Lords Sitting of 10 June 1986

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

Type 23 Frigates: Cost
Viscount Mersey: 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To ask Her Majesty's Government what is the anticipated cost of Type 23 frigates, and when these ships might be superseded by the NATO frigate mentioned on page 19 of the 1986 Statement of Defence Estimates (Cmnd. 9763—I).
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, the estimated average cost of the first eight Type 23 frigates is £115 million each (at 1985–86 prices). The NFR is aimed at the 1990s, but the project is still at a very early stage, and along with its NATO partners, the United Kingdom is considering whether to move forwards to the project definition phase.
Viscount Mersey: My Lords, I thank my noble friend for that reply. It is certainly encouraging to hear that the Type 23 frigate is estimated to cost only £115 million as against the Type 22, costing £150 million. But surely we should strive for a common frigate design across the whole breadth of NATO, bearing in mind particularly that our defence expenditure is no longer increasing in real terms.
Lord Trefgarne: My Lords, yes; that is a desirable objective from a number of standpoints, but we shall need to be certain that the important criteria are met. I have in mind, for example, that the cost of the vessel is comparable with what a national project would produce.

Retail Price Index: Weighting
2.37 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they intend to adjust the weighting of the elements used in the determination of the retail price index.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, the weighting of the index is revised as a matter of routine at the beginning of each year. I have no immediate plans to change the way that this is done. However, I expect to receive shortly a report from the RPI Advisory Committee and will be ready to consider making changes in the light of its recommendations.
Lord Campbell of Croy: My Lords, I thank my noble friend for that reply. Have the Government taken into account the recent report commissioned by the Institute for Fiscal Studies, which found that the RPI at present overstates the rate of inflation and does not fully reflect expenditure by less well-off families? On both these points should not this accepted measure of inflation be made to be as accurate as possible? If that is done the success, both recent and current, in curbing inflation is seen as being greater than we had thought.
Lord Young of Graffham: My Lords, the RPI Advisory Committee was convened in September 1984 to advise on the possibility of rebasing the index. They will be no doubt aware of the report of the Institute for Fiscal Studies, and I think we should see their recommendations. If I might say so, it makes a pleasant change for the Government to be criticised for exaggerating figures.
Lord Mellish: My Lords, would the Minister be good enough to publish in Hansard details of the elements contained in the retail price index, so that some of us may know what he is talking about?
Lord Young of Graffham: My Lords, I shall certainly arrange for that to be done, or for details to be placed in the Library.
Lord Bruce of Donington: My Lords, in view of the importance of the RPI as a base upon which a whole series of calculations are made from time to time—and which indeed, as the noble Lord will know, is an official index incorporated in the Finance Act for the purposes of taxation—will he take steps to ensure that if any significant change is made in the weighting, the details are revealed by way of a separate document published by the Government so that everybody knows exactly what is happening?
Also, is the noble Lord aware that the movements of the RPI are also of some significance in the price formula in connection with British Telecom and are proposed to be of significance in the case of gas bill prices? Will the noble Lord take all these considerations on board and make sure that the House is thoroughly informed of when any significant changes are made and the precise reasons for them?
Lord Young of Graffham: My Lords, I am well aware of the significance and the importance of the retail price index and also of the various different ways in which it is used, including Government securities. That is the reason there is an advisory committee, which is an independent committee. They will be making suggestions to me which will be published. I have no doubt at all that they will be giving the best possible advice and that they will be looking at it from an independent point of view.
Lord Bruce of Donington: My Lords, but will it be published?
Lord Young of Graffham: My Lords, I should have thought so.
Lord Monson: My Lords, would the noble Lord agree that people on very low incomes do not normally

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either run motor vehicles or pay mortgage interest? Would he agree therefore that the retail price index as at present constituted is not an adequate guide to inflation so far as concerns the lowest income groups?
Lord Young of Graffham: My Lords, I suspect that there are different retail price indices according to whether you smoke, drink, change your clothes too often, and so on. But it is important that we should have a single, comprehensible, simple-to-understand index and one which fairly represents the cost of living in the country. That is the important point.
Lord Stallard: My Lords, will the Minister accept that the weighting in the index must be seen to be fair as well? As the noble Lord, Lord Campbell, has said, the present weighting does not reflect people on lower incomes and those who live on pensions. It certainly will not reflect the worsening conditions of those people under the social security legislation which is now going through, particularly in relation to their housing costs. Will all these factors be taken into account in the changing of the index?
Lord Young of Graffham: My Lords, I am afraid that I can go along with none of the contentions of the noble Lord's question, but I will say this. My predecessor appointed an advisory committee and I look forward with interest to receiving the recommendations that it makes.
Baroness White: My Lords, would the noble Lord consider possibly having two price indices, one for those who are subject to income tax and one for those who are not? That might be a simple way of differentiating.
Lord Young of Graffham: Yes, my Lords; the Treasury publishes a separate prices and tax index which shows different figures. But we must be very careful, because we are a nation of some 50-odd million people and we could construct 50-odd million different retail price indices. What we must do is to have a single figure which is fair and understandable.
Lord Hatch of Lusby: My Lords, is the noble Lord aware that in the report quoted by the noble Lord, Lord Campbell of Croy, it was shown that the average price of those goods most bought by the lowest 10 per cent. of households had risen by 17 per cent. above the average price of those goods most normally bought by the top 10 per cent. of households?
Lord Young of Graffham: My Lords, that may well be, but I am not sure whether it is necessarily so. It may well be what the Institute of Fiscal Studies report said. How correct that is is a second matter, although I have no reason not to suspect that it is correct. But I am advised by an advisory committee of independent people and I must listen to what they have to say.
Lord Mackie of Benshie: My Lords, will the noble Lord assure the House that he will accept the advice of his advisory committee, whether it puts the index up or down?
Lord Young of Graffham: My Lords, we are talking about the construction of the index, and that is the point to bear in mind. This is an independent index. I have an independent advisory committee and I must listen to it.
Lord Kennet: My Lords, have the Government given recent reconsideration to the vexed question of the presence of cigarettes on the retail price index, given that their very presence there is an incentive to successive governments to refrain from raising the price of cigarettes as much as they perhaps ought?
Lord Young of Graffham: My Lords, if that is an incentive, I have not noticed that it has worked.
Lord Rochester: My Lords, will the noble Lord undertake at least to give some further consideration to the representations made by a number of noble Lords relating to the effect of the retail price index, particularly on the lower paid?
Lord Young of Graffham: My Lords, I have an advisory committee and I will really listen to what it has to say. I have no doubt that it has studied the Institute of Fiscal Studies report. But we have to construct a retail price index which works for the entire country. I accept that there may well be differences in the bottom decile or the top decile, but we have to look at an index which is comprehensible for the whole country.
Lord Molloy: My Lords, will the noble Lord the Minister accept that we can hardly get a fair estimate of the situation, particularly when, irrespective of what the index says, the lowest group in Great Britain, which has been increasing, is bound to be much worse off than anyone on average pay or for whom the index does not reflect the true situation? Much of this appalling poverty is not revealed by the price index and the Government ought to find some other system of ascertaining who these people are and of helping them.
Lord Young of Graffham: My Lords, all I can say is that the bottom decile of earners—that is, the lowest 10 per cent. of earners—have over the last seven years seen their pay go up above the rate of inflation as shown by the RPI.
This is a matter which I expect we could debate all day. But I have an advisory committee and I hope that noble Lords will bear with me and see what that advisory committee has to say.
Lord Campbell of Croy: My Lords, in case there should be any doubt about my purpose in raising this Question, is my noble friend aware that I have complete confidence in the advisory committee and that, although there is this comment in the report about there not being a full reflection of the expenditure of less well-off households, our object must be to have one index? At the moment the report indicates that the present RPI overstates the rate of inflation, so there is not a great deal to be worried about on that
Lord Young of Graffham: Yes, my Lords.

Residuary Bodies: Appointment of Women
2.47 p.m.
Baroness Stedman: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether and when they propose to appoint any women to serve on the residuary bodies following the abolition of the GLC and metropolitan counties.
The Minister of State, Department of the Environment (Lord Elton): My Lords, my right honourable friend the Secretary of State for the Environment has no plans at present to make further appointments to the residuary bodies. However, if it becomes necessary or desirable to make additional appointments he will, as before, be guided by a person's suitability and availability. He will make no distinction between men and women for this purpose.
Baroness Stedman: My Lords, I thank the noble Lord for that reply. Does he recall that in a Written Answer he told me initially that 10 women were considered out of the 220 people who were considered for nomination, and appointments were made, as he said this afternoon, subject to availability and suitability? Is the Minister really suggesting that there are only 10 women in this country who might be considered for such a job, with all the expertise that we have among women in local government and ex-local government?
Is he also aware that I should have thought that Sections 85 and 86 of the Sex Discrimination Act placed a duty on Ministers to have regard to the appointment of women to public bodies? Was the Prime Minister consulted, because she is the person who, some years ago when the Equal Opportunities Commission published its report on women in public life, sent a message of congratulations and said that it was her wish that more women should be involved?
Lord Elton: My Lords, I am grateful to the noble Baroness for drawing my attention to Section 6(1) of the Sex Discrimination Act, which is applied to Ministers by Section 85(1). I can confirm that we have not discriminated against women in the search for people to serve on these committees. I can confirm that we considered 220 names. Our search extended to the top ranks of public administration, the legal, surveying and planning professions and local business. The fact is that there were not enough names forthcoming to satisfy the criteria which the noble Baroness applies. I think that as the tone of public life and commercial life changes, it is a question of good women working their way through to the top and they have not all arrived there yet.
Baroness Phillips: My Lords, is the noble Lord the Minister aware of the effect of his reply on women's organisations? It is very disturbing that he has now said that there were not enough women of quality in commerce, industry and the professions to be considered. I wonder whether he has considered the effect it will have when people read that tomorrow.
Lord Elton: My Lords, I said that the numbers were not sufficient to satisfy the criteria of the noble Baroness, Lady Stedman. The Government welcome the success of women in all fields of life; and with such a leader, how could it be otherwise?
Baroness Faithfull: My Lords, does my noble friend really say that of the women who applied none was as capable, as sensitive and as intelligent as the men? I find it hard to believe.
Lord Elton: My Lords, unlike my noble friend, I am not given to sweeping generalisations. I can only say that they were not as suitable as the men appointed.
Lord Avebury: My Lords, is the Minister aware that many people—and not only women—will find his remarks about good women finding their way to the top offensively patronising and that they will never do so as long as the Government set such a bad example?
Lord Elton: My Lords, the Government set a very good example by the composition and leadership of the Cabinet. I can say to the noble Lord that we also welcome the rise of good men to the top.
Baroness Seear: My Lords, in the list that the noble Lord gave us he did not mention the elected members of local authorities. There are a great many distinguished women on the local authorities. How many of the people who were doing the selection from this list and who made these sweeping judgments were women?
Lord Elton: My Lords, the approach to the elected members of local government was through the coordinating committees of the local authorities in each of the abolition areas. Each co-ordinating committee appointed one of its members to the residuary body. The Government had no control over the composition of those committees, which were appointed by the elected representatives themselves. Therefore I cannot comment on the balance of women and men on those committees.
As to the processes by which these names were arrived at, they were arrived at by the ordinary machinery of government which contains both men and women in both senior and junior ranks.
Lord Moyne: My Lords, will my noble friend not agree that the old conception of a statutory woman is really rather out of date and ought not to be gone back to, but that his approach of sympathetic treatment of women equally with men is what everybody wants?
Lord Elton: My Lords, I am grateful to my noble friend for endorsing the precise policy that the Government follow.
Lord Jenkins of Putney: My Lords, is the noble Lord not aware that the bodies which have been abolished regularly included a very large number of capable women produced by the elective process? On consideration, is he not sorry that he abolished the elective process and thereby incurred the calumny which has fallen upon him this afternoon?
Lord Elton: My Lords, as I was at pains to demonstrate, the elective process actually produced a member for each of these residuary bodies, and none of them was a woman.
Baroness Macleod of Borve: My Lords, my noble friend the Minister referred to a good woman. Just for clarification, can he tell us what is his definition of a good woman?
Lord Elton: The same, my Lords, for these purposes as of a good man, but rather more attractive.
Baroness David: My Lords, is the Minister aware that in a recent survey of 1,653 public bodies only 15 per cent. of the members were women, and of those chairing them only 6 per cent. were women? Does he not think that whoever compiles the list of the great and the good could have another go and try to get a few more women on it?
Lord Elton: My Lords, I shall be happy to pass on that sentiment, but the fact is that the Government are committed to encouraging the contribution of women to public life at a senior level and this is already done. It reflects the history of the past, but it takes time to achieve stature and experience in any profession. The tendency for women to take part in public life in this way is more recent than allows all of them to get there yet.
Baroness Burton of Coventry: My Lords, is the Minister aware that many years ago we always said that a woman had to be a great deal better than a man to get equal consideration? Is he further aware that those of us who term ourselves progressive women hope that those times have passed? Will the Government do something about it?
Lord Elton: My Lords,I can confidently assert that those times are past, and there is nobody better fitted than the noble Baroness to remind us of what a very significant and constructive step was taken when your Lordships' House was strengthened by the recruitment of Life Baronesses.

Unemployment: Government Measures
2.55 p.m.
Lord Dean of Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they propose any further measures to deal with the question of unemployment other than those already announced, bearing in mind the recent release of the Manpower Services Commission corporate plan report.
Lord Young of Graffham: My Lords, we value the contribution that the Manpower Services Commission makes to employment and training and note its plans with interest and approval. Since the preparation of the MSC's corporate plan, we have made extra resources available for the nationwide restart
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programme which offers special help to all those people unemployed for more than one year. The commission now expects to help and advise almost 4 million people to find work, train or update their skills this year, compared with 3 million last year.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that reply and, naturally, for the report, which contains some optimistic predictions. But is it not a fact that the report also says that unemployment, especially long-term unemployment, is likely to remain with us until the 1990s and that 24 per cent. of all the people unemployed have been so for more than two years? May I ask the Secretary of State when he expects this figure to start to fall significantly in real terms?
Lord Young of Graffham: My Lords, the corporate plan of the Manpower Services Commission is of course its corporate plan. Perhaps I may read one extract from it:
"With the prospect of a roughly stable level of unemployment over the period to 1990, the number of long-term unemployed should begin to stabilise in the early part of this planning period".
It goes on to say:
"The number of people unemployed for more than three years is likely to continue to grow for some time".
That is the forecast for planning purposes which the Manpower Services Commission has made itself. I have said in your Lordships' House in answer to another Question that I hope very much that by the time the figures for the number of long-term unemployed are published at Christmas time we shall see that they are beginning to decline. I very much hope that is so because in common with all in the Government I recognise that one of the great areas in which we have to work hard is in trying to help those who have been out of work for more than one year.
Lord Bottomley: My Lords, did the Minister see the BBC "Panorama" programme last night which showed that there are more unemployed in the county of Cleveland than elsewhere in the country? Does he recall that a Conservative Government when faced with a similar problem years ago appointed a Minister—the revered noble and learned Lord the Lord Chancellor—specially to deal with the problem? What are the Government going to do about unemployment in the North-East?
Lord Young of Graffham: My Lords, the first thing the Government have to do about unemployment generally but also about the specific problem in the North-East is to recognise that we live in a world of change and that we have to prepare ourselves for tomorrow's conditions. Nothing any government could ever decide will restore the same outline of industrial occupations that used to exist in Middlesbrough, in Cleveland and in the North-East as a whole. It is of fundamental importance that we recognise that. We have announced an enterprise company for British Shipbuilders. We have announced in Middlesbrough itself that we are making it part of our inner-city initiative. We are urgently looking at all ways in which we can help with the real problem which, in common with our other neighbours in Western Europe, we have in adapting to change in the evolution of the Industrial Revolution.
Lord Hatch of Lusby: My Lords, the noble Lord is again talking about comparability with Europe. Is he aware that the rate of male unemployment in this country is nearly twice that in France, Germany, Italy and the United States? Is he further aware that fewer men are employed in this country today than were employed before the outbreak of the First World War? Is this the kind of stability of unemployment the noble Lord is looking for?
Lord Young of Graffham: My Lords, that is quite a separate question. I have not checked on the number of people employed before the First World War. I would find it difficult to assume that that is correct. But the facts which I can tell the House and which I think are important to all of us, since the noble Lord talked about Europe, are that in the period from 1981 to 1985 our unemployment rate and that of France has each grown by about 36 per cent., while that of Italy has grown by 49 per cent., and that of Germany by 81 per cent. Those are the realities of the world in which we live and they are the realities of the world that we are determined to face.
Lord Molloy: My Lords, will the Minister consider as a further measure contacting those learned societies that specialise in science and technology, who are of the opinion that by advancing science and technology, they can create more jobs, while not necessarily bringing down the level of unemployment? They believe also that they can make a contribution to achieving that which the Minister wants to achieve by Christmas—a massive reduction in unemployment—from the point of view of encouraging science and technology, with the Government giving a lead.
Lord Young of Graffham: My Lords, I am grateful for the noble Lord's suggestion. I shall of course listen to advice from any quarter, and I do so constantly. Perhaps I may correct one point. What I said was that I hope very much that when the figures for Christmas are published, we shall see that long-term unemployment is beginning to reduce. I am not making any forecast about the general level of unemployment.
Lord Lloyd of Kilgerran: My Lords, from my reading of the Manpower Services Commission's report, I fail to find any specific reference, although there may be a reason for this, or I may have overlooked it, to Wales and the position in Wales. Will the Secretary of State indicate at this stage whether there are any specific proposals dealing with Wales in relation to this important matter?
Lord Young of Graffham: My Lords, the Manpower Services Commission includes Wales and there is a separate committee for the Principality. I am sure that that which we are talking about includes Wales, but I shall examine it specifically in relation to Wales.
Lord Gibson-Watt: My Lords, when my noble friend looks into this matter, will he not find that the diversification of industry in Wales, and particularly in South Wales, has been one of the outstanding achievements of the present Government? Although the figures are still far too high, the ongoing success there is well worth recognising.
Lord Young of Graffham: My Lords, I am grateful to my noble friend for that question. We are living at a time of considerable industrial change. We are living at a time when we see the extractive industries—coal and many others—going through the kind of difficulties through which manufacturing industry went in 1980–81. We should be trying to help facilitate the change and not hinder it in any way.
Lord Glenamara: My Lords, is the noble Lord aware that since our exchanges last week, when the noble Lord, Lord Grimond, and I mentioned shipbuilding redundancies, there have been a further 450 engineering redundancies in the town of Blaydon? How much further do the Government intend to let the situation in the North-East of England deteriorate? As I told the noble Lord last week, it is worse than in the 1930s. Why does the noble Lord not buy himself a cloth cap, as the noble and learned Lord the Lord Chancellor did when he was appointed, and get up to the North-East, not on a cosmetic tour but to see what the Government can do to help?
Lord Young of Graffham: My Lords, I have spent a considerable amount of my time in the North-East. I am very aware of the problems; but I should be misleading your Lordships' House if I, or the Government, were to hold out any hope that we could change the state of the world's shipping industry; that we could somehow conjure up orders for ships that are not required; that we could somehow so transform our industry that we would turn the clock back 25 years to find ourselves where we were then. This Government are determined not to waste the golden opportunities of the 1970s, when we should have looked at the problems and dealt with them. But we shall deal with them today, so that the 1990s will be a time when the North-East, together with the rest of this country, can go forward.
Viscount Trenchard: My Lords, does my noble friend not agree that while the change in industry is a major reason for the problems of this country and of many others in relation to unemployment, there is another major contributory cause to the absolute level of British unemployment? It is that this country lost more than half its share of world markets between 1960 and 1975 under governments of every party.
Baroness Stedman: Under governments of two parties, my Lords.
Lord Young of Graffham: Yes, my Lords, we lost a considerable share of world markets. However, we must recognise also that the Industrial Revolution is still continuing; that it is just beginning to arrive in some parts of the world; that even today it probably only covers half of the world; and that we will always have competition from those parts of the world that can afford to have the latest plants and can certainly pay the lowest wages.
Lord Stoddart of Swindon: My Lords, may I ask the noble Lord whether he has studied the Question that is before him? It asks the Government,
"whether they propose any further measures".

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I also ask the noble Lord whether he has read yesterday's Hansard, when his noble friend Lord Caithness waxed eloquent about the Channel tunnel and the 65,000 man years of employment that it will provide throughout the country and in the North-East in particular? If that is the case in relation to a civil engineering project such as the Channel tunnel, then would it not be right for the Government to stimulate the economy by building more roads, and more schools, reviving the inner cities, and undertaking all kinds of other civil engineering projects? That would do what the Channel tunnel is expected to do and revive the economy and provide jobs.
Lord Young of Graffham: My Lords, I am extremely grateful to the noble Lord for reminding me of the Question, but I am less grateful to him for going on to matters quite outside the Question, although I am happy to deal with them. The Channel tunnel is important in its own right. It has, as a very welcome by-product, the creation of 65,000 man years of employment, which will happen in the North-East. But infrastructure work is important in itself, and it is not of importance merely for the creation of jobs. Otherwise, we shall run the risk of going the way that Australia has gone.
I need not remind any of your Lordships that the finance minister of Australia has said, "We must stop this, otherwise we are in danger of turning into a banana republic". An Australian Government that was elected on an election platform of infrastructure spending to promote employment has today soaring inflation, balance of payments problems, and increasing unemployment.
Lord Nugent of Guildford: My Lords, is my noble friend not aware that in yesterday's issue of The Times it was stated that in the South and South-East there is a shortage of skilled workers, including engineering workers? Is there not some way in which my noble friend could use his powers to match up the surplus in the North with the shortage in the South?
Lord Young of Graffham: My Lords, one of the great problems from which we suffer in this country is the immobility of those with skills. Indeed, I suspect that there are many shortages in the South that could be filled by those who come from the North. We have a problem with accommodation, and we are looking at that aspect urgently.
Lord Stallard: My Lords, the Minister referred to his reply last week, when he predicted that long-term unemployment would be reduced by Christmas or would be reducing in the next six months. In his earlier replies today, the Minister seemed to be saying that that reduction would be dependent on the impact of the MSC programmes. Do I understand the noble Lord correctly? Is he simply saying that there will be a reduction in the number of long-term unemployed because they will all be on training progammes, important though they are; or is he actually saying that there will be more jobs for the long-term unemployed by Christmas?
Lord Young of Graffham: My Lords, I said neither. I said that we have lived through a period of which I first became aware in 1982 when I went to the Manpower Services Commission. I said that we have lived through a period in which long-term unemployment has been steadily rising. I said that it has now peaked and levelled, and I hope very much when we see the figures for Christmas, we shall see that unemployment has been reduced. It is vitally important that we get those of our citizens who have been out of work for more than a year back to work. That is our objective.
Lord Dean of Beswick: My Lords, is the Minister not aware, with reference to his reply to an earlier supplementary question, that neither Wales nor Scotland are featured in the report? The Manpower Services Commission will be reporting later on both these areas of the United Kingdom. Is the Minister also not aware that the report itself states that because of the criteria being altered by the Government, there are another half million people who could be added to the current figure of 3.28 million unemployed in real terms? Are we not in fact talking about 3¾ million unemployment and not 3¼ million, which is the number now being given? Also, does the Minister have any intention in the near or far future of altering the criteria yet again to mask the situation and not present it as it really is?
Lord Young of Graffham: My Lords, the noble Lord will see that the first paragraph of the report states very clearly that this plan details programmed development for Great Britain as a whole. It is intended to publish plan and review documents for Scotland and for Wales in June. Those will be the separate documents available.
Whatever the Manpower Services Commission's report may say, the last labour force survey discloses not that there are more than 3.2 million people unemployed but that if one accepts as a definition of unemployment those who are without a job and are seeking work, unemployment is beneath 3 million and falling. Your Lordships can measure any way you will, but if you take the figures which the Manpower Services Commission wishes to add into this report you must adopt the labour force survey definition and take a rather larger figure away.

Business
3.11 p.m.
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Report stage of the Airports Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjournment the Report stage of the Armed Forces Bill will be taken.

National Health Service (Amendment) Bill
Brought from the Commons; read a first time, and to be printed.
Bromborough Dock Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Clifton Suspension Bridge Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Business of the House
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the debates on the Motions in the names of the Lord Dean of Beswick and the Lord Ardwick set down for 18th June shall each be limited to 2½ hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to each debate—(Viscount Whitelaw.)
On Question, Motion agreed to.

Business of the House
Viscount Whitelaw: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That Standing Order 38 (Arrangement of the Order Paper) be dispensed with to enable the Committee stages of the Children and Young Persons (Amendment) Bill and of the Disabled Persons (Services, Consultation and Representation) Bill to be taken before the Motion standing in the name of the Lord Holderness on Wednesday 18th June.—(Viscount Whitelaw.)
Lord Monson: My Lords, despite its somewhat complex wording the Motion down for 18th June in the name of the noble Lord, Lord Holderness, is an extremely important one, dealing as it does with the possible threat to the health and safety of the people in parts of this country as a result of nuclear contamination. I therefore ask the noble Viscount whether it is right that a debate of such importance should be postponed until extremely late in the evening.
Viscount Whitelaw: My Lords, in answer to the noble Lord, I understand that my noble friend Lord Holderness, whose prayer the noble Lord rightly says it is, has been consulted and is happy for the Private Member's Bill to precede the prayer. I hope that there will be no inconvenience caused by that.
Lord Monson: My Lords, I am grateful to the noble Viscount for that information.
On Question, Motion agreed to.

Airports Bill
3.14 p.m.
Report received
Clause 1 [Power to direct reorganisation of BAA's undertaking prior to appointed day]:
Lord Underhill Lord Underhill moved Amendment No. 1:
Page 2, line 17, at end insert—
(" ( ) The Secretary of State shall not approve proposals relating to Stansted Airport under subsection (3) unless the memorandum and articles of association of any company nominated to operate that airport include provision to prevent the company from receiving any loan from another company in the same group of companies otherwise than on terms (whether as to repayment, interest or security) equivalent to those available on the open market.").
The noble Lord said: My Lords, in moving this amendment, which relates to Stansted Airport, I feel I must make a comment on procedural difficulties. This is in no way an official complaint and I am not criticising the Ministers responsible for this Bill or even the hard-working officials at the Department of Transport.
However, it is difficult for Members to handle a Bill of this kind when the Marshalled List was not made available until 11.15 this morning and the grouping of amendments was not presented to me until just before half-past one. That makes life difficult for everyone concerned and I have no doubt that the Minister has found the same problem. Perhaps the Leader of the House—unfortunately he has left the Chamber—will take note of this comment, which is not a protest, as it may indicate the state of government legislation and the overburdening of Parliament with it.
In Committee, amendments to Clause 1 were tabled relating to Stansted being operated as an independent and free-standing company. I think it would be generally agreed that the ensuing debate was less than satisfactory. The noble Lords, Lord Boyd-Carpenter and Lord Broxbourne, saw the amendment as a threat to the Government's decision to develop Stansted airport. The noble Earl, Lord Caithness, largely agreed with those sentiments. The noble and learned Lord, Lord Denning, questioned the adequacy of the wording of the amendment. That view was taken by the other noble Lords to whom I referred and they generally felt that the wording of the amendment was ambiguous.
Therefore I think it is fair to say that the rationale of the amendment basically was not considered at all during that debate. This new amendment overcomes the concern about wording. It provides that loans between Stansted and the other BAA companies should be prohibited unless there are adequate safeguards. Those safeguards are written into the amendment. This will be contained within the constitutional documentation of the Stansted company. Its effect would be to limit the funding of Stansted's operation and development to the use of revenues generated by Stansted itself and the funds obtained by the Stansted company directly from the open market. This would ensure that Stansted operates as an independent and free-standing airport. That was our intention in Committee but the wording of our amendment was questioned.
It should be emphasised that the amendment does not prevent the Stansted company from entering into contractual relationships with other BAA companies in relation to such matters as central services and similar items. The amendment relates solely to loans. Under the proposals which the Government intend to bring forward for reconstructing the BAA airports it is clear that subsidy will continue to be afforded to Stansted. The proposed holding company will be able to make loans to its subsidiary companies.
The Government argue that these loans will be controlled by the provisions of Part IV of the Bill, and in particular Clause 39. However, we make the point that Clause 39 is primarily geared to loans which are not at commercial rates of interest. As a result, the issue will be as to what constitutes a commercial rate of interest. That is a significant issue given the reconstruction arrangements that the Government intend to implement.
Noble Lords will be aware, possibly even more than I am, that commercial rates differ according to the risks involved. The BAA holding company could use its surplus and lend to Stansted at rates which appear to be commercial but fail to reflect the real risk involved. Alternatively, capital could be raised from the market by the holding company especially for investment in Stansted, and because of the holding company's ability to issue guarantees the interest rates would be lower than if Stansted obtained the loan itself direct from the market. In both cases a hidden subsidy would be involved and this would be very difficult to identify.
In previous debates about subsidy to Stansted extraordinary conflicts in the Government's approach have been revealed. For the better part of four years the local authorities concerned have campaigned hard to have eliminated the damaging effects of subsidy to Stansted. In their White Paper the Government responded with a commitment to that end, and since that White Paper the former Secretary of State for Transport has made numerous statements confirming this particular commitment. On the other hand, when problems and ambiguities, the effect of which would be to undermine totally those commitments, are properly pointed out, the Government argue that the subsidy to Stansted really does not matter. In fact, the noble Earl, Lord Caithness, said as much on 15th May:
"Stansted's prices have been much lower than Manchester's throughout the last six years. But one soon sees that Manchester's traffic has grown from 3.5 million passengers to over 6 million passengers a year, whereas Stansted is handling only half a million".
And the noble Earl concluded:
"I do not believe that these airports are in direct competition".—[Official Report, 15/5/86; col. 1286.]
That argument fails totally to recognise the realities of life. At the present time Stansted is only a local airport. It competes with the Lutons of this world. It has an annual passenger throughput of only half a million passengers. It is not tenable for the Government to suggest that the reduction in Luton's traffic over the past few years has not been influenced by a subsidised Stansted with low traffic charges, free car parking and similar facilities; nor is it tenable to suggest that similar consequences will not flow
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throughout the civil aviation system once Stansted is developed from a local to an international airport.
In fact, we all know that the Government have recently sanctioned a £290 million terminal development at Stansted. This will ensure for the future that Stansted will compete for traffic with other major airports; and not just Luton, but other airports, such as Southend, Birmingham and East Midlands will be concerned. It is also at this stage that competition with the Manchesters of this world will take place. This is why it is all the more important that the subsidy should be eliminated.
The final point to note is that a free-standing Stansted will be able to operate economically. The North of England Regional Consortium has produced detailed figures to demonstrate this fact. So far as I am aware, the Government have never challenged the validity of that work. Therefore we can only assume that the Government accept what the northern consortium has said. If the Government are sincere on this particular issue, they should have no difficulty whatever in accepting this amendment. It simply achieves what the Government say they are committed to achieving, which is that the Stansted company should be a free-standing company. If the Government reject the amendment, surely they should do the honourable thing and publicly announce that they have decided to withdraw the commitments that they have previously given. I beg to move.
Baroness Burton of Coventry: My Lords, I should like to support this amendment. I repeat straightaway that I am not opposed to the development of Stansted Airport, but I am opposed to the amount of development that is being undertaken now and I am opposed to the way in which the Government have been carrying out this procedure from the very commencement of the plan.
The amendment that we are discussing today relates to loans, but so far as I am concerned our discussion takes place against a background of distrust, which, as the noble Earl the Minister knows, I feel has been engendered by the Government and their actions in this whole affair. Whether we are dealing with loans, with access or with buildings, it is obvious that the Government are determined to push ahead with so large a development, disregarding the protests and arguments of local authorities or anybody else, and if other airports suffer financially from what is being done, that is just too bad.
I should like to mention another important and indeed vital financial aspect, which is the projected rail link to Stansted. I gather that already serious financial problems have arisen, and perhaps the Minister would comment on these when he comes to reply and let us know whether what I have been told is indeed correct and that there are these problems. The British Railways (Stansted) Bill has really been a shambles, which nobody could deny. Noble Lords will recall that the noble Earl, Lord Caithness, very good humouredly took a certain amount of exception to what I had to say about the constant deferment of the Second Reading, which was made necessary by another place refusing, on 24th February, to pass the Bill. Indeed, the noble Earl, Lord Caithness, may remember that on the first day of the Committee stage of this Bill on 15th

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May I gave him in my remarks the information that he was proposing to give to me in his reply; namely, that the British Railways (Stansted) Bill was to be discussed in another place that night.
We were both rather surprised the next morning when we came to look at it to find that the matter had slipped once again and been still further deferred. The noble Earl the Minister knew no more about the reason for this than I did. The matter had just gone. However, a resumed debate of some sort was managed on 3rd June, when less than one hour was allowed for discussion, to the indignation of many Members in another place who wished to speak. It is still the feeling of many Members there that money spent on Stansted will penalise developments elsewhere. The attitude of the Government is seen as one of determination that, to quote one Member, "Stansted shall become a sort of third charter airport".
However, I should like to remind the House that the Government have still not accepted the proposal put forward by British Rail many months ago. As Mr. David Mitchell, the Minister of State at the Department of Transport, said on 3rd June:
"We have not yet finished examining the viability of the case that British Rail has put to us. When we have done so, we shall certainly make an announcement".—[official Report, Commons, 3/6/86; col. 821.]
The Bill has now been committed. When the Minister comes to reply, can he give us any idea of the timescale that is now envisaged?
These questions are all linked with our discussion today. As the Minister will recall, in previous debates I have pointed out how Luton has suffered from a subsidised Stansted. I believe that the long-term subsidisation of Stansted, which is essential to the success of Stansted, will similarly affect other airports. That is why many supporters of this amendment believe that subsidy for Stansted should be eliminated, and we would welcome a statement from the Minister when he comes to reply as to how long he feels that this subsidisation must continue.
Lord Denning: My Lords, I hope that your Lordships will not accept this amendment. On the previous occasion when we talked about the freestanding company I complained that the term was unintelligible—to me, at all events. It is quite clear that this amendment is trying to prevent a commercial company from obtaining any loan from a company in the same group. It seems to me that commercially that is quite unacceptable. The whole object of this amendment is to try to prevent the development of Stansted, and I hope that your Lordships will not accept it.
3.30 p.m.
The Lord Bishop of Manchester: My Lords, whatever the noble and learned Lord, Lord Denning, says about whether the proposal is commercially desirable, the amendment fits into wider regional policy. We had a short and quite spirited debate on unemployment a short time ago when the Secretary of State for Employment declared how vital it was to deal with long-term unemployment. He also talked about the older industries declining in certain areas of which the North-East and the North-West of Britain are two.
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If one fits airport policy into that whole picture, it is incumbent on the Government to make quite sure that where there are opportunities for encouraging regional airports that should be done. It may be argued that fears about Stansted's development are bogus, but I believe that the arguments put forward by the noble Lord, Lord Underhill, should carry a great deal of weight. Stansted would undoubtedly be moving into a different ball game altogether.
It is generally recognised by all of us on all sides of the House that airports generate employment. They are vital for the areas in which they operate. Here there is a threat from one of the more favoured parts of Britain, one would maintain, at the expense of regional airports in other parts. I believe that in this case the Government ought to show their concern in a real and genuine sense for those parts of the country where unemployment is high, particularly in the North of England. Regional airports would undoubtedly be encouraged if they felt that Stansted was not being subsidised in hidden ways. I hope that your Lordships will support the amendment.
Lord Lloyd of Kilgerran: My Lords, I follow the right reverend Prelate in expressing my surprise at the narrow, legalistic view directed by the noble and learned Lord towards this important amendment. There are wider matters beyond legalistic views, commercial viability and so on, as the right reverend Prelate said. The Government must have in mind wider regional policy and they should endeavour to encourage regional airports. I heard the eloquent statements of several noble Lords on the other side of the House about how regional airports encourage employment and are a great asset regionally. I strongly support the amendment on the grounds that if that attitude is adopted by the Government, it will generate employment.
Lord Dean of Beswick: My Lords, I rise to speak in favour of the amendment. I support the comments of the noble Lord, Lord Lloyd, regarding the brief intervention of the noble and learned Lord. His advice is always valuable, but in a strange departure from his usual modus operandi in the House he gave little reason for what he said on this occasion. If the Bill stays as it is, Stansted will operate with a heavy subsidy at the expense of regional airports; it will be in an advantageous position.
Noble Lords who were present on the last occasion when the Bill was debated will have heard the noble and learned Lord give us the benefit of his advice that there is no such legalistic term as a "free-standing" airport. I said that with my limited education I fully understood the term. It would mean that it stood on its own feet and financed itself out of its revenue. I saw no point in trying to mask that by saying that there was no legalistic recognition of the terminology.
I support the amendment. It is designed to ensure that Stansted Airport operates on a free-standing and independent basis and that subsidy is eliminated. I do not think it will come as a surprise to your Lordships when I indicate my complete support for it. I have spoken on the same subject in your Lordships' House before.

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What should surprise us is that this debate should be taking place at all. The previous Secretary of State for Transport, who is now the Secretary of State for the Environment, more than made clear his commitment over 12 months ago to eliminate heavy subsidy to Stansted in the interests of fair and equal competition among airports. The fact that those commitments have now been eroded as a result of the provisions of the Bill means that we are now in the almost laughable position of seeking to explain to a free market Government the rationale of their philosophy in so far as airports are concerned.
I wish to cover three issues in my contribution. The first is the prejudicial effects of heavy subsidy to Stansted upon all airports outside the South-East. As other noble Lords have said, the subsidy will have a wider impact than merely affecting other airports. We are dealing basically with the well-being of other areas. The second issue is the way in which high levels of subsidy will be possible, notwithstanding the provisions of Parts I and IV of the Bill; and the third is the way in which this amendment would secure everyone's objectives, including those of the Government.
Stansted makes a huge loss in relation to turnover. In 1984–85 a loss of £3.1 million was recorded on a turnover of £3.7 million, which is pretty substantial. In operating terms the airport has recorded a loss every single year since 1971–72. Compared with local authority airports, Stansted's performance is very poor. Indeed, Stansted enjoys the next to worst financial performance of all the 17 airports which operate international flights.
One of the reasons why the airport performs so badly is that it has more spare terminal capacity than any other airport in England. Another reason is its extraordinarily low levels of income. Despite the fact that it enjoys a throughput of passengers of around 500,000 a year (a usage which is significantly higher than that of several regional airports), revenue yields per passenger were more than 50 per cent. higher 15 years ago than they are today. That is mainly a reflection of the very low landing charges which are employed at Stansted and which have seriously undermined the growth of other airports near to London, particularly Luton.
It is my firm belief that in the future that prejudicial effect will not be contained in the South-East. Subsidy will increase in scale to such an extent that no airport will be immune from the consequences associated with predatory pricing policies.
To airports outside the South-East low charges and subsidy represent unfair competition in the extreme. Those airports have to operate as free-standing entities. Their charges need to reflect the cost of operating and developing their facilities. Very low landing charges at Stansted mean that they will be unable to compete effectively. It is no answer to say that there is no competition among airports. Such an argument coming from a Government who believe that there is a case for promoting competition in the supply and distribution of water, and so on, is simply ridiculous.
I now turn to my second point as to how subsidy will continue under the arrangements proposed by the
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Government. It has been argued—and no doubt the noble Earl, Lord Caithness, may make the same point in closing the debate—that by restructuring Stansted as a semi-autonomous company under a holding board and ensuring that any loans between companies are made at commercial rates of interest, subsidy will be eliminated. The Secretary of State made those views clear in a Statement to the other place on 5th June. I am afraid that that view is misconceived.
The proposed holding company will of course be able to make loans at commercial rates of interest to its subsidiaries, but it is not automatic that such loans will or need to be repaid. The Government have argued that Part IV of the Bill, and Clause 38 in particular, will assist in controlling subsidy, but in a practical sense that is doubtful. The Government have made considerable efforts to tighten up that part of the Bill, but the task that they have set themselves is enormous because of the impossible starting point.
Subsidy will happen—indeed, it will be encouraged to take place by the restructuring arrangements—and it will be for the CAA to try to keep up and control it. That will be almost impossible. Clause 38, for example, talks of the need to control loans at commercial rates of interest or otherwise. That raises the question of what is an appropriate commercial rate of interest. Commercial rates will differ according to the risks involved. The BAA holding company can use its surplus and lend to Stansted at rates which appear to be commercial but fail to reflect the real risks involved. That would make for a hidden subsidy, incapable of accurate definition. If we cannot identify the subsidy, we cannot control it, and that is the major problem with Part IV of the Bill.
Lord Soames: My Lords, I hope that the noble Lord will forgive me for interrupting him, but do I gather from his argument that the new airport should be sited where unemployment is bad rather than where the site is good, from the point of view of passengers who wish to fly into this country?
Lord Dean of Beswick: My Lords, as with the privatisation of the bus companies, the noble Lord has missed the bus. I was not talking about that.
Lord Soames: My Lords, I could not hear very well what the noble Lord was reading.
Lord Dean of Beswick: My Lords, the noble Lord obviously was not listening to me. He may have been talking. I was making the point that it is not a question of the siting of airports, it is a question of the equalisation of treatment.
I now turn to the most important question: can Stansted be operated on a viable, free-standing basis? I am interested in that point. People who understand my strong objections to the development of Stansted have often pointed out to me that my wish to see subsidy eliminated from Stansted is motivated by a desire to see Stansted fall. That is not the case. The work which has been undertaken in the regions and which is cogently summarised in the North of England regional consortium's latest booklet Stansted and the Airports Bill clearly demonstrates our position.

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On the basis of the work undertaken, there is no doubt that Stansted can comfortably pay its own way provided that it enjoys the level of demand which the Government believe it will accommodate over the next few years. The work also shows that at the same time it would be possible for Stansted to service itself, without subsidy, a significant cost commitment associated with the development of its terminal.
Unlike the Stansted investment recently approved by the Government, the results of the work have been laid before Members of Parliament and Peers. At no time have its assumptions and conclusions been challenged by the Government or their advisers. They obviously feel that there is no economic or social case for subsidising Stansted; otherwise we believe that they would have said so.
Subsidy to Stansted is not capable of justification. It would create prejudicial effects throughout the airport system. If airports outside London are to grow and to exploit their potential on an equal basis, subsidy must be eliminated. That would ensure that the pace of Stansted's development would be a reflection of market demands and not the desire of the BAA to maximise the size of its asset base. The work shows beyond all reasonable doubt that Stansted could work profitably on such a basis.
In the other place, Members from all parties and representatives of all interests united to support the amendments now being debated. I hope that your Lordships will take note of the points that I have made. All that I am asking for is equal treatment for regional airports and Stansted. On that basis, this amendment is worthy of your Lordships' support.
Lord Mountevans: My Lords, it has been argued, and I think rightly, that airports generate employment. I cannot, however, accept the contention that it follows that airports must be built where unemployment is high, and in the case of this amendment, out in the provinces. Nor can I accept the contention that a subsidised Stansted would leave the directors of the board of a privatised BAA in that position for a long time.
I believe that airports should be built, as the noble Lord, Lord Soames, implied, to satisfy demand, not to counter unemployment problems. If I want to go to Rome, the construction of a subsidised airport and the existence of free facilities at Bologna are irrelevant. I do not want to go to Bologna; I wish to go to Rome. If a customer wants to come to London, which is where at the moment demand is identified as being the fastest growing and the strongest, we must build Stansted as part of a united London airport system. I therefore urge your Lordships to reject the amendment.
3.45 p.m.
Lord Sefton of Garston: My Lords, the case against the unfair subsidisation of Stansted has been well and truly made. I should not have intervened in the debate if it had not been for the last intervention and that of the noble Lord, Lord Soames. It is right to say that the opposition to the subsidisation of Stansted arose because someone wanted to build an airport in areas of high unemployment. The last speaker said that plainly. That is not the reason for the opposition.
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I shall remind your Lordships of the comment of the noble Lord, Lord Young, when he replied to my noble friend Lord Dean about unemployment. It shows how people who see no further than the Watford Gap—I mean the Watford Gap near the Midlands—see this problem. When the noble Lord was questioned about unemployment, he said that there was a possibility that vacancies in the South-East of England could be filled by unemployed people from the North. That shows that the Government believe that one of the solutions to high unemployment in our country could be bringing people from the North to the South-East to take up the many vacancies that everyone knows exist there.
That was a direct implication by the Government. What does it mean? They would not bring anyone who was over 60 or who was infirm from the North. No; they would not want that. To fill the vacancies in the South-East they would bring, as this country has been doing for about half a century, all those people who were able-bodied, young, fit and able to strive for themselves. They would leave behind another growing problem. Whenever the House considers social matters, it unanimously points out that there is a problem in the inner cities in the North of this land. Those inner cities are left with a high proportion of elderly people and people who are not as able and willing to move as others.
The noble Lord, Lord Soames, shakes his head. That merely illustrates the fact that he has not studied the subject of airports in the context of the nation. With all due respect to the noble and learned Lord, Lord Denning, his sights seem to be somewhat limited. He thinks only of Stansted. He says that it would not be sensible not to subsidise Stansted. Stansted will be subsidised. There is no demand by people to go to Stansted. It is being encouraged by the growth in the South-East of England.
I do not fault the Government for looking at airports on a regional basis, because airports are not designed merely to serve the West End of London. Heathrow is not there just to accommodate pop stars who want to come in and out of the capital. Heathrow has been built up because there is a continuously growing demand in the South-East of England. When the Government look for expansion, they do not think of looking at Prestwick in Scotland, and for a long time they did not think of looking at Manchester. Now they acknowledge that Manchester is a growth airport for the North-West region.
What are they doing in the Bill? Whether or not the Government admit it, they are saying that Stansted will be subsidised by the activities of the South-East, and if it is not subsidised by the airport activities in the South-East it will be subsidised sooner or later by the Government. The money will come out of the public purse. If we look at the same situation from a regional point of view, for example the northern regions, what do we find? We find that the Government are prepared to back Manchester. They are prepared to pay lip service to other regional airports which have been laid down for a long time and have not merely come into existence when unemployment increased. They have been there for a while. What are they going to do at Merseyside? Liverpool airport is the only possible place for expansion of airport facilities in the North-West.

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There is no other. Yet we cannot obtain from the Government a satisfactory answer as to what they intend to do to keep Liverpool airport in existence. All that we get are fair words saying that the Government desire that Liverpool shall be a success.
However, the Government will not put a hand in their pocket and pull out £3.5 million to help it. Oh no! They are prepared to underwrite all the public expenses that will go into the provision of airport facilities at Stansted that people in the area do not want. They prefer to do so because they are blinded by the metropolis in the South-East of England. The noble Lord, Lord Young, in his innocence gave the game away. The noble Lord is a new politician. He revealed how the Cabinet thinks. It thinks South-East, It thinks London. If it was possible to wipe off the rest of the country from the Wash northwards, the Cabinet would be quite prepared to do so. It does not understand the nation.
All that I shall say is that the Government should have another look at the matter. They should not be talking about producing an airports plan simply for the South of England. They should not be talking about producing an airports plan to meet present-day demand. They should have sufficient courage to look 50 years ahead. They should be asking themselves how they want to plan the airports system in the country as a whole. If they look at the matter seriously, they are bound to conclude that there should be no unfair subsidy at Stansted and they should do more at regional airports than at the moment they seem to want to do.
Lord Howie of Troon: My Lords, I have no great wish to look 50 years ahead in the context of the Bill. I am sure, however, that my noble friend is right in saying that we should look 50 years ahead in terms of air transport. Today, we should stick to the Bill. I rise briefly to say that to my dismay I shall be obliged to vote against the amendment. It is totally misconceived. It is possible that Stansted will be subsidised at an early stage in its life. I do not know. That is a matter for the airport authority. If it is subsidised it will be subsidised by the airport authority's money. It will be a cross-subsidy within the revenues earned by the airport authority from the seven airports. Incidentally, it is likely that Prestwick airport will be subsidised as well. I come from a good deal further north of the Watford Gap than my noble friend. I know Prestwick quite well.
I shall explain what prompts me to oppose my noble friends. When, in another place I represented Luton, a good deal of my activities were devoted towards encouraging people to build up Luton airport. At that time, in the early and middle 1960s, the airport was not an obvious success. It was bound to become a success, and indeed now is a success. But in those days, many people locally saw Luton airport as nothing more than a burden on the rates. The airport was subsidised, quite properly, from the rates. It was subsidised quite properly in accordance with the principles of the party of which I have been a member for a long time. I am fairly sure that Liverpool airport at one stage in its career was subsidised from the rates and still is. That is right. I do not object at all.
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It is fairly likely also that Manchester was at some time subsidised from the rates. I do not object to that, either. I agree of course that the regions should have fair treatment. But the principle of developing Stansted has been accepted by the Government, by both Houses of Parliament and by the report on the third London airport. What we are asking for is fair play for Stansted. If Stansted needs to be subsidised in its early stages, it should be. The best course my noble friends can take is to air the principles embodied in the amendment and then withdraw it to save me the embarrassment of voting against it.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness): My Lords, I am grateful for the intervention of the noble Lord, Lord Howie of Troon. He brought us back to the amendment which seems to have been forgotten in some of the earlier discussion. The noble Lord has put the whole matter back in perspective.
The amendment is yet another attempt to ensure that Stansted cannot be cross-subsidised. It is an entirely unnecessary amendment. The concern about cross-subsidy stems from the fear that this will allow Stansted to offer lower charges and to attract traffic that would otherwise have used regional airports. But the Bill already contains very effective safeguards to ensure that such unfair cross-subsidy is prevented. These provisions have been considerably strengthened during the passage of the Bill. Clause 39 enables the CAA to prevent any airport pursuing a predatory pricing policy. Predatory pricing is defined very widely to embrace any pricing policy that harms or is intended to harm another airport and that results in prices that are lower than costs or artifically low as a result of receiving any subsidy including loans on noncommercial terms, failure to achieve a reasonable return on capital, failure to pay reasonable dividends or failure to have appropriate proportions of equity or debt.
This goes much wider than the current amendment which is rather narrow in that it is confined to the terms of inter-company loans. In addition, Clause 39(5) makes clear that in considering whether prices are predatory, each airport will be considered as if it stands alone and not as part of a group. That was a point well met when the noble Lord, Lord Howie of Troon, mentioned Prestwick. This provision constitutes an absolute defence against any cross-subsidy harming another airport's business.
I have been a little disappointed by the debate. Some noble Lords have, I believe, failed to take into account what was said in another place and what I said at Committee stage. We had a fair discussion then. Some arguments have been reiterated without any consideration being given to what the Government have said. I am a little disappointed that this should happen in your Lordships' House. I should like, however, to answer one or two specific points. The noble Baroness, Lady Burton, mentioned the British Railways (Stansted) Bill. We have been through this before. It is a fairly old chestnut between us. We shall be making a decision shortly on financial viability. That is currently with Ministers.
The right reverend Prelate the Bishop of Manchester said that we should encourage regional airports. I can

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tell the right reverend Prelate that this is the Government's policy. We have encouraged regional airports. During our tenure of office, traffic at Manchester has grown from 3.5 million to over 6 million passengers a year. No Government have done more for regional airports than this one. The noble Lord, Lord Dean of Beswick, summed it all up rather well when he said that all he was seeking was equalisation of treatment. If the noble Lord wants equalisation of treatment, then the Government should give a grant to Stansted in exactly the same way as governments have given £25 million to Birmingham airport. Manchester is subsidised; Prestwick is subsidised; many airports are subsidised. If that is what the noble Lord wants, he will get unfair subsidy of Stansted which is not what the Government want.
4 p.m.
Lord Dean of Beswick: My Lords, we are discussing the Bill and not what has happened in the past. We are discussing what effect the Bill will have on airports. During our earlier proceedings on the Bill, I referred, as did others, to the fact that to develop Manchester in the foreseeable future will require another terminal costing in excess of £200 million. Whatever format Manchester takes after the passage of this Bill, it will be expected to find that £200 million. During my contribution on this amendment, I said that with a turnover of just over £3 million Stansted had made a loss of almost the same amount. That money was found by somebody else. I am asking what will happen in the future. It is not equal treatment whichever way one looks at it.
The Earl of Caithness: My Lords, I think that all I can add to that is that Manchester, as with any airport which has developed well, has come out of the stage of subsidy. However, the principle remains. If the noble Lord wants equalisation of treatment with regard to any airport that is trying to get off the ground, where there is a demand for traffic as there is in the South-East and as there will be at Stansted, the Government are perfectly entitled to give Stansted a grant—
Lord Dean of Beswick: My Lords—
The Earl of Caithness: My Lords, no. The noble Lord has already abused Report stage, I am afraid, and I must continue. He cannot differentiate suddenly between the past and the present, because what he wants is continuity and continuity would ensure a grant to Stansted and would ensure unfair cross-subsidy. That is not what the Government want. Any loan to Stansted will have to be clearly shown in the accounts and balance sheet. There will be no unfair cross-subsidy for the reasons that I have explained. I therefore believe that the amendment is not only unnecessary but also incompatible with the memorandum and articles of association of the company, which would not be the appropriate vehicle for a provision of this kind. It could not be effectively enforced. It could also be removed at any time by the private sector BAA holding company which will own 100 per cent. of the shares in the Stansted airport company.
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The concerns of noble Lords who have spoken on this matter about the actions of a subsidised Stansted have already been met by the Bill as drafted. I think that we should terminate this matter by asking the noble Lord, Lord Underhill, to withdraw the amendment.
Lord Underhill: My Lords, I am extremely disappointed in the Minister's reply because he has not answered the important points that I put forward in moving this amendment. I am very grateful to other noble Lords, some of them barristers, who have supported the amendment. It has nothing to do with where an airport should be built, as the noble Lord, Lord Mountevans, stated. What we all know and no one will deny is that for a period of years Stansted has been heavily subsidised. At the Committee stage I gave figures which my noble friend Lord Dean of Beswick repeated this afternoon as to the huge losses incurred by Stansted on relatively small turnovers over a period of years because it has been subsidised. It was the intention of the BAA to subsidise it.
I always hesitate to criticise our learned judges, but the noble and learned Lord, Lord Denning, in his brief intervention said that we are trying to stop loans from fellow companies. We are not. We are saying that they have to be on a fair basis. That is why we have put in the words,
"(whether as to repayment, interest or security) equivalent to those available on the open market".
That is why those words were deliberately included. There is certainly no intention in this amendment to stop development at Stansted, whatever may be our personal views.
At the Committee stage on 15th May the noble Earl said:
"I reiterate the intention that Stansted should not pose a problem to regional airports on an unfair basis and cause unfair competition.
The noble Earl said that that is the Government's aim. He continued:
"We share the noble Lord's aim that such competition should be fair".
That is why I say to my noble friend that I am moving this amendment. I hope that when I call for a Division in the House my noble friend will realise that is why we are moving this amendment—so that competition shall be absolutely fair.
The noble Earl says that the amendment is unnecessary because of Clause 39. I refer the noble Earl to what I said in my opening comments about Clause 39. He referred to predatory pricing. There is nothing in my amendment about predatory pricing. We are talking about the possibility—and it is a definite possibility, or probability—that the BAA could encourage loans either by itself or between one company and another on a basis which could never be obtained on the open market. That is the point of this amendment. Everyone who believes in fair competition and justice for all airports will support this amendment. Therefore I have no hesitation whatever in saying that we shall not withdraw it. It is a principle which I think many Members in this House should like to see observed.
4.6 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 135.

DIVISION NO. 1

CONTENTS

Airedale, L.

Leatherland, L.

Amherst, E.

Listowel, E.

Ardwick, L.

Llewelyn-Davies of Hastoe, B.

Aylestone, L.

Lloyd of Kilgerran, L.

Banks, L.

[Teller.]

Blyton, L.

Mackie of Benshie, L.

Bottomley, L.

McNair, L.

Brockway, L.

Manchester, Bp.

Bruce of Donington, L.

Milford, L.

Burton of Coventry, B.

Molloy, L.

Caradon, L.

Monson, L.

Carmichael of Kelvingrove, L.

Mulley, L.

Chitnis, L.

Nicol, B.

Cledwyn of Penrhos, L.

Northfield, L.

Cudlipp, L.

Oram, L.

Davies of Penrhys, L.

Parry, L.

Dean of Beswick, L.

Phillips, B.

Diamond, L.

Ponsonby of Shulbrede, L.

Elwyn-Jones, L.

[Teller.]

Ennals, L.

Prys-Davies, L.

Falkender, B.

Rathcreedan, L.

Falkland, V.

Rhodes, L.

Fitt, L.

Ritchie of Dundee, L.

Foot, L.

Seear, B.

Gallacher, L.

Sefton of Garston, L.

Glenamara, L.

Shackleton, L.

Graham of Edmonton, L.

Shepherd, L.

Gregson, L.

Silkin of Dulwich, L.

Grey, E.

Stallard, L.

Grimond, L.

Stedman, B.

Hampton, L.

Stewart of Fulham, L.

Hanworth, V.

Stoddart of Swindon, L.

Hatch of Lusby, L.

Taylor of Blackburn, L.

Houghton of Sowerby, L.

Taylor of Mansfield, L.

Hughes, L.

Underhill, L.

Hutchinson of Lullington, L.

Vernon, L.

Irving of Dartford, L.

Wallace of Coslany, L.

Jeger, B.

Walston, L.

John-Mackie, L.

Wells-Pestell, L.

Kagan, L.

Whaddon, L.

Kennet, L.

Wigoder, L.

Kilbracken, L.

Williams of Elvel, L.

Kilmarnock, L.

Willis, L.

Kirkhill, L.

NOT-CONTENTS

Ailsa, M.

Cameron of Lochbroom, L.

Alexander of Tunis, E.

Campbell of Croy, L.

Allerton, L.

Carnegy of Lour, B.

Ampthill, L.

Cathcart, E.

Annan, L.

Constantine of Stanmore, L.

Auckland, L.

Cork and Orrery, E.

Bancroft, L.

Cottesloe, L.

Bauer, L.

Cox, B.

Belhaven and Stenton, L.

Craigavon, V.

Bellwin, L.

Craigmyle, L.

Beloff, L.

Cullen of Ashbourne, L.

Belstead, L.

Dacre of Glanton, L.

Bessborough, E.

Davidson, V.

Blake, L.

De Freyne, L.

Boyd-Carpenter, L.

Denham, L. [Teller.]

Brabazon of Tara, L.

Denning, L.

Brookes, L.

Derwent, L.

Brougham and Vaux, L.

Dilhorne, V.

Broxbourne, L.

Drumalbyn, L.

Butterworth, L.

Eccles, V.

Buxton of Alsa, L.

Effingham, E.

Caithness, E.

Ellenborough, L.

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Elliot of Harwood, B.

Mersey, V.

Faithfull, B.

Monk Bretton, L.

Fortescue, E.

Montgomery of Alamein, V.

Gainford, L.

Morris, L.

Gibson-Watt, L.

Mountevans, L.

Glenarthur, L.

Murton of Lindisfarne, L.

Gray, L.

Newall, L.

Gray of Contin, L.

Nugent of Guildford, L.

Grey of Naunton, L.

O'Brien of Lothbury, L.

Gridley, L.

Onslow, E.

Hailsham of Saint Marylebone, L.

Orkney, E.

Orr-Ewing, L.

Halsbury, E.

Plummer of St Marylebone,

Harmar-Nicholls, L.

L.

Henderson of Brompton, L.

Porritt, L.

Hives, L.

Portland, D.

Holderness, L.

Quinton, L.

Home of the Hirsel, L.

Radnor, E.

Hooper, B.

Rankeillour, L.

Howie of Troon, L.

Rochdale, V.

Hunter of Newington, L.

Rodney, L.

Hylton-Foster, B.

St. Aldwyn, E.

Ingrow, L.

St. Davids, V.

Jessel, L.

Saltoun of Abernethy, Ly.

Kaberry of Adel, L.

Sanderson of Bowden, L.

Kings Norton, L.

Seebohm, L.

Kinloss, Ly.

Sempill, Ly.

Kinnaird, L.

Skelmersdale, L.

Kitchener, E.

Soames, L.

Lane-Fox, B.

Strathcarron, L.

Lauderdale, E.

Strathspey, L.

Layton, L.

Sudeley, L.

Long, V.

Swinton, E. [Teller.]

Lucas of Chilworth, L.

Terrington, L.

Lurgan, L.

Thorneycroft, L.

Lyell, L.

Torrington, V.

McAlpine of Moffat, L.

Tranmire, L.

McFadzean, L.

Trefgarne, L.

Macleod of Borve, B.

Trenchard, V.

Mancroft, L.

Ullswater, V.

Manton, L.

Vaux of Harrowden, L.

Margadale, L.

Vickers, B.

Marley, L.

Vivian, L.

Marsh, L.

Ward of Witley, V.

Maude of Stratford-upon-

Westbury, L.

Avon, L.

Whitelaw, V.

Merrivale, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.14 p.m.
Lord Underhill Lord Underhill moved Amendment No. 2:
Page 2, line 17, at end insert—
("( ) The Secretary of State shall require that before he approves proposals under subsection (3) the memorandum and articles of association of any nominated company to which the proposals relate contain such restrictions on the allotment and transfer of shares that the holding or holdings of any one or more shareholders (whether individual or corporate) cannot exceed in aggregate ten per cent. of the issued capital of the company, and that the Secretary of State shall retain a special share which will give him the right to veto any proposed change to this Article.")
The noble Lord said: My Lords, this amendment should have been moved by my noble friend Lord Carmichael, but in his absence I shall formally move it and he will then speak on it. I beg to move.
Lord Carmichael of Kelvingrove: My Lords, the House may remember that we discussed this matter at some length on 15th May when a very large number of Members on all sides of the Committee took part and, I think it is fair to say, showed a certain anxiety about it. I also think that the Minister himself realised that an important point was being made by those noble Lords and he promised to come up with a form of words which he hoped would allay the fears that were raised

143
by many noble Lords. This of course the Government have done in the form of an Answer to a Written Question in another place. Mr. Michael Spicer gave a reply saying that a provision would be included in the articles of association of the privatised BAA restricting the shareholding of any individual or of parties acting in concert to 15 per cent. of the total issued capital.
Lord Boyd-Carpenter: My Lords, if the noble Lord will allow me, he referred to an Answer given in another place, but is he aware that my noble friend Lord Caithness gave an Answer in this House on 4th June on these lines? Therefore, this House is well aware of the position.
Lord Carmichael of Kelvingrove: My Lords, yes, I do have a note of that. The paper I have in front of me merely contains the earlier answer. I hope that I did not suggest that this House was not aware of the Answer that had been given, but I was using this particular piece of paper.
As I said, the noble Earl, Lord Caithness, said that he would try to find a form of words, and these words have been produced. That is the important point. I believe that they are a good attempt, but they are not quite firm enough and do not quite meet the spirit of the amendment which was supported by so many speeches throughout the Committee last time we discussed this matter.
I hope that it will be for the convenience of the House if I also speak to Amendment No. 5. The amendments which I propose make two changes of some significance. Instead of the 15 per cent. shareholding, Amendments Nos. 2 and 5 both suggest that the figure should be 10 per cent. I understand that many people in the industry believe that even 10 per cent. is rather high for a powerful organisation or company, such as these companies are likely to be, but that 10 per cent. is considered to be a more suitable figure.
Secondly—and perhaps this is the more important point—there is the question of the special share, or what has colloquially come to be known as the golden share, being held by the Minister. Of course, this is included in the Answer which was given in another place and also in this House. From this point of view, looking at some of the statements that were made in the very excellent speeches on 15th May, we find, for instance, that the noble Lord, Lord Tordoff, agreed with the amendment then tabled, which is repeated in this Marshalled List, that, on the face of the Bill or in some other entrenched way, there should be a golden share or a special share so that there can be certainty.
The noble Lord, Lord Boyd-Carpenter, said that even if we were to run a marginal risk of losing control of our airports, it would be essential to introduce something in the nature of a special share. Again, I believe, and I hope he believes, that that should be on the face of the Bill rather than merely be in the articles of association or under the control of the articles of association by an agreement with the Minister. We know that Ministers can change. We know that it could be withdrawn at some later date without Parliament having any say at all, whereas if it were on the face of the Bill, it would need an order or require the Minister to come to Parliament to make the case
144
for withdrawing his control over an individual or a group of individuals.
The noble Earl, Lord Dundee, had much the same anxiety about the need to restrict an airline share ownership and foreign share ownership. We believe on this side of the House—and I hope the House generally will accept the spirit of this—that the Government have gone some way, but we are still uneasy that they have not put it on the face of the Bill. We believe it is absolutely crucial that it should not be something that can be too easily changed by a future Secretary of State or future government. Therefore, I hope that the Minister will accept this amendment in the spirit in which we have tried to move it.
Lord Lloyd of Kilgerran: My Lords, with the leave of the House, I should like to make a short preamble to my own remarks in support of this amendment. My noble friend Lord Tordoff has asked me formally to apologise for the fact that he is unable to be present today at the Report stage. My noble friend mentioned this point at Committee stage I believe, and certainly he mentioned his position to the Front Bench of the Government. However, he has thought fit to put down his name in support of about 20 amendments at this stage of the Bill. At rather short notice I have been asked to stand in for my noble friend. It is an interesting situation in which I find myself. Accordingly, I have prepared myself by reading everything my noble friend Lord Tordoff said during the three days of the Committee stage. I have read all the amendments, and the conclusions I have come to may help the House to shorten the proceedings on this Report stage.
What has struck me about most of the 20 amendments is that they are almost self-explanatory. They will be moved by members of the Front Bench of the Labour Party, and I shall listen to what I expect will be their usual thorough and skilful way of presenting amendments to the House. I shall listen carefully to see whether there are any gaps which ought to be filled, but it is not my intention at this stage of the Bill to make Second Reading speeches.
Coming to this amendment, the noble Lord, Lord Carmichael of Kelvingrove, mentioned that the noble Earl the Minister indicated at col. 1308 on the first day of the Committee stage that he hoped that the Committee would not divide. He said:
"I want to study everything that has been said today. I cannot over-emphasise that point. The matter"—
which is in effect the subject of the present amendment—
"is seriously under discussion in my department at the moment. My right honourable friend the Secretary of State, the Minister for Aviation and myself were discussing the matter only this morning. With due respect to the noble Lord, it would not be beneficial to divide the Committee now. At a later stage that might be the right thing to do, but I hope the noble Lord will not choose to do so while we are still formulating our final thoughts".—[Official Report, 15/5/86; col. 1308.]
I have endeavoured to discover what those final thoughts are. I have not been a party to any of the correspondence, but I have noticed that a large number of amendments have been put down under the name of the noble Earl, Lord Caithness. I must confess that in the short time at my disposal I have not been able to take adequate advice about the contents

145
of most of these amendments. Therefore, it may be that among the many amendments there is an answer to this particular one but I have not been able to find it.
The position I take with regard to this amendment is that in the articles of association there should be certain words as set out in the amendment. I need not repeat them, because the noble Lord, Lord Carmichael, has indicated them to your Lordships. In the view of those of us on these Benches that in itself is not sufficent. Articles of association can readily be amended by the shareholders whenever they wish, and in order that the position should be preserved in relation to this point this amendment should be in the Bill, giving the Government the powers to prevent any amendment of the articles of association unless they agree. That seems to me to be the simple point in relation to this amendment.
The Government have gone quite a long way towards meeting the attitude of the Opposition and also of my noble friend Lord Tordoff at the Committee stage, but not quite far enough. All we are asking the Government is this: if the amendment appeals to them, they should preserve the position by putting in the Bill an amendment which enables the Government to prevent any change of the articles of association by the shareholders of the company concerned. I strongly support the amendment.
Lord Boyd-Carpenter: My Lords, at Committee stage I thought that noble Lords opposite were on to a good horse, and, frankly, I was surprised that this Bill should have got so far as to reach the Committee stage in this House without some step being taken to secure that there was no risk of airports being taken over by some interests who might wish to see those airports run down. But with all due respect, I think the noble Lord, Lord Carmichael of Kelvingrove, is now flogging a dead horse. He was good enough to give way when I ventured to remind him that an Answer had been given in this House by my noble friend Lord Caithness—and the noble Lord, Lord Carmichael, mentioned also an Answer given in another place—indicating the intention of the Government to deal with this point by way of the articles of association of the new company.
I can understand that noble Lords might prefer something in the Bill. However, from a practical point of view provided that the Government carry out their undertaking to put this in the articles, I cannot see that there is anything really to worry about if the matter is dealt with in that way.
I did not understand the noble Lord on the Liberal Benches when he said that the Government would not be able to deal with the proposed amendment of the articles. If the noble Lord will look at the answer which my noble friend gave him on 4th June, he will see that it ends with the words:
"The Secretary of State will retain a special share which will give him the right to veto any proposed change to this article".—[Official Report, 4/6/86; col. 1084.]
That seems clear enough. Therefore, the only danger that theoretically one could imagine would be the arrival of a Secretary of State who was prepared to hand over the British airports to foreign interests or
146
interests which would run them down. Noble Lords opposite know better than I the character of those who might fill this office in alternative governments, and I should not wish to be so offensive as to suggest that either the Labour Party or even that quaint mixture of interests which calls itself the Alliance—rather less allied now than two or three days ago—is likely to throw up a Secretary of State of that kind. Therefore, it seems to me that the position is perfectly satisfactory as it stands.
Lord Lloyd of Kilgerran: My Lords, I do not want to enter into the rather acrid atmosphere of party controversy by mentioning the rhetorical reference to these Benches, but before the noble Lord sits down may I say to him that it is true that in the reply in this House given by the Parliamentary Under-Secretary to the Department of Transport it was said that the,
"Secretary of State will retain a special share which will give him the right to veto any proposed change to this article".
The noble Lord who has just sat down wholly gives his case away. He knows very well that in regard to the future no government can be committed to this important matter constitutionally, except of course if it is in the statute. Whatever government may be in power—even the present Government may find themselves in a position to change something that they wish to change—if it is in the Act itself then there is the greater safeguard; and that is all that these Benches ask.
4.30 p.m.
Lord Boyd-Carpenter: My Lords, before the noble Lord sits down, will he allow me to point out to him that if he is prepared to assume a lunatic Secretary of State, or a Secretary of State completely oblivious to the national interest, it would be equally easy to assume a Parliament similarly stupid? Most of us who understand the way our constitution works believe that however much we may differ from policies of Secretaries of State, it is stretching one's credibility to the limit to believe that you would have a Secretary of State who would deliberately agree to amend the article and so let down the operation of airports in this country. Even if the noble Lord is naïve enough to believe that, he is even more naïve if he believes that Parliament would let him.
The Earl of Caithness: My Lords, the noble Lord, Lord Lloyd of Kilgerran quoted from what I said on 15th May—the extract in the Official Report, at col. 1308—and then I gather he solved his riddle by finding the answer I gave to my noble friend Lord Boyd-Carpenter on 4th June. It was one of many possible solutions when we were discussing restrictions on share ownership, with which these amendments deal.
Perhaps I may first deal with Amendment No. 5. That is the one concerning the local authority airport companies. We introduced amendments at Committee stage to remove the former Clause 24 which would have prevented local authority owners from including in the articles of their airport companies restrictions of the type proposed by this amendment. Clause 24 is now much more limited in its scope and it gives local authorities the freedom to introduce the type of restriction proposed by this

147
amendment—or different restrictions if they consider that these are feasible and necessary.
But the point is that the Bill as currently drafted gives local authorities the freedom and flexibility to decide whether to introduce such restrictions; it does not force a restriction on to them. They can take that decision in the light of the particular circumstances of their own airport and the implications for the region which that airport serves. I am sure that this is a matter which should be left to the local authorities themselves. It would not be appropriate for the Secretary of State to hold a special share in airports which are not currently owned by central government.
Turning to the British Airports Authority, we, as promised, announced on 4th June that we had decided to place a restriction on shareholdings in the privatised BAA, limiting the holding of any individual, or of parties acting in concert, to a maximum of 15 per cent. of the issued share capital. This announcement was in response to the concerns expressed, in particular by noble Lords, about the need for such a restriction in the national interest. We concluded that a general restriction of this kind was appropriate, bearing in mind the serious practical legal difficulties with more specific restrictions on particular groups of shareholders, which I mentioned at Committee stage.
This restriction is certainly not an isolated safeguard. It is very much a belt and braces provision, bearing in mind the whole series of other safeguards which exist against undesirable action by shareholders of an airport company. These include the provisions of the Airports Bill itself—for instance, in relation to discrimination between users of an airport. There will also be continuing regulation of issues such as safety and security. And there is also the Fair Trading Act, which provides for a reference to the MMC if a shareholder proposes to purchase enough shares to be in a position materially to influence policy or to gain effective control. If such an acquisition is judged to be against the public interest it can be prevented by the Secretary of State for Trade and Industry.
These provisions should be sufficient to guard against the problems envisaged by noble Lords. But we have provided yet a further safeguard with the 15 per cent. restriction on shareholdings. We consider that a restriction at this level is fully adequate to meet the concerns expressed, and even the concerns expressed by the noble Lord, Lord Carmichael of Kelvingrove, just now. It balances restrictions on the influence of individual shareholders with the need to ensure that the BAA's shares are freely negotiable—a key principle of the Stock Exchange. This level of restriction is precedented in a number of previous privatisations, most recently British Telecom, and is proposed for British Gas. I do not consider that there is a case for a more restrictive provision in the case of the BAA. The amendment as drafted proposes to place the restriction on the BAA's subsidiary companies, but the intention is that these will be 100 per cent. owned by the BAA.
In talking of precedents, there are well-known precedents for a share restriction of this type in other privatisation measures such as British Telecom. They have always been written into the articles of association. There has not been a need to write it on to
148
the face of the Bill, because that gives no more reassurance than the reassurance of the statement of 4th June by the Government. Therefore I do not believe that it would help in any way to have it on the face of the Bill, and I would ask the noble Lord, Lord Carmichael, to withdraw the amendment.
Lord Carmichael of Kelvingrove: My Lords, I am rather disappointed at the noble Earl's reply. We always get this argument that there is a safeguard for British Telecom. In this instance, airports are special. We are speaking particularly about the London airports, and the possibly predatory intentions of certain other airports in Europe. There is no one from abroad suddenly going to take over British Telecom and run it down in order to make the telephone companies of France, Germany or Holland better. There is no comparison. It is a bad example to use, and it has been used a number of times. Airports, because of their international nature, are special in this way.
The noble Lord, Lord Boyd-Carpenter, spoke most fluently and convincingly at the Committee stage of the Bill on 15th May when he said, at col. 1300:
"There is then the subtler (but I should have thought not wholly non-existent) risk of an acquisition by foreign interests designed not crudely to damage the operation of our airports but working so as to prevent their proper development".
Had I not been convinced earlier by the amendments, the noble Lord's argument would certainly have convinced me.
Today in another important and powerful speech he spoke much more in support of the Government. He tried to clarify the question of having it on the face of the Bill. I think I got his words correctly when he suggested that I was flogging a dead horse. But he added, "provided the Government carry out the intention of including it in the articles of association". However, the noble Lord, Lord Lloyd of Kilgerran, stated that there was nothing, other than the Written Answer to a Question in both Houses, to say that the Government are going to do this. This House is going to let this Bill go without an assurance, other than the assurance given in those Answers.
Lord Boyd-Carpenter: My Lords, is the noble Lord suggesting that where a Minister of the Crown, in that capacity, has answered a Question in this House committing the Government to certain action, it is even conceivable that he should not implement that?
Lord Carmichael of Kelvingrove: My Lords, I was paraphrasing the noble Lord's own words when he said. "provided the Government carry out their intention". All kinds of things flow from that. There is some doubt unless we get it on the face of the Bill. Of course no Minister would give his name to something he did not intend to put into effect, but why did the noble Lord, Lord Boyd-Carpenter, show a doubt himself? The words may not be exactly as they are in the Written Answer.
When the Minister sits down to discuss this with his civil servants it may be slightly different.Therefore I think that the amendment I have put forward from this side of the House is one that clears up any doubt. It does not add anything to the statement made in the written reply. It merely makes it quite clear that we want the Secretary of State to have this controlling

149
share without any doubt or risk of omission, deliberate or otherwise.Therefore I feel it is asking very little for the Government to go a little beyond what they have said in this statement and put it on the face of the Bill. It would give a great deal of protection for the future than merely having it in the articles of association.
On Question, amendment negatived.
The Earl of Caithness The Earl of Caithness moved Amendment No. 3:
After Clause 9, insert the following new clause:
("Statements in connection with flotation.
.—(1) This section shall apply where—

(a) an offer for sale to the public of any securities of the successor company is made by or on behalf of the Crown;

(b) any invitation or advertisement is issued (whether or not in documentary form) by or on behalf of the Crown in connection with the offer; and

(c) that invitation or advertisement does not contain all the listing particulars.

(2) None of the persons mentioned in subsection (3) shall incur any civil liability by reason of the invitation or advertisement, or any omission from it, if—

(a) the contents of the invitation or advertisement were submitted to the Council of The Stock Exchange;

(b) the Council did not object to the contents of the invitation or advertisement; and

(c) the invitation or advertisement and the listing particulars, taken together, would not be likely to mislead persons of the kind likely to consider the offer.

(3) The persons referred to in subsection (2) are—

(a) the Crown;

(b) any person acting on behalf of the Crown in connection with the offer;

(c) the maker of any statement contained in the invitation or advertisement;

(d) any person responsible for the preparation of, or of any part of, the listing particulars.

(4) The reference in subsection (2) to a person mentioned in subsection (3) incurring civil liability shall include a reference to any other person being entitled as against the person so mentioned to be granted any civil remedy or to rescind or repudiate any agreement.
(5) In this section "the listing particulars", in relation to the offer, means such particulars as, by virtue of any provision of any enactment other than this section or of any subordinate legislation, have been approved by the Council of The Stock Exchange for the purposes of the admission of the securities to which the offer relates to the Official List of The Stock Exchange.")
The noble Earl said: My Lords, at this stage I must apologise for the number of Government amendments that I have brought before your Lordships at this rather late stage of a Bill. It is not what we would have wanted ideally; and some, I acknowledge, would have been more appropriately tabled at Committee stage. But the process of improving a Bill, which is what our deliberations have been all about, seldom lends itself easily to a strict timetable with a definite cut-off point. Some of the amendments, particularly to Part IV and to new Schedule 1, are consequential to amendments made in Committee. Some indeed—as the noble Lord, Lord Lloyd of Kilgerran, will be pleased to hear—are as a result of further considerations that I have been able to undertake on behalf of the Government, perhaps with some success, which I hope will be welcomed by parties opposite. Some are needed because other legislation has not progressed as speedily as we might have hoped.
Turning now to Amendment No. 3, the Financial Services Bill presently being considered in another
150
place provides for protection against civil liability arising as a result of the publication of abridged listing particulars if these have been approved or authorised by the Council of the Stock Exchange. That provision recognises the increasing use of what are known as mini-prospectuses in share sales, which were first given general application under the terms of the Stock Exchange (Listing) Regulations 1984.
As your Lordships will be aware, the Government are committed to increasing the numbers of people who hold shares. We have already had substantial success in this field. Mini-prospectuses have an important role to play in this respect. They can make the acquisition of shares a less daunting prospect for the first-time buyer, as they do not contain all the complexities of the offer document.
It is possible that the relevant clauses of the Financial Services Bill may not be brought into force by the time of the main advertising campaign leading up to the BAA privatisation: I am therefore proposing this new clause in the Airports Bill as a safeguard against this possibility. An identical provision has already been included in the Gas Bill, which is presently at its Committee stage in your Lordships' House, as we know full well.
This new clause provides protection against civil liability arising simply from the abridging of the prospectus, despite full disclosure having been made elsewhere. There is still a very clear requirement that persons of the kind likely to consider the offer shall not be misled, and the Council of the Stock Exchange has the power to object to the contents of the document. If it did so, the exemption from civil liability would become void.
This new clause forms a small but valuable part of our drive to widen share ownership. I commend it to your Lordships and beg to move the amendment.
4.45 p.m.
Lord Williams of Elvel: My Lords, I am grateful to the noble Earl for his explanation of the new clause. He is right in saying that this amendment is already in the Gas Bill which is in Committee of your Lordships' House, and I hope your Lordships will excuse me if part of what I say will be repeated tomorrow when Clause 58 of the Gas Bill is debated in Committee.
To my mind there are three problems with this clause. The first concerns the responsibilities of those who are concerned with offering securities of the successor company for, by, or on behalf of, the Crown. The new clause specifically exempts, as I understand it (I am asking as much as anything for clarification on these points) the directors of the company, who would normally be responsible under company legislation for ensuring that the mini-prospectus is correct and not misleading. It seems to exempt those directors under subsection (3)(d). It exempts those who are acting as agents of the Crown as well as the Crown itself under the other subsections. These exemptions apply to civil liability. It therefore fairly and squarely places the responsibility on the Council of the Stock Exchange. If the Council of the Stock Exchange approves the mini-prospectus or any other documents which may be issued then the terms of this clause apply and others, as the noble Lord has said, are exempt from any liability in the civil courts.

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The noble Earl referred quite rightly to the passage of the Financial Services Bill. The Financial Services Bill, in its present form—the noble Earl is right in saying that that Bill may be changed in your Lordships' House—grants immunity to the Council of the Stock Exchange as a self-regulating organisation. Indeed this is a concession that the Government made after the debate in Standing Committee in another place, so that the result of the Financial Services Bill, if passed in its present form, would be to grant the Council of the Stock Exchange immunity not only for its own members, which was the original contention from our side of the House, but also from civil suits from third parties who may thereby be damaged. This is a point which will be raised by some of my honourable friends during the Report stage in another place of the Financial Services Bill. However, I understand that the Government have rather nailed their flag to this particular mast and have decided that the self-regulating organisations will be immune from civil liability when carrying out their functions under the Bill.
I therefore ask myself the question: if the Crown and those acting on behalf of the Crown are immune; if the directors of the company are immune; if the Council of the Stock Exchange is immune, and I find as a potential investor—I do not know whether I will be or not—that any of these prospectuses are misleading in any sense, against whom do I have recourse? All the people against whom I might have recourse appear to be immune under one form of legislation or another.
My second problem is this. The noble Earl has referred to the new clause. The new clause in subsection (1)(a) refers to
"an offer for sale to the public of any securities of the successor company".
The noble Earl and I had an exchange during Committee about what the proper capital structure of the British Airports Authority, as to be privatised, might be. There was some discussion as I remember it about debt equity ratios and the noble Earl asked me to write to him. I placed a copy of my letter in the Library; the noble Earl was kind enough to write back to me and also placed a copy of his letter in the Library. There are two points relating to securities which I should like to raise: one is that it is my contention that the capital of BAA should be converted into ordinary shares rather than a mixture of shares and other securities. Therefore I should have preferred the new clause to have read simply, "shares".
I rest my case on what the noble Earl wrote to me. A copy of the letter is in the Library. He quite rightly refers to the fact that the British Airports Authority, as a nationalised industry, has built up substantial reserves over and above the initial capital fund, if you like, that was provided by the National Loan Fund. The noble Earl said in his letter:
"It would be inappropriate to offer the BAA to the financial markets with such large reserves. Although the policies which have caused these reserves to grow were appropriate for a nationalised industry such as the BAA, a private company would probably have not have pursued them. Instead it would have distributed a significant proportion of its profits and financed capital expenditure through the issue of new securities. As a result, its reserves would have been much smaller and its other liabilities much larger than those of the BAA".
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It is not for me to judge what the conduct of a private company in those circumstances might or might not be. It seems perfectly reasonable; there are many private companies which build up their reserves and do not have recourse to debt. They build up their reserves because that gives them greater financial stability; and for the Government simply to assume that in those circumstances a company would have had resource to debt instruments rather than financing itself entirely from its own cash flow seems to me to be rather a large assumption.
However, I am afraid that worse is to follow because the noble Earl goes on to say in his letter:
"Although, as you say, the precise balance between debt and equity is a question which we shall decide at a later date, I can assure you that the net assets figure will not change at the time of vesting and will remain equal to the sum of liabilities and reserves".
Unless the Accounting Standards Committee of the Institute of Chartered Accountants of England and Wales have changed their policy since I rose to my feet on this, it simply is not true to say that the net assets figure will be equal to the sum of liabilities and reserves. It might be true to say that the gross asset figure will be equal to the sum of liabilities and capital reserves, but I am afraid it is simply not true to say what the noble Earl has said in his letter to me. I have no doubt he will take this opportunity of correcting what I am sure is a mistake on the part of his advisers.
There is also a third point. If such a statement were repeated in a prospectus, mini-prospectus or other, to my mind it would be a wholly misleading statement—not only misleading but quite false in accounting terms. I come back to the first point: against whom do I have recourse? If everybody is immune, I have recourse to nobody. I would ask the noble Earl to clarify these points because they are important. I understand that he may wish to return to them on Third Reading, but I hope that he can deal with these very important questions because to my mind the letter that the noble Earl wrote to me contains an error of simple accounting fact, and I want to know if that error is to be corrected or if it is to be potentially reproduced in some prospectus. If it is to be so reproduced, who can I sue?
Lord Lloyd of Kilgerran: My Lords, I should like to thank the noble Earl for the clear way in which he explained the context of this amendment. I should also like to identify myself with the three problems raised by the noble Lord, Lord Williams of Elvel. Perhaps I may say that I was not a party to the correspondence to which the noble Lord, Lord Williams, has referred, though I suppose I could have seen it in the Library had I made my searches there and had I had more notice of what had happened. However, if there is any further correspondence, I should be grateful if I could be sent copies of it.
A further point I should like to raise is associated with the second problem brought forward by the noble Lord, Lord Williams, and it relates to subsection (1)(a) of this new clause. It refers to,
"an offer for sale to the public of any securities".
Leaving out the rest of the wording, immunity is granted by the rest of the clause in regard to an offer for sale to the public of any securities. I ask this question, apologising to the noble Earl for the fact that I have not

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given him notice beforehand: does this mean that the Government are not claiming immunity for any other offer of sale to the public, such as industrial assets or even intellectual property rights, to take one limited field? Is the immunity intended to refer solely to securities?
I do not know what definition is to be given to "securities". The noble Lord, Lord Williams, suggested, instead of the word "securities", the word "shares". I merely ask the Government whether the immunity in relation to the offer for sale which is referred to here is limited to securities in the narrow sense. I am sorry; I fear that I have interrupted the noble Earl in his discussions and I know that he will have a difficult problem in answering all these questions. All I am asking for is a clarification of the scope of the word "securities" and whether the Government are claiming any immunity in relation to other matters which obviously will be offered for sale in the course of this operation.
The Earl of Caithness: My Lords, I am grateful for the comments and the questions which the two noble Lords have put to me. I find myself in some difficulty over the first question that was posed by the noble Lord, Lord Williams of Elvel, for the very good reason that the Financial Services Bill is still in another place and it would be wrong for us in this House to start consideration of the Bill before it reaches us here. However, I shall draw to the attention of my right honourable friends in another place the point that he raises, and I hope to be able to get an answer to him before Third Reading in regard to where he links this Bill with the Financial Services Bill. I hope he will accept that assurance in the good faith in which it is offered.
The noble Lord also asked whether everyone was immune and against whom, if he is misled, can he take legal action? That is another interesting point which I will investigate and then reply to him later. However, I would emphasise that this Bill does not grant immunity to the Stock Exchange and therefore the point he is making is more relevant to the Financial Services Bill than to this Bill.
The noble Lords, Lord Williams of Elvel and Lord Lloyd of Kilgerran, asked me about securities. Both noble Lords would have preferred the use of the word "shares" rather than "securities". We used the term "other securities" because of the commitment that at least an equivalent element of debt will be included in the company's structure to that which is written off under Clause 3. We included that precisely at the request of the Opposition in another place and if the noble Lord, Lord Williams, has difficulty, I wonder whether he would perhaps liaise with his honourable friends in another place. We could discuss that, too, before Third Reading.
I turn finally to the letter of 4th June. In fact, I wrote two letters to the noble Lord on that date, and he has picked up a point from the penultimate paragraph of one of them which I had also picked up on reconsideration. Indeed, I had asked for a letter to be written to the noble Lord. I believe there is a confusion between us and that confusion may have arisen because of the differences in accounting practice
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between nationalised industries such as the BAA and private sector companies, in the definition of "net assets". I shall be happy to continue to seek advice on the letter and will write to the noble Lord, Lord Williams, on this point. The basic point is that we would expect to draw on the reserves in order to increase the liability of the BAA, but its total assets will remain unchanged. I hope that the noble Lord, Lord Williams, will not be too disappointed with that reply, and I shall try to get further information to him as soon as possible.
5 p.m.
Lord Lloyd of Kilgerran: My Lords, before the noble Earl sits down, may I go back to the question I asked about the scope of the word "securities"? Is it merely limited to shares and, therefore, are the Government not claiming any immunity in regard to any other assets which they propose to offer for sale?
The Earl of Caithness: I am sorry, my Lords, but I thought I had answered the noble Lord, Lord Lloyd. The words "other securities" were requested. I believe that they are wider than the word "shares", but I will take advice on that and write to the noble Lord.
Lord Lloyd of Kilgerran: My Lords, I am very much obliged to the noble Earl.
Lord Morris: My Lords, I do not know whether I can help on this point but, as the noble Lord, Lord Lloyd, knows, the phrase "offer for sale" is a technical term which is defined in one or other of the Companies Acts—I cannot remember which. It would refer to securities, because it embraces debentures as well as shares in a company. That is why it is absolutely necessary and Her Majesty's loyal Opposition were absolutely right to insist on this term.
Lord Williams of Elvel: My Lords, I am grateful to the noble Earl for his response, even though he found some of my questions rather difficult. If I may for his guidance, return to some of the points that I made and which he covered—
Viscount Davidson: My Lords, I am sorry to interrupt, but this is Report stage and on Report it is only the mover of the amendment who can speak twice.
On Question, amendment agreed to.
Clause 12 [Transfer of airport undertakings of local authorities to companies owned by such authorities]:
Lord Underhill Lord Underhill moved Amendment No. 4:
Page 10, line 2, after ("may") insert (", subject to subsection (5A),").
The noble Lord said: My Lords, it may be for the convenience of the House if I also speak to Amendment No. 6. The aim of these amendments is to require the Secretary of State to issue directions to airport authorities to establish airport companies in phased batches of similarly sized airports. We envisage that this provision would be used by the Secretary of State to issue directions in the first instance to, say, the largest local authority airports, such as Birmingham,

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East Midlands, Luton, Manchester and Newcastle. The remaining 11 airports currently caught by the provisions of Part II of the Bill could subsequently be covered by directions on additional batches.
There are three primary justifications for suggesting that this course should be followed. First, 16 local authority airports fall within the £1 million annual turnover threshold which is included in Clause 13 of the Bill. We have listed those on previous occasions. But the variation in their size, function and financial viability is considerable.
It is essential that the particular circumstances of individual airports are given close attention by Ministers, civil servants and their consultants when proposals for company formation are being considered. This is more likely to be possible if airports with similar characteristics are handled together. This will ensure that the available resources are focused constructively and not diverted on to a wide variety of issues. The very fact that 16 airports are covered by Part II of the Bill is likely to cause difficulties for the civil servants responsible for handling the company formation process, which will not be inconsiderable.
Ministers have made it clear during the passage of the Bill that they are keen that all 16 airports should be subject to company formation; and may I stress at this stage that we are talking about company formation and not privatisation, because that is not referred to in the Bill. This is more likely to be achieved effectively if the process is spread over a number of months and is not the subject of unseemly haste.
At all stages of the Bill amendments have been tabled designed to exclude the smaller local authority airports from the provisions of Part II of the Bill. Those amendments have been constructive and well reasoned, and local authorities with smaller airports quite reasonably believed that the case put forward would be so acceptable to the Government that there would be a lower criterion and therefore they would be covered by Part II of the Bill. Hence they have not really started to formulate any proposals for company formation.
These amendments would ensure that they have adequate time to prepare transfer schemes and that their companies are established on a sound basis. In no way do they hit at the purpose of the Bill. They will make the implementation of Part II more smooth, reasonable and sensible. Therefore, I hope that the Government will accept them. My Lords, I beg to move.
The Earl of Caithness: My Lords, before dealing with this amendment, may I, with the leave of the House, quickly go back to the last amendment? It escaped my memory at the time but the point raised by the noble Lord, Lord Lloyd of Kilgerran, with regard to shares is, of course, covered in the definitions on page 72 of the Bill as printed.
I am grateful to the noble Lord, Lord Underhill, for explaining the purpose of these amendments, but what the noble Lord did not make clear was their effect. When are turnovers comparable and how many years would it take for local authority airports with an annual turnover in excess of £1 million to become public airport companies? This goes to the very root of
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the amendments. It is the Government's view that all airports with an annual turnover of over £1 million are sizeable businesses which would benefit from being converted into Companies Act companies at an early date, and they have had notice of this for quite some time.
The planned date for establishing public airport companies at all of the local authority airports with a turnover of more than £1 million is 1st April, 1987. It is, we know, a tightish timescale, but we want a timescale in which the necessary safeguards can be made to ensure a proper transition to company status. Therefore, it is a practicable timescale. We have now issued draft guidance on the establishment of public airport companies and my officials and our consultant advisers, Price Waterhouse will be discussing this with airports and local authorities before it is finalised. If one considers that the timescale is tight, one would do well to think back to the speed with which the Greater Manchester district councils managed to establish Manchester Airport plc, and that was even without the benefit of Government guidance. Therefore, I hope that the noble Lord will withdraw this amendment.
Lord Underhill: My Lords, the timescale is set out in the new subsection (5A) of Amendment No. 6 which reads,
"(a) that there is a period of no less than one year between each such direction".
As I have explained, the purpose of the amendment is to effect a smooth formation of these companies.
The noble Earl referred to his advisers. There is a subsequent amendment dealing with advice and perhaps we can deal with that question when we come to that. In the meantime I suggest that I withdraw the amendment and seek further advice, because local authorities are very troubled and concerned to see that there will be no hasty decisions in setting up these companies, perhaps to get them all done at one stage, and taking no account of their size and the difference between one airport and another. So they should like this to be considered further. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 5:
Page 10, line 14, at end insert—
("( ) The memorandum and articles of association of the company shall contain such restrictions on the allotment and transfer of shares that the holding or holdings of any one or more shareholders (whether individual or corporate) cannot exceed in aggregate ten per cent. of the issued capital of the company, and the Secretary of State shall retain a special share which will give him the right to veto any proposed change to this article.").
The noble Lord said: I spoke to this amendment with Amendment No. 2. I should like to take it to a Division in order to get the opinion of the House, largely because we have reached a point where local authority airports could be even more easily influenced by not having a golden share on the face of the Bill, since 51 per cent. could quite easily be sold by local authorities. It may be necessary for it to be sold by them because of other conditions within the Bill which would cause local authorities to raise money outside. Therefore I hope that the House will show its desire to have on the face of the Bill the concept of the

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control of the Minister through the golden share. I beg to move.
The Earl of Caithness: My Lords, I do not think I can add anything to what I said earlier.
5.10 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 89; Not-Contents, 127.

DIVISION NO. 2

CONTENTS

Ardwick, L.

Kirkhill, L.

Attlee, E.

Listowel, E.

Aylestone, L.

Llewelyn-Davies of Hastoe, B.

Banks, L.

Lloyd of Kilgerran, L.

Birk, B.

[Teller.]

Blyton, L.

Longford, E.

Boston of Faversham, L.

Lovell-Davis, L.

Bottomley, L.

McNair, L.

Brockway, L.

Melchett, L.

Brooks of Tremorfa, L.

Milford, L.

Bruce of Donington, L.

Molloy, L.

Burton of Coventry, B.

Monson, L.

Caradon, L.

Mountevans, L.

Carmichael of Kelvingrove, L.

Mulley, L.

Cledwyn of Penrhos, L.

Nicol, B.

Crawshaw of Aintree, L.

Northfield, L.

David, B.

Oram, L.

Davies of Penrhys, L.

Parry, L.

Dean of Beswick, L.

Phillips, B.

Diamond, L.

Pitt of Hampstead, L.

Donaldson of Kingsbridge, L.

Ponsonby of Shulbrede, L.

Ennals, L.

[Teller.]

Ewart-Biggs, B.

Prys-Davies, L.

Ezra, L.

Ritchie of Dundee, L.

Falkender, B.

Robson of Kiddington, B.

Falkland, V.

Rochester, L.

Fitt, L.

Seear, B.

Foot, L.

Sefton of Garston, L.

Gallacher, L.

Shackleton, L.

Gladwyn, L.

Shepherd, L.

Glenamara, L.

Silkin of Dulwich, L.

Graham of Edmonton, L.

Stallard, L.

Gregson, L.

Stedman, B.

Grey, E.

Stewart of Fulham, L.

Grimond, L.

Stoddart of Swindon, L.

Hampton, L.

Taylor of Blackburn, L.

Hanworth, V.

Taylor of Gryfe, L.

Houghton of Sowerby, L.

Taylor of Mansfield, L.

Hughes, L.

Underhill, L.

Hutchinson of Lullington, L.

Vernon, L.

Jacques, L.

Wallace of Coslany, L.

Jeger, B.

Walston, L.

Jenkins of Putney, L.

Wells-Pestell, L.

John-Mackie, L.

Williams of Elvel, L.

Kilbracken, L.

Ypres, E.

Kilmarnock, L.

NOT-CONTENTS

Alexander of Tunis, E.

Brougham and Vaux, L.

Allerton, L.

Broxbourne, L.

Annan, L.

Bruce-Gardyne, L.

Auckland, L.

Butterworth, L.

Bauer, L.

Buxton of Alsa, L.

Belhaven and Stenton, L.

Caccia, L.

Beloff, L.

Caithness, E.

Belstead, L.

Cameron of Lochbroom, L.

Bessborough, E.

Campbell of Croy, L.

Boyd-Carpenter, L.

Carnegy of Lour, B.

Brabazon of Tara, L.

Cathcart, E.

Brookes, L.

Constantine of Stanmore, L.

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Cork and Orrery, E.

Maude of Stratford-upon-

Cowley, E.

Avon, L.

Cox, B.

Merrivale, L.

Craigavon, V.

Mersey, V.

Craigmyle, L.

Middleton, L.

Cross, V.

Monk Bretton, L.

Cullen of Ashbourne, L.

Montgomery of Alamein, V.

Dacre of Glanton, L.

Morris, L.

Davidson, V.

Murton of Lindisfarne, L.

De La Warr, E.

Newall, L.

Denham, L. [Teller.]

Norfolk, D.

Derwent, L.

Nugent of Guildford, L.

Dilhorne, V.

Onslow, E.

Drumalbyn, L.

Orr-Ewing, L.

Eccles, V.

Pender, L.

Ellenborough, L.

Peyton of Yeovil, L.

Elliot of Harwood, B.

Plummer of St Marylebone,

Erroll of Hale, L.

L.

Faithfull, B.

Porritt, L.

Fanshawe of Richmond, L.

Portland, D.

Fortescue, E.

Quinton, L.

Fraser of Kilmorack, L.

Radnor, E.

Gainford, L.

Rankeillour, L.

Gibson-Watt, L.

Renton, L.

Glenarthur, L.

Rochdale, V.

Gray, L.

Rodney, L.

Gray of Contin, L.

St. Davids, V.

Hailsham of Saint

Saltoun of Abernethy, Ly.

Marylebone, L.

Sanderson of Bowden, L.

Halsbury, E.

Seebohm, L.

Harmar-Nicholls, L.

Selborne, E.

Hives, L.

Selkirk, E.

Holderness, L.

Sempill, Ly.

Home of the Hirsel, L.

Shannon, E.

Hooper, B.

Shaughnessy, L.

Hunter of Newington, L.

Skelmersdale, L.

Hylton-Foster, B.

Stokes, L.

Ingrow, L.

Strathcarron, L.

Kinnoull, E.

Strathspey, L.

Kitchener, E.

Sudeley, L.

Lane-Fox, B.

Swinton, E. [Teller.]

Lauderdale, E.

Terrington, L.

Layton, L.

Thomas of Swynnerton, L.

Long, V.

Thorneycroft, L.

Lyell, L.

Torrington, V.

McAlpine of Moffat, L.

Tranmire, L.

McAlpine of West Green, L.

Trefgarne, L.

McFadzean, L.

Ullswater, V.

Macleod of Borve, B.

Vaux of Harrowden, L.

Malmesbury, E.

Vickers, B.

Mancroft, L.

Vivian, L.

Margadale, L.

Ward of Witley, V.

Marley, L.

Whitelaw, V.

Resolved in the negative, and amendment disagreed to accordingly.

5.18 p.m.
[Amendment No. 6 not moved.]
Clause 14 [Transfer schemes]:
Lord Underhill Lord Underhill moved Amendment No. 7:
Page 12, line 6, at end insert—
("( ) When formulating any advice for the purpose of subsection (2) or considering any scheme for approval under subsection (3) the Secretary of State shall take into account the financial consequences for the transferor authority of implementing the advice or scheme.")
The noble Lord said: My Lords, in moving Amendment No. 7 it may be for the convenience of the House if I speak also to Amendment No. 8. The first amendment relates to issues associated with debt; the second to independent advise, to which reference was made on the previous amendment. It may be helpful if I explain each amendment in turn.
Amendment No. 7 relates to debt. The Committee discussed extensively the issues associated with handling debt in the context of establishing airport companies. The noble Earl has acknowledged the complexity of the issues, for on 22nd May he remarked that:
"We realise the problems that may be entailed and we are looking at these seriously … I hope to have something to report to the House at Report stage".—[official Report, 22/5/86: col. 414.]
I hope that will be so, but as I am permitted to speak only once, except for a brief response at the end, I had better outline the purpose of the two amendments, in case what the noble Earl has to say does not fully accord with what we hope he will have to say.
The amendment now tabled safeguards the position on the basis that the Government's deliberations do not produce their own amendment. We are particularly concerned that an amendment shall be made to the Bill because assurances that the Government will adopt a flexible approach in considering proposals are obviously not sufficient. During the passage of the Transport Bill local authorities were assured that there would be little or no cost to the passenger transport authorities by transferring assets to the new public transport companies. However, experience shows those assurances to have meant nothing. In one PTA area—namely, Greater Manchester—the Department of Transport is asking the ratepayers to pick up a bill that could amount to as much as £58 million, with no indication that the expenditure limit will be determined with that level of commitment taken into account.
As has been previously made clear in Committee, based on the latest accounts for the year ended 31st March 1986, debt outstanding in relation to those local authority airports affected by the Bill amounts to no less than £120 million. Those amounts range from more than £28 million in Birmingham to less than £½ million in Southend. I have a schedule, of which the noble Earl no doubt also has a copy, listing the debts and interest charges of all 16 local authorities affected.
The way in which debts at each airport are handled could have very serious implications for their local authority owners. In the case of Birmingham the annual interest charges alone on outstanding debt would be £3½ million, and the potential loss of grant of £3 million would make a total charge of no less than £6½ million to that authority. That would equate to a £1·64p rate in the pound, which is not met at present.
The transfer scheme to be determined by the Secretary of State under Clause 14 will determine what is to be the legal responsibility of the airport company. If debts are not assigned by that scheme to the company, they will remain the legal responsibility of the local authority concerned. It will be left with them as a matter of law until those debts are redeemed.
The Government have demonstrated some level of understanding of the problems, but a balance will clearly need to be struck between the creation of viable company structures and the financial interests of the transferor local authorities. It is equally clear that no two airports will be alike and that it would be counter-productive to attempt to define hard and fast rules for inclusion in the Bill as though they were. It is still considered vital that the Bill should not remain totally
160
silent on this issue and that the Secretary of State will take into account the interests of transferor authorities in the way in which he determines schemes under Clause 14.
The amendment is designed to encourage that. It does not bind the Secretary of State to do anything except to take into account all the possible financial consequences. The 16 local authorities concerned all hope that the Government will accept it. I use the words "take into account"; I hope that they will not be challenged by the noble Earl, because time after time the Government have justified the use of those words in various Bills when we have attempted to make certain matters more firm.
Amendment No. 8 deals with independent advice. I regret that it was one of the amendments that the noble Earl described as being superficially attractive but wrecking at the Committee stage. However, he did confirm:
"So there is nothing to prevent the local authority and the airport from seeking independent advice. If that advice is given to the local authority and the local authority presents it to us before we finalise our thoughts, we shall of course take it into account".—[Official Report, 15/5/86; col. 1368.]
In the light of that statement the Government should have no difficulty in accepting Amendment No. 8. It would simply confirm in the Bill that which the Government have said they will do, and that would be of great comfort to the local authorities.
The need for confirmation of that point is paramount. The concern of the local authorities stems largely from the fact that they are far from convinced that the Government understand all of the issues. The Government's insistence on creating company structures for all the airports, irrespective of size and turnover, is a reflection of their dogmatic approach to company formation. The issues need to be handled with considerable sensitivity. The blanket approach simply will not do. Each airport will pose different problems requiring different solutions.
Both the Government and the local authorities will find it beneficial to have independent advice available. Neither side has the monopoly of wisdom. The noble Earl referred to their expert advice, and the local authorities similarly want expert advice. The Government have appointed independent experts to appraise the transfer schemes produced for the initial bus companies, and we want to ensure, with Amendment No. 8, that taken independent financial advice is taken and submitted before the scheme is put forward.
I understand that a meeting today of the grants working party and Department of Transport representatives moved some way on that matter, and I hope that the noble Earl will have something to report. It is suggested that an additional grant related expenditure assessment for airport debt remaining with the local authorities after the establishment of the new airport companies was one of the matters considered, and that the Government have it in mind to make proposals.
If the Government do have a statement to make, then I suggest that the precise methodology for constructing grant related expenditure in that case was not explained, although I understand that the local authority associations are to be notified by letter. Naturally, as we are discussing this particular clause,

161
this House would like to know the method today. Also, it is not clear whether, at that meeting, the Exchequer grant total was increased by a corresponding amount. The proposal will result in some additional block grant for authorities with airport underakings, but within a fixed grant total that could mean that it would be at the expense of all other local authorities.
I thought that it was necessary to put those points because they were matters to which the noble Earl referred at the Committee stage, when he said that he hoped to have something further to say on Report. Meanwhile, I hope that the Government will accept the amendment. I beg to move.
Lord Parry: My Lords, as this is the Report stage, I shall not say that Cardiff, Wales, airport is the best airport in Great Britain; I will spare the House that. However, it does have a great interest in this particular amendment and I have been asked by the joint committee that serves the airport to point out that the amendment is one that the Minister, should he feel so disposed, could accept.
As my noble friend who leads from this side of the House has already said, the amendment is designed to ensure that, in view of the particular circumstances of individual airports, there should be flexibility in the application of schemes, and that schemes should have regard to local circumstances and needs. That is particularly important in the case of Cardiff, Wales, airport, which is the only national airport specifically serving Wales.
The amendment further provides that any advice in that respect obtained by a principal council from independent financial advisers should be taken into consideration by the Secretary of State. In our case, the Secretary of State for Wales has contributed to the development of the airport by his agreement to a recent extension of its runway. Therefore, I see no reason why the Minister should not on this occasion say that he can accept the amendment and that we can proceed to the next stage.
5.30 p.m.
The Earl of Caithness: My Lords, we are grateful for the attention given to this amendment by the noble Lord, Lord Underhill, and also the attention given by my noble friend Lord Dudley, whose presence we sadly miss today. Both noble Lords have given considerable attention to transfer schemes under Clause 14, and in particular to the question of transferring airport debts.
I said in Committee that we were giving this question further consideration, and indeed we have given it considerable thought. I was able to report the results of that further consideration in a letter yesterday to my noble friend Lord Dudley; with a copy to the noble Lord, Lord Underhill, which I hope he has received. I also sent copies to the noble Lord, Lord Tordoff, the noble Baroness, Lady Fisher, who took part in the consideration in Committee, and to my noble friend Lord Butterworth. I hope that they are pleased with the results of our deliberations.
I believe that we have now found a solution that reconciles our objectives of establishing airport
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companies which are viable, or have every prospect of viability, with the objective—expressed in this amendment—of taking account of the financial consequences for the transferor authority of doing so by leaving airport debts with local authorities. The solution that we propose is to introduce from 1987–88 a new grant related expenditure assessment to cover the cost of servicing airport debts left with local authorities. The total for this GREA will he an addition to the debt charges component of total grant related expenditure; and the addition will be taken into account in determining the level of aggregate Exchequer grant. The details will be incorporated in the rate support grant settlement.
This solution was suggested by the local authority associations and therefore should be acceptable to them. I could expand on the method of operation of this new special GRE but it is complex and in view of what I have been able to say I will spare the House further details unless I am specifically requested to do otherwise. I will also make sure that a copy of the letter to my noble friend Lord Dudley is placed in the Library for everyone to see. We believe that it is a major step forward and I am grateful to the noble Lords who encouraged us to take it.
Lord Diamond: My Lords, perhaps I may intervene on a matter of explanation. Can the noble Earl confirm that he referred to an injection of new money, additional money, and that it is not merely a reallocation of the rate support grant?
The Earl of Caithness: My Lords, I will clarify what I said. What we are proposing would involve the introduction of a new grant related expenditure assessment for past airport debt borne by the controlling authorities. The notional cost of financing this debt would be calculated using standard interest rate and repayment rate factors consistent with those used for the other GREAs for debt charges. The amounts calculated in this way would be added to the individual authorities' overall GREAs to ensure that the entire notional cost of financing past airport debt is met with the rate support grant. For airports owned by more than one authority, as most are, the airport debt GRE will be divided among the joint owning authorities, pro rata to their shares in the airport company.
I hope that as a result of the major move that we have made the noble Lord, Lord Underhill, will see fit to withdraw his amendment. By introducing a special GRE we have taken account of the financial consequences to transferor authorities in a specific practical way. The special GREs are referred to in the draft guidance on the establishment of public airport companies that my department issued today.
The department's advice will, I am sure, now be thought fully satisfactory on this important point of treatment of airport debt. Indeed, the noble Lord, Lord Underhill, was correct in saying that there was a meeting this morning to explain to the representatives of local authorities how our proposals will work. Naturally, we shall look at each proposal submitted by local authorities, carefully taking into account the individual points that each airport has. I know that Cardiff will not be excepted from that generalised rule. In view of this major concession and what I have said,

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I hope that the noble Lord will withdraw his amendment.
Lord Underhill: My Lords, I am encouraged and grateful to the noble Earl for confirming what I understood was the position at the joint meeting. There is such a thing as bush telegraph! However, he has not answered one of the points that I made, and I do not think that it is within his power to do so. I think it is possibly the Secretary of State for the Environment who should know something about this and it is his position to answer.
The point I made, which was echoed by the noble Lord, Lord Diamond, is that we still do not know whether this will be new money. The noble Earl said that this will be added to the past GREAs of the authorities, but will it be totally new money in the actual rate support grant settlement when that is announced by the Secretary of State for the Environment? That is the important point. Otherwise, it will be taken from the national pool in order to advance this additional GREA, or some of the authorities will suffer. I hope that the noble Earl will ensure that his right honourable friend is shown this passage in Hansard because these are important questions to be answered. We also want to know the method which will be used to calculate the amount. I believe that was not discussed at this morning's meeting. In the meantime, I beg to leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Lord Underhill Lord Underhill moved Amendment No. 9:
After Clause 14, insert the following new clause:
("Application of Part II to passenger transport authorities.
. The Secretary of State may by order apply the following provisions of this Part to a metropolitan county passenger transport authority as they apply to a principal council.").
The noble Lord said: My Lords, this amendment is primarily concerned with the position of Liverpool airport. It may be remembered that we had a lengthy debate on this subject in Committee. However, I remind your Lordships that the airport is at present owned by the Merseyside Passenger Transport Authority which, under the provisions of the Bill, is able to establish an airport company if served with a direction under Clause 12 but is not allowed to retain ownership of the company.
The Government envisage agreement being reached among the constituent district councils over the future ownership of the airport company. The amendment provides the Secretary of State with a fallback position enabling him to allow the passenger transport authority to retain ownership should the districts fail to reach an agreement. The Merseyside PTA considers that the Government should have covered this possibility in the Bill, or at least accepted the amendment tabled in Committee enabling the authority to retain ownership of the airport.
In response to the amendment tabled to Clause 11 in Committee, the noble Earl confirmed that the PTA would not be able to hold shares in an airport company, he said:
"This was a quite deliberate decision taken by my right honourable friend because the Government did not see PTAs as an
164
appropriate body to hold shares in an airport, to deal in such shares, to provide certain services to an airport, to make loans to it and the other things which principal councils are enabled to do under Clauses 15 to 26 of the Bill. We believe that public sector shareholdings in the public airport companies should be held by directly elected bodies, rather than indirectly elected ones".—[official Report, 15/5/86; col. 1326.]
When pressed further, the noble Earl said:
"It is clear to me that the PTA own the airport. We believe they are not the right body to own it, and we appreciate the problems that have arisen over the temporary basis, and perhaps it is not the ideal way of doing it, but we believe that following privatisation it should be the five district councils who own it".—[Col. 1329.]
Incidentally, I note the use of the word "privatisation" but we are not arguing about that; we are talking about the formation of a public company.
This amendment has been tabled not because the PTA is particularly keen to retain ownership of the airport but because it is keen to remove any uncertainty regarding the future ownership and financing of the airport and to ensure that adequate arrangements are made to give the airport the opportunity to expand its operation to justify the significant investment over recent years.
The Government's antipathy to the passenger transport authority retaining ownership of the airport is surprising and conflicts with the combined effects of the Government's Local Government Act 1985 and their Transport Act 1985. Those two pieces of legislation established the metropolitan passenger transport authorities and provided for them to become owners of the metropolitan transport companies. It is difficult to understand how it can be proper for the six passenger transport authorities to hold shares in passenger transport companies when the Government believe that it is inappropriate in the case of an airport company. Why in the one case and not the other?
The Government's position is dependent upon the Merseyside districts reaching agreement on the ownership of Liverpool airport; yet the fact that the PTA currently owns the airport is a direct result of the failure of the districts to reach agreement on ownership following the abolition of the Merseyside District Council. It was unclear from the Minister's response at the Committee stage whether it was the Government's intention to approach the five Merseyside district councils to establish their position on the future ownership of the airport company. Do the Government intend to take the initiative or are they looking to the passenger transport authority to pursue the matter?
The latter approach will be particularly unfair because the authority was not a party to discussion between the district councils in Merseyside over the ownership of the airport following abolition of the Merseyside District Council; it was not informed about proposals by Liverpool City Council to take responsibility, nor was it told that the Secretary of State found that proposal unacceptable. The Government still seem to be assuming that the district councils will want to take over the airport. That may well not be the case. That is why we believe that the Government should accept the amendment that has now been tabled.
The district councils concerned will be faced with an important decision. How do the Government plan to

165
councils expected to receive advice? There is no allowance in the staffing levels of the passenger transport authority to carry out this additional work. Maybe that is another matter to be considered when the question of GREA is under consideration.
On the issue of the airport debt remaining with the PTA, if the authority is no longer responsible for the airport that will be grossly unfair. The authority is rate capped and additional expenditure on servicing debts will result in a loss of grant through the GREA mechanism. An obvious alternative would be to give the responsibility to the Merseyside residual authority, which will levy a charge on each of the district councils. In fact, there is some logic in the Merseyside residual body preparing a transfer scheme. But we still cannot understand why the Government are averse to the simple solution, which is that of accepting the passenger transport authority as shareholders for the airport. Basically, that is the purpose of this amendment. I beg to move.
5.45 p.m.
Lord Sefton of Garston: My Lords, I almost feel that I should apologise for intervening again in this debate. We had a long discussion on Merseyside and Liverpool airport during the Committee stage of the Bill and I thought that we had taken steps then which might finally resolve the difficulties in Merseyside and in my mind. I asked the Minister to write to me and explain the exact situation in regard to Liverpool airport, particularly in the light of the not very remote possibility that the district councils will not consider that they have a role to play in regard to Liverpool airport.
I received a letter from the noble Earl and when I had read the first page of it I thought that it seemed to sort the matter out. The Minister says:
"We propose, therefore, that when the new company is formed under the forthcoming legislation and assets are transferred to it, the shares should pass to the 5 districts".
That seemed to be definite enough, and the districts would have to take the shares. The letter continues still more helpfully:
"However, it is our intention to ensure that the new company, so far as possible, is given every opportunity to become viable".
I fail to see why the passing down of a past debt enables a company to become viable in circumstances such as those of Liverpool, because the sums are mounting up by £33½ million every year.
The letter then states:
"This would mean that all 5 districts would continue to service past debt and contribute to its extinguishment through PTA precepts as they are doing at present".
I should like to point out to the Government that some of the districts consider that they were not doing that; that they have been compelled to do it. As districts, they did not want to participate in Liverpool airport, but Liverpool airport was maintained and kept going by Merseyside County Council, which was not composed of delegates from the district councils but of directly elected representatives from the whole of Merseyside. Anyway, I thought that this was making progress.
166
However, the letter goes on:
"It will be for the 5 district councils collectively"—
and that word poses a problem—
"to decide the proportion that each will take of the equity capital"—
I assume that if payments to the airport are to depend upon the proportion of the equity capital held by the different district councils, there will be some difficulty in getting the district councils to accept a major portion of that equity capital—
"and the arrangements for continuing financial support to the airport".
That of course comes under the same heading. If a decision has to be taken collectively by five district councils (which to say the least have some difficulty in coming to a consensus) in order to decide how much each individual district council will contribute to Liverpool airport, then I can imagine that there will be some problems.
Then the letter says:
"We would expect proposals on these matters to form a part of the scheme to be presented by the PTA under C1.14 of the Bill".
My sympathy goes to the PTA. Now we have a situation where the Government are saying to the PTA, "You go along and meet the five district councils"—which are all composed of politicians and, if I may say so, fairly active politicians—"each speaking for its own district council". According to this letter, it looks as though the PTA will have the job of obtaining a consensus from the district councils and submitting it to the Minister. I have had some experience in Merseyside. I was the first chairman of Merseyside County Council. Suffice it to say that I do not envy the role of the PTA.
Finally, the letter concludes:
"We believe that this represents the most equitable solution to the problem of allocating Liverpool Airport debts".
The Government may believe that. I can only say about this letter that it does not get us much further. My specific question to the Minister was: will he write to me and tell me what in particular the Government intend to do if there is not any agreement among the district councils in respect of Liverpool airport? My noble friend on the Front Bench has just made that point.
I hesitated to speak, but this is the Report stage of the Bill and if one wants answers to a problem it is not possible to get up and down, as one can in Committee, and therefore I had to speak now. If I have delayed the proceedings of the House I am very sorry, but again I urge the Minister to give specific answers to the following questions: first, where is it stated in the statute that he can compel local authorities to take over responsibility? Secondly, where is it stated that he can compel them to meet and decide a scheme that apportions their responsibilities and equity capital in the new company? Thirdly, where is it ensured that any direction given by him will be carried out by the district councils? Finally, what will the Government do if in fact he does not have the power or is unable to obtain agreement among the district councils?
If the Minister cannot answer those questions now, before this Bill goes any further, I suggest that the only fair course that he can take is to take the action as proposed in this amendment, which does not instruct

167
him but merely gives him the facility to clear up the matter once and for all, if in fact he cannot obtain agreement.
The Earl of Caithness: My Lords, as the noble Lord, Lord Underhill, said, there is only one airport currently owned by a PTA, and that is Liverpool which is owned by the Merseyside PTA, as the noble Lord, Lord Sefton of Garston, has just reminded us.
As I explained at an earlier stage, we do not think that this is an ideal solution. It came about only because Merseyside District Council was unable to reach agreement on ownership. We should prefer that the new public airport company that will operate Liverpool airport should be initially owned by the district councils within the area of the old county councils—the districts which, through their membership of the metropolitan county council, have supported the airport over the past decade. We propose therefore that the shares should pass to the five district councils.
We were not able to achieve that under the Local Government Act 1985 because the district councils could not agree on the future operation of the airport. But in this Bill—and this answers all the questions of the noble Lord, Lord Sefton—we have taken powers to resolve such disagreements. Under Clause 14 the Secretary of State can modify transfer schemes or in the case of complete disagreement substitute one of his own. But we hope that that will be unnecessary and that the five district councils can come together with an agreed solution.
I think that we have reached a major disagreement on philosophy between both sides of the House. We strongly believe that the district councils (the elected body) should be the owners and not the PTAs. I can understand the reasons for the noble Lord, Lord Underhill, requiring ownership by the PTA, but we have a major disagreement and I do not think that I can be of further help to him at this stage.
Lord Underhill: My Lords, I am sorry that the noble Earl feels that the Government can be of no further help to the House—because it is not just a question of being of no further help to me—or to Liverpool. This is one of the problems that we said would arise under abolition. The Government have not fully thought out all the issues that will arise from abolition and as each problem arises they have to find a way to get over it.
In this case they are getting over it by Clause 14 where, if there is not agreement, the Secretary of State can modify the scheme, substitute another one for it or bring forward his own. One of the criticisms that we made on Second Reading concerned the powers given to the Secretary of State. Here we have the situation that if five district councils cannot agree, the Secretary of State will have his own way, whatever that might be, with the advice of his civil servants and outside consultants.
As the PTA represents the elected members of the five district councils, it is common sense that that should be the body to run the company. I do not think that anybody would argue much about that. That is the disagreement of philosophy. The Government believe that if they can get agreement, okay; if they
168
cannot, the Secretary of State will impose his own scheme.
We can only wait and see. I do not want to labour the point. It affects only one area but it is an important area. We may have to consider whether to come back to this again on Third Reading. I do not believe that the Government's answer is satisfactory. It will certainly not be welcomed in the Merseyside area and at the end of the day it is not democratic. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 17 [Disabilities of directors of public airport companies]:
Lord Underhill Lord Underhill moved Amendment No. 10:
Page 15, line 2, at end insert—
("( ) The Secretary of State may grant a written dispensation from subsection (2) in the case of any individual member.
( ) any such dispensation—

(a) may extend both to the consideration or discussion of any such contract or other matter and to voting with respect of it, or to either alone;

(b) may relate to contracts, proposed contracts or other matters of all discriptions or of any particular description specified in the dispensation; and

(c) may be withdrawn or varied at any time by a notice in writing given by the Secretary of State to the member in question.").

The noble Lord said: My Lords, this is another matter which we debated at Committee stage, but it is an important issue and I hope that the Government will relax the view that they took then.
The question of the rights of elected member directors to participate in the consideration of airport matters in council meetings has been discussed not only here but at every stage of the Bill's passage through Parliament. But at no time have Ministers acknowledged the key justification for the Opposition amendments or explained why they felt it necessary to reject them at every stage.
At Committee stage, the noble Earl referred (in col. 425 of the Official Report) to a similar package of amendments as "Oliver" amendments. This amendment is not asking for anything new or for more, but simply for the scope for dispensation contained in the Transport Act 1985.
In the view of the Minister's refusal to acknowledge the validity of the Opposition's arguments (which I should say were accepted by various parts of the House in previous debates), it is necessary to explain the justification for the amendment in detail. Clause 17(2) of the Bill prevents an elected member director from voting on any matter relating to an airport company, including a contract or proposed contract with the authority, and taking part in any discussion of a contract or proposed contract. The Bill would, however, enable an elected member director to participate in discussions about the company apart from any contract or proposed contract between the company and the council.
The Minister was thoroughly correct in his assertion, as I stated at Committee stage, that the Transport Act 1985 imposes more severe constraints on elected member directors, preventing them from discussing or voting on any matter relating to a public transport company. But that Act enables the Secretary

169
of State to issue a dispensation from those provisions, and that was also stressed at the Committee stage. The Secretary of State quickly issued a dispensation which enabled elected member directors, in the words of Department of Transport Circular 4/85, to:
"play a proper part in their authority's consideration of matters relating to its general control over the company".
The effect of that dispensation is to bring the constraints imposed by the Transport Act into line with those proposed in the Bill.
But under the provisions of the Transport Act there is scope for wider dispensations to be granted by the Secretary of State in particular circumstances. That is explained in Circular 4/85:
"Members wishing in exceptional circumstances to vote on any matter or speak on a matter excluded from the dispensation … may apply to the Secretary of State for Transport, or in Wales the Secretary of State for Wales, for particular dispensation".
This amendment is intended to write into the Bill the scope for the additional exceptional dispensations to be granted in the same way as those envisaged in the Transport Act. Frankly, Ministers have not made out a case for their refusal to do that.
During the Committee stage (at col. 427 of the Official Report of 22nd May) the noble Earl said:
"The reason that the Bill is phrased in its present terms is because we took on board the points … made on the Transport Bill and therefore we extended the provision to make it more liberal than the Transport Act, and as a consequence deleted the dispensation".
But the provisions of the Bill are not more liberal than the combined effect of the provisions of the Transport Act and the general dispensation already issued.
I want to know why it is right to give dispensation under the Transport Act and yet the Government are refusing to give it in similar circumstances under this Bill. Why is there a difference? Why cannot the Government accept the amendment and bring the Bill into line with what they themselves brought forward in the Transport Act? I beg to move.
The Earl of Caithness: My Lords, I must admit that I was a little surprised to see this amendment on the Marshalled List as it is a slimmed-down version of Amendment No. 38 moved in Committee by the noble Lord, Lord Underhill. We took the matter to a vote and the amendment was defeated.
As the noble Lord has reminded us, Clause 17 already provides a rather more liberal regime than its counterpart in the Transport Act 1985 as it will allow members of the principal councils who are also airport directors to take part in the consideration or discussion of matters relating to their airports other than matters of contracts or proposed contracts between the airport company and the council. That was done deliberately, to allow the maximum informed discussion on airport matters. The amendment would allow the Secretary of State discretion to extend that liberal regime further in specific cases or, indeed, more generally, if he were to be persuaded that that was justified.
The overwhelming consideration must of course be that conflicts of interest of airport directors who are councillors should be avoided and that the highest standards in the conduct of public business should be maintained. There is a balance between maintaining such standards and the potential benefits which could
170
stem from further relaxation. We have given this matter further consideration but, as I have already explained, we believe that we have gone as far as is prudent and consistent with establishing, so far as possible, an arm's length relationship between the new public airport companies and local authorities.
I ask noble Lords to recognise that we have already produced a more liberal regime than under the Transport Act 1985. I am unable to help the noble Lord, Lord Underhill, further on this point, and I hope that he will withdraw the amendment.
Lord Underhill: My Lords, I do not think that the noble Earl has advanced any reason why the amendment should be withdrawn. Admittedly we debated an amendment in Committee, and the noble Lord recognises that it has come back in a different form. A couple of paragraphs have been left out. I remind noble Lords that the Division on the amendment last time was defeated by only six votes. We have brought forward the amendment in a different form this time because of the principle contained in it. It is wrong for the noble Earl to repeat yet again that there is a more liberal regime. The clause does not provide for the liberality that is given in the Transport Act 1985. All we are asking is for the Government to be consistent and to put in the Airports Bill what they themselves put in the Transport Act 1985. For that reason, apart from any other considerations, the House should agree to the amendment, and I hope that it will.
6.2 p.m.
On Question, Whether the said amendment (No. 10) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 116.

DIVISION NO. 3

CONTENTS

Airedale, L.

Glenamara, L.

Ardwick, L.

Graham of Edmonton, L.

Attlee, E.

Grey, E.

Aylestone, L.

Hampton, L.

Birk, B.

Hanworth, V.

Blyton, L.

Harris of Greenwich, L.

Bottomley, L.

Houghton of Sowerby, L.

Brockway, L.

Hughes, L.

Brooks of Tremorfa, L.

Irving of Dartford, L.

Burton of Coventry, B.

Jacques, L.

Caradon, L.

Jeger, B.

Carmichael of Kelvingrove, L.

Jenkins of Putney, L.

Cledwyn of Penrhos, L.

John-Mackie, L.

Crawshaw of Aintree, L.

Kagan, L.

David, B. [Teller.]

Kilbracken, L.

Davies of Penrhys, L.

Kilmarnock, L.

Dean of Beswick, L.

Kirkhill, L.

Diamond, L.

Llewelyn-Davies of Hastoe, B.

Donaldson of Kingsbridge, L.

Lloyd of Kilgerran, L.

Donoughue, L.

Longford, E.

Elwyn-Jones, L.

Lovell-Davis, L.

Ennals, L.

McGregor of Durris, L.

Ewart-Biggs, B.

McIntosh of Haringey, L.

Ezra, L.

Mackie of Benshie, L.

Falkender, B.

McNair, L.

Fitt, L.

Manchester, Bp.

Foot, L.

Mayhew, L.

Gallacher, L.

Melchett, L.

Gladwyn, L.

Milford, L.

171

Molloy, L.

Shackleton, L.

Monson, L.

Shepherd, L.

Mountevans, L.

Stallard, L.

Nicol, B. [Teller.]

Stedman, B.

Parry, L.

Stewart of Fulham, L.

Phillips, B.

Stoddart of Swindon, L.

Pitt of Hampstead, L.

Taylor of Mansfield, L.

Ponsonby of Shulbrede, L.

Underhill, L.

Prys-Davies, L.

Wallace of Coslany, L.

Rea, L.

Walston, L.

Ritchie of Dundee, L.

Wells-Pestell, L.

Rochester, L.

Whaddon, L.

Russell of Liverpool, L.

Williams of Elvel, L.

Sefton of Garston, L.

NOT-CONTENTS

Alexander of Tunis, E.

Layton, L.

Allerton, L.

Lindsey and Abingdon, E.

Arran, E.

Long, V.

Bauer, L.

Luke, L.

Beaverbrook, L.

McAlpine of West Green, L.

Belhaven and Stenton, L.

McFadzean, L.

Beloff, L.

Macleod of Borve, B.

Belstead, L.

Malmesbury, E.

Bessborough, E.

Margadale, L.

Blake, L.

Marley, L.

Boyd-Carpenter, L.

Marsh, L.

Brabazon of Tara, L.

Marshall of Leeds, L.

Brookes, L.

Maude of Stratford-upon-

Brougham and Vaux, L.

Avon, L.

Broxbourne, L.

Merrivale, L.

Bruce-Gardyne, L.

Mersey, V.

Butterworth, L.

Monk Bretton, L.

Caccia, L.

Montagu of Beaulieu, L.

Caithness, E.

Montgomery of Alamein, V.

Cameron of Lochbroom, L.

Morris, L.

Campbell of Croy, L.

Murton of Lindisfarne, L.

Carnock, L.

Napier and Ettrick, L.

Cathcart, E.

Newall, L.

Colwyn, L.

Norrie, L.

Constantine of Stanmore, L.

Onslow, E.

Cork and Orrery, E.

Orr-Ewing, L.

Cox, B.

Pender, L.

Craigavon, V.

Peyton of Yeovil, L.

Craigmyle, L.

Plummer of St Marylebone,

Cross, V.

L.

Cullen of Ashbourne, L.

Portland, D.

Dacre of Glanton, L.

Quinton, L.

De La Warr, E.

Radnor, E.

Denham, L. [Teller.]

Rankeillour, L.

Dilhorne, V.

Rochdale, V.

Dundee, E.

Rodney, L.

Eccles, V.

St. Davids, V.

Ellenborough, L.

Seebohm, L.

Elliot of Harwood, B.

Selborne, E.

Erroll of Hale, L.

Selkirk, E.

Faithfull, B.

Skelmersdale, L.

Fortescue, E.

Soames, L.

Fraser of Kilmorack, L.

Strathcarron, L.

Gibson-Watt, L.

Strathclyde, L.

Glenarthur, L.

Strathspey, L.

Gray, L.

Sudeley, L.

Gray of Contin, L.

Swinton, E. [Teller.]

Grimston of Westbury, L.

Thomas of Swynnerton, L.

Hailsham of Saint

Torrington, V.

Marylebone, L.

Tranmire, L.

Holderness, L.

Trefgarne, L.

Home of the Hirsel, L.

Ullswater, V.

Hooper, B.

Vaux of Harrowden, L.

Hylton-Foster, B.

Vickers, B.

Ingrow, L.

Vivian, L.

Killearn, L.

Ward of Witley, V.

Kinnoull, E.

Whitelaw, V.

Kitchener, E.

Young of Graffham, L.

Lane-Fox, B.

Zouche of Haryngworth, L.

Lauderdale, E.

Resolved in the negative, and amendment disagreed to accordingly
6.10 p.m.
The Earl of Caithness The Earl of Caithness moved Amendment No. 11:
After Clause 19 insert the following new clause:
("Capital controls relating to investment in public airport companies by local authorities in England and Wales.
.—(1) Where a local authority dispose of any securities of a public airport company (whether it continues to be such a company after the disposal or not)—

(a) any amount received by the authority in respect of the disposal shall be treated for the purposes of section 72 of the 1980 Act (expenditure which authorities may make) as a receipt of the authority which, by virtue of section 75(1) of that Act, is a capital receipt of the authority for the purposes of Part VIII of that Act (capital expenditure of local authorities etc.) but

(b) only the relevant sum shall be taken into account under section 72(3)(d) of that Act.

(2) In subsection (1) "the relevant sum", in relation to an amount falling within paragraph (a) of that subsection, means

(a) three-tenths of that amount, or

(b) if regulations are made for the purposes of section 72(3)(d) of the 1980 Act which prescribe a proportion other than three-tenths in relation to disposals falling within subsection (1), the proportion of that amount so prescribed.

(3) Where a local authority incur any expenditure in respect of the acquisition of any securities—

(a) of a public airport company, or

(b) of any company which, as a result of the acquisition by the authority of those securities, becomes a public airport company.

the amount of that expenditure shall, in so far as it is not prescribed expenditure of the authority for the purposes of Part VIII of the 1980 Act by virtue of Schedule 12 of that Act, be treated as prescribed expenditure of the authority for those purposes.
(4) In this section and section 20 "the 1980 Act" means the Local Government, Planning and Land Act 1980; and this section and section 20 apply to England and Wales only.")
The noble Earl said: My Lords, we have made no secret of the fact that we should like local authorities to privatise their airports, though we will take no steps to oblige them to do so. There is already an incentive to authorities to sell their shareholdings in so far as they would be able to use the proceeds to finance capital expenditure within existing resource limits, or to redeem debt. Either course would enable them to reduce external borrowing, and the burden on the ratepayer, for financing a given level of capital expenditure.
The proposed new clause would add another incentive, by enabling authorities to use the proceeds of the sale of shares to augment their capital expenditure allocations. That is done by classing the proceeds from the sale of shares as capital receipts for the purpose of the local authority capital control system. The only constraint is that the use of these receipts to justify extra spending will be limited by the same prescribed proportion—that is 30 per cent. as already applies to other non-housing receipts, or whatever proportion may subsequently be prescribed by regulations. I know that noble Lords opposite may say that these receipts should not be subject to any limitations on their use, but I hope nevertheless that they will welcome this opportunity for local authorities to increase their spending power by selling shares in airport companies. I beg to move.
Lord Carmichael of Kelvingrove: My Lords, I am grateful to the Minister for his explanation. He says that the proceeds of the sale by a local authority of

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shares in a public airport company will be treated as capital receipts for the purpose of the controls contained in the Local Government, Planning and Land Act 1980. What is surprising from a government such as this is that local authorities are to be restricted to spending 30 per cent. only of such receipts in succeeding years. That applies even if they are endeavouring to sell more than 51 per cent. of the shares. I am not as concerned about this as the Government should perhaps be. However, for a government bent on privatisation to impede a local authority in the use of money received in endeavouring to reach the magical 51 per cent. about which the Government speak seems to show a slight inconsistency in the Government's thinking. They are perhaps so strong in their feeling that local government should not be able to spend money that they are putting this consideration even before what until now has been their blind urge to privatise.
Lord Lloyd of Kilgerran: My Lords, I am grateful to the Minister for explaining the scope of the new clause. Like the noble Lord, Lord Carmichael, I wonder what is the magic of the three-tenths. Is the Minister able to clarify the 30 per cent. in subsection (2)? Is there any reason apart from taking a figure more or less out of the air?
The Earl of Caithness: No, my Lords. the figure of 30 per cent. is not taken out of the air. It has been discussed, I understand, in the House previously and is well precedented in relation to non-housing receipts of local authorities. Section 20 of the Local Government, Planning and Land Act 1980, which applies to England and Wales only, might help the noble Lord, Lord Lloyd of Kilgerran.
On Question, amendment agreed to.
6.15 p.m.
Clause 20 [Local authority financial controls in England and Wales]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 12:
Page 16, line 41, leave out from second ("the") to end of line 43 and insert ("1980 Act—").
The noble Earl said: My Lords, in moving this amendment, I should like also to speak to Amendments Nos. 14, 15, 16 and 17.
Clause 20 applies the same controls to private capital raised by public airport companies as to capital finance provided by the controlling authority, because both add to the public sector borrowing requirement. These amendments address the situation in which an airport company issues securities that transfer control of the company to the private sector or where a subsidiary ceases to be controlled by the airport company. Because the private sector would then be bearing the risk of their investment, the amounts raised by these share issues will not add to the PSBR. Therefore, they should not count against the capital expenditure allocation of the local authority, which would cease to control the airport company as a result of the share issue. I hope noble Lords on all sides of the House will welcome the clarification provided by these amendments. I beg to move.
Lord Williams of Elvel: My Lords, I should like to reserve my comments for the next amendment that we shall be moving on the same clause, more or less on the same subject.
On Question, amendment agreed to.
The Deputy Speaker (Lord Wells-Pestell): My Lords, I have to inform your Lordships that if Amendment No. 13 is agreed to, I cannot call Amendment No. 14.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 13:
Page 17, leave out lines 6 to 11.
The noble Lord said: This amendment addresses itself to the problem about which the noble Earl spoke on the previous amendment and which was debated at some length in Committee. It is, if I may say so, an extremely important point for two reasons. First, the definition of what is in the public sector borrowing requirement is a matter of considerable controversy. On this side, we do not accept the present definition of the PSBR as one that is necessarily right. Secondly, the clause as drafted would make the situation worse for some airport authorities that will have to deal with it. I should like to illustrate what I am saying.
Local authority airport companies, when they wish to raise funds, assuming that they still have majority control, will be required to submit their capital expenditure and their borrowings to local authority expenditure controls in operation under the 1980 Act. This, for at least one airport, is somewhat worse than the present situation. It also means that the new directors of new companies which may be minority controlled by the private sector and which have individual private shareholders will be constrained from operating their companies in the best possible manner in the interests of all their shareholders, as is their duty under the Companies Acts. It therefore imposes upon them restrictions that we believe are both difficult and fundamentally unhealthy.
As the noble Earl said during previous amendments, these restrictions derive from the question of PSBR accounting. If we are ever to get any sense into national accounting, particularly the public sector borrowing requirement, we have to make sure that where there are minority interests involved—even where the majority is held by a public body which is subject to the normal procedures—those companies should be free to go out and borrow wherever they want without having the control from the Treasury, or wherever it may be. We have to develop these arguments in extenso—if I may use that expression in your Lordships' House—in Committee.
However, I would very much hope that the noble Earl will feel able to be a little more helpful on this point than he was previously. If he does not, he must recognise that he is making life harder for existing airports. At Manchester there is already freedom to borrow outside, which will be restricted. For companies with potentially minority private shareholdings, where any other company in any other situation would be free to borrow properly on the financial markets under its directors' judgment and intent, it makes those companies subject to an extraneous control which would, in our view, inhibit

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the directors of the company from fulfilling their proper functions. I beg to move.
The Earl of Caithness: My Lords, as the noble Lord, Lord Williams of Elvel, said, we had a good canter around this course before—a gallop, as he prefers to call it, and I would agree with him—when I explained this in detail to the House in Committee on the 22nd May. The aim of this amendment is to remove control over private capital raised by airport company share issues while retaining control over that raised by loans. It seems to make what I would regard as a totally spurious distinction between different methods of raising private capital. Both add to the public sector borrowing requirement, in the way that I explained to the House in Committee on the 22nd May. Therefore, private capital raised by either means should be subject to the same control. I would therefore ask the noble Lord to withdraw his amendment for the very good reasons advanced earlier.
Lord Williams of Elvel: My Lords, did I hear the noble Earl correctly? I raise this question by way of clarification. Did he say that whether public airport companies sell shares or raise debt this falls under the public sector borrowing requirement? Perhaps before I reply he would confirm whether he said this.
The Earl of Caithness: My Lords, no. I think what I said was "raised by airport company share issues".
Lord Williams of Elvel: My Lords, how can you issue a share without selling the share? I am trying to clarify the point. Clearly, if there is a share issue, someone has to buy the share. That means that the shares are sold, assuming that the share issue is successful. I do not see how that falls in any sense under the public sector borrowing requirement on any definition of any official in any Treasury in any country in the world. I accept that the raising of debt might fall into such a definition.
My point specifically relates to debt. Where share issues are made, where shares are sold successfully to the public, and where there is a minority interest, it is in the interest of the minority—and the directors have to represent the minority as well as the majority shareholders—that debt issues which the company which might wish to make should not be constrained by extraneous factors because of some arbitrary PSBR accounting.
The Earl of Caithness: My Lords, with the leave of the House, perhaps I may try to clarify the situation. The money raised represents a call by the public sector on the private sector. As long as the company is controlled by the local authorities then that money should be classed within the PSBR.
Lord Williams of Elvel: My Lords, I think that I understand the noble Earl. He is not referring to share issues at all, or the selling of shares. We can leave that aside. The noble Earl is referring to raising debt—borrowing, as I understand from what he said. The argument of the noble Earl is that debt issue—the raising of debt—should be within the PSBR. My argument stands that we are dealing with companies
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where there are minority shareholders. If the noble Earl cannot give any help on this I do not see how he will get minority shareholders to come into local airport companies when their debt raising capacity will be constrained by the limitations of the public sector borrowing requirement.
On Question, amendment negatived.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 14 to 17:
Page 17, line 7, after ("(b)") insert ("subject to subsection (1A),").
line 13, at end insert—
("(1A) Subsection (1)(b) shall not apply to any amount raised by the issue of any securities—

(a) by a public airport company where, as a result of the issue of those securities, it ceases to be such a company; or

(b) by a subsidiary of a public airport company where, as a result of the issue of those securities, it ceases to be such a subsidiary.").

line 17, leave out ("that Act (expenditure which authorities may make)") and insert ("the 1980 Act").
line 40, leave out subsection (6) and insert—
("(6) Section (Capital controls relating to investment in public airport companies by local authorities in England and Wales) (4) applies for the purposes of this section.").
The noble Lord said: My Lords, I have spoken to Amendments Nos. 14 to 17. I beg to move en bloc.
On Question, amendments agreed to.
Clause 22 [Provision of services for public airport companies]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 18:
Page 18, line 27, after ("applies") insert ("in relation").
The noble Earl said: My Lords, this is simply a technical amendment which provides for consistency in the drafting. I beg to move.
On Question, amendment agreed to.
Clause 24 [Avoidance of restrictions on transfer of securities of public airport company]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 19:
Page 19, line 35, after ("dispose") insert (", or offer to dispose,").
The noble Earl said: My Lords, I beg to move Amendment No. 19 and, with the leave of the House, speak to Amendments Nos. 21 and 22.
The objective of Clause 24 is to ensure that principal councils do not thwart the Government's policy of encouraging the sale of airport company shares outside the local authority by making it in practice impossible for any of the local authorities to dispose of their shares to whom they wish. Subsection (1)(b) already invalidates provisions which could restrict the sale of shares to the private sector by requiring that they be sold only to other shareholders or particular categories of persons. The amendments are specifically designed to prohibit further restrictions which would require the transferor to offer the shares to other shareholders, in the first instance, before being allowed to sell them to a third party. It is also possible that under the memorandum of articles of an airport company a transferor may be precluded from freely disposing of his shares unless certain conditions or circumstances pertaining to the sale are satisfied. The amendment to subsection (1)(c) extends the scope of provision so as to render void any such restrictions on the disposal of shares. I beg to move.
The Deputy Speaker (Lord Wells-Pestell): My Lords, I ought to say at this stage that Amendments Nos. 21 and 22 should be in the name of the noble Earl, Lord Caithness, and not under the names that appear on the Marshalled List.
Lord Williams of Elvel: My Lords, I am very grateful for the clarification that the noble Lord has offered. Under no circumstances whatsoever would our side of the House be party to Amendment No. 22 to which I wish for the moment to speak.
My worry with regard to the amendments that the noble Earl has moved—particularly Amendment No. 22—is that the Government appear (if I may continue the equine analogy of our last exchange) to be making legislation on the hoof. We have here a clause which refers to
"on the fulfilment of particular conditions or in other particular circumstances".
There is no definition as far as I can see. I do not see how the courts will be able to define what the "particular conditions" or "particular circumstances" may or may not be. I put this simply in the interest of clear legislation, in which your Lordships' House should be interested. I have no particular comment to make on the substance. I shall comment on the substance when we come to Amendment No. 20.
6.30 p.m.
The Earl of Caithness: My Lords, perhaps I may just look at the point which the noble Lord, Lord Williams, has raised to see whether it can be clarified. I shall return with an appropriate amendment at Third Reading if that is helpful, or I shall certainly write to the noble Lord if we believe that the amendment as drafted is all right.
Lord Lloyd of Kilgerran: My Lords, will the Minister kindly let me have a copy of this correspondence, because I am a little confused about the particular conditions and circumstances in the amendment?
The Earl of Caithness: Of course I shall, my Lords.
On Question, amendment agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 20:
Page 19, line 37, leave out from ("persons") to end of line 40.
The noble Lord said: My Lords, I beg to move Amendment No. 20. This is in the nature of a clarifying amendment, if I may put it like that, because in Committee, when the noble Earl and I had a short discussion on this matter, we mentioned certain areas where Clause 24, as originally drafted when it came to your Lordships' House, might be defective. The Government brought forward certain amendments, and there are certain amendments to those amendments which have been brought forward now. Therefore we are dealing with a relatively new clause.
The noble Earl was kind enough to write a letter to me dated 10th June, which I received just at the beginning of the Report stage of this Bill, so perhaps he will excuse me if I have imperfectly digested its content.
In Committee, I was arguing that whatever the Government tried to do to prevent a local authority
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from putting its shares in a local airport company under restriction could in my view be defeated by all kinds of different transactions which a local authority might enter into. I instanced the case of a local authority pledging shares to a bank, and a bank holding those shares until such time as the loan that the bank would make to the local authority was discharged, and during that time—
Lord Lloyd of Kilgerran: My Lords, I apologise for interrupting the noble Lord, but I am trying to follow his argument. He has referred to the previous argument at the Committee stage, at which I was not present. Would it be convenient for him to tell me where that can be found in the appropriate Hansard? Can it be found at col. 450 of the second Committee day? I am sorry if I have asked a difficult question, but I am trying to follow the argument.
Lord Williams of Elvel: My Lords, the noble Lord must excuse me because, although I have the two relevant copies of the Official Report in front of me, I am afraid that I have not had time to find the column numbers. I thought that the noble Earl and I were on common ground in understanding the debate that we had actually had at the time. I did not refer to the columns and I am not quite sure exactly where it can be found. However, it is in a debate on Clause 24 which we had in Committee, and that is the clause we are debating at the moment. I apologise to the noble Lord, Lord Lloyd, for not being able to point immediately to the column in the Official Report, but I hope that he will soon be able to find it.
The point I was making was that a local authority would be enabled to defeat the legislation by pledging shares in the local airport company to a bank; and that bank would hold those shares as security for a loan; and until that loan was redeemed by the local authority the shares could not be sold. I am advised by the noble Earl, Lord Caithness, in his letter that this is a normal banking practice, and I think that I can confirm that. The letter then says:
"But it is not the Government's intention to prevent arrangements of this sort. Our concern is only to ensure that where a public airport company is owned by a number of local authorities, no one local authority is prevented from disposing of its shares if it wishes to do so by its fellow local authorities. It is this that the new clause sets out to achieve. The sort of arrangements you described would be ones entered into freely by the local authority itself. There is no reason why a local authority should feel the need to encumber itself in this way",
etc. I understand that the point I made in Committee is well taken by the Government and I understand the tenor of the noble Earl's letter. I think that that is all absolutely clear.
Where I come to a problem is in the new amendment, Amendment No. 22, to which the noble Earl has spoken, which is to insert:
"on the fulfilment of particular conditions or in other particular circumstances".
In my view, it would be perfectly possible for the courts to interpret the particular circumstances to cover the sort of banking arrangement that I have in mind, and this is why I would press the noble Earl again to look at the wording of his amendment, to which he has just spoken, in the light of the assurance he has given to me in the letter which I received

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today.This is really the point of the exchange—to try to clarify the Government's thinking on this matter.
The Earl of Caithness: My Lords, I confirm that I shall look at that particular point again. I would not want to invalidate something about which I have written to the noble Lord, Lord Williams. With that assurance, I hope that he will withdraw his amendment.
Lord Lloyd of Kilgerran: My Lords, before the noble Earl sits down, perhaps he would kindly let me see any future correspondence, because as regards the discussion on this particular point I find that I do not understand the argument of the noble Lord, Lord Williams, or the answer of the noble Earl, Lord Caithness. It is of course entirely my fault, but it would be helpful if a copy of future correspondence could be sent to me.
The Earl of Caithness: My Lords, with the leave of the House, I reconfirm what I said earlier to the noble Lord, Lord Lloyd of Kilgerran.
Lord Williams of Elvel: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 21 and 22:
Page 19, line 39, after ("except") insert—
("(i)").
Page 19, line 40, at end insert (", or
(ii) on the fulfilment of particular conditions or in other particular circumstances.").
The noble Earl said: My Lords, I beg to move Amendments Nos. 21 and 22. I have already spoken to them.
On Question, amendments agreed to.
Clause 28 [Directions to airport operators in the interests of national security etc.]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 23:
Page 22, line 30, at end insert ("or to be in the interests of national policy for the development of air transport")
The noble Lord said: In its present form the Bill contains certain safeguards and incentives to encourage the development of air transport. But although these safeguards have a very useful part to play, they do not appear able in themselves or in combination to promote the proper development of air transport at all times. Nor is it hard to notice the potential conflicts of interests or of purpose which they do contain at any time.
The intention of this amendment therefore is to give reserve powers to the Secretary of State to protect the development of British aviation along with the reserve powers he already has under Clause 28 to look after interests of national security and of international relations.
In what way do existing incentives and safeguards not go far enough? Since the BAA's major source of future profits derives from traffic growth, clearly there is a good economic incentive to provide capacity and facilities corresponding to that growth. However, in
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the event of a world recession, for example, airport owners might well be discouraged by high interest rates from a long-lead investment. And in the short-term, whether or not there is a recession, it is often more profitable not to expand and develop since new capital does not have to be found as a result. Of course, airport owners would always want to further the national interest if they could, but under the Bill their first responsibility is to shareholders, and what is the best policy for the first consideration would not always be so for the other.
Yet there is also the CAA as economic regulator to help ensure the timely provision of capacity. However, when we look at how the CAA's powers would in fact be exercised under the Bill, these do not appear adequate to ensure such provision. The BAA's prices will be monitored to show a reasonable profit, whether or not it provides additional capacity. It is difficult to see what incentives the BAA can receive for providing capacity or what penalties could be imposed if it did not. If a higher financial return could be obtained by investing in projects not airport-capacity related, it would be difficult for the airport mangement to recommend major capital investment in terminals if it could achieve a higher return elsewhere, such as by building supermarkets. Indeed, the difficulty which the Civil Aviation Authority would face under the Bill has been clearly recognised by that body and intimated in the chairman's preface to the recent publication CAP 522 on air traffic distribution, in which advice given to the Secretary of State is as follows:
"In the light of the privatisation of the British Airports Authority and the changes in its objectives which will inevitably ensue, the industry will need to look to the Government to take the lead in securing adequate capacity at the right time".
On the other hand a further safeguard is contained in the Bill through the planning process. Any proposed change of use of airport land for non-airport purposes would need planning permission, and no doubt the likelihood of such land being needed for aviation purposes would always be taken into account. However, regarding such protection as can ever be afforded by the planning process, there is no safeguard to guarantee the preferences of local planning authorities. Past experience might well suggest that these authorities would prefer supermarkets to terminals. Planning approvals might then be easier to obtain for non-airport activities.
Yet, my Lords, if we do accept that existing economic incentives to the owner, the existing economic and regulatory powers of the Civil Aviation Authority and the existing planning process are neither sufficient in themselves nor in combination and thus that there is a good case for Government reserve powers to protect the proper development of British aviation, we should be asking conversely, what problems, if any, might arise from such Government powers? One fear might be that the commercial value of an airport company would suffer once reserve powers are known to exist. But for that fear to be justified reserve powers would have to be exercised fairly often rather than very infrequently, which is the probability. And, while it may be alleged that commercial interest would never conflict with national interest, at present the Government are powerless to intervene if in fact it ever did.
Another concern could well be that this type of amendment puts too great a burden on the Secretary of State. Can he really be the best judge in this matter? Does he know better than the airport owner about capacity? However, we do not question the role and judgment of the Secretary of State on national security and international relations. Equally, if another of his tasks comes to be to protect the proper development of air transport, this task is then to protect the national interest on the rare but significant occasions when necessary, rather than to interfere with normal aviation decisions. Yet it has to be conceded that reserve powers enable the Secretary of State to be coercive—however infrequently he may use them. Against that it should be observed that we would accept that this measure of coercion is to be applied to a privatised monoply with its own compulsory powers of purchase, and thus is not to be applied to small businesses or individual interests with which there might have been some kind of emotive confusion.
Previous amendments on this issue in your Lordships' Committee, and in the other place, took a more detailed form, and thus gave rise to specific objections, apart from the principle concerned. This amendment deals with the principle that the Secretary of State should be able to protect the development of air transport in the national interest. That does not denigrate the existing measures and incentives in the Bill, hut simply suggests that they do not go far enough and should go further. I hope my noble friend may be able to accept the amendment and I beg to move.
6.45 p.m.
Baroness Burton of Coventry: My Lords, I think there can be no better introduction to this amendment than the advice submitted by the Civil Aviation Authority to the Secretary of State for Transport entitled, measures for the distribution of traffic among the London area airports, (CAP 522). Equally, I would suggest there can be no doubt that on almost every available forecast London will need additional runway capacity by the turn of the century or, if some forecasts are correct, sooner than that.
I believe that in the light of the privatisation of the British Airports Authority and the changes in its objectives that will obviously ensue the industry will need to look to the Government to take the lead in securing adequate capacity at the right time. Further to that, it is vital that the necessary preparations are put in hand now so that the industry can develop logically and without hardship to the general public. This was what the Chairman of the CAA emphasised again and again, and most strongly—that there was a need to provide additional runway capacity before the end of the century. As the House knows, on many occasions, and most recently on Second Reading, I said I believed that the Government and the British Airports Authority must stand accused of refusal to look at the full future potential of Gatwick and hence inability for its full development.
I believe—as I am afraid the House also knows—that we should have had this additional runway capacity at Gatwick, that we should have allowed Stansted to develop to its capacity of 2 million
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passengers per annum, and that we should have given support to regional airports where the conviction remains, whatever the Government may say, that they will suffer financially because of the determination of the Government to build up Stansted whatever the cost.
If Members of this House have had time to study the at-last-resumed Second Reading debate on the British Railways (Stansted) Bill in another place on the 3rd June, they will note that that conviction remains. Members were far from satisfied. I consider that there has been too hasty an amount of development at Stansted. Those were the words I used on the first day of our Committee stage on 15th May. I remain convinced that the proposed increases in charges at Stansted will be covered by subsidisation, and quite obviously Stansted cannot succeed unless it has increased charges. I believe that the traffic will have to be directed to Stansted and, as I have said many times, going back months and years, I believe that the charter industry is in very grave danger from this Bill.
This brings me back to the Civil Aviation Authority and its urgent recommendation; namely, that we are going to be short of runway capacity. If the Government accept the advice of the CAA on air traffic distribution in the London area—and I think we must remember that the Government by no means have accepted the advice of the CAA in the past—they will have to make necessary preparations now for any alleged shortage of runway capacity in the 1990s. This House knows that it takes as long as 10 years, or even longer, from initial conception of a new terminal building or runway to its final entry into service. The British Airports Authority has prevented the construction of the additional runway capacity at Gatwick, although the Government have been most careful to say that they do not regard themselves as being bound by the terms of the agreement made in 1978. If such timidity—and I should like the noble Earl, Lord Caithness, to note this—on the part of the Government to grasp the nettle of additional runway capacity at Gatwick is to continue in the future, it will gravely affect the future of civil aviation in the United Kingdom and—to quote the amendment to which we are speaking today—it will not,
"be in the interests of national policy for the development of air transport".
The Chairman of the Civil Aviation Authority is retiring and has passed on to Mr. Christopher Tugendhat these views on further runway capacity being needed. Mr. Nicholas Ridley has passed on to Mr. John Moore his timidity about a second runway at Gatwick—apart from distancing the Government from the agreement made. Indeed, the House was told that the present Government were not consulted about the agreement, and are not parties to it. I hope, and many in the industry hope, that Mr. Tugendhat and Mr. Moore will start afresh on providing this urgently needed capacity particularly—and I stress "particularly"—for the future of our air charter industry.
Before today's debate I looked up Mr. Tugendhat's entry in Who's Who and I noted that prior to taking up office as a commissioner and subsequently as a Vice-President of the Commission of the European Community, he was a Financial Times leader and feature writer. So I thought that perhaps I might bring

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to his attention what that paper had to say on 2nd June last:
"Alternative possible sites for potential runways need to be clearly identified, and the necessary planning procedures initiated. Unless that is done soon, London could face the possibility of runway starvation at the turn of the century".
In replying to this amendment, I hope that the noble Earl, Lord Caithness, will be able to tell the House that the Government have taken on board this recommendation of the Civil Aviation Authority that additional runway capacity will be necessary in the 1990s, and that, as it takes 10 years to bring any runway to fruition, they are prepared to undertake the matter in the near future.
Lord Boyd-Carpenter: My Lords, I hope that my noble friend Lord Caithness will take this amendment seriously. It seems to me to raise a point of considerable importance for the future of our civil aviation industry. The Bill already provides that the Government can give a direction where our international relations are involved, and this is of course right. But it is silent on the question of what is to happen if the new airport company does not in fact provide adequate accommodation for the British civil aviation industry.
If it does not so provide there is the possibility—indeed the near certainty—of serious economic damage to this country. No one knows better than the noble Earl how successful has been the development of British civil aviation. It is one of our success stories of recent years. It has gone on both within the publicly-owned sector and the privately-owned sector to expand, develop, and to increase both directly our earnings from aviation services, and indirectly even more our earnings from tourism, by facilitating flights into this country and out of this country. It is a major factor in our economy, and it is one of the bright features of our economy.
What is to happen if the new set-up—if I may use shorthand—does not provide adequate airport capacity to serve that industry? We know that Heathrow is very near to capacity. We know that Gatwick is building up, and we know—and I shall not go into the details of it—some of the problems of Stansted. But as the Bill stands, if the new successor company does not make adequate provision, no power appears to lie in the Government of the day to secure that that capacity is provided.
If that capacity is not provided, it is clear what will happen. International civil aviation is a flexible and mobile set-up. If it is not possible to get a convenient slot into Heathrow, Gatwick or Stansted, transatlantic aircraft will go into Schiphol, Charles de Gaulle, Frankfurt, or wherever it may be, and we shall lose both the earnings that British airlines would have if passengers were flying on those routes and the tourist income from the tourists they would bring. We should also lose the income from the businessmen who would come.
It is an extremely important aspect—and this I have not touched on—of the financial prosperity of the City of London that at the moment it is a city which is singularly accessible by air. Therefore, I must press my noble friend to say what, if the Bill stands in its present form and he does not accept my noble friend's
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amendment, this Government or a successor government would do if inadequate capacity were provided.
I do not think that this is just a nervous fantasy. I have experience going back over some years of the difficulty of providing additional airport capacity; of the massive vocal opposition which any proposal to extend an airport arouses; of the interminable public inquiries during which so-called environmentalists employ expensive counsel to delay proceedings month after month and year after year. It is a major undertaking to expand any airport. It would perhaps be understandable if a company, with its duty to its shareholders, did not feel inclined to face the expense, the trouble, the contumely, the ill will which it would encounter from any proposal for expansion.
Moreover, if an airport is already operating to capacity it is likely to be a profitable airport. From the airport shareholders' point of view it is the ideal situation, because you are getting the maximum return on the capital invested in the airport, and that is good for the company. But as I have tried to say, and I do not want to weary your Lordships by repeating it, it would be serious for this country if our airports, particularly those serving London, were to become completely occupied and therefore traffic had to be turned away.
Is this likely to happen? I can only say that the Civil Aviation Authority, which is the expert body on this matter—with great respect to my noble friend, the Civil Aviation Authority knows much more about civil aviation than the Department of Transport ever has or ever will—has said in CAP 522, which my noble friend behind me quoted, that there will be a shortage of runway capacity in the London area before the end of the century. The end of the century is only 13½ years off, and as one of my noble friends reminded us, and I think the noble Baroness too, any airport extension, particularly involving the building of a runway, involves years and years of effort before it can be brought into being.
Therefore, I suggest to my noble friend that this is not just a nervous fantasy but a real issue of probably fairly early import. My noble friend owes it to the House, as he certainly owes it to the civil aviation industry, to indicate, if he does not accept my noble friend's amendment, what the Government propose to do about this situation. I can tell him, from a number of contacts that I happily still have with the civil aviation industry and the airlines, that those responsible, intelligent, and far-seeing people who run our airlines are very much concerned and worried about this.
If the Government were just to stand pat and say that they were not going to interest themselves in even the possibility of taking power to deal with this problem as and when it arises, they would be causing considerable alarm and concern in this important and growing industry. I very much hope that my noble friend will give us a helpful reply.
Lord Underhill: My Lords, in view of the impressive speeches that have been made on this subject it would be wrong not to pass some observation from this Dispatch Box. First, we had not considered that this aspect would be covered by Clause 28, but as noble

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Lords know the Labour Party's general policy is that there should be an all-embracing policy for civil aviation and airports as a combined matter, and when we come to Clause 32 my noble friend Lord Carmichael will be speaking on this and dealing with the development of the civil aviation industry in all parts of the United Kingdom. Therefore, we shall reserve our comments until we reach that particular amendment.
7 p.m.
Lord Monson: My Lords, I think that the noble Earl, Lord Dundee, has made out an excellent case for this amendment, and indeed for Amendment No. 24, which I take to be an alternative, although I fear that I was not in the Chamber to hear his opening remarks.
Of the two alternatives I slightly prefer Amendment No. 24, for the following reason. If a Green or Green-inclined party were ever to come to power in this country or were to form part of a coalition, it is quite likely that national policy for the development of air transport for as long as the Greens were in government would be radically transformed and that national policy might be to cut the incidence of air traffic by 50 per cent. or more. For that reason I believe that Amendment No. 24 is slightly better. In any case, I hope that Her Majesty's Government will accept one or other of these two amendments.
The Earl of Kinnoull: My Lords, the noble Lord, Lord Underhill, referred to Amendment No. 32, which refers to environmental consequences—
Lord Underhill: No, my Lords; Amendment No. 30.
The Earl of Kinnoull: My Lords, I shall not comment. I beg your pardon.
Perhaps I should briefly intervene, because my noble friend Lord Boyd-Carpenter has put the case so powerfully to the House that noble Lords would not wish any repeated arguments, particularly at this time of night. I believe that my noble friend's amendment, which he has moved so lucidly, is a matter simply of principle and judgment. The judgment in my view is whether the Government should have the final responsibility under this Bill over the long-term strategic planning of air transport. At every stage of this Bill, both in another place and in this House, this issue has been raised and concern has been expressed from all sides. There is plenty of concern outside the House as well, as my noble friend said.
I have tried to examine exactly what powers the Civil Aviation Authority has and can implement if there is a question of conflict of policy over the best interests of long-term air transport policies. The power it has, as my noble friend reiterated at the last stage of this Bill, is to encourage investment; it is not to compel investment or to compel anyone, but simply to encourage investment. I suggest this is a peashooter of a power when one is talking of the long-term interests of air transport. We all know how unpopular is longterm planning of airports. We have all seen Stansted over the past 25 years, going back and forth from
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public inquiry to public inquiry. I cannot believe that with a private company there would be the energy or the impetus to enter into the conflict of a new airport. Yet, as my noble friend has said, there is concern about the future capacity of London's airport runways. As my noble friend has said, the late chairman, who I believe retired on 31st May, put in his preface this very point on CAP 522. I shall not quote that again.
I hope my noble friend will be able to say something encouraging on either of these two amendments. As the noble Lord, Lord Monson, said, it is a question of choice of amendments. But like my noble friend I believe that the principle behind the amendments is crucial to this Bill.
The Earl of Caithness: My Lords, I believe we were also discussing Amendment No. 24. These amendments seek to add to the Secretary of State's powers of direction under Clause 28 a very broadly-worded provision in relation to the national interest for the development of air transport.
Notwithstanding the sincerity with which noble Lords and the noble Baroness have spoken of the longterm future and good of the Civil Aviation Industry, these amendments would give the Secretary of State an open-ended power to direct any airport operator to undertake activities which could be regarded as having any bearing on the national interest for air transport development. That is something which is very difficult to define objectively and its interpretation might change with the government of the day. Such activities could apparently be required irrespective of cost. The power is so broad that it could even be used to require an airport operator to develop an entirely new airport or close an existing one, whatever the effect on his business.
I consider that we must seek to circumscribe such open-ended powers of direction in the Bill so far as possible. Clause 28 is confined to the fundamental issues of national security, together with international relations. Airports operate in an international environment and the Government have international obligations to other governments in the field of aviation which they must ensure are fulfilled. But to add to these provisions a wide power of direction in respect of national policy would be a serious imposition on the freedom of airport operators which I do not consider justified. I hope that my noble friends and the noble Baroness will bear in mind that if such a wide and broadly based—
Lord Harris of Greenwich: My Lords, is there not any national interest involved? This is exactly the point made by the noble Lord, Lord Boyd-Carpenter. If it becomes clear that there is a risk that this country will not have enough airport capacity, what steps will the Government then take? That is the question asked by the noble Lord, Lord Boyd-Carpenter. So far, the noble Earl has not addressed himself to it.
The Earl of Caithness: My Lords, so far, I have not finished what I was going to say. If the noble Lord, Lord Harris, will bear with me—I know he is probably anxious to go elsewhere—I shall continue. I hope that even he will realise that there are many who would be

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unhappy about investing in a company which had such an open-ended threat hanging over it on such a very broad provision. Therefore we consider at the moment that this power of direction is unnecessary as it gives the Secretary of State (not only the current one but all his successors) power over a commercial airport operator which he could operate irrespective of the impact on their business. That is something we should all bear in mind.
We believe that the development of air transport will be best served by ensuring that airports operate in a commercial environment responding to the market pressures to provide facilities and that the privatised airports and the local authority airports, where they see a demand in the future, will respond without the necessity of the Government having to have such a draconian power written into the Bill.
My noble friend Lord Dundee says that it is a reserve power, but I am sure he knows as well as I do that when it is written into the Bill, even though it is a reserve power, there will always be the threat that there will be a demand for it to be used from the moment the Bill is enacted, where other methods of encouraging the industry would be preferable.
A number of noble Lords referred to the recent publication known as CAP 522. The Government have taken decisions that will provide sufficient capacity in the London area up to the mid-1990s. Thereafter there might be further expansion of Stansted or a fifth terminal at Heathrow, but both would require planning permission. That would provide sufficient capacity to take us past the end of this century and into the next. We believe it is difficult to plan now for beyond the end of this century. It is difficult to forecast traffic growth with certainty that far ahead and the contribution that regional airports could play and how far Manchester will develop as an international hub. In addition, there is the question of the size of aircraft. With bigger aircraft, we might not need further runway capacity. Although some people would say that we must start providing for airport capacity now, the next generation of aircraft could enable better utilisation of the existing runways. Indeed, a fifth terminal at Heathrow might be the answer rather than another runway.
Yesterday my department published new passenger and aircraft forecasts and they maintain the consistent pattern of growth shown in recent air traffic forecasts. These forecasts are the fifth to do so since 1979. We remain of the view that we expressed in last June's airport policy White Paper that an objective of United Kingdom airports policy is to make the best use of the existing facilities. However, where there is demonstrable demand for the provision of additional capacity the Government will take such steps as they can to initiate, encourage and facilitate the provision of such capacity without it having to be written on the face of the Bill.
My noble friend Lord Boyd-Carpenter said that civil aviation is a success industry. I could not agree with him more. I am very proud and very impressed by what we have been able to do. I think we can continue the success story without the necessity of having to write such amendments as these on the face of the Bill by encouragement and other steps.—
Lord Boyd-Carpenter: My Lords, would my noble friend allow me to intervene? I was encouraged to hear him say that should the need for additional airport capacity become apparent the Secretary of State would take such steps as he could to see that it was provided. But under the Bill as it stands, what power would he have to do so?
The Earl of Caithness: My Lords, I believe that he has the powers already existing in the civil aviation legislation; but at this stage I cannot point my finger at a particular section of an Act that gives the enabling power. However, I shall look into that specific point for my noble friend. Going back to the CAP 522 point, and in particular in answer to the noble Baroness, Lady Burton of Coventry, we have not made a final decision on the recommendations of the CAA. We are considering this and a final decision will be forthcoming, I hope, in the not too distant future.
Baroness Burton of Coventry: My Lords, I am grateful to the noble Earl for giving way. With regard to the remark he has just made, is he referring to the rail link to Stansted or to the runways? I wanted to ask him whether he is rejecting the opinion of the Civil Aviation Authority that London will need additional runway capacity before the end of the century. It takes at least 10 years to lay down such a runway.
The Earl of Caithness: No, my Lords; that is one of the many points we are still considering at the moment as part of the CAA's submission to us. If I may sum up, we believe that the free marketplace will provide all the necessary incentives to take care of the situation envisaged and described so eloquently by so many speakers today. That is a preferable way of doing it rather than by means of the heavy draconian powers of either of these amendments.
The Earl of Kinnoull: My Lords, before my noble friend sits down—I am not sure whether I am allowed to speak a second time on Report stage—he has raised an important point, and I should like to ask him exactly what are the powers the Minister could take in the future? My noble friend has said that he will write to another of my noble friends. However, this is really the kernel of the amendments and I find it unacceptable that, although my noble friend has come prepared with an answer, he cannot answer the kernel and the purpose of the amendment. May I suggest to my noble friend that as we continue our discussion perhaps further advice could come from the Box behind, so that he will be able to answer this question? If he cannot answer it I would say, with respect to him, that he has not given us a totally satisfactory reply.
Can I also ask my noble friend whether he is disagreeing with the general principle that the Minister who is responsible for air transport should in the national interest always protect air transport? Is he saying that the amendments before us at the moment are too draconian, and is he prepared to see whether he could bring forward substitute proposals at a later stage that would satisfy the House?
7.15 p.m.
Lord Monk Bretton: My Lords, I think it is worth mentioning one point, since I have had to study this in the light of other amendments. I do not think that Section 4 of the Civil Aviation Act 1982 is being repealed. Its effect is to be modified when matters to do with Clauses 29, 30 and 31 of this Bill will be considered; but I think that otherwise it stands. It does say most of the things that we want, one of them being:
"to further the reasonable interests of users of air transport services".
Lord Harris of Greenwich: My Lords, I did intervene earlier on this point and the noble Earl chastised me for having interrupted him when he said he was going to come and give a full and adequate answer to the questions which had been put to him. As the House will realise, none of the questions in fact has been answered. The noble Earl has now been asked one specific question. He claims there is a general power in civil aviation legislation. What is the power? The noble Earl is representing the Government in this House and is trying to reassure us that the power the House wants to write into this Bill is unnecessary because it is already part of the legislation of this country. The noble Earl must therefore answer this question, and in detail I hope. What is in fact the position? Can he answer the question?
Baroness Nicol: My Lords, I am sorry to intervene. I wanted simply to remind the noble Lord and the House that we are at the Report stage and I think it would be better if we confined ourselves to one speech.
Lord Harris of Greenwich: My Lords, with great respect, I asked a question earlier. I have now in fact put the point made in a former speech, which is, to ask the noble Earl to answer the question that I and others have put to him today: namely, can he now answer this question in precise detail? The question is: what is the effect of existing legislation on this particular point?
The Earl of Caithness: My Lords, I thought I had answered the noble Lord. I said I was unable at the moment to put my finger on the precise point in order to answer, and therefore the answer that I gave was a specific answer. I would say to my noble friend Lord Kinnoull that I quite understand the House wants a specific answer which I am at the moment unable to give. Therefore I should like to reconsider this matter with my officials and I hope to be able to give all the necessary answers at a later stage.
The Earl of Kinnoull: My Lords, in that case, can my noble friend given an assurance that we can bring this point back again at Third Reading without being in breach of our rules of procedure?
The Earl of Caithness: My Lords, with the leave of the House, perhaps I might answer that and try to help the House a little further. Under the provisions of Section 1 of the Civil Aviation Act 1982 the Secretary of State has the duty of carrying out and encouraging measures for the development of civil aviation. He would have no power himself to provide an airport but clearly could give encouragement for an airport under
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that Act. If my noble friend seeks to withdraw his amendment and to bring it hack at a later stage, I do not see from my knowledge that there is any objection to his doing that.
Lord Boyd-Carpenter: My Lords, did my noble friend's answer, recently provided for him, indicate (as I understood it to do) that while the Secretary of State could make encouraging noises, and so on, he would not actually have any power to make the new authority or the new company set up under this Bill create additional capacity?
The Earl of Caithness: My Lords, the words I used were that,
"the Secretary of State has the duty of carrying out and encouraging measures for the development of civil aviation."
It is the words "carrying out" that I should like to investigate further, because they might well solve the problem.
The Earl of Dundee: My Lords, I am very grateful to all noble Lords who have spoken to this amendment. Certainly, there is a question of balance. Too many restraints on the airport owner could always be counter-productive. Against that there is the national interest and national aviation policy, but of course there is always the need to ensure adequate protection. In this case I believe that the risk to national aviation policy is far more significant than any risk that reserve powers might be counter-productive. But in view of the assurance which my noble friend the Minister has just given, I beg leave to withdraw the amendment.
Amendent, by leave, withdrawn.
[Amendment No. 24 not moved.]
Lord Underhill Lord Underhill moved Amendment No. 25:
Page 24, line 15, at end insert—
("( ) The Secretary of State may, with the consent of the Treasury, make grants to airport operators for the purpose of defraying or contributing towards expenses incurred by them in complying with directions given to them under this section.")
The noble Lord said: My Lords, I can be extremely brief on this amendment. The amendment was set down to deal with the question of directions on national security. Quite clearly, we accept that the Secretary of State should have these powers and we recognise what was said by the noble Earl at Committee stage about the Secretary of State not taking these powers of direction lightly. But they could be directions to a particular airport operator which must be operated continuously, or they could be directions for a particular occasion.
It is with directions for a particular occasion that this amendment is concerned, because they might be costly to the airport operator. Even though the directions might be desirable and necessary for security purposes, we believe that it ought to be possible for the Secretary of State, with the consent of the Treasury, to make grants to defray either all of the cost of the directions or part of it.
The amendment is permissive and not mandatory. It states that,
"The Secretary of State may, with the consent of the Treasury".
While not challenging, in any way, the motives behind this clause, we believe that there ought to be this power

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for the Secretary of State to make grants, with the agreement of the Treasury, where he considers it necessary. My Lords, I beg to move.
The Earl of Caithness: My Lords, when we considered this Bill in Committee, the noble Lord, Lord Underhill, who has proposed this amendment put forward a similar one which applied not only to the powers of direction under Clause 28, but also to those in respect of special facilities at airports. For our Report stage, noble Lords have, in effect, divided their original proposal into two, in that they have tabled a similar provision for incorporation into Clause 63. I am happy to tell the House that thus far I am in agreement with them; that is, I agree that the issues fall into two distinct parts. Directions made in the interests of national security or to discharge international obligations are, indeed, different from directions to provide special facilities at airports.
As I promised when we debated these matters in Committee, I have discussed both aspects of the powers of direction with noble Lords who expressed an interest. Those discussions have borne fruit and, thanks to the powers not of direction but of persuasion which those noble Lords have deployed, I can tell the House that I shall be in a position to take a very sympathetic—indeed, the most sympathetic—stance towards the amendments which noble Lords opposite have proposed to Clause 63, with regard to powers to pay compensation to an airport operator for running VIP facilities. So we have heeded the good arguments put forward by noble Lords opposite and indeed by some of my noble friends.
However, I have to say to the noble Lord, Lord Underhill, that the Government are firmly against the incorporation of provisions—even discretionary ones—to pay compensation for directions which may be imposed under Clause 28 on the rare, but extremely important, occasions when national security or the United Kingdom's international obligations are at issue. I oppose this amendment principally for the following reasons.
International civil aviation very largely exists because of the framework of international agreements which have been negotiated and it must accept the costs, as well as the benefits, which flow from those agreements. The Government's policy is that the civil aviation industry should meet the costs of the necessary regulatory measures which are taken to ensure its safe operation within the international agreements which govern it. Airports have a national security and international relations dimension which goes beyond managing an airport business.
The Clause 28 powers over airport operators are analogous to those over the CAA in Section 6 of the Civil Aviation Act 1982, except that the Clause 28 powers are much more restrictive to reflect the independent status of airport operators. The powers of direction under Clause 28 are heavily circumscribed. General directions can be given only in the interests of national security or international relations; specific directions only in the interests of national security or to discharge an international obligation. Therefore, in the light of that explanation and with the assurance of a sympathetic response to a similar amendment to
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Clause 63, I hope that the noble Lord, Lord Underhill, will withdraw this amendment.
Lord Underhill: My Lords, we are naturally very encouraged by what the noble Earl said about Clause 63 when we reach it, but I must say that I cannot fully understand the Government's reasoning on this amendment. There could be circumstances where, for reasons of security and international obligations, there is a short visit to a small airport by someone for whom security measures must be taken, though the local authority may already be burdened with debt in connection with that airport. It seems to me that in such a case it is wrong not to give the Secretary of State power to make a grant. The noble Earl says that he has consulted with his advisers. We shall have a further look at what he has said, but I still believe there is common sense and fairness in our proposal. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Brabazon of Tara: My Lords, in moving that further consideration on Report of this Bill be now adjourned, I suggest that we do not return to this Bill before half-past eight. I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Armed Forces Bill
7.28 p.m.
Report received.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 1:
Before Clause 2, insert the following new clause:
("Persons under 18 years entitled to be discharged after one month.
Terms and conditions of service
. After section (2) of the Armed Forces Act 1966 (Regulations as to variation of term of service) there shall be inserted the following section—
"2A. Notwithstanding section 2 above, a person to whom this Act applies and who is under the age of 18 years, shall be entitled to be discharged after one month's notice in writing by that person."").
The noble Lord said: My Lords, for the convenience of the House we can also discuss Amendments Nos. 2, 3 and 5 at the same time, because they all fall as part of a piece. As the Minister well knows, at Committee stage we on this side of the House raised a number of issues that stemmed directly from the special report of the Select Committee on the Armed Forces Bill. There was no proscription as to the amount of time available to us then, but there were limits to the number of issues that could be raised and there were one or two which I had marked when I read the report of the Select Committee and which I felt it would be appropriate to raise this evening, and the burden of these amendments is contained in the proceedings.
What I have to say arises particularly from the evidence presented by a body called At Ease. The Minister and his advisers will be well aware both of what it said in its memorandum and of what took place in the Select Committee. I am also deeply indebted to the noble Lord, Lord Donaldson, and to

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the committee. He reported substantially—perhaps not directly, and I have no knowledge of his attitude to these amendments—on the ground which I wish to cover.
The present position is that a member of the armed forces may discharge himself as of right only during the first six months of service if he should join under the age of 18, and during the first three months of service if he should join over the age of 18. After that no one may apply to buy himself out until after he has attained the age of 21 or has completed three years of adult service, whichever is the longer. Premature voluntary release therefore applies only to those committed to long engagements who have already completed three years' adult service. At this stage release is discretionary on the part of the military authorities and may be and often is refused.
In its memorandum, the At Ease organisation gave a considerable amount of what it claims to be evidence but, I am bound to say, in deference to what I consider to be the facts. The supporting data to justify its evidence was somewhat sketchy. Nevertheless, I raise the matters here because the Minister himself may appreciate the opportunity to correct some of the impressions that were given. For instance, the organisation said at page 106 of the evidence:
"The minimum engagement of three years, effective from the time they reach age eighteen, can seem like an eternity for a boy of seventeen, and many of them take desperate action such as going absent without leave, deliberately injuring themselves, in some cases attempting suicide and showing other signs of extreme distress. It is a common occurence for this behaviour to follow a discovery of what their real situation is regarding their terms of engagement".
I read very carefully what I would call the rebuttal evidence which was contained in the Select Committee report. For the purposes of the debate I refer to page 111, annex A, and to the Ministry of Defence commentary on At Ease. It says:
"A young applicant under 18 years of age is not allowed to join the armed forces without the consent of his parents. If he applies for entry at a Careers Information Office he is asked to bring his parents in so that the terms of engagement may be fully explained to them all in detail. He is not asked to sign on immediately but is sent away to consider the matter before entering into an engagement. The potential recruit and his parents are given a 'notice paper' to consider which clearly sets out the minimum period of service which will be expected of him, and which spells out the earliest date on which his service may end, particularly as his length of engagement, in the Army and RAF, affects his rate of pay. It also clearly states the statutory rights of exit which the recruit has during his first few months in the armed forces".
The defence of the Ministry to those two statements is, "You know what you are signing on for before you sign; you know there is circumscription as to the ease of getting out; and therefore it is entirely up to you".
I now turn to the report by the noble Lord, Lord Donaldson. At paragraph 2 of page 1 the report says:
"Within the limits of Service discipline"—
No doubt the Minister will lay heavily upon that—
"Boy volunteers at any rate should be free to change their minds with due notice and after a fair trial or when a new situation arises. The weakness of the present system is that they cannot as of right except during their first 6 months".
That is the explanation for one of the amendments in which I plead the case that persons under the age of 18 should be entitled to be discharged after one month.
Paragraph 9 of the report says:
"We therefore recommend a major change in the recruitment of boys under 18; namely, that every boy apart from certain
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apprentices, at the age of 18, should have the option either to confirm his original engagement, or to convert it to one of 3 years only from 18. In this way no boy would be held against his will after 21. In the special case of apprentices receiving 2 years' training or more, we recommend that they should have a three-fold option, to confirm their original engagement, to reduce it to the completion of training plus 5 years' service, or to leave altogether at 18".
I have been struck by the incredible lower limit. We are talking not about men but about boys of 16 and 17. I am reminded of the fact that although I did my service during the war, we always talked in terms of 18 being the time at which one saw active service. Of course there was boy service and people then joined the forces at a younger age. From reading the details of the Falklands War, one sees that there were boys who were doing a man's job below the age of 18 in my old service, which was the Royal Marines. Therefore I am not raising the issue of the ability of boys or men below the age of 18 being competent and doing a job about which we would all be proud. But I am struck by the fact that many boys at the age of 16 or 17 in this context are terribly, terribly young.
I have two boys of my own who are well beyond that age. I try to reflect on their mental attitudes to life at the age of 16 and 17. I say that if boys have thought about it, if their parents know about it, and even if they have signed and understand all of the paraphernalia of engagement, it is still terribly, terribly young. We need to look yet again at what we are doing.
The report of the noble Lord, Lord Donaldson, at the top of paragraph 121, has a very telling paragraph:
"No Binding Commitment until 18".
That is, in effect, the gravamen of my first amendment.
The noble Lord, Lord Donaldson, says:
"The next course to consider is to introduce a break point at 18 so that any boy could leave then as of right. This, it seemed to us, should dispel all criticism. Boys joining from 16 onwards would have had a fair experience of Service life, and if they did not like it they could go when they came of age. There seemed to be no particular moral objection to a man making an agreement at 18 to serve on for a term of years. The objection has always been to his committing himself at too early an age. This solution, again, would be very costly in manpower, though it could be feasible in the specific case of long-term apprentices".
The report from which I quote is now 16 years' old and the statistics may not be relevant. Therefore I do not quote them. But I hope the Minister will understand—I certainly do not intend to divide the House on matters of this kind—what I am saying in the context of the Acts of Parliament which govern discipline in the armed services. In particular, the At Ease organisation is indicating in its evidence that many of the cases that come to it concern young men or boys who are below the age of 21 and who are absent without leave because they have in effect realised all of a sudden the enormity of what it is they have signed on for. I am not talking here about service life itself but about the length of service.
My amendments seek to provide for young men, who I continue to look upon as boys because they are certainly below the age of 18, better opportunities to say "No thank you" to a service life earlier than the present arrangements allow. I beg to move.
Lord Donaldson of Kingsbridge: My Lords, my recollection of 17 years ago, when the report was made, is not very clear, and I have not had time to read

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the report right through. The noble Lord the Minister thought that it was written by the Master of The Rolls, which shows you how things go.
The important paragraph—and I do not want to waste a lot of time on the ages—is that which the noble Lord, Lord Graham, just mentioned, which is paragraph 121:
"Boys joining from 16 onwards would have had a fair experience of Service life, and if they did not like it they could go when they came of age".
We were considering a break point at 18. We compromised after that because the services were very nervous about it. They said, "Let them decide at 18 whether they will go on for their full 12 years or whether they will get out at 21". We came to a conclusion in relation to the importance of getting something done because the National Council of Civil Liberties had a room full of documents about men who had been arrested, who had deserted, or who had gone away. The situation really was dreadful and something had to be done. Therefore we included a recommendation, and that was about as far as we could go at that moment.
I have not monitored the consequences of the report. I know that it was commissioned by a Labour Government and presented to a Conservative Government, who said that they were accepting it more or less in toto. However, I am ashamed to say that I have not looked back year after year to see what they have done. I would ask the Minister to say whether there is a lot of trouble at the particular age in question. It seems to me that it should be possible to go a step further than we did and to say that a boy who joins at 16 or 16½ years of age may have six months in which to make up his mind whether he will give it a run until he is 18. He has another chance to do so at 18, or then to sign on for the full period unless he is an apprentice, in which case the matter can be dealt with slightly differently.
I believe that the position is this. If one's training is really good, and it certainly was at the time of the report and I feel sure that it is now, then one will not lose at 18 many of the boys one wants to keep. But if one does not give the boys the knowledge that they can get out at 18 if they want to, then one will not recruit a lot of very good boys whom one would like to recruit and keep. For example, I and, I am sure, most Members of this House, given our present knowledge, and not aged 16½, would not sign on at 16½ to a commitment for 12 years' service that we could not get out of before we had served for five years. We would say that we would sign on for two and a half years and then consider the options. Therefore I believe myself that it might well be to the advantage of the forces if the option provided by the first amendment were accepted.
On the other hand, I agree entirely with the noble Lord, Lord Graham, that we want to hear what are the arguments now. I know what the arguments were in the past, and they seem to be very much the same except in respect of a far more serious situation. It is rather like the difference between unemployment in the 1920s and unemployment now. In the 1920s, children were starving, and now at least they are not. Therefore the situation of a number of boys between
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16½ and 18 becoming very depressed and miserable because they cannot get out is one thing, whereas the situation in the old days was that they were 21 or 22 and wanted to get married and simply could not do so. That was not acceptable and so they deserted. Then they were captured, they ran away, and the whole situation was a great deal worse.
I do not want to make too much of this. I personally believe that the armed forces would lose absolutely nothing by giving the option to leave at 18, but I should be very interested to hear what the Minister has to say.
7.45 p.m.
Lord Trefgarne: My Lords, this amendment and the others relating to discharge all appear to be based, as the noble Lord has said, on a paper submitted to the Select Committee of another place by an organisation called At Ease. That paper, and the Ministry of Defence's very full response to it, are included in the Select Committee's published special report. Our view of the proposals reflected in the noble Lord's amendments has not changed in any way since my department's memorandum was given to the Select Committee, and I do not propose to go into all its detail here today; noble Lords will no doubt have seen it.
However, I must emphasise that it would be wrong to equate service in the armed forces to any other employment. Special considerations apply to the armed forces, who are recruited specifically for the defence of the realm. The crucial importance of that role means that the services must at all times be manned to the fullest extent and at constant readiness. If servicemen had the right to opt out at short notice, any unpopular service or activity could be brought to a halt by the sudden departure of the trained and experienced personnel upon whom its success depended.
Fully-trained replacements cannot simply be recruited off the streets; the necessary training to cope with the increasingly complex technology of service life is lengthy, intensive and costly. Both the interests of the taxpayer and the security of the nation demand a reasonable return on such training. The right of discharge for the under-18s at one month's notice, or at three months' notice for those over 18, would completely disrupt the stable manning of the armed forces and their ability to fulfil their allotted tasks.
I should, however, stress that the services bend over backwards to ensure that new recruits, especially those under 18, and their parents fully understand the nature and length of the commitment they are considering. There are statutory break points after entry at which a recruit can leave as of right. Thereafter, premature voluntary release is often possible for those dissatisfied with service life, while those clearly unable to adapt to the life may be administratively discharged. In my view, therefore, there are no grounds for viewing the terms of service for young recruits as being unnecessarily restrictive. They are of course less free than their counterparts in other employments, but that is fully justified by the services' vital need for stable manning and fully-trained personnel.
I may say that before my recent change of responsibility in the Ministry of Defence, I had junior

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ministerial responsibility for dealing with many such cases, so I am well aware of the background to the matter to which I have referred tonight. Indeed, some of the detailed cases brought to me by Members of Parliament and, on occasion, by Members of your Lordships' House were cases that I dealt with personally. I hope your Lordships will accept that they were always dealt with with care and, in appropriate cases, with the compassion that they deserved.
So much for Amendments Nos. 1 and 3. I turn now to Amendment No. 2, upon which Amendment No. 5 is consequential. I was not clear what the noble Lord, Lord Graham, meant by the right to renegotiate a contract on reaching the age of 18. The noble Lord could mean that a young serviceman would have the right to renounce his commitment to the armed forces altogether and to leave; or he could merely mean that the recruit should have the opportunity to reduce the term for which he is engaged.
I have already explained in relation to the earlier amendments the reasons why we cannot accept very short notice periods for servicemen: because of the vital importance of stable manning and the need to ensure a reasonable return on training. We could not, therefore, accept any proposals which would give volunteers an absolute right to leave on reaching the age of 18. However, the services are well aware of the dangers of committing young recruits to lengthy terms of service when they are perhaps not absolutely certain of the career they wish to pursue. For that reason, all recruits are able to exercise a statutory right to leave at break points within the first six months of their service.
The services also realise that a young recruit might pass those break points and only later decide that he does not wish to be committed to the armed forces for the six or nine year engagement he originally undertook. As a result of proposals made in 1970 by the committee chaired by the noble Lord, Lord Donaldson of Kingsbridge, youngsters joining the Army and Royal Air Force under the age of 17½ are able to alter their terms of service at the age of 18 in order to reduce their six- or nine-year engagement to three year notice engagements. There is no "Donaldson option", if I may call it that, as such in the Royal Navy since its single open engagement effectively allows all servicemen to leave after completing four years of adult service.
Therefore, I hope that your Lordships will accept that the services offer young recruits committed to long engagements the chance to reconsider at the age of 18. But I do not believe that we can go further. For those reasons I hope that the noble Lord will not seek to press this amendment and will not seek to move Amendments Nos. 2, 3 or 5.
Lord Donaldson of Kingsbridge: My Lords, before the noble Lord sits down, as we are on Report may I ask a question? Is the noble Lord aware that the arguments he has used are, without exception, exactly the same arguments which were used to us when we made the major changes which I think—and I ask the noble Lord to tell me whether this is so—have worked rather well?
Lord Trefgarne: Yes, my Lords, I dare say the arguments I am deploying this evening have some similarity to the arguments deployed on a previous occasion, but they have lost nothing in the intervening years.
Lord Mayhew: My Lords, without dissenting from a great deal that the noble Lord has said, may I ask whether calculations have been made in his department as to the effects on Army numbers of implementing the proposal in the first amendment? Obviously some recruits would leave but recruiting might be a little easier if this proposal were accepted.
Lord Trefgarne: My Lords, if I have your Lordships permission to speak again, I am not certain whether any work has been done specifically along the lines suggested. In any event, it is rather difficult to assess in isolation the effect of such a change without actually trying it. I shall make some inquiries and if there is any further information available I shall be glad to write to the noble Lord.
Lord Graham of Edmonton: My Lords, with the leave of the House, I am as disturbed as is the noble Lord, Lord Mayhew, that the Minister uses the phrase "completely disrupt". How do we know that if the amendment were carried it would completely disrupt unless one has done some homework and has some idea?
The Minister is not normally guilty of this but he is simply using a phrase unless he has some basis for it. The noble Lord, Lord Mayhew, would not be expected to know because he did not take a major part in the debate but when the matter was raised in Committee statistics were given as regards a likely effect. On page 28 of its report the Ministry of Defence estimates the manpower effects of the changed conditions, and the figures are given. I should have thought that the Minister would have had some information in anticipation of the possibility that someone, if not myself, would ask for some figures. Therefore, I am disappointed in that respect.
The Minister talks in terms of the vital defence role played by the Army. Everyone in this House, including the Minister and myself, pays full tribute to the need for fighting forces who are fit and efficient and able to respond to the needs of the nation. However, I was somewhat struck and very sombre when I realised that young boys below the age of 18 were fighting in the Falklands. I may be wrong. and I know that the Minister—
Lord Trefgarne: My Lords, if I may prevail upon your Lordships for permission to speak again, I understand there were no soldiers under the age of 18 fighting in the Falklands.
Lord Graham of Edmonton: My Lords, I will get out my cuttings and ask the Ministry of Defence to clarify what is contained in them. If there was no one under the age of 18 actually engaged in the fighting—
Lord Trefgarne: My Lords, that is not what I said. I said there were no soldiers.?
Lord Graham of Edmonton: No soldiers, my Lords. The Royal Marines would be upset if they were not classified as soldiers in this context.
Lord Trefgarne: My Lords, I apologise to your Lordships for rising yet again. The Royal Marines, of course, count themselves as part of the Royal Navy and I should have thought the noble Lord would know that.
Lord Graham of Edmonton: That is right, my Lords, so what we have is a joke made about boys under the age of 18 fighting not only for their lives but for ours who, apparently, are not included when I make a general remark. If we are saying that there are Royal Marines and members of the Royal Navy who are under the age of 18 who were fighting, then my case is made.
The purpose of these amendments is to seek to establish two things—first, that the young boys who sign on know exactly what they are signing on for and, secondly, that below the age of 18, in particular, they have the opportunity to review their contracts. The Minister quite fairly said that I had not dealt in detail with what I meant by "renegotiate the contract". The Minister says, in effect, that they can renegotiate the contract at the age of 18 and that they can now shorten the contract from six or nine years down to a three-year period. To that extent, the amendment is perhaps not built upon a sound premise.
However, I am very uneasy because it appears to me that the arguments used 17 years ago, as the noble Lord, Lord Donaldson, said, are exactly the same and the Minister says that nothing has changed. I think a great deal has changed in 17 years, not least the firm conviction that the whole raison d'être of our armed forces has changed. It is very much a volunteer force. It was then, but it is very much more so now.
I am satisfied that I have raised important matters here. The noble Lord has made a very effective point in saying that the position cannot be compared to that of a boy of 16 who takes on an apprenticeship or an indenture in civilian life. The nature of the job needs to be clearly understood. As I said in Committee, people who join the forces, having been attracted by a great deal of publicity and the better wages compared with civilian life, not only need to believe that they will like the life but also need to understand as fully as possible the dangers that exist. One of those dangers might be that if they do not like it they are circumscribed as to the manner in which they can terminate their contracts.
I am certainly grateful to the Minister for having taken part in what I think has been a very valuable exchange. There are people outside the House who have formed the view that there are some terrible detriments and hurts suffered by these young people. I said at the beginning of my remarks that I do not accept at face value what I am told is the size of the problem. The noble Lord, Lord Mayhew, certainly wanted some statistics, and so do I, but this is perhaps not the appropriate time to raise this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
8 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 4:
After Clause 4, insert the following new clause:
("Discrimination.
. After section 69 of the 1955 Acts and section 39 of the 1957 Act, there shall be inserted the following section—
"It shall be an offence for any person subject to this Act to discriminate against, harass, hold in contempt or ridicule any person or persons on the grounds of religion, race, colour or political belief.".").
The noble Lord said: My Lords, Amendment No. 4 is all of a piece with an amendment that I moved at Committee stage which was phrased in terms of discrimination. The thrust of my arguments then was centred on sectarianism and the UDR. I am mindful of the reply which the noble Lord's ministerial colleague gave in another place, which in substance the noble Lord has repeated here—and I make no objection to that. The Minister in another place said:
"I want to take the opportunity of the debate to make it clear that discrimination on grounds of race, religion, colour or any other grounds by members of any regiment or service of the armed forces in their dealings with other service men or with the public would not be tolerated and would be viewed extremely seriously".—[Official Report, Commons, 10/4/85; col. 452.]
I spoke on the grounds of what I had read; and my bible on these matters does not derive from pressures from outside. My interest had been awakened by what I had read; I made inquiries, and the line of my honourable friend Mr. Kevin McNamara on the argument about discrimination dealt with sectarianism. I was struck, as no doubt the advisers to the Minister, if not the Minister himself, were struck, by an article in the Observer last Sunday which was headed, "Blacks in the Army: The Thin White Line". The article begins:
"At the Trooping the Colour ceremony next Saturday, it will be hard to spot a black face among the Guardsmen. Nor is it easy to find a black Army officer—or even a black NCO. In a special Observer investigation, Paul Lashmar and Arlen Hams reveal that there is widespread racial prejudice in the Army that keeps black Britons out of 'prestige' regiments, like the Guards, and stifles their progress up the ranks".
The Minister will understand that I was interested in what the article had to say and I believe that the House will also be interested in it. It reads:
"As the elite Guards regiments march by the Queen at next Saturday's Trooping the Colour, the casual observer may be aware of one curious fact. There is about as much chance of a black or brown face featuring among the 2,000-odd soldiers on parade as a Guardsman who is only five feet tall.
The reason is simple. The seven regiments of the Household Division—protectors of the Royal Family, Colonel in Chief Her Majesty the Queen—operate an unofficial colour bar.
"The Ministry of Defence denies its existence"—
and of course the Minister did, too—
"But the fact remains that you do not see a black or Asian Guardsman outside Buckingham Palace or on ceremonial duty. The Guards refuse to reflect today's multi-racial society in which there are at least two million people of Afro-Caribbean and Asian origin—over 4 per cent. of the population.
"One serving senior Guards NCO told us: 'There are no blacks in the Guards. There have never been and never will be. People do not want to see a black face under a bearskin. Blacks are generally persuaded to go elsewhere.'
"A Guards officer who left recently told us: 'Blacks do not get to the depot. It has become a tradition not to have blacks.' He added, apparently unaware of the illogicality of his statement: 'There is no racial discrimination' ".
There is much more that I am tempted to read, and this will depend on the reply from the Minister, but there are quite clear instances of harassment, racial prejudice and bigotry reported by black men, and in one instance a black woman, from their own experience.
The Minister may tell us, as his colleague in another place told us, that this is not a matter of policy; and yet the facts remain. The Minister needs to tell the House that not only is racial prejudice not practised but that all the other opportunities that can be taken by the MoD are taken to ensure that those who belong to an ethnic minority are provided with exactly the same opportunities as others to serve in the regiment of their choice.
Of course, I understand that there are regiments of a local character which recruit from within their own catchment area and in which there may be fewer black or ethnic minority citizens in comparison with other regiments. There may also be policy criteria such as the height of the servicemen and so on. Clearly, we are not arguing that a person who is black ought to be advantaged by comparison with someone else in matters about which there can be no complaint. However, I want the Minister to explain to the House that the points made in this article are not only capable of being rebutted but have been rebutted and that the evidence mentioned in the newspaper has actually been called for and investigated. If that is the case and the evidence has been investigated, I want the Minister to tell us the true situation.
The Minister knows that in addition to the area of the armed forces there are other sectors in our public life—and I am thinking in particular of the police—where at one time it would have been beyond belief that such things as a colour bar or racial prejudice existed. Such a thing could not have been contemplated. But we know that over the years instances of such prejudices have appeared in the courts. We all recognise this sad fact. Such instances are not to be blown out of proportion, but they are a fact of life. Racial prejudice exists. This article tells us that it exists to a disquieting degree in some branches of the armed forces. I invite the Minister to respond to the amendment that I have moved in terms that will satisfy me and others outside the House that this article is ill founded and not well based. I beg to move.
Lord Mayhew: My Lords, I do not think that this is a subject that was dealt with by the Select Committee. Nevertheless, the noble Lord, Lord Graham, has done well to give the Minister an opportunity to comment on the points that he has made and on the article which has aroused a great deal of interest. We want to be quite assured by the Minister that there is not discrimination such as the noble Lord, Lord Graham, described.
I am bound to say that I think the amendment goes a little wide. To make it a criminal offence to ridicule someone for their political beliefs has some remarkable implications for those of us in this House. I am thinking in particular of the relationship between the militants and the moderates in the Labour Party. Under this amendment I think that Mr. Kinnock may
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be very easily convicted. As a matter of fact I recall that when I was in the ranks of the army I was a Labour candidate for Parliament. I can assure the noble Lord, Lord Graham, that this exposed me to a great deal of ridicule, but I should not have wished those who ridiculed me to have been subjected to criminal proceedings. That would have been carrying things too far. Nevertheless, seriously, the noble Lord, Lord Graham, has raised an important point and given the Minister an opportunity to reassure the House, on this matter.
Lord Trefgarne: My Lords, on the last occasion that your Lordships met to discuss the Bill we considered an amendment not dissimilar to the one before us today. At that time I stressed that all forms of discrimination by members of the armed forces whether on racial, religious, sex or other grounds would not be tolerated regardless of whether the victims of such discrimination were members of the public or other servicemen. I explained the various statutory safeguards in the Race Relations Act, the Service Discipline Acts and the code of practice on the treatment and questioning of persons by the service police which apply to the armed forces both in their internal discipline and to their recruitment practices. I am fully satisfied that these provisions are more than adequate to make it quite clear that racial or other discrimination within the armed forces will not be tolerated and will be most firmly dealt with if any instances of such behaviour were to be discovered. I do not believe that the noble Lord's amendment would contribute anything useful to our efforts to prevent discrimination, but I agree with him that such discrimination is to be utterly condemned.
Perhaps I may just touch on the article to which the noble Lord referred. The entire armed forces, as I said, operate a policy of non-discrimination and no form of discrimination is tolerated in any regiment or unit. Recruitment and promotion are achieved by merit alone. I can do no more than stress that there are equal opportunities for those of equal ability, regardless of ethnic origin. I hope that those clear assurances and declarations of the Government's and the armed forces' policy in those areas will reassure both noble Lords.
Lord Graham of Edmonton: My Lords, methinks the Minister doth protest too much. He is saying that there is a creed that all advancement is on merit. Over the coming weeks he will need to consider Answers to the Questions that I shall table. We are led to believe that those with a black skin or of ethnic minority are persistently and universally in comparison with white people less able and inferior, and that is a matter of serious concern.
The Minister says that the Government have tried to abolish the practices mentioned in the article. I invite him, with the leave of the House, to comment further. Damning and damaging statements are made in the article, and he has not rebutted them. Eight or nine cases are mentioned. Next week's Observer may carry a statement dealing with those eight or nine cases, and that arrangement might satisfy me. But let me read to

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the House two quotes from the article which are of deep interest:
"Perhaps most damning is the poor comparison the British Army makes with its American counterpart. The US Army runs a highly-successful equal opportunity policy and blacks in the American Forces face little of the racism suffered by their British colleagues.
"One retired black American officer, Major-General Roger Blunt, a West Point graduate, told us: 'The British experience is 30 years behind America'.
"Leading US social scientist Charles C. Moskos reports that blacks now make up 30 per cent. of the US Army's 776,000 men and women. And at a banquet held in Washington in 1982 for black officers of flag rank, there were 76 black generals and admirals present".
Of course the numbers are completely different and the ethnic mix in America is different, but we are catching up. If the Government rest their argument on the premise that it is completely different, I disagree. It is possible to compare our practices with those in America provided that one builds in certain qualifications.
Let me give one final illustration:
"Evan Virtue left the Royal Green Jackets two years ago after 11 years' service, thoroughly disillusioned by his experiences. He believes that it is virtually impossible for a black soldier to rise above the rank of corporal, no matter how long he has served.
"Originally from Jamaica, Virtue had wanted to be a soldier from the age of five. He joined the regiment in 1973 at the age of 17 straight from his south London school. He was a crack pistol shot and represented the British Army in a number of shooting competitions. He also completed three tours of Northern Ireland.
"Virtue was promoted three times to lance-corporal and 'busted'—demoted—each time. Promoted to lance-corporal, he was twice recommended by his immediate superior for promotion to corporal and passed his sergeant's exam. On both occasions his promotion was turned down.
" 'The simple truth was that they did not want black sergeants in the battalion. But what used to get to me more than anything was that you would be part of a group of men that you were prepared to die for if necessary and then one of them would turn round and call you a coon or a nigger' ".
That is now in public print. I should have thought that the least the Minister could say was that he takes a serious view of what was said, particularly as it has caused an investigation to be made and the man to be interviewed, and that he will write to me.
There are other parliamentary means whereby I can pursue the matter. I am disappointed with his reply. It is as bland as his replies to me on the issue at Committee stage.
Lord Mayhew: My Lords, before we close the discussion let me put two further points to the Minister. I do not doubt his sincere intention to avoid all forms of racial discrimination in the forces, but he must concede that there is a problem. There is a disproportionate lack of coloured people in the armed services. I ask him to give us the reasons, which he did not do in his reply. No doubt there are many perfectly straightforward reasons, but we should like him to tell us what they are.
My second point is this. The problem is well recognised by the police, and the police are making special effort to increase the recruitment of coloured people. Is the Ministry of Defence making a similar effort? This is a subject to which we may well return. We have the Defence Estimates ahead. I should like the Minister to reassure us (perhaps not now) that his ministry has made a thorough investigation of the
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reasons for the disproportionate lack of coloured entrants and that special steps are being taken by the ministry to overcome the problem.
Lord Graham of Edmonton: My Lords, the Minister is not replying. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 5 not moved.]
Viscount Long: My Lords, I beg to move that this House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.18 to 8.30 p.m.]

Airports Bill
Report stage resumed.
Clause 29 [Traffic distribution rules]:
Lord Underhill Lord Underhill moved Amendment No. 26:
Page 25, line 2, leave out ("and").
The noble Lord said: My Lords, I hope that it will be convenient if I speak also to Amendments Nos. 27, 28 and 29. The four amendments relate to two clauses—Clause 29, which is relevant to traffic distribution rules, and Clause 30, which relates to the limitation on aircraft movement at certain airports. It is unfortunate that it is necessary in some of these debates to explain the purpose of the amendments and deal with previous arguments, because that all takes some time.
As the Bill stands, statutory provision is made only for consultation with aviation interests. The purpose of the amendments is to balance such interests against those of people on the ground. The value of that is recognised by the former CAA chairman, the noble Lord, Lord Boyd-Carpenter, whose knowledge of this matter we well respect. He said:
"I accept completely that it is necessary that they"—
that is, the local authorities—
"should be consulted".—[Official Report, 22/5/86; col. 466.]
To be fair, he added that he doubted whether the local authorities had any contribution to make from the air travellers' point of view. Of course there are aspects of this matter other than those relating to air travellers.
The noble Earl considered that wide and ample consultation would take place. He cited the example of the CAA's consultation on air traffic distribution in the London area. However, the 322 bodies consulted to which he referred overwhelmingly represented aviation and airline interests. Surrey and West Sussex county councils, for example, both vitally affected local authorities, were not consulted. They had to take it upon themselves to make their views known. That is the type of omission that these amendments seek to rectify.
By listing three interested groups to be consulted under Clauses 29 and 30, the Government have achieved the very thing that they are seeking to avoid: a fear that those who are not listed in the Bill will not

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be consulted. If consultees are to be listed, that list should be balanced and comprehensive. There is need to seek clarification from the noble Earl about what he meant when he said:
"a minimum level of consultation".
He said that twice, at cols. 461 and 469 of Hansard. He said how that was justified. Does it mean that the Government do not want wide consultations, or do they want consultations only with those who have a vested interest?
I suggest that the noble Earl was mistaken when he said:
"The provisions of Section 35 of the Civil Aviation Act 1982, under which the BAA airports after privatisation will be under a requirement as to consultation, are virtually identical to those in the Airports Authority Act 1975 under which the BAA airports operate now".—[official Report, 22/5/86; col. 468.]
There are fundamental differences. The 1975 Act requires consultation with respect to matters affecting their interests. However, the 1982 Act specifies:
"consultation with respect to any matters concerning management or administration of the aerodrome which affects their interests".
Consultative committees, particularly those of the major international airports, have effectively contributed to issues far beyond the limitations of the management or administration of their respective airports:, for example, consultations with the CAA on air traffic distribution in the London area, the very subject of these amendments, on which the CAA has recently issued its report.
No safeguard exists within Section 35 of the 1982 Act for the Secretary of State to give aerodrome operators directions. Such powers under the 1975 Act may become particularly important, as he will no longer be dealing with a statutory authority but an independent company. The Gatwick Airport Consultative Committee, for example, has pointed out that at present it has direct links to both the airport operator, which is at present the BAA, and the Department of Transport. Those important differences between the two Acts were raised in Committee by the noble Lord, Lord Monk Bretton. I think that he will agree that he raised those differences.
Surely the noble Lord, Lord Boyd-Carpenter, was somewhat mistaken when he expressed his experience of consultative committees. He said that,
"they took a rather narrow view of problems, that their membership was restricted … and that the part they played was not especially helpful or influential".—[Official Report, 22/5/86; col. 467.]
I recognise his great experience and knowledge, but I suggest that the annual reports of such committees illustrate the wide-ranging issues to which they have addressed themselves and contributed views. They also represent a broad spectrum of bodies—local authorities, chambers of commerce, ABTA, tourist boards, the consumers associations, passenger representatives and similar bodies.
I understand that the Secretary of State intends to issue guidelines on the formation and running of consultative committees. Would it not be appropriate to set them out as a schedule at the end of the Bill? The noble Earl also stated that he was sure that the Secretary of State would want to have the considered views of the local airport consultative committees in setting an ATM limit. Confirmation of that from the
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Secretary of State would be welcome. However, if that is the case why is there opposition to Amendment No. 29?
I do not know whether the noble Earl has seen a letter to the Permanent Under-Secretary of State at the Department of Transport, which is dated 9th June. He may not yet have seen it because today is only 10th June. It refers to the annual meeting held in Aberdeen last Friday, 6th June, when the chairmen of no fewer than 18 consultative committees of Britain's leading airports unanimously passed a resolution criticising the Government's refusal to include safeguards for consultative committees in the Airports Bill. I shall not quote the whole of the resolution, but it states:
"In view of Ministers' statements and assurances that they wish consultative committees to continue, this annual meeting places on record its inability to comprehend Government's apparent determination to resist the retention of a provision which would secure that objective".
The wording of Amendment No. 26, which seeks consultation with local authorities under Clause 29, is the same as the Bill's provision for such consultation under Clause 30. I cannot understand why the provision is in one clause and not in the other. The noble Earl indicated that air transport movements are essentially a planning tool, whereas air traffic distribution has nominal non-aviation planning implications. He said that in col. 468 of Hansard, but not in those exact words.
The air traffic distribution rules provide the framework for aviation activity and airport provision for any given area, and therefore must be planning relevant. So much support was expressed from all sides during the Committee stage that I hope that the noble Earl has now been able to reflect upon what was said and that he may now find it possible to accept these amendments. The first amendments are important because of the fact that they include the local authorities, while both sets of amendments feature the relevant airport consultative committee. I beg to move.
Lord Monk Bretton: This is a matter that concerns me. I was unhappy to discover that the local authorities were not consulted about the air traffic distribution rules in the London area recently. That surprised me. The noble Lord, Lord Underhill, said that he believed these things to be planning relevant. I should like to emphasise that I also believe that to be the case. There is no doubt that when Gatwick was starting, traffic had to be steered in its direction and that it did not particularly want to go there at first. This will happen again in the case of Stansted. Surely, there must be implications for planning connected with the speed at which traffic increases at Stansted, the types of aircraft landing there, the question of night flying, the amount of road traffic generated, and so forth. There is a good deal in that.
Airport consultative committees at the major airports want to keep their wider brief as at present. They want to ensure their link with the Civil Aviation Authority and, if possible, in view of privatisation, to strengthen it. The Gatwick consultative committee has until now been vouchsafed a direct link to the Department of Transport and the Civil Aviation Authority representative has sat with it. The committee wants these things to continue. It wants to

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know whether they will continue, and seeks a clear answer. I quite understand that my noble friend the Minister does not want to have to send Civil Aviation Authority representatives to every airport consultative committee meeting at every airport. But, surely, they should be present at the big ones and at the opportune moment. I hope that my noble friend will find a way to meet these problems. They are of considerable importance.
I know that it has been said that a rather narrow view should possibly be taken of consultative committees. But the present British Airports Authority does not agree with that. It believes that the consultative committees are a help. It likes consultative committees. It is better, I suggest, that this means of getting views expressed is used rather than explosions taking place elsewhere because consultation has not taken place.
8.45 p.m.
Lord Lloyd of Kilgerran: My Lords, in supporting these amendments, may I first apologise to the House for not being in my place for the first two or three minutes of the speech of the noble Lord, Lord Underhill? The noble Lord moved the amendment from a practical point of view with great skill and thoroughness. I hope that the Minister, even at this late hour, can apply his mind not only to what appears in his brief but also to the fact that this clause deals with traffic distribution rules. These rules are of fundamental importance in relation to airports. That is quite obvious.
When dealing with the distribution rules, it seems to me to be plain common sense that any local authority or authorities which appear to the Secretary of State to be affected by operations at the airports should be consulted. There is really no difficulty about this. It does not mean that any local authority can come forward. It has to be an authority that appears to the Secretary of State to be affected, the Secretary of State having complete and utter discretion to decide which authority should be considered. It is not, therefore, a matter, as suggested, of opening the door to a vast amount of opposition. Under the amendment, the Secretary of State has the power to decide.
When dealing with traffic distribution rules, it seems to me fundamental common sense to consult the relevant airport consultative committee. I repeat this because it seems to me that sometimes when the Minister replies he forgets the fundamentals of certain clauses. I am not referring to any airport consultative committee; it has to be the relevant airport consultative committee. Again, the Secretary of State has full discretion in deciding which airport consultative committee shall come in. It is not a matter of allowing anyone to come along and kick up a row, as is sometimes suggested. It seems to me from a plain, practical and pragmatic point of view that the amendment is a great help to the Government in dealing with these problems of traffic distribution at airports.
Traffic distribution is of fundamental importance. There is no need for me to stress the point. This amendment would help very much not only the Government but also the airports themselves in relation to traffic distribution. I strongly support the
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amendment so ably put forward by the noble Lord, Lord Underhill.
The Earl of Caithness: My Lords, Clause 29(4) sets out the consultation arrangements which shall apply before the Secretary of State can make traffic distribution rules. He must first consult the CAA, who may then canvass opinion from a wide variety of civil aviation interests. Similarly, Clause 30(6) sets out the consultations which the Secretary of State must undertake before he makes an order limiting aircraft movements at an airport. Of course I appreciate noble Lords' reasons for seeking to expand the range of interests consulted under this Bill and we have reviewed the position since we last discussed the matter.
I sought to explain at Committee stage that the list of potential consultees, such as that in Clause 29(4), wide though it is drawn, is not intended to be exhaustive. It merely sets out the prime candidates for appropriate consultation. I hope that this clarifies the point raised by the noble Lord, Lord Underhill, when he mentioned my reference to minimum consultation at an earlier stage.
We envisage with great confidence that the CAA will sound out views from a very much wider range of interests. I invite your Lordships to cast an eye at the consultation list for the CAA's recent review of London area traffic distribution to see the depth and breadth of the authority's consultation. The CAA consulted—I remind your Lordships that the consultation was carried out twice—322 different bodies, including 48 United Kingdom airlines and 154 foreign airlines, the three London scheduling committees, IATA, 35 airports, 19—that is most—of the airport consultative committees, local chambers of commerce, the trade union movement, the CBI, planning organisations, and a variety of environmental and noise abatement groups. Notwithstanding that exhaustive list, the noble Lord, Lord Underhill, mentioned two bodies that were not approached by the CAA but made representations to it. This highlights the problem of where one draws the line when one comes to putting lists in a Bill.
The noble Lord, Lord Lloyd of Kilgerran, said that the amendment refers—and he stressed this—to, "the relevant Airport Consultative Committee". If we look at the list that the CAA consulted when referring to air traffic distribution in the London area I wonder which airport consultative committees the noble Lord—let us imagine that he was Secretary of State at the time—would have considered it necessary for the CAA to consult. Would he indeed have said that Aberdeen Airport Consultative Committee would have been one? That committee was consulted by the CAA.
Lord Lloyd of Kilgerran: My Lords, is the noble Earl asking me personally a question about this matter? It seems to me that he has misunderstood the purpose of this amendment and does not realise how helpful it would be in relation to deciding distribution of traffic. The noble Earl has cited all these institutions which have been consulted. However, this kind of amendment would help the Secretary of State to decide who are the relevant persons for the purpose of

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dealing with the distribution of traffic in a particular area. He has forgotten that the main object of this amendment is to limit the activities and the discussions which have to take place.
The Earl of Caithness: My Lords, if the purpose of the amendment is to limit the consultation I should have thought that Aberdeen Airport Consultative Committee, to which I have just referred, would have been aggrieved at not being consulted by the CAA on air traffic distribution in the London area. It shows that the CAA consults on a very much wider basis than just the relevant body.
With due respect, I think that the noble Lord is wrong when he says that I have misunderstood the reason for this amendment. I see it clearly. I rather wish the CAA to consult on a wider basis than the narrower basis which the noble Lord advocates. The point that I seek to make is that traffic distribution rules, where they are warranted, will be founded on the widely acknowledged experience and expertise of the CAA complemented by the views expressed direct to the authority from as wide a spectrum of civil aviation interests as one might care to imagine.
Noble Lords will be familiar—I might say with some contrition, overfamiliar—with my concern that to extend the list of organisations which may be consulted would invite claims from even more bodies which could also legitimately claim an interest. The unavoidable question here is: where would one say "Enough"? At what point would the direct interest become so diluted as to render consultation what it should never be—a meaningless, mechanical exercise carried out merely to satisfy the niceties of bureaucracy?
I have no ready answer to that question. I suspect that there is no easy answer. While I appreciate the motives which underlie these amendments, I hope that the noble Lord, Lord Underhill, will not press them because, although we understand the reasons for them, we believe that the CAA will more than cater for them in its consideration.
I would say to the noble Lord, Lord Underhill, that I have indeed received a copy of the letter to the Permanent Under-Secretary of State, dated 9th June. The third point of the resolution is that it be conveyed to Ministers and Members of the House of Lords forthwith. It certainly has been, but nonetheless, as so many were consulted, I believe that the CAA has more than done its duty on that.
Lord Underhill: My Lords, the reply of the noble Earl has left me almost as dim as the lighting has suddenly become. However, I am very pleased that he has had the letter from the Gatwick Airport Consultative Committee to which I referred. I hope that the noble Earl will also have noted the very important airport consultative committees whose chairmen were at this annual meeting. It may be useful if I mention them: Aberdeen, Birmingham, Bristol, Cardiff Wales, East Midlands, Edinburgh, Glasgow, Leeds, Bradford, Liverpool, London Gatwick, London Heathrow. Luton, Manchester, Newcastle, Prestwick, Southampton, Stansted and Teesside. That is a not unimportant list of airport consultative committees.
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For the noble Earl to say that what we are trying to do is merely to bring in the niceties of bureaucracy is a debating point that I am sorry he should make because it has nothing to do with that. Surely the points which the noble Lord, Lord Lloyd of Kilgerran, made are the important ones. As the noble Lord, Lord Lloyd, said, the amendment says:
"any local authority … who appear to the Secretary of State to be affected"—
therefore he will decide—
"and the relevant Airport Consultative Committee".
It could be argued, when one is talking about distribution of traffic in the London area, that it affects every single airport in the country. That may arise when we are dealing with another amendment later on.
I am very disappointed, particularly by the fact, as I mentioned, that Surrey and West Sussex—who are surely vitally interested in air traffic distribution in the London area—were not consulted. They had to seek their own consultation. It is suggested that this amendment would encourage claims from other bodies. People can make claims, but unless it is in the legislation we are fairly safe. Including the local authorities which the Secretary of State thinks will be affected and the relevant airport consultative committee surely means that the Secretary of State is covered. He does not then have to submit to every little body which feels it ought to be consulted. We want to provide exactly the same type of provision that the Government have already put in the Bill, but we want to make certain that these include the local authorities and airport consultative committees.
At this late hour I do not propose to divide the House on this amendment. But I am very disappointed, because we had the same arguments tonight as at Committee stage. We have made very little progress on a matter which is common sense. At the end of the day, as the noble Lord, Lord Lloyd of Kilgerran, said, it will help the Secretary of State rather than hinder him. In these circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 27 to 29 not moved.]
Clause 32 [Matters to be taken into account by CAA]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 30:
Page 29, line 8, after ("in") insert ("all parts of").
The noble Lord said: My Lords, a similar amendment was discussed in Committee on 22nd May. I thought that the noble Viscount, Lord Davidson, on behalf of the Government, was rather too dismissive of it. He indicated that our intention to substitute "civil air transport industry" for "civil aviation" was too restrictive because our wording might not include both airlines and airports. He also thought that "United Kingdom" necessarily included all parts of the United Kingdom. I feel that this was a rather semantic argument. However, I am afraid that we on this side of the House, and I am sure a number of other Members, feel unconvinced. Indeed, I think that the noble Viscount, Lord Davidson, completely missed the purpose of the amendment.
We are not on this occasion questioning the Government's policy or the commitment to the regional airports. We were seeking to make clear in the duties of the civil aviation authority, in the way the powers in Part III of the Bill are exercised, that they should not forget that the United Kingdom airports are not just those located in London and that there are other airports throughout the country which need also to be considered.
I am sure that noble Lords who know Members who live and spend most of their time outside London will appreciate this feeling which is held by many people outside London in the civil aviation field that far too often the CAA looks at aviation issues as though the regional airports did not exist or were irrelevant. A case in point, which we have just dealt with at considerable length in the last group of amendments, is the traffic distribution policy and the fact that the regional airports were not really considered at all. That is despite the fact that over 25 per cent. of London's existing traffic has, on the face of it at least, no need to be met at London.
9 p.m.
The local authorities are all agreed that it would be wholly wrong to force passengers to airports which they do not want to use, and there might be little or nothing anyone can do to influence the emergence of a system which accurately reflects origin and destination patterns in the short-term. The noble Lord, Lord Monk Bretton, made the point earlier that people almost had to be forced to go to Gatwick by government and civil aviation subterfuges. That the same will need to be done as regards Stansted rather exposes the idea that there is no way of controlling people; that passengers will go where they want to go. Of course passengers will go where they want to go. According to the Government, every passenger coming to Britain wants to go to Heathrow and one realises that in the beginning there must be some degree of invisible persuasion to make them go to Gatwick and probably even more persuasion to make them go to Stansted. This is something that will arise more and more as we become involved in the Stansted-Heathrow-Gatwick controversy. We want to include in the Bill these few fairly innocuous but nevertheless very important words for areas outside London.
However, the point is that this Bill will be a major influence on the nation's civil aviation industry well into the next century. I cannot see many other civil aviation Bills being introduced before the end of the century. If the Government's policy to exploit the traffic potential at regional airports means anything, there can be no argument that we need to underline the national dimension to this policy with a long-term context in mind.
One such objective relates to tourism. At the present time over a third of London's future demand is attributable to tourism. The available scope to encourage greater use of gateway airports, like those in Scotland and Manchester, is quite considerable. This was a point which was sharply underlined in the report of the House of Commons Select Committee on Trade and Industry. The CAA has indicated that such policies would run—not "could" run—counter to the
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nation's international obligations. The issue whether those obligations should be reviewed as a long-term measure is not considered, let alone is it openly discussed.
It is this type of attitude as well as everything else that needs to be overcome. It will not happen overnight. We shall not suddenly have people thinking more broadly overnight. It will take quite a long time to develop. The time will depend on the extent to which the objectives can be established and efforts made to achieve them. This has particular significance for the CAA which is the licensing, regulatory and in some important respects the strategic arm of central government in the aviation field.
The local authorities firmly believe the amendment to be both necessary and desirable, and they hope that the Government Will look at it favourably. I was slightly disappointed when I reread what the noble Viscount, Lord Davidson, said last time, when he seemed to treat the matter politically on the basis of the North and the South. That is obviously involved, but it is not a party political point. It goes much deeper than purely a party political point. Therefore, I hope that the Government will accept that these words are much more important to those outside the London area than they are perhaps to those in the London area. I quite accept that in purely semantic terms,
"the need to secure the sound development of civil aviation in the United Kingdom"
does not seem to be a great deal different from,
"the need to secure the sound development of civil aviation in all parts of the United Kingdom."
Apart from the South-East, I am speaking of the people in Devon, the people in Cardiff and Wales, and the people in Manchester, Glasgow, Edinburgh, Aberdeen and Birmingham. They all feel the same. It is a small concession for the Government to make, but it will be a big step in bringing the North and South a little closer together. I beg to move.
Baroness Burton of Coventry: My Lords, I should like briefly to support the amendment. If the Government were to say that of course the United Kingdom means all parts of the United Kingdom, I would accept that, but I do not think that that meets the case here. I believe that there is a strong feeling throughout the country that all parts of the United Kingdom do not receive equal consideration.
I know that the local authorities feel that, and I am quite convinced that those running the regional airports feel it. I cannot really understand what the Government could object to in inserting "all parts of" because if the "United Kingdom" means all parts of the United Kingdom, I can see no reason for not inserting it. I believe that it would give a boost to the regional airports and to the local authorities. I very much hope that the Government will accept the amendment.
Viscount Davidson: My Lords, I really do not think that I can be accused to having been dismissive at the Committee stage. I do not think that the noble Lord, Lord Carmichael, has really read the Official Report correctly. I certainly did not wish to treat the matter politically; that was certainly not my intention. Indeed, I remember quite well that I gave a definite

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assurance to noble Lords that the Government fully support regional airports.
Perhaps I may assure the noble Lord again, as I did at the Committee stage, that the words "United Kingdom" in Clause 32(3) are entirely inclusive of all parts of the United Kingdom. This convention of inclusion is consistent with the practice of previous legislation: for example, Section 4 of the Civil Aviation Act 1982, which Clause 32 directly substitutes for the purposes of Part III of this Bill, gives the CAA an objective to secure the sound development of the civil air transport industry "of the United Kingdom". I can assure your Lordships that, in giving advice under Part III of the Bill, the CAA will give the most careful consideration to all elements of civil aviation throughout the length and breadth of the country. If that assurance is not enough to convince the noble Lord, perhaps I may point out a major difficulty which lies at the core of his amendment. Clause 32, as it stands, requires the CAA to have regard to the sound development of civil aviation in the UK as a whole. Clause 32 enables the CAA to take the broad view of what is good for civil aviation throughout the United Kingdom. The amendment would at best confuse the CAA—to what exactly should the authority have regard?—and at worst would tend to compel it to consider implications of proposals for each part of the UK separately, on a piecemeal basis, area by area. So the CAA might be inhibited in giving advice which, say, argues for an improvement in services at a regional airport at the expense of the London airports, even though that was to the benefit of the industry at large. I am sure that this is not what the noble Lord intends.
I do of course fully appreciate the concern felt by the noble Lords opposite for the welfare of civil aviation in the regions. I have already said that I feel extremely strongly and agree about that; but there is no monopoly on that concern. Quite the opposite: this Government have done more for regional aviation than any of their predecessors. And the facts bear me out. There have been unprecedented levels of capital spending authorised since 1979—nearly a quarter of a billion pounds in fact. This has led to major developments at Birmingham, Manchester, Leeds/Bradford and Newcastle. Moreover your Lordships will know that one of the major policy thrusts of this Government has been for liberalisation within Europe. And a major plank of that policy has been the liberalisation of inter-regional air services within the European community. It was only last Thursday that I replied to a question from the noble Baroness, Lady Burton of Coventry, when I said we already have new bilateral agreements with the Netherlands, Germany, Luxembourg and Belgium. We plan further negotiations with other individual countries. The fruits of this bold endeavour can perhaps best be seen at Manchester which now offers scheduled services to over 35 foreign destinations, about half of which were introduced in 1985.
I hope that in the light of that very clear assurance which I have given about the Government's commitment to regional aviation, and in the light of the difficulties with the noble Lords' amendment, which I touched on at the beginning of my speech, this amendment will not be pressed.
Lord Carmichael of Kelvingrove: My Lords, I am sure the noble Viscount will realise that I and my noble friends find his reply a rather disappointing one. We are not concerned about whether or not the intentions of the Government are necessarily good. Of course, expenditure has increased since 1979 for airports because air traffic is increasing, and will go on doing so for a long time. It would be very unlikely that for a matter of seven or eight years there would not be an increase in the capital investment in airports to account for this. I am sorry if the noble Viscount felt that I had dismissed his case earlier; but I still feel that really he has missed the point. The point is not whether the Government or the Civil Aviation Authority actually take account of "all parts of the United Kingdom" when they are making decisions.
In so many parts of the United Kingdom the feeling is that nothing happens outside the South-East; and this exacerbates—that is a word I hate using, but it is the only one which works in this case—the division between north and south. The very simple use of words could be slightly improved.
I do not believe that "all parts of the United Kingdom" therefore means that the CAA or the Government would need to start looking specifically at individual areas just to give them the feeling that responsibility for civil aviation was over the whole country instead of thinking of civil aviation as being Heathrow and Gatwick. They do not often think of Stansted, yet. When they do, there is annoyance in most parts of the country because it is felt that they are being left out again.
I do not want to be a grumpy Northerner, but this is the impression one gets; and this is not a party point. I was recently at our conference in Blackpool and sat with a group of press, television and Labour Party people. Somebody said to me—and he was very much a Southerner—"How did you come down?" I said. "I drove down". He replied, "Oh, you drove down. I suppose Blackpool is closer to Scotland that it is to England". To him England was somewhere below the old Watford Gap. This feeling is being increased by a refusal to accept quite simple words. However, if the noble Lord wishes to say something.—
Lord Ferrier: What about Prestwick my Lords?
Lord Carmichael of Kelvingrove: My Lords, this is on another issue which perhaps we had better do without just now. My point is that I am disappointed; but I have tried it twice and we are not going to have the Government accept it, so I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.15 p.m.
Lord Underhill Lord Underhill moved Amendment No. 31:
Page 29, line 10, leave out ("and").
The noble Lord said: My Lords, in speaking to Amendment No. 31, I should also like to deal with Amendments Nos. 32 and 34. All three deal with the question of environmental consequences. It may be recalled that somewhat similar amendments were debated in Committee, but these three amendments have now been revised to avoid the ambiguous nature

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of the amendments of Committee stage which were highlighted by the noble Lord, Lord Boyd-Carpenter. The noble Lord assured the House that the CAA is extremely concerned to minimise the adverse environmental consequences of airport development and usage. If that is the case, why is there any objection whatever to amending the Bill to make such provision?
The noble Earl reminded the Committee (at col. 502 of Hansard) about the Government's policy towards the environmental impact of airports as set out in the 1985 Airports Policy White Paper. He quoted from that White Paper:
"to minimise the impact of airports on the environment generally; and to ensure that land use planning and conservation policies take fully into account both the development needs arising from airports and the environmental consequences."
The noble Earl added that the White Paper set out a number of other policy intentions which could also be included within Clause 32, but that this would overburden the legislation.
However, a number of these points are already included in Clause 32, and a number of points are also included in Clause 37. Clause 32 relates to,
"Matters to be taken into account by CAA."
Clause 37 relates to the
"Imposition of conditions by CAA."
By accepting these amendments, the Government will be providing a balance, in accordance with the White Paper policy objectives, to those points already written into Clauses 32 and 37 of the Bill.
Under the Civil Aviation Act 1982—I shall not weary the House by going into the whole detail of the section—it is obvious that the direct responsibility of the CAA is to serve the interests of the air transport industry. This is primarily its duty. Also under the 1982 Act it has the duty to minimise adverse effects on the environment and any disturbance to the public, but that is subject to the objectives to which I referred in the 1982 Act, which generally are to serve the air transport industry.
Therefore, it is surely incumbent on the Secretary of State to ensure that environmental matters are taken into account. One cannot ignore environmental matters when dealing with aviation and airport matters. The noble Lord stressed that these points are made in the Government's White Paper on airports policy. Powers exist under Section 17 of the Civil Aviation Act 1982 for the CAA to refer matters to the Secretary of State where noise, vibration, pollution or other disturbances attributed to aircraft may be involved. The local authorities would welcome assurances that this will continue to be the case.
While clearly the CAA is primarily concerned with serving the interests of the air transport industry, the Secretary of State will take into account the environmental factors providing a balanced approach in accordance with the Airports Policy White Paper objectives. By accepting these amendments, the Government would give that assurance not to environmental bodies but to the local authorities. I hope that after reflection from the Committee stage, now that we have tidied up the amendments in a form which I think is acceptable, the Minister will be able to accept them. I beg to move.
Lord Lloyd of Kilgerran: My Lords, when I was preparing myself for the somewhat daunting task of replacing my noble friend Lord Tordoff in this debate at Report stage, and to deal with the 20 amendments with which I was landed, I came to Clause 32 dealing with,
"Matters to be taken into account by CAA.".
and I found that there were amendments Nos. 32 and 34. The House is asked to consider in Amendment No. 34 the need,
"to minimise adverse environmental consequences of airport development and usage".
I thought that this was an amendment that the Government would accept.
Clause 32 deals with matters to be taken into account by the CAA, and it refers to the international obligations, and then, subject to parts that I need not read, it says that the CAA shall have regard to the matters referred to in subsection (3). The matters are as follows. The first is,
"the need to secure the sound development of civil aviation in the United Kingdom".
The second is,
"the reasonable interests of users of air transport services".
The third matter laid down is,
"such policy considerations as the Secretary of State may notify to the CAA for the purposes of this section".
Surely the Government should like to accept an amendment which adds to those matters the need to minimise,
"adverse environmental consequences of airport development and usage".
It is not the need to minimise just anything, but,
"the need to minimise adverse environmental consequences".
This is a matter for the Secretary of State. He has discretion in all these matters which is not appreciated. Consequently if the Government really consider that environmental matters are important, this is a simple amendment which will assist them in their action to deal with complaints. Complaints are inevitable when dealing with improvements to airports.
This is the kind of amendment which would help the CAA and therefore the Secretary of State; they would take into account "the need to minimise". The noble and learned Lord the Lord Advocate is present. He knows the difficulty of interpreting what "minimise" means in certain circumstances. Nevertheless, it would be helpful for the Government and the CAA to decide to minimise environmental consequences.
What would be the result of accepting this amendment? It would save the CAA or the Secretary of State an awful lot of trouble.
There are three very distinguished persons on the Front Bench and if they should like to have a consultation on the matters I have already raised before I go on, I shall be only too glad to pause in my approach to this matter. I see that they have now separated themselves and are smiling benevolently at me, and so I shall continue on this very interesting point.
The amendment would save the Government, the Secretary of State or the CAA from hearing the complaints that are always being made that the CAA

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is a bureaucratic concern or that the Secretary of State is a bureaucrat and that these matters have not been taken into consideration. If this were put into the Bill as a practical matter, in my view it would save the Government a lot of trouble.
I quite appreciate that the noble Earl the Minister at this late hour has had a difficult time on this matter. Perhaps he does not think it is a difficult time, but he has worked very well and very nobly. If only he would lift his visor just a little. Is the noble Viscount, Lord Davidson, advising him how to lift the visor? I am very glad that the noble Viscount nods to indicate that he is trying to persuade the noble Earl to lift his visor. If only he would lift his visor and look away from his notes and brief and think of this as a practical man, as a man accustomed to wonderful territories where he and his ancestors have lived for so long. All we are asking is for the Government to insert a provision that there is a need for the CAA to,
"minimise adverse environmental consequences of airport development and usage".
If the noble Earl the Minister would treat this matter in the context of his knowledge of agricultural and environmental conditions, I think he would accept this amendment.
Lord Monk Bretton: My Lords, I should like to say a word or two in support of this amendment. The justification for it has already been pretty well urged, I think the House will agree. I shall not elaborate too much. I was grateful at Committee stage when my noble friend said that he hoped he had made it crystal clear that Government policy was to continue to take environmental factors into account. By way of environmental factors what I am thinking about particularly is what, in terms of compensation, is generally known as "injurious affection". Injurious affection is a species of damage that has to be paid for. It is injurious affection that airports create. It is a cost to the community. I made that point in view of what my noble friend Lord Boyd-Carpenter said earlier about the dangers of getting too much involved in worrying about the environment when you have to make money out of air traffic. You still have to pay for injurious affection.
The trouble is that although my noble friend made that admirable expression of purpose, on reading the Bill there certainly is not much sign of it. In fact my noble friend felt that it was not necessary to put this, as he said, on the face of the Bill. I recollect being far from alone in having anxieties about this. My noble friend Lord Cork felt that it was a great mistake to omit reference to this from the face of the Bill. At Committee stage I mentioned my anxieties about this and asked whether it was really adequate to leave the matter to Section 5 of the Civil Aviation Act 1982. I think that is really the case if we do not put something on the face of this Bill about it. It is a matter of whether these environmental matters would in this way be regarded pari passu with the air traffic matters. I think it is important that this should be dealt with pari passu.
My noble friend at that time did not venture an opinion about it but I do hope he will still say that he is prepared to have a further look at it. I think, from
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what he has said, that he does see the practicable desirability of having something on the face of the Bill but he sees the technical difficulty in doing that. I remain most anxious that this amendment should be in the Bill. I wonder whether this might be made possible if we were to repeat Section 5 of the Civil Aviation Act of 1982: the same procedure as we find in Clause 32 of this Bill regarding Section 4 of the Civil Aviation Act 1982—in other words, to ignore it for the purpose of reading Clause 32 of this Bill. In that way it would be possible to put this amendment as a part of Clause 32 and get it on the face of this Bill. I suspect it would be surer and plainer. I hope my noble friend may see his way to doing something on these lines.
The Earl of Caithness: My Lords, naturally I appreciate the motives which prompt this amendment, and I can assure the noble Lord, Lord Lloyd of Kilgerran, that I have lifted my visor on this but that, having looked, I shut it again pretty quickly. There are other amendments on which, as the noble Lord knows, I lifted my visor and where we made a lot of progress and a number of concessions, as a result of what has been discussed—
Lord Lloyd of Kilgerran: My Lords, I am sorry to interrupt but I have not noticed the concessions while I have been sitting here all day.
The Earl of Caithness: My Lords, I am disappointed with the noble Lord: I really am, after all we have gone through. I do not think he really means that. My noble friend Lord Monk Bretton mentioned injurious affection. That is a subject which I dealt with as an agricultural surveyor; but I do not think he is quite right in saying it is appropriate here, because most of the development has followed the airport. The houses and industry that come in with the airport reap a benefit from the airport. Perhaps it should be the other way round and they should pay the airport for the benefit of the increased rent and the capital value that accrue to them through being next to the airport.
9.30 p.m.
Lord Monk Bretton: My Lords, I wonder whether my noble friend is entirely aware of some of the bitter things that happened around Gatwick in the early days, when people were not adequately compensated and suffered very badly. I do not think he should take that view.
The Earl of Caithness: My Lords, I realise that there have been some occasions when certain people have not felt they were fully compensated. I was putting the alternative view that many have come in subsequently.
Lord Lloyd of Kilgerran: My Lords, I am sorry to interrupt the noble Earl again, but he does turn his back on the House and perhaps he was making concessions when he was turning his back towards me. I did not hear what he said, but I am sure it was very useful.
The Earl of Caithness: My Lords, indeed, I hope it was very useful. What I said—I will repeat it and look at the noble Lord; it is sometimes difficult to hear the

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Back-Benches too—was that there is the alternative agreement to that put forward by my noble friend. I come back to the point that, having looked at these amendments against, I am still of the opinion that they are unnecessary.
Clause 32 sets out those matters which the CAA must take into account in giving advice under Part III of the Bill, or in preparing a slot allocation scheme under Clause 31. In particular, Clause 32(3)(c) requires the CAA to have regard to—and it is a repetition of what I said at Committee stage—
"such policy considerations as the Secretary of State may notify to the CAA for the purpose of this section".
That means that the Secretary of State can instruct the CAA to look to whatever policy issues he thinks appropriate in the formulation of its advice. This provides ample opportunity for the Government to draw the CAA's attention to environmental matters.
The Government's policy on airports and the environment is set out in last year's White Paper on airports policy. The noble Lord, Lord Underhill, has quoted a section which I read out in Committee, so I shall not repeat that. The White Paper dealt with a variety of other policy issues which could also be embodied in a notification under Clause 32(3)(c). However, there is no need to spell out all those various issues on the face of the Bill.
The Government naturally accept that aircraft noise is an unfortunate, though unavoidable, consequence of airport development. We are anxious that nuisance should be avoided so far as is practicable and reasonable. That is why the Government are so keen to see noise abatement measures at, for instance, Heathrow and Gatwick, such as maximum noise limits, noise preferential routes on take-off and restrictions on night movements. That is why I hope today to gain the approval of the House for a new clause which will allow an airport operator to be required to monitor the track-keeping of aircraft. Above all, the Government firmly believe that the most effective measure for reducing noise disturbance is to reduce aircraft noise at source—in the aircraft itself. That is why there are firm regulations which deal with the noise levels of aircraft operating in this country.
I shall not weary your Lordships with the ample evidence of the Government's concern that the impact of airports on the environment generally should be minimised. I shall simply reiterate that Clause 32(3)(c) provides the mechanism through which the Government can ensure that the CAA are given appropriate notice of policy relating to the impact of airport operations on the surrounding area in the context of requiring their advice under Part III of the Bill. That mechanism caters for the end which this amendment seeks to achieve, and in that light I hope that the noble Lord, Lord Underhill, will withdraw it.
Lord Underhill: My Lords, I am sure the noble Earl appreciates that at the end of the day I am almost certain to withdraw these amendments. But it is not good enough to say that there are three criteria laid down in Clause 32 and four criteria laid down in Clause 37, but pose a reason why this criterion should not be included. Yet the Government regard it as
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important, because the noble Earl stressed that time and time again.
Surely it is a question as to the CAA's balance between its responsibilities to the civil aviation industry and its responsibilities to the Government's outlook on environmental considerations. That is why these matters ought to be in the Bill, and I cannot understand the timidity of the Government, reflected through the noble Earl, in not wanting to put them in. What harm would it do to put them in?
But at this late hour, all I can do, once again, is to read what has been said and come forward at Third Reading with a better amendment which will really fit the Government's intentions in considering environmental matters and hope to put that in the Bill so that the CAA and other bodies will know that it is really the intention. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 32 not moved.]
Clause 34 [Interpretation of Part IV, etc.]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 33:
Page 29, line 23, at end insert—
(" "the 1980 Act" means the Competition Act 1980;")
The noble Earl said: My Lords, in moving Amendment No. 33, I wish at the same time to speak to Amendments Nos. 44 and 48. These are technical amendments. I beg to move.
On Question, Amendment agreed to.
Clause 37 [Imposition of conditions by CAA]:
[Amendment No. 34 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 35:
Page 34, line 3., leave out ("and 47") and insert (" to (Breach of accounts conditions: criminal penalties etc.' ").
The noble Earl said: My Lords, in moving this amendment, I should like to speak at the same time to Amendments Nos. 45, 46 and 87.
The accounts conditions in Clause 38 have been the subject of previous debates, both here and in the other place. I believe that we all agree on their importance. They have two main uses: first, by ensuring full transparency in an airport business, they act as a disincentive to unfair cross-subsidy and other monopoly abuses, and equally importantly they will ensure that sufficient information is disclosed to enable, for example, other airports to decide whether there is a prima facie case for a complaint about predatory pricing.
If the accounts conditions are to work in the way intended, it is important that they are as difficult to breach as possible and, where such a breach occurs, that the remedy can be swift and certain. In the light of this, we have re-examined the procedure in Clauses 46 and 47 in relation to enforcement of accounts conditions. We have concluded that the existing enforcement procedure, while working well for conditions on prices and trading practices, is less effective in relation to accounts conditions. For example, a compliance order—which is intended as a means of remedying any breach of a condition—could probably only require an airport operator to comply with a condition in subsequent annual accounts: it

221
could not do anything in relation to accounts already filed which failed to disclose the information specified in a condition.
This is clearly unacceptable. The new clause that I am proposing would avoid any such problems. It provides a separate enforcement procedure for accounts conditions, similar to the procedure that already exists in the Companies Acts for enforcement of the requirements to file annual accounts with the Registrar of Companies. The new clause provides that a failure to comply with an accounts condition is a criminal offence, subject to a fine. In addition, the CAA is empowered to impose further conditions to secure disclosure and publication within a specified period of any information omitted from the airport operator's accounts in breach of a condition. Failure to comply with such a condition within the time allowed will also be a criminal offence subject to a fine and to a daily default fine. The new clause includes some protection for the airport operator by providing a defence if he can prove that he took all reasonable steps to comply with a condition.
I hope that your Lordships will agree that this new procedure is necessary. It replaces a less effective procedure with something that is quick and clear. It will ensure that an airport operator cannot get away with non-disclosure of information that should be revealed, so we can be sure that every year published information will give a complete financial picture of an airport operator's airport related business.
The other three amendments grouped with the new clause are consequentials, making clear that accounts conditions are enforceable under the provisions of the new clause, and applying the new clause to accounts conditions imposed on associated companies of airport operators. I commend the amendments to your Lordships. I beg to move.
On Question, amendment agreed to.
Clause 38 [Mandatory conditions in case of designated airports]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 36:
Page 34, line 35, leave out ("business carried on by him at") and insert ("his business so far as consisting of the carrying on of operational activities relating to").
The noble Earl said: My Lords, in moving this amendment, I should like to speak at the same time to Amendments Nos. 37, 39 and 40. These amendments simply bring the wording of Clauses 38 and 39 into line with the definition of "operational activities" in Clause 28 which was inserted at Committee stage. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 37:
Page 34, line 45, leave out ("activities carried on at the airport (whether") and insert ("operational activities relating to the airport (whether carried on").
The noble Earl said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 38:
Page 35, line 31, leave out ("for the time being in force under subsection (3)") and insert ("imposed in pursuance of subsection (3) (as they are for the time being in force)").
The noble Earl said: My Lords, this is a technical amendment. I beg to move.
On Question, amendment agreed to.
Clause 39 [Discretionary conditions]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 39 and 40:
Page 38, line 6, leave out ("the business carried on by him at") and insert ("his business so far as consisting of the carrying on of operational activities relating to").
Page 38, line 17 leave out ("the business carried on by it at") and insert ("carrying on operational activities relating to").
On Question, amendments agreed to.
Clause 41 [References to Commission in relation to imposition or modification of conditions]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 41:
Page 41, line 7, leave out from ("(2)") to end of line 13.
The noble Lord said: My Lords, this is a very important amendment. I apologise to your Lordships for the fact that in Committee the other day this amendment passed through when we were in rather a hurry and, as I was otherwise engaged, I did not have time to speak to it. Therefore, I take this opportunity to speak to the amendment now.
There are two points to consider in relation to this amendment, which refers, as your Lordships will realise, to Clause 41(5)(b). The first is a general point, which is that, in defining the public interest, the commission is required in the Bill as at present drafted to have regard to matters that, in our view, are not really essential to the proper conduct of either the airports or the commission itself.
It is a strange subsection. In spite of referring to the general objectives specified in paragraphs (a) to (d) of Section (2), the Bill refers the Monopolies and Mergers Commission to a very curious section of interests which, in my view, are covered by paragraphs (a) to (d). In essence, it refers to the concessionaires at airports. We on our side can see no reason why they should be singled out for special preference by the commission when it is studying references that it will no doubt have to study when they arrive.
There is a further point, which is almost a constitutional point. Under the clause as drafted, the commission is required to have regard to:
"the following objective, namely the furtherance of the reasonable interests of persons granted such rights".
I have a certain experience of competition legislation and I believe that this is the first time that I have seen in any proposed legislation that the commission should have regard to the furtherance of any interests. I believe that I am right in saying that there is no precedent in legislation for the commission—which is an objective body set up under its own statute and with its own terms of reference—to be directed to further certain interests, however reasonable they may be. It is that phrase that I find—and I must use this word to the noble Earl—objectionable.
If the noble Earl is prepared to say that the phrase "the furtherance of" might be left out, then we would take a slightly jaundiced but less hostile view of the clause. Nevertheless, we believe that the clause is, first, unnecessary and, secondly, discriminatory in favour of certain interests that are of a particular kind, and that those interests are already covered by paragraphs (a) to (d) of Section (2).
Furthermore, I believe that your Lordships will be very conscious of the definition of "public interest" which we are invited to approve. The "public interest" is defined in many statutes, and as privatisation goes on it is defined in different ways in different statutes. However, when instructing the commission to have regard to certain items in the public interest it is in my view vitally important that the objective role of the commission should be sustained. Any attempt to divert the commission from its objective role into pursuance of sectional interests, furtherance of other interests and specifying particular groups of people to whom the commission should have regard seems to be quite contrary to the role that the commission has performed for many years now in a very distinguished manner and appears to introduce into legislation a factor which I believe your Lordships should weigh very heavily before accepting.
I know that the noble Earl put forward an amendment in Committee, and again I apologise for not being here to respond to it, but I must tell him that I feel strongly about the substance of subsection (5)(b). I feel much more strongly about the words "the furtherance" in subsection (5)(b). In that spirit, I beg to move.
9.45 p.m.
The Earl of Caithness: My Lords, I have to admit to some surprise at seeing this amendment on the Marshalled List since the words it seeks to delete were in fact added by a Government amendment during Committee stage with the agreement of your Lordships. This was as a result of a commitment given in another place by the Government following a defeat in the Committee stage—a defeat engineered with the full support of the Front Bench of the noble Lord, Lord Williams. I now find it surprising to find him coming back to say that that is not what the Opposition meant when they defeated the Government in Committee. That is why I am puzzled.
I now turn to the meat of the amendment. A great deal of concern has been expressed that concessionaires of commercial activities at airports, who contribute substantially to airports' economic and business success, seem to have very little protection against monopoly abuse compared to airport users—that is, airlines and passengers.
In fact, the Bill provides some protection for concessionaires. In respect of "relevant activities"—that is, the aeronautical side of the airport Business—Clause 39(3)(b) enables the CAA to impose conditions to deal with unreasonable discrimination in the granting of concessions, unreasonable limitations on the numbers of concessions, or unfair exploitation of concessionaires. Then, as part of the quinquennial review provided for in Clause 41, the MMC will investigate whether any practice of the airport
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operator in granting concessions for all airport activities (aeronautical and commercial) operates against the public interest.
Before the Government amendment which your Lordships accepted in Committee, the MMC would have carried out its functions primarily with an eye to the end effect on the reasonable interests of airport users, and the other CAA objectives specified in Clause 37(2). The MMC was required to have regard to those objectives in carrying out investigations under the Bill—but not sole regard. This wording is quite deliberate. The MMC, as respected guardian of the public interest, has a great deal of knowledge and expertise of fair trading matters in the commercial world generally. In regulating airports, while it would naturally have airport-related objectives in mind, it would make no sense to prevent it from using its expertise in other commercial fields and taking into account other relevant factors in reaching its decisions.
The Government amendment in Committee brought out one other factor: the reasonable interests of concessionaires to which the MMC should have regard—and again not sole regard—in those circumstances where it was looking at business practices which affected those concessionaires. There is no presumption that in any set of circumstances one particular factor would override any other. Judging where the public interest lies always involves—as the noble Lord, Lord Williams, with his experience, will know—a balancing act to weigh the relative importance of various, sometimes diverging, interests. With the amendment, the objectives to which the MMC should have regard cover all the major aspects of an airport's purpose and operation. If the Bill is to be effective in regulating what could be substantial monopolies, this approach seems to me to be right.
The noble Lord raised the particular point with regard to the word "further".There is a precedent for it in Section 4(1)(b) of the Civil Aviation Act 1982 and, indeed, in this Bill in Clause 37(2)(a). However, as he has asked me to have a particular look at it then of course I shall. I give him that assurance and I hope that, in the light of the explanation that I have given, the noble Lord will withdraw the amendment.
Lord Williams of Elvel: My Lords, I am grateful to the noble Earl for his response. When I moved this amendment I apologised for not having been here at the Committee stage of the Bill when this amendment was discussed. Unfortunately I was detained on other matters and this point went through rather quickly; otherwise we could have had this discussion in Committee.
I hope that, in taking back the expression "furtherance of the reasonable interests", the noble Earl will assure me that he will remove those words. If he does so then I am happy to withdraw the amendment. If he does not, I must ask the House to express its opinion in the usual manner.
The Earl of Caithness: My Lords, with the leave of the House, perhaps I may just say that the noble Lord knows that I cannot give him that assurance because I have not yet taken the point away to look at. He asked me to do so and I said that I would, but I cannot give him an assurance.
9.52 p.m.
On Question, Whether the said Amendment (No. 41) shall be agreed to?
Their Lordships divided: Contents, 22; Not-Contents, 38.

DIVISION NO. 4

CONTENTS

Airedale, L.

Oram, L.

Attlee, E.

Ritchie of Dundee, L.

Brooks of Tremorfa, L.

Seear, B.

Carmichael of Kelvingrove, L.

Simon, V.

David, B. [Teller.]

Stoddart of Swindon, L.

Dean of Beswick, L.

[Teller.]

Elwyn-Jones, L.

Taylor of Blackburn, L.

Ferrier, L.

Taylor of Gryfe, L.

Kagan, L.

Underhill, L.

Lloyd of Kilgerran, L.

Williams of Elvel, L.

McNair, L.

Winstanley, L.

Monson, L.

226

NOT-CONTENTS

Allerton, L.

Gray, L.

Belstead, L.

Gray of Contin, L.

Boyd-Carpenter, L.

Grimston of Westbury, L.

Brabazon of Tara, L.

Hives, L.

Brougham and Vaux, L.

Hooper, B.

Butterworth, L.

Long, V.

Buxton of Alsa, L.

Lucas of Chilworth, L.

Caithness, E.

Lyell, L.

Cameron of Lochbroom, L.

Montgomery of Alamein, V.

Carnock, L.

Morris, L.

Coleraine, L.

Murton of Lindisfarne, L.

Cork and Orrery, E.

Renton, L.

Craigavon, V.

Saltoun of Abernethy, Ly.

Cranbrook, E.

Sanderson of Bowden, L.

Davidson, V.

Skelmersdale, L.

Denham, L. [Teller.]

Swinfen, L.

Elliot of Harwood, B.

Swinton, E. [Teller.]

Elton, L.

Ullswater, V.

Glenarthur, L.

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
10.1 p.m.
Clause 42 [Supplementary provisions relating to references]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 42:
Page 42, line 16, at end insert—
("(i) it is within the power of the CAA to give, and (ii) ")
The noble Earl said: My Lords, I shall speak to Amendment No. 43 at the same time. These are essentially clarifying amendments which make it clear that the CAA's duty to provide information to the MMC which the latter needs for an investigation under Part IV of the Bill extends only to information which it is in the CAA's power to disclose. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 43:
Page 42, line 18, leave out ("which is either") and insert—("(iii) either is")
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 44:
Page 42, line 34, leave out ("Competition Act 1980") and insert ("1980 Act")
On Question, amendment agreed to.
Clause 46 [Breach of conditions: investigation of complaints and making of compliance orders]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 45:
Page 47, line 19, at end insert ("; but nothing in this section applies to a condition to which any provision of section (Breach of accounts conditions: criminal penalties etc.) applies.")
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 46:
After Clause 47 insert the following new clause:
("Breach of accounts conditions: criminal penalties etc.
.—(1) Any airport operator who fails to comply with any condition imposed in accordance with section 38(2)(a) (in pursuance of either section 38(1) or section 39(1)) shall be guilty of an offence and liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to a fine.

(2) Any airport operator who, in the case of any condition imposed in accordance with section 38(2)(b) (in pursuance of either section 38(1) or section 39(1)), fails to comply with that condition before the end of the period allowed for compliance with it by virtue of that or any other such condition shall be guilty of an offence and liable—

(a) on summary conviction, to a fine not exceeding the fifth level on the standard scale; and

(b) on a second or subsequent summary conviction, to a fine of one-tenth of the amount corresponding to that level for each day on which the contravention is continued.

(3) Where an airport operator has failed to comply with any such condition as is mentioned in subsection (1) above, then (whether or not proceedings are brought under that subsection in respect of that contravention) the CAA may impose, in relation to the airport to which the contravention relates, such conditions as the CAA considers appropriate with respect to the publication of any matter to whose non-disclosure the contravention relates; and if the airport operator fails to comply with any condition so imposed before the end of the period allowed for compliance with it by virtue of that or any other such condition he shall be guilty of an offence and liable as mentioned in paragraphs (a) and (b) of subsection (2).
(4) In any proceedings for an offence under this section it shall be a defence for the person charged to prove—

(a) in the case of an offence under subsection (1), that he took all reasonable steps for securing compliance with the condition in question;

(b) in the case of an offence under subsection (2) or (3), that he took all reasonable steps for securing compliance with the condition in question before the end of the period mentioned in that subsection.

(5) Any reference in this section to an airport operator failing to comply with a condition is a reference to his failing to do so in contravention of section 37(1).")
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 47:
After Clause 50, insert the following new clause:
("Orders under the 1973 Act or 1980 Act modifying or revoking conditions.
.—(1) Where, in the circumstances mentioned in subsection (3), the Secretary of State by order exercises any of the powers specified in Parts I and II of Schedule 8 to the 1973 Act or section 10(2)(a) of the 1980 Act, the order may also provide for the revocation or modification of any relevant conditions to such extent as may be requisite to give effect to or to take account of any provision made by the order.
(2) In subsection (1) "relevant conditions" means any conditions for the time being in force under this Part other than any conditions imposed or modified in pursuance of section 38(3) or (4).
(3) Subsection (1) shall have effect where—

(a) the circumstances are as mentioned in section 56(1) of the 1973 Act (order on report on monopoly reference) and the monopoly situation exists in relation to the carrying on of any operational activities relating to one or more airports;

(b) the circumstances are as mentioned in section 73(1) of that Act (order on report on merger reference) and at least one of the two or more enterprises which ceased to be distinct enterprises was an airport operator; or

(c) the circumstances are as mentioned in section 10(1) of the 1980 Act (order on report on competition reference) and the anti-competitive practice relates to the carrying on of any operational activities relating to one or more airports.

(4) Expressions used in this section which are also used in the 1973 Act or the 1980 Act have the same meanings as in that Act.")
The noble Earl said: My Lords, with this amendment I shall speak also to Amendment No. 90.
The Deputy Speaker (Lord Renton): My Lords, it may assist the noble Earl if I point out that, according to the groupings which have been notified to the occupants of the Woolsack, Amendment No. 89 goes with Amendment No. 47.
The Earl of Caithness: My Lords, I apologise to the House for the error that I have just made. These are technical and, apparently, rather complicated consequential amendments. Their purpose is merely to ensure that nothing done by the CAA under Part IV of the Bill can prevent the Secretary of State for Trade and Industry from using his powers under normal competition law. I beg to move.
On Question, amendment agreed to.
Clause 52 [Co-ordination of exercise of functions by CAA and Director General of Fair Trading]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 48:
Page 53, line 34, leave out ("Competition Act 1980") and insert ("1980 Act").
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 49 and 50:
Page 54, line 4, after ("(1)") insert ("Subject to subsection (2A,").
Page 54, line 19, at end insert—
("(2A) During the period beginning with the coming into force of this section and ending with the coming into force of section 35 this Part applies to—

(a) any airport which is managed by a company to which any property, rights or liabilities have been transferred in pursuance of a scheme made under section 1 or 14; and

(b) any such airport as is mentioned in subsection (1)(b) above.").

The noble Earl said: My Lords, these amendments provide a safeguard, ensuring that an airport company established under this Bill, either a subsidiary of the BAA or a public airport company, could not lose for a period the statutory undertaker and related provisions, set out in Part V of the Bill. At present Part V of the Bill is tied in with Part IV, dealing with economic regulation. Part V applies to airport operators who have applied for a permission to levy charges under Part IV.
We wish to retain the freedom to bring Part IV into force at an appropriate time, without having the timing dictated by other factors. This amendment ensures that, whether or not Part IV is already in force, we shall be able to apply Part V as soon as any airport is transferred to a company under the Bill. So there will be no possibility of an airport company having to operate without the powers in respect of planning permission and such other matters as compulsory purchase which were enjoyed by its former owner. I beg to move.
On Question, amendments agreed to.
Clause 63 [Provision of special accommodation at airports]:
Lord Underhill Lord Underhill moved Amendments Nos. 51 to 53:
Page 64, line 7, at end insert—
("( ) give the airport operator a direction requiring him to take such steps as may be specified in the direction for the purposes of, or in connection with, the use of such accommodation and facilities by such persons;").
Page 64, line 10, leave out ("so available") and insert ("available as mentioned in paragraph (a)").
Page 64, line 23, at end insert—
("( The Secretary of State may, with the consent of the Treasury, make grants to airport operators for the purpose of defraying or contributing towards expenses incurred by them in complying with directions given to them under this section.").
The noble Lord said: My Lords, the noble Earl said that when we came to these amendments he would have some joyous news to give because the Government would be accepting them. I must congratulate the noble Lord, Lord Tordoff, who, I believe, has been in correspondence on the matter. As his colleague, the noble Lord, Lord Lloyd of Kilgerran, happened not to be present during the two minutes when the Minister made this happy statement, I am moving the amendments formally in the hope that the noble Earl will repeat to us that they are accepted by the Government.
Lord Lloyd of Kilgerran: My Lords, I wish simply to say how delighted I am if this news is correct.
The Earl of Caithness: My Lords, we debated this matter during our consideration of the Bill in Committee and I referred to that debate when we discussed a similarly termed amendment to Clause 28, where I explained at some length why in that case I considered the question of compensation to be inappropriate.
As I previously indicated, I regard directions made under Clause 63 in respect of the provision and operation of special facilities as a different issue. Since our debate in Committee, I have, as promised, discussed the matter with the noble Lord, Lord Tordoff, and other noble Lords who have taken an interest in this question. As a result, I am happy to say that I accept these amendments tabled by noble Lords opposite. They serve to clarify the ambit of this clause and provide the discretion to make grants to airports operators in the way that the noble Lord, Lord Tordoff, so eloquently advocated at Committee stage. I have to say that the Government's intentions to pay an airport operator's additional operating costs in running VIP facilities remain as I stated in Committee. But thanks to these amendments your Lordships have ensured that the power behind these intentions is made explicit on the face of the Bill and this, I believe, makes for a more open provision. I am happy to accept these amendments on behalf of the Government.
On Question, amendments agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 54:
After Clause 63, insert the following new clause:
("Monitoring of aircraft movements.
.—(1) Where an airport is designated for the purposes of section 78 of the 1982 Act (regulation of noise and vibration from aircraft), the Secretary of State may, after consultation with the airport operator, by order require him—

(a) to provide, maintain and operate such equipment as is specified in the order (in accordance with any instructions so specified) for the purpose of monitoring the movements, within an area so specified, of aircraft on flights to and from the airport, and

(b) to make to the Secretary of State such reports as are so specified with respect to the movements monitored by the equipment in pursuance of paragraph (a), and to permit any person authorised by the Secretary of State for the purpose to inspect the equipment on demand at any time;

and it shall be the duty of the airport operator to comply with the requirements of the order.
(2) Any reference in subsection (1) to the movements of aircraft shall be read as a reference to the routes taken by them measured by reference to both direction and height.
(3) Subsections (9) and (10) of the said section 78 (enforcement) shall apply for the purposes of this section as if, in subsection (9) of that section, any reference to subsection (8) of that section were a reference to subsection (1) of this section.")
The noble Earl said: My Lords, in moving this amendment I should like to speak at the same time to Amendments Nos. 77 and 80.
Under Section 78 of the Civil Aviation Act 1982 the Secretary of State has powers to require an airport operator to take certain noise abatement measures at aerodromes designated for the purposes of that section to minimise the disturbance caused by aircraft taking off and landing. One important noise abatement

231
measure is the concentration of aircraft taking off from the designated airports along the least possible number of routes so that they overfly as few people as possible. The airports so designated are currently Heathrow, Gatwick and Stansted.
The Secretary of State has the powers under Section 78 of the Act to impose, after consultation with the person managing a designated aerodrome, the duty of providing, operating and maintaining a noise monitoring system. But similar powers are not available for monitoring the compliance of aircraft with the specified take-off routes.
The new clause enables the Secretary of State, after consultation with the airport operator, to impose on him a requirement to monitor the movements of aircraft (that is, their direction and height) on flights to and from the airport, and to make monitoring reports to the Secretary of State. This will be done at the airport operator's expense but it is a matter for the airport operator whether he chooses to recover the costs of installing and operating the monitoring system through airport user charges.
If the airport operator fails to comply with a duty imposed under the new clause, the Secretary of State is empowered to remedy the failure—for example, by installing and operating the equipment himself—and to recover the costs for so doing from the airport operator. Failure to make monitoring reports to the Secretary of State will make the airport operator liable to a fine.
The other two amendments are consequential, providing for the commencement of the new clause and for it to extend to Northern Ireland.
Enforcement of compliance with the noise preferential routes will remain with government.
This amendment will enable compliance with such routes to be more effectively monitored. It should thus encourage airlines to greater efforts to adhere to the routes and will therefore make for more effective limitation of aircraft noise disturbance around designated airports. It offers yet another positive assurance to communities around such airports that we are committed to caring for their environment. I commend it to your Lordships. I beg to move.
Lord Underhill Lord Underhill moved, as an amendment to Amendment No. 54, Amendment No. 55:
Line 3, leave out ("after consultation with the airport operator").
The noble Lord said: My Lords, Amendments Nos. 55, 56 and 57 go together. These are amendments to the government amendment to insert the new clause after Clause 63.
Needless to say, we are in complete agreement that monitoring arrangements should be carried out. We are quite happy to accept the principle. It must be emphasised that the new clause applies not only to the BAA but to designated local authority airports. There are three reasons why the CAA would be a more appropriate body than the BAA or the designated local authority airports to carry out this task.
First, it is the CAA which advises on the routes, tracks aircraft throughout their flights over the British Isles and is in a position to admonish pilots who do not follow the prescribed tracks. It is therefore logical that the CAA should monitor compliance with its instructions. To give this job to the BAA and other designated local authority airports seems a cumbersome and inefficient way of carrying out responsibilities which are essentially those of the CAA.
Secondly, airport operators will be poorly placed to carry out the task. Most have no experience in this field and do not have the necessary equipment. In practice, they would almost certainly rely on a feed from the CAA's own equipment in order to do the job.
Thirdly, to the extent that deviations might be the result of conscious decisions by CAA traffic controllers, the CAA would be in a much better position than the airport operators to report to the department the reasons for these apparent infringements. Were it otherwise, it could be suggested that the operators are being placed in the invidious position of regulating their own regulators, which I think everyone will agree is rather nonsensical. Therefore, the purpose of these amendments to the Government's new clause is that the monitoring should be carried out by the CAA and not by the airport operator. I beg to move.
10.15 p.m.
The Earl of Caithness: My Lords, I think that I might have misheard the noble Lord, Lord Underhill, when he said that there are local authority airports designated for this purpose. I hope that I did not hear him say that; but if he did so, then I am afraid that it was a slip of the tongue—which is most unusual for him—because there are no local authority airports designated for the purpose of this clause.
I think the House would agree that it is the business of the airport operator that causes the noise disturbance to communities near the airport. It is a well-established principle that the polluter pays for the pollution for which he is responsible. That principle is implemented for other noise abatement measures that the airport operator at designated airports adopts to mitigate the nuisance caused by his activities. For example, the BAA already, at its own expense, provides and operates equipment for monitoring aircraft noise. The operator can, if he so wishes, recover his expenses through user charges. It would be wrong not to follow those recognised and established principles.
The purpose of the noble Lord's amendments is to enable the Secretary of State to require the Civil Aviation Authority to monitor the movements of aircraft taking off and landing at an airport designated for noise abatement purposes. As the monitoring of track-keeping is not part of an air navigation service, the CAA cannot recover such expenses under Section 73 of the Civil Aviation Act 1982. But the CAA is entitled to recover those expenses from Government. The effect of the noble Lord's amendment is to let the polluter off the environmental hook at the expense of the taxpayer. The polluter—the airport operator customers—will not pay for mitigating the environmental impact caused by his activities, thus breaching a well recognised convention. For this reason alone, I

233
hope that the noble Lord will withdraw his amendment.
However, there are other cogent arguments also. The airport operator is free to choose his own agency to provide air navigation services at his aerodrome and the extent of those services. Should he choose an agency other than the CAA, it would be unreasonable and impractical to require the CAA to monitor the track-keeping of aircraft taking off and landing at the aerodrome under instructions from another body. It is true that the British Airports Authority now employs the CAA to carry out the air navigation services at its airports including its designated London airports. But we cannot be sure that the BAA will do so for ever. In such changed circumstances it will be unreasonable to require the CAA to monitor the track-keeping of aircraft using those aerodromes.
The amendment makes the new clause technically deficient. Subsection (3) of the clause enables the Secretary of State to take steps to remedy the failure of a person to perform the duty of track-keeping monitoring imposed on him by the Secretary of State. Such steps may include asking the CAA to perform those duties. But, as with the amendment, the CAA is required to carry out track-keeping monitoring at a designated aerodrome, subsection (3) of the clause is incapable of rational interpretation.
There is one more question which we have fully considered before tabling the new clause: whether the airport operator could be expected to have the operational and administrative expertise to operate a track monitoring system. That question also applies to other specialised services. For any of these services the airport operator is free to contract with a suitable organisation to perform that duty. I hope that what I have said will persuade the noble Lord, Lord Underhill, to see fit to withdraw his amendments.
Lord Underhill: My Lords, I am grateful to the noble Earl for so fully explaining the purposes of the Government's amendment. Whether or not it was a slip of the tongue, I confess that I did not read Section 78 of the 1982 Act before I came into the Chamber. However, I am going by the Government's own Notes on Clauses, which refer to the fact that Section 78 of the Civil Aviation Act 1982 requires noise abatement measures to be undertaken at aerodromes designated for the purposes, and it then goes on:
"currently Heathrow, Gatwick and Stansted".
The word "currently" I assume meant that others could be added to it, including the other BAA airports. I presume that is a possibility, and therefore I assume that if only three are currently designated it is possible for local authority airports to be designated, if so desired. But I shall consider carefully what the noble Earl the Minister has said and see whether or not my advisers are satisfied with the explanation, or whether we will come back on Third Reading. I beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
[Amendments Nos. 56 and 57 not moved.]
On Question, amendment agreed to.
Clause 65 [Capital controls in relation to local authority airport undertakings other than public airport companies]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 58:
Page 65, line 30, at end insert—
("(5) This section applies to England and Wales only.").
The noble Earl said: My Lords, this is a purely technical amendment. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 59 to 61 not moved.]
Clause 68 [Restriction on disclosure of information]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 62 to 66:
Page 66, line 39, leave out ("or").
line 40, at end insert ("or a local weights and measures authority in Great Britain;")
Page 67, leave out line 6 and insert—

("(a) the Trade Descriptions Act 1968;

(aa) the Fair Trading Act 1973;

(ab) the Consumer Credit Act 1974;").

line 7, at end insert—

("(ba) the Resale Prices Act 1976;

(bb) the Estate Agents Act 1979;").

line 22, at end insert—
("(6) In this section "the Commission" means the Monopolies and Mergers Commission.").
The noble Earl said: My Lords, I beg to move Amendments Nos. 62 to 66 and to speak to Amendments Nos. 95, 96 and 97. These are technical and consequential amendments. I beg to move.
On Question, amendments agreed to.
Clause 69 [Supplementary provisions relating to transfer schemes]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 67 to 69:
Page 67, line 37, at end insert—
("(1A) A scheme under section 1 or 14 may—

(a) provide that any functions of the transferor under any statutory provision not contained in this Act shall, to the extent to which that provision relates—

(i) to property transferred by the scheme, or

(ii) to any undertaking of the transferor, or part of such an undertaking, so transferred,

be transferred to the transferee under the scheme; and

(b) define any such functions—

(i) by specifying the statutory provision in question,

(ii) by referring to all the statutory provisions (not contained in this Act) which relate to the property, of or to the undertaking or part of the undertaking, to be transferred by the scheme, or

(iii) by referring to all statutory provisions within subparagraph (ii), but specifying certain excepted provisions").

Page 68, line 5, at end insert—
(" ( ) the reference in paragraph 8 to any of the transferred rights and liabilities shall be read as including a reference to any property or functions transferred by the scheme:
( ) the reference in paragraph 10, in relation to pending legal proceedings or applications, to any transferred property, right or liability shall be read as including a reference to any functions transferred by the scheme;").
line 12, at end insert—
("(5) In this section "statutory provision" means any provision (whether of a general or special nature) contained in, or having effect under, any Act (whether public general or local).").
The noble Earl said: My Lords, I beg to move Amendments Nos. 67 to 69 and to speak to Amendment No. 79. These are also technical amendments. I beg to move.
On Question, amendments agreed to.
Clause 73 [Orders and regulations]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 70:
Page 70, line 38, after first ("order"), insert ("made by the Secretary of State")
The noble Earl said: My Lords, I beg to move Amendment No. 70 and speak at the same time to Amendments Nos. 76 and 78. This new clause is a technical amendment providing for the expansion of certain clauses in the Bill to the Channel Islands and United Kingdom colonies. I can expand on this if any noble Lord would wish me to do so. I beg to move.
On Question, amendment agreed to.
Clause 75 [Financial provisions]:
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendments Nos. 71 and 72:
Page 71, line 25, at end insert—(" (a) ")
line 27, leave out ("and") and insert—
("(b) any sums required by him for making grants under section 63; and
(c)")
On Question, amendments agreed to.
Clause 76 [General interpretation]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 73:
Page 71, line 33, leave out from ("means") to end of line 41 and insert ("the aggregate of the land, buildings and works comprised in an aerodrome within the meaning of the 1982 Act;")
The noble Earl said; My Lords, I beg to move Amendment No. 73. It is a technical amendment.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 74 and 75:
Page 72, line 25, at end insert—
(" "subordinate legislation" has the meaning as in Interpretation Act 1978;")
Page 73, leave out lines 17 and 18.
The noble Earl said: My Lords, I beg to move Amendments Nos. 74 and 75 together. These are technical amendments. I beg to move.
On Question, amendments agreed to.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 76 to 78:
After Clause 77, insert the following new clause:
("Application of provisions of Act to certain overseas territories.
(1) Her Majesty may by Order in Council direct that any of the following, namely—

(a) sections 28 and 33, and

(b) any provision of section 72, 74 or 76, shall extend with such modifications (if any) as may be specified in the Order, to any of the Channel Islands or to any colony.

(2) An Order in Council under this section may make such transitional, incidental or supplementary provision as appears to Her Majesty to be necessary or expedient.")
Clause 78 [Short title, commencement and extent]:
Page 74, leave out lines 14 and 15 and insert ("sections (Monitoring of aircraft movements) to 66;")
Page 74, line 16, at end insert—
("section (Application of provisions of Act to certain overseas territories).")
On Question, amendments agreed to.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 79 and 80:
Page 74, line 24, after ("paragraphs") insert ("1A, 1B,")
Page 74, line 35, at end insert ("section (Monitoring of aircraft movements);")
On Question, amendments agreed to.
Schedule 1 [Application of Part IV to associated companies of airport operators]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 81 to 86:
Page 75, line 7, leave out ("in relation to an airport of") and insert ("under this Part (as it applies in accordance with this Schedule) of the following conditions in relation to an airport, namely—

(a) conditions under section 38(1) or 39(1) with respect to the accounts of an associated company of the airport operator, and

(b)").

Page 75, line 9, leave out ("an associated company of the airport operator") and insert ("such a company, and for related purposes;").
Page 75, line 16, after ("operator") insert ("with respect to whose accounts the conditions were imposed or (as the case may be) ").
Page 75, line 21, at end insert—
("Section 38.
2A.—(1) Where an associated company of the airport operator in the case of any airport either carries on operational activities relating to the airport or is entitled to grant rights by virtue of which any such activities may he carried on by other persons, section 38(2) shall have effect in relation to the airport with the modifications specified in sub-paragraphs (2) to (4) below.
(2) After paragraph (a) there shall be inserted the following paragraph—
"(aa) such conditions as the CAA considers appropriate to secure that the accounts of any associated company of the airport operator, being a company which either carries on operational activities relating to the airport or is entitled to grant rights by virtue of which any such activities may be carried on by other persons, disclose—

(i) any subsidy furnished (whether by the making of loans on non-commercial terms or otherwise) by any persons or authority to the company in connection with its business so far as consisting of the carrying on of operational activities relating to the airport, and the identity of any such person or authority,

(ii) any subsidy so furnished to that business by the company out of funds attributable to any other activities carried on by it, and

(iii) the aggregate income and expenditure of the company attributable to any such operational activities (whether carried on by the company or by some other person); and".

(3) After "the airport operator" where it occurs in paragraph (b) there shall be inserted "or the associated company".
(4) After "the airport operator" where it last occurs there shall be inserted "or in paragraph (aa) to the accounts of any associated company of the airport operator".
(5) Where—

(a) sub-paragraph (1) above does not apply to an airport at the time when conditions are imposed in relation to the airport under section 38(1)(a) or (b), but

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(b) at any later time it appears to the CAA that that sub-paragraph then applies to the airport,

the CAA shall thereupon impose in relation to the airport such conditions as are mentioned in paragraphs (aa) and (b) of section 38(2) as modified by this paragraph.").
Page 75, line 23, at end insert—
("(aa) in subsection (1), the reference to section 38(2) shall be construed as including, in relation to an airport to which sub-paragraph (1) of paragraph 2A above applies, a reference to section 38(2) as modified by that paragraph,").
Page 76, line 19, leave out ("paragraph 3 above") and insert ("this Schedule").
The noble Earl said: My Lords, with the leave of the House I beg to move Amendments Nos. 81 to 86, and to speak also to Amendments Nos. 88 and 89. This brings us back to Amendment No. 47, when I moved that Amendment No. 90 should be discussed. There was a mistake on the Marshalled List that the Chair had. I was right in what I said—that it was Amendment No. 90 and not No. 89, so No. 89 is included with this group of amendments and No. 90 goes with No. 47. This rather long set of amendments completes a process which we began at Committee stage when Schedule 1 was added to the Bill. I beg to move.
On Question, amendments agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 87:
Page 77, line 30, at end insert—
("Section (Breach of accounts conditions: criminal penalties etc.)
.—(1) In section (Breach of accounts conditions: criminal penalties etc.) any reference to an airport operator shall be construed as including a reference to an associated company of an airport operator.
(2) In that section, as it applies to any such company in accordance with sub-paragraph (1)—

(a) in subsection (1), the reference to section 38(2)(a) shall be construed as a reference to paragraph (aa) of section 38(2) (as modified by paragraph 2A(2) and (4) above),

(b) in subsection (2), the reference to section 38(2)(b) shall be construed as a reference to that provision as modified by paragraph 2A(3), and

(c) the references to sections 37(1) and section 39(1) shall be construed in accordance with paragraph 2 and paragraph 3(a) above respectively.").

On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 88 and 89:
Page 77, line 31, at end insert—
("( ) Section 48(3) shall apply in relation to any subsidiary conditions as if the reference to section 38(2) were a reference to that provision as modified by paragraph 2A above.").
Page 77, line 43, leave out ("mentioned in sub-paragraph (1)(a) above.") and insert ("with respect to whose accounts the conditions were imposed or (as the case may be) that pursued the course of conduct in respect of which the conditions were imposed.").
On Question, amendments agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 90:
Page 77, line 43, at end insert—
("Section, (Orders under the 1973 Act or 1980 Act modifying or revoking conditions)
In section (Orders under the 1973 Act or 1980 Act modifying or revoking conditions) (3)(b) the reference to an airport operator shall be construed as including a reference to an associated company of an airport operator engaged in carrying on any operational activities relating to one or more airports.").
On Question, amendment agreed to.
Schedule 2 [Application of enactments relating to statutory undertakers etc.]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 91 to 93:
Page 78, leave out line 10.
Page 78, line 17, leave out ("and").
Page 78, line 18, at end insert ("and sections 283, 296 and 611 of the Housing Act 1985;").
The noble Earl said: My Lords, Amendments Nos. 91, 92, and 93 are technical. I beg to move.
On Question, amendments agreed to.
Schedule 4 [Consequential amendments]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 94.
Page 80, line 41, at end insert—
("TOWN AND COUNTRY PLANNING ACT 1971 (c.78)
1A.—In section 223(2)(b) (cases in which land is to be treated as not being operational land), after "the Gas Act 1986" insert ", the Airports Act 1986".
TOWN AND COUNTRY PLANNING (SCOTLAND) ACT
1972 (c.52)
1B.—In section 212(2)(b) (cases in which land is to be treated as not being operational land), after "the Gas Act 1986" insert ", the Airports Act 1986".").
The noble Earl said: My Lords, Amendment No. 94 is technical. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 95 to 97:
Page 80, line 46, at end insert—
("CONSUMER CREDIT ACT I974 (c.39)
In section 174(3)(a) (exceptions to general restriction on disclosure of information), after" or the Gas Act 1986" insert "or the Airports Act 1986" and after "the Director General of Gas Supply" insert "the Civil Aviation Authority,".").
Page 81, line 5, at end insert—
("ESTATE AGENTS ACT 1979 (c.38)
In section 10(3)(a) (exceptions to general restriction on disclosure of information), after "or the Gas Act 1986" insert "or the Airports Act 1986" and after "the Director General of Gas Supply," insert "the Civil Aviation Authority,".").
Page 81, line 12, at end insert—
("( ) In section 23(6) (disclosure of information), for "28 and 29" substitute "and 28".").
The noble Earl said: My Lords, Amendments Nos. 95 to 97 were discussed with Amendment 62. I beg to move all three en bloc.
On Question, amendments agreed to.
10.30 p.m.
Lord Monk Bretton Lord Monk Bretton moved Amendment No. 98:
Page 81, line 12, at end insert ("
( ) In section 35(2) at the end insert—
"and shall, in doing so, give effect to any direction given to him by the Secretary of State." ").
The noble Lord said: My Lords, this is the last amendment in the series on airport consultative committees. In a nutshell, the Secretary of State is in any case keeping consultative committees under Section 35 of the Civil Aviation Act. I suggest that it is prudent, and this amendment provides, that the Secretary of State should have a reserve power to instruct, when he deems it necessary, an airport

239
management as to whom they must appoint to their consultative committee. I would agree that to date there have not been problems over this.
It has been particularly evident that the British Airports Authority likes its consultative committees. But the British Airports Authority will now cease to exist and instead there will be commercial concerns in its place. There is not really quite the certainty that there was before about what policy will be adopted in appointing to these committees. There is no question but that consultative committee memberships are very anxious about this. There is no doubt that they would sleep a lot better at night if they knew the Secretary of State had this power. It is purely a discretionary power and I believe they are right to ask for this.
This amendment was not put down at Committee stage because I am afraid we received it rather too late. It very nearly missed out again this time and was put down hastily by me at Report stage only. I hope—in fact I am sure—my noble friend will look at it with all due care and consideration because I know that there are strong feelings that something should be done about this. I believe the airport consultative committees regard it as a kind of minimum last stand. The noble Lord, Lord Underhill, on a previous amendment earlier read out the telegram, the resolution from the conference that the consultative committees have held in Glasgow which makes a very good preface to this amendment. I shall not trouble the House with it again.
I know I should take a very firm line over this and say that it is vital we come to a decision about it and so forth, but I doubt whether at this moment there is any great possibility of dividing the House. I should have thought that one might have even more chance if one adopted such policies of finding that there was not a quorum. I do not know, but I beg to move.
Lord Underhill: My Lords, the noble Lord, Lord Monk Bretton, referred to a previous statement I made about the meeting of the chairmen of the airport consultative committees. I want briefly to say that I have received a communication from the consultative committee for Stansted airport, who themselves have reminded me (I do not know about other noble Lords) that this meeting of the chairmen, which was held only on 6th June, decided unanimously to press for this power of direction as explained by the noble Lord, Lord Monk Bretton. I hope the views of the chairmen of all these 18 consultative committees will be taken into consideration.
Lord Lloyd of Kilgerran: I also have been approached on this matter, strange to say, and I hope that the Government will take care to consider this very carefully even at this late hour.
The Earl of Caithness: I can assure the noble Lord, Lord Lloyd of Kilgerran, that we will not take care now because we have already taken care at the moment when the amendment went down.
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Once the BAA is privatised it will be required to provide facilities for consultation under the powers in Section 35 of the Civil Aviation Act rather than Section 2 of the Airports Authority Act 1975. Section 35 already applies to non-BAA aerodromes. There is no practical difference in the wording of the two provisions except that the Airports Authority Act includes a power of direction for the Secretary of State.
This power of direction has never been used. Indeed, it is not clear how it could, in practice, be used and we do not consider that it is necessary. BAA has set up consultative committees under the duty in the Airports Authority Act while local authority airports have set them up under the duty in Section 35 of the Civil Aviation Act. They are clearly an effective means of consulting with local interests and local authorities, as well as airport users, and we expect that they will continue to function at all sizeable airports in future.
The amendment would give the Secretary of State a power of direction over local authority airports and some smaller private airports, such as Biggin Hill, which are designated under Section 35, as well as over BAA airports. After much consideration of the matter, I consider that this would be an unnecessary imposition on their freedom. The existing duty in Section 35 provides a satisfactory means of ensuring that airports consult as required with local interests and users, and, if necessary, there is a legal remedy. I hope that with the assurances I have given my noble friend will see fit to withdraw his amendment.
Lord Monk Bretton: My Lords, I should like to thank my noble friend the Minister very much indeed for this thorough reply. This is obviously a fairly complicated issue and I should like to reserve my position to the extent that if there were reason for it, I might like to return to it on Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 5 [Transitional provisions]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 99:
Page 84, line 49, at end insert—
("Compulsory purchase orders
A compulsory purchase order made under section 17 of the 1975 Act which is in force immediately before the appointed day shall have effect as if made under section 55 of this Act; and the provisions of section 55 shall apply accordingly.")
The noble Earl said: My Lords, this is a technical amendment. I beg to move.
Lord Williams of Elvel: My Lords, I shall be very brief. I wonder whether the noble Earl can help us on the interpretation of the word "immediately". I do not quite understand whether it is a day before, a week before, two weeks before, three weeks before, or five months before. What is the meaning of the word "immediately" in this context? If the noble Earl can help us on that, I am sure it will be to the benefit of the House.
The Earl of Caithness: My Lords, "immediately" means immediately—the second before. I hope that clarifies the situation for the noble Lord, Lord Williams of Elvel.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 100:
Page 85, line 44, at end insert—
("Extensions of Shops (Airports) Act 1962.
14.—Any order designating an airport for the purposes of the Shops (Airports) Act 1962 and in force at the commencement of section 64 of this Act shall, as from that commencement, be treated as designating that airport for the purposes of that Act as amended by this Act.")
The noble Earl said: My Lords, this is a technical amendment. I beg to move.
Lord Carmichael of Kelvingrove: My Lords, I thoroughly accept that this is a technical amendment in terms of its wording. When one looks at it, it is so technical that it is extremely difficult to understand. That is one of the reasons I rise to ask the Minister whether from his notes he can explain the purpose of the amendment to the House. I am sure that if he is not able to do so, he will write to me.
I appreciate the fact that the shops Act would work in a different way in the foreign section of the air side of an airport as against the rest of an airport, but on the other hand, how does it affect the ordinary passengers who—I think this was raised at an earlier stage—may be quite legitimately flying from, say, Aberdeen or Glasgow to London, or from London to Glasgow, which would be much better for them? If they were travelling in that direction, they may very well require things in the airport before they left. At the same time one can see the danger of creating an additional shopping space, almost subverting the Shops Bill which we dealt with recently, if the area merely became a place where people could go on a Sunday to do their shopping. I wonder whether the Minister is able to clear up our worries. The noble Lord, Lord Mountevans, intended to speak to this and that, among other reasons, is why I should like the Minister to help us either now or by correspondence.
The Earl of Caithness: My Lords, the noble Lord, Lord Carmichael of Kelvingrove, is absolutely right to mention the noble Lord, Lord Mountevans, because this is not only a technical amendment but it is partially consequential on the new clause moved by the noble Lord, Lord Mountevans, at Committee stage. As your Lordships will recall, shops at designated airports are already exempted from the restrictions on opening hours in Part I of the Shops Act. The new clause of the noble Lord, Lord Mountevans, extended this exemption to cover also Part IV of the Shops Act which restricts Sunday trading.
This amendment provides that designations already in force (covering 19 United Kingdom airports) will continue to apply when the new provision is introduced. Currently designated airports will then be exempt from both the hours of opening and the Sunday trading restrictions. If the amendment were not made, we would need separately to designate the airport for Sunday trading, which would be a rather bureaucratic and inefficient way to proceed. So we
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sought to make life very much easier for the noble Lord, and for all the users of the airports, by introducing this amendment.
Lord Boyd-Carpenter: My Lords, can my noble friend make it clear whether the shops allowed to open at airports on Sundays, despite the collapse of certain other legislation, include shops not only on the air side but in all parts of the airport?
The Earl of Caithness: My Lords, I believe the answer to that is, yes, but I will check and, if I am wrong, I will come back to my noble friend. I have just been informed that it is all shops within the airport terminal.
On Question, amendment agreed to.
Schedule 6 [Repeals]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 101:
Page 87, line 57, at end insert—

("1985 c.71.

Housing (Consequential Provisions) Act 1985.

In Schedule 2, paragraph 29.")

he noble Earl said: My Lords, this is a technical amendment which adds to Schedule 6 a repeal that was inadvertently missed out. It is an additional repeal added to Schedule 6. The Housing (Consequential Provisions) Act 1985 contains a reference to the Airports Authority Act 1975. Since the latter will be repealed in its entirety once the BAA is vested in a successor company under the Airports Bill, all references to it in other Acts also need to be repealed. My Lords, I beg to move.
ord Williams of ElvelMy Lords, in responding to this amendment may I thank the noble Earl for the courteous way in which he has conducted the discussions on the Report stage. May I also thank the noble Viscount, Lord Davidson, for his informed and, if I may say so, dextrous contribution. From the Opposition Benches I should like to pay our very sincere tribute to the way in which the Government Front Bench have handled this Report stage.
Lord Boyd-Carpenter: My Lords, perhaps I may echo the very courteous and very appropriate words that the noble Lord, Lord Williams of Elvel, has spoken, and also say, as one who has been here through a good deal of these proceedings, how much I have admired the courtesy, the good temper and the sheer physical stamina which my noble friend has shown in dealing with this Bill.
Lord Lloyd of Kilgerran: My Lords, I join the noble Lord, Lord Williams of Elvel, in his tribute to the Ministers who have dealt with this Bill. May I also thank them for the tolerance and sympathy which they have extended to me, in coming in as a substitute for my noble friend Lord Tordoff.
The Earl of Caithness: My Lords, I am extremely grateful for those kind words. I should like to say that my task has been made very much easier by the helpful and constructive way in which the Report and, indeed, the Committee, have been handled by noble Lords opposite, and by the noble Lord, Lord Lloyd of Kilgerran, today and his noble friend Lord Tordoff at Committee stage.
I think that many of the concerns of noble Lords opposite, and indeed of my noble friends, have been taken into account. We are making a better Bill as a result, which is typical of this House and indeed its great strength. There are one or two matters to which we shall have to come back at Third Reading, and the assurances that I gave to noble Lords that I will look at matters again will be fulfilled. I hope that I shall have the opportunity to discuss some of the points with noble Lords before a later stage.
On Question, amendment agreed to.
House adjourned at a quarter before eleven o'clock.