Lords Sitting of 22 July 1986

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

Lord Moore of Wolvercote
The Right Honourable Sir Philip Brian Cecil Moore, GCB, GCVO, CMG, QSO, having been created Baron Moore of Wolvercote, of Wolvercote in the City of Oxford, for life—Was, in his robes, introduced between the Lord Maclean and the Lord Charteris of Amisfield.
Lord Dainton
Sir Frederick Sydney Dainton, Knight, having been created Baron Dainton, of Hallam Moors in South Yorkshire, for life—Was, in his robes, introduced between the Lord Kearton and the Lord Trend.

Arts Council Grants
2.43 p.m.
Lord Nugent of Guildford: 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 is the annual grant given by the Arts Council to the National Theatre and to the Royal Shakespeare Company; and whether they are satisfied that the financial control of the management in these two theatre groups is adequate to ensure good value to the taxpayer.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, the projected grants for 1986–87 are: the National Theatre, £7,811,000 and the Royal Shakespeare Company, £5,592,000. My right honourable friend the Minister for the Arts has full confidence in the boards of the two companies and in their ability to maintain value for money.
Lord Nugent of Guildford: My Lords, I thank my noble friend for that informative Answer. But is he aware of recent press allegations that the artistic directors of these two theatres have made greater profits out of recent successes in their respective theatres when those successes have gone on to Broadway and other commercial theatres than have the theatres themselves? I listened to my noble friend's reassurance, but does he not think that with such very large sums of taxpayers' money—nearly £13 million—being granted to these two theatres, something more is needed to ensure that they have a fair share when greater profits are made? Will the Minister ensure that measures are taken to give the
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Arts Council greater control of the management so that the taxpayer who has to finance the losses on these theatres gets a fair crack of the whip when they make big successes?
Lord Belstead: My Lords, it is certainly within the directors' conditions of service that they should be able to be properly rewarded for their expertise. I think this is a question of balance between what is due to the companies and what is due to the directors. Sir Kenneth Cork is at the moment chairing an Arts Council inquiry into the funding of the live theatre, and my right honourable friend the Minister for the Arts has asked Sir Kenneth to look specifically at this issue and to produce guidelines for the future.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that I entirely support his answers to this Question? Is he further aware that both these companies have been rigorously examined by the noble Lord, Lord Rayner, and Mr. Clive Priestley and have been given a clean bill of health? Is that scrutiny not to be valued more than the so-called investigative journalism which is really a form of disguised Philistinism?
Lord Belstead: My Lords, as the Government's reply which I gave says, my right honourable friend has full confidence in the boards of the two companies—and, incidentally, a senior officer of the Arts Council attends meetings of both boards. Nonetheless, I think that it will be of use generally that the inquiry of Sir Kenneth Cork will be looking at this particular matter. I am sure that it will help.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that while it is right that the contract that is entered into as to what the artistic directors can and cannot do and receive in those capacities should be rigorously looked at, it is wrong that the artistic directors in this case should be blackguarded because they have produced a success? The return that they have obtained under the terms of their contract could not have been as high as it was if they had not produced successful productions, and rather than blackguard them for doing it should we not encourage them to continue producing successes of that kind?
Lord Belstead: My Lords, I think that the enormous, popular success of the National Theatre and the Royal Shakespeare Company are eloquent of the ability of the directors as well as the staff and the performers.
Baroness Birk: My Lords, is it not true that these two companies enjoy unique national and international prestige and also earn a great deal financially for Britain? Is it not because they are so successful—and a great deal of the credit for that success must go to their artistic directors—that this matter has arisen? If there are guidelines produced, then it will be a result of their successes. Can the Minister reassure us that, if this controversy is used to attack government investment in the arts, Ministers will resist this action rigorously and loudly?
Lord Belstead: My Lords, I did not pick up any attack on the Government's investment in the arts during this Question and Answer session. If I do so, like the noble Baroness I shall resist it. I agree with her about the success of these two great companies.
Lord Mishcon: My Lords, would the noble Lord, Lord Nugent of Guildford, accept from someone who, over many years, has been a director of the National Theatre, that in fact there is very great financial control? Would he give appreciation to the fact that two very eminent people—
Noble Lords:Order!
Lord Mishcon: My Lords, may I put my remarks in the form of a question? Would the Minister agree—and would the noble Lord, Lord Nugent, listen—that the nation has been privileged to have two directors of two great companies—namely, Sir Peter Hall and Trevor Nunn—as directors of subsidised theatres when the commercial world wanted them very badly and would have paid them very much more?
Lord Belstead: My Lords, I have already paid tribute to the success of those two great companies. My noble friend Lord Nugent has however asked a serious and important question which has elicited two pieces of information for which I think I should thank my noble friend. The first is that the Government reiterate their confidence in the ability of the boards to maintain value for money, and the second is that nonetheless we think that it is helpful that Sir Kenneth should be looking into the question of balance in these matters.
Lord Birkett: My Lords, does the Minister agree that as the boards of both the National Theatre and the Royal Shakespeare Company have upon them eminent lawyers, accountants and hard-headed businessmen of all sorts, they are therefore highly capable of making a commercial deal in a commercial world when required; and that the suggestion put about recently in the press that Sir Peter Hall and Mr. Trevor Nunn have somehow pursued their own distinguished careers at the expense of the theatres they direct is patently absurd?
Lord Belstead: My Lords, that is fair comment. Nonetheless I reiterate that I believe that it will be to everybody's advantage to have some recommen-dations from Sir Kenneth Cork's inquiry about the balance in this matter. I hope that we shall also receive some guidelines for the future.
Lord Nugent of Guildford: My Lords, is my noble friend aware that I greatly welcome Sir Kenneth's inquiry? I shall be only too delighted to hear that it fully confirms the soundness of the present arrange-ment. Is my noble friend also aware that if even 1 per cent. of the huge subsidy could be saved, it would give the Arts Council sufficient elbow room to provide a grant for a hard-press provincial theatre which receives no grant?
Lord Belstead: My Lords, I am not entirely surprised to hear my noble friend ask that question—a question to which I shall draw the attention of my right honourable friend.
Lord Strabolgi: My Lords, arising out of the question of the noble Lord, Lord Nugent, will the Minister also bear in mind that a small proportion of the grant which goes to the two theatres could well be used for the Theatre Museum in Covent Garden which is once again held up for lack of funds?
Lord Belstead: My Lords, I am again not wholly surprised that the noble Lord, Lord Strabolgi, moves on to that particular ground. However, it is ground which lies rather outside the scope of the original Question.
Lord Hutchinson of Lullington: My Lords, the arrangements between the RSC and the director with regard to any work that he did outside the theatre and transfers from the theatre were looked into in detail and were approved in every way as being to the advantage of the RSC. Does the Minister agree that the only thing wrong that the two reports found was that both theatres were seriously under-financed? Will he tell the House what the Government intend to do about that finding of those two important reports?
Lord Belstead: My Lords, I agree with the first question asked by the noble Lord, Lord Hutchinson, but with respect to him, I disagree with his second question. If we take the years 1983–84 to the present financial year, we see that the real term increase for the Royal Shakespeare Company is nearly 6 per cent. and for the National Theatre over 7·5 per cent. They are not doing so badly.
Lord Butterworth: My Lords, does the Minister agree that as a result of Mr. Priestley's inquiry into the Royal Shakespeare Company, he found that the company was palpably under-funded, and that, in consequence, the Government made funds available so that the grant for that year could be increased by no less than 22 per cent.?
Lord Belstead: The run of figures for the Royal Shakespeare Company shows a healthy increase. I have given the figures. I shall draw the attention of my right honourable friend to the question asked by my noble friend Lord Butterworth, but I think that there is no more that I can possibly add on this matter.

Afghanistan and Middle East: UK Action
2.55 p.m.
Lord Hatch of Lusby: My Lords, at the request of my noble friend Lord Molloy, and with the leave of the House, may I beg leave to ask the Question standing in the name of my noble friend Lord Molloy?
The Question was as follows:
To ask Her Majesty's Government what plans will be developed during the British Presidency of the Council of the EC to help to end the occupation of Afghanistan and the occupied sections of the Middle East countries.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, during our Presidency we shall continue to support the efforts of the United Nations Secretary General to secure a settlement in Afghanistan on the basis of successive United Nations resolutions calling for the withdrawal of Soviet troops. We shall continue also to promote peaceful solutions to the problems of the Middle East and a withdrawal of unauthorised foreign forces, in accordance with the relevant UN resolutions.
Lord Hatch of Lusby: My Lords, with regard to the first part of the Question, can the noble Baroness tell the House whether any discussion on this matter took place during the Soviet Foreign Secretary's recent visit? On the second part of the Question, can she say whether the Government will be observing the progress of the new attempt at a settlement in the Middle East which is demonstrated by the visit to Morocco of the. Prime Minister of Israel?
Baroness Young: My Lords, the answer to the first part of the noble Lord's supplementary question is, yes, both my right honourable friend the Prime Minister and my right honourable friend the Foreign Secretary raised the subject of Afghanistan with Mr. Shevardnadze. Regrettably, he indicated no change in the Soviet position on Afghanistan. With regard to the noble Lord's second supplementary question, we of course welcome all initiatives to encourage discussion and dialogue on the Middle East. We remain convinced that the region's problems can be solved only by negotiation. It is of course too early to evaluate the effect of the visit to Morocco of the Israeli Prime Minister.
Lord Cledwyn of Penrhos: My Lords, does the noble Baroness recollect that about five or six weeks ago we were told that the United Nations talks, under the chairmanship of Mr. Cordoves, were making good progress? Can she say what has happened to those talks? Her reply just now was not too encouraging. Have the talks come to a halt, or are they unsatisfactory? What steps are Her Majesty's Government taking to encourage them?
Baroness Young: My Lords, the position is that the talks continue. The United Kingdom supports the effort of Mr. Cordoves to find a settlement along the lines of the United Nations resolution which calls for an immediate withdrawal of foreign troops, the return of refugees, self-determination for the Afghan people, and the restoration of Afghanistan's independence and non-aligned status. Perhaps I may add to what I said about the discussions with Mr. Shevardnadze. Mr. Gorbachev has said that he wants to withdraw Soviet troops, but we want him to translate his words into reality. There is no obstacle to his doing so. Troop withdrawal is the real test of Soviet commitment to negotiations and the key to a peaceful solution to this problem.
Lord Cledwyn of Penrhos: My Lords, I sympathise with what the noble Baroness has just said. Will she deal with the talks over which Mr. Cordoves was presiding? Are they continuing, or have they come to a halt?
Baroness Young: My Lords, I am sorry if I did not make that part of my reply plain: the talks continue. Of course they do not go on all the time. The key obstacle to a solution is the question of the withdrawal of Soviet troops from Afghanistan.
Lord Gladwyn: My Lords, do the Government agree that the only sensible way to end the war between Iraq and Iran, which otherwise may go on for ever, to say nothing of the Palestinian problem, would be for the two super powers jointly to summon a conference on Middle Eastern affairs generally? That would mean accepting that the Soviet Union had at least a role to play in Middle Eastern affairs. If that is not possible at the moment, and it is not likely to be possible until the end of the Russian occupation of Afghanistan, will the Government say that they approve in principle of such a development, which I need hardly say is welcomed by Mr. Gorbachev?
Baroness Young: My Lords, on the first part of the noble Lord's question, again, the Soviet proposals for a Middle East conference were discussed with Mr. Shevardnadze when he was in London. We have no objections to the principle of an international peace conference or indeed a preparatory meeting, as has been proposed by the Russians, but the timing is crucial and neither can be effective if the parties are not ready to make them work. We are not at all certain that the gap between the parties has yet narrowed sufficiently to make that possible. On the noble Lord's second point about Afghanistan, I think that I have made the Government's position clear.
Lord Hatch of Lusby: My Lords, although I am glad to note that the noble Baroness has taken heed of the wishes of Mr. Gorbachev to withdraw from Afghanistan, may I ask her whether she will use all the diplomatic experience of the Foreign Office to make it as easy as possible for the Russians to withdraw from Afghanistan, considering that our Foreign Office has such a long history of such behind-the-scenes negotiations?
Baroness Young: My Lords, I am delighted to hear that the noble Lord holds the Foreign and Commonwealth Office in such high regard. I shall pass that on, and I am sure that it will be pleased to hear it. We have done our best to help with a solution on Afghanistan. We are not of course directly a party to the talks. We hope very much that a solution will be found, but, as the noble Lord rightly says, the key is the withdrawal of Soviet troops.
Lord Mellish: My Lords, could not the outrageous invasion of Afghanistan by a foreign power be solved if the Russians were so minded? All the guff about United Nations resolutions and the rest means nothing at all if the Russians are determined to stay there. To any idea that somehow it is rather difficult for them, my response is "So what!". Let them get out; they should not have gone in there in the first place.
Baroness Young: My Lords, as always, the noble Lord puts plainly what I think everybody believes. The Soviet troops should not be in Afghanistan, and there are now about 120,000 of them there. But when the

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matter has been raised at the United Nations each year there has been an overwhelming vote in support of the principle that the Russian troops should be withdrawn and that there should be a political settlement.

Children's Eyesight: Safeguards
3.2 p.m.
Lord Rugby: 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 legal safeguards exist for children whose eyesight may be irreparably damaged by over-prescribing.
Baroness Hooper: My Lords, the need for a prescription to correct refractive errors, however small, is a matter of clinical judgment by the optician or doctor who undertakes the sight test. Any complaint that may arise should be referred to the local family practitioner committee for investigation.
Lord Rugby: My Lords, I thank the noble Baroness for that reply. I presented a paper to the noble Baroness, Lady Trumpington, showing that the Ophthalmological Society had done its own investigation and found that something like 20 per cent.—
Noble Lords: Question!
Lord Rugby: My Lords, is the noble Baroness aware that some 20 per cent. of children of that age are being put into glasses when they have no impairment whatsoever to their visual acuity, and that that may indicate that eye tests are being oriented much more to a commercial sale of spectacles than to a moral obligation to look after the welfare of the child in the long term?
Baroness Hooper: My Lords, I am aware of a recently published report that concluded that over-prescribing of spectacles to school children was very common. However, I understand that there are conflicting professional views on the criteria used in coming to that conclusion and that the author of the report herself accepts that the methods employed,
"constituted a very blunt instrument for measuring visual function".
However, accepting that there may be some over-prescribing of spectacles, the department has sought independent professional advice.
Lord Mottistone: My Lords, does my noble friend agree that it is sad that the obsession of the noble Lord, Lord Rugby, with the presumed wickedness of all opticians colours greatly his questions and gives them a bias which is not reasonable?
Baroness Hooper: My Lords, I find it a little difficult to agree with that. Since the Question asked about legal safeguards, let me say that, in addition to considering complaints, family practitioner committees have powers to investigate any cases
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where it appears from their routine examination of sight-test forms that there is prima facie evidence of excessive prescribing of glasses. That power is quite separate from the investigation of the complaint. There are indeed safeguards and monitoring systems in place.
Lord Ennals: My Lords, is not the Question prompted by a rather scaremongering article in the British Journal of Ophthalmology and are we not talking of only a very small percentage of children? Will the noble Baroness accept my great satisfaction that the deparment is at least having a look at the matter in order that the argument between the two noble Lords can be satisfactorily settled?
Baroness Hooper: My Lords, as I said in my original reply, there are conflicting professional views on the study. It may be of consolation and interest to noble Lords to know that the British College of Ophthalmic Opticians is funding a study into the identification and treatment of clinically important refractive errors in primary school children.
Lord Maude of Stratford-upon-Avon: My Lords, may I ask my noble friend whether safeguards exist or can be devised for those children who, owing to lack of proper parental control, have their eyesight damaged by over-exposure to television?
Baroness Hooper: My Lords, that is always taken into account. But there is other evidence, and indeed the report itself suggests, that about one-third of the children who have spectacles came for their medical examination without them.

Social Security Commissioners, Cardiff
3.7 p.m.
Lord Elwyn-Jones: 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 why it has been decided not to appoint a successor to Mr. Roderic Bowen QC as resident Social Security Commissioner in Cardiff.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, following extensive consultations, it has now been decided on grounds of efficiency that, while hearings will continue to take place in Cardiff and commissioners will sit there regularly for that purpose, the Cardiff office of the Social Security Commissioners should be closed for administrative purposes.
Lord Elwyn-Jones: My Lords, I am grateful to the noble and learned Lord for his unfailing courtesy, but may I invite him to think again? Has not an office of the Social Security Commissioners been efficiently and economically maintained in Cardiff for over 40 years both for oral hearings and for the purposes of adminis-tration, and is not the volume of work in that office as great as ever? Will not any suggested savings be minimal? Finally, is the noble and learned Lord aware

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that his decision will be hurtful to Welsh feelings at the very time when the Principality feels itself left out in the cold both economically and in the matter of public administration?
The Lord Chancellor: My Lords, I have no doubt that the office was very efficiently and economically administered. Unfortunately, it was underused by the Welsh people. They called there hardly at all. They made their applications by post. So the case on that ground is not as strong as the noble and learned Lord would lead one to think. As to feelings, I am sure that the Welsh people would appreciate efficiency as much as I do.
Baroness White: My Lords, would the noble and learned Lord not agree that, as between Jerusalem and Jericho, the distance between London and Cardiff in either direction is equivalent, and that therefore there can be no objection to basing in Cardiff a Welsh-speaking commissioner who can also deal, as the present office deals, with a number of cases across the Border? The workload can be perfectly well adjusted in that way. Would the noble and learned Lord not agree that it is of little consequence to have a Welsh-speaking commissioner in London as proposed? That does not matter to the metropolis but it does matter to the capital city of Wales that it should be denuded of an office that it has enjoyed, that can perfectly well perform and that can, I repeat, deal with cases across the Border because the Welsh-speaking commissioner will undoubtedly be bilingual.
The Lord Chancellor: My Lords, oral hearings will continue as before. I am not sure that it would not be hurtful to English feelings to make people go to Wales for them.
Lord Hooson: My Lords, will the noble and learned Lord not reconsider the matter and not deal with it perhaps quite so flippantly as he has done? Is he aware that this is a matter, I believe, that is deeply hurtful to the people of Wales, who regard it as undermining the administrative entity of Wales for administrative purposes? As the work in this office is as great as it ever was, what are the grounds for removing it? Can the noble and learned Lord say with whom he had consultations?
The Lord Chancellor: My Lords, yes I can say with whom I had consultations. However, to be accurate, I would have to write them down and put them in the Library. The rest of the question was, I believe, a repetition of the previous point. The office accommo-dation will be saved. Apart from its use for hearings, which will take place in other Welsh accommodation owned by my office, the office accommodation was valuable only when people called, and they seldom did. As regards the Welsh people, I know that a number of very eminent persons have written to me about it, but I have never seen any wide outburst of feeling, and I do not believe that it exists.
Lord Broxbourne: My Lords, would my noble and learned friend be good enough to make clear, in so far as it is not to be implied from his previous answers, that this change of policy and practice implies no
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adverse judgment on the conduct in office of Mr. Roderic Bowen, whom all of us who had the privilege and pleasure of knowing held in the highest regard and affection?
The Lord Chancellor: My Lords, Mr. Roderic Bowen, who retired, I believe, some time around the end of March, ended his career with universal approval from everyone who knew him both inside and outside the profession.
Lord Cledwyn of Penrhos: My Lords, if the case load is too small, could it not properly be increased by allowing claimants from the border counties of Gloucester, Hereford and so on to come to Cardiff to have their cases dealt with, bearing in mind that most of the people there are half Welsh anyway? Further-more, would the noble and learned Lord not agree that the cost of the Cardiff office is relatively small with only one clerk and, I understand, a long lease that is not an expensive one?
The Lord Chancellor: My Lords, I thought that I had made clear that the oral hearings will take place as before. Therefore, the oral hearings of claims are not in question in this matter. What is in question is the use of accommodation when most of the applications are made by post, with only the occasional personal visit. We are not talking about the oral hearings, which will go on.
Lord Edmund-Davies: My Lords, is it too late to ask that there should be some further thinking—the sort of thinking that went on before the institution in 1948 of a system whereby we have had a Welsh-speaking resident Social Security Commissioner in Cardiff? That is the sort of thinking that appeals deeply, I believe, not only to Welshmen and Welsh-speaking Welshmen but also to residents in Wales for whom this arouses a most important and potent feeling. I would ask whether there cannot be some rethinking in respect of this matter. It is not suggested that there has been any inefficiency; that has gone by the board. It is not suggested that there will be any powerful saving of money. What is being ignored, I respectfully submit, is the deep-seated feelings of Welshmen and Welshwomen.
The Lord Chancellor: My Lords, the advantage of a Welsh-speaking commissioner is well appreciated, and there is and will be one. As I have said, the oral hearings will go on as before.
Lord Mackie of Benshie: My Lords, I hesitate, as a Scotsman, to say anything to the noble and learned Lord on this matter. Did I understand him to say, however, that while he had had several dignified protests from distinguished people, there had been no riot and therefore that he could ignore what had been said?
The Lord Chancellor: My Lords, no, I do not believe that the noble Lord has got it quite right. He may be interested to know, however, that I have increased the number of whole-time commissioners to 15, including two for Scotland, and that there are in addition two part-time commissioners. This is part of the process of

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achieving a better service for the whole of England and Wales, and I hope also for Great Britain.
Lord Elwyn-Jones: My Lords, knowing of the sympathy that the noble and learned Lord has shown on other matters relating to Welsh aspirations, will he look at this again?
The Lord Chancellor: My Lords, the noble and learned Lord is always persuasive, but I am afraid that the decision has been made. If there is any defect in the service, I shall of course look at it again. But the interests of efficiency are just as much in Welsh interests as in English interests.
Baroness White: My Lords, will the noble and learned Lord inform us whether he disapproves, therefore, of the designation of Cardiff as a capital city?
The Lord Chancellor: My Lords, I am afraid that this is rather outside the scope of the Question, which related to a somewhat narrower issue.
Baroness White: My Lords, it is the kernel of the Question.
The Lord Chancellor: My Lords, it may be the kernel, but it is not the lieutenant!

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Elton will, with the leave of the House, repeat a Statement that is being made in another place on Local Government Finance 1987–88.

Wages Bill
3.17 p.m.
Lord Denham: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that Her Majesty and His Royal Highness, having been informed of the purport of the Wages Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Bill read a third time.
Clause 2 [Deductions from wages of workers in retail employment on account of cash shortages etc.]:
The Minister of State for Defence Procurement (Lord Trefgarne)The Minister of State for Defence Procurement (Lord Trefgarne) moved Amendment No. 1:
Page 4, line 3, leave out ("respect of) and insert ("connection with").
The noble Lord said: My Lords, in moving this amendment, I wish to speak at the same time to Amendments Nos. 2 and 3. These amendments are designed to ensure that the category of worker covered by the provisions of Clauses 2 and 3 is clear. There is no policy change involved. The amendments make
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clear that a worker who is involved in the collection of money in connection with retail transactions from members of the public, fellow workers or other individuals in their personal capacities but who is not involved in the retail transaction itself—that is, their job is not the sale or supply of goods or the supply of services but simply collecting money in respect of sale and supply by someone else—is covered by the provisions of Clauses 2 and 3. I beg to move.
Lord Wedderburn of Charlton: My Lords, we are very grateful to the Minister for his explanation of the amendment. I wonder whether he can possibly answer some queries and difficulties that we have. Little could be more important in the Bill than the definition of retail employment and retail transactions. Unless one falls within that golden area, one is, as a worker, vulnerable to such deductions as one's contract allows—these are workers, as we know from previous debates, whose contract is largely in the hands of the employer—to the full extent of 100 per cent. But if one is in retail one is allowed the limit of 10 per cent. unless it is one's final pay packet when, again, one can have all of it stopped.
The Government have had difficulty with this definition of the area of retail employment since the debates in another place—since 4th March. Mr. Trippier then indicated that the original definition needed amendment when pressed by my honourable and right honourable friends. At the last moment, we now have what seems to us—and perhaps we are wrong—a rather more important amendment than the Minister had indicated. We have not merely those carrying out retail transactions as defined, but also those who are collecting amounts payable in connection with retail transactions either with the public, with other individuals or with fellow workers in individual capacities.
I wonder whether the Minister can clear our minds in relation to this 10 per cent. protection and its ambit. The Government have in every debate placed great stress upon clarity. Indeed, it has been a ground upon which they have rejected almost every amendment we have pressed upon them.
Let us take the simple case of an office with a canteen where the office workers take their tea from the canteen workers and pay their money to the cashiers. The cleaners are all employed by the same employer. Is it the case that the canteen workers who dispense the tea and supply the goods, if not services, to the office workers are retail workers and that the office workers are not? The cashier might not have been, but for this amendment—and I thought perhaps this amendment meant to include the cashier who is collecting amounts in connection with these transactions. Are the cleaners not retail workers unless they help to dispense the tea? The clause provides that they do not have to be doing it regularly, but, whether regular or not, if they have engaged in a retail transaction once or twice that seems to bring them within the provisions.
In the simple example of the works canteen one has the situation where office workers make the payments to the employer via his cashier. The employer of those office workers must make sure that there is a clause in the contract of employment, or written consent, for

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him to receive the money because this is a payment which appears to be caught by Clause 1(2).
There could be many more difficult scenarios and problems. But if we could be clear that this amendment was meant clearly to bring in the cashier and such people, and that the position is as we understood with regard to the other workers, it might be possible to give advice to people as to what this Bill meant. Does the Minister consider, as it is necessary to amend the vital definition of retail employment on Third Reading, that it might be better to advise employers generally that a 10 per cent. deduction is a better limit and that 10 per cent. should be adhered to in all those examples I have given and indeed many more? That would have been a better clause in the Bill.
Lord Trefgarne: My Lords, I believe that the noble Lord is correct in his understanding. It is true that this amendment has been refined and improved. The 10 per cent. limit applies widely to ensure that the workers are all fully covered. The canteen workers are covered, as are the cashiers. I hope that is the assurance which the noble Lord is seeking and that he will therefore be able to give this amendment a fair wind.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendments Nos. 2 and 3:
Page 4, line 7, leave out from ("involving") to ("of") in line 8 and insert ("whether on a regular basis or not)—
(a) the carrying out by the worker").
Page 4, line 11, at end insert (" , or
(b) the collection by the worker of amounts payable in connection with retail transactions carried out by other persons directly with members of the public or with fellow workers or other individuals in their personal capacities; ").
On Question, amendments agreed to.
Clause 4 [Provisions supplementary to ss. 2 and 3].
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 4:
Page 6, line 43, at end insert ("in respect of any cash shortage or stock deficiency of which the existence is established by the employer".).
The noble Lord said: My Lords, I rise to move Amendment No. 4, and for convenience I shall speak also to Amendment No. 5, which would make a parallel amendment in a later subsection.
These amendments arise from the drift of your Lordships' debates on previous stages of this Bill which took place on amendments moved by myself and my noble friends Lord McCarthy and Lord Stoddart. The noble Lord, Lord Trefgarne, quite correctly, pointed out that they were technically deficient. That was his kind way of putting it. A little later on he said that they would have a perverse effect. But he was right, and we accepted that. We therefore left the matter until now, when, as is our custom, we are moving much more limited and modest amendments.
The problem arises when a retail worker is dismissed—a retail worker who is not likely to be earning a City salary and whose wage is important week by week to the household. The issue on the final dismissal is that the Bill allows the employer, if the contract covers it—as it so frequently will—to deduct
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not merely the one-tenth but also the full wage. Time and again we have pressed the Government to refine this clause. We asked the Government to limit it, one would have thought reasonably, to cases where the employer dismissed the worker lawfully. However, they rejected that. We have to accept that. But the employer can dismiss illegally and still deduct the full wage. That is the purport of the Bill. Indeed, as I shall argue in a moment it is the object of the Bill in certain cases.
By sheer chance, this very morning in the law reports in The Times—it is the only newspaper that carries law reports; I would that it were somewhere else—one finds a decision of the Court of Appeal in which all members of the court stress that it is a fundament principle of our law that someone should not be allowed to take advantage from his own default under the contract. Lord Justice Lawton says in this morning's report that the apprentice—because it was an apprentice—should not be allowed to plead his own default in order to establish his right to claim compensation. Here the employer can rely upon his own default, no matter how unlawful the dismissal, and, so long as the contract clause allows it otherwise, deduct the full amount.
We are not challenging that in these amendments, but we say that at least that circumstance is a matter which should make your Lordships at this very last moment consider whether or not this clause is absolutely right.
The effect of these amendments would be to add a tiny condition to the operation of the employer's right under the clause to take the whole wage. The condition would be that there should be not only the consent of the worker in writing, or the clause in the contract, together with the other conditions—the demand for the payment and the other conditions on deduction in Clauses 2 and 3—but, as the amendments say, also that in respect of any cash shortage or stock deficiency the existence should be established of such cash shortage or stock deficiency.
It may puzzle some of your Lordships as to why it is necessary to say that. As the cases in the law reports and other evidence make clear, the reason is that so many of these contract clauses permit the employer to deduct what he says he will deduct without need of proof of the existence of the cash shortage or stock deficiency. In saying that, I do not say that most employers operate to the letter of the law in that respect. But that is a normal clause in retail workers' contracts, and we are dealing with the law and what is permitted and what is not. These amendments would provide far less than we have asked for before. They would add the requirement that the cash shortage or stock deficiency be established. They do not even say "by reasonable measurement" as a previous amendment of ours provided.
That is the first ground for these amendments. But a second ground which I apprehend will be very difficult for the Government to resist—though I am aware that the noble Lord has resources to resist our amendments which are far beyond my capacity to imagine—is the Government's Bill itself.
In regard to another and highly related matter in Clause 2(3), the Bill says that the employer must take

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certain steps in regard to deductions and to cash shortages not later than 12 months:
"beginning with the date when the employer established the existence of the shortage or deficiency or (if earlier) the date when he ought reasonably to have done so".
Clause 3(3)(b) makes a parallel provision in regard to payments. In other words, in regard to limitation of action and limitation of claim the Bill itself evisages that the machinery works only where there has been an existing shortage and one which, if he did not know about it, the employer ought reasonably to have known about.
Therefore, that is very different from the contract clauses which exist across the board. It is very different from the clause in the case of Anthony Barratt in the law report, which has figured in our earlier debates, who suffered the arbitrary deductions which were struck down under the present law as being unreason-able by the High Court. That limitation will go and no such protection will exist. In other words, on this second point the amendment asks for no more than the Bill envisages in those other clauses, and therefore the Government are asked to say that, where the right of the employer to deduct all is to come into play, at least there must be what they themselves have called in another part of the same clause the establishment of the deficiency or the shortage. I beg to move.
3.30 p.m.
Lord Rochester: My Lords, I should like to support this amendment. At present there is nothing in the Bill to stop an unscrupulous employer from deducting the entire wage on the last pay day, whatever the circumstances under which the employment is terminated, and whether or not the deduction is fair and reasonable, provided only that the action is covered by the contract of employment.
It is true that an aggrieved employee can take his case to an industrial tribunal; but he will find no remedy there, even though in the extreme case the alleged deficiency or shortage may be a figment of the employer's imagination or greed, or the employee may be dismissed unfairly, spitefully, or unlawfully. I do not pretend for a moment that there will be many such cases; but surely they should not be allowed to occur at all. This amendment would at least ensure that an onus is placed on the employer to establish the existence of a shortage or deficiency before the payment of the entire final wage is withheld. As such, I suggest that it deserves the support of the House.
Lord Trefgarne: My Lords, these amendments are similar to amendments which were tabled by noble Lords opposite during Committee and Report stages, but with one notable difference. The Bill limits deductions on account of cash shortages or stock deficiencies to 10 per cent. of wages, but removes the limit from the final instalment of wages. The amendments would remove the limit from the final instalment of wages only when an employer has established the existence of the cash shortage or stock deficiency in respect of which he has made a deduction or received a payment.
I think that this must reflect the concern of noble Lords during the Report stage over the point made by
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the National Association of Citizens Advice Bureaux that some unscrupulous employers might make frequent dismissals to recover debts where the 10 per cent. limit is preventing them doing so.
Let me say again that the aim of Clauses 2, 3 and 4 of the Bill is to strike a balance. The Bill simulta-neously ensures that workers are not left with little take-home pay on account of deductions, and also that employers can obtain money to which they are contractually entitled, though by instalments.
By removing the 10 per cent. limit from the final payment of wages, the Bill ensures that whatever is still owing to the employer at the termination of the contract can be offset against the final payment of wages. I should point out that some employers who commented on the proposal for the 10 per cent. limit when it was originally set out in the Department of Employment's consultation paper in 1984, expressed general support but thought it would be unreasonable if the employer had to pay a worker the whole of his final payment of wages when a contract ended and then go to the court for an outstanding debt. The Government thought that this was a reasonable point, and it is for that reason that the limit is not applied to the final payment of wages.
Put another way, the purpose of Clause 4 is to enable employers to recover under contract, and without having to take civil action, amounts which, but for the controls in Clauses 2 and 3, they would have been contractually entitled to recover earlier.
Having said that, the employer is not given an unlimited power under Clause 4 to make deductions from the final instalment of wages. He is still limited by the requirements of Clause 1 that any deduction must be authorised by statute, contract or by prior written consent. He is also limited by the other various safeguards in Clause 1 that ensure that, for example, the worker must be given a copy or explanation of the term of the contract and that the contract cannot be retrospectively varied to authorise deductions.
To add an additional requirement that the employer must establish the existence of the shortage or deficiency—not the amount, but the existence—would not be of any great advantage to the worker. Where a contract allows for deductions on account of cash shortages or stock deficiencies, a deduction must satisfy the requirements of Clause 1 of the Bill, and it follows that a worker who believes that there was no shortage or deficiency and that a breach of contract has taken place will have a right of complaint under the Bill as it stands on the grounds that the deduction was not authorised by the contract. On any such complaint the employer would have to establish the existence of a shortage or deficiency. The only circumstances in which this would not be the case would be where the contract did not require there to be an actual shortage or deficiency. We must take note of the other controls which exist in the Bill, the small number of cases where the problem addressed by this amendment is likely to arise, and the fact that the purpose of Clause 4 is to ensure that employers can recover amounts contractually due to them, and that they would have recovered earlier but for the controls in Clauses 2 and 3, without need to take civil action. Given all this, I believe that the amendments are neither necessary nor desirable.

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In general, the combined effect of Clauses 1, 2 and 3 is to establish sufficiently strong controls to protect the worker without tying up the employer in needlessly complicated provisions. For these reasons, I ask the noble Lord to reconsider his amendments.
Lord Wedderburn of Charlton: My Lords, one could reconsider these amendments. They are much too mild, especially after the speech of the Minister. The noble Lord has restated the Bill and he says, for example, that this must go on the record because really the Government cannot get away with a misunderstanding of their own Bill. The noble Lord says that in many cases the worker would have a right to go to the tribunal. Of course that is not so. The noble Lord says that the only case where that would not be so would be where the contract did not provide that the employer had to prove some kind of cash shortage or deficiency. I do not know where the noble Lord has been these past months and years, but that is the ordinary case, especially in retail. In the ordinary case there may be some limitation; but the need to prove the cash shortage or deficiency is just not the normal case, so there is no question about going to the tribunal.
As for protecting the worker—protecting the worker with what, my Lords? The Government say, "with this contract". These are workers who have no bargaining power; we are largely dealing with unorganised workers, with workers who are vulnerable and whose contractual terms are very largely written by the employer. This is the last moment when some kind of justice can be done for people earning £50 or £60 a week, and one simply asks that the employer should be made to prove that the deficiency exists in respect of which he takes the whole wage package from the family in the last week of employment. What does one get? One is told that it would be quite unreasonable to force employers to go to the county court to claim the money which may well be due to them. It is common ground.
Yet what did we get in a previous debate when we asked that employees who were illegally dismissed should have some rights when they were not paid their wages in lieu of notice, for example? We were told in clear terms, "Let them go to the county court". The attitude of the Government is perfectly clear. It is quite clear that the Government of 1896, a Conservative predecessor to this Government, had a better social conscience than this one has in regard to workers who are poorly paid, where the labour market is weak, where their conditions are not strong, and where they are highly vulnerable. Even where the facts, as the noble Lord, Lord Rochester, rightly said, do not really substantiate there even being a deficiency if the contract (as it usually is) is for the employer's right to take the wage, the Government says, "yes, he must do so". That is something on which this House should vote.
3.41 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 100; Not-Contents, 121.

DIVISION NO.1

CONTENTS

Addington, L.

John-Mackie, L.

Airedale, L.

Kagan, L.

Annan, L.

Kilmarnock, L.

Ardwick, L.

Kings-Norton, L.

Attlee, E.

Leatherland, L.

Banks, L.

Listowel, E.

Beswick, L.

Llewelyn-Davies of Hastoe, B.

Birk, B.

Lloyd of Hampstead, L.

Blease, L.

Mackie of Benshie, L.

Blyton, L.

McNair, L.

Boston of Faversham, L.

Mais, L.

Bottomley, L.

Milford, L.

Briginshaw, L.

Nicol, B.

Brockway, L.

Northfield, L.

Bruce of Donington, L.

Ogmore, L.

Buckmaster, V.

Oram, L.

Burton of Coventry, B.

Phillips, B.

Caradon, L.

Pitt of Hampstead, L.

Carmichael of Kelvingrove, L.

Ponsonby of Shulbrede, L.

Chitnis, L.

[Teller]

Cledwyn of Penrhos, L.

Prys-Davies, L.

David, B.

Rathcreedan, L.

Davies of Penrhys, L.

Ritchie of Dundee, L.

Dean of Beswick, L.

Robson of Kiddington, B.

Diamond, L.

Rochester, L. [Teller.]

Donaldson of Kingsbridge, L.

Sainsbury, L.

Dowding, L.

Sefton of Garston, L.

Elwyn-Jones, L.

Serota, B.

Ennals, L.

Shepherd, L.

Ewart-Biggs, B.

Silkin of Dulwich, L.

Ezra, L.

Simon, V.

Fisher of Rednal, B.

Stallard, L.

Fitt, L.

Stedman, B.

Foot, L.

Stoddart of Swindon, L.

Gallacher, L.

Strabolgi, L.

Gladwyn, L.

Strauss, L.

Glenamara, L.

Taylor of Blackburn, L.

Graham of Edmonton, L.

Taylor of Gryfe, L.

Granville of Eye, L.

Thurlow, L.

Gregson, L.

Tordoff, L.

Grey, E.

Underhill, L.

Grimond, L.

Wallace of Coslany, L.

Hampton, L.

Walston, L.

Hanworth, V.

Wedderburn of Charlton, L.

Harris of Greenwich, L.

Wells-Pestell, L.

Hatch of Lusby, L.

Whaddon, L.

Hughes, L.

White, B.

Hunt, L.

Wigoder, L.

Irving of Dartford, L.

Williams of Elvel, L.

Jacques, L.

Ypres, E.

Jenkins of Putney, L.

NOT-CONTENTS

Bauer, L.

Cullen of Ashbourne, L.

Belhaven and Stenton, L.

Davidson, V.

Bellwin, L.

De Freyne, L.

Belstead, L.

Denham, L. [Teller.]

Bessborough, E.

Denning, L.

Blake, L.

Derwent, L.

Boyd-Carpenter, L.

Dilhorne, V.

Brabazon of Tara, L.

Drumalbyn, L.

Brougham and Vaux, L.

Elles, B.

Broxbourne, L.

Elliot of Harwood, B.

Butterworth, L.

Elliott of Morpeth, L.

Buxton of Alsa, L.

Elton, L.

Byron, L.

Faithfull, B.

Caithness, E.

Forbes, L.

Cameron of Lochbroom, L.

Fortescue, E.

Campbell of Alloway, L.

Fraser of Kilmorack, L .

Campbell of Croy, L.

Gainford, L.

Carnegy of Lour, B.

Gardner of Parkes, B.

Carnock, L.

Geddes, L.

Cathcart, E.

Glanusk, L.

Cayzer, L.

Glenarthur, L.

Constantine of Stanmore, L.

Gray of Contin, L.

Cork and Orrery, E.

Gridley, L.

131

Grimthorpe, L.

Murton of Lindisfarne, L.

Hailsham of Saint

Nugent of Guildford, L.

Marylebone, L.

Onslow, E.

Halsbury, E.

Orr-Ewing, L.

Harmar-Nicholls, L.

Peyton of Yeovil, L.

Henderson of Brompton, L.

Portland, D.

Hives, L.

Quinton, L.

Holderness, L.

Rankeillour, L.

Home of the Hirsel, L.

Reilly, L.

Hooper, B.

Richardson, L.

Hunter of Newington, L.

Romney, E.

Hylton-Foster, B.

Rugby, L.

Inglewood, L.

St. Davids, V.

Kaberry of Adel, L.

Saltoun of Abernethy, Ly.

Killearn, L.

Sanderson of Bowden, L.

Kimball, L.

Sandford, L.

Kinloss, Ly.

Sandys, L.

Kintore, E.

Seebohm, L.

Knollys, V.

Selkirk, E.

Lane-Fox, B.

Sempill, Ly.

Lauderdale, E.

Shannon, E.

Layton, L.

Skelmersdale, L.

Long, V.

Somers, L.

Lucas of Chilworth, L.

Stanley of Alderley, L.

Lyell, L.

Stodart of Leaston, L.

Macleod of Borve, B.

Sudeley, L.

Mancroft, L.

Swinton, E. [Teller.]

Margadale, L.

Thomas of Swynnerton, L.

Marshall of Leeds, L.

Todd, L.

Maude of Stratford-upon-

Tollemache, L.

Avon, L.

Trefgarne, L.

Merrivale, L.

Tryon, L.

Mersey, V.

Vaux of Harrowden, L.

Middleton, L.

Vickers, B.

Milverton, L.

Vivian, L.

Montgomery of Alamein, V.

Whitelaw, V.

Mottistone, L.

Young, B.

Mowbray and Stourton, L.

Young of Graffham, L.

Munster, E.

Resolved in the negative, and amendment disagreed to accordingly.

Local Government Finance 1987–88
3.49 p.m.
The Minister of State, Department of the Environ-ment (Lord Elton): My Lords, it may be for the convenience of your Lordships if I now repeat a Statement which is being made by my right honourable friend the Secretary of State for the Environment in the other place. The Statement is as follows:
"With permission Mr. Speaker, I would like to make a Statement about Local Government Finance for 1987–88.
"The Government believe that for 1987–88 there should be a rate support grant settlement which allows no increases or very low increases in rate bills if authorities budget responsibly; which provides greater certainty for all authorities about their grant entitlements; and which provides tough pressures on authorities who persist in overspending. I want to make it clear that this settlement means that high rate bills, or poor standards of service, or both, will be entirely the fault of the authorities concerned. Under the present rating system the link between the governed and the governors is being increasingly weakened. Our proposals for the future will certainly restore that link. Meanwhile, this settlement is designed to secure the greatest possible democratic accountability that the present system can yield.
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"My proposals are as follows. For local authority current expenditure, I propose to set provision at £25.2 billion. This is a cash increase of £2.9 billion over provision for 1987-88 published in January's public expenditure White Paper and is equivalent to an increase of 3¼ per cent. over local authorities' budgets for 1986–87. This level of provision represents a reasonable assessment of what local authorities will spend, given the level of inflation and their past pattern of spending. But it does not follow that I believe local authorities need to spend at this level: there is widespread scope for carrying out services more efficiently and for cutting out extravagant provision.
"I am therefore reviewing—and I want to consult local authorities as usual about—the aggregate of grant-related expenditures with the aim of keeping them broadly steady in real terms.
"I propose to provide authorities with about £12.85 billion in aggregate Exchequer grant. This will maintain the grant percentage at 46.4 per cent. of relevant expenditure, the same as in 1986–87. This is a cash increase from 1986–87 of over £1 billion. This will mean that if authorities spend in line with the generous provision we have made, there should on average be no need for rate bills to increase at all. Ratepayers will have the certainty that the blame for high rate increases lies fairly and squarely at the door of their local authority.
"These are very substantial increases which I am sure will be welcome. They make it fair for me to propose a change which will both provide authorities with greater certainty as to their grant entitlement and increase the penalties for the reckless, putting greater pressure on authorities to spend less.
"Hitherto, overspending authorities have contributed grant to a pool of money which was then recycled to all authorities on the basis of a common rate poundage. Individual authorities had no certainty as to their grant entitlements, which depended not only on their own expenditure decisions but on those of all other authorities. Of necessity, authorities could only be informed of the estimated level of recycled grant to a late stage, when it was difficult for them to take it into account in setting their rate or precept. More paradoxically, even those authorities who chose to overspend regained some recycled grant.
"I therefore intend to introduce legislation in the autumn, after consultation, to abolish grant recycling. As a result, authorities will be able to plan their budgets and rates with much greater assurance. Their grant entitlement will depend solely on their own expenditure decisions. It also means a tougher regime for high spenders. They will continue to lose grant if they overspend, but will not then gain on the roundabouts by getting recycled grant, part of what they lost on the swings.
"I turn to the incorrigible, for whom we have rate limitation. I am today laying before the House a report setting out how authorities will be selected next year. I am selecting authorities not selected in 1986–87 whose budgets are more than 12½ per cent. above GRE and show growth of more than 4 per

133
cent. since 1985–86. I am reselecting those authorities which were selected in the current year whose budgets are more than 12½ per cent. above GRE and show growth either of more than 4 per cent. since 1985–86 or more than 20 per cent. since 1982–83.
"On these criteria, nine authorities not selected in 1986–87—Brent, Brighton, Gateshead, Hounslow, Middlesbrough, Newham, North Tyneside, Sheffield and Tower Hamlets—are selected. Eleven authorities are reselected— Basildon, Camden, Greenwich, Hackney, Haringey, Islington, Lambeth, Lewisham, Newcastle, Southwark and Thamesdown. Together with the authorities subject to automatic precept control under the Local Government Act 1985, this will mean that, in all, the Government will next year be limiting the rates or precepts of 40 authorities with expenditure totalling some £4½ billion.
"I am today also setting the expenditure levels for the 20 rate-capped authorities. For reselected authorities, there will be a cash standstill on expenditure levels for 1986–87. All but one of the nine newly selected authorities have budgeted in 1986–87 for a significant increase in spending. I am therefore setting their expenditure levels at the lower of their cash budget this year and a 6 per cent. increase over their 1985–86 budget. I am, of course, open to representations for redetermination of expenditure levels. As last year, where an authority applies for redetermination because it considers that special accounting arrangements imply unachievable economies in 1987–88, I will not use my powers to reduce expenditure levels or impose conditions.
"My right honourable friends the Secretaries of State for the Home Department, Education and Science and Transport will be making separate announcements about expenditure levels for ILEA and the joint authorities subject to precept limitation under the Local Government Act 1985.
"In the field of capital expenditure, I have to tell the House that, from authorities' own forecasts, we expect the main national cash limit in England to be overspent in 1986–87 by about £700 million.
"The Green Paper Paying for Local Government set out proposals for a better capital control system, both for the benefit of the national economy and to give local government greater stability. I am urgently considering what steps to take in the light of the responses. I shall make a further announcement later.
"I am acting now however to end an abuse relating to advance and deferred purchase schemes. These are borrowing schemes masquerading as expenditure. They make use of a bank or other intermediary to transfer expenditure from the year when work is done to an earlier or later year. On the scale that some authorities have indulged in recently, these devices store up massive problems for their ratepayers in the future.
"I shall therefore introduce legislation to ensure that prescribed expenditure is incurred in the proper year regardless of when the authority pays. This will apply to all advance and deferred purchase arrange-
134
ments, and other arrangements with similar effect, entered into after midnight tonight. It will apply to England and Wales. Officials are writing to local authorities today with the details.
"I am considering an exemption, so that authorities which genuinely need to use the device for its proper purpose for an occasional project are not disadvantaged. Any such exemption would take effect from a date to be announced.
"My proposals for this settlement—decision on abolition of recycling, rate limitation, advance and deferred purchase—increase the pressure on high spending authorities. On the other hand authorities which spend sensibly and prudently will have a clear opportunity to keep rate increases low. They will have greater certainty and will not have to gamble their budgets and rates on the unpredictable proceeds of recycling. Where authorities spend up, they will forfeit grant. Where spending exceeds all reasonable limits in flagrant disregard of the interest of ratepayers and local businesses, authorities will be subject to rate limitation.
"With a realistic spending provision and a generous grant level that keeps the percentage of grant aid unchanged, I believe this is a settlement which the whole House should welcome."
My Lords, that concludes the Statement.
4 p.m.
Baroness David: My Lords, I should like to thank the Minister for repeating the Statement which, I may say, is a very long, complicated Statement and difficult to digest thoroughly in the short space of time there has been since we were handed it. It is superficially fairly attractive, but I can see a number of snags masked by jargon.
In paragraph 4 the Statement refers to the need to spend, but it does not follow that there is a need to spend at this level. I think that it is for local authorities and their electors to decide about their need to spend, and perhaps the results of the May elections this year will show that local electors have a view about whether their authorities should spend or not.
The Statement speaks of 3¾ per cent. increase over budget for 1986–87. I should like to point out that the police have recently been given an increase of 7½ per cent.; the low paid manual workers are still very much needing an increase, and we still have a teachers' bill looming up. So there will be much pressure on local authorities which they cannot help.
So far as greater efficiency is concerned, I am aware that the Audit Commission said that there is considerable scope for savings in the local authorities up to £1 billion. But the fact is that the joint groups of civil servants and officials could agree efficiency savings of only £200 million which has been taken into account in quantifying the £3 billion gap.
In paragraph 6 of the Statement there is a mention of a cash increase from 1986–87 of over£l billion, but [ think when we consider this we have to remember:hat the local authorities have lost £17 billion in grant since 1979 because of the grant being reduced from 61 ser cent. to 46·4 per cent. We are glad that this will not be reduced any further this year.

135
The last sentence of that paragraph reads:
"Ratepayers will have the certainty that the blame for high rate increases lies fairly and squarely at the door of their local authority".
I think we have to remember that in the Social Security Bill we managed to reverse the fact that 20 per cent. of rates will be paid by people who have not paid them before. We do not yet know whether the Government will force that to be reversed in another place tomorrow, but some people will have to pay quite a high increase through no fault of their own.
With reference to paragraph 5 and paragraph 8 about grant-related expenditure and grant recycling, we understand that there is to be a review of GREs, and that may have quite an effect on what local authorities can spend. We now know definitely though from paragraph 8 that grant recycling is to be abolished. That may mean again a considerable reduction in what local authorities have to spend. I think the amount of grant recycling was £680 million last year, though I am not sure whether that figure is correct.
Rate capping is to go on. In paragraph 11 we are told that 40 authorities will be rate capped; and that is £4½ billion of expenditure which will be under central government control. That again is removing the powers from local authorities to decide what they want to do.
So far as capital expenditure is concerned, I suppose what was called creative accounting will be stopped; but again we have to remember that it was only because local authorities were in such dire need to spend that they took upon themselves this method of finding ready money. We know how the infrastructure and so on desperately needs money to be spent upon it.
It seems to us as a general comment that central Government are putting local government in a straightjacket, as they have been doing in the past. As I said at the beginning of my remarks, although it may appear that there are some superficial attractions in this year's rate support grant, we are worried about what the final effect may be.
Baroness Stedman: My Lords, from these Benches we should also like to thank the Minister for repeating the Statement which he thinks ought to be welcome on all sides of the House. We do not quite take that view, and I doubt whether many local authorities will agree with the Minister. I should also like to join the noble Baroness in complaining about the length of the Statement and the short time we have had to consider it. I know that that is no fault of the Minister, but it is something that might be taken account of.
There is talk in the Statement of a more generous increase in public expenditure and more generous grants to local authorities. But the flow-back has been abolished. At present the rate support grant total is worked out and in tandem the local authorities prepare their budgets. This year the two totals did not tally and some £630 million RSG was unclaimed. That was recycled a few months ago—and in many cases, certainly in the case of the shire counties, after the local authorities had fixed their rates. Therefore it did not help them in reducing their rate demands.
136
If there is a future under-claim and the flow-back is abolished, the Exchequer (presumably the Consoli-dated Fund) will receive that extra grant back. The uncharitable might be persuaded to say that the Government can afford to be more generous in the knowledge that local authorities will not be able to claim it all. If there was a £630 million flow-back this year and it had gone to the Exchequer, I am advised that it could have produced a halfpenny tax cut. If underclaim is on the same scale in 1987–88, what would a similar amount be? If it is not to be recycled, what might it produce towards tax cuts? Is this really just a backdoor method of building up a surplus to meet tax cuts in the future? I think it smacks of creative accounting as bad as or worse than local authorities have been using in the advance and deferred purchase scheme.
The Government can argue that if local government increases are in line with inflation, no rate rises will be necessary. But in the real world local authorities find this quite impossible. Therefore some will lose grant which will not be recycled; but the Government will be able to point to those wicked local authorities which will have to bear all the blame.
We have had public expenditure totals; we have had aggregate Exchequer grants which include block grants; we have had flow-back; we have had rate capping; we have had grant recycling. When will we get local government finance on a proper scale? When rate capping first came into being we were told that not more than 10 or 12 authorities would be caught or involved. Now we have reached 20 rate capped, and 20 others have an automatic precept control. Many of these are in areas of great need, high unemployment and poor housing, with much greater demands on their social services. But the Government accept that this practice is necessary and now needs to be extended. At least they have left in a provision for applying for redetermination. I hope that if any of these authorities apply for redetermination, their applications will be sympathetically received.
On Thursday next week we are to consider a Bill that is intended to improve the recycling provisions of the RSG as it is at the moment. Yet there is to be further legislation this autumn to enshrine today's proposals in statute. I regret very much that yet another local goverment Bill is to come before this House before we have made an attempt to settle the question of local government finance and the functions and structure of local government.
Finally, if the Government can find this £1 billion plus of pump-back, why do they choose to do it in this way? Why not put it into capital expenditure; and even better still, since local authorities are overspent on capital, why not allow those local authorities to spend their own capital receipts in helping them to reflate the economy?
Lord Elton: My Lords, I am grateful to both noble Baronesses for their response to the Statement that I have repeated in this House. As to its length, of course I always regret detaining your Lordships for a minute longer than necessary, but had it been shorter, the noble Baroness could rightly have said that it was so condensed that it did not tell us what was in it. I understand that the Statement was available to both

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Front Benches promptly at 3 o'clock, which is what convention lays upon me. While I sympathise, on this occasion I do not apologise.
To the noble Baroness, Lady David, I would say that electors are free to decide under this settlement whether the local authority shall spend, and how. But what the Government have said is that if local authorities spend beyond what 1 think is generally accepted to be a very generous allowance, they must face the consequences which will be known to them in advance. Certainly, pay is a considerable factor in local authority expenditure; but with inflation now at 2·5 per cent. on the retail prices index, there can be no justification for high settlements. The local authority employers will bear the responsibility for any excessive pay deals in terms of higher rates and the unions in terms of job losses; and one or the other must be the result. Central government have no intention of providing more money simply to make high settlements above the rate of inflation. The noble Baroness, Lady David, would like us to return to the days of 61 per cent. GRE. I understand that the cost of that would be—
Baroness David: My Lords, if I may interrupt the noble Lord, I did not say that.
Lord Elton: My Lords, if she did not, then I need not counter what she said and thus I shall save a little more of your Lordships' time. Rate capping does not tell local authorities what to spend their money on. It only tells them how much they can spend in total; so this is not a direction (as I think the noble Baroness will find that she did say) to local authorities as to how to spend their money; it is a direction on how much money to spend.
The question of advanced and deferred purchase agreements was raised. I would only say by way of illustration that I understand that in the current year Manchester has entered into an agreement worth £100 million—and that is a year in which it has a capital allocation of only £44½ million for the whole year; so your Lordships can see that this is not something which the Government can simply leave for future generations to pick up the tab without any protection from those who know what is going on.
The noble Baroness, Lady Stedman, is quite right to say that the recycling figure this year is between £630 million and £650 million and not £680 million. The Exchequer will get the money back if it is overspent, but the greater part of the lengthy Statement was spent in explaining why overspending should not now be necessary because we have taken into consideration all the factors which hitherto have led to it which can be regarded as reasonably prudent housekeeping. In the long term, it is the taxpayer's and the ratepayer's money that is in question, and if it returns to the taxpayer's pocket via the Treasury that is no bad thing.
The noble Baroness, Lady Stedman, I think sought to say that the pressures for expenditure were greater than reflected even in the generous terms of the Statement, which I may say is made in the wake of consultation with the Consultative Committee for Local Government Finance and reflects closely what the Secretary of State was there told. I can only say that the Audit Commission has identified potential
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savings of up to £1,000 million per annum from its studies, and I am sure that local authorities that wish to spend even more can find ways of saving money therefrom.
The noble Baroness, Lady Stedman, finally asked me when we could look to a settled system of rates. My goodness, she is not alone in looking forward to that! The noble Baroness will know that we circulated a Green Paper; that the proposals in it were a package and we do not intend to introduce the results piecemeal. The closing date for comments on capital was 14th April, but the closing date on the proposals for the comments on the proposals for current expenditure is 31st October. It will be in the light of those comments altogether that my right honourable friend and his colleagues will conclude the best way forward.
4.15 p.m.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that many people will very much welcome his announcement of the abolition of recycling? It has always seemed to many of us quite illogical that where money is withheld because of overspending it should be redistributed to other local authorities. This seems a welcome if belated step. Will my noble friend also explain, particularly to the two noble Baronesses who do not appear fully to understand it, that local government expenditure on the scale of recent years is of very considerable significance to the management of the national economy for which the national government are responsible?
Lord Elton: My Lord, I am grateful to my noble friend for his intervention. I would point out that recycling was even more illogical than he suggested because the recipients of the recycled money were not only the non-overspending authorities, but they were the overspending authorities themselves. As to the depth of understanding of the noble Baronesses opposite of what I regard as a formidable system, I would not altogether under-estimate it. Nonetheless, they ought to understand better than they do that this is a vital matter for the national as well as for the local economy.
Lord Dean of Beswick: My Lords, I too welcome the Statement although I have some dubiety about some of the assumptions that are contained within it. May I ask the Minister what he meant when he said, in paragraph 9:
"I therefore intend to introduce legislation in the autumn after consultation"?
What does the word "consultation" mean? I assume that it means consultation with the local authority organisations. Will it be before a decision is taken or after? Very often consultation with this particular Government means consultation about what they have arrived at and not an attempt to get an acceptable solution.
Is it not a fact that of the nine authorities that have been added to the rate-capping list, certainly eight are in areas of the greatest need by any criteria that are set. Report after report highlights this type of authority as being very seriously short of cash and of government support. Is it not also a fact that these authorities,

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when this exercise which is contained in the Statement is carried out, will either be faced once again with reducing services that are already at a dangerously unacceptable level or facing rate capping once again?
Also, if the GRE formula—and we have not been given any indication today of what the Secretary of State means when he refers to it—and the GRE criteria are lowered considerably, there will be other authorities who will suffer financial penalties by the lowering of the GRE. So far as the so-called £1 billion extra that has been found is concerned, it is only one-seventeenth of what local authorities had lost in government support since 1979. I am not suggesting that we go back to the 1979 formula; but the facts are that the local authorities where money is badly needed have lost £17 billion in central government support since this Government came into office.
Those are some of the queries that will be worrying people. If we get to the situation where GREs are lowered considerably, may we not be in a situation where the penalties which the Government collect will exceed the £1 billion which they are distributing, bearing in mind that the last recycling exercise involved £650 million?
May I close on this point? The Minister of State will recall that in March when he made the last Statement on the recycling of the surpluses, I think it was the noble Lord, Lord Diamond (who I believe has just left the Chamber) and me who put to him the question of when we were going to have a system of simplified accounting so that local authorities in the long term could know where they were going. I do not think for one moment that this particular formula which has been put before your Lordships today helps us in that exercise one iota. I look forward to what the local authorities themselves will say about the Statement when they have digested it.
Lord Elton: My Lords, the noble Lord suggests that rate capping—and he is right—falls in areas where there are many poor people. It has now been in existence for some time and it is not readily apparent that the poor people suffer as a result but that on the whole administration is made more efficient—not all that much more efficient yet, though, which is why we are going on with it.
As to the desirability of doing away with recycling, I would refer the noble Lord to his honourable friend the Member for Blackburn, who, on 5th March, referred to the financial uncertainty caused by the recycling arrangements in Labour and Conservative authorities alike. He, in common with many others, made it quite clear that this was a change which would be welcome. I am afraid that I could not follow the noble Lord in his constant references to GRE having gone down, because it has in fact gone up.
Lord Dean of Beswick: My Lords, is it not a fact that the Secretary of State, in setting the GRE levels, which I do not think are being set here, has power to move them downwards and depress them? Is it not a fact that if you depress them below a certain point you could be in a net gain position with the clawback you would get by people being drawn in because they have exceeded their GREs?
Lord Elton: My Lords, the question is hypothetical, because it has not been depressed. It has gone up 3¾ per cent. since last year, which is in line with inflation. I join the noble Lord and the noble Baroness, Lady Stedman, in eagerly awaiting the day when we will have a clearer and simple system which people can follow with greater ease. It would be much more fun at the Dispatch Box, I can tell your Lordships; but I doubt whether we shall get there until after we have had the consultation on the Green Paper.
Lord Harmar-Nicholls: My Lords, may I just ask a procedural question concerning the noble Lord, Lord Dean? Both noble Baronesses said that this was an intricate Statement and they found it difficult to comment on it even when they had the Statement in front of them. I understand that. However, it looks as though the noble Lord, Lord Dean, who sits on the Back Benches, has got a copy of the Statement. Is it fair that the Back-Benchers on one side should have a Statement when Back-Benchers on the other side do not?
We are all interested in the possible outcome of this matter. Why is there this disproportionate allocation of the printed Statement? Ought we not all to be treated the same? How do we account for this? We all want to do our duty but we cannot do it unless we have the equipment and the ammunition. The noble Lord, Lord Dean, appears to have it.
Lord Dean of Beswick: My Lords, may I answer that question?
Lord Elton: No, my Lords; I do not think the noble Lord can actually answer a question during this procedure, I regret to say. I am not certain whether the reproach my noble friend is implying is directed towards the Front Bench opposite for being too generous or towards my own Front Bench for being too mean; but I think there should be a certain amount of equity in this matter and I shall ask my noble friends to look into it through the usual channels.
Lord Dean of Beswick: My Lords, may I just ask the Minister to respond to what I think was an important point I made on the question of consultation? May I also tell my noble friend Lord Harmar-Nicholls that the difference between us is probably that I got to a photocopier quicker than he did?
Lord Elton: My Lords, we will indeed publish a consultation paper and consult with all the interested local authorities on it. We will do so before we come to a final conclusion on how to do what we have decided to do.
Lord Sefton of Garston: My Lords, I was rather intrigued by the use in the Minister's statement of the words "democratic accountability". I should like to ask him to elaborate on that, because democratic accountability means different things to different people, depending on where you sit in the spectrum of the political life of the nation. What would be the attitude of the Minister to democratic accountability regarding a mandate the Government are claiming was taken almost four years ago, in view of the fact that the last recent by-election and the results in many

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local authorities have proved that democratic accountability, so called, is now indicating that the local authority electors want more spent in certain areas of this country? The noble Lord, Lord Young, shakes his head. I do not know whether that is to keep the sawdust level or whether he is indicating something. If he wants to indicate something, I will sit down. Evidently he does not: he just wants to shake his head, and that does not mean a thing in politics. If he had a little more experience in political life, he would never do that in a meeting.
On the point about recycling, would the Minister agree that, generally speaking, over the years when any recycling has taken place—now he is performing—the money that was recycled went to those areas which were hardest hit by problems? In this particular era, the areas with those problems have those problems because, as the noble Lord said, they are problems arising out of government policy. While I do not disagree at all that the central government shall be in charge with national finance, would he not agree that those areas such as Merseyside, the North-East and many other areas which up to now have benefited from recycling will now be denied that? They are the areas which have to tackle the problems that directly arise from a government policy which leaves us with 4 million of our citizens without work.
Lord Elton: My Lords, the noble Lord wishes me to respond to a general policy initiative. I think what he is saying is that the way in which we distribute the aggregate exchequer grant towards local authority expenditure should reflect criteria regionally in a way in which it does not. The noble Lord should know that there is already a component in the calculations for rate support grant closely affecting the needs of the different areas when we arrive at the basic figures. I would also draw his attention to the panoply of other methods which we use for assisting disadvantaged areas: urban development grant, development land grant, enterprise zones, development corporations and so on.
I do not think the Statement itself is, or should be, the forum for a debate on general policies—that is not the procedure of this House—but I would draw the noble Lord's attention to all those considerations, which he may wish to discuss at length on another occasion.
Lord Sefton of Garston: My Lords, I think that the Minister does not pay much attention to the democratically-expressed will of local authority electors.
Lord Elton: My Lords, I was not going to respond to that point because I thought your Lordships would prefer to keep the debate short and sweet. I would, however, say that the constitution of this country provides for a central government to be elected at no more than five-yearly intervals and gives it the power to do what this Government are doing. The electorate will have a chance to comment on that sooner or later, but not more than five years after the last election; and I think the noble Lord opposite is in for a nasty surprise when it does.
Baroness David: My Lords, may I just clear up one point? The Minister responded to my earlier remarks about the Audit Commission, saying that there was considerable scope for savings of up to a billion. In fact, I referred to that in my remarks and I said that the joint groups of civil servants and officials, who I think are an official group, went into this and agreed efficiency savings of £200 million and not £1 billion. It was the £200 million that was taken into account in quantifying the £3 billion gap; so I think the £1 billion has been a little discredited.
Lord Elton: My Lords, I am quite happy for the noble Baroness to illustrate with greater clarity what she said to start with. I should like to conclude by saying that this is an exceptionally generous settlement. It takes account of all the points put to us by representatives of all three political parties. It gives local authorities an opportunity to maintain services at present levels without large rate increases, and indeed to improve them if they are more efficient. That seems to me to be something which we all earnestly ought to applaud.

Wages Bill
Consideration of amendments on Third Reading resumed.
The Secretary of State for Employment (Lord Young of Graffham)The Secretary of State for Employment (Lord Young of Graffham) moved Amendment No. 6:
Page 7, line 1, leave out ("whether or not") and insert ("notwith-standing that").
The noble Lord said: My Lords, from all the excitement of recycling, we come to the slightly more pedestrian matter of a drafting amendment to clarify the requirements of Clause 4(3).
The present wording of subsection (3) might suggest that even if a payment made on or after the date of a worker's final instalment of wages fails to satisfy the requirements of Clause 1(2), there is some merit in considering whether it satisfies the time limit in Clause 3(3)(b). That is clearly undesirable. Replacing the words "whether or not" by "notwithstanding that" improves the clarity of the clause and makes it apparent that if the requirements of either Clause 1(2) or Clause 3(3)(b) are not satisfied, then there is no need to look at the requirements of the other clause. This amendment is intended to clarify the position for both employers and workers, and I ask your Lordships to accept it.
On Question, amendment agreed to.
4.30 p.m.
Clause 13 [Abolition, or variation of scope of operation, of wages councils]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 7:
Page 14, line 41, after ("so") insert—
("(i)").
The noble Lord said: My Lords, I should like also to speak to Amendment No. 8, which carries the substance of the matter. I apprehend that this is not a very controversial matter, but it carries on the theme

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of clarity pursued by the Secretary of State with the last amendment which, he will have noticed, we did not in any way resist. It arises from two provisions, Clause 18 and Clause 26(3) which, if I may briefly describe it in this way, were put into the Bill at rather later stages. They are concerned with workers who work in a dual capacity, part of the time of which takes them into a wages council sphere and part of the time of which does not.
There have long been difficulties about such matters. I refer to workers who work in different types of business where the employer owns a retail shop within the wages council and the worker works for a short time also in the employer's florist shop nearby which is not within it; and workers who work in residential establishments that are licensed and within the wages council and who move to an unlicensed building of the same employer, or to an office in the case of cleaners, and who fall outside the wages council for a small part of their work. There is the famous illustration of the shop assistant who sold sweets in the shop but lost entitlement to the wages council rate for the time that she was assigned to the postal counter.
The Government's answer to these problems, which was fortified by Clause 18 and the provision in Clause 26, is the traditional answer—to apportion the time or the work, to divide between the two. We have no hope of convincing the Government to change that formula, although my noble friend Lord McCarthy put forward arguments in that direction at an earlier stage. All we seek to do here is to give the Secretary of State power to put to good use his enthusiasm for clarity. We are glad that we can offer him the gist in person. Where the anomalies are so great it seemed to us that a further power might be useful; namely, that the Secretary of State might need to vary the frontiers of the wages council so as to bring the incidental work or payments or time under more comprehensive protection or, indeed, under a more sensible arrangement.
It could be said that it is possible under the Bill as it stands for the Secretary of State to do this under Clause 13 because it is true that Clause 13 allows the Secretary of State to vary the scope of the operation of a wages council by reference to any matter or circumstance whatever. But the same provision, Clause 13(3), goes on to bring to the attention of the Secretary of State in making such an order particular matters. They relate only to the operation of the wages council in regard to employers who are specified in the order, or members of an organisation so specified, or the like. The particular matter therefore which is spelt out by the Bill appears to relate to the variation of the scope of a wages council and possibly even to indicate that it would normally be by restricting that scope. But it says nothing at all about the problems which can arise in respect of groups of workers for whom the apportionment arrangements and the dual capacity arrangements in the other two clauses might well not be wholly sensible and fully satisfactory.
We therefore offer in this amendment the suggestion that in exercising his power the Secretary of State should specifically be told by the Bill that, just as he must pay particular attention to employers' problems under subsection (3), to be even handed he must also
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pay particular attention to the very difficult problems which sometimes arise in respect of workers in this position. I beg to move.
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Wedderburn, for his desire to clarify my life; but, alas, this does not really clarify the way. Clause 13 gives the Secretary of State a general power to make an order varying the scope of operation of any wages council by reference to any matters or circumstances whatever and a particular power to vary the council's scope of operation by excluding individual named employers or employers in membership of, or represented on, named organisations.
Amendments Nos. 7 and 8 taken together would give the Secretary of State an additional particular power to vary the council's scope of operation by varying the description of work done or workers who are within scope. Amendment No. 8 would provide that such variation should have regard in particular to the provisions of Clause 18 and Clause 26(3) which are concerned with workers whose work for an employer is only partly within scope of a wages order and with the method of apportioning their remuneration between the part in scope and the part not in scope.
In the debate on Amendment No. 38 on Report (the amendment which introduced the present subsection (3) of Clause 26) the noble Lord, Lord McCarthy, referred to the apportionment principle as anomalous and unjust. These two amendments, put down in the names of the noble Lords, Lord Stoddart and Lord Wedderburn, imply that the principle of apportionment may be undesirable in certain circumstances and require the Secretary of State to have regard to that fact when making an order varying a council's scope of operation.
Clause 13 makes it possible for the Secretary of State to vary the scope of operation of a wages council in cases where minor boundary extensions seem applica-ble. This amendment, which is in form an extension of this power but in reality a limitation on how it may be used, is intended to make it possible for a wages order to be applied to all the work done for a particular employer by a worker whose work would otherwise be covered only partly by the order. For example, if a worker was employed by a hotel and spent most of his time tending the grounds (which is out of scope work) but part of it tending the bar (which is in-scope work) the Secretary of State would be able to alter the definition of the council's scope so that all the work the worker did for the employer concerned was covered by the wages order.
Workers have been employed partly on work in scope, and partly not, probably since wages councils first began and no government have sought to change the position in such a way. This Government are certainly not going to do so, for reasons we have made abundantly clear both in your Lordships' House and in another place. Work in scope will be covered by the wages order, the other work will be subject only to contractual arrangements, as would be the case if it were done by another worker engaged solely on that work. It may seem to noble Lords opposite a good idea to remedy what they see as an anomaly, but just where

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do you draw the line? What would be the situation if the hotel I have just mentioned employed a full-time gardener as well as the part-time gardener and part-time barman? Would not the full-time gardener regard it as an anomaly if his part-time colleague was covered by the wages order for all the time he worked for the hotel while he was not so covered? I really must ask your Lordships to reject this amendment.
Lord Wedderburn of Charlton: My Lords, we thank the Secretary of State for his response, although we are disappointed by it. Perhaps I may make two comments about his response. I must make it clear that my noble friend Lord McCarthy is wholly in accord with this amendment. Only an unfortunate circumstance prevents my noble friend being here to explain again how the apportionment factor can be anomalous and even unjust. I am not sure that the Secretary of State actually resisted that argument to the full. Of course, I understand that where people are doing two sorts of jobs there will be a difficulty whatever line is drawn, as the Secretary of State's noble friend Lord Trefgarne explained in setting the number of employees to reckon on for rebates for redundancy. Therefore, on that matter we remain unconvinced.
We have no criticism at this point of the apportionment principle but merely say that it may be insufficient to do what is obviously sensible. We felt that the Secretary of State would like a further power to do something sensible, but if he feels that he does not want to do that, so be it.
Secondly, we were interested to note his reliance upon historical precedent. "You cannot do this", he said, "or anything different from this because this has been done ever since wages councils first began". If only he would take the same approach to some of the other matters he is throwing out of the wages councils legislation. We could have pressed upon him that argument had we heard it in Committee, and we would have known how to do it. We would have said that it has been like that since 1909 when young people in sweated trades first began to be protected.
However, we see that we shall not prevail upon the Secretary of State. It is a small point, but one suspects it is one which will cause the Secretary of State to look at his general powers under Clause 13 when this Bill is enacted. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Clause 14 [Wages orders]:
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 9:
Page 17, line 19, after ("time") insert ("being").
The noble Lord said: My Lords, I ask your Lordships to support this amendment, which is a drafting correction to insert the word "being" which is omitted from the present print of the Bill.
On Question, amendment agreed to.
Clause 16 [Effect and enforcement of wages orders):
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 10:
Page 18, leave out lines 12 to 32 and insert—
("16.—(1) If, in the case of any worker to whom an order under section 14 applies, the amount of remuneration paid to the worker by his employer in respect of any week is less than the statutory minimum remuneration provided for him by the order in respect of that week, the worker shall be taken to be entitled under his contract to be paid the difference between those two amounts as additional remuneration in respect of that week."
The noble Lord said: My Lords, with permission, I should like to take Amendments Nos. 10 to 15 and Amendment No. 21 together. The first six amendments clarify the application of Clause 16, which deals with the effect and enforcement of wages orders. The seventh amendment, which is related to the others, improves the wording of Clause 20(6) dealing with the recovery of underpayments by means of civil proceedings taken by a wage inspector. The amendments do not change the substance of either clause. They make the Government's intentions clearer and improve the drafting.
The broad effect of the amendments is to ensure that the provisions of Clause 16, which entitles workers contractually to the statutory minimum and makes it an offence for employers to pay less, are consistent with the revised Clause 17 included in the Bill at the Committee stage. Clause 17 establishes what remuner ation is to be taken into account in determining whether the statutory minimum has been paid. I ask your Lordships to support this group of amendments I beg to move.
On Question, amendment agreed to.
Lord Young of Graffham Lord Young of Graffham moved Amendments Nos. 11 to 15.
Page 18, line 33, leave out ("relation to") and insert ("respect of")
Page 18, line 34, leave out ("remuneration not less than") and insert ("an amount of remuneration equal to, or exceeding.").
Page 19, line 16, leave out from ("(a)") to ("by") in line 19 and insert ("the statutory minimum remuneration provided for the worker in respect of the week in question").
Page 19, line 21, leave out ("actually so paid") and insert ("paid to the worker").
Page 19, line 42, at end insert—
("() Any reference in this section, in relation to a worker, to remuneration or statutory minimum remuneration in respect of a week shall be construed as a reference to remuneration or statutory minimum remuneration in respect of the following namely—

(a) in the case of a time worker, time worked by the worker in that week, and

(b) in the case of a piece worker—

(i) work executed by the worker in that week, and

(ii) any such time as is mentioned in section 15(4) occurring during that week.").

On Question, amendments agreed to.
Clause 17 [Computation of remuneration]:
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 16:
Page 21, line 20, after ("apply") insert—
(" (a) ").
The noble Lord said: My Lords, we introduced an amendment on Report designed to ensure that where an employer supplied goods or services to a worker

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and the charge he made for those goods or services was to count as remuneration paid for the purpose of comparing what he had paid with the amount statutorily due, the worker had to give his prior agreement or consent. This was to avoid the risk to which the noble Lord, Lord McCarthy, had drawn attention, of a worker having to accept payment in goods or services provided by the employer. While the noble Lord, Lord McCarthy, was gracious enough to thank me for that amendment I have now to tell your Lordships' House that we think it desirable to go one step further.
As the Bill stands, it would not be impossible, or indeed unlawful, for a worker and employer mutually to agree to an excessive charge being made for the goods or services in question in order to side-step the requirement of the Bill that statutory minimum remuneration should apply. In other words, there could be a mutual agreement to contract out of the legislation. We have never countenanced contracting out in any previous wages council legislation and it has no place in the current Bill. Indeed, we have safeguarding provisions elswhere in this part. The purpose of this amendment is to make sure that no loopholes exist, and I commend to it the House. I beg to move.
4.45 p.m.
Lord Wedderburn of Charlton: My Lords, I thank the Minister for his explanation of this amendment, but there are one or two questions I should like to put. It is a difficult matter. Indeed, the noble Lord, Lord Trefgarne, is on record on 26th June as saying he considered it to be complex. The noble Lord, Lord Rochester, said that he thought that Clause 17 was one that he did not understand. I certainly did not, and I refrained from speaking. My noble friend Lord McCarthy found it difficult. So there has been difficulty, especially round the area of what my noble friend Lord McCarthy called, on one occasion, the truck provision or the potential truck provision.
These are deductions which count against the worker—if I may put it that way—in calculating remuneration. Therefore, we are wholly at one with the Secretary of State in wanting to be careful to see that the whole nature of the legislation is not abused by the worker being made to pay or have a deduction made which is such that the employer can get away from a proper calculation of statutory minimum remuneration.
The questions I should like to put to the noble Lord the Minister relate to the change from the previous version, which said that the deduction could be in respect of,
"goods or services supplied by the employer with the worker's prior agreement or consent",
to the version which substantially appears in Amendments Nos. 18 and 19.
The first question is: where the price is greater than the net expenditure of the employer, why should the employer recover a greater sum than that expenditure to which he would be limited in the second of the two cases unless the worker has agreed to the price? Is it the case that the worker's prior agreement or consent does
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not need to be to the actual price because the price which the employer can charge when he is supplying goods of a kind which in the course of his business he supplies is to be the price that he would have obtained for the goods or services if they had been supplied in the course of that business? If it is not in the course of his business then he is only allowed expenditure incurred in connection with the supply of the goods or services.
All phrases have problems, but accepting the second, for the moment, as watertight, the issue of whether the employee needs to have given his consent and agreement to the actual business price, which may be rather more, in our view arises. The second point is that we regret that at this late stage the phrase,
"in the course of his business"
appears. I do not think that appears in a similar area of the Bill. I am not trying to do other than accept that the noble Lord is attempting to make this subsection better from the same point of view which we share, but the phrase,
"in the course of his business"
is well known to cause difficulties in other areas of the law. We express regret that a problematical phrase should have been introduced at Third Reading.
Obviously it is not really possible at this stage to propose any other phrase which would be better. It will no doubt go through as part of the Bill, but we want to register that second point and ask that first question, which worries us somewhat. The intention of the Government to improve the clause in our view has succeeded, but we worry about the issue of the relationship between an employer's expenditure and the price of goods when they are offered and supplied in the course of his business,
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Wedderburn. At this late stage the intention of this amendment is merely to prevent a mutual agreement to contract out of the legislation. Indeed, the employer would be entitled to charge the retail price and this could be the maximum. However, the point of the amendment is to prevent voluntary contracting out by both parties. Indeed, in the words I used before, it would prevent an excessive charge being made for the goods or services in question, in order to prevent the statutory minimum remuneration being paid. I suspect that this amendment has the support of noble Lords opposite. It is for the protection of the employee, and I hope that your Lordships' House will accept it in that spirit.
On Question, amendment agreed to.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 17:
Page 21, line 28, leave out from beginning to second ("or") in line 29.
On Question, amendment agreed to.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 18:
Page 21, line 31, at end insert ("or
(b) to deductions made or payments received by the employer on account of any goods or services supplied by the employer with the worker's prior agreement or consent to the extent that any such deductions or payments do not result in the

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employer recovering from the worker an amount exceeding the cost to the employer of supplying the goods or services in question;").
On Question, amendment agreed to.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 19:
Page 21, line 34, at end insert—
("() For the purposes of subsection (4)(b) the cost to an employer of supplying any goods or services shall—

(a) where he supplies goods or services of the kind in question in the course of his business, be taken to be the amount which he would have obtained for the goods or services if they had been supplied in the course of that business; and

(b) in any other case, be taken to be the amount of expenditure incurred by the employer in connection with the supply by him of the goods or services.").

On Question, amendment agreed to.
Clause 20 [Officers]:
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 20:
Page 24, line 23, leave out ("has dealings") and insert ("is dealing").
The noble Lord said: My Lords, Clause 20(2) requires wages inspectors to identify themselves. The expression "has dealings" may imply that a sequence of dealings must take place before an officer need identify himself to a person who may not know that he is acting as an officer. It is the Government's intention that officers should identify themselves whenever they deal with a person who appears not to know that they are acting as officers. I ask noble Lords to support the amendment. I beg to move.
On Question, amendment agreed to.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 21:
Page 26, line 5, after ("of) insert ("an amount of).
On Question, amendment agreed to.
Clause 24 [Transitory provisions relating to existing wages councils and wages orders]:
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 22:
Page 27, line 34, after ("(a)") insert ("subject to paragraph 5A of Schedule 6,").
The noble Lord said: My Lords, I beg to move Amendment No. 22 standing in my own name and that of my noble friend Lord Wedderburn of Charlton. It may be for the convenience of the House if we discuss Amendments Nos. 23, 24, 25 and 29 together with Amendment No. 22.
The combined effect of these amendments relates to the procedure that a wages council has to follow in making a wages order. The amendments do not in any way change the new procedure contained in the Bill; they simply seek to delay the introduction of the new procedure. In fact the amendments are rather modest. They give to the Secretary of State a new power, in addition to the other new powers in Part II of the Bill, which offers him the option of deciding whether the new procedure for making a wages order should, as the Bill now provides, come into effect at the same time as
150
most of the other provisions of Part II, two months after Royal Assent, or at some other date. In other words, the Secretary of State would be given flexibility in respect of the procedures for making wages orders, which surely must be a desirable objective. Indeed, we are trying to help the Secretary of State.
If the amendments are not accepted or agreed by the House, then particular problems will be created for at least two groups: the clothing industry; and the licensed residential establishments and licensed restaurants. In the case of the clothing industry, which faces serious problems that arise from the Bill, where the operative date of a new wages order is on 1st January, the anniversary of the last order will be put in jeopardy. Both sides of the industry are concerned about this matter and support this group of amendments.
Perhaps I should explain that, as part of their national agreement, the British Clothing Industry Association and the National Union of Tailors and Garment Workers agree the contents of the wages order of the Clothing Manufacturing Wages Council. Naturally, like any other agreement, it can take some time to achieve and then the proposed agreement has to be submitted to the memberships of both organisations for final approval or otherwise. While this procedure is not as extended as that proposed in the Bill for wages councils, the dates for the various stages of the existing procedure were agreed within the clothing industry before it was known that the Wages Bill would significantly increase the time taken by a wages council to bring an order into effect.
At present wages councils can make orders effective from the day on which they agree to them. In practice they always endeavour to agree an order well in advance of the operative date so that employers are given adequate notice. However, the Bill will increase to some three months the shortest time taken for a wages council to make an order effective. Indeed, the wages councils which are due to make new orders with effect from dates in December are being advised by the Department of Employment to agree a new order in August of this year.
As I have already indicated, the Clothing Manufacturing Wages Council is due to make a new order on 1st January 1987. Although the industry's voluntary national agreement comes into effect a full month earlier, it is impossible for the industry to change the agreed timetable for the voluntary procedures to agree the contents of a wages council order in time to maintain the anniversary date. I understand that in correspondence with the clothing industry the Parliamentary Under-Secretary of State, for Employment, Mr. David Trippier, has rejected any concession on timing because the problem is not of a sufficiently general character. However, while it is true that only those wages councils with anniversary dates that fall two months after Royal Assent and earlier than the clothing industry anniversary date would be affected by these amendments, there are significant industries, such as the licensed residential establish-ments and licensed restaurants, (which in fact has adjourned its meeting until after this Bill receives Royal Assent) which cannot maintain their anniver-sary date unless these amendments are accepted. Indeed, this industry's anniversary date of 6th October

151
is such as to give the Bill retrospective effect, because the council would have had to issue its proposals before the Royal Assent and indeed, as I understand it, before the Bill entered the Committee stage of your Lordships' House. As it stands, the Bill will penalise catering workers because a statutory body quite properly has not anticipated the outcome of legislation.
I am not sure whether the Government expected the council to anticipate the outcome of this Bill; but if they did, then it did not show much courtesy and respect to this House. Indeed, had the council anticipated it, the legality of any order may very well have been in question. This is a complicated matter. I had difficulty in understanding it myself, and I hope that I have been able to assist your Lordships in understanding it. I assure your Lordships that it would do no harm to the Bill to have the amendments included. It would certainly ensure that no anomalies such as those that I mentioned occur after the passing of the Bill. I hope that the Secretary of State will accept them. I assure him that we are trying to be helpful. I beg to move.
5 p.m.
Lord Young of Graffham: My Lords, the noble Lord has explained that the amendment put down in his name and in the name of the noble Lord, Lord Wedderburn of Charlton, is intended primarily to provide a dispensation in the Bill to make it easier for the clothing industry to adapt its well-established, voluntary bargaining arrangements to the new timescale introduced by the Bill for bringing in wages orders.
However, I fear that we are not persuaded that the difficulties which might be occasioned to the clothing industry by the new procedures proposed by the Bill—and we accept that there might be some difficulties—are insurmountable or that they provide sufficient reason for amending the Bill overall, even as a transitional measure. We have given firm undertakings to introduce these particular reforms, which have been sought by a number of employers in other industries who have had good reason to complain about the insufficient amount of time for representations about pay proposals or the effect on their businesses of retrospective pay awards.
I have been asked to assure the noble Lord—and I hope that he will accept this in the spirit that it is offered—that if there are any administrative measures which would assist the clothing industry to smooth the transition from the old procedures to the new, the Office of Wages Councils will gladly put them in hand. I therefore ask your Lordships to resist these amendments.
Lord Stoddart of Swindon: My Lords, I am sorry that the noble Lord could not accept the amendments. That would probably have been the safest and most satisfactory way out. The industries that I have mentioned, and others, would then have had statutory force behind them and may have felt far more confident. However, I think the noble Lord has tried to be helpful. He has heard what I said. There have been representations from the clothing industry in particu-
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lar. It would be churlish of me not to accept his assurances that if and when anomalies occur, the Government will be prepared to take administrative action to assist in overcoming them. I think that that is a fair assurance. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 33 [Short title, commencement and extent]:
[Amendments Nos. 23 to 25 not moved.]
Schedule 2 [Constitution etc. of wages councils]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 26:
Page 36, line 26, leave out ("not more than 5")
The noble Lord said: My Lords, with the leave of the House, I shall speak also to Amendment No. 27. This amendment concerns the make-up of a wages council. I see that the noble Lord, Lord Trefgarne, has momentarily replaced the Secretary of State. I hope that he will take the same view as his noble friend did on a previous amendment; namely, that that which has been done in wages councils for a long time should continue.
The amendment goes to a rather curious change that the Government intend to make. A wages council is made up of two sides representing the employers and the unions and the workers; it then has a third side, which is very important to its operation and which needs careful consideration—the independents. For as long as there have been wages councils, I believe that it is right to say that the number of independents has normally been three, although I believe in some cases it has been one. But for a certain number of years three has been the norm.
The Government changed the period of tenure in another place, but left the rest as it stood. Then suddenly—and I say "suddenly" advisedly, because my noble friend Lord McCarthy and others protested about the lack of notice—in Committee the Government introduced an amendment saying that there should be not three but five independents. That radical change was made without consultation with the CBI, the TUC, ACAS and so on. That has been said, and to my knowledge it has never been denied. The grounds upon which the change is being made have not been made fully clear, and we feel quite justified in trying to clarify the position at the last moment, before we lose the Bill from the consideration of this House.
In Committee (at col. 454 of the Official Report) the noble Lord, Lord Trefgarne, said that the inspiration for the change came from employers in the retail trade, with, he understood, the support of the workers side of the council. By the Report stage my noble friend Lord McCarthy had discovered that that was not the understanding at least of the union. That misunderstanding remains, and so that cannot be the basis of the change.
Secondly, there was talk both in another place and here, but mainly here, about the difficulty of securing a reasonable attendance of independent members on wages councils. The noble Lord, Lord Trefgarne, (at col. 451) and the noble Lord, Lord Young, (at col.

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224) on Report said that appointing more independent members would make it easier to achieve a fuller presence at meetings. The noble Lord, Lord Young, then went on to say that the terms of appointment now were in his hands and the current terms allowed him to replace any member who failed to attend half the meetings in 12 months. Therefore that does not seem a strong reason to change the fundamental structure of a wages council.
The amendments would avoid the disadvantage which the Secretary of State appears to be putting himself under; namely, of appointing, if he did, two more independents to each of the 26 wages councils. According to the noble Lord and to his honourable friend, Mr. Trippier, these are people who are difficult to find, and it would mean appointing 52 more people to the 26 wages councils. Our amendments would say that there would be not more than five independents; the number would normally be three; but it would be five if the wages council asked the Secretary of State. We put in the third provision because we believe that the wages council is likely to know more about the problem into which it is falling than the Secretary of State.
That provision also deals with some of the problems that have arisen in people's minds. For example, at the Report stage my noble friend Lord McCarthy asked (at col. 222) what would happen to the change in the term of office of independent members who were already there. The noble Lord, Lord Young, has not really replied to that.
The problem has arisen as to whether the change may amount to a claim for further patronage. I say that not in criticism of the Secretary of State, but it has arisen in some people's minds. On Report (at col. 224) the noble Lord, Lord Young, was very firm about any such matter. He said there was no intention on the part of the Government to pack the ranks of independent members with their supporters. Therefore that is not the reason for the change.
In Committee the noble Lord, Lord Trefgarne (at col. 451) said that the Secretary of State would not necessarily immediately appoint all the independent members. What is it all about? What is the problem? It does not seem to be attendance. People who are bad attenders can already be got rid of and the terms of appointment can be altered. It does not seem to be the sort of people. It does not seem to be for the reasons that the Minister's honourable friends and others in the Conservative Party generally were making such a fuss about, as my noble friend Lord McCarthy commented in Committee (at col. 452). He said that if one reads the documents, one sees that all sorts of nasty things are said about the mixture of lawyers, academics, businessmen and the occasional trade unionist who turn up as independents. The problem does not seem to be that. It does not seem to be related to a real need to have them because they may not appoint them all, and people are hard to find.
The Government have given no explanation for this provision. My noble friend Lord McCarthy ended by saying:
"It all looks very suspicious".—[Official Report, 8/7/86; col. 225.]
Although there may be some who say that I am a suspicious man, he is not. What is it all about? The
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Government must come clean for once. If they do not like the approach to the market economy taken by some independents such as Sir John Wood or other distinguished independent members of wages councils, they had better say so. If it is not that, and it is not the general attendance and structure of wages councils—because they may not appoint the members—I fail to find any justification for this new matter introduced at a late stage in this House. As far as I can find, it was never hinted at by Government spokesmen in the other place. I shall be interested to hear whether I am wrong.
We move the amendment in a genuine spirit of a Third Reading amendment which meets all the Government's arguments such as they are. The possibility of five independent members is introduced, but the normality of three is retained. The case must be made (in our amendment the wages council makes the case) for the Secretary of State to appoint new members. No doubt he could discuss the matter with the wages councils in the interim if he felt that that was needed.
Surely that is a rather better structure and would clear the mind of any suspicious persons. It gives the Secretary of State the power, but it makes the wages council a counterbalancing element. It brings things out into the open, at least in wages councils discussions, rather than leave the matter to the private patronage of the Secretary of State to put two more people, for unknown reasons, upon wages councils.
On these Benches we feel strongly on this matter, having read the lack of explanation from the Government. We shall listen attentively to the Government. We hope that they can put forward some kind of explanation, which so far they have not done. We hope that the Government too will take this matter seriously. I beg to move.
Lord Rochester: My Lords, when this matter was discussed on Report, I said, speaking on behalf of my noble friend Lord Sainsbury and myself, that I thought that the Government needed to give the House a good deal more information than they had as to why they had increased the number of independent members on wages councils to a maximum of five.
We received a little more information from the Secretary of State at the time, but there was one point I made to which I received no response. I asked the noble Lord, Lord Young, whether he would find it possible to say that if two more independent people were to be appointed as members of wages councils, at least one of them should have practical experience of industry. I asked that in that case due regard be paid to the fact that in the industries covered by wages councils there is a rather higher proportion of small businesses than in industry generally.
I hope that on this occasion the noble Lord, Lord Trefgarne, can make some response to that point. If he cannot give me a categorical assurance on the matter, I hope that he will at least express some sympathy with the point that I have made.
5.15 p.m.
Lord Trefgarne: My Lords, as your Lordships will by now be well aware, an amendment to increase the

155
maximum number of independent members on a wages council from three to five was adopted by your Lordships in Committee. Criticism was then made by noble Lords opposite, both in Committee and on Report, on the grounds of lack of prior consultation. Allegations were made that the real purpose of the amendment was to "pack" the ranks of independent members with our supporters.
An amendment put down in the names of one or two noble Lords opposite and the noble Baroness, Lady Turner, to change the number back to three was subsequently withdrawn. The amendments seek to make the additional two appointments of independent members conditional upon a request being made by the council in question. The practical effect of that would be that if the two sides of the council could not agree on whether they should ask the Secretary of State for an increase, the decision would lie with the independent members who have the casting vote in such an event. I am sure that noble Lords would see that as unacceptable.
As my noble friend explained during the debate on Report, it is inevitable that there will be difficulties in finding a date and time convenient for the large number of people involved in the operation of a major council—up to 30 people on each side in the larger councils, not counting the independent members. There will also be occasions when members cannot attend through sickness or other matters beyond their control. Increasing the number of independent members who can be drawn on will make it easier to achieve a fuller presence at meetings which have to decide questions of considerable importance to the industries concerned.
Once again I wish to assure your Lordships that we are not seeking to influence councils' decisions by filling the independent members' posts with our friends. Had we wanted to do that, three friends would have been just as effective as five. Our aim is merely to avoid criticisms made in the past, particularly by the retail industry, that important questions had to be decided with the assistance of only one or two independent members. We do not intend that the Secretary of State will proceed to appoint five independent members of each council. Three members are likely to continue to be adequate for many councils, particularly the smaller ones.
The noble Lord, Lord McCarthy, made great play in debate of the fact that we have said that it is difficult to find people to sit as independent members, and that is surely one other reason why we would not do what he claims we intend to do.
I hope that I can dispel from the minds of noble Lords the thought that there is some dark and sinister plot in these proposals. There is no such thing. We merely propose this modest measure to make the operation of the councils rather smoother when inevitably one or two of the existing independent members cannot be present.
I hope that the noble Lord will feel that his fears have been assuaged and that he will now seek leave to withdraw the amendment.
Lord Rochester: My Lords, with the leave of the House, may I ask the noble Lord, Lord Trefgarne, whether he will respond to the point of substance that I made?
Lord Trefgarne: My Lords, if I have your Lordships' permission, may I apologise to the noble Lord, Lord Rochester, for not dealing with that point? I have complete sympathy with the point that he made. Perhaps I may take some advice on how we could give effect to that sympathy and write to him.
Lord Wedderburn of Charlton: My Lords, this is a much more difficult matter than the noble Lord suggests. I have tried as carefully as I could to note the points that he made. There are not many that are new. Most of them fall within my compass. He said about our amendment—this seems to be the only point of substance, and it is a new point because it is a new amendment—that two additions to the wages councils would be made by the Secretary of State on the proposal of, or at the request of, the wages council. That is true.
The noble Lord then posits the case that where the two sides were tied the independent members would have the casting vote on the matter. Inferentially, he seems to suggest that they would keep themselves in power and prevent further independent members being appointed. If that scenario arose, the Secretary of State would have an easy remedy in his hands through the terms of appointment of independent members. It would clearly be improper in all sorts of ways.
I do not believe that I can do other than turn on the Government the argument that they have so often turned against us when we have moved amendments, slightly better drafted than theirs; namely, that in practice it would not be a problem. It is clearly not the root of the problem. It is clearly not the reason why they want five. Five could gang up, equally improperly, although not involving the same machinery. The fact that there are 30 people on each side and that it is difficult to make a date in the diary is not very compelling.
The noble Lord refers to sickness. If he will guarantee to me that four of the five will not go down with influenza more often than two of the three, we will take it. But that is surely not the reason. They do not want to pack the wages councils with their friends. I am not sure that I have read that anyone has ever said that. Nor is it a dark and sinister plot. Quite frankly, we do not expect many dark and sinister plots from the Government. What one gets are clumsy manoeuvres that come out in the open. This one came into the open rather late. I do not know that the noble Lord, or even the Secretary of State, is the author. But somewhere, somehow, there is a reason for this that has not been properly debated. That is our belief. We feel, therefore, that this is a matter, if noble Lords will think of the balance of the arguments, on which, even at this late stage, opinion should be tested.
5.21 p.m.
On Question, Whether the said amendment (No. 26) shall be agreed to?
Their Lordships divided: Contents, 60; Not-Contents, 135.

DIVISION NO.2

CONTENTS

Ardwick, L.

Kirkhill, L.

Barnett, L.

Listowel, E.

Birk, B.

Llewelyn-Davies of Hastoe, B.

Blease, L.

Lovell-Davies, L.

Blyton, L.

McIntosh of Haringey, L.

Boston of Faversham, L.

Milner of Leeds, L.

Bottomley, L.

Mulley, L.

Brockway, L.

Nicol, B.

Caradon, L.

Northfield, L.

Cledwyn of Penrhos, L.

Parry, L.

David, B.

Phillips, B.

Davies of Penrhys, L.

Pitt of Hampstead, L.

Dowding, L.

Ponsonby of Shulbrede, L.

Elwyn-Jones, L.

[Teller.]

Ennals, L.

Prys-Davies, L.

Ewart-Biggs, B.

Rhodes, L.

Fisher of Rednal, B.

Serota, B.

Gallacher, L.

Shackleton, L.

Glenamara, L.

Shepherd, L.

Graham of Edmonton, L.

Silkin of Dulwich, L.

[Teller.]

Stoddart of Swindon, L.

Hatch of Lusby, L.

Strabolgi, L.

Heycock, L.

Taylor of Blackburn, L.

Houghton of Sowerby, L.

Taylor of Mansfield, L.

Hughes, L.

Underhill, L.

Irving of Dartford, L.

Wallace of Coslany, L.

Jacques, L.

Wedderburn of Charlton, L.

Jenkins of Putney, L.

Wells-Pestell, L.

John-Mackie, L.

White, B.

Kearton, L.

Willis, L.

Kilbracken, L.

Ypres, E.

NOT-CONTENTS

Aldington, L.

Drumalbyn, L.

Alexander of Tunis, E.

Elles, B.

Ampthill, L.

Elliot of Harwood, B.

Arran, E.

Elliott of Morpeth, L.

Auckland, L.

Elton, L.

Bauer, L.

Faithfull, B.

Belhaven and Stenton, L.

Fanshawe of Richmond, L.

Beloff, L.

Ferrers, E.

Belstead, L.

Forbes, L.

Bessborough, E.

Fortescue, E.

Birdwood, L.

Fraser of Kilmorack, L.

Blake, L.

Gainford, L.

Blyth, L.

Gardner of Parkes, B.

Boardman, L.

Geddes, L.

Boyd-Carpenter, L.

Glanusk, L.

Brabazon of Tara, L.

Glenarthur, L.

Brougham and Vaux, L.

Gray of Contin, L.

Broxbourne, L.

Gridley, L.

Butterworth, L.

Hailsham of Saint

Buxton of Alsa, L.

Marylebone, L.

Caccia, L.

Halsbury, E.

Caithness, E.

Harmar-Nicholls, L.

Cameron of Lochbroom, L.

Harvington, L.

Campbell of Alloway, L.

Henderson of Brompton, L.

Campbell of Croy, L.

Hives, L.

Carnegy of Lour, B.

Holderness, L.

Carnock, L.

Home of the Hirsel, L.

Cathcart, E.

Hood V.

Clinton, L.

Hooper, B.

Colwyn, L.

Hunter of Newington, L.

Constantine of Stanmore, L.

Hylton-Foster, B.

Cork and Orrery, E.

Inglewood, L.

Cowley, E.

Kimball, L.

Cullen of Ashbourne, L.

Knollys, V.

Davidson, V.

Lane-Fox, B.

De Le Warr, E.

Lawrence, L.

Denham, L. [Teller.]

Layton, L.

Derwent, L.

Long, V.

Dilhorne, V.

Lothian, M.

158

Lucas of Chilworth, L.

St. Davids, V.

Lyell, L.

Saltoun of Abernethy, Ly.

Macleod of Borve, B.

Sanderson of Bowden, L.

Mancroft, L.

Sandford, L.

Margadale, L.

Sandys, L.

Maude of Stratford-upon-

Selkirk, E.

Avon, L.

Sempill, Ly.

Merrivale, L.

Shannon, E.

Mersey, V.

Skelmersdale, L.

Middleton, L.

Somers, L.

Milverton, L.

Stanley of Alderley, L.

Montgomery of Alamein, V.

Stodart of Leaston, L.

Mottistone, L.

Strathcona and Mount Royal,

Munster, E.

L.

Murton of Lindisfarne, L.

Sudeley, L.

Newall, L.

Swinton, E. [Teller.]

Norfolk, D.

Terrington, L.

Nugent of Guildford, L.

Thomas of Swynnerton, L.

Onslow, E.

Todd, L.

Orr-Ewing, L.

Tranmire, L.

Peyton of Yeovil, L.

Trefgarne, L.

Portland, D.

Trumpington, B.

Portsmouth, E.

Vaux of Harrowden, L.

Radnor, E.

Vickers, B.

Rankeillour, L.

Vivian, L.

Renton, L.

Westbury, L.

Rochdale, V.

Whitelaw, V.

Romney, E.

Wise, L.

Rugby, L.

Young, B.

St. Aldwyn, E.

Zouche of Haryngworth, L.

On Question, amendment agreed to.

5.30 p.m.
[Amendment No. 27 not moved].
Schedule 6 [Transitional provisions and savings]:
Lord Trefgarne Lord Trefgarne moved Amendment No. 28:
Page 43, leave out lines 11 to 19 and insert—
("4.—(1) Where at any time during the period of two years ending with the date of an offence under section 16(3) of this Act an order under section 14 of the 1979 Act applied to the worker in relation to whom the offence was committed, or to any other worker employed by that worker's employer, section 16 of this act shall have effect in relation to any such time as if—

(a) in subsections (4) and (7), any reference to any other failure on the part of the employer to pay an amount of remuner-ation equal to, or exceeding, the statutory minimum remuneration provided for a worker by an order under section 14 of this Act were a reference to any failure on the part of the employer to pay an amount of remuneration equal to, or exceeding, the remuneration for the time being fixed in relation to a worker by an order under section 14 of the 1979 Act or by a permit under section 16(1) of that Act;

(b) in subsection (5), the reference to the statutory minimum remuneration so provided were a reference to the remuner-ation so fixed; and

(c) subsection (6) were omitted.

(2) For the purposes of subsections (4) and (5) of section 16 of this Act, as they have effect in accordance with sub-paragraph (1), the following matters, namely—

(a) the question whether an employer has failed to pay an amount of remuneration equal to, or exceeding, that fixed by any such order or permit under the 1979 Act as is mentioned in that sub-paragraph, and

(b) the amount referred to in subsection (5)(6), shall be determined in accordance with sections 17 and 18 of the 1979 Act, and not in accordance with sections 17 and 18 of this Act.").

The noble Lord said: My Lords, this amendment— and I should like, with your Lordships' permission, to speak at the same time to Amendment No. 30—omits the transitional provision dealing with the position where the two-year period during which arrears may be claimed on a prosecution for failure to pay the

159
statutory minimum straddles a period when the 1979 Act applied and a period when the Bill applied and replaces it with an improved version. I beg to move.
[Amendment No. 29 not moved.]
Lord Trefgarne Lord Trefgarne moved Amendment No. 30:
Page 43, line 23, leave out from beginning to ("and") in line 24 and insert ("an amount of remuneration less than that fixed by any such order or permit under the 1979 Act as is mentioned in paragraph 4(1)").
The noble Lord said: My Lords, this amendment follows the one to which I have just spoken. I beg to move.
Lord Trefgarne Lord Trefgarne moved Amendments Nos. 31 to 34:
Page 44, line 2, after ("affect") insert—
("(a)")
Page 44, line 3, after ("(1)") insert (", or
(b) any right of a worker to any annual holidays or to any holiday remuneration in respect of those holidays,").
Page 44, line 10, after second ("of) insert (", or in connection with,").
Page 44, line 14, at end insert—
("() Without prejudice to the generality of sub-paragraph (1), an order under this paragraph may make provision in connection with preserving the effect of rights to which paragraph 5(4)(b) above applies.")
The noble Lord said: My Lords with your Lordships' permission I should like to move Amendments Nos. 31 to 34 en bloc. This group of amendments relates to the accrued rights of workers to holidays and holiday pay at the date a wages order ceases to apply to them. Wages council workers are not entitled to paid holidays in their first year of service. The rights they accrue in each year are based on length of service and are allowed in the following year. Schedule 6, as at present drafted, enables the Secretary of State to make an order preserving such accrued rights as at the date a wages order ceases to apply to a worker. As it would have been impossible to make such an order on the date of Royal Assent and for it to take effect from that date, provision was made for it to have retrospective effect. However, as workers under the age of 21 are to be excluded from the system from Royal Assent, problems are likely to arise in safeguarding their rights through an order made at some future date.
The amendments therefore preserve the accrued holiday entitlement for under 21s as at the date of Royal Assent and for other workers as, at the date that the relevant wages order ceases to apply to them. The existing provision enabling the Secretary of State to make an order has been retained as a safeguard should it prove necessary at some future date to clarify the preserved rights provision.
Amendments Nos. 31 to 34 further secure workers' accrued rights to holidays and holiday pay in the cirumstances I have described. I ask your Lordships to agree to them. I beg to move.
Lord Wedderburn of Charlton: My Lords, we welcome these amendments. We are grateful to the Minister for explaining them so clearly. They are of some complexity, but it shows that complexity is
160
sometimes worthwhile. These amendments, in preserving the accrued rights of the workers concerned, and especially of holiday rights, and the rights of workers under 21, are a crumb or a morsel for which we are grateful and are an improvement to the Bill.
Lord Trefgarne: My Lords, I beg to move that this Bill do now pass.
We have had a number of interesting debates. If I may say so, I think that your Lordships have considerably benefited from the expertise of the noble Lords, Lord Wedderburn and Lord McCarthy, and the noble Baroness, Lady Turner, not to mention a number of other noble Lords who have spoken on this Bill. I am bound to say that some of the matters which we have discussed are matters with which I myself, at the outset at least, was not familiar. I too am now better informed on these matters. I am grateful to all those noble Lords who have helped at least in my education process. I am also grateful for the construc-tive way in which amendments have been proposed from all quarters of the House. I beg to move.
Moved, That the Bill do now pass.—(Lord Trefgarne.)
Lord Wedderburn of Charlton: My Lords, it would be churlish not to thank the noble Lord for his kind words and to say that there have been moments when some of the complexities and difficulties of the Bill have made us feel that we wish to join him in search of small ships, wide ships, fat ships and thin ships. It has sometimes been a difficult Bill. However, we cannot change our view that it is a Bill which is for low wages and for the removal of protections from vulnerable workers. The Bill differs from much of the Government's previous employment legislation. It is a Bill which is primarily about workers who are either not strongly organised in trade unions, or whose collective bargaining machinery does not function in the way which protects them as well as many other sectors of the workforce.
First, there are the workers who have deductions made from their wages. Even today we have regretted the Government's inability to retain a modicum of that protection which we have seen in our law, albeit imperfectly drafted and circumscribed in the law of 1896. Need of improvement was clear. Yet the Government were unable to retain any part of the protection of reasonableness that the law has put forward for so many years. There are the garage attendants whose money is stopped for shortages for which there is no responsibility in anyone's moral code but simply because their contracts say so—and when their employer likes to do it. There is the case of the 18-year-old Anthony Barratt in the High Court, and other cases. There are instances from the Low Pay Unit, such as that of the young petrol attendent who worked seven days a week, took home £48 a week, and was constantly being charged "shorts"—as it is known in the trade. In the Citizens' Advice Bureaux cases there is the evidence that workers in these sectors of the labour market have to take such jobs as they can find on any conditions of employment. I have had sent to me many cases from law centres since the beginning of our debates in this House.

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This situation has a moral side as well as a straight-forward employment, economic and social aspect. It seems to us to be quite immoral to remove from workers in this position the legal protection of reasonableness unless there is a very strong reason. The Government admit that there is a problem. Although they have never used these words, they must have said to themselves, "Yes, in the retail trade the position is so bad that, in spite of those employers who try to persuade us otherwise, there must be a limit of deductions to 10 per cent. per week, except where the employer dismisses." We have heard again today that the situation where the employer dismisses can include a case where the employer dismisses unlawfully and without any proof that the shortage exists.
There are many who have pressed upon me that this Bill is a positive incentive to employers to dismiss in these sectors of employment. Until recently I had thought that perhaps that went too far. However, I am now persuaded that there will be many situations in which the threat of dismissal will be a consequence of this Bill. An employer—who no doubt would not come within the concept of any of us of a good employer—who has one of these clauses in the contract of employment of a workers says, "I shall stop 80 per cent. of your wages this week for cash shortages." The worker, who has been to hear a debate in the House of Lords, says, "You cannot do that. I am a retail worker with a 10 per cent. limit. I am protected." The employer says, "You talk to me like that and you will get the sack. If you get the sack, I can deduct the lot. Which would you rather have?"
If the noble Lord thinks that that is an impossible scenario, let him try working in a shop occasionally. Noble Lords will find that the odd employer will do that—perhaps more than the occasional one. Indeed, if the employee is then sacked, we say (just as in the case of complaining about a wages council) that that must be an unfair dismissal. The Government say, "Not a bit. That will be extending the right of unfair dismissal unduly wide." Yet this is supposed to be a Bill to protect the workers. Of course it is nothing of the kind.
The facility of cashless pay by repeal of the Truck Acts and 10 other statutes, or parts of statutes, on which almost no word has been said, has no justification. The repeal of those provisions amounted to no more than a fit of blind deregulation. On 6th June (at col. 1207 of the Official Report) the Secretary of State gloried in the fact that this one enactment replaced 13 whole Acts, more than 20 orders and parts of other legal instruments.
It is a curious belief that to get rid of legal regulation will have a beneficial effect. What is the beneficial effect? We also come to that in Part II. It is the same beneficial effect which Part II is said to have and with which I shall deal in a moment: that since 1909 2¾ million workers on low pay have been protected by wages councils; four-fifths of them have been women; two-thirds have been part-timers; one-fifth of all young people in full-time employment entering employment in these industries. The rates are £63 to £72 a week for 1985—because I am giving the Government's own figures from the consultative documents; earnings are at or near £1 million.
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In clothing manufacture today the 1986 statutory minimum rate is £70. The vast majority of countries in Western Europe pay their minimum adult wage to workers aged 18 and over. The only country which the Government quoted in their consultative document in relation to the payment of the adult rate is Holland, where the rate is paid at the age of 23. That says something about the Government's attitude to evidence, to which I want to return. The Government never put forward the evidence, and when the evidence is put forward to them, they ignore it. Under this Bill workers under the age of 21 are to be withdrawn in this sector and thrown on to a labour market without any protection of wages councils' orders. So strongly did the Government feel about this that they denounced the ILO convention, especially in regard to young workers, who as the ILO study on minimum wage fixing said in 1984:
"are more vulnerable to possible exploitation due to their inexperience and perhaps because of their very desire to earn a living by finding a first job".
Of course these industries are above average statistics in being the first jobs of young workers.
What is the explanation for this extraordinary behaviour on the part of the Government? The only justification worth debating has been that, to put it in the words of the noble Lord, Lord Trefgarne, who put it most succinctly on 26th June (at col. 433 of the Official Report):
"A central purpose of … the Bill is to promote employment".
At col. 1207 on 6th June the Secretary of State said:
"this is a Bill to promote employment. It will do so by easing regulation of the labour market and removing burdens on employers. This will make it easier for them to get on with the job of creating wealth and employment".
The first thing to notice about this claim—and it is this with which I wish to encapsulate our objection to the Government's approach to this matter in the Bill—is that it is not new. On 17th December 1979, the Secretary of State, when talking about one of the first measures to cut down employment protection rights, said that these clauses:
"have the purpose of reducing the burden imposed on employers, especially small employers. This burden, perceived and real, has been a deterrent to the employment of more people".—[Official Report, Commons, 17/12/79; col. 64.]
The noble Earl, Lord Gowrie, on 28th May 1980 (at col. 474 of the Official Report), said:
"several clauses in the Bill seek to reduce the burden which the last Government's employment protection legislation imposed on employers",
and the noble Earl went on to speak of the "Employment Destruction Act". The only explanation for the Bill as a whole, not merely as regards wages councils, is that the Government are putting forward the repeal of the Truck Acts' protections for workers on deductions and the emasculation of the wages councils as a way of creating jobs.
Yet again and again this has been refuted in the sense of the evidence that has been put to the Government again and again that this is not, in the case of some research anyway and in the case of a lot of research, more than a very vestigial way of increasing employment—certainly not on any basis is it a major way.

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My noble friend Lord McCarthy put forward the various major studies on 8th July at col. 326 of the Official Report, and I shall not repeat them now. I shall not do so because, when my noble friend detailed them and spent more time than I can allow on them, the only reply he received from the Secretary of State was the noble Lord thanking him for his annual Dimbleby lecture on all the research on wages councils. We have not heard a better reply than that.
However, there is another point. The old government line used to include the other half of the truth. When he began, the noble Earl, Lord Gowrie (who used to speak of these matters perhaps a little more con brio) said not merely that getting rid of employment protection would increase employment or would encourage recruitment; but on 25th July 1979 he also said (col. 1942 of the Official Report):
"In the words of the old song: 'Something's got to give".
This has become a famous passage in labour legislation.The noble Earl was speaking about unfair dismissal and its restriction, and said:
"and in our case it is the ability of our economy to sustain, without the raging inflation which has the same job destroying effects in the end, the levels of employment to which we have become accustomed".
The Government were quite clear from the beginning that they were no longer attached, that they no longer identified themselves with that thrust of policy which has been present in virtually all governments since the war—namely, the desperate need to retain the Beveridge concept of pursuing and the White Paper concept of pursuing full employment. The Government knew that that would change; the Government said at the beginning that that would change. It is only recently that the Government have gone on destroying employment protection legislation without mentioning the second half of the proposition. Yet as they have continued to destroy employment protection legislation, unemployment has risen, is still sticking and possibly will increase in toto, although we know that the noble Lord the Secretary of State has his eye on the statistics well enough to be able to say that by Christmas long-term unemployment may have dropped a little.
The removal of this legislation makes this Bill quite logical because if anyone is to suffer in the crisis—and there is a continuing crisis—it will be the poor more than the rich. It is always the poor more than the rich. It has been the poor more than the rich in all budgets since 1979. It has been the poor more than the rich in terms of social security. It will be the poor more than the rich when they can get their new controls over single payments for those on supplementary benefits; and the people whose wages are deducted under the new powers, the people whose wages council rate will go down, and the young workers under 21 who will have no protection of a wages council minimum will meet those who the Government are now about to prevent from having a single payment for a teapot or a blanket.
The only extraordinary thing about this Bill is the redundancy rebate provision in Part III. It is perhaps there that in a way one can acquit the Government of any dark plot, because who could have believed that,
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having decided that £200 million should be saved on redundancy rebates (it is understandable that a certain amount should still be paid out) this small sum which is to be paid out should be paid by a criterion which is measured by the presence or absence of 10 employees in an enterprise. If it were not so serious it would be almost a joke. We do not have a perfect solution to that problem, but we suggested to the Government that perhaps we could think along the lines of giving rebates to employers who were promoting policies of training, employment, and so on. Good heavens, no, that would be far too great a positive government intervention in the labour market!
Once again, even in regard to Part III the Government believe that if they can deregulate, if they can strip bare, especially the legal protections for working people, in the long-run—and I am sure that they are honest about this—employment and prospects will improve. We do not believe that long-run guess is right. We do not think the medium-term tactic has any merit, and we certainly do not think that the short-term measure in stripping those who are already vulnerable and in many cases exploited has political sense or any common decency or morality. This is a bad Bill and it will be a shame to see it enacted.
Lord Rochester: My Lords, your Lordships may be pleased to know that at this stage of our proceedings I do not intend to make a long speech; but there are a few things that I should like to say.
As the Bill progressed through its various stages in this House, my noble friends and I—for I think I may speak for them, too—have come to feel that it is a bad Bill. Its main purpose has been to prevent wages councils from exercising any functions for people aged under 21. The justification for this has been said by the Government to be that it will create more employment opportunities for young people; but as the noble Lord, Lord Wedderburn of Charlton, has just said, no conclusive evidence has been brought forward that it will produce anything more than a marginal increase in jobs largely at the expense of adults.
I have consistently supported the view that a limit should be placed on the percentage of the adult rate payable to young people. But that is not to say that they should be left, as they will be under the Bill, altogether without protection. We continue to feel there is a strong case for graduated scales of payment to be made for people aged under 21. One beneficial effect of this would be that it would make it less likely that someone in that age group, to use the Government's phraseology, having got his or her foot on the first rung of the employment ladder would be unceremoniously thrown off the ladder and be replaced, on reaching the age of 21, by someone younger at a much lower rate of pay.
We are no more pleased that in future wages councils will be empowered only to fix a single minimum rate and a single overtime rate. I recognise—and I have had some experience of this on the ground—that in the past wages council orders have often proved too detailed and there has been duplication and discrepancy as between one set of wages council orders and another. Our feeling is that provision should still be made for certain premium

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payments—for example, for work done on Sundays. We also feel it should be possible for wages councils to fix a minimum period for annual holidays.
When that subject was debated, the Government said it was a matter which should be left for agreement between employers and employees. But as my noble friend Lady Seear pointed out at that time, negotiation to be fair must be between parties which have equal weight. Negotiation which takes place between employers who have all the strength and employees who are altogether without protection is a very different thing.
In our view it has been the same in the matter of wages inspectors. The Government have been determined not to provide an adequate number to enforce what few wages orders will remain once this Bill is enacted. For many people, wages inspectors provide the only protection they have in the absence of collective bargaining through trade unions. Yet the Government have even opposed the concept that when a worker is dismissed because he has made a complaint to the wages inspectorate, that dismissal should be regarded as unfair. No wonder that on this side of the House many of us have reached the conclusion that this Bill is not really intended, as it purports, to be a measure for the reform of wages councils; rather is it the first stage in a process of allowing them to wither away altogether.
As regards Part I of the Bill—and here I must differ from the noble Lord, Lord Wedderburn of Charlton—we welcome the repeal of the Truck Acts, particularly because the extension of cashless pay will eliminate one of those differences between the employment conditions of manual workers on the one hand and white collar staff on the other, which are based on social distinctions which have long since become out of date.
Having said that, we are depressed by the unwilling-ness of the Government to accept any amendment aimed to ensure that deductions from wages should be fair and reasonable and equally we do not see why protection against excessive deductions from wages should not be extended to all employees rather than confined as now to workers selling directly to the public.
We remain dissatisfied that under Part III the payment of redundancy rebates should be restricted to firms employing fewer than 10 people. We think it wrong in principle to deny employers who have paid contributions into the redundancy fund the right to draw from that fund when faced with the very conditions for which the fund was created. Like the noble Lord, Lord Wedderburn of Charlton, we do not see why the criterion for determining whether or not redundancy rebate should be made should be dependent solely on size. There is no reason to suppose that firms employing a relatively small number of people are necessarily worse off financially than others.
In short, my Lords, we feel that this Bill is largely ill-conceived. On the main issue which it raises we remain firm in our belief that more jobs will not be created by entrusting the power of determining wages solely to employers. More employment opportunities will come about only when government employers and trade unions recognise their responsibilities and
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when there is a more general awareness that increases in pay on the part of all who are in employment must be matched by corresponding increases or improve-ments in productivity.
Despite our differences, my last word must be one of thanks to the noble Lord, Lord Trefgarne, and to the Secretary of State for Employment. We wish that perhaps we could have seen more of him than we have since this Bill has had so much to do with the element of deregulation which, as he so often tells us, is to be seen as the cure-all for our employment problems. But this is a moment for goodwill. He is a busy man. On behalf of my noble friends, I should like to thank both the noble Lord, Lord Trefgarne, and the Secretary of State for the courtesy with which they have enabled our exchanges on this Bill to be conducted.
6 p.m.
Lord Boyd-Carpenter: My Lords, at this the final stage of the Bill I should like to say a brief word of welcome to it. I always enjoy listening to the noble Lord, Lord Wedderburn of Charlton, because he always succeeds in putting with great clarity and force views with which I wholly disagree. Indeed, I often feel that he resembles Socrates because, as your Lordships may recall, Socrates was ultimately charged and condemned to death because of his habit of making the worse appear the better case. I sincerely hope that that resemblance will not cause me to have to administer a glass of hemlock and soda to the noble Lord, Lord Wedderburn of Charlton, in the Guest Room.
I disagree so fundamentally with his approach. What seems to me one of the good features of the Bill is one that he denounced. That is that it sweeps away a mass of legislation and of regulation. In general principle it surely must, in particular at a time of high unemployment, be a good thing to simplfy the legal background to the whole employment situation. A mass of complicated legislation, no doubt easily understood by great companies with high-grade professional advisers, is very difficult to follow for the small employer, whom it is the object of the Government very properly to encourage. It is very difficult for them to understand, and it is confusing. It is a good thing to sweep away a mass of legislation which, however good in its time, has served its term.
We are not in the situation in which we were when much of this legislation was enacted. On the contrary, we are in an era, alas, of high unemployment, and an era of, on the whole, high wages. In that totally different situation much of the legislation that this Bill will remove is positively harmful and damaging.
I am only sorry that it does not go further in respect of wages councils. I am inclined to think that in the present situation wages councils have fully served their term, and that there would be an advantage in removing them altogether. The Bill does, however, reduce their scope in a number of ways, as the noble Lord, Lord Wedderburn of Charlton, pointed out. I would point out that Clause 13(1) gives the Secretary of State power by order to abolish any further wages council that he desires to abolish. I say to my noble friend on the Front Bench that I hope that his noble friend will not be slow in exercising that power.
I know that the wages council system is dear to the industrial relations establishment, but it has little to do

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with the situation we are in today in which the great majority of the population are on high levels of remuneration, and indeed when much economic thought believes that a great many of our troubles, including the degree of unemployment, are directly related to the high level of wages and to the increases still taking place.
When we have at the same time heavy unemployment involving many people, including the young to whom the noble Lord opposite referred, who would far rather be employed at a modest wage than unemployed, wages councils seem to be a real obstruction in the way of the developments that we want to see. Therefore, I am glad to see that though the Bill does not go so far in this respect as I should like, and as I have advocated in this House before today, it gives my noble friend the power to deal with more of these councils, and I hope that he will not be hesitant in exercising it.
Finally, I would agree very much with the noble Lord, Lord Rochester, in expressing appreciation of the way in which this Bill has been handled from Government Front Bench. I think that my noble friend Lord Trefgarne will probably find it almost easier to go back to the fascinating question of the shape of a frigate.
Lord Trefgarne: My Lords, I am grateful to every noble Lord for their kind words to me personally. When we set out on the passage of this Bill I never really thought that I would be able to persuade the noble Lord, Lord Wedderburn, to agree with my views on the matter. The only risk was that I would be persuaded to agree with his. Happily I have avoided that fate, and happily most of your Lordships did not agree with the noble Lord either because the Bill has passed through your Lordships' House unscathed, and for that at least I am grateful. I beg to move.
On Question, Bill passed, and returned to the Commons with amendments.

Agriculture Bill
6.5 p.m.
Lord Belstead: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Agriculture Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Clause 14 [Compensation to outgoing tenants for milk quota: Scotland):
The Minister of State, Scottish Office (Lord Gray of Contin)The Minister of State, Scottish Office (Lord Gray of Contin) moved Amendment No. 1:
Page 11, leave out lines 23 to 34.
The noble Lord said: My Lords, I think it would be helpful to the House if, along with Amendment No. 1, we considered Amendment No. 3. These amendments parallel for Scotland amendments relating to England
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and Wales tabled by my noble friend Lord Belstead and agreed by the House at Report stage; time did not permit appropriate Scottish amendments to be tabled at that juncture. The most significant amendment, No. 3, is a new clause, a Scottish equivalent of Clause 15. Amendment No. 1 is consequential upon the insertion of this new clause.
If I may remind your Lordships, the issue here is to ensure that transferred quota acquired by the tenant dairy farmer will be disregarded at a rent review under existing land tenure legislation; that is to say, it is to be treated in a similar way to a tenant's improvement—the tenant will not be charged rent on it. If a tenant has paid for quota through a land transaction and effectively transferred that quota on to the tenancy, it is only right that it should be regarded in the same light as a tenant's improvement and disregarded in rent determinations. This is provided for in subsection (3). This subsection also achieves what subsection (2) of Clause 14 was intended to achieve, but in a different way. By providing that transferred quota is to be disregarded, subsection (3) makes it clear that allocated quota is not to be disregarded. This means that a tenant's potential eligibility for compensation in respect of allocated quota when the lease terminates will not affect the rent payable. This preserves the original intention of subsection (2) of Clause 14, and Amendment No. 1 therefore proposes the removal of that subsection.
Subsection (4) of the new clause makes it clear that if an incoming tenant has made a payment to the landlord on taking over a holding to which quota is attached, this does not count as the acquisition of transferred quota. Subsections (5) and (6) ensure that the successor or assignee of the original tenant will be treated in the same way as the original tenant in respect of transferred quota. Subsection (7) applies the clause to Crown land. I beg to move.
Clause 15 [Rent arbitrations: milk quotas]:
Lord Belstead Lord Belstead moved Amendment No. 2:
Page 12, line 31, at end insert—
(" (4) Section 95 of that Act (Crown land) applies to this section as it applies to the provisions of that Act.").
The noble Lord said: My Lords, this is a technical amendment. It applies Section 95 of the Agricultural Holdings Act 1986, which relates to Crown land, to rent arbitrations in respect of land to which milk quota is attached. I beg to move.
Lord Gray of Contin Lord Gray of Contin moved Amendment No. 3:
After Clause 15, insert the following new clause:
("Rent arbitrations: milk quotas, Scotland.
.—(1) Paragraph 1 and the other provisions of Schedule 2 to this Act referred to therein shall have effect for the interpretation of this section, as they do in relation to that Schedule.
(2) This section applies where an arbiter or the Scottish Land Court is dealing with a reference under—

(a) section 6 of the 1886 Act;

(b) section 32(7) of the 1911 Act;

(c) section 7 of the 1949 Act; or

(d) section 5(3) of the 1955 Act,

(determination of rent) and the tenant has milk quota, including transferred quota by virtue of a transaction the cost of which was borne wholy or partly by him, registered as his in relation to a holding consisting of or including the tenancy.
(3) Where this section applies, the arbiter or, as the case may be, the Land Court shall disregard any increase in the rental value of the tenancy which is due to—

(a)where the tenancy comprises the holding, the proportion of the transferred quota which reflects the proportion of the cost of the transaction borne by the tenant;

(b) where such transferred quota affects part only of the tenancy, that proportion of so much of the transferred quota as would fall to be apportioned to the tenancy under the 1986 Regulations on a change of occupation of the tenancy.

(4) For the purposes of determining whether transferred quota has been acquired by virtue of a transaction the cost of which was borne wholly or partly by the tenant any payment by a tenant when he was granted a lease, or when a lease was assigned to him, shall be disregarded.
(5) Paragraph 3 of Schedule 2 to this Act (insofar as it relates to transferred quota) shall apply in relation to the operation of this section as it applies in relation to the operation of that Schedule.
(6) This section shall apply where paragraph 4 of Schedule 2 to this Act applies, and in any question between the original landlord and the head tenant, this section shall apply as if any transferred quota acquired by the sub-tenant by virtue of any transaction during the subsistence of the sub-lease had been acquired by the head tenant by virtue of that transaction.
(7) Section 86 of the 1949 Act (Crown Land) shall have effect in relation to this section as it does in relation to that Act.").
The noble Lord said: My Lords, I beg to move Amendment No. 3 formally.
Clause 17 [Designation and management of environmentally sensitive areas]:
Lord Belstead Lord Belstead moved Amendment No. 4:
Page 14, line 23, leave out ("are") and insert ("is").
The noble Lord said: My Lords, this amendment is designed to correct a grammatical error. I beg to move.
Lord Belstead Lord Belstead moved Amendment No. 5:
Page 14, line 24, at end insert—
("(5A) The Minister shall not make an agreement with any person under subsection (3) above in respect of any land unless that person has certified to the Minister—

(a) that no person other than he is the owner of the land; or

(b) that he has notified any other person who is an owner of the land of his intention to make an agreement under subsection

(3) above in respect of the land;
and in this subsection references to the owner of the land are to the estate owner in respect of the fee simple in the land or, in Scotland, the absolute owner of the land within the meaning of section 93 of the Agricultural Holdings (Scotland) Act 1949.").
The noble Lord said: My Lords, during debate in Committee and at Report stage a number of your Lordships expressed concern over the arrangements between landlords and tenants in the designation of environmentally sensitive areas. My noble friends Lord Peel and Lord Radnor moved amendments on this matter. There is a wide and most welcome consensus among representatives of landlords and tenants that there should be a proper procedure here. At Report stage, therefore, I undertook to consider whether this consensus might be sealed by a reference on the face of this clause.
The amendment that I have tabled attempts to reflect this. Broadly speaking, it requires a tenant to certify that the landlord has been notified before an environmentally sensitive area agreement can be made. I am advised by lawyers that the word "certified" is the most appropriate in this instance. What we shall do in practice is to require the tenant to give a declaration on the application form that he has
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sent a copy of the agreement to the landlord and indicated his intention to join. In our literature we shall urge tenants to discuss the agreement with the landlord if their tenancies make this appropriate. I hope your Lordships will feel that this amendment moves a considerable distance in the direction which my noble friends have urged. I beg to move.
Lord Middleton: My Lords, as my noble friend Lord Belstead has reminded us, he gave an undertaking to the noble Earl, Lord Peel, that if tenants have not notified their landlords they will not have their application for inclusion in an ESA accepted. At Report stage, my noble friend said he was prepared to consider whether the Government might write that requirement into the Bill. That is what has been done. Clause 17 is thereby much improved. I am most grateful to my noble friend for doing that.
Lord John-Mackie: My Lords, I take the words of the noble Lord, Lord Middleton, and if the noble Lord, Lord Belstead, says that the lawyers are satisfied then I believe we are, too.
The Earl of Radnor: My Lords, perhaps I may be allowed to add my thanks to my noble friend for being as good as his word and for writing this provision into the Bill. It is an extremely important one. As I said previously, the creation of these ESAs must be smooth and their running must be smooth. I could not possibly see, without some sort of assurance such as this being written into the Bill, that that would necessarily happen. Now I think, or at least I hope, it will, and I am grateful. I know that goes for my noble friend Lord Peel as well.
Lord Belstead Lord Belstead moved Amendment No. 5A.
Page 14, line 26, leave out ("and") and insert ("or").
The noble Lord said: My Lords, I must apologise for the fact that this amendment was put down yesterday. It was observed only at the last minute. It is a purely drafting amendment. I beg to move.
Clause 23 [Short title, commencement, consequential amendments, repeals and extent]:
Lord Belstead Lord Belstead moved Amendment No. 6:
Page 19, line 17, leave out ("and 14") and insert ("to [Rent arbitrations: milk quota, Scotland]").
The noble Lord said: My Lords, this amendment is consequential on the introduction of Clause 15 and the new clause, Amendment No. 3 on the Marshalled List, which my noble friend Lord Gray of Contin has moved. They deal with rent arbitrations where milk quota has been acquired by the tenant. The effect of this amendment is to provide for the appropriate agriculture Ministers to introduce the provisions contained in these clauses from a date which is to be laid down in an order. Your Lordships will recall that the Bill already provides for the end of tenancy quota compensation to be introduced by order. I think that this amendment completes the matter. I beg to move.
Lord Belstead Lord Belstead moved Amendment No. 7:
Page 19, line 38, leave out ("and 17(12)") and insert ("11, 17(12) and 21"),
The noble Lord said: My Lords, this amendment ensures that there will be no legal impediment to the consolidation of any marketing schemes which extend to Northern Ireland. I beg to move.
6.15 p.m.
Schedule 1 [Tenants' compensation for milk quota]:
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 8:
Page 23, line 41, at end insert—
("In prescribing the average yield per hectare to apply within Less Favoured Areas the Minister shall set the same figure for each type of Less Favoured Area within the United Kingdom.").
The noble Lord said: My Lords, at Report stage we discussed the reasons why the Government were intending to put a lower standard quota on Scottish less favoured areas than those in England and Wales. Your Lordships may remember that I was not satisfied with the reply given by my noble friend Lord Belstead. Since then, having read and studied Hansard, I have become aware that every other noble Lord who spoke either failed to appreciate the problem or was concerned about it. Since then, my noble friend Lord Belstead has very kindly written to me on the subject. But I am sorry to have to tell him that I am none the wiser; hence this amendment, for even if I do not get the answer I want I believe it is the duty of your Lordships' House to try to clarify the matter.
The question I have to put to my noble friend Lord Belstead is: why is it intended—I emphasise the word "intended" because I fully realise the final figure will only appear in the regulations—that Scottish less favoured areas should have a starting point 500 litres lower than English and Welsh ones? My noble friend implied when he spoke at Report stage that this figure was only a starting point. It was a starting point for arbitrators as a guide. They could vary the final settlement either way, according to the conditions on the farm. If the Scottish farm were similar to the English and Welsh one, the end result would be approximately the same. I have to ask my noble friend: why only approximately? Why not the same? Does that mean that because the starting figure is different there would be a likelihood of a different result?
Let me give the House an example. There are farms in Northumberland in less favoured areas that adjoin those across the Border. Can my noble friend Lord Belstead say that if two farms, one on either side of the Border, are similar the tenant will be awarded the same standard quota? If that is the case, why the difference of 500 litres between Scottish LFAs and English and Welsh areas? Frankly, I cannot see my noble friend saying that they will not have the same judgment, for that would be blatantly unfair. The question I want answered is: if there are in Scotland farms identical to those in Wales or in England will the standard quota allotted be identical in each case? If the answer is yes—which from reading the remarks made by my noble friend Lord Belstead at Report I believe it should be—will my noble friend consider very
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carefully before the regulations are laid, wording those regulations so that they make it absolutely plain to the arbitrators that the judgment and the result must be exactly the same? From what has been said so far and what is in the Bill, it is not clear to me or to those who advise me that this is the case. I beg to move.
Lord Belstead: My Lords, my noble friend has explained clearly in his brief remarks on this amendment that what he is concerned about is that the setting of figures for the standard quota for the milk arrangements in the less favoured areas in Scotland and the setting of figures for less favoured areas in England and Wales will lead to a preferential position so far as concerns Scotland. In setting the average figures to be used for the purposes of calculating the standard quota, we feel that we must look at the average yields achievable in those areas; so, my right honourable friend the Minister of Agriculture, Fisheries and Food in England and the Secretary of State for Scotland have looked at the average yields per hectare in the original less favoured areas in England and Wales and in Scotland respectively.
They have also looked at the average quality of land in the original Scottish less favoured areas and, quite clearly, it is lower than in the original less favoured areas in England and Wales. In prescribing figures, we need to look at the average for the areas concerned. As I sought to explain to your Lordships during the Report stage debate, the prescribed figures are only there to give a starting-off point to the arbitrator, if an arbitrator has to come in, in order to help the parties in their discussions or the arbitrator, about the standard quota for a particular piece of land.
However, we recognise that there may be farms in England or Wales which have land which is of the same quality and has similar climatic conditions to land in Scotland. I have to say that, despite the concerns expressed by my noble friend, I do not believe that the prescription of different figures on either side of the border for the original less favoured areas will cause inequities. My noble friend put to me a direct question. He said that if there is land on one side of the border, for instance in the South-East of Scotland, and that there is land on the other side of the border in the North-East of England, could I give him an assurance that, on the figures which we say we have in mind—because they will be figures which will be put into subordinate legislation—the same farms will be treated in the same way?
Outside this Chamber, I have been through figures informally with my noble friend Lord Stanley. I am sure that my noble friend will check me if I am not correct in this, but I think that it is fair to say that the answer to my noble friend's question is that, on the figures that we have in mind to put into subordinate legislation, the similar farm on the Scottish side of the border would come out one-fifth of 1 per cent. in favour. When you consider that the less favoured areas in Scotland are many miles, in some cases many hundreds of miles, north of the less favoured areas in England and Wales, I do not think that one-fifth of 1 per cent. in favour of Scotland is unreasonable on the figures that we are intending to put forward.
So I say to your Lordships that the effect of the formula in all cases is going to be to give the

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producer—whether he is in the hills in Wales or in England or in Scotland—a standard quota which will be over 11 per cent. lower than the yield one would reasonably expect from his farm. And that is going to be good for tenants, because let us remember that if tenants have a quota over the standard quota they are going to get 100 per cent. of everything over the standard quota; so that it is going to be good for all tenants in the whole of the British Isles that the standard quota is going to work out at more than 11 per cent. below what one could reckon ought reasonably to be produced on a farm. Even though I am proud to be working in the Ministry of Agriculture, Fisheries and Food on the English side of the border, nonetheless I do not think it is unreasonable that one-fifth of 1 per cent. should be the slight amount in favour of similar farms with similar yields on the Scottish side of the border.
Lord Mackie of Benshie: My Lords, I am simply wondering whether the Scottish Minister thought that one-fifth of 1 per cent. was enough of a difference for all these hundreds of miles further north.
Lord Gray of Contin: No, my Lords. I certainly do not but I am prepared to settle for it.
Lord John-Mackie: My Lords, surely if there is a difference as small as that, would it not satisfy the noble Lord, Lord Stanley, if you just made it the same?
Lord Stanley of Alderley: My Lords, I should like to thank my noble friend for that explanation. I have to admit that I have difficulty in finding fault with the scheme if it really is one-fifth of 1 per cent. I hope that those noble Lords who come from Scotland will not think I am being somewhat suspicious that I am being "ripped off", as they say, by them. But, to be serious, if my noble friend intends to make the regulations such as to make identical farms in England and Wales against those in Scotland have a difference of only one-fifth of 1 per cent., then, yes, I have reluctantly to concede the point on this. But of course we have not seen the regulations yet and it is up to my noble friend to make sure that this is so when the regulations are produced for us, as I know he will. With that, I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Lord Mackie of Benshie Lord Mackie of Benshie moved Amendment No. 9:
Page 24, line 27, leave out ("the sum of that value and").
The noble Lord said: My Lords, we have tried to improve this Bill in a number of ways and have failed. This is really a last attempt to introduce an element of fairness into the splitting of the value of the quota. I accept that the CLA and the NFU have failed to agree so that the Minister has had to step in and impose a formula. Unlike Solomon, he did not suggest halving the baby down the middle and giving half to each. He cut off a toe and offered it as the tenant's fraction, or at least that is how it appears to a lot of people.
What the tenant's fraction does, if I might explain it once again, is to take the rental value—and this is important—of the tenant's improvements, whether they be buildings or machinery or equipment, and
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make that the numerator, the top figure. Then it takes the sum of those values and adds it to the rental value; and makes that the denominator. In most cases, it will not make a tremendous amount of difference because where you have a landlord who has supplied the buildings, kept them up and so on, the adding of the sum of the tenant's rental values to the fraction will not make a great deal of difference.
Where it makes an enormous difference is where the tenant has done a tremendous amount of work. The noble Lord, Lord Mottistone, brought up a personal case that he knew of. In a case like that, where the tenant may have built all the buildings, then it is up to the arbiter to put a value on the land and a value on the buildings and to say which value is the greater or the lesser. I think it pretty well inconceivable that an arbiter looking at a figure like that could say that, in fact, the rental value of the buildings for 100 cows was greater than the rental value of a 150-acres pasture to carry 100 cows. I think that an arbiter obviously has to use his common sense, and the provision in the Bill is for arbitration. These are lines to guide the arbiter.
When you add that sum then, of course, it makes a complete nonsense of any decent regulation or decent calculation of the values attributable to the tenant and the landlord. It at once reduces it enormously. I must say that most tenants have a suspicion that this is why it was done. It appears to me to be entirely wrong that in a case like this, where a great deal of money has been put in, the value should be deliberately reduced; and that is what happens by adding it to the landlord's input by way of rent. There is no shadow of doubt that that is what it is for and that is what it does.
What we have to ask ourselves is: is that a fair way to split the value of the quota? The quota has a value; and I maintain that what is proposed is not fair, and it is seen as not fair by a great many people in this country. I think it is an enormous pity that the Minister did not accept a 50–50 split and also that the CLA, the SLF and the NFU did not agree on a figure. What we now have to do in Parliament is to decide what is a fair way to calculate the fraction.
My position is a perfectly simple one: it is grossly unfair in a great many cases to add back the value so as to lower the value of the fraction to the tenant. That is putting it as simply as I can, and obviously I shall be very interested to hear the arguments adduced by other noble Lords against this simple amendment and also the arguments of the Minister. I must say that in simple fairness it appears to me that this amendment is a good one, and one which will be seen and approved by most of the people who are interested in this subject. I beg to move.
6.30 p.m.
Lord John-Mackie: My Lords, as your Lordships know, we argued this point about fairness to the tenant for a long time during the Committee stage and again on Report. I do not feel, for once, that I can improve on the arguments of my noble kinsman. He has put the case very well, and I think it is a very strong case. As he said, it is a pity that agreement could not have been reached between the CLA and the NFU. I spoke to the noble Lord, Lord Middleton, and asked whether they would not agree on 60–40, but he was not keen on that.

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He thought the Government's plan would be fair enough. I am afraid I do not agree with him, and so I should like to support the amendment of my noble kinsman. I hope the Minister will see the justice of it because when one does a lot of calculations—and I have a pile of them which have been made by various people—there are occasions when calculations can be very unfair indeed to the tenant.
Lord Walston: My Lords, I do not believe that the Third Reading of any Bill is the time to rehash all the arguments that have taken place during the Committee stage and on Report. I shall not attempt to do that, and I am sure your Lordships would not think well of it if any noble Lord were to do such a thing.
This amendment of my noble friend Lord Mackie of Benshie is similar to some amendments we have already discussed. It is very modest in form and I think it will go some way towards improving a situation which even the noble Lord, Lord Belstead, cannot really feel is completely satisfactory. We all agree that it is a very complex matter, and I am afraid that the result in this Bill has left many people dissatisfied. If the Government felt it was possible to agree at this late stage to this very modest amendment, some of that dissatisfaction would be removed and some of the inequity in the present arrangements would be, if not put right, at any rate ameliorated. Therefore I very much hope that the noble Lord will be able to tell us that he can accept this amendment.
Lord Middleton: My Lords, I do not think that noble Lords will be too disappointed if this amendment provides them with the last occasion on which they can discuss compensation for milk quotas this Session, and indeed perhaps beyond this Session. I thought the House had decided, after many different methods had been proposed, debated and rejected, that the Government's way of calculating the amount of compensation payable to a retiring tenant for his milk quota was the best way, or at any rate the least unsatisfactory way. That is the method set out in Schedule 1 to the Bill.
However, now we have another suggestion; and certainly the noble Lord, Lord Mackie of Benshie, is being consistent in striving to obtain greater compensation for the tenant who has provided and paid for much of the fixed equipment with which his milk quota has been built up. I am of course in sympathy with what the noble Lord is trying to do, and the way he proposes to do it in this amendment is very ingenious.
Without going into complicated details of Part II of Schedule 1, it is probably enough to say that what is called in the schedule the tenant's fraction forms a significant part of the compensation payable in various circumstances. As the noble Lord, Lord Mackie of Benshie, has reminded us just now with great clarity, the tenant's fraction is calculated according to the rental value of the tenant's input by way of improvements and fixed equipment.
This amendment seeks to alter the arithmetic so that more weight is given to that tenant's input. I am sure that this is not the time for yet another debate about who gets what, but I think it must be said that if you
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try to put figures into the noble Lord's proposal, you arrive at sums of compensation which must surely go a long way beyond what has been intended by the Government even in their most generous mood and, indeed, go well beyond the kind of 50-50 share-out that has formed the basis of several previous amendments.
I am very much in favour of the tenant being compensated for his investment in dairy equipment, and indeed that was one of the objects of the amendment which I proposed in Committee and of which your Lordships did not approve. But I am not in favour of the tenant being compensated for the same improvement twice. I believe that could happen if a tenant became entitled to compensation under this amendment and also under the normal compensation provisions of the 1986 Act. Furthermore, according to my calculations, it would be possible, where a tenant had provided virtually the whole of the dairy buildings and equipment, for him to receive under this proposal anything up to twice the total value of the quota.
The noble Lord proposed at an earlier stage half the value of the quota as a fair portion for the tenant and, on a previous occasion, he also proposed that valuers could, where a tenant has invested heavily, increase the 50–50 ratio in favour of the tenant. But to go from 50 per cent. to 200 per cent. seems to me to be stretching compensation beyond the bounds of generosity and indeed beyond the bounds of the fairness for which the noble Lord has just told us he is searching.
In an extreme case—and such cases do occur—where a tenant has invested heavily, allowing for reasonable and realistic up-to-date costs for buildings and equipment, I calculate that under the noble Lord's proposal a tenant's compensation could work out at as much as £770 per acre. That approxi-mates to the present average value per acre of a let farm, and I wonder whether many landlords would desire or indeed be able to raise the money for what would amount to buying back their farm in such a case. This part of the Bill, surely, is about compensation for milk quotas and not about leasehold enfranchisement. I therefore hope that the Government will resist this amendment.
Lord Mottistone: My Lords, perhaps I may intervene because the noble Lord, Lord Mackie, kindly said that this came out of a speech I made earlier about a friend of mine on the Isle of Wight who has this problem. I was very impressed that my noble friend Lord Middleton said he was in sympathy with the tenant getting his fair share.
I shall not add to what has already been said; suffice it to say that my friend advised me that I should support the amendment. In his case, where he has provided a very large amount of the new equipment, if not all, he estimates that he would get about 80 per cent., which he reckons is about his fair share. I suspect that my noble friend Lord Middleton must have been pushing the point into a very special case to find his 200 per cent. But it all stems from that. Whether it is 80 per cent. or 200 per cent., it is quite clear that the Bill as it stands at the moment will not give him a fair share. For that reason, I strongly support the noble Lord, Lord Mackie of Benshie.
Lord Stanley of Alderley: My Lords, it goes without saying that I support the amendment, and I shall not bore your Lordships as to why I do so. But if some of your Lordships, and indeed my noble friend Lord Belstead, feel that this amendment tips the balance too far in favour of the tenant, as my noble friend Lord Middleton felt it did, I would say that by accepting it we would give the other place a chance to discuss it. Quite frankly, the other place has not had a chance to discuss in full this whole clause which deals with milk compensation. I believe that it should be given this opportunity. I hope therefore that your Lordships will see this as a way of giving the other place the opportunity even if it wishes to moderate the actual details of the amendment of the noble Lord, Lord Mackie of Benshie. I support it.
Lord Belstead: My Lords, as your Lordships may remember, having established the standard quota for a farm—and your Lordships agreed to amendments which moved a small but significant distance in favour of the tenant in doing that at previous stages of the Bill—there is then a need to establish what share of the value of that standard quota is attributable to the tenant and what share of that standard quota is attributable to the landlord. In assessing that, the starting-off point is the total theoretical rental of the farm—what it would have earned in 1983 if all the facilities had been provided by the landlord.
If, for example, the tenant's improvements were worth £2,000 per annum and the rent paid for the land used by dairy cows was £8,000, the total theoretical rent would be £10,000. One then expresses the tenant's improvements as a percentage of that total. In the example I have just given, the tenant's improvements would represent 20 per cent. The tenant contributed 20 per cent. and the landlord 80 per cent., so the tenant's fraction in that case is 20 per cent.
The noble Lord, Lord Mackie, and my noble friends Lord Middleton and Lord Stanley of Alderley say that that is not enough. But let us look at what the amendment does. The amendment of the noble Lord, Lord Mackie of Benshie, does not compare the tenant's contribution with the total theoretical rent of the holding. Instead of sharing the value of standard quota proportionately according to the respective contributions of the tenant and landlord, the noble Lord, Lord Mackie, wishes to give the tenant a share equal to his contribution as a simple percentage of the landlord's. This principle, with very great respect to the noble Lord, is really indefensible when one comes to look at what it comes up with by way of results.
Before I give the fairly startling results, as a matter of principle, if two people contribute equally to the creation of an asset one would not expect one of them to obtain the whole value of the asset when it is sold. Yet that is the principle on which this amendment is based.
Perhaps I may stand by that by giving figures. Let us take a case where the value of the tenant's improvements is £5,000 and the value of the land used for the dairy cows—because that is all we are allowing for in the Bill—is £5,000. Both parties will have contributed equally to the build-up of the quota. Under that example, I say to my noble friend Lord
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Mottistone, the tenant would get 50 per cent. But under the amendment of the noble Lord, Lord Mackie, the tenant would get 100 per cent; he would get the lot. In certain cases this formula would produce an even odder result. It could in fact mean that in some circumstances the tenant's fraction would turn out to be more akin to the kind of thing which my noble friend Lord Middleton has been putting forward and would become more than 100 per cent. In those cases we would find the landlord having to pay a tenant compensation equalling the value of the quota.
I ask whether that is right. It would be a major swing in favour of the tenant. What we have tried to do in this Bill—and not just the Government but your Lordships as a whole; many of your Lordships not agreeing to it but nonetheless accepting it—is to make a quite significant though modest move in the direction of the tenant in the arrangements which this Bill puts forward for paying for the first time capital sums to tenants who are milk producers when they retire or leave their holdings. But where two people, the tenant and the landlord, had contributed equally to the creation of the asset and at the end of the day one of them, the tenant, was to be able to claim the whole of the asset, would not be reasonable and such an amendment would not be seen to be reasonable revising work.
Lord Mackie of Benshie: My Lords, a great deal of ingenuity has been employed in playing with the figures. I accept that you might have a case where the tenant gets the lot. He cannot of course get 200 per cent. The noble Lord, Lord Middleton, would without doubt agree with me that you cannot get that amount.
In the first case put forward by the noble Lord the Minister, he referred to the value of the tenant's improvements. This is the value put on by an arbiter or arbitrator who knows the position. He is not going to put on ridiculous figures. Even if a tenant has built all the buildings the arbiter will look at what the land is worth. Buildings without land are not worth anything. But if he has built all the buildings he has without doubt put up the value of the land and he has put up the rental value of the land as well. No arbiter would ever put the value of the buildings at a greater value than the value of the land. That is the cause of everything and supports the cows which give the milk which gives the value of the quota.
We are talking about sensible people looking at practical situations. We are not talking about the theoretical ones. In the very sensible first case the Minister gave he said the value of the tenant's improvements was £2,000 a year and the value of the land was £8,000. that would make the tenant's fraction one-quarter. That, in my view, would not be sensible. It would not be sensible because I do not think it would be enough—it should be 50–50. But at one-quarter it is not overgenerous if he has put in £2,000 a year as against £8,000. It appears to me to be a good example of exactly what I am talking about and is much fairer than the other way.
I do not think you will ever get a 200 per cent. case. Remember that we are talking about an arbiter looking at the values. We are not talking about a theoretical case; we are talking about an arbiter looking at it. I think that my amendment makes it

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fairer. It may not be perfect but it certainly makes it a fairer division. The Minister's first example shows perfectly clearly that that is a fair way to do it. Therefore, I am afraid that I must ask the opinion of the House.
6.50 p.m.
On Question, Whether the said amendment (No. 9) shall be agreed to?
Their Lordships divided: Contents, 69; Not-Contents, 112.

DIVISION NO.3

CONTENTS

Addington, L.

Lloyd of Kilgerran, L.

Airedale, L.

Longford, E.

Amherst, E.

Lovell-Davies, L.

Birk, B.

McIntosh of Haringey, L.

Bottomley, L.

Mackie of Benshie, L.

Brooks of Tremorfa, L.

McNair, L. [Teller.]

Caradon, L.

Mais, L.

Cledwyn of Penrhos, L.

Mottistone, L.

Dean of Beswick, L.

Parry, L.

Donoughue, L.

Phillips, B.

Elwyn-Jones, L.

Pitt of Hampstead, L.

Ewart-Biggs, B.

Ponsonby of Shulbrede, L.

Falkland, v.

Prys-Davies, L.

Gallacher, L. [Teller.]

Ritchie of Dundee, L.

Glenamara, L.

Rochester, L.

Graham of Edmonton, L.

Seear, B.

Grey, E.

Serota, B.

Hampton, L.

Shepherd, L.

Hanworth, V.

Silkin of Dulwich, L.

Harris of Greenwich, L.

Simon, V.

Hatch of Lusby, L.

Stanley of Alderley, L.

Hayter, L.

Stoddart of Swindon, L.

Heycock L

Taylor of Blackburn, L.

Howie of Troon, L.

Taylor of Gryfe, L.

Hunt, L.

Taylor of Mansfield, L.

Irving of Dartford, L.

Tordoff, L.

Jeger, B.

Underhill, L.

Jenkins of Putney, L.

Wallace of Coslany, L.

John-Mackie, L.

Walston, L.

Kagan L

Whaddon, L.

Kennet, L.

White, B.

Kilbracken, L.

Williams of Elvel, L.

Kilmarnock, L.

Willis, L.

Kirkhill, L.

Wise, L.

Llewelyn-Davies of Hastoe, B.

NOT-CONTENTS

Alexander of Tunis, E.

Cork and Orrery, E.

Ashbourne, L.

Craigavon, V.

Bauer, L.

Davidson, V.

Belhaven and Stenton, L.

De La Warr, E.

Beloff, L.

Denham, L. [Teller.]

Belstead, L.

Derwent, L.

Bessborough, E.

Drumalbyn, L.

Blake, L.

Elles, B.

Boardman, L.

Elliot of Harwood, B.

Brabazon of Tara, L.

Elliott of Morpeth, L.

Broadbridge, L.

Elton, L.

Brougham and Vaux, L.

Ferrers, E.

Broxbourne, L.

Forbes, L.

Butterworth, L.

Fortescue, E.

Caithness, E.

Fraser of Kilmorack, L.

Cameron of Lochbroom, L.

Gardner of Parkes, B.

Campbell of Alloway, L.

Gisborough, L.

Campbell of Croy, L.

Glanusk, L.

Carnegy of Lour, B.

Glenarthur, L.

Carnock, L.

Gray of Contin, L.

Clinton, L.

Greenway, L.

Constantine of Stanmore, L.

Gridley, L.

180

Grimston of Westbury, L.

Newall, L.

Hailsham of Saint

Norfolk, D.

Marylebone, L.

Onslow, E.

Harmar-Nicholls, L.

Orr-Ewing, L.

Henderson of Brompton, L.

Pender, L.

Hives, L.

Plummer of St. Marylebone,

Home of the Hirsel, L.

L.

Hood V.

Portland, D.

Hooper, B.

Portsmouth, E.

Hylton-Foster, B.

Radnor, E.

Kimball, L.

Rankeillour, L.

Kings Norton, L.

Renton, L.

Kinloss, Ly.

Renwick, L.

Knollys, V.

Rochdale, V.

Lane-Fox, B.

Romney, E.

Lawrence, L.

Russell of Liverpool, L.

Layton, L.

Saltoun of Abernethy, Ly.

Lindsay, E.

Sanderson of Bowden, L.

Lindsey and Abingdon, E.

Sandys, L.

Long, V.

Selkirk, E.

Lucas of Chilworth, L.

Skelmersdale, L.

Lyell, L.

Strathcarron, L.

Mackintosh of Halifax, V.

Strathcona and Mount Royal,

Macleod of Borve, B.

L.

Mancroft, L.

Sudeley, L.

Marshall of Leeds, L.

Suffield, L.

Maude of Stratford-upon-

Swinfen, L.

Avon, L.

Swinton, E. [Teller.]

Merrivale, L.

Trumpington, B.

Mersey, V.

Ullswater, V.

Middleton, L.

Vaux of Harrowden, L.

Milverton, L.

Vickers, B.

Montgomery of Alamein, V.

Vivian, L.

Morris, L.

Windlesham, L.

Munster, E.

Ypres, E.

Murton of Lindisfarne, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.58 p.m.
Schedule 2 [Tenants' compensation for milk quota: Scotland]:
[Amendment No. 10 not moved.]
Lord Belstead: My Lords, I beg to move that this Bill do now pass.
I shall say just a few words on the Bill, not actually commensurate with the amount of work which has been done, because in thanking noble Lords in all parts of the House for their work on the Bill I have to admit that we have made 60 amendments to it. Although it is true that many of the amendments are of a drafting or contingent nature, the presence of six new clauses and one new schedule testifies to the scrutiny which your Lordships have given to the Bill.
Perhaps the most important part of our work has been that on the clauses and schedules governing claims for payments made by outgoing tenant dairy farmers. This is a new and difficult subject, as we know from the exchanges we have just had on the last amendments, but it is an important subject for those concerned. The Bill will make it possible for sums of money—and although there are differences in your Lordships' House about the size, they can be significant sums—to be paid to outgoing tenants in respect of their contribution to the quota attached to their farm; and it will be the first time that such payments have been possible. My noble friend Lord Gray of Contin has moved amendments which apply the same principles to Scottish agriculture and Scottish land law, and has made such modifications as were needed to provide for environmentally sensitive areas in Scotland.

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Perhaps I may just mention Clause 19 of the Bill. This was an important environmental clause. It came to your Lordships' House already in the Bill, though in fact it is in the Bill because of an initiative from the noble Baroness, Lady Nicol, who raised the matter in debate long before this Bill was actually drafted and introduced. During our long debates my noble friends Lord Peel and Lord Sandford have pressed the point that it should be possible for farm capital grants to extend to farm-based ancillary businesses. As I explained to your Lordships, the original proposal which my noble friend put forward carried some difficulties for the Government, but I am glad that in the Bill we have been able to meet the point of my noble friend, which I believe is right in the climate of seeking greater diversification for farm businesses.
We have now also written into the Bill statutory provision for the continuation of ADAS. I should like to testify that this was due not least to pressure from the Front Bench opposite—the noble Lord, Lord John-Mackie, spoke on this matter—and from other noble Lords such as the noble Lords, Lord Walston and Lord Mackie of Benshie, and many of my noble friends. So we have put into the Bill a statutory provision for the continuation of the advisory services.
We have also written in provision for the monitoring of environmentally sensitive areas, which was not there when the Bill came to your Lordships' House, and today we have put in statutory notification to landlords when a tenant wishes to make an environ-mentally sensitive area agreement. This Bill has received very thorough scrutiny in your Lordships' House. I thank your Lordships for that and I commend the Bill to the House. I beg to move.
Moved, That the Bill do now pass.—(Lord Belstead).
Lord John-Mackie: My Lords, the noble Lord, Lord Belstead, put it in a nutshell when he said that we had passed 60 or 70 amendments—I forget the exact number. Of course many of those amendments were drafting amendments. When such a number is mentioned it looks as though we have managed to amend the Bill to a considerable extent, but I do not think that the picture is quite so rosy as that figure would suggest and as the noble Lord makes out. However, we are all entitled to make the best use of figures that we can, and the noble Lord is very good at doing it.
The noble Earl, Lord Ferrers, who was in his seat not long ago and whom we are glad to see back obviously much better after his unfortunate and extraordinary accident, appealed to the House to obey the convention and not to table a lot of amendments at Third Reading. So far as I am concerned, we adhered to that; but I should just like to say a few words on the Question that the Bill do now pass.
I have three points to make, the first of them on Clause 1. Naturally, we welcome many of the provisions—if of course they materialise. We tried to get "shall" instead of "may", but the word is still "may", and I think that "may" will be found all the way through the Bill. A lot of the work of course is done by regulation. In due course we shall welcome in many of the regulations some of the figures about which we were arguing earlier.
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I must admit that I am still worried about ADAS. I have spoken to many people before and since the Report stage and there is no question but that the morale in ADAS is not at all good. All of them are very worried, as can well be imagined in a body that has existed for so long, and the work of which has been much appreciated, and which has built up a tremendous spirit between itself and the farming community. I have made many friendships—and not only in Scotland, where the advisory service is somewhat different and is attached to the colleges; the people with whom I have had contact in Lincolnshire, Essex and, for that matter, Hertfordshire have been tremendously enthusiastic. The sudden change comes at a very curious time in our agricultural affairs and it is something which is hitting the morale of this excellent body.
They are worried about charging. This measure has suddenly been thrust upon them and they now have to ask farmers to pay for their service; but it is not so much the question of charging as the way in which the charge is to be made. As noble Lords will know, I put down an amendment to try to get the Government to place a levy on fanners through the various bodies by which levies can be applied—and there are plenty of them—so that the costs could be spread and it would not seem all that much to pay. ADAS would have been able to go to any farmer, and any farmer could have asked ADAS to come, knowing that there was an overall charge and individually they did not have to pay. That would have done much to satisfy the men in the field in ADAS.
Then there is the question of the cost. It is all very well saying, "What is the £35 an hour?" I know that travelling time is not charged, but at that rate the small farmer, and particularly the smaller fanners who need this advice and have appreciated it as a free service over the years, will give a lot of thought to it before asking anyone to come along and give advice, however necessary it may be. Quite frankly, I am worried about this change at a time when farming is not in a good way. I thought the noble Lord, Lord Stodart. was about to nod his head, but he has changed his mind.
There is no doubt about it: we are in a difficult situation, and we will be for quite a while until things can settle down. It does not seem to me to be a time to make such a major change in our advisory services. I know that my noble kinsman will say something about the situation in Scotland, which I think is just the same. I can only hope that the new subsection (3), which the Minister included at Report stage, will live up to expectations. I do not quite understand why he had to use the word "organisation" instead of "ADAS". However, we accepted his explanations in good faith at Report stage and I hope that subsection (3) will fulfil our hopes.
I need not waste any time on Clauses 2 to 12. Like any other Government Minister, the noble Lord took the opportunity to tidy up a number of loose ends. Opportunities do not always come along to do that in a Bill.
My second point relates to Clauses 13, 14 and 15 and to the schedules. We have already spoken about this matter during the debate on my noble kinsman's amendment, but I should like to make the point that was brought up at Report stage by the noble Earl, Lord

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De La Warr. The more I speak, think and read about this situation, the more I begin, like him, to regret that the nettle was not grasped early on in the proceedings when quotas first came in. Whether quotas will actually stop in 1989 I do not know, but that is the plan. Most of us think that it could not possibly be achieved in that time, but one never knows. That would be the time to take the opportunity to see whether we could change back to the system in which the MMB have their quotas and there is no question of adding a value to the land, which is something that has created so many difficulties. I do not think a lot of quotas have actually been sold, because selling a parcel of land with quotas is a difficult procedure; but some have been sold. If farmers have done that, they should know the situation and can arrange to have that amount of money written offby 1989. They have been warned, and I feel that they have only themselves to blame if they pay high prices for quotas.
However, I should just like to say that, as we all know, the NFU are not happy about the situation in the Bill as regards the tenant. The TFA are not happy and the MMB are not happy. There is a certain silence from the CLA which perhaps indicates that they are happy, and if that is the case, it is not good, in my opinion, that there should be such a divide in the industry. But we have failed to get together, and we shall have to wait to see how the provision works.
My third point is on the environmental issue. At the Report stage we had quite a long discussion on the question, which was raised by the noble Earl, Lord Onslow, of landscape conservation orders. The noble Earl, Lord Ferrers, pointed out (at col. 107 of the Official Report) the number of bodies, orders and what-have-you in this area. We have national park orders, SSSIs, areas of outstanding natural beauty, the new ESAs, landscape special development orders in national parks and then we are asked to have LCOs. We have two ministries, agriculture and environment, then we have the Nature Conservancy Council and the Countryside Commission and on top of all that we have goodness knows how many voluntary environ-mental bodies.
They are worthy people. I know a lot of them and am friends with them. There are the Friends of the Earth, the CPRE, the RSPB and the Ramblers Association to name but a few. Friendly I may be with them, but they give me the impression that they are baying for farmers' blood on the question of the environment, and we have to watch the situation very closely.
The Bill opens up the question of grants and advice for farmers. Clause 16 talks about:
"the conservation and enhancement of the natural beauty and amenity of the countryside (including its flora and fauna and geological and physiographical features)".
That is a fair mouthful.
The greatest amount of lobbying was on the milk quota, but the next best was on environmental points. I have an enormously thick file about what we should do in regard to the Bill one way and another. Let me repeat what I have often said before. The prime duty of agriculturists is to produce food, and environmental considerations must fit into that. I emphasise that as
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firmly as I can. It is quite extraordinary that today there is a presumption, because of the publicity given to surplus food production in the CAP in Europe, that food production is no longer important. We have that right, left and centre in the press and generally going about one's business. That attitude should be defeated.
In a world which still has about 800 million people on a diet which is far below that needed for good health—and half that number are likely to be on a starvation diet—it is a dangerous presumption that food production is no longer important. After all, in this country we produce only 80 per cent. of the food that we eat.
From my experience of going about meeting farmers and seeing farms, I should say that 90 per cent. or more of our farmers look after the environment perfectly well; but it can be an expensive job and farmers naturally welcome grants that may come through the Bill. However, I make the reservation again that food production comes first.
This Bill has taken a long time to get through both Houses. It spent three months' gestation somewhere in the ministry and was brought back with the matter of the quotas filling the gap in the middle and that has been what most of the argument has been about. Farmers are uncertain about the legislation and it is important that it should be enacted as soon as possible. Michaelmas is approaching and a lot of tenancies may be changing hands. It is vital that farmers quickly know the worst or, one hopes, the best. Will the Minister please take note of all those points? However, in the meantime, we shall let the Bill go through.
7.15 p.m.
Lord Mackie of Benshie: My Lords, I agree with all that my noble kinsman has said. I do not know whether either Minister read the article in the Financial Times this morning by that distinguished and experienced agricultural journalist and practical farmer, John Cherington. He used a most significant phrase. He spoke about consulting the remnants of the advisory service. That is a throw-away line.
It is significant that, while we have been discussing the fine points of the new legislation, the Government by their attitude and the uncertainty that they have spread in the farming community have destroyed the advisory service—and I use the word "have" advisedly. They are in the process of destroying the college services in Scotland. If the Minister wishes, I can give him exact figures of what is happening in my area.
This Bill, on which we have spent so long and on which we congratulate ourselves, can do little harm, I suppose, if the Government change their attitude. But if they want to restore the advisory services, their attitude must change. There is nothing in the Bill to stop that; but my goodness, they must do something soon!
The Plant Breeding Institute, which is famous well beyond the bounds of this country, produces 90 per cent. of our new wheats. It is in a state of total uncertainty. Without doubt, the commercial firms not only in this country but in Europe and America will be looking at those highly skilled people. If the Government take the first clause and see about the

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provision of services and goods connected with agriculture, and if they change their attitude, they may be able to undo some of the enormous harm that they have already caused.
I approve of the marketing levies, which are quite useful; but they must be backed up by a belief in the industry that the Government are serious about using them both to market and to maintain advisory services.
The position in milk and cereals is still desperate. We still have enormous surpluses. The Government have to take national measures to replace the cropping of the land which must come out of cereals and must come out soon. We already have 5 million tonnes in intervention stores. What there will be after harvest I do not know. But sure as fate, the whole situation will blow up. We have nothing definite—but we could have under the Bill—by which farmers can replace those crops in surplus. The intentions under the Bill need to be put into practice very soon, or else we shall have an even bigger mess than we have at present. If noble Lords doubt me about the mess, let them look at the number of farms for sale and the figures for losses in the north-east of Scotland last year.
We have produced a Bill. It might be said that we have been fiddling while Rome burns. I cannot view the Bill with any great pleasure.
Lord Forbes: My Lords, I should like to join with other noble Lords in congratulating my noble friend Lord Belstead on the way that he has handled the Bill. He has bent over backwards, sideways and forwards to answer the many points that have been raised on all sides of the House. In general I welcome the Bill and wish it a speedy passage. Much will depend upon what Ministers make of the powers that have been given to them by the Bill. I am uncertain as to whether charging for some of the advisory services will bring about the results that the ministry wants. I am in no doubt that the advisory services will continue to be as helpful to farmers in the future as they now are.
I suspect that when advice is being given, advisers will introduce the topic of conservation and that the farmer will obtain the advice that he wants. I doubt whether the ministry will obtain the cash saving that it expects. My fear is that in the future that will lead to people asking, "Why stir up a hornet's nest for so little?"
There is then the question of compensation for milk quotas. Those are extremely complex measures. All that one can predict with certainty is that whenever those measures are used, arbitrators and valuers will have a field day.
As usual, when legislation is complex there will always be a good spin-off for the legal profession and accountants. It is difficult to foresee what will be left for the poor tenant or landlord at the end of the line. The Bill contains conservation measures. Whether farmers will indulge in conservation will depend, not on what is in the Bill, as the noble Lord, Lord John-Mackie, pointed out, but on whether farming is profitable. Free advice or the offer of grants will have no effect while farmers' livelihoods are still at stake.
The future of our rural areas depends upon the ability of British agriculture to flourish. I hope that the Bill will help that because today much of British
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agriculture is in considerable trouble. If that goes on, not only the rural areas but the rural population will be affected.
Lord Stodart of Leaston: My Lords, I have never concealed my distaste from the outset for the schedule which I think will be the notorious feature of the Bill. It must be the longest schedule ever written. I counted the 10,000 words which were needed to explain something. It surprises me that both my noble friends, to whom lucidity is paramount, require so many words to explain what they have both told us is a fairly simple matter. In one of the national newspapers today, I read that my noble friend Lord Belstead, at some function in the West Country over the weekend, had been congratulated before he had made whatever observations he was going to make. The least I wish to do is to congratulate him on and thank him for his tolerance of all the pinpricks that he has endured from at least one of those behind him.
Lord Belstead: My Lords, I should like to thank all noble Lords who have taken part in different stages of the Bill. There are noble Lords in the House this evening who have instituted interesting and important debates who have not spoken on the Question. That the Bill do now pass. Some of your Lordships have; and contributions have come not least from the noble Lord, Lord John-Mackie, on the Front Bench opposite and the noble Lord, Lord Mackie of Benshie.
I hope that the noble Lord, Lord Mackie of Benshie, will forgive me if I pick up one point that he made. He was critical, and I understand why, of the challenges which face the advisory services at present. It is important that I should put on the record the fact that Clause 1 gives the advisory services wider powers and statutory provision for their continuation. The advisory services in England and Wales have well over 4,000 men and women on the staff.
My noble friend Lord Forbes, speaking of the future of the advisory services in the context of charging, was right when he said that he reckoned that the advisory services would continue to be as helpful to farmers as they now are. I genuinely believe that.
I am sure that the noble Lord, Lord Mackie of Benshie, will not think that I was merely trying to have the last word when I felt that I should say that on behalf of the Ministry, because I believe it to be the case. I beg to move that this Bill do now pass.
On Question, Bill passed, and returned to the Commons with amendments.

Legal Aid (Scotland) Bill [H.L.]
7.25 p.m.
The Lord Advocate (Lord Cameron of Lochbroom): My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
(References are to [Bill 143] as first printed for the Commons.]
1 Clause 1, page 2, line 5, leave out subsection (4).
2 Page 2, line 12, leave out 'without prejudice to subsection (4) above".
Lord Cameron of Lochbroom: My Lords, with the leave of the House, I beg to move that this House do agree with the Commons in their Amendments Nos. 1 and 2.
Clause 1(4) sets out the range of expertise and experience to which it was thought desirable the Secretary of State should have regard when appointing members to the board. That range is neither mandatory nor exhaustive, and discussion of the subsection in another place suggested that it was of limited value to retain it in the Bill. However, I should make it clear that it is still my right honourable friend's intention to take into account the range of expertise that is suggested in the subsection when he comes to make appointments to the board. Amendment No. 2 is consequential. I beg to move.
Moved, That this House do agree with the Commons in the said amendments.—(Lord Cameron of Lochbroom.)
Lord Elwyn-Jones: My Lords, in the absence of my noble friend Lord Morton of Shuna, I take upon myself the onerous responsibility of speaking on matters of Scottish law, which is always dangerous. However, I venture to think that there will not be much controversy at this stage of the proceedings. Amendments Nos. 1 and 2 seem to be sensible. The mixed bag—if I may so describe it—in subsection (4) was not very helpful. Indeed, it was extremely disturbing. I agree with what has been done in another place.
On Question, Motion agreed to.

COMMONS AMENDMENT
3 Page 2, line 17, at end insert—
'(5A) Before appointing persons to be members of the Board in pursuance of either paragraph (a) or paragraph (b) of subsection (5) above, the Secretary of State shall consult with the professional body mentioned in that paragraph.'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 3.
This amendment fulfils an undertaking which I gave in your Lordships' House on Third Reading. It provides on the face of the Bill that the Secretary of State should consult the Law Society and the Faculty of Advocates on appointments to the places on the board reserved for solicitors and advocates respectively. That formalises what would have been the procedure adopted by the Secretary of State in any case. The faculty and the Law Society have already been consulted on the first advocate and solicitor members of the board. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
The Earl of Selkirk: My Lords, the amendment is valuable and important. I am sure that my noble and learned friend realises that the Bill's success will depend upon the personnel on the board. It would be foolish if the Secretary of State had not consulted. He obviously would have done so, but I think that it is right that the matter should stand four square in the Act. I am grateful to my noble friend.
Lord Elwyn-Jones: My Lords, I recollect the eloquent words of the noble Earl, Lord Selkirk, at an earlier stage of the Bill which I had the privilege of attending. I agree entirely with the words that have fallen from his distinguished lips.
On Question, Motion agreed to.
7.30 p.m.

COMMONS AMENDMENT
4 Clause 3, page 3, line 15, leave out from 'State' to the end of line 17 and insert—
'(4A) guidance under subsection (4) above shall not relate to the consideration or disposal (whether in general or in respect of individual applications) of—

(a) applications for legal aid or advice and assistance;

(b) supplementary or incidental applications or requests to the Board in connection with any case where legal aid or advice and assistance has been made available.'.

Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 4. Your Lordships will recollect that we had a lively discussion in this House on the guidance power in this clause. That discussion was continued in another place. As the Government have frequently made clear, guidance is intended to cover such matters as financial procedures, but there is no intention that it should affect the consideration or disposal of applications. However, the Government accepted in another place that this point could be made clearer, and this is the purpose of the new subsection (4A) of Clause 3. The new subsection does two things. First, it says in terms that any guidance given by the Secretary of State cannot affect the consideration or disposal of applications in general, as well as individual applications for legal aid or advice and assistance. Secondly, it says that guidance cannot affect consideration or disposal of supplementary or incidental applications to the board. This would prevent the Secretary of State giving guidance on such matters as the circumstances in which the board should agree to the employment of counsel. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
The Earl of Selkirk: My Lords, I am grateful to my noble and learned friend for this amendment. It may have made no difference, but it has clearly outlined points made in this House as to what is, I am sure, the right approach to the problems that lie before the board. It would be intolerable if the Secretary of State were to decide issues of principle in individual cases of legal aid. It would be quite wrong. This makes it abundantly clear that that is not the intention. I thank my noble and learned friend.
Lord Elwyn-Jones: My Lords, this touches upon a theme that we discussed previously. I agree with what has just been said. Valuable and important as the Secretary of State is, this is a matter for the profession, above all others, to determine.
On Question, Motion agreed to.

COMMONS AMENDMENT
5 Clause 7, page 6, line 16, at end insert 'this section or under'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 5. With the leave of the House, I shall speak also to Amendment No. 14.
The amendment to Clause 7 restores an existing power to prescribe exceptions and conditions in relation to the provision of advice and assistance, which was inadvertently omitted in the course of our bringing together the relevant provisions in the Legal Aid (Scotland) Act 1967 and the Legal Advice and Assistance Act 1972. The related Amendment No. 14 to Clause 37 applies affirmative resolution procedure to such regulations. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENT
6 Clause 14, page 10, line 22, at end insert—
'(3) The Board shall establish a procedure under which any person whose application for legal aid under this section has been refused may apply to the Board for a review of his application.'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 6. It may be for the convenience of the House if I also speak to that part of Amendment No. 12 which inserts a new subsection (5) in Clause 24 of the Bill. These two amendments fulfil the undertaking which the Government gave in Committee in another place to provide on the face of the Bill for the establishment by the board of a review procedure in relation to refusals by the board of applications for legal aid both for civil cases and summary criminal proceedings.
I hope that your Lordships will welcome the amendments. I have especially in mind the discussions that we had on these matters in this House during the earlier course of the Bill, particularly in regard to refusals of criminal legal aid. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
The Earl of Selkirk: My Lords, this was a point raised strongly in this House. I am grateful to my noble and learned friend for the amendment. It will, I think, give an added sense of confidence to the procedure. Without that, there would have been, I believe, a certain degree of uncertainty. I believe, therefore, that the amendment is a valuable addition.
Lord Elwyn-Jones: My Lords, I respectfully agree that the right to apply to the board for a review of the application is a very important measure. And, if I may say so without being patronising towards another place, it seems to have done some quite good work on this Bill.
On Question, Motion agreed to.

COMMONS AMENDMENT
7 Clause 21, page 14, line 34, at end insert—
'(2A) Subject to regulations made under this section, and to sections 22 and 23 of this Act, criminal legal aid shall not be available in connection with summary criminal proceedings until the conclusion of the first diet at which the accused has tendered a plea of not guilty.'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 7. For the convenience of the House, I should also like to speak to Amendment No. 10. I have very much in mind what the noble and learned Lord opposite has just said. This amendment reinstates the subsection deleted in Committee in your Lordships' House, indicating in general terms on the face of the Bill which summary proceedings for persons not in custody will be covered by criminal legal aid and which by assistance by way of representation. Amendment No. 10 is consequential to that reinstatement.
It was thought that this was a much more desirable way of indicating where the point came at which criminal legal aid should be provided in summary criminal proceedings than the dividing line that could only arise by a combination of regulations made under Clause 21(2) and Clause 9, which deals with assistance by way of representation. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
The Earl of Selkirk: My Lords, we had some discussion on this. My interpretation is changed substantially by what comes under Amendment No. 12, which defines the matter more closely. I raise no objection to this. It is a very delicate point. But there is the preliminary advice that can be given in any case. I am therefore most happy to thank my noble and learned friend for the amendment.
Lord Elwyn-Jones: My Lords, while not pretending to understand the reference to
"until the conclusion of the first diet"—
I must say that it conjures up an attractive picture, especially at dinner time—I understand vaguely to what it refers. In so far as I do, I respectfully agree with what the noble Earl, Lord Selkirk, says.
On Question, Motion agreed to.

COMMONS AMENDMENT
8 Clause 22, page 15, leave out lines 19 and 20, and insert—
'(c) where he is being prosecuted under summary procedure, and either is in custody or has been liberated under section 295(1)(a) of the Criminal Procedure (Scotland) Act 1975 (liberation by police on undertaking to appear)—'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 8. This amendment results from our discussion of this point in Committee, when I promised to look further at it. One of the reforms introduced by the Bail (Scotland) Act 1980 was to enable the officer in charge of a police station to release a person who has been arrested and charged with an offence which may be tried summarily, but to require that he give a written undertaking to appear in court on a specified day. In practice, as pointed out in discussion, such undertakings usually require appearance within a very short time—a day or two—of the release, and this may make it difficult for the accused to consult a solicitor in the normal way. We therefore propose that in such circumstances he should be eligible for automatic legal aid in the same way as are persons in custody. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
The Earl of Selkirk: My Lords, this sounds to me a sensible arrangement. I am unfamiliar with the procedure of "liberation by police on undertaking to appear". I thought that this would have been called bail. I dare say there are better words that can be used. But the amendment seems to me sensible.
Lord Morton of Shuna: My Lords, mechanical difficulties having prevented me arriving in time, I might as well say something. This amendment helps the situation mentioned at earlier stages. It is to be welcomed.
Lord Elwyn-Jones: My Lords, if I may echo the words of the noble Earl, Lord Selkirk, why do we have this charming phrase, "liberation by police on undertaking to appear"? Is that really a long way of saying bail?
Lord Cameron of Lochbroom: My Lords, with the leave of the House, it describes exactly what is done. It is a procedure in place of bail which is granted either by the court or in very exceptional circumstances, I think I am right in saying, by the Lord Advocate.
On Question, Motion agreed to.

COMMONS AMENDMENT
9 Page 15, line 30, at end insert—
'(e) where he is being prosecuted under section 255 or 452B of the Criminal Procedure (Scotland) Act 1975 (new prosecution for same or similar offence), until his case is finally disposed of.'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 9. Again, this amendment deals with a point which was raised in Committee in your Lordships' House. One of the innovations of the Criminal Justice (Scotland) Act 1980 was to enable the High Court, where an appeal against conviction was successful, in some circumstances and where it was thought just, to authorise the bringing of a new prosecution. Without this amendment, the accused in such circumstances would have to apply for legal aid in the normal way, either to the courts in solemn proceedings or to the board in summary cases.
No doubt in such cases, which are of course far from common, legal aid would normally be granted. However, as noble Lords commented—in particular the noble Lord, Lord Morton of Shuna—the circumstances which lead to authority for a retrial being granted will not in general be the responsibility of the accused, and therefore assistance from the legal aid fund should always be available to meet the costs of his defence at the second trial. We can see the force in that, and the amendment therefore makes automatic legal aid available, without financial or other tests, to accused persons against whom such a new prosecution is brought. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
Lord Morton of Shuna: My Lords, as I asked for this amendment in Committee, I am very pleased to see that while I was not persuasive here I seem to have managed to persuade people in another place. It is wholly to be welcomed.
On Question, Motion agreed to.

COMMONS AMENDMENT
10 Clause 24, page 16, line 21, after 'Act', insert ', to section 21(3) of this Act'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 10. I have already spoken to this amendment.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENT
11 Page 16, line 36, leave out 'Regulations made under this section may prescribe' and insert 'The'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 11. For the convenience of the House, and with leave, I shall speak also to Amendments Nos. 12 and 15.
As your Lordships may recall, I gave an undertaking in Committee that an amendment would be introduced in another place setting out on the face of the Bill factors to be taken into account by the Board in determining whether the interests of justice criterion has been satisfied. This amendment and part of Amendment No. 12 and Amendment No. 15 fulfil that undertaking.
The amendments take account of the views expressed by your Lordships, by the Royal Commission on Legal Services in Scotland, by the various bodies consulted, including the Law Society, and views expressed in another place. New Clause 24(3) in Amendment No. 12 sets out the factors to be taken into account by the board in determining whether it is in the interests of justice that criminal legal aid be made available in any case. We think that these cover the most important aspects which should commonly fall to be taken into account. It is neither possible nor desirable—I think that your Lordships would agree—to draw up a list which would cover everything which might be relevant in determining whether the award of legal aid is in the interests of justice in any individual case. The list is therefore neither exhaustive nor exclusive, and the board will be able, and indeed bound, to take into account any other relevant considerations which are placed before it in relation to a particular case. The test remains, as it is at present, whether in all the circumstances of the case it is in the interests of justice that legal aid be made available.
New subsection (4) gives the Secretary of State power to add new factors to the list, or to amend existing ones by regulation; but not to delete any factors. This power will enable the Secretary of State to take account of changes in criminal law or court procedure which suggest the list has to be updated; or to amend a factor which has unexpectedly turned out to be ambiguous or otherwise difficult to apply. These

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regulations are made subject to affirmative resolution by Amendment No. 15, and will therefore require the approval of both Houses of Parliament.
The new subsection (5) in Amendment No. 12, as I indicated earlier in relation to Amendment No. 6, introduces for the first time a procedure for reviews of refusals of summary criminal legal aid.
Finally, new subsections (6) to (8) in Amendment No. 12 provide for the exceptional case where a person who is not legally represented in summary proceedings appears for trial, and the court concludes that he should be represented, either in his own interests or in the interests of someone else, such as a child witness. These cases were first raised in this House, I think by the noble Lord opposite, Lord Morton of Shuna, but were discussed more extensively in another place. The new provision will enable such cases to be dealt with quickly where speed is needed, while leaving the decision as to legal aid, as in all summary cases, with the board. It seemed to us that this was necessary if the consistency in awards of legal aid in summary criminal cases, which we all think important, was to be achieved.
Under subsection (6) the court is enabled to adjourn the trial to allow the accused to apply for legal aid, or to reapply if he had previously been refused, under the interests of justice criterion. The board is obliged to handle the application expeditiously. We would envisage that it could be dealt with, once received, in a very short time indeed—a matter of one or two working days. As I have said, we did not wish to give a court a general power to overrule decisions by the board, or to substitute itself for the board, since this could reintroduce the present inconsistencies between courts in the award of legal aid for at least some types of case. Reference of the case from the court to the board avoids this difficulty. On the other hand, the amendment would allow the court to take the initiative in raising the matter. Where legal aid had been refused by the board earlier, the court would in effect be asking the board to review the case in the light of the court's expressed view that legal aid should be available.
However, subsection (7) also provides that automatic legal aid will be available from the date of application until the application is determined. Legal aid will therefore be available to cover the preparation of the defence. Subsection (7) could also be used to ensure that the accused was legally represented if, very exceptionally, the court decided that the trial had to proceed more or less immediately, perhaps because it was undesirable or difficult to recall witnesses to a later diet. We envisage that there could be a mechanism whereby the accused could, with the assistance of the duty solicitor of the court clerk, fill in an application on the spot.
Subsection (8) provides for the situation where the board refuses an application on grounds of financial eligibility. As the legal expenses will have to be paid by the board under the automatic provision of subsection (7), it seems only right that the board should have power to recover those expenses from an accused who is able to afford to meet them himself. I have taken some time to set out the scope and purpose of these amendments. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
Lord Morton of Shuna: My Lords, perhaps I may speak to the same amendments as the noble and learned Lord the Lord Advocate. If there has to be a reference to factors that may be in the interests of justice, and a clause relating to the interests of justice, it is better that it should be in the Bill. The factors listed in Amendment No. 12 appear, in general, to be satisfactory. The most satisfactory factor is the phrase "shall include" at the beginning. That leaves it clear to the person or persons making the decision that there may be other factors.
In the consultation paper the question was raised—and it was raised in this House and in another place—whether previous convictions would be a factor. The consultation paper drafted by the Scottish home and health departments suggested that that might be so. I can see the reasons why there is no mention even of a prohibition in the new clause; but I trust that the noble and learned Lord the Lord Advocate will in some way or another be able to get it through to people that this should not be a factor.
The amendment which is subsection (6), which gives the sheriff a right to suggest to the accused that he may apply for legal aid and for the case to be adjourned, I would suggest is a rather clumsy way out of the difficulty. However, I would dissociate myself with the suggestion made in another place by a Member who sits on the other side from me and for another political party that in some way the Government had gone back on their word. I think it is quite clear that the Government have done exactly what they said they would do in another place.
It seems unfortunate that this will usually involve adjournment of a summary trial and that if, for example, a sheriff decides that legal aid should be applied for because he does not want a young child to be cross-examined by the accused, the costs of the case if it goes ahead that day, will hang like a sword of Damocles over the accused. After the trial he may find that the Legal Aid Board decides that he was not entitled to legal aid anyway. These seem to me to be difficulties, but in general the amendments are to be welcomed; but I give them a subdued welcome.
The Earl of Selkirk: My Lords, I am very grateful to the Government for doing this because it is really turning regulations into statutes. I made a number of complaints at the number of regulations which were put in, and this clarifies the issue. I have no doubt that if this clause had not been there, regulations of this sort would have been used. However, it is much more satisfactory that these rather fundamental issues should appear on the face of the statute.
Lord Cameron of Lochbroom: My Lords, with leave, perhaps I may just answer one point which the noble Lord opposite made about previous convictions. The noble Lord may be aware that, as the amendments were put in another place, there was a specific factor. However; I think it was pointed out then that a tailpiece of that kind might be a disadvantage to some applicants who might wish to say that because of their previous convictions they were more likely to face a

195
sentence depriving them of liberty, which of course is a point covered by factor A. These representations were accepted by the Government and accordingly the particular amendment covering that was deleted.
On Question, Motion agreed to.

COMMONS AMENDMENT
12 Page 16, line 39, at end insert—
'shall include—

(a) the offence is such that if proved it is likely that the court would impose a sentence which would deprive the accused of his liberty or lead to loss of his livelihood;

(b) the determination of the case may involve consideration of a substantial question of law, or of evidence of a complex or difficult nature;

(c) the accused may be unable to understand the proceedings or to state his own case because of his age, inadequate knowledge of English, mental illness, other mental or physical disability or otherwise;

(d) it is in the interests of someone other than the accused that the accused be legally represented;

(e) the defence to be advanced by the accused does not appear to be frivolous;

(f) the accused has been remanded in custody pending trial.

(4) The Secretary of State may, by regulations made under this section vary the factors listed in subsection (3) above by amending factors in the list or by adding new factors to the list.
(5) The Board shall establish a procedure under which any person whose application for criminal legal aid in summary proceedings has been refused may apply to the Board for a review of his application.
(6) Where a person who is being prosecuted under summary procedure is not represented by a solicitor or counsel and has either—

(a) not applied for criminal legal aid in connection with proceedings; or

(b) applied for criminal legal aid but been refused it on the grounds that it is not in the interests of justice,

the court at the trial diet may, if it considers that owing to the exceptional circumstances of the case it would be inequitable to proceed with the trial without such representation and without legal aid being made available to him, adjourn the diet to enable an application for legal aid to be made to the Board which shall consider the application expeditiously.
(7) Where the trial of an accused person is adjourned as is mentioned in subsection (6) above, and he has made an application to the Board, criminal legal aid shall be available to him until his application is determined by the Board.
(8) Where any person to whom criminal legal aid has been made available in pursuance of subsection (7) above has his application for criminal legal aid under subsection (6) above refused by the Board on the ground that it is satisfied that subsection (1)(a) above does not apply in his case, the Board may require him to pay to the Fund the whole or part of the amount of any sums paid out of the fund under section 4(2)(a) of this Act in respect of the criminal legal aid so made available.'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 12, to which I have already spoken.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENT
13 Clause 36, page 26, line 15, at end insert—
'(ff) make provision in connection with the recovery of sums due to the Fund and making effective the priorities conferred by this Act on the payment of such sums out of
196
awards of expenses or property recovered or preserved for a person receiving legal aid, including—

(i) provision in connection with the enforcement (by whatever means) for the benefit of the Fund of any award of expenses or any agreement as to expenses in favour of a person who has received legal aid; and

(ii) provision making a solicitor's right to payment out of the Fund dependent, in whole or in part, on his performing any duties imposed on him by regulations made for the purposes of this paragraph;?.

Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 13. With leave and for the convenience of the House, I should also like to speak to Amendment No. 16. Perhaps I should make one point in relation to Amendment No. 13 as it appears on the Marshalled List and in particular the paragraph which appears at the top of page 4. I am advised that in the third line of that subparagraph where the phrase:
"on his performing of any duties"
appears in the Marshalled List, the word "of is otiose, and that the amendment as presented and passed in another place excluded the word "of.
With that introduction, perhaps I may say that these two amendments provide for the Secretary of State to make provision by regulations about the way in which sums due to the Legal Aid Fund may be recovered and protected. This power is presently exercised by rules of court; but since other matters dealing with sums due from property recovered are dealt with by regulations, it seems preferable to be able to deal with all the aspects together in one set of regulations. The Lord President of the Court of Session, with whom we have consulted, agrees that this would be appropriate.
Amendment No. 16 also inserts a provision to make it clear that rules of court may make provision for the apportionment of sums recovered by virtue of an award of expenses between distinct proceedings or matters. This reflects an existing power in the present legislation. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
14 Clause 37, page 27, line 19 after 'section', insert '7,'.
15 Page 27, line 20, leave out '24(3)' and insert '24(4),'.
16 Clause 38, page 27, leave out from line 37 to line 7 on page 28 and insert—
'(c) make provision as to the apportionment of sums recovered or recoverable by virtue of any award of expenses made generally with respect to proceedings or matters which are to be treated as distinct by virtue of regulations made under section 36(2)(c) of this Act;'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 14, to 16 en bloc, to which I have already spoken.
Moved, That this House do agree with the Commons in the said amendments.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
17 Schedule 1, page 32, line 40, leave out 'is'.
18 Page 32, line 40, leave out 'incapacitated' and insert 'is unable to carry out his duties as a Board member.'.
Lord Cameron of Lochbroom: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 17 and 18 en bloc. These are essentially drafting amendments, which make it clear that a board member may be dismissed because of physical and mental illness only if that illness makes him unable to carry out his board duties. I think that this clarification, which was suggested by the Opposition in another place, is a useful one, and I would commend it to your Lordships.
Moved, That this House do agree with the Commons in the said amendments.—(Lord Cameron of Lockbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENT
19 Schedule 3, page 37, line 31, at end insert—
''The Maintenance Orders (Reciprocal Enforcement) Act 1972.
.—(1) In section 31(1) of the Maintenance Orders (Reciprocal Enforcement) Act 1972 for the words from "secretary" where it first occurs to "taking" there shall be substituted the words:—
"Secretary of the Law Society of Scotland who shall send the application and any accompanying documents to a solicitor practising in the sheriff court within the jurisdiction of which that other person resides or to such other solicitor practising in Scotland as appears to the Secretary to be appropriate, for the purposes of enabling the solicitor to take".
(2) In section 32 of that Act—
(a) after subsection (7) there shall be inserted the following subsections—
"(7A) The Secretary of State on receiving notice under subsection (6) above shall send a copy of the registered order and of the related documents to the Secretary of the Law Society of Scotland who shall send the copy of the order and of the related documents to a solicitor practising in the registering court or to such other solicitor practising in Scotland as appears to the Secretary to be appropriate for the purpose of enabling the solicitor to take, on behalf of the person entitled to the payments for which the order provides, such steps as appear to the solicitor appropriate to enforce the order.
(7B) Where an order is registered in the sheriff court by virtue of subsection (3) above, any provision of the order by virtue of which the payments for which the order provides are required to be made through or to any officer or person on behalf of the person entitled thereto shall be of no effect so long as the order is so registered.";
(b) subsection (9)(e) of that section shall be omitted.
(3) In section 34(5) of that Act, for paragraph (b) there shall be substituted the following paragraph—
"(b) for subsection (3) there shall be substituted the following subsection—
'(3) Where the Secretary of State receives from the appropriate authority in a convention country an application by a person in that country for the variation of a registered order, he shall, if the registering court is a sheriff court, send the applica-tion, together with any documents accompanying it, to the Secretary of the Law Society of Scotland who shall send the application and any accompanying documents to a solicitor, practising in the registering court or to such other solicitor practising in Scotland as appears to the Secretary to be appropriate for the purpose of enabling the solicitor to take on behalf of the applicant such steps as appear to the solicitor appropriate in respect of the application.'.".
A.—(1) Section 43A of that Act shall be amended as follows.
(2) In subsection (1) for the words "section 2(1) and (6Xc), 3 and 4 of the Legal Aid (Scotland) Act 1967" there shall be substituted the words "sections 15 and 17 of the Legal Aid (Scotland) Act 1986".
(3) In subsection (2) for the words "sections 2(1) and (6)(c), 3 and 4 of the said Act of 1967", there shall be substituted the words "sections 15 and 17 of the said Act of 1986".
(4) In subsection (3) for the words from "legal advice" to "said Act of 1972)", where they second occur, there shall be substituted the words "advice and assistance under the said Act of 1986, shall, notwithstanding any financial conditions or requirements to make contributions imposed by sections 8 and 11 of that Act,".'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 19. With leave and for the convenience of the House, I should also like to speak to Amendment No. 21. These amendments are to Schedule 3 of the Bill. Again, as regards Amendment No. 19, I have to point out that there appear to be errors in the Marshalled List on page 5. I am advised that halfway down the page at the start of subparagraph (3) the phrase should read
"in section 34(5) of that Act"
as opposed to "the Act". In the substituted subsection in the third last line noble Lords will see the phrase
"on behalf of the applicant such…"
and then the word "steps" should appear. Again that was in the amendment which was passed in another place.
While I am referring to the Marshalled List, in Amendment No. 21, to which I am also speaking, again owing to a printing error there is perhaps some difficulty in understanding the way in which the amendment should be set out. It is to appear in three columns, the first of which will contain the date, "1972 c.18"; the second column will read "The Maintenance Orders (Reciprocal Enforcement) Act 1972"; and the third column will read "Section 32 (9)(e)".
I apologise for bringing these very technical matters to your Lordships' attention, but it is of some importance in endeavouring to understand these particular amendments which involve Section 31 of the Maintenance Orders (Reciprocal Enforcement) Act 1972. That act requires the Secretary of State for Scotland to send incoming maintenance applications from foreign countries to the Law Society's Legal Aid Central Committee, and that committee in turn to instruct the solicitors in the appropriate jurisdiction and to take steps to enforce the order.
Of course, the Legal Aid Central Committee will be replaced by the board once the Bill comes into operation. Therefore, it is necessary to devise some alternative mechanism for dealing with these applications. Since this task involves the choice of a solicitor and legal aid is not necessarily involved, it seems appropriate for this to be done in future by the Law Society rather than by the board. I place on record my grateful thanks to the Law Society for agreeing to take on this task. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
Lord Elwyn-Jones: My Lords, may I take it that the "O" appearing below the title is neither a cri de coeur from the exhausted draftsman nor a zero, but the letter in the alphabet?
Lord Cameron of Lochbroom: My Lords, I would be cautious, but I suspect it is the letter in the alphabet. If I am wrong about that, it is perhaps a matter which I ought to have brought to your Lordships' attention earlier. I am advised that it is because the effect of the amendment is to bring in a new section before subsection (1) of the Act and therefore it has to be called "O".
Lord Morton of Shuna: "Alpha" might be better, my Lords.
As the noble and learned Lord the Lord Advocate has made reference to the Law Society, I think it would be unfortunate to complete our consideration of this Bill without paying tribute to the considerable efforts and help they have provided I think to both the Government and those on this side of the House in giving us their comments on this rather technical Bill.
On Question, Motion agreed to.

COMMONS AMENDMENT
20 Schedule 3, page 38, line 20 [Schedule 3], at end insert—
'The Tenants' Rights, Etc. (Scotland) Act 1980 (c. 52)
In section 9B(4) of the Tenants Rights, Etc. (Scotland) Act 1980 for the words "Legal Aid and Advice (Scotland) Acts 1967 and 1972 and to any provision of those Acts for payment of any sum into the legal aid fund" there shall be substituted the words "Legal Aid (Scotland) Act 1986 and to any provision of that Act for payment of any sum into the Scottish Legal Aid Fund".'.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 20.
First, may I echo the words of the noble Lord opposite so far as concerns the assistance given by the Law Society and, indeed, other bodies including the Faculty in the passage of this Bill through both Houses.
This amendment updates a reference to existing legal aid legislation in the Tenants' Rights, Etc. (Scotland) Act 1980 which is being inserted by the Housing (Scotland) Bill. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

COMMONS AMENDMENT
21 Schedule 5, page 41, line 8, at end insert—
'1972 c. 18. The Maintenance Orders Section 32(9)(e)'
(Reciprocal Enforcement) Act 1972.
Lord Cameron of Lochbroom: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 21. I have already spoken to this amendment.
Moved, That this House do agree with the Commons in the said amendment.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.

Company Directors Disqualification Bill [H.L.]
Returned from the Commons agreed to.
Insolvency Bill [H.L.]
Returned from the Commons agreed to.
Gas Bill
Returned from the Commons with the amendments agreed to.
Ipswich Port Authority Bill
Returned from the Commons with the amendments agreed to.
Alcoholics Anonymous (Disposition) Bill [H.L.]
Returned from the Commons agreed to with amendments.
Bournemouth-Swanage Motor Road and Ferry Bill [H.L.]
Returned from the Commons agreed to with amendments.

Bromborough Dock Bill [H.L.]
Returned from the Commons agreed to with amendments.
House adjourned at four minutes past eight o'clock.