consequences of that in whatever way might be needful. I think that the only needful matter that we have to consider is what we do about the non-working wife or the wife with insufficient income to use up her personal reliefs. What do we do to replace the relief that she gets under the existing system?
Where there are children there is certainly a way forward. We adopted it before when we rid the system of the child relief. In regard to disablement of wives, there are social benefits there. That is where I suggest the recompense can come. But from the change there will be very substantial revenue saved, which would be available for distribution in other directions which would fulfil the social purpose. I think that we ought to take the very bold line of going the whole way and saying that there are ways that can be found of meeting the problems which would arise from this quite dramatic change in our tax system.
My concluding words are these. I do not think that we should make tax reform wait upon political or financial expediency to apply principles which have been ignored for so very long. I think that we must not look at reform solely in terms of the football mentality of winners and losers. That is what people tend to do. Look at what is happening now on social security! Who are the winners, who are the losers? It is not what the principles are; not whether there will be greater fairness or whether the body politic will be improved and the social conditions improved. None of these things occurs to the media when proposals first come out. Who is going to win? Who is going to lose? I think that is a great pity.
Some redistribution may be necessary to achieve these things. Some may have to pay more. They have probably been fortunate in paying less over many years, so they should not resent having to pay a little more in the interests of greater fairness or the adoption of clearer principles in our taxation system. I hope that the Chancellor will not regard his mind of March 1985 as the final condition in which he should approach this matter in the forthcoming weeks in the House of Commons and here.
5.44 p.m.
Baroness Gardner of Parkes: My Lords, last July we had in Nairobi a world conference to mark the end of the "Decade of Women". Out of that conference came a document of over 350 paragraphs of forward-looking strategies to the year 2000. Within those strategies, there is every call for equality of treatment in terms of taxation, and a number of conferences and meetings have been held in this country and attended by a large number of women's organisations and individuals. One that met in December sent me just this week the recommendations that they had put forward on improvements that should be made in taxation so far as women are concerned.
The points they make are simple ones and I think worthy of repetition. First, they said that pending the establishment of individual taxation, regardless of marital status and the abolition of the married man's tax allowance, the Inland Revenue should be instructed to facilitate and not obstruct implementation of separate taxation schemes; and, secondly, that married people should be required to sign all tax forms jointly. Their second major point which I shall deal with in a moment was parents' payments for child care allowance to be allowed against income.
But, returning to the earlier point, I should like to give my own views on this point of married people being required to sign the tax forms jointly. I notice that in paragraph 18 of this report it indicates that Britain is almost alone in not having this requirement. The wording in the actual paragraph is somewhat unusual. It says:
"In this matter the United Kingdom is out of line with European practice; almost all other countries require, where the wife has any income, that she either files a separate return or signs a joint return."
The aspect that I do not quite understand is the expression, "almost all other countries". Surely it is all other countries or it is not all other countries. The word "almost" puzzles me. But it is clear that of the Community countries, this is a fairly unique practice in Britain. This certainly covers great hardship and difficulty for women. So many women have no idea of what their husbands earn. If he gets a wage increase, he often does not tell the wife. She has no way of knowing whether or not the amount she is given for housekeeping is an adequate amount or a fair share. It is really a great disadvantage that the husband knows all about the wife's tax affairs and yet she has no entitlement to know anything about his.
I do not know how far this goes back in the history of the United Kingdom but I certainly think that it is high time that it changed. I think the answer that married people should sign the tax forms jointly would be a way of dealing with this point. With regard to the child care situation, this problem has very much come to light within the past year or so. I notice that the noble Baroness, Lady Robson, brought up the case of the young doctor. That was an interesting case because the situation is that if the employer decides to set up a workplace nursery and the employees are all low-wage earners they are entitled to have the use of that workplace nursery and it is an allowable benefit and non-taxable. But if, on the other hand, the employee is earning over £8,500, then it must be declared as a taxable benefit on a form P11D and tax paid on the

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benefit. At one nursery for child day care with which I was associated, the cost was £120 per child per week. That could mean that the mother is expected to pay tax on that sum. My mathematics are not very good. It would be easier if I treated it as £100 a week and said over £5,000 a year. But she had to pay a taxable benefit on £5,000 a year and her earnings were perhaps only £9,000.
That was a very difficult situation and worked against the very type of woman of whom we are all wishing to see so many more in this country. I have in mind the young woman who has been trained for and is making good progress in her career, who then takes time off to have her children. However, when they are at a stage when perhaps they have gone to primary school, she then wants to return to her work. She needs to do so if she is to keep her place on the ladder and really reach the top because those years taken out in order to bring up children definitely set a woman back in any sort of career where she is aiming for the top. So I think that something must be done to look at this even if it were only looking at the way in which the car allowance is dealt with. With the car allowance, at the moment there are certain fixed sums that you are assessed on and that you pay tax on if you have a car. The amount varies according to whether it is a small or a large car. But the people who are enjoying the benefit of a company car are by no means paying every penny of what it is actually costing; so there seems to be a quite unfortunate difference between the way in which cases would be assessed, for instance, for child care and for a company car. I think that is an instance where we should see some change come about to help women in that situation.
Transferability is, I know, a very contentious item and how you view it really depends on how you see marriage and child upbringing. Some people believe that a fully transferable allowance would be a way of keeping women at home. Others believe that lack of any transferability would force women out to work. Either way would seem to be wrong, and I think it is eminently desirable to have a neutral situation in tax, if that is possible. But I think we are tending to overlook the fact that women take on a great deal of work in the home, and a good deal of that work is unpaid. I notice that the British Federation of University Women in their evidence made the point very clearly that we must not be confused between a non-earning spouse and a non-working spouse.
That is a very relevant point. Often the woman who is at home and non-earning is very hardworking indeed. In some cases she may have made a quite considerable financial sacrifice to be at home to look after the children for those few formative years. That is the typical pattern in this country, where women take just a few years off and then go back to work. I think our statistics show that in Western Europe we have one of the highest proportions of mothers returning to work.
I was also interested to note that no evidence was taken from the Wages for Housework Campaign, which I know believes that the work done by women in the home should be taken into account in assessing the gross national product. There is quite strong pressure now from women's organisations, not just in
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the United Kingdom but throughout Europe and the world, to press for a greater recognition of the work women are doing. However, I know that many women like to work outside the home, and many need to do so; so there should be no great disincentive to work outside the home but there should remain the opportunity for a woman to stay at home with her children if she wishes to do so. I do think that the transferable allowance would help that.
The other point has been covered by many speakers, but I really feel I should say something about the question of the so-called unearned income or investment income. I always think it is so wrong to say that it is unearned income, because the 1980 Green Paper made it very clear that of the large number of people who have this sort of income the great majority were people over retirement age. On the whole, those women would be people who had saved throughout their life, perhaps from their employment or perhaps even from their housekeeping, in the days when fewer women went out to work. But that was not unearned income: that was earned income, and the tax was paid on it. It was savings income really, and then it was available for investment. I think people feel rather bitter about the fact that this is put on to their husband's income and they are taxed at that level. Certainly something ought to be done about that.
Today my attention was drawn by a most able woman to the fact that she had been divorced and after 20 years of marriage she had received a small settlement—not a large one. She said that she had given all her time for the 20 years. Then on remarriage that small amount she had and the income it produced, which was a result of 20 years' work with her first husband, was simply added on to the income of her second husband and taxed as his income; yet it had never had anything whatsoever to do with him and she looked on it as her nest egg for the future.
With the matrimonial proceedings Bill and the effects we are seeing in the courts where a woman is expected more and more to stand on her own feet even after many years of marriage, I think this whole taxation issue, and in particular the question of investment or unearned income, is very important. The noble Lord, Lord Houghton, made the point very clearly, and I support what he said. It is high time the position was changed. I think it was right for it to be included in this paper. Had it not been, the document we have before us would have overlooked one aspect in relation to what, although it might appear to be unearned income, is very often earned income that has been put aside. Because of that, I believe it has very rightly been considered in this paper. I thank the noble Baroness, Lady Serota, for bringing this debate before the House, and I shall be interested to hear what others have to say on these matters.
5.56 p.m.
Lord Seebohm: My Lords, I shall be very brief, for two reasons. First, the noble Baroness, Lady Serota, has introduced this debate today so clearly that many of the points we might have made have already been made. I may say that her clarity and the way in which she introduced this subject were typical of all the meetings we held in Sub-Committee C. The second

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reason is that I doubt whether my voice is going to last for very long because I am just recovering from an attack of 'flu.
The first question, to my mind, when we looked at this problem was whether in fact it was a proper subject for the European Commission to be concerned with, or whether it was just another harmonisation for harmonisation's sake. However, the memorandum stems from Article 119 of the European Treaty, which required member states to ensure application of the principle that men and women should receive equal pay for equal work. In due course the commission drew up an action programme, in which taxation formed one of the areas for action as a prerequisite to a fairer and more advanced social order. I accept, therefore, that it is an appropriate question for the Select Committee to study, although the extent to which the various details are implemented should be harmonised throughout the member states.
There are many political and social considerations which are not the same in every country, by any means. In most countries, as has already been said, the incomes of husbands and wives are aggregated for tax purposes and a single document is signed by the husband or the main earner. At first sight it might appear to be a simple matter to disaggregate the system, with mandatory separate returns. However, a closer examination of the problem shows that, as the Inland Revenue pointed out to us very clearly in their evidence, a whole package of changes in a number of fields would have to be made. Those would include the problems arising from the new concepts of property rights. I do not know how many of your Lordships have come across this, but in the last two or three years husbands who own houses have found that in fact they do not really own them at all. There are also interest relief on mortgages, personal allowances and particularly the husband's marriage allowance, shared liabilities such as capital gains tax and all sorts of other matters which are tied up in the final separation of husbands' and wives' tax assessments. Also, the alteration of the tax assessments is undoubtedly bound to bring about changes in social security benefits.
One thing, however, is abundantly clear. Whatever the difficulties, reform is long overdue and this is one of the cases, as we have said before, I think, where the Government must not say "Yes, we agree with you but the time is not ripe." There is the principle which we have mentioned before of unripe time which the Government seem to find very handy.
As the report points out, before the war only one in 10 married women worked, and now 60 per cent. of married women are working. I remember that in my own business before the war 8 per cent. of the staff at Barclays Bank were women and now there are 62 per cent. full-time women and 11 per cent. on top of that are part-time workers. That indicates a complete social change.
First, let us look at the criteria for any personal tax system. As the 1980 Green Paper stated, the first is fairness; the second is simplicity; the third is sex equality; and the fourth is privacy. To these I would add, as the Inland Revenue pointed out, and as the noble Lord, Lord Allen, remarked, cheapness of administration and being difficult to avoid or evade. The first of these points was the disaggregation of
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earned income in such a way that the wife's earned income after using her earned income allowance does not incur tax at the highest rate of the joint income.
Secondly, the system should be as simple as possible to understand and should be the same for a single woman, a married woman or a divorced woman and no changes should take place when the marital status also changes. Professor Meulders of the Brussels University pointed out to us on the subject of simplicity that the latest system introduced into the Netherlands involves completing a document which is accompanied by 50 pages of instructions telling the recipient how to fill it in. This must not happen here.
Thirdly, there is sex equality. This is the critical area which includes the question of transferable allowances—with which I shall not deal any more—the retention or removal of the marriage allowance, the segregation of unearned income, which has been dealt with by the noble Lord, Lord Allen, and the transferable allowance which I think has been dealt with sufficiently by the noble Baroness, Lady Serota, and other people. I strongly endorse the view of the committee that this proposal of transferable allowances which we believe may be still in the Government's mind, should be abandoned if a genuine commitment to equality of women is involved. This view was strongly supported by many of the women's organisations which gave evidence to the committee. There was general agreement that the marriage allowance should be abolished, but that at all costs the child benefit system should be retained and possibly increased for one-earner families. This is the only important point that I wish to stress.
There is a fundamental difference between a tax allowance and a cash benefit payable to the child-caring spouse. Admittedly, the former results in an increased pay packet for the earner, none of which is necessarily handed over to the spouse, who is normally the wife; and, in the case of the latter, there is a specific sum of cash available to the wife for support of the children. This is something which we must not let go. It has been enormously popular, it is of tremendous help and I think is has brought great benefit to the children themselves. I believe it has the added advantage that it does not at all affect tax rates and does not have to be entered in the tax return. So that is something that can be altered at will up or down without interfering with any of the other tax arrangements.
The fourth criterion is that of privacy and this can be achieved only by the introduction of mandatory separate returns. That must be our target. The memorandum does not recommend the deregulation of earned income which, again, has been dealt with; so I shall not repeat the arguments on that.
Finally, let me say that I am not one of those people who believe that having children is a tragedy or an unwelcome burden. For most women having a family is a joy and a fulfilment and it is important that change does not go too far. I may not be popular for saying that, but I think that some people go slightly overboard. But what we must ensure is that the real needs of the children and the family as a whole are adequately protected.
6.4 p.m.
Lord Banks: My Lords, I should like to join in thanking the noble Baroness, Lady Serota, and her committee for the most valuable report which they have provided. It is particularly useful to have the summary of the Commission's view as expressed in the memorandum, and the views of the European Parliament and of the Economic and Social Committee. I think I am right in saying that all these bodies, including the Select Committee, want to see independent taxation with the individual adult as the unit. Certainly we on these Benches agree most warmly with that.
We also agree with the committee that the integration of the income tax and social security systems is urgently required, as my noble friend Lady Robson pointed out. One of our complaints about the Fowler review is that it does not deal with integration of the tax and social security systems and that we must await a further Green Paper with possible further upheaval in the social security system in a few years' time.
When the United Kingdom's position with regard to the taxation of men and women is examined, the married man's allowance is the universal target for disapproval. The married man's allowance gives assistance to one-earner couples and to two-earner couples. The principle of independent taxation would suggest that there should be one single person's allowance for each adult. The married man's allowance provides one-earner couples with one-and-a-half times that, and two earner couples with two-and-half times that.
But if we eliminate the married man's allowance, should the two single allowances be transferable? There has been much discussion of that already in this debate. There are arguments for and against which are set out in the report and, as the noble Baroness, Lady Serota, said, they are powerful on both sides. But, on balance, the committee say no, the allowances should not be transferable.
Non-transferable allowances, provided the single person's allowance remained the same, would penalise both one-earner and two-earner couples. One-earner couples would go from one-and-a-half to one and two-earner couples would go from two-and-a-half to two. Transferable allowances would penalise two-earner couples, reducing them from two-and-a-half to two, but would boost one-earner couples, by increasing them from one-and-a-half to two. The question is: should that boost go to couples where one spouse chooses not to work? The committee say in those circumstances no, and I have every sympathy with them. The principle of independent taxation would suggest that they should not be transferable, as my noble friend Lady Robson argued.
But while accepting that, it seems to me that there would have to be exceptions. What about couples over retirement age living on the pension of one spouse? It would not be reasonable to expect the no-income spouse to go out to work. It is not a question there of choice. What about disabled spouses? What about spouses caring for an elderly relative? Then, in addition to the child benefit to provide for the families with children, there would need to be provision for adult dependants to transfer their personal allowances.
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It might be said that new or higher cash benefits in these circumstances would be the way in which to solve that problem. But however strong are the arguments for new and higher cash benefits—and, in many cases, they are strong on other grounds—I do not think that it would be satisfactory to try to compensate for apparent unfairness, or for actual unfairness, in the tax allowances by means of cash benefits. If that is so, then a number of exemptions are creeping in and the whole operation is becoming complicated. Some of the difficulties to which the noble Lord, Lord Allen of Abbeydale, referred are entering into the scene.
But I believe there is one way in which the problem could be solved and that brings me back again to the question of the integration of tax and social security benefits. If the personal allowances were turned into credits, into cash payments like child benefit—which was described to us just now by the noble Lord. Lord Houghton of Sowerby—then each spouse would get his or her cash payment and, if earning, it would offset his or her tax liabilities on every pound earned; or, if not earning, it would be drawn in cash and the spouse could do what he or she liked with it. In addition, those couples with no income would benefit; those paying the higher rate of tax would lose. Adult dependants would have their cash payment. No distinction would be made between men and women. Marital status would cease to have any relevance. This would be much simpler and the question of transferability would simply not arise.
If the cash payments exactly represented the value at the standard rate of the single person's tax allowance, then as in the case of the transferable allowances there would be no large sum available for other purposes such as child benefit; but these credits would be part of a wider scheme, including child credits replacing or continuing the child benefit, and the general level of credits might well be higher than existing personal allowances and child benefit since the scheme could be further redistributary. A satisfactory balance has to be struck between the size of the credits and the standard rate of tax: the one of course eats into the other. At any rate, those who are concerned about equal tax treatment for men and women would do well to investigate the tax credit solution. It would, in my opinion, be politically easier to introduce and administratively easier to operate.
6.11 p.m.
Baroness Lockwood: My Lords, as a member of the committee, I too should like to thank the noble Baroness, Lady Serota, for the very efficient way in which she chaired the committee and for her presentation of our report this afternoon.
The committee was looking at income taxation and equal treatment for men and women in the context of the memorandum from the European Community, but I could not help thinking that I had been here before. The noble Baroness, Lady Platt, has referred to the consistent stream of complaints on taxation matters that came to the Equal Opportunities Commission. As chairman of the commission from 1975 to 1983 I led what seemed to be innumerable deputations to successive Chancellors of the Exchequer, to the Treasury and to the Inland Revenue

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on this matter. Therefore it is encouraging to think that we are perhaps beginning to make progress.
The kind of complaints which the commission received can be clearly seen in the evidence which was presented to your Lordships' committee. The complaints covered both taxation on earned income and taxation on unearned income. This evening I shall be dealing only with unearned income but I am very grateful to the noble Lord, Lord Allen, and to my noble friend Lord Houghton for dealing in detail with the taxation of married women's unearned income. I should like to make it absolutely clear that there is no question of our proceeding to equality in this field unless we also include the taxation of unearned income.
The inquiry by your Lordships' committee differed in an important respect from the previous discussion in the United Kingdom based on the 1980 Green Paper. The memorandum from Europe is concerned with income taxation and equal treatment for men and women, whereas the Green Paper was concerned with the taxation of husband and wife. My noble friend Lord Houghton has referred to the statement of the Chancellor of the Exchequer in the Budget debate last year, and it seems fairly clear from his statement that one of the main premises of the proposed Green Paper which we are anticipating is to be that each person shall have the same standard allowance but if either husband or wife is unable to use up that allowance it can be transferred to the other partner. I think we have to ask whether this is likely to confine the discussion too narrowly. In order to determine what changes are necessary in the taxation system we need to look at the economic and social changes which have taken place since the wife's allowance was introduced for the first time in 1918, let alone since 1799 when income tax was first introduced and a married women's income was to be (I quote):
"stated and accounted for by her husband".
These economic and social changes are not confined to the United Kingdom. Our experience is certainly shared by member countries of the EC and by most other parts of the world to some extent. The noble Baroness, Lady Platt, referred to some of the economic changes that have taken place in the position of women and pointed out to the House that 60 per cent. of all married women between the ages of 16 and 59 are economically active. This change is not confined to women without children. Increasing numbers of women with children are at work but largely on a part-time basis. Indeed, if we take mothers of all children between the ages of 0 and 16, we find that 55 per cent. of those mothers are working.
The noble Baroness, Lady Robson, referred to the problems of a professional woman who goes out to work and needs child care facilities. I remind your Lordships that the wife's earnings, whether in the professional classes or the manual working classes, constitute a quite important factor in household income. Indeed, it is well known that three times as many families would be below the poverty line were it not for the wife's earnings. So we are concerned here with an important economic factor.
A woman's work pattern is different from that of a man. The economic activity rate of women, particularly married women, dips between the ages of 25 and
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34; rises to its highest peak between the ages of 35 and 49; and then begins to fall again after the age of 50. However, this latter age group of non-working wives is fast diminishing. Between 1973 and 1983 the economic activity rate of 55- to 59-year-old married women rose from 48 per cent. to 52 per cent. and for those in the next generation coming afterwards it is increasing at an even faster rate. In evidence at page 20, paragraph 4, we were told that the largest group of one-earner couples are families caring for children and other dependants. The "Women and Employment" survey of the Department of Employment found that 60 per cent. of all non-employed women were caring for children or sick or elderly relatives and only 14 per cent. were simply looking after the home. So this economic evidence shows that most married as well as single women have some financial independence.
Indeed, as the noble Baroness, Lady Gardner, has said, that point was clearly recognised in this House when we debated the Matrimonial and Family Proceedings Bill. The phrase that was going around at that time was that marriage should not provide a meal ticket for life. However, because of children and dependants, or because of the caring role, there are times in a woman's life when she needs financial support.
We must also look at economic changes in the context of some of the social changes that have taken place and are taking place in our society. Different types of family groupings are occurring. Unfortunately, the high divorce rate is leading to an increase in single parent families, four-fifths of whom are headed by a woman. Trial marriages and cohabitation are increasing. Permanent liaisons outside marriage where there are children are increasing. There are single-sex liaisons. And completely outside marriage, and such liaisons, an increasing number of single people of both sexes are buying and setting up their own homes, sometimes in a group for a short period of time but, increasingly, by themselves in order to get their foot on the mortgage ladder.
Whatever we may think of those groupings, the fact remains that there is no longer a single family and household pattern with which to concern ourselves but a whole variety of patterns. Some kind of equity between different households must also be taken into account now. In the light of those changes, we need to look very closely at what constitutes equality between men and women in relation to income taxation.
The dilemma that is facing us can perhaps best be seen in the conflict of views that came to the committee from Europe. The Economic and Social Committee's opinion of the memorandum, was:
"Tax laws should on no account incorporate an evaluation of … being married or not married; tax systems should be completely neutral in this respect".
However, the European Parliament recommended that:
"The tax system should be neutral as between the married couple where only one partner is in paid employment and the married couple where both partners are in paid employment".
Those two principles are incompatible. Immediately one gives two allowances to married people with only one income, one discriminates against single people or against non-married couples.

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The objective of the memorandum is to ensure that taxation does not constitute a deterrent to women going out to work. That too seems incompatible with the principle of neutrality between the family with one worker and the family with two workers.
Moreover, and as has already been said by a number of noble Lords, such would be a disincentive to married women to go out to work. Your committee was therefore persuaded that it is those who cannot work because of caring for dependants who are most in need of protection.
In the evidence of the Child Poverty Action Group to the committee, it was suggested that the £3·9 billion that would be saved by the abolition of the married man's allowance—that is, excluding the relief that would still be paid to those aged over 65—would be sufficient to increase child benefit by £7·65 per week and still leave £85 million to extend invalid care allowance to married women. Your Lordships will recollect that invalid care allowance is not now paid to married women on the assumption—albeit out-dated—that they are being kept by their husbands.
That would seem to me to present the most equitable way forward—remembering, as has been said, that it is women with dependent children and women who are caring for elderly or invalid relatives who constitute the largest group of women who are financially dependent on their partner.
I hope especially therefore that the committee's conclusion that the taxation system must be considered in conjunction with the social security system, and that support for dependants and in particular for children should be given to income maintenance rather than the taxation system, will receive the support of your Lordships' House.
6.26 p.m.
The Earl of Buckinghamshire: My Lords, speaking tenth on a tightly-drawn topic has, as I am sure your Lordships will agree, its drawbacks. It will lead to some repetition, and for that I apologise. I should also like to say that when I was asked to join the committee it was with some trepidation that I agreed to serve, because tax and equality of treatment for women is, your Lordships will surely agree, a potential hornets' nest.
Reform of taxation and equality of treatment for women are topical subjects. They are subjects that encourage trenchant views. Our own report was received with some praise by The Times, but on 1lth December last year it was also condemned by that newspaper's leading article as being totally wrong. More subtly, the same newspaper suggested that we had taken a contrary view to my right honourable friend the Chancellor whose proposals for transferable allowances had yet to be published. In other words, The Times thought that we were somewhat precipitate in our conclusions. Just to reassure your Lordships, I have to say that the tardiness of the Green Paper from the Chancellor cannot be blamed on Sub-Committee C.
The reason for such discord is that tax is not simply a means by which governments raise funds. Taxation and moral and social issues sit uneasily together, but
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we are all well aware of the social engineering aspects of taxation. When we add pressures to encourage marriage and the support of family life to those that involve an encouragement or discouragement of women in the workplace outside of the home, it is easy to see how conflicts can arise.
If one then considers the need for equality between men and women in taxation—which we do not have—one soon realises that change will result in "winners and losers" and that any proposals for reform may cause major disquiet.
I should like to deal now with three aspects of the committee's report. First, establishing the need for change; secondly, the reasonableness of the committee's recommendations; and finally, and very briefly, the treatment of unearned or investment income. It is important to remember that the committee's report arose out of the European Commission's memorandum on earned income taxation in relation to ensuring equal treatment for men and women. That emphasis on equal treatment was very well touched upon by the noble Lord, Lord Houghton, earlier.
In the United Kingdom, our taxation principles date back to the late 18th and early 19th century. Your Lordships will be pleased to note that the world has progressed somewhat faster than our own tax system. Today, more than 60 per cent. of wives under retirement age are in part-time or full-time employment outside the home. Equality of opportunity for women is slowly improving—not as fast as some may wish—yet we still have a taxation system that discriminates against women within the family. The husband is responsible for his wife's tax affairs; she has no income privacy; and his income is totally private.
In addition, discrimination occurs between family units. Two-earner families are better treated than one-earner families by approximately one times the single person's allowance. Two earners in a family are better treated than two single people who cohabit. Those who cohabit in turn qualify for tax relief on mortgage loans up to the maximum of £60,000, which makes the cohabiting couple in reverse significantly the best treated for tax allowances. It seems we have a very odd system of personal taxation. Even without the impetus from the commission to remove discrimination between men and women it can be seen that there is a need for reform within the United Kingdom.
Given a need for change, how reasonable are the committee's conclusions? The committee was sympathetic to those who advocated transferable allowances, recognising that under the present system of allowances this would be the most neutral in its effect on tax payable. In addition, transferable allowances would continue to support marriage and family life and ensure that couples in a family unit on the same total earnings would pay the same tax irrespective of how many worked. However, the weight of evidence taken—your Lordships can read it for yourselves if you have not already done so—supported a fully independent system which was neutral, and demonstrably so, towards women's employment outside the home. Independent taxation will ensure that single and married women in paid employment are treated alike for tax.

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So far as I can understand it, it is this neutrality which led to The Times' rejection of independent taxation because the committee's rejection of transferable allowances seemingly appears to fail to recognise and support the family and marriage. I do not agree with that interpretation, but independent taxation will lessen the strains on the family by allowing privacy on earnings. It will enhance the status of women. Independent taxation will be simple to administer and more readily understood, whereas a system of transferable allowances will almost certainly lead to friction within the family; it will be more difficult to understand and more expensive to administer. Independent taxation removes the present anomalies that exist between two-earner families who, some would say, are too generously treated compared to the one-earner families and will largely end the discrimination that presently exists between family units.
What does this mean in practice? It will mean that the married persons' allowance will disappear so that the one-earner family will pay more tax—on current allowances approximately £375 per annum at the 30 per cent. tax rate, if my arithmetic is correct. It will mean that the two-earner family will also pay more tax. Increases in tax are not popular and it will be very necessary to have transitional arrangements to protect particularly the single earners, pensioners and disabled people in any change of this nature. However, if this change to independent taxation releases over a period some £5 billion this could be diverted to those in need, or who are perceived to be in need: that is, elderly dependants, dependent children or families who currently require and need a direct cash support in the community.
Changes in our personal taxation system will cause a "winners and losers" syndrome. If we allow this thought to be paramount then change will be delayed or less desirable changes will occur. The losers in the short term can be protected and, of course, it is easier to introduce change if taxation rates are reduced at the
So, to conclude on the practical effects, if we group taxpayers and potential taxpayers into three
So, to conclude on the practical effects, if we group taxpayers and potential taxpayers ino three groups—single earners, two earners and earners with dependants—then cash will be taken from the families of two earners, whose allowances will be reduced from approximately two and a half times the single person's allowance to twice times. The single earners, who apparently are mainly in the over 40s group, will also see a reduction in their allowances and will need protection over this transitional period. In principle, the cash released from the two-earner families can be diverted to deal with the third group; that is, those with dependants and who are perceived to be in need.
I now turn briefly to taxation of unearned income or, as some would prefer to call it, investment income. In my view, this was quite properly not fully explored by the committee, given the context of the commission's memorandum. There are certain legal problems of identifying property in England and Wales. These problems do not appear to exist in Scotland. I suspect that, in any case, they are not insoluble problems. I have to say that I have some doubts on the advisability of making a situation where unearned income is treated separately for tax on the
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man and the wife. I am not in favour of a system which will, I suspect, ensure that the main beneficiaries of totally independent taxation of unearned income will be the specialist tax advisers. So far as I am aware, no country has separate taxation for unearned income, not even the United States. It seems to me that the simplest method might well be to total the unearned income and divide by two for the purposes of assessing tax liability on a man and his wife. It may be deemed appropriate to have an allowance for a nest egg so that small investors do not suffer tax on their hard-earned savings.
The conclusions of the committee are, in my view, reasonable. Independent taxation will produce losers; that is, more tax under the present system of allowance will be paid by two-earner families and single-earner families, but there are certainly ways to protect single-earner families from the adverse effects in a changeover period. Whether two-earner families will also require protection is, I suspect, more of a political decision.
I am able to see the advantages of fully transferable allowances, particularly as there would be few, if any, losers in the system. However, it seems to me that the arguments should be geared towards the principle and a correct system of taxation and not be contaminated with how much tax we as individuals should be asked to pay. That is a separate matter. It should also be noted that we have to some extent moved down the road towards independent taxation where relatively high earners can be separately assessed for tax. To move back to transferable allowances may be regarded as a backward step. The question of unearned income is a separate issue to the one under discussion but, of course, no less important for that.
In closing, while I, too, should like to have some guidance from my noble friend the Minister on the timing of the Green Paper and of any subsequent reforms, I should not be surprised if the Government hasten somewhat slowly over this very tricky subject. None the less, in closing I commend this report to your Lordships and trust that all will agree that it has proved a useful addition to the discussion of personal tax changes in the United Kingdom.
6.40 p.m.
Lord Plant: My Lords, I, too, should like to thank the noble Baroness, Lady Serota, for the way in which she chaired our committee, and for her most lucid introductory statement to this debate. The Government issued a Green Paper on this subject as long ago as 1980. The Chancellor of the Exchequer, in his first Budget statement, indicated his desire to modernise the tax system; he wished to get away from the ideas and the social problems of earlier decades of this century. Last year in his Budget he informed another place that a further and more definitive Green Paper would be issued shortly. He underlined the fact that the tax districts would be fully computerised by early 1988, and so would be able to deal more easily with any future changes that he might have in mind. The Inland Revenue press released the news at the same time—that is, on 18th March 1985—and indicated that the Government favoured a system of fully transferable single persons' allowances. The Government intended the forthcoming Green Paper

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also to deal with the cumulative system of PAYE and ensure a closer integration between the tax and benefit systems.
For a long time the Inland Revenue and the DHSS have been looking closely at this problem. It is not an easy problem to deal with, but at some stage in the future it will have to be tackled. We still await the promised Green Paper, and there have been a number of excuses for the delay: but why has it not been issued? Perhaps the Government recognise that there are no votes in reducing the married man's allowance to that of a single person. Taking money from the married man's pay packet is fraught with danger, unless there is some compensation. Is the compensatory element to be fully transferable allowances? I believe it is.
The last time the pay packet was raided, which was ten years ago, was when the child allowances were transferred from the husband to the wife. This had the helpful approval of the TUC and coincided with an extra flow of money to the pay packet, so there was no outcry. It seems that the Government are keeping their options open, but from what we can gather they are thinking of getting away from the cumulative basis of PAYE, which will facilitate transferability of allowances. The evidence of Mr. Christopher, the General Secretary of the Inland Revenue Staff Federation, is very relevant (it is on page 118 of the Select Committee report). The IRSF evidence also fully supported independent taxation, as I do.
Another not unrelated matter is the criticism last week by the all-party Social Services Committee of the Government's proposals that the family credit, which is the new benefit to help low income families, should be paid to fathers by employers through the pay packet. The present tax system presumes that the husband has responsibility for all financial transactions and is the major earner. This view is now critically opposed by the TUC, among many others, on the grounds that the system is based on outdated views of the role of women as dependent on their husbands. The increasing development of the role of women in the economic fabric of this country has given impetus to the claim that taxing of married couples should be carried out with fairness, simplicity, sexual equality and privacy. These issues constitute the core of the EEC resolution which is compelling the Government to give urgent attention to this matter.
The problem now facing us is that the married man's allowance is one-and-a-half times that of the single person and the working wife. The married man's allowance was introduced in 1918 as a result of wartime pressure because of the legal and moral obligations he has to support his wife and family. Incidentally, those obligations have not lessened. At this stage I must say I am opposed to any system which will lead to a weakening of traditional family life. The wife's earned income relief was introduced in 1942, again as a result of wartime pressure. If we change it the Government must not make the tax system more complicated. Some of the present complex issues result from changes intended to put right injustices and unfairnesses, and in fact as a consequence of piecemeal development over many years.
I should like just to mention the household where the wife is not working—and there are very many of
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them. If all persons have the same allowance it will be of no benefit to the husband unless his wife's allowance can be transferred to him, and he would then have two allowances. If it is not transferable, the husband would be worse off—and that is not a starter for any Government.
The Inland Revenue staff have to deal with 6 million job changes a year and also with the fact that the majority of working women are part-timers and many work intermittently. One of the interesting findings of the Department of Employment and the Office of Population Censuses and Surveys dealing with women and employment was that most husbands cannot be described as enthusiastic about their wives working, though they are prepared to tolerate it if it does not interfere with their own work. This attitude and the fact that women still do most of the housework account for the substantial proportion of married women with grown children who work part-time only, if at all. Only 27 per cent. of wives covered in the survey, all of whom were under 60, worked full-time; 33 per cent. worked part-time, and 35 per cent. were neither working nor seeking work.
It is a fact that millions of families are kept from poverty by the wife's small earnings. Any introduction of transferability of allowances has to take into account this problem, and it obviously will be somewhat complex for the working wife. There are indeed 1,800,000 of them earning less than the wife's earned income allowance. The EEC has direct and strong opinions on this question, but it must be recorded that the EEC finds some difficulty in reconciling its desire to support traditional family life and its desire to see equality of treatment of men and women, married and unmarrried. The EEC does not regard transferability of allowances as a desirable option. Moreover, if we are to have fully independent taxation I think it will follow that the treatment of investment income should not differ from the agreed system of dealing with earned income.
It is unfortunate that this debate takes place before the Green Paper appears. There is obviously some trouble behind the scenes; otherwise, we should have received it before now. I assume, of course, that we must have it by the time of the Budget, and maybe we should keep our minds open until then. We shall then have the Government's ideas, the public's reaction to them and, indeed, the reaction of the public to our own documents, which in my view points the way for the future.
6.48 p.m.
Baroness Seear: My Lords, I do not think that anybody would challenge the statement that over the last twenty years there has been a fundamental change in the position of women, not only in this country but in all the advanced industrialised nations. I shall not go into the reasons for this; they are very widely known. I myself would say that probably more than anything else it stems from our now almost complete control over fertility, by which women can control not only the numbers of their children but also the times when they shall have them—the timing of their families. This has given women a freedom which they have never had since the days of Eve. Whatever the reasons,

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the fact is that the position of women is now something totally different from their position even at the end of the Second World War.
We have reacted to this situation with legislation, and legislation itself has stimulated further change. Of course, with the emancipation of women—which, as I say, I think has come very largely from control over fertility—women have been asking and have been given piecemeal, sometimes a little grudgingly, increasing degrees of equality. But it has been a piecemeal approach. We had the 1970 Equal Pay Act. This was to give equal remuneration. It was realised—indeed, it was realised by many people at the time of the passing of the Act—that this raised almost more questions than it answered and that equal pay without equal opportunity did not mean very much and would not achieve the objectives that women sought. So it was followed by the Sex Discrimination Act in 1975.
Comparably, through the European Commission, we had a directive on equal pay. This was followed similarly by a directive on equal treatment, which, with various differences, was largely about equal opportunity. Then it was found both here and throughout the Community, and also in the eyes of the Commission, that just as equal pay had needed to be supplemented, if it was to mean anything, by equal opportunity, so equal pay and equal opportunity by themselves were quite inadequate unless supplemented by changes in social security and changes in a whole range of other matters, of which taxation is one but only one, that would make for genuine equality.
It is understandable that we have had this piecemeal approach. It also means however, that we have a very untidy approach to the whole question of the position of women and the consequences of the changed position of women. With every change that we have made and with every legislative advance, we have created anomalies and thrown up further questions that demand additional examination and additional action. We have not taken—I do not say that this was a mistake initially—the reality of the change and then had a broad look at what is really required over a whole range of matters—pay, opportunity, social security, child provision, taxation, pensions and retirement age—which are affected by legislation and which greatly affect the reality, or non-reality, of women's equality. Of course as a result we are left with a large number of anomalies and with extraordinary, unanticipated consequences of the changes that we have made and of the changes that we have not made but which are called for by the changed circumstances.
We even have the case given by my noble friend Lady Robson as to how the dates of marriage are being altered in order to meet the tax system. I have to say, with all respect, that my noble friend got it a bit wrong although not wrong regarding the date of marriage. Is it not in the month of May that a young man's fancy turns to whatever it is that a young man's fancy turns to, and not the month of March? But then, you see, this is another consequence of the way in which we have dealt with the matter. We have even distorted the young man's natural instincts in May and pushed them back two months so that he can outwit the Chancellor. This cannot be proper and cannot have
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been intended. It is the sort of unanticipated consequence that we get when we have legislation that does not really meet the needs of the circumstance and which people then manoeuvre in order to try to bring it in line with what they want.
Have we not therefore to accept that the position is totally changed and that we have to abandon an approach that, because it has continued over centuries, it is not surprising that we find difficult to change? Over centuries, there were good sound biological reasons why it should be the way that it was. We have to change from seeing the woman as part of a family with the man as the breadwinner on whom she is dependent. Our whole tax and social security policies have been based on the assumption that the man is the breadwinner, that the woman is the dependant and that tax and social security have to be worked out on that concept.
What we have to move towards is acceptance of the reality today: that the woman is an individual person who may or may not be married, who in many cases if she is married is, sadly, in my view, not going to stay married, and who in many instances will be responsible either for a family, as an individual and a single person, or just for herself if she is not responsible for a family. If we accept that this is the position, we have surely to base not only our tax policies but indeed all our social security policies on the fact that the woman is an individual person, married or single, to be taxed as an individual person in a way in which her social security needs will be met on the basis of an individual.
I hasten to say that this is not an attack on the family as such. A great many people who strongly support the idea of the independence of women, of separate taxation for women and of women being treated as an independent person in tax and social security, are also strong supporters of the family and would like to see it in a much healthier position than in many ways it is at present. But we have to examine the way to achieve this. I go along very much with what the noble Lord, Lord Houghton, said when he argued that social policies and tax policies should not be confused; that we should have a tax policy that is logical, based on the principle, which we accept, of the taxation of the individual person; and then that we should examine what the needs of the family really are and what the requirements are in terms of the benefit to meet those needs and to sustain the family.
If we did this with the deliberate intention of sustaining the family through social security payments, or whatever system we get for meeting those needs, then we would do the job a great deal better than we have been doing it by trying to manipulate the tax system in a way that proves very inadequate. What we are doing all the time is manipulating a system that was worked out for a quite different set of social circumstances from those we have today. What we should be doing is looking at the social circumstances of today and working out de novo what is required to meet those circumstances both in terms of tax and in terms of security benefits.
From what I have been saying, it is obvious that I believe that the allowances should not be transferable, that the woman who earns should have her own single person's allowance and that this should not be

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transferable if the wife stays at home. But this is not to say that the family should not be supported properly if the wife decides to stay at home. If the wife so decides and there are no children to be looked after, that is a matter for herself and her husband. It is perfectly possible, through proper systems of support based on children, to maintain the position of the family even more strongly than at present if we make the adjustments suggested by many people, particularly in relation to the married man's income allowance.
I suspect—in fact, I do more than suspect; I am convinced—that if we are really to examine the position as it now is, the requirements of a modern society in which the woman cannot depend for the whole of her life on being supported and does not wish to depend for the whole of her life on being supported by the man, breadwinner and head of the family, we are going to find that the only really satisfactory solution to recognising the independence of the woman and at the same giving proper support to the family will be through an integration of tax and benefits, as my noble friend Lord Banks has been saying. I do not believe that we shall get out of the present difficulties, inconsistencies and contradictions in our present practice until we move to a system of this kind.
I know that everyone is reluctant to set up more committees and so on. But listening to this debate, I am mindful that it is now 14 years since your Lordships' House set up a Select Committee on sex discrimination. Out of that committee came a great deal of evidence and new policy with regard to the position of women. I wonder very much whether what we need now, if we are to take an overall view of the problem with which we are confronted, in which the taxation of women and the transferability or non-transferability of the allowance is only one tiny part, if we are to do the job properly and not have yet another instalment of the piecemeal approach creating yet again more anomalies while we are attempting to provide solutions, is something like a Lords committee to look at all the implications, including tax and social benefit, of the changed position of women. This seems to me to be the logical conclusion of the work that your Lordships' House did 14 years ago—it is quite a long time—so that with the experience we have had over those 14 years we can have a system which meets the new situation, not by patching up what has gone before but by reshaping what is required to meet the needs of today and tomorrow.
7.1 p.m.
Baroness Turner of Camden: My Lords, as other noble Lords have already said in this debate, the past decade has seen substantial changes in public attitudes towards the employment of women and their treatment in employment. Some of us think that change has not been rapid enough. Nevertheless, we have had legislation opposing discrimination in employment, and the pressure continues to end discrimination in retirement ages and in pension benefits. The Equal Opportunities Commission, of which I am a member—and may I say in passing how pleasant it was to hear in the debate the noble Baroness, Lady Platt, who is at present chairman, and
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the noble Baroness, Lady Lockwood, who was a previous member of the Commission—has played and continues to play a significant role in changing attitudes and in widening and opening up areas of employment which 20 years ago would not have been considered appropriate for women at all. The Manpower Services Commission, the CBI, and the TUC all support programmes aimed at ending discrimination and at encouraging women to enter careers which are likely to involve them for a working life rather than for a short time as a prelude to marriage.
It is clear that the social changes which have taken place and are continuing to take place are irreversible. Most women, as noble Lords have said in the debate, have jobs outside their homes now whether they are married or not, and for most of their lives. It is generally estimated that a woman now spends no more than seven years outside the workforce for childbearing purposes.
However, our present system of income tax has evolved over a period when paid work outside the home was the exception rather than the norm for married women, except for some working class women who always worked. However, they tended to be in those days too badly paid to be considered for tax purposes.
The tax system we now have reflects the then pervasive social assumption that women, whether married or single, were destined to be dependants. Indeed, in the years before the last war there was a marriage bar in many professions, including the Civil Service, in support of the philosophy that married women were expected to leave the workforce. Those days are long past but the remnants of the thinking behind those concepts remain and are enshrined in our tax laws.
As noble Lords have said, the offending section of the law is Section 37 of the Income and Corporation Taxes Act 1970 which says quite categorically that,
"A woman's income chargeable to income tax shall … be deemed for income tax purposes to be his"—
that is, the husband's—
"income and not her income".
The Equal Opportunities Commission comments in its consultative paper issued in 1978:
"It is not surprising that a system based upon this assumption should be regarded as, at best, humiliating—and at worst discriminatory".
Indeed, as the noble Baroness, Lady Platt, said, it has led to complaints to the Equal Opportunities Commission from women who feel that so far as the Inland Revenue is concerned they are invisible—but I hasten to add, however, such invisibility does not bring any financial benefit. Clearly if we are concerned about equality of treatment something should be done to ensure that this applies to our taxation system. For this reason we welcome the report of the Select Committee.
The report brings together a great deal of information on the complex subject of taxation both in the United Kingdom and in other countries of the European Community. It includes evidence from a large number of interested and specialist bodies including the Equal Opportunities Commission. It

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reaches its conclusions taking into account the changing social background to which I and others have referred.
The majority of those who gave evidence to the Committee favoured reform of the present system and identified Section 37 of the 1970 Act as the basis of present discrimination. The most evident form that this discrimination takes is the married man's allowance to which reference has been made in the debate which the EOC thinks might once have had an historical justification but which now has none. The tax system in the United Kingdom is one in which husband and wife are treated as a unit. All income is for practical purposes aggregated and the wife has dependent status. There is, it is true—and this has been referred to also—provision for couples to opt for separate taxation but because of the existence of the married mans allowance this is only of advantage to couples with high incomes.
Furthermore, because the system only recognises the existence of the husband, with whom the Inland Revenue normally corresponds even about the wife's earnings—although I note that there have been some improvements in that regard—there is a lack of privacy so far as the wife's earnings are concerned. Many wives have complained that while they do not know what their husband earns, he knows what their income is. This lack of privacy is referred to in the submissions of a number of witnesses, notably from those representing organisations of professional women, many of whom quite rightly feel strongly about this.
Therefore, for the sake of equality and equity we should adopt the recommendation that our system should be one of independent taxation with each partner assessed as an individual. Moreover, the system should be neutral. In other words, it should not seek to influence people in one direction or another, whether to work or not to work outside the home, for example.
However, there are other considerations since although we should make adjustments to meet social change, we should try to do so with as little adverse effect as possible and should, if we can, utilise the opportunity to make reforms in other directions.
If we move in the direction of independent taxation, it becomes necessary to look at the matter of dependants. Chief among these are children. The Child Poverty Action Group in its evidence was able to show with some conviction—as were other witnesses—that poverty is mostly found in families of low earners with children. They are the very people who benefit least from tax concessions and most from benefits like child benefit. The Child Poverty Action Group is unequivocally in favour of devoting the resources which would be released by phasing out the married man's allowance to improving child benefit. In this they have some support from the EOC and certainly from the Trades Union Congress.
As for child care, some European countries provide allowances for child care through the tax system. We do not. Moreover, it seems that we have moved in the opposite direction. Two years ago the Inland Revenue ruled that employer-provided nursery and creche facilities were fringe benefits attracting tax for all but low-paid workers. The noble Baroness, Lady Gardner
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of Parkes, made extensive reference to that in her speech. I hope that the Chancellor will find it possible to review that at an appropriate opportunity. I may say that representations have already been made to the Chancellor both by the EOC and the TUC, and so far he has not found it possible to do so. I hope that he will change his mind. There are other dependants—the disabled, the old, or wives who cannot work because of their need to care for such members of the family. There is a case for providing direct cash benefits, and this is referred to in various parts of the report. Certainly it would be better, in my view, than simply being the subject of a tax allowance on someone else's pay.
It is, however, clear that involved in this matter of reform of taxation is the matter of the one-learner couple. It has been suggested that this could be overcome by a system of transferable allowances with the earning spouse thus having a higher allowance. It must be noted, however, that many of the organisations giving evidence to the Committee were against that idea. It could simply be a way of reinstituting the married man's allowance if the earning spouse received two allowances. Moreover—and this has been referred to repeatedly in the debate—it would certainly act as a disincentive to women who would otherwise like to take work outside the home. The point is put with absolute clarity by one of the organisations representing professional women, the City Women's Network, when they say:
"In the case of a one-earner (say the husband) couple, transferability would ensure that the couple would still receive the two personal allowances for offset against the husband's income. When the wife wishes to return to work then her income is effectively being taxed at what was her husband's marginal rate after deduction of two allowances … where the wife's earnings are low this will be a powerful disincentive to her returning to work".
The same body also make a comment about the destruction of privacy involved in such a system, and I agree with their comment.
Further comment about transferable allowances has also been made by the Inland Revenue Staff Federation, which indicated in some detail that the system would be administratively difficult and costly, and as they are actually involved with the administration of taxation systems they really are in a position to know about that.
After examining the arguments very thoroughly, the Select Committee believes that those arguments against transferable allowances are substantially greater than those in favour. It agrees with the principal conclusion of the European Commission memorandum that the aim of equal treatment is best served by a system of fully independent taxation; further, that support for dependants—and, in particular, children—should be given through income maintenance and that the benefit should go to the caring spouse, who is frequently the wife.
These seem overdue and necessary reforms if we are to keep pace with what is happening in our society and to respond to social needs. I share the view that has been expressed by a number of noble Lords that there really is no logical basis for treating unearned income any differently from earned income; but I also agree with the noble Lord, Lord Allen of Abbeydale, that there can be some complication involved there that needs careful study.

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In the middle of last year we were promised a Green Paper on personal taxation. I hope that when it appears we shall see that note has been taken of the Select Committee report, and that we shall eventually reform our system in accordance with the conclusions of that report.
7.12 p.m.
Lord Brabazon of Tara: My Lords, I should like to join other noble Lords in thanking the noble Baroness, Lady Serota, for introducing this important subject for debate this afternoon. It may be of interest to your Lordships to know that these issues are also being debated elsewhere today. The European Commission is itself holding a conference near Oxford on the memorandum on income tax and equal treatment, so it is indeed a topical subject.
I should also like to thank the noble Baroness, Lady Serota, and her colleagues on the sub-committee for the report that they have produced. It provides a clear guide to the complicated issues which we have been discussing today.
In one sense today's debate is timely in that my right honourable friend the Chancellor of the Exchequer has the personal tax system and the taxation of married couples in particular under review and will be publishing a Green Paper on this very shortly. I realise that the Green Paper will be a little later than was originally expected. I am afraid that that has been a consequence of producing a paper which covers a wide range of subjects needing full and careful consideration. I am sure that your Lordships will appreciate that, as the Green Paper has not yet been published, I shall not be able to comment in detail on a number of the interesting and important points raised in the debate as I cannot, of course, anticipate what will be in the Green Paper. Nor can I comment on speculation in the press, which the noble Baroness, Lady Robson, invited me to do. Moreover, we are now in the close season shortly before the Budget, when Treasury Ministers and their spokesmen customarily make no comment about tax matters, lest they should give any hint of what may be announced on Budget Day.
The taxation of husband and wife is a subject which seems at first sight straightforward, but becomes more complicated as you delve into it. One reason is that any tax system has a number of different objectives, which do not necessarily all point in the same direction. It is quite instructive to look at these objectives, and to see how far the system which we have in this country measures up to them.
Many people would make fairness the first objective: the tax system should ensure that the necessary burden of taxation is spread fairly between taxpayers according to their ability to pay. But this apparently straightforward idea itself depends on a number of judgments. For example, how should the tax burden be spread between people at different levels of income? How far should the tax system take account of family circumstances, and by what means? The present system recognises family responsibilities in a very broad way; and many noble Lords have mentioned this. Married couples are treated as a unit, and the husband has a higher allowance than a single
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person, whether or not his wife has income of her own. If his wife has earned income, she has a separate allowance to set against it, equal to the single person's allowance. This system produces results which are often criticised on grounds of fairness.
A married couple who both go out to work have higher allowances than two single people. But their allowances fall sharply when the wife gives up paid work, which is often when married couples are under the greatest financial pressure. And a small number of married couples with income from savings pay more tax than if they were treated as two single people. These are problems which the Green Paper will look at in more detail.
A second objective is equality: that the tax system should treat men and women equally. Often linked with this is privacy: all taxpayers, male or female, married or single, should be able to have privacy in dealing with their tax affairs. Here I would join the noble Lord, Lord Houghton of Sowerby, in congratulating the Equal Opportunities Commission, its previous chairman, the noble Baroness, Lady Lockwood, and the present one, the noble Baroness, Lady Platt of Writtle, on their persistent work in drawing the Treasury's attention to this. The present system does not achieve equality because of the higher allowance given to married men. Nor is privacy available to all. Most taxpayers, married or single, in fact pay all their tax at source without the need to fill in tax returns, but when a married couple are sent a return, it is the husband who is in law responsible for filling it in. Many married women object to having to give their husband details about their incomes.
Finally, simplicity is an objective which, in principle, commands virtually universal support. Everybody would like the tax system to be easy for taxpayers to understand and play their part in. The present personal tax system is a good deal simpler than it was a few years ago, thanks in no small measures to changes the Government have introduced: to take just two examples, mortgage interest relief is now given at source for the majority of taxpayers; and tax on bank interest is deducted at source. But many ordinary taxpayers—and indeed the noble Lord, Lord Allen of Abbeydale—still complain that they cannot understand the tax system, and it is not difficult to see why. Married men are treated differently from married women, "breadwinner wives" differently from "breadwinner husbands", a wife's investment income differently from her earned income, and, for pensioners a wife's pension based on her own contributions is taxed differently from a pension based on her husband's contributions. There are also two options for married couples to be taxed separately, which have different purposes and different effects.
However, here I should like to correct one point made by the noble Baroness, Lady Robson of Kiddington, about the time of year one got married. Indeed, the noble Baroness, Lady Seear, accused us of trying to divert the course of nature. This used to be true, but the present position is that the appropriate proportion of the allowance is given depending on the time of year of the marriage.
Thus—as I have said—there is a range of objectives to bear in mind, and these objectives sometimes conflict. The clearest illustration of this is perhaps the

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trade-off between fairness and simplicity: tax legislation could be a good deal shorter and simpler but for the special provisions which seek to make the system fairer for certain groups.
The fact that desirable objectives may conflict and that there can be different perceptions of what is fair may be one of the reasons why there is such a wide variety of systems for taxing husband and wife in different countries. As the Select Committee's report says:
"The tax treatment of husband and wife in Member States covers most of the spectrum from fully independent taxation to full aggregation".
For example, Greece and Italy take the individual, married or single, as the unit for tax purposes, whereas Germany and Luxembourg take the married couple as the unit, in most cases, and France goes further and looks at the whole family's income, including that of the children. Some systems treat income from earnings differently from income from other sources. And there are different arrangements for filing tax returns.
Thus there is no single model for the taxation of married couples which can be regarded as generally accepted. The European Commission recognised this in their memorandum which formed the starting point for the committee's inquiry. They said:
"it must also be borne in mind that each national system of taxation has been developed as an entity with a coherent balance between units, rates, and allowances; a change in any of these elements may require other adjustments to maintain a balance in the system".
If I have a criticism of the memorandum—and here I agree with the noble Baroness, Lady Robson of Kiddington, and the noble Lord, Lord Allen of Abbeydale—it is that it concentrates in its conclusions on the single aspect of the impact of the system on work incentives for married women. This is undoubtedly very important, but it has to be considered alongside other issues, such as investment income, which has been mentioned by so many noble Lords who have spoken this afternoon. If I may say so, your Lordships' Select Committee took a broader view and looked more carefully at these other issues.
I hope that your Lordships will understand why I have had to keep my remarks general, and cannot set out the Government's views on all the important questions which the taxation of married couples raises. What I can say is this. My right honourable friend the Chancellor has studied the Select Committee's report very carefully, and I shall pass on to him all the points which have been made in the valuable debate we have had today. I hope that the forthcoming Green Paper will be studied with equal care. This is a complex issue, which has an impact on large numbers of taxpayers. It cannot be decided on the basis of any single principle: it demands careful thought to what the practical consequences would be for people in a wide variety of differing circumstances. The Select Committee report, and some of the evidence submitted to the inquiry, recognised, courteously, that it was not possible to assess the system of transferable allowances properly until the Green Paper is published. I hope, therefore, that all those who have contributed to the recent inquiry and the interesting debate we have had today will give the Green Paper the close attention it deserves.
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I hope, too, that we can encourage the widest possible response from the general public. They, after all, represent the majority of ordinary taxpayers who will be most affected by any changes. We particularly want to hear their views when the wider public discussion begins. I should like once more to thank the noble Baroness, Lady Serota, for having introduced this interesting debate, and, as I have said, I hope that we shall all be interested when the Green Paper is published.
7.22 p.m.
Baroness Serota: My Lords, the House, and particuarly those noble Lords who are waiting to speak on matters raised in the Unstarred Question of the noble and learned Lord, Lord Elwyn-Jones, which is to follow this debate, will be glad to hear that I do not intend to make another long speech today. Although I am sorely tempted to comment on some of the points that have been made in this wide-ranging debate on our report, I shall simply confine myself to thanking all those noble Lords and noble Baronesses who have taken part in what I believe has been a valuable and constructive debate.
I am naturally somewhat disappointed at the reply of the noble Lord the Minister. I can only express the hope that "very shortly" means more this year than "later this year" meant last year when the Chancellor made those comments in his Budget speech. However, we appreciate his position tonight and look forward to seeing the Green Paper, and I shall not press him further on whether this is going to come before or after this year's Budget.
That apart, it is gratifying that every single speaker in this debate is agreed that the long-standing and historical discrimination, both direct and indirect, against women in income taxation systems must now go, and that is the message which comes loudly and clearly from our hours of debate this afternoon. It is in that context, and on behalf of the sub-committee (many of whose members have spoken with such knowledge and such experience during our debate), that I would urge the Government once again in their consideration, and in the propositions they put forward in the Green Paper, to bear in mind the Commission's memorandum, our report on it, and all the speeches which have been made in our debate tonight.
On Question, Motion agreed to.

Law Centres
7.25 p.m.
Lord Elwyn-Jones Lord Elwyn-Jones rose to ask Her Majesty's Government what steps are being taken to safeguard the law centres which are now threatened with closure.
The noble and learned Lord said: My Lords, I make no apology for raising again the question I asked in the House on 8th May last year; namely, what action is being taken by the Government to safeguard law centres from compulsory closure or from inability to carry on.
The value of law centres as an important part of our provision of legal services to our people has long been

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acknowledged, and indeed referred to in all authoritative reports upon their working and their operation. The Lord Chancellor's Advisory Committee on Legal Aid, which is a most distinguished body—including two judges and several experts in the legal services field—reported last year that the law centres are making a vital contribution to legal services.
The Royal Commission on Legal Services reported in 1979:
"The impact of law centres has been out of all proportion to their size, to the number of lawyers who work in them and to the amount of work it is possible for them to undertake. The volume of work they have attracted has shown how deep is the need they are attempting to meet."
That was the Royal Commission.
Now we have the benefit of two further important and recent reports. First, there is the 35th Report of the Law Society, which, at page 57, says this:
"The Society has continued to express concern to the Government about the severe effects on law centres and Citizens Advice Bureaux which may well result from the legislation abolishing the Greater London Council and the metropolitan county authorities. Law centres and advice agencies are also in an uncertain financial position as a result of other restrictions on local authority expenditure and changes in policy on the use of the Urban Programme. Urban Programme policy is now unhelpful to law centres and advice agencies. Bids for this form of funding have all been rejected by central government despite many being given high priority by their sponsoring local authorities."
That is the Law Society.
Then the Lord Chancellor has just received the report of the Lord Chancellor's Advisory Committee on Legal Aid, to which I attach particular importance. That expert body—and, if I may say so, concerned body, from my long experience of their working and sense of responsibility—say this:
"At present there are three main sources from which advice, assistance and representation may be obtained: the legal profession: law centres and specialist advice agencies; and CABx and other generalist advice agencies. Each has its part to play and among those involved in the delivery of legal services there is now a general recognition of the interdependence of these three main categories of providers."
The committee's report goes on to say:
"We therefore greatly regret that law centres and other specialist and generalist advice agencies are forced to operate under the continued threat of diminishing or disappearing funds. In our last Report we drew attention to the damaging effect on law centres of the uncertainty produced by the lack of a coherent Government strategy on funding."
How lacking that still is!
"Over the past year it has become clear that central government will not extend its existing funding of law centres to those centres which are threatened either by the withdrawal of urban aid or by the withdrawal of grants following the abolition of the Metropolitan County Councils and the Greater London Council under the Local Government Act 1985. At a time when local authorities are being exhorted to curtail their expenditure, central government has insisted that the funding of law centres and other advice agencies should be met largely if not wholly from local resources."
Those are very important and significant reports. The fact is that the need for the services of law centres is now greater than ever before because there is a greater growth of the problems that they were created to deal with. Indeed, there has been a massive increase in the numbers of people seeking help from the law centres and other advice agencies. That arises because they render their greatest service in the poorest
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districts in the community. They provide access to justice for the most disadvantaged people in the community, especially—and I mark this because I think the House would be well advised to bear it in mind—in the troubled inner city areas.
As the noble Lord, Lord Hooson, said when we last debated this matter, they are not like normal solicitors' offices. Indeed as he pointed out they often have a shop window to their premises. They are readily accessible, most of them at all times, for emergency advice. They provide legal advice on a wide range of problems, many of which solicitors in ordinary private practice would not deal with, such as housing problems. Local authority housing expenditure has been slashed and the experience of law centres such as Hillingdon is of more and more requests for advice in that sphere. As a result, partly of Government policy, there are more homeless people and more problems for the homeless. In employment matters, centres such as that of Hillingdon now under threat, give advice at industrial tribunals and county courts on employment protection legislation and other relevant matters. The law centres give advice and representation on welfare benefits to various Government and local departments. On immigration, they help in the complex questions of law that arises in immigration and in delicate negotiations with Government departments and immigration officers. In the field of juvenile crime their availability for emergencies is very important.
The tragedy is, as I have indicated already, that law centres are placed to a great extent in the very areas which are subject to maximum pressure by the Government on local authorities not to increase expenditure. Yet it is those very authorities which the Government say should find the resources to support the law centres.
When legislation was passed in those long, long debates we had in that long summer to abolish the GLC and the metropolitan authorities the Government—and the noble Lord, Lord Elton, I remember so well—issued many assurances that important voluntary and advice services such as law centres would not disappear. But that is not happening. Those undertakings have not been and are not being carried out. The Government's position taken both by the Lord Chancellor—I regret the absence of the noble and learned Lord—and the Secretary of State for the Environment, is that the funding of law centres is a matter for local decision. I do not accept that. Equal access to justice, equality under the law and the provision of legal services are surely the responsibility of central Government. Where do we now stand?
The imminent prospects for the hundreds of thousands who depend on this country's 56 law centres are grave. Several law centres expect to close in April. Others may have to close or to cut their services. The Government's arrangements following abolition of the GLC and the metropolitan authorities are in chaos. Law and advice centres throughout the country, particularly in the metropolitan areas, do not now know—and we are now in mid-February—whether they will or will not be offering services to the public in April, in two months' time.
One third of our law centres are affected by this chaos and may have to close down or reduce services shortly. Three of them, Liverpool 8, Paddington and Hillingdon, will close unless there is help from central government and help quickly. Those three and Southall law centre have already issued redundancy notices to staff. Paddington has stopped taking on new cases. I opened Paddington law centre, in happier days perhaps, 12 years ago. It has 239 current cases of which, at most, only 10 per cent. are likely to be dealt with fully within the next six weeks. Of the remainder some will be transferred to private solicitors. Some will be transferred in other ways but all the group cases and many individual cases will be left undealt with and the people concerned will have to fend for themselves. The staff at Paddington I am told are particularly concerned about many women in the area who are victims of domestic violence and who trust the law centres as the place where they can come. Several have said in recent weeks that they do not know what they will do and that they will be unable to go elsewhere.
Paddington is a disadvantaged community and the contribution of the law centre there has been to bring knowledge of the law to people so that they are aware that the law can be on their side. This is one of the great values of law centres. That valuable service is in danger of being lost. The loss of Paddington law centre will also threaten the services provided at Bloomsbury and Marylebone county court on possession summonses day, as the other law centres in the area may be unable to provide the extra people for the service. Paddington provided much of the resource particularly for the private sector tenants in that service which may now be cut back or suspended.
Turning now to perhaps an even more harassed area, Liverpool: in the past 12 months Liverpool 8 law centre, which covers Toxteth, has started over 2,000 cases. The centre estimates that over 1,000 will be left high and dry. Much of its work is in tribunal matters, particularly those arising from the large number of DHSS problems that the centre deals with. Not only will these be left unconcluded, but the people in the area, particularly black people, are unlikely to seek or to get help elsewhere if the centre closes with all the problems that will arise in the future.
There is little prospect now of the law centres keeping going by replacing lost metropolitan council and GLC grants with grants under Section 48 of the Local Government Act 1985 upon which the Government placed so much reliance in our debates. That Act provides for district councils to jointly grant-aid voluntary sector organisation in their counties. Unfortunately, in Merseyside and the West Midlands there are no effective co-ordinating committees of the districts and hence no grants.
In London the joint grants committee decided on January 30th that advice services, including law centres, did not form part of (and I quote) "a pattern of provision" across London. That had been one of the criteria for grants. On that day they turned down the individual application by Paddington law centre. Other law centre applications (from Tower Hamlets, Hillingdon, central London and Hammersmith and Fulham) will be heard on 27th February; but on present form, unless there is a change of attitude both by them and the Government, many of those may well
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be rejected. The position of Hillingdon, the value of whose work I ventured to refer to, is that they are at the end of their tether. They are lobbying the Hillingdon council meeting on 27th February, seeking a change of that council's decision not to support the law centres.
It is in the other sector of the Government's post-abolition arrangements—namely, the transitional help for schemes within one district—where the most appalling under-financing and chaos now exists.
Within six weeks to go when those authorities are abolished, dozens of CABs, law centres, housing aid agencies and other voluntary organisations do not know whether they will be able to continue. They do not know whether they will receive a grant through these transitional arrangements. They do not know how much any grant would be worth. They do not know when they will know. I hope that we can have some reassurances about these matters.
Last week the Department of the Environment notified district councils of their final allocations of finance under the transitional arrangements. In many instances the amounts differed widely from the provisional allocations announced earlier. For example, Birmingham had £556,000 instead of the three-quarters of a million; Coventry had £53,000 instead of £100,000. The provisional allocations were themselves far less than was needed to replace metropolitan county council and GLC grants to voluntary organisations and less than the district councils' initial requests. Several advice and law centres depend on these grants to continue their services after April. Many now seem unlikely to receive them. Those that do receive them through the transitional scheme will probably get less than they need to maintain services. Southall and the three law centres in Wandsworth seem particularly vulnerable; but several others, including Salford, Dudley, Wythenshawe, Ealing, Brent Young Persons' Service and central London may well also be victims. This is just six weeks before abolition.
Several CABs, including Acocks Green, are in the same position. In Southall, for example, the hold on life is very tenuous. Ealing Borough Council made an initial request to the Department of the Environment, which proposed to meet £47,000 of the law centre's £100,000 per year cost. The provisional allocation by the Department of the Environment was 41 per cent. of the amount requested by Ealing Council. So the Southall law centre, again an area of much trouble, which is located where the need for law centre services is so great, does not know what is happening. Is it to be offered 41 per cent. or the £47,000, or more, or less, or nothing?
The other factor—which, because of time I must take shortly—that may cause advice and law centres to close down this year is the loss of urban aid grants. In recent years, the Department of the Environment has not favoured revenue grants for advisory services. Several law centres which have depended on the urban programme for years for their grants, are now being refused further help. Benwell, Hounslow, South Manchester and North Manchester have all been rejected, while Brent, Hyson Green, and Gateshead are all under consideration now and will be in very grave difficulties in surviving if they are turned down.
It is a dismal—indeed, a potentially grave—picture so far as order in our society is concerned. We are talking about the areas of the greatest need, the greatest despair, where there is the need for the most full and generous legal advice and assistance. The time is critical for several of the law centres and for many people living in these harassed communities. We must not walk on the other side.
7.46 p.m.
The Lord Bishop of Lincoln: My Lords, I should like to support the points that have been made by the noble and learned Lord, Lord Elwyn-Jones, in his very cogent speech which paints a grave picture with regard to the law centres. I should like to do it briefly from a particular angle. Your Lordships will know that two years ago the most reverend Primate the Archbishop of Canterbury set up a Commission to look into conditions in the inner cities. At the turn of the year it produced its report. The commission's report received some rather foolish and hysterical criticism from certain quarters before it was even published. Nevertheless, the report itself comes out of a very deep and wide penetration, by a whole variety of expert people, into the facts and the feelings—that is important: the facts and the feelings—of the most deprived areas of our land, the inner cities and the housing estates which often surround them.
The noble and learned Lord, Lord Elwyn-Jones, has quoted the Lord Chancellor's advisory committee's views on this whole subject. He said that they have said that the law centres are making a vital contribution to the whole area of legal services. I should like to add the sentence that comes before that, where they say:
"We think the law centres should be here to stay".
That is what is endangered. There is no question about the kind of need that they are meeting. A vivid picture has already been painted by the noble and learned Lord.
In the inner cities there are very few solicitors. People are unaware of their rights, often very confused as to how they may receive help and often frightened to ask. I know one law centre which was making 40 referrals a week to bodies such as Citizens Advice Bureaux, with whom the law centres work in very close contact. I think the fact that there are already plans for other law centres hopefully to be set up shows how great is the need.
I need not say more. I should simply like to close by quoting again from the Lord Chancellor's advisory committee's 34th report (and we must remember that so far nothing is in view after April):
"The lack of clear Ministerial responsibility and direction for the legal services is a chronic problem. Actual and proposed changes in the urban programme policy and local government arrangements have made it an urgent problem".
I hope the Government will deal with it with the urgency that it requires.
7.48 p.m.
Lord Hutchinson of Lullington: My Lords, it gives me particular pleasure to follow the right reverend Prelate the Bishop of Lincoln because I know from
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personal experience his deep interest in these kinds of social problems. I think we all welcome his presence here at this late hour on this topic.
In addressing the House on this very important subject, important to any lawyer let alone to anyone who believes that justice is at the bottom of our system of democracy, I make certain presumptions which I hope I have made with justification. I presume that the Government first of all believe that every individual has certain civil rights, be he rich or poor; that every citizen should if possible be made aware of those rights and that the state has a duty to facilitate that awareness; that when those rights are affected the citizen should know where to turn for advice and assistance; and that the deprived and disadvantaged should be able to obtain that assistance at public expense.
If the Government agree with those statements—and no doubt the Minister in his reply will tell us whether he does—then I ask this question of the Minister. How can the Government stand by and allow numerous law centres to die which have been set up in the most depressed areas of the country, simply because local authorities cannot or will not support them financially and no Government department will accept responsibility for them?
The total cost of the law centres is something between £5 million and £6 million a year. Fifty-six of them, 24 of which are now in real danger of closure, nearly all in rate-capped areas, dealt last year with 400,000 cases. They are set up in areas in which, as the noble and learned Lord has pointed out, there are few solicitors' offices; they are open all day, and indeed I think that no fewer than 20 of them have been providing 24-hour duty solicitor schemes for a considerable time. They give advice to people whose problems are not on the whole covered by legal aid schemes and where the green form scheme is simply inadequate or inappropriate, as has already been said, in housing law, welfare, immigration, child care, juvenile crime, particularly, debt problems, evictions and so on.
Few private practitioners have expertise in these particular areas and, in any event, cannot afford to take on this unrenumerative work. Again, cases are often much more effectively and efficiently undertaken through group work where families or whole streets or buildings are affected in planning or environmental matters, for instance at Coin Street recently, where the residents' interests were protected through the Lambeth local law centre by two individuals, whereas the other parties to the proceedings spent thousands of pounds on that long planning inquiry.
The law centre is an unfrightening and welcoming place and people in deprived areas simply do not go to solicitors' offices even if they can find them. If one takes the county court, the law centres provide services near the county courts or at the county courts which save literally thousands of pounds. Evictions lead to homelessness and to putting the families into bed and breakfast accommodation and so on. Tenants appear unrepresented and enter into hopeless obligations which they cannot fulfil and I understand that the turn-up rates at county courts where there is no legal centre are sometimes not as much as 50 per cent.

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This is a very sensitive area and the law centres can do an enormous amount by seeing these people before they appear in court, by seeing that they only enter into obligations that they can undertake and so on. In any event, the demand for law centres is clearly and overwhelmingly proved by the attendance all day at these centres. The Law Society and the Lord Chancellor's advisory committee have inquired in depth into the question: can the provision of legal services now or in the future be safely left to the private profession? Their reply is an unequivocal and clear, no.
Law centres are doing a vital job, and there is a need indeed for an increase in law centres across the country forming a crucial part of the network of legal services, and for the Lord Chancellor to be responsible for the core funding of these law centres. They are incredibly cost-effective, they operate on a tiny underpaid professional staff backed up with very substantial voluntary work from solicitors and barristers working for nothing—members of the so-called grasping profession.
If the professional basis goes then the volunteers go, too. In certain fields this is a far more appropriate use of resources than paying lawyers under the legal aid scheme, as the advisory committee itself pointed out. And, as they reiterate in their latest report, the basis of provision of legal aid is that the individual should be able to get early advice. This he can do from solicitors, from CAB, but particularly and above all from law centres, and so save the costs of litigation, save the cost of court appearances, and save wasting hours of time.
It is now recognised by almost everybody who has looked into this matter, except the Government, that law centres form an essential part of the legal services of this country. The Lord Chancellor's advisory committee have told the noble and learned Lord that they deplore the fact that the Government have failed to respond to the Royal Commission on legal services by not developing a coherent strategy for legal services across the country. They deplore the fact that the Government have failed to fund the centres so that they have proper security to enable them to pursue recruitment and staffing policies; they deplore the fact that the Government have failed to integrate these centres into the legal services network of the country and, as I have already said, they have advised the Lord Chancellor to provide the core funding.
It is the noble and learned Lord the Lord Chancellor who is at the centre of this Government failure; yet it is really regrettable that he is not here tonight to deal with some of these questions which are so crucial. We are told that the noble and learned Lord the Lord Chancellor has no authority to take on law centres, but he funds seven law centres and his own advisory committee continues to advise him to do so. How very odd that they should do that if they know that the Lord Chancellor has no authority to do it.
In a recent debate in this House, I was taken to task by the noble and learned Lord for not knowing my constitutional A.B.C. so that it is with some trepidation that I would point out that the noble and learned Lord the Lord Chancellor is responsible, apparently, for legal advice and assistance—but not for the law centres where the poor get their legal advice and assistance. He is responsible for the courts, the magistrates and the judges who work in them, but not
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for the procedures followed in the courts. He is responsible for criminal legal aid, but not for the duty solicitors who tell the defendants how to get criminal legal aid.
All this would seem a most powerful argument for the setting up of a Ministry of Justice where all these vital matters could be dealt with responsibly and together. But, as it is, some law centres are funded by the Department of the Environment, some by the Lord Chancellor's department, and some by local authorities, although there is no statutory duty upon them to do so, and by voluntary bodies. All of them are in a state of complete uncertainty and half of them are liable to close. Every single one is doing a vital job where it is most needed in these deprived areas of the country.
May I refer very shortly to two examples which have been referred to already by the noble and learned Lord, Lord Elwyn-Jones: first, Liverpool 8. This was set up largely through the unstinted efforts of the combined churches there; 60 per cent. of the managing committee are black, 40 per cent. of it are women, there are seven staff and they have been funded by the Merseyside City Council. The centre serves the whole community. They have issued a guide in Hindu, Urdu and in English. There is such a need there that only by a system of rigid appointments can they cope with the cases which come in every day. And they will close down when that authority goes.
Paddington is another example to which the noble and learned Lord also referred. May I tell your Lordships, as an example, what is happening. Funded by the GLC, the London Borough Grants Committee decided that law centres should be funded by district councils. Westminster issued a grandiose proposal for funding the voluntary sector. They refused to take up transitional finance and their main purpose, they say, was to provide financial assistance to voluntary organisations with a first priority to help the underprivileged and the handicapped and those in need.
So far as Paddington Law Centre is concerned, no grant is forthcoming. The centre needs £75,000 by the 28th February, or it closes. Westminster says, "Oh, you can go in for our pound-for-pound scheme". The centre has spent hours over this and has approached 500 organisations and charities. At the moment it has raised £200. What is the use in any event of this sort of exercise on an annual basis to raise funds for a serious and vital social agency such as this?
The West London Law Centre says that if it closes there can be no question of private practice filling the vacuum. All the local solicitors have written in to the same effect. I quote only one firm, very well known to me, which says this:
"We have always been impressed with their humane approach, assistance and help for the less privileged members of this community. There is an abundant need for the services they provide. The area in which Paddington Law Centre is situated contains a substantial number of immigrants, unemployment, single-parent families, generally destitute and often homeless; and it is these under-privileged and needy people who will suffer most".
I say to the Minister: are the Government simply content to let that law centre close down? Are they content to let the law centre in Liverpool close down? Are they content to sit back and say, "We are not responsible; the Lord Chancellor's Department is not

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responsible. The local authority is responsible. We know that they are ratecapped and they have not got the money. We have the evidence that they are not going to be supported by the local authority, but nevertheless we will sit back and let it happen". I shall be interested to hear from the Minister whether in fact that is the view that the Government take.
The plain fact is that these centres will be lost. They are a vital part of the provision of the legal services. They are doing a crucial and unique job of work for citizens who need legal services more than any other section of the population. It is a scandal that central Government are prepared to see them go under on the basis, as I say, that no department of state is prepared to take the responsibility and because, with wholly inadequate transitional help and rate capping, the local authorities cannot support them either.
In my submission, clearly it is the Lord Chancellor's own advisory committee which presumes that responsibility lies in his department. It is surely for him to tell the House what he intends to do about it; but, in his absence, it falls to the Minister. I am sure all your Lordships will be eager to hear whether he is prepared, on behalf of the Government, to accept this vital responsibility.
8.4 p.m.
Baroness Macleod of Borve: My Lords, at this late hour it is very difficult for me to follow three such very eloquent speeches, and I have been looking forward with trepidation to my own, rather humble, few words.
This is a particularly interesting Question because I think every Member of your Lordships' House whether here in person or outside, would agree with me that to help people in need, whatever their need may be, is one of the things which noble Lords throughout your Lordships' House would wish to do. Whether it is to help them to obey the law, whether it is concerned with housing or whatever their problems may be, it is very important that such people should be able to go to specific persons to ask for advice.
While I was listening to the noble and learned Lord, Lord Elwyn-Jones, however, I wondered whether his Question tonight was not perhaps a little premature. My reason is this. The 1st April has not yet arrived, and we know from the press, the media and various other organisations that local authorities are still unable to make up their minds how much money they are going to allocate for all sorts of different projects, from the arts and voluntary organisations to, perhaps, in this context tonight, the law centres, with all the other pressures that they have on them. With respect, I would suggest that as the local authorities are themselves responsible, because of their flexibility and because of the differences in the way they manage their local boroughs, it is up to them to decide what they want to spend their money on.
As the noble Lord has said, the local law authorities will perhaps finance the law centres with the aid of grants, and in certain inner city areas we know that there are grants to be had. There are 59 law centres, and I know there is general agreement in your Lordships' House that they fulfil a useful and necessary service in certain areas. However, I do not think we need feel that they are needed nationwide.
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They are needed, as noble Lords have said, in certain areas. That is perhaps why at this time there are only 59 law centres in being.
I am very grateful to the noble and learned Lord for not having instanced two law centres this evening. He made a wide-ranging geographical comment on many law centres, but I am lucky enough to know two others to which I do not think the noble and learned Lord referred. They are Haringey and Tottenham. I spoke to the heads of the law centres this afternoon, and it was very interesting to note that although those two boroughs are coterminous they treat the problems of their citizens completely differently. For instance, Haringey have no citizens advice bureaux, but they have an enormous advice bureau which deals with over 15,000 inquiries. They assure me that if there is anything they cannot deal with in the field of law they ask for a qualified lawyer or solicitor to come in and give them advice.
Tottenham, on the other hand, has a law centre. They deal with welfare rights, and they deal with housing, immigration, legal aid and what is, of course, an interesting subject to me, the giving of advice on juvenile crime. On the latter point, if a child has got into a problem then the parents of the child can come to the law centre and ask for advice on what to do about that particular problem. They deal with just over 5,000 inquiries, which are augmented by a mass of telephone calls. But what was also interesting to me, knowing the area, was that Tottenham and Haringey go together and provide a 24-hour emergency service.
As I have said, it is interesting that these coterminous boroughs find that it is possible to help all the people within their boroughs on a completely different footing. As other noble Lords have said, the Citizens Advice Bureaux are the main voluntary service in this country to whom people can apply for help and guidance about a wide cross-section of problems that they have and there are over 1,000 Citizens Advice Bureaux in our country. But of course they cannot deal with everything and they transfer to other authorities those questions with which they are unable to deal: for instance, the very special services of the lawyers and the solicitors.
The Government are committed to ensuring that worthwhile organisations—and I am sure that those we are talking about tonight will come within that category—continue to be supported. But I should like the Minister to confirm, perhaps on behalf of the local authorities—which will be difficult because there are so many of them, they are autonomous and they can make up their own minds how they spend their money—that money will be forthcoming to help those organisations. I must finish by paying a very sincere tribute to all the voluntary organisations which help—sometimes slightly paid, sometimes entirely voluntarily—with their wisdom and expertise throughout the country. I should particularly like to pay my tribute to the solicitors who give of their time and expertise to those in need.
8.13 p.m.
Lord Pitt of Hampstead: My Lords, I find it difficult to follow the last speaker. We are dealing with a very serious issue, the issue of how we enable ordinary people in the poor areas to get legal aid which is not

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available other than through the law centres. The reason the law centres grew up in the areas where they are, is that in those areas there are not usually ordinary solicitors because the service is not lucrative. They have grown up because there are a lot of subjects which concern the poorer sections of the community and which do not carry legal aid. That is the point about the law centres.
Law centres have two particular values. First, they are in areas which are otherwise not well served by solicitors: and, secondly, they deal with subjects which other solicitors do not deal with, sometimes because they are not subjects to which they have become accustomed and sometimes because the service is not lucrative. I was very glad about the way in which the noble Lord, Lord Hutchinson, put the issue. But if we believe that people should get legal advice and should be advised as to how they can defend themselves, how they can benefit from the system in the society in which they live and how they can take care of their families in difficult circumstances, then we should be pleased that these law centres are in existence.
If we are pleased that these law centres are in existence, we should want them to continue; but if they are to continue they must be financed. We should like the Government to recognise these facts and provide co-finance for these services. I am not necessarily suggesting that the Government should meet all the costs of each legal advice centre but that the Government should provide core-finance. The centres can then get additional finance from the local authority, from charitable trusts and from other organisations in their areas. So far we have not succeeded in getting the Government to see this point.
The noble and learned Lord the Lord Chancellor funds seven. It seems that he is funding them only because he saw them being funded and thinks that he has to carry on as they are there. He obviously does not think he has to do more than that. There is also the Government's urban aid which is helping some of these law centres. Of course some local councils provide finance for many of them.
The Government told us that they would remove the upper-tier of the metropolitan authorities, and that the lower-tier would continue. I remember that when we had our debate on voluntary services we were reassured that of course the lower-tier authorities would have finance and would take care of them. Even though we were assured that there would be no hardship because there would be a transitional government grant, we have now come to the reality.
The reason I said that I could not follow the last speaker was that we are now in the middle of February, which means that we are less than six weeks away from the date on which those upper-tier authorities will cease to exist and the lower-tier authorities must take on the job. I have been in local government for many years and one does not, in the middle of February, not know what one is going to do on 1st April. Therefore the idea that in the middle of February you still have to wait to see what happens on 1st April is nonsense.
We have an example of what we warned the Government would happen. We have Paddington, which is in Westminster. Westminster can afford to
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finance Paddington. Westminster benefits most from the fact that the GLC is being abolished, but Westminster has never been prepared to meet its real share of the cost of running London. That is why Westminster has been in the forefront of the agitation to abolish the GLC. That is why Westminster is going to court to stop the GLC from helping voluntary organisations. It does not want to finance Paddington. We are told that the cost will be £75,000, which is chickenfeed to Westminster, but it has no intention of helping the poor people in Paddington. There is also Liverpool 8. In that case, the situation is different. What has happened is that up until now the machinery has not been created to enable the grant which the Merseyside county council gave to Liverpool 8 to be continued. I hope the Minister will tell us that some machinery has been found for dealing with that.
Then we have Tower Hamlets which cannot afford the law centre. We always knew that would be the trouble when we abolished the GLC. The Government knew it. With the abolition of the GLC and with Westminster not prepared to help the other poorer boroughs, poor boroughs such as Tower Hamlets cannot afford to meet the cost of basic services. This is where we are. However, the Government can do something about it. The noble and learned Lord the Lord Chancellor ought to be prepared to deal with the matter because it is part of legal services and ought to be dealt with through the Lord Chancellor's department. But I am not too disturbed about that—I am waiting to gain the attention of the Minister who is at the moment chatting with his advisers—because the Government can commit themselves right now to meet the cost of law centres through the means of urban aid. They can do it. They have done it with some and they can undertake to do it with all. That would be a way of the Government financing it without having the battle as to whether or not the noble and learned Lord the Lord Chancellor thinks he has the power.
I hope that when the Minister replies he will tell us that the Government have recognised the value of the law centres, that the Government have recognised the need that they should continue to be financed and that the Government recognise that they can meet the cost of the law centres and that they will do it through the urban aid programme. That is straightforward and can be done. I am hoping that that is what the Minister will tell us.
8.22 p.m.
Lord Elystan-Morgan: My Lords, this debate cuts completely through every party boundary. The value—the inestimable value—of law centres has been long acknowledged not only by the Labour Party but by the Alliance Parties; and, indeed, in a fairly recent publication by the Society of Conservative Lawyers it was firmly enunciated that the establishment of law centres and the part which they play in the life of the community at large is something which accords completely with the Conservative philosophy. Therefore there is no theological difference in terms of politics between anybody in relation to this matter.
My noble and learned friend Lord Elwyn-Jones has for the second time in nine months placed the House very deeply in his debt on account of having raised a

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matter of such very considerable public significance and importance. The picture that he has painted, the accurate and living case which he presented to the House, was complemented totally by the contribution of the noble Lord, Lord Hutchinson. Although I could add a number of factual instances myself, I do not think that it is necessary to do so. The case is an overwhelming one. Even if one, to use the words of St. Paul, had the tongue of men and angels, I am sure that it would not possibly advance what has so powerfully been put before the House already.
The situation of law centres in this country at the moment is bleak and miserable. It is bleak because there is every reason to believe that unless the Government intervene, the total amount of money at present invested is inevitably going to fall. It is miserable because, according to the 35th annual report on legal aid by the Law Society, 27 of the 54 law centres in existence at the present moment find themselves in the direst jeopardy, and unless there is some nova causa interveniens they will not survive over the next six to nine months. The situation is as simple, as clearcut and as brutal as that.
There can be no doubt whatsoever about the value of legal centres. Nobody in this House would seek to argue to the contrary. The Benson Royal Commission on Legal Services reporting in 1979, as the House will remember, spoke of legal centres as,
"having an impact out of all proportion to their size".
The Commission went on to recommend that there should be a comprehensive network of such centres over the whole country. Indeed every authoritative report and every commentary upon this field has come to exactly the same conclusion; for it is clear, as has already been so cogently proven by others in this debate, that they provide a service that could not be provided in any other way.
For some reason or other millions of our fellow citizens would not go to a solicitor's office even if they were assured that it would not cost them a penny. They have the same disinclination to go there as if they were to submit themselves to the tender mercies of the Spanish Inquisition. It may be that they follow all too closely the words of Anthony Trollope who said:
"There is no more miserable place on earth than the waiting room of the common attorney".
I know that to be a fact as one who in earlier days practised for many years on that side of the profession before coming to the Bar. It is against such a background that one should look at this problem.
Some localities in this country are practically not covered by legal services. There are areas of legal interest which in practice are not covered for millions of people. It is only by the work of legal centres that those people are able to have a chance of having their legal rights upheld. One refreshing feature is that the moment a legal centre is established in an under privileged area there is then the prospect of private firms moving in and indeed of private firms that are already in the locality extending their area of interest to cover those very subjects about which this House has already been talking.
In or about 1976 the Law Society commissioned a very important survey in certain London boroughs. It
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was a survey on the utilisation—or rather the underutilisation—of legal services. I am afraid that I cannot quote chapter and verse—I have come very lately into this debate to speak in the absence of my noble friend Lord Silkin of Dulwich—but the findings of that survey as I remember them showed that there was a massive under-utilisation of legal services by most ordinary persons. The survey showed that well over 60 per cent. of people who died leaving property of more than 10,000 in value died intestate; that well over 70 per cent. of substantial personal injury claims where there was to say the least a fightable case were never taken up; and that 40 per cent. of fatal accident cases, where there was a substantial run on liability, were not taken up. So the survey went from one heading to another. It was obvious that even with the full benefits of legal aid millions and millions of our fellow citizens will not use solicitors' services which are provided unless they are provided in attractive circumstances such as we have in legal centres.
The point was made by the noble Lord, Lord Hooson, in the debate on 8th May, that the centres were shop windows in shopping centres, providing a 24-hour service, day in and day out, throughout the whole year. The centres are staffed by people of warm humanity; dedicated people who, more often than not, are providing their services wholly voluntarily. Often they are young people who are forward-looking and who are able to gain the confidence—to wean, as it were, the confidence—of the people who go to see them.
I do not believe that any tribute is too high to be paid for the efficiency of the centres and for the invaluable role that they play in the lives of our communities. It is a role, as I have said, that cannot and will not be borne by any other agency. The Minister's task in replying tonight—and I fancy that it is an unenviable task—is to say whether the Government are to proclaim their position in terms of massive goodwill but doing nothing, or whether the Government, in the light of the debate on 8th May, have reconsidered the situation.
It is perfectly clear that the funding cannot come from local government. That is the trouble already. The law centres find themselves in jeopardy because of a trinity of factors; the abolition of the GLC and the metropolitan county councils, the temporary nature of the urban aid programme, and the general situation in which local government bodies fund themselves having to exercise agonising and utterly impossible decisions that would test the wisdom of a Solomon in relation to priorities, all of which are utterly worthy and meritorious.
It is not appropriate for local authorities to fund law centres even if they could do so, for the simple reason that a substantial number of cases the centres are dealing with matters in which the individual finds himself or herself in conflict with the local authority. It is therefore an altogether unhealthy principle to look to local government for funding.
The noble Baroness, Lady Macleod, in a thoughtful speech, as always, made the point that it may be too early and too premature to fire a shot across the bows of law centres, bearing in mind that there is still some time to go till 1st April. All I can say to that is that if

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we do not fire a shot across the bows now then the ship will be on the reef very, very soon.
It is not just a case of the new bodies having to confront all manner of frustrating and agonising issues. In many cases they are not bodies that have been affected by the legislation of 1984 and 1985. There is the instance of the Adamstown Law Centre in Cardiff—and I am indebted to my noble friend Lord Prys-Davies for this information. As to the productivity of that centre, in 1984 it dealt with 560 cases. In 1985 the number was 706. At the beginning of this year the centre had a 26 per cent. increase in general work as compared with January 1985. There was an 85 per cent. increase in landlord and tenant cases. But, so far as the grant is concerned, it is not a question of waiting till 1st April. For the next financial year the centre has only 75 per cent. of its running costs. I suspect that that situation is duplicated in many other cases up and down the land.
It is ironic, as other noble Lords have reminded us, that tonight we are talking about survival of the 54 centres already in existence rather than about the network of law centres that the Benson Committee demanded for the whole country. The noble Baroness, Lady Macleod, said that there is no such necessity in all areas. I accept that; certain underprivileged areas have needs that are far more acute. However, there should be a national network as Benson argues for it.
In my submission, the only department that can handle this matter is the Lord Chancellor's Department. I appreciate that an unfortunate conflict of jursidiction has arisen between the noble and learned Lord's department and the Department of the Environment, but, as I understand it, no legislation is necessary. I say that with trepidation even in the absence of the noble and learned Lord the Lord Chancellor, for I have no doubt that he might well give me the same lesson in the ABC of constitutional principles.
However, my understanding is that under the Appropriation Act the noble and learned Lord the Lord Chancellor has been paying for seven legal centres for many years—as indeed did my noble and learned friend Lord Elwyn-Jones. Nobody suggests that such is an unlawful payment. Woe betide those two noble and learned gentlemen if that be the case! If it is lawful to pay for seven legal centres, then it is lawful to pay for 70. If it is lawful to pay X thousands of pounds, then it is lawful to pay Y millions of pounds. It must therefore be that this is a situation where, although there is no specific obligation upon the Lord Chancellor—I grant that—nevertheless there are the general legal powers enabling him to meet such an obligation.
I have spoken at far greater length than I had intended. The value of law centres is not in issue. They perform a priceless task in the life of the community. If they do not perform that task then it will not be performed at all and millions of people will be denied the needs of justice in that connection. The only funding that is practicable is funding from the Lord Chancellor's Department. We shall await with great anticipation that which the noble Lord has to say on this particular issue, for all the goodwill in the world will not save one law centre unless the Government are prepared to act.
8.37 p.m.
Lord Hooson: My Lords, the noble Baroness, Lady Macleod, raised the point in an otherwise eloquent speech that this was a premature Question raised by the noble and learned Lord, Lord Elwyn-Jones. I could not disagree more. The shot across the bows to which the noble Lord, Lord Elystan-Morgan, referred was surely on 8th May. The vessel has been proceeding in the same unacceptable direction ever since, with no lifebelts and no lifeboats offered by the Lord Chancellor's Department.
If I may say so, as I did in the last debate, I think it is highly regrettable that the noble and learned Lord the Lord Chancellor is not replying to this debate. This matter is one of fundamental importance to the country. I do not mean to be in any way offensive to the noble Lord, Lord Skelmersdale, who will no doubt reply in his usual and charming way to this debate, but what we really wanted was to have the noble and learned Lord the Lord Chancellor state exactly where the Government stand on this issue.
We in the Alliance parties believe that the case for effective law centres in our deprived inner city areas is beyond all doubt. The people need the services that the centres provide. I am sure that no Members of your Lordships' House—and least of all those who have served in another place and represented constituents—will be unaware of the fact that many people in our communities are ignorant of their legal and social rights. Even more so are they nervous and tentative about challenging the power, and sometimes the misuse of power, of those whom they regard as big brother, or of the local council, the rapacious landlord, the sharp salesman, and so on. Such people turn for advice. It was part of the duty—and often a very rewarding duty—of the conscientious Member of another place to give guidance, help and advice to such people.
It seems to me—and when I was in another place I only represented a rural area—that the problems that a constituency Member could appreciate were increased tenfold in the inner city areas, where one did not have the kind of coherent society that one so often has in the more established areas of this country. I think it can be said of all parties and all governments that we have over the past 30 years underestimated at all times the enormous social problems, the economic problems, the educational problems and the racial problems in our inner cities. We have so underestimated them that we now have very real problems facing us. It was to fill the gap in the legal services that law centres were invented. In the last debate on this subject I set out the attractions of the law centres to the people who dwelt in the inner city areas.
Therefore it is my view that the need for these centres is overwhelming. What I am concerned with, and what all your Lordships are concerned with this evening is: what is the Government's attitude? The Government give the impression that they would weep no tears if the law centres disappeared altogether. They are following a policy which, it seems to me, indicates a willingness to wound the law centres and a reluctance to kill: that is, they are prepared to follow a policy or to take up an attitude which almost inevitably means, in the longer run, that more and more of our law

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centres will disappear, and to do nothing about it. They pay lip service to the value of the law centres yet do nothing coherent about them.
What is the policy of the Government towards law centres? Do they intend to make sure that law centres continue? Or are they content to see the local authorities in some cases unwilling for perhaps political or social reasons to fund the law centres and in other cases having so many conflicting financial demands that they are unable to finance the law centres? I think we are entitled, following the debate of last year, to ask the Government to come out this evening with a coherent statement of their policies on these matters.
The lack of policy approach towards the law centres is. I think, also reflected in the lack of financial approach. We have some law centres financed by local government, some financed by the Department of the Environment and some financed by the Lord Chancellor's Department. Where is the coherence in that policy? In the 1984 report of the Lord Chancellor's Legal Aid Advisory Committee there were several recommendations and I shall simply quote two of them. The first is:
"That law centres should be treated as an essential part of the national network of legal services, that your Lordship"—
that is, referring to the noble and learned Lord the Lord Chancellor—
"should take on responsibility for their core-funding and that the basis of that funding should be sufficiently assured to allow law centres to pursue viable recruitment and staffing policies and to promote long-term planning".
The noble Lord, Lord Skelmersdale, will undoubtedly remember that this was the recommendation in 1984, so the Government have had a long time to consider it. We are entitled to know this evening whether the Government accept that recommendation, and if they do not, what qualification they put on it. Do they accept part of the recommendation? If so, what part?
The second recommendation is:
"That the first priority should be to ensure the survival of existing law centres without waiting upon the aftermath of changes in local government and Urban Programme policy to see what support Borough and District Councils choose to provide".
That is the priority which was recommended and the Government have shown no intention so far of accepting that for priority treatment. They have been content to say that they will leave it to the local authorities. That is simply not good enough. We are talking about an essential service for the inner city areas.
I am rather inclined to agree with the noble Baroness, Lady Macleod, that in many parts of the country law centres of this kind are probably not necessary and that the work is perhaps done by Members of Parliament, local solicitors, the Citizens Advice Bureau, and so on; but I think that the problems of the inner city areas are on a totally different scale and in a totally different environment. In those areas this service is, I believe, essential and we shall be very disappointed indeed if the Government do not this evening, at the second prodding—this time a much more powerful shot across the stern of the departing vessel—give some indication that they are
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sympathetic to this movement for law centres and that they appreciate the service they provide for many of the deprived people in our country.
8.46 p.m.
Lord Skelmersdale: My Lords, it is with some feeling of déjà vu that I begin with what the noble Lord, Lord Elystan-Morgan, called the unenviable task of replying to the noble and learned Lord, Lord Elwyn-Jones, as it was in response to the noble and learned Lord some nine months ago that I last spoke on this issue. I think I am right in saying that this issue was first raised in your Lordships' House. Nevertheless, the House is again fortunate to have the opportunity to debate what steps Her Majesty's Government are taking to safeguard law centres threatened with closure. I can assure the noble Lord, Lord Hooson, that I do not feel that I am in any sense the Government's stern.
I should like to start by agreeing with every noble Lord who has spoken that law centres are a good thing. The question this debate has been about is: where do we go from here? Last year I made clear the Government's view on the funding of and responsibility for law centres. I am now able to take this opportunity to reaffirm our position on this issue and also to respond to the continuing concern of the noble and learned Lord who is an indefatigable champion of the law centres movement. I must remind noble Lords that law centres are voluntary organisations. They are not, and never have been, a statutory part of the framework of legal services.
Noble Lords spoke of needs. Who—or rather what—does and should identify that need? The answer must be local circumstances and people. The law centres are set up in response to perceived local needs. They do not enjoy an entitlement to public sector funding over and above their earnings under the legal aid scheme. They must seek support on a local basis from local authorities by convincing those authorities that, at a time of public expenditure restraint—and I shall come back to that point—their services are sufficiently valuable to merit local authority funding. As I have said before, these are decisions which local authorities must make.
Noble Lords have mentioned tonight decisions by individual local authorities, such as the case of Westminster referred to by the noble Lord, Lord Hutchinson of Lullington, not to fund law centres. Who am I to say that if any council does not rate a particular law centre as of sufficient priority to get support, in the light of local needs and conditions, that it is wrong? What are local authorities for if it is not to take that kind of local decision?
I should now like to turn very briefly to the role of the urban programme in funding law centres. We should never lose sight of the fact that the overall objectives of the urban programme increasingly reflect the need to target resources on initiatives to regenerate depressed local economies and improve the opportunity for jobs in our inner cities. Law and other advisory services are consequently among schemes which must now take a much lower priority for this source of funding. There is certainly no prospect that the urban programme will be able to help realise the objective of a centrally funded, national network of law centres.

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The noble Lord, Lord Hooson, spoke about a willingness to wound and a reluctance to kill. That simply is not so. Within the limits of our policy priorities we have been able to offer some help to law centres. When I spoke on 8th May last year, I undertook to clarify the position of the seven law centres given only two years' initial funding. My right honourable friend the Secretary of State for the Environment decided to offer up to two years' additional urban programme support, on the basis of a tapered grant—75 per cent. in year three and 50 per cent. in year four. Each local authority would have to accept these conditions by formally submitting the law centres for the additional funding. To date, acceptances of the offer for the Bristol, Wolverhampton and Brighton law centres have been received and I understand that the other centres are also likely to be submitted for extended funding.
I would say to the noble Lord, Lord Hooson, that what I said last year is coming to pass. The two law centres in Lambeth which were the cause of much concern when we debated this issue then, duly reached the end of their period of urban programme funding, and subsequently received continued funding from—guess who?—the borough council. The great majority of successful time-expired urban programme projects receive replacement funds from the local authorities.
I hope that the House can appreciate why the priorities of the urban programme as a whole must take pre-eminence over the long-term requirements of any specific initiatives which I may help to start up. We are currently being pressed by noble Lords opposite to tackle unemployment with the utmost vigour. The increasing emphasis in the urban programme on economic and employment measures is only one of a great many initiatives we have taken in this area, and I take it amiss that we should, by implication, be criticised for this.
I shall turn in a moment to the particular issues of abolition and constraints on local authority spending, which noble Lords have mentioned. However, first I should like to dwell for a moment on the role that law centres play in our legal services.
In our response to the report of the Royal Commission on Legal Services, the Government said that they took the view that the needs of the public for legal assistance were most appropriately met by lawyers in private practice, in this context under the legal aid and legal advice and assistance schemes, supplemented, where this suits local circumstances, by law centres. It said that the Government
"does not believe that a sufficient case has been made for any direct ministerial responsibility for the availability of legal services in any particular area".
However much noble Lords might deprecate this—and they have made their feelings pretty clear to me this evening at least—that is the Government's strategy.
My noble friend Lady Macleod mentioned the role played by citizens advice bureaux. It is of course the case that law centres are only one of a number of local arrangements made for the provision of general and legal advice, including citizens advice bureaux which the Royal Commission on Legal Services, I might add, saw as the front-line provider of such services. Citizens
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advice bureaux have developed various arrangements for making legal advice available, either by referring cases to private practitioners or themselves providing the services of lawyers directly. Voluntary organisations are of course independent bodies and they must decide for themselves how they should be organised. Public funders, however, do need to avoid supporting a proliferation of advice services. In 1984, for example, the community projects review, prepared for the Department of the Environment by a team including private sector and voluntary sector representatives, concluded that local authorities should not consider advice projects as separate entities but should consider their funding within a local strategy for such services. So there are different routes which might be followed to achieve the desired result in any area.
I would say to the right reverend Prelate the Bishop of Lincoln that the Government have no quarrel with law centres. The Government accepts that law centres may well have a role to play in providing legal advice in certain areas. They do not deprecate the efforts of law centres and indeed, in the past, have offered them considerable—not to say generous—support. Over the years many law centres have been given the opportunity to start their lives with urban programme grant aid. In 1985–86 about £2.2 million worth of urban programme support was given to 28 law centres. Over the same period, the Lord Chancellor's Department provided £628,000 of direct support for seven law centres. As many of your Lordships are aware, this is an exceptional measure taken, as we well know, as a result of decisions made by the noble and learned Lord, Lord Elwyn-Jones, in his period in that high office. There have been calls for this support to be extended to other centres; but it has been made clear on a number of occasions recently that my noble and learned friend does not consider it is open to him to do so.
He has no specific statutory authority to fund law centres but, even if he had, his department possesses neither the administrative nor the financial resources to take on this responsibility. And I can make it clear once more that there are no present plans to change the current arrangements for responsibility in respect of law centres.
Furthermore, the primary objectives of the Lord Chancellor are the administration of the courts and the provision of resources to the legal aid and legal advice assistance schemes. My noble and learned friend does not consider it appropriate that he should assume direct and general responsibility for the funding of agencies involved in the giving of advice to, and the representation of, litigants.
Putting aside all questions of propriety however—and here again I think it was the noble Lord, Lord Hutchinson, who mentioned the point of the propriety of having local authorities funding the law centres and I have explained now that there is an equal question of propriety in the Lord Chancellor's Department doing exactly the same thing—there is the question of resources generally. The claims in respect of law centres cannot be looked at in isolation from other demands on the resources which are available or from other demands on public expenditure generally. Expenditure on the legal services programme has increased significantly in recent years and spending on

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legal aid has, in the lifetime of the present Government, doubled in real terms and trebled in cash terms. The scope of legal aid has been extended in a number of respects and the level of financial eligibility maintained in real terms. Nevertheless, there are regularly calls for more to be done, just as there are calls of the kind which have prompted this debate in your Lordships' House. Concern has been expressed about the effect of restraint on local authority expenditure, and of abolition, on the funding of law centres. On the first of these issues, the majority of local authorities have, over the years, behaved responsibly and adjusted their spending policies in line with the overall requirements of national economic policy—under all governments. The Government have had to act, by means of rate limitation, in respect of a tiny handful of authorities who have not accepted the constraints imposed by our economic situation, and which are the highest overspenders in the country. Such authorities, like the rest of us, will have to cut their coats according to their cloth. But the limits that we have set are ones to which other authorities have been adjusting over the years, and they are not ones with which authorities cannot cope. There will still be room—and the greater the efficiency improvements the greater the room—to fund voluntary projects which serve the needs of the area.
On the question of overall spending restraints, the same applies. Clearly law centres cannot be protected from the general expenditure pressures, but there is still room to support them if the local authorities value them sufficiently highly.
As regards abolition, I realise that successor authorities are taking different spending decisions from those which the Greater London Council and the metropolitan counties have been taking. I welcome that, but the former's profligacy is not something which one would want to be inflicted on, for example, London's ratepayers for longer than necessary. But where voluntary bodies are concerned the Government have taken several steps to ensure that local authorities are in a position to continue funding worthwhile groups.
I must here reply to the noble Lord, Lord Pitt, who based his speech on particular aspersions as to what the Government were doing and had been doing in this respect. First, there is the rate support grant settlement, where we have given successor authorities not a bit but 100 per cent. of the resources that the GLC and the metropolitan counties would have had—and this of course includes the law centres, which those authorities have supported in the past. Furthermore, this year's settlement has of course recognised the special needs of the inner cities, where law centres are most prevalent. This might have been brought home to your Lordships as well as it has been to me by the loud protests of shire counties that have demonstrated just this in recent weeks.
Second, there is the additional transitional grant which we are giving to successor authorities in support of £20 millions' worth of local voluntary projects. Allocations were announced last week. The effect of this is to make it cheaper for the ratepayers to fund voluntary sector projects over the next four years, and so to encourage authorities to take on ex-GLC or met.
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county projects. I repeat that transitional grant is extra. The main support has to come through the rate support grant. It has always been made clear that the £20 millions transitional grant was not meant to match any given figure of local authority expenditure. The noble and learned Lord, Lord Elwyn-Jones, has, I regret, been misinformed about the nature of the grant. The figures that he gave comparing percentage allocations with bids are to that extent, I am afraid to say, somewhat misleading. Transitional grant is meant only as a partial and temporary support to local authority expenditure plans.
I freely admit that the decisions on grants next year are coming later than Ministers and voluntary bodies would have hoped, and that this is a worrying time for voluntary groups. I must point out, however, that it is by no means unusual, even in normal circumstances, for local authorities at this time of year not to have finalised their grant decisions for the next financial year. Local councillors are well aware of the timing constraints, and I am sure that they will take their decisions as quickly as possible. The Government have done all that they can to ease and to facilitate the move to new funders, and I am confident that the overall outcome will be satisfactory. I cannot, however, offer assurances to every individual voluntary group or to individual law centres. We have always made clear that abolition does not alter the general principle that these decisons remain—as they always have been—ones for the local authorities themselves. Just as Parliament did not compel the Greater London Council or the metropolitan counties to fund voluntary bodies, so it has not compelled districts and boroughs to do so. Nor has it given Ministers the power to compel districts and boroughs to do so, either.
I hope that this explanation will assist noble Lords in comprehending why the Government take the firm view that law centres are a supplement to the legal framework. As I have already indicated, they are by no means the only form of supplement, and where they do not themselves exist other alternatives may well be available to meet the particular needs of the community. Where they are felt to be necessary, we are entirely happy that they should exist. We commend the work they do, as we commend all forms of worthwhile voluntary activity.
In our inner cities policies we constantly strive to achieve private and public sector partnership. We adhere to the philosophy that the state should not be regarded as a bottomless source of funds, and that business should be more actively involved in their communities. Law centres, in common with other voluntary groups, might therefore consider looking for a greater contribution by the local community not only from public funds but also from local businesses, the professions and other private sources, either in cash or in kind. I know that one noble Lord mentioned a particular law centre where the local authority had suggested some form of pound-for-pound grant.
Lord Elwyn-Jones: My Lords, Westminster.
Lord Skelmersdale: Westminster, my Lords. I thank the noble and learned Lord. It had therefore sought to get contributions of this nature. This had failed. Does

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that not bear out exactly what the council had itself decided? If there was a need that was generally supported, then it would act: if there was not—and this can be taken as proof that there was not—then it would not. Involvement in the community—
Lord Pitt of Hampstead: My Lords, am I to understand that the noble Lord is actually saying that there is not a need for Paddington to have a law centre?
Lord Skelmersdale: No, my Lords; I am not saying that. I am saying that Westminster City Council, whose responsibility this is, is saying exactly that.
Involvement in the community is something which we can all pursue, and there are many skills which can contribute. I hope that it will not be taken amiss if I suggest that this is an avenue which the law centres movement should pursue, recognising that a single form of organisation, the large law centre, may not always be the only way of providing the services in question. For instance, the noble and learned Lord, Lord Elwyn-Jones, mentioned housing and welfare benefit cases. The noble Lord. Lord Hutchinson, mentioned planning. I must ask them: are there no other sources of this advice? Time prevents me going into detail, but I must, like my noble friend Lady Macleod, refute the arguments of the noble Lord, Lord Elystan-Morgan, and answer "No" for the reasons that I have already given.
I am well aware that these are not the answers which noble Lords who have spoken are seeking. But I believe that the Government have given law centres a fair chance to prove their worth, and that it is now up to them to seek support locally from both public and private sources.
House adjourned at five minutes past nine o'clock.