Lords Sitting of 26 June 1986

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Saint Albans): The LORD CHANCELLOR on the Woolsack.
Lord Saint Oswald—Sat first in Parliament after the death of his brother.

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, before the commencement of business, I take the opportunity to inform the House that I have accepted an invitation from the Prime Minister to attend a lunch in honour of the President of the Federal Republic of West Germany on 2nd July. Accordingly, I trust that the House will agree to grant me leave of absence for Wednesday, 2nd July 1986.

European Air Fares
Baroness Burton of Coventry: 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 decisions were reached, or recommendations made, at the meeting of the Council of Transport Ministers held on 18th/19th June in view of the decision by the European Court of Justice that government control of air fares within the EC was illegal.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness): My Lords, civil aviation was not discussed at the last council meeting, which was adjourned. However, a further meeting of transport Ministers has been scheduled for next Monday. We shall press for progress on aviation issues then.
Baroness Burton of Coventry: My Lords, the Minister has given me the information I intended giving him. Does he realise that this saga really reflects nothing but failure upon failure and that we never get anywhere at all? Am I correct in assuming that he has just told the House that at that last important meeting which was deferred until 18th and 19th June the Council of Transport Ministers did not even discuss the liberalisation of transport within the Community? Is he further aware that the European commissioner responsible for transport declared that the decision to abandon the meeting without discussing air fares was deeply regrettable? What do the Government now propose to do?
The Earl of Caithness: My Lords, I can confirm that aviation was not discussed at the last council meeting. I read the same article that the noble Baroness has quoted about the comments of the commissioner responsible. The Commission has tabled a paper
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which will be discussed on 30th June and we shall be taking over the presidency on 1st July. We shall be pressing very hard on this matter of aviation and upon other matters of transport.
Baroness Burton of Coventry: My Lords, I do not have much faith in papers being tabled. We do not get anywhere, whatever is tabled. Does the Minister recall that on 5th June we were told in this House that the Commission said that unless there was satisfactory progress in the council by June it would itself take steps to apply the competition rules of the treaty? What will happen? Is the Commission really going to take action or will there be no discussion again?
The Earl of Caithness: My Lords, indeed the Commission can take action under Article 89 of the Treaty of Rome. Alas, as there was no discussion at the last council meeting there seemed to be little point in the Commission taking action straight away until the discussion on 30th June. Thereafter it will be up to the Commission to decide what action to take, but I understand that it will want to take action immediately if no progress is made.
Lord Boyd-Carpenter: My Lords, now that the European Court has actually come out with a sensible decision, would it not be a good idea to encourage it in that by acting promptly on it?
The Earl of Caithness: My Lords, that is exactly what we in the Government are trying to do and what the Commission is trying to do. I am grateful to my noble friend for that question.
Baroness Burton of Coventry: My Lords, as Monday 30th June is the last day of the Dutch presidency of the EC and as we ourselves assume the presidency on 1 st July, can we take it that there will be no further excuses for immediate action?
The Earl of Caithness: My Lords, I think we have made enormous progress on aviation liberalisation, and we shall continue to press with all the forces at our command to take it a stage further.

Anti-Heroin Campaign: Evaluation
3.5 p.m.
Lord Rodney: 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 evaluation has been made of the impact that their anti-heroin advertising campaign has had on teenagers' attitudes to drugs.
Baroness Hooper: My Lords, the anti-heroin campaign is being independently evaluated by two companies, one using a quantitative survey of 700 young people and the other interviewing small groups in depth. The evaluation has indicated that the campaign has increased young people's resistance to heroin.
Lord Rodney: My Lords, I thank my noble friend for that Answer. Do the Government agree that the solution is ultimately to eliminate the demand for drugs? Will Her Majesty's Government be continuing with the advertising campaign to ensure that these encouraging results continue?
Baroness Hooper: Yes, my Lords. The campaign is continuing on the basis that over the two-year period that it has been in existence the evaluation provides clear evidence that the percentage of young people who said that they would reject an offer of heroin increased from 83 per cent. to 94 per cent. during the first year of the campaign. There is also an increased awareness of the consequences of heroin misuse. Therefore, the campaign will certainly continue.
Baroness Seear: My Lords, how does the noble Baroness reconcile what she has just told us with a greatly increased anxiety about drugs and a greatly increased anxiety in the prison service about the number of people passing through the courts on drug offences?
Baroness Hooper: My Lords, the campaign is, after all, designed to prevent the need for services, including the rehabilitation services, and to avoid the prison consequences of drugs. As I have said, the campaign is only in the first two years of its existence, and the results so far have proved beneficial. But that does not mean to say that the Government will stop there. Other means are being used to help fight the campaign against drugs.
Lord Avebury: My Lords, should not the attack on drugs be twofold, both from the demand end, with the use of a campaign such as the one that is the subject of this question, but equally on the cultivation, manufacture and supply of the drugs, to prevent them from coming into this country in the first place? Do the Government not agree that if as much money had been spent at the other end, in eradicating the crops and in preventing them from being turned into consumable drugs, as has been spent in prevention in the western world, then we should have dried up the supply a long time ago?
Baroness Hooper: My Lords, the Government are well aware of this aspect of the problem. They have taken steps, and are continuing to do so, to prevent the source of the drugs from continuing to increase.
Lord Winstanley: My Lords, the noble Baroness stated that the purpose of this advertising campaign was not to persuade heroin addicts to cease using heroin but to dissuade young people from experimenting with heroin, thus avoiding the risk of becoming addicted. Will the noble Baroness agree that it would be difficult at this early stage to evaluate the effectiveness of the campaign from that point of view? Does she also agree that a campaign of a very different kind using resources of a different kind will be required to deal with people who are already addicted?
Baroness Hooper: My Lords, to answer the noble Lord's first question, yes, the reason for this campaign
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was that heroin misuse had escalated rapidly and we wanted to influence young people's attitudes against it.
Lord Molloy: My Lords, does the noble Baroness agree that what is required is a more massive determination among all the great powers to eradicate this appalling curse? Could not our Government, soon to be in the chair of the EC, make this eradication a substantial item for international action?
Baroness Hooper: My Lords, I think that goes slightly beyond the bounds of the original Question. Nevertheless, the Government are using every means at their disposal to pursue the campaign both nationally and internationally.

Acid Rain: Research
3.10 p.m.
Lord Molloy: 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 research is being undertaken to combat the problem of acid rain in order to enable the United Kingdom to make more use of the substantial coal reserves without damaging the environment.
Lord Skelmersdale: My Lords, my right honourable friend the Secretary of State for the Environment oversees a substantial programme of research aimed at establishing the causes, effects and possible cures for acid deposition. The Natural Environment Research Council and the Meteorological Office also carry out research into these aspects of the problem.
Research and development work on improved combustion technologies which reduce emissions is being undertaken by the Central Electricity Generating Board and British Coal. In particular, they are working on the evaluation of flue gas desulphurisation processes; on coal cleaning technologies; and on the development of the pressur-ised fluidised bed combustion process, the slagging gasifier process and the use of low nitrogen oxides burners.
Lord Molloy: My Lords, may I say that that is indeed an encouraging reply? Would the noble Lord not agree that there also seems to be room for a great deal of interplay and co-operation? Would he not further agree that since the Chernobyl disaster there are very luminous question marks about nuclear energy, and that if we could conquer acid rain, that would mean that Britain would have a massive accumulation of reserve power that would be very worthwhile developing?
Lord Skelmersdale: My Lords, if I caught the order of the noble Lord's supplementary questions correctly, my answers are yes, yes, no, yes. Perhaps I should explain the "no", which was on the future of nuclear power in this country. I would agree that it is something that we have to be continually vigilant about, but it should be put in its perspective. From 1970 up to March 1985 there have been 746 deaths

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associated with the coal-mining industry and only 10 in the civil nuclear industry, none of which related to radiological hazards.
The Earl of Halsbury: My Lords, would the noble Lord agree that in so far as these matters are coming under examination in depth by environmental scientists, their conclusions will not be rendered more valid by bringing them under political pressure to produce the answer of yesterday?
Lord Skelmersdale: My Lords, I am grateful to the noble Earl for that supplementary question. I, too, heard the answer of my noble friend Lord Brabazon yesterday. I must say that some of the questioning in these matters is, in my view, a little premature.
Lord Northfield: My Lords, the Central Electricity Generating Board's complaint on this matter has been that the costs of protecting the environment have proved too high for the electricity producing industry. Has that problem been overcome? Is the Central Electricity Generating Board now more willing to install the sort of suppressors and so on which will prevent the sulphureous emissions?
Lord Skelmersdale: My Lords, although the CEGB is continuing research into flue gas desulphurisation, its current estimate is that retro fitting would cost some £1·6 billion and add approximately 8 per cent. to 10 per cent. to the cost of electricity. This is why its major effort in research is in new burning technologies, to which I referred in my original Answer.
Lord Avebury: My Lords, have the Government evaluated the work of US scientists who concluded that if we continue to burn fossil fuels at the present rate, there will be permanent and irreversible changes in the world climate which will result in the raising of ocean levels by several metres? What would be the effect of this on a country like the United Kingdom with a large coastline?
Lord Skelmersdale: My Lords, the sea level is something that goes up and down through natural causes, irrespective of the greenhouse effect to which the noble Lord refers. Of course, we take very seriously any research paper on this subject which emanates from any part of the world.
Lord Parry: My Lords, would it not, in fact, alter the balance between "wet" and "dry" in the Government?
Lord Skelmersdale: My Lords, the Government consist of people, not of land.
Lord Stoddart of Swindon: My Lords, will the noble Lord the Minister say, in relation to the number of deaths from nuclear power and those from coal mining, whether those figures include deaths through uranium mining? Secondly, following the reply he gave, may I ask him to confirm that there is absolutely no reason why in future coal-fired power stations should not be built, because if desulphurisation plant is included, they will not be a danger to the environ-ment through acid rain?
Lord Skelmersdale: My Lords, no. The regrettable deaths to which I referred in answer to the supplementary question of the noble Lord, Lord Molloy, did not include uranium mining, as uranium is not mined in this country. I was talking about deaths in this country and I was making what I believe is a valid comparison so far as coal-fired stations are concerned, I have no reason to believe that they are not an option for the future.
Baroness Nicol: My Lords, did I understand the Minister to say that there was collaboration on the question of acid rain? Does he mean collaboration with other European countries; and can he tell us to what extent this collaboration has taken place?
Lord Skelmersdale: My Lords, in my previous answers I was referring particularly to collaboration between the various organisations in this country. But so far as other European governments are concerned, the United Kingdom plays a full part in research being carried out under the auspices of the UN/ECE convention on long-range transboundary air pollution through the European monitoring evaluation programme, which includes monitoring emissions and deposition and work on effects.
Other research is also being carried out within the European Community. For example, we are participating in an exercise on the early diagnosis of forest decline with reference to atmospheric pollutants with scientists from the Netherlands and the Federal Republic of Germany. We have also written to the governments of several European countries proposing bilateral arrangements for the regular exchange of information on the content of our respective air pollution research programmes. The CEGB and British Coal are also funding a £5 million research programme with the Royal Society and the Swedish and Norwegian Academies of Science on surface waters acidification programmes.
Viscount Hanworth: My Lords, I came in a little late on this Question. May I ask the noble Lord, if it has not already been asked, whether he appreciates that the emissions from knocks, in other words, from cars, are as important in acid rain as the sulphur?
Lord Skelmersdale: My Lords, with respect, I think that that is wide of the Question on the Order Paper.
Lord Taylor of Gryfe: My Lords, in addition to the environmental bodies which have been consulted in this matter, can the Minister tell me what are the findings of the research department of the Forestry Commission on the effect of acid rain on the forests of this country and of Scandinavia as a result of emissions from power stations?
Lord Skelmersdale: My Lords, as I understand it, somewhat indefinite; but, if I may, I shall take the opportunity to write to the noble Lord.
Lord Ezra: My Lords, in the impressive list of research that the noble Lord indicated as being done in this matter, he mentioned pressurised fluidised bed combustion. Would he not agree that this is one of the

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most promising ways of dealing with this problem and that it has been in hand for a number of years? Will he indicate when we can come to the commercial application of this process?
Lord Skelmersdale: Yes, my Lords; I would certainly agree with the noble Lord, Lord Ezra, that this looks by far the most promising avenue at the moment. But of course it is still at the experimental stage. Development of a commercial-scale plant could be some 10 to 15 years off, depending on the progress with research.
Lord Molloy: My Lords, would the noble Lord agree that this discussion has been very useful and that most people would applaud what this House has done this afternoon? Therefore, could he not perhaps have discussions with his noble friend the Leader of the House as to whether one day we might have a fuller debate on this vital subject?

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Wages Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Horticultural Development Council Order, the Report stage of the Protection of Children (Tobacco) Bill and the Third Reading of the Surrogacy Arrangements (Amendment) Bill will be taken.

Commonwealth Development Corporation Bill [H.L.]
3.19 p.m.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, I beg to move that the Commons amendment be now considered.
Moved, That the Commons amendment be now considered.— (Baroness Young.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[Reference is to Bill 64 as first printed for the Commons]
Clause 1, page 2, line 18, after "may,", insert "after consultation with the Corporation and".
Baroness Young: My Lords, I beg to move that this House do agree with the Commons in their amendment.
During the progress of this Bill through both Houses there was considerable debate about the desirability of providing the Secretary of State with the power to provide the Commonwealth Development Corporation with grants as well as loans. It was stated on behalf of the Government that such a power would be used by the Secretary of State only after full consultation with the corporation. An amendment was moved in another place proposing that the need to consult in this way should be made a statutory requirement. That amendment was acceptable to the Government without qualification, and I commend it to your Lordships. I beg to move.
Moved, That this House do agree with the Commons in the said amendment.—(Baroness Young.)
Lord Oram: My Lords, we on this side can readily support the noble Baroness in this amendment. 1 looked at the report of the short debate in another place, and I noticed that the honourable Member who moved this amendment claimed nothing more for it than that it would have a humble and limited effect. I think that is very true. It is in fact a useful addition to the Bill. As the Minister explained, there is a close working relationship between the ODA and the CDC, and it is clear that if the Minister was wanting to make a grant to the CDC he would in any case have consultations with that body. There is certainly no objection to making it a statutory requirement that he should have such consultation, and therefore I support the noble Baroness.
Lord Walston: My Lords, as somebody who queried the wisdom of the original powers which were in the Bill, may I say that I, too, am extremely pleased that this amendment was made in another place. 1 think it improves the Bill—a Bill which is in any case useful in its own right.
On Question, Motion agreed to.
Privilege amendment agreed to.

Family Law Bill [H.L.]
3.22 p.m.
Report received.
Clause 64 [Family proceedings rules]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 1 to 3:
Page 38, line 26, at end insert ("which relate to the costs of proceedings").
Page 38, line 31, leave out ("so far as relating to the costs of proceedings,").
Page 38, line 35, leave out from beginning to end of line 36 and insert ("Notwithstanding anything in the Legal Aid Act 1974. the power conferred by subsection (1)(b) above").
The noble and learned Lord said: My Lords, these amendments, which I am advised it will be proper for me to move en bloc and which I shall therefore so move unless there is an objection, are the product of further consideration of Clause 64. I may say that I have had the assistance of views expressed by the Law Society.
The first two amendments restrict Clause 64(1)(a) so that the proposed power of the Matrimonial Causes Rule Committee to amend and repeal primary legislation will apply only to costs matters. As I said in Committee, I have seen this particular phrase in a great deal of primary legislation affecting subordinate legislation in my time; but I am advised that for this particular Bill and this particular clause I only need it for costs, and if it goes by with a little goodwill so much the better, it is cheap at the price. May I add that the third amendment ensures that the Matrimonial Causes Rule Committee will be able to make rules prescribing rates for legally aided work, notwithstand-ing the provisions of the 1974Act. I had no doubt and still have no doubt myself, on this question, but the

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society raised some concern based on counsel's opinion that there was a question about vires here, and Parliamentary Counsel has made this further refinement in order to put the matter beyond doubt.
I should explain that I have no intention whatever of bringing forward rules which introduce the same arrangements for private work. As I have explained previously, these new powers will ensure that such a distinction can be drawn. I beg to move that these three amendments be agreed to en bloc.
Lord Mishcon: My Lords, on the last occasion, at the Committee stage, it was rather jovially suggested that I, who had to be out of the country at the time on professional business, had deliberately arranged it so in order that I might avoid the wrath of the noble and learned Lord the Lord Chancellor, which was very vocally expressed, at certain suggestions that were made by the Law Society.
I would never have tried to avoid the noble and learned Lord's wrath because I know well—it is a matter of history—that one of his many engaging attributes which have been practised in the legal profession and in Parliament in a distinguished way over many years is that whenever the noble and learned Lord feels that he has merely an arguable case the voice is raised, the fist beats down upon an innocent table and superlatives are interspersed with superb rhetoric. I know, too, that the Bishops' Benches have sometimes suffered the harangues of the noble and learned Lord—all given and taken in good part—and I believe that they are comforted by the biblical recollection that when the Almighty wished to persuade Elijah into rational behaviour, His voice was not in the tempest. His voice was not in the fire, it was a still, small voice.
The noble and learned Lord has been very gracious today in the way in which he has introduced these amendments. My recollection of the words that were used when the Law Society, through the very eloquent mouth of my noble and learned friend Lord Elwyn-Jones, expressed certain views about Clause 64(1) of this Bill is that the noble and learned Lord ranged, in describing various arguments of the Law Society, between "absolute nonsense" and "arrant nonsense". I forget which of those adjectives was applied to the way in which the Law Society drew attention to the wording of Clause 64(1), which gave to the rule-making authority in family proceedings the right to amend or repeal any statutory provision relating to the practice and procedure of the Supreme Court or county courts so far as may be necessary in consequence of provisions made by the rules.
The anxiety was expressed that although this followed precedent the Family Division and family proceedings were of a very specific nature and, unlike other civil proceedings, there are matters which can be drawn within the ambit of practice and procedure which vitally affect the rights of parties. One example that can be given is that under the provision as it stood in the Bill it would indeed have been open to the rules committee to have decided, for example, to dispense with the requirement of the judge's certificate that arrangements in regard to children are in order before any court grants a decree absolute.
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Therefore, on reflection, the noble and learned Lord has graciously, by implication, withdrawn the descrip-tions of "arrant nonsense" and "absolute nonsense", and has decided most graciously, as I say, now to propose these amendments which follow the line of argument of the Law Society. He has also been good enough to pay tribute to them. My Lords, I am more than content.
Lord Meston: My Lords, so far as I am concerned, the noble and learned Lord has certainly bought good-will with these amendments. We are grateful for the amendments, which remove any doubt as to the extent of the powers given under Clause 64(1). At the Committee stage the noble and learned Lord vigorously removed most of the misgivings and many of the misapprehensions about Clause 64(2), and we were also grateful for that. Nevertheless, misgivings will perhaps remain, at least until we in fact see the rules under Clause 64(2) in operation. But it would not be right to debate the matter further, and it would certainly not be right to delay the passage of this otherwise very useful Bill.
Lord Elwyn-Jones: My Lords, may I also be permitted to congratulate the noble and learned Lord and thank him for his conversion on the road to the Woolsack, by acknowledging in this amendment at least some of the veracity of what was said at an earlier stage, which he so eloquently dismissed as arrant nonsense?
The Lord Chancellor: My Lords, I am indeed flattered to be compared to Elijah. I seem to think that the noble Lord, Lord Mishcon, was aiming even higher when he compared his own voice to a still, small voice. I would not aim so high myself. I am completely unconverted, but I thought I would bow for peace and quiet.
On Question amendments agreed to.

Insolvency Bill [H.L.]
3.30 p.m.
The Lord Chancellor: My Lords, I beg to move that the House do now resolve itself into Committee (on re-commitment) on this Bill.
Moved, That the House do now resolve itself into Committee (on re-commitment).—(The Lord Chancellor.)
On Question Motion agreed to.
House in Committee (on re-commitment) accordingly.
[The LORD ABERDARE in the Chair.]
Clauses 1 to 82 agreed to.
Clause 83 [Companies registered under Companies Act, Part XXII, Chapter II]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 1:
Page 52, line 25, leave out ("the Companies") and insert ("this").
The noble and learned Lord said: I should like, if I may, to take Amendments Nos. 1, 2 and 3 together. I

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am afraid that my quick-change act might lead some people to say plus ca change, plus c'est la meme chose. May I, before I address myself to these three amendments with the leave of the Committee, take the opportunity to say a word of tribute to my noble and learned friend Lord Brightman? Some noble Lords will know that this piece of consolidation will be his last as chairman of the Joint Committee, and I am sure that all sides of this Committee would wish to join me in thanking him for his valuable work in leading this most useful of the House's bodies.
Turning to the amendments, Nos. 1 and 3 are identical and relate to provisions concerning deceased, bankrupt, or insolvent contributories. The provisions referred to are those contained in Clauses 81 and 82 of this Bill and are not, as the Bill presently states, provisions of the Companies Acts. Amendment No. 2 between them, removes a superfluous definite article. I beg to move.
Lord Elwyn-Jones: May I intervene merely to join in the congratulations and gratitude to the noble and learned Lord, Lord Brightman, for the great work he has done, along with his colleagues, on this heart-breaking and difficult work of consolidation, particu-larly on this Bill!
Lord Lloyd of Kilgerran: May I intervene and declare an interest in that I am a member of the Select Committee dealing with these consolidation matters? I should like to join the noble and learned Lord, Lord Elwyn-Jones, in praise for the work of the noble and learned Lord, Lord Brightman, and also for the work of the principal witnesses. The principal witnesses did an extremely fine job in relation to this Bill.
On Question, amendment agreed to.
Clause 83, as amended, agreed to.
Clauses 84 to 137 agreed to.
Clause 138 [Appointment of liquidator in Scotland]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 2:
Page 77, line 10, leave out ("the").
On Question, amendment agreed to.
Clause 138, as amended, agreed to.
Clauses 139 to 225 agreed to.
Clause 226 [Contributories in winding up of unregistered company]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 3:
Page 124, line 42, leave out ("the Companies") and insert ("this").
On Question, amendment agreed to.
Clause 226, as amended, agreed to.
Remaining clauses agreed to.
In the Schedules:
Schedules 1 to 5 agreed to.
Schedule 6 [The categories of preferential debts]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 4:
Page 269, line 29, leave out from beginning to ("or") in line 30.
The noble and learned Lord said: Amendments Nos. 4 and 5 are to correct minute mistakes. They arise as a result of other Bills currently before Parliament. Amendment No. 4 is consequential upon provisions of the Social Security Bill. Amendment No. 5 is consequential upon provisions of the Gas Bill, which has relatively little to do with insolvency, but I am told that these amendments are necessary. I beg to move.
Lord Lloyd of Kilgerran: I must make a confession in that I was not present when the Select Committee considered this matter. But is it technically correct that "The Gas Act 1986", which has not yet passed through this Chamber, should be now inserted into this Bill?
The Lord Chancellor: I raised exactly the same point when I first saw this amendment, and was assured that it was all in order. But I cannot really go into the technicalities of it, because I do not understand it.
Lord Lloyd of Kilgerran: Of course, I will accept what the noble and learned Lord has said.
Lord Elwyn-Jones: It has been done before.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Schedules 7 to 11 agreed to.
Schedule 12 [Enactments repealed]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 5:
Page 296, line 57, at end insert—

("1986 c. 00

The Gas Act 1986.

In Schedule 7, paragraph 31.").

The noble and learned Lord said: I have already explained that this amendment refers to the Gas Bill. I beg to move.
On Question, amendment agreed to.
Schedule 12, as amended, agreed to.
Remaining Schedules agreed to.
House resumed: Bill reported with the amendments.

Company Directors Disqualification Bill [H.L.]
3.40 p.m.
The Lord Chancellor: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of re-commitment be discharged.
Moved, That the order of re-commitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

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

Drainage Rates (Disabled Persons) Act,

Corneal Tissue Act,

British Shipbuilders (Borrowing Powers) Act,

Horticultural Produce Act,

Armed Forces Act,

Civil Protection in Peacetime Act,

Safety at Sea Act,

Health Service Joint Consultative Committees (Access to Information) Act,

Commonwealth Development Corporation Act,

Land Registration Act.

Wages Bill
3.41 p.m.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.—(Lord Trefgarne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the chair,]
Clause 12 [Continued existence of wages councils after repeal of Wages Councils Act 1979]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 71:
Page 14, line 5, after ("effect") insert ("other than in relation to the clothing industry").
The noble Lord said: I move this amendment on behalf of the National Union of Tailors and Garment Workers. I place it in isolation though I know that a great number of other sections of the working community are affected by this legislation. This group thinks that because of the peculiarities of the industry it affects it perhaps more than some of the others. I shall try to be as brief as possible because I realise that in the time available the Committee will wish to discuss a great number of other amendments.
A viable and competitive economy cannot be created by cutting wages and worsening terms of employment. I contend that the Government are wrong in attempting to maim the wages councils. The clothing industry is the only major manufacturing industry within the wages council system. It is there because the industry faces problems which, as I said, probably do not apply anywhere else in manufacturing. The industry has an extremely diverse structure ranging from modern factories to production in the home. The census of production for 1983 suggests that there are some 6,000 clothing factories and workshops, half of them employing fewer than 10 people. I have no wish to read the extensive figures I have on this problem because of the time factor, but
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any figures from the census of production must also be treated with caution as they do not include thousands of unregistered establishments.
The extent of non-registration was well illustrated in a recent report by the factory inspectorate on 300 clothing factories in the West Midlands, Leicester and East London. The inspector discovered nearly 200 previously unregistered factories. Even excluding factories where there had been only a change of occupier, there were still 100 new factories previously unknown to the inspector. The inspectors were visiting premises only where they knew of a clothing factory. It is certain that the proportion of unregistered factories in the area concerned was higher than those figures show.
I contend that there are two sets of workers who, when the Bill becomes an Act, will be more adversely affected. First, I should like briefly to deal with the question of young workers in the clothing industry. In many areas of the country the clothing industry is traditionally a major employer of female school-leavers. Many women leave the industry when they have children, though a number of them return when their children go to school. Workers up to the age of 21 form a high proportion of the industry's workforce. The age of 21, certainly in the post-war period, has never been regarded as the adult age for women. There are no figures for the proportion of the clothing workforce which is under the age of 21 but the union estimates that it is at least 25 per cent. of the total workforce and probably in excess of that. The Government's proposals would deem young workers not fully productive for five years. Anybody—not only in the clothing industry but in the industry to which I belonged—with knowledge of these industries would tell you that this is complete nonsense.
Another two groups of people could be extremely vulnerable under this proposed legislation. I refer to the ethnic minorities and home workers. Statutory protection combined with effective enforcement, which unfortunately is lacking at present, is vital in an industry such as clothing. This is illustrated by the two groups of workers most subject to exploitation—the ethnic minorities and home workers. The Wages Bill now before noble Lords ignores the realities of the clothing industry in, for example, parts of London and the West Midlands. There many clothing workers are required to work excessive hours in poor conditions, often for very low wages. It is a scandal that workers, many of them women with a poor command of English, should be dealt with in that way. More statutory protection, not less, combined with proper enforcement is urgently needed.
Home workers are particularly vulnerable to exploitation and even the Government's consultative paper recognised the need for provisions of some kind for their protection. Unfortunately the proposals in the Wages Bill contradict that. The clothing wages councils at present have a home worker holiday allowance. It would be a tragedy if this were to disappear as is required by the Bill. This would affect adversely tens of thousands of workers in the clothing industry.
The Government adopt, at least in public, the position that the Wages Bill is a job-creating measure,

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but in the clothing industry it is far more likely to destroy jobs. As I have already stated, the clothing industry is extremely diverse. It can be divided into two sectors. One is advanced and is capable of offering its employees conditions which are comparable with those elsewhere in manufacturing; the other is backward and can offer its employees little more than the historical role of sweat shop conditions. The Wages Bill combined with the removal of the protective legislation which applies to women's hours of work proposed in the Sex Discrimination Bill would lead to workers in the backward sector being forced to work longer hours with fewer holidays and probably for less pay. That will certainly have no beneficial effect on employment.
I have tried in a few minutes to illustrate how two or three sections of the community could be seriously affected by this Bill. Perhaps the Government can look at it again and give the clothing industry some special consideration. I beg to move.
Lord Murray of Epping Forest: I rise to support my noble friend, not so much in the sense of arguing that clothing is a special case as arguing that it is a case which graphically illustrates the need for protection for workers of the kind to whom the noble Lord has referred. I think in particular of the East End of London and of the area around Brick Lane where even the most casual observation will show the dangerous, dilapidated and appalling conditions in which mainly Bengali women are working. It was the area where the word "sweating" first entered the industrial vocabulary. It was the area that gave rise to the trade boards themselves. If this Bill is passed, the state of those workers will be even more degrading. That is why I share my noble friend's view that the Bill, which is a licence to exploit people in that situation, should not commend itself to the Committee.
Lord Trefgarne: Our proposals for the reform of the wages councils system are based on the responses that we received on the consultation exercise that we conducted last year. They showed that the majority of employers and employers' organisations favoured retention and reform of the system. I acknowledge that most employers in the clothing industry favoured retention with minimal change, but it remains the case that employers overall wanted reform, and that is what we have provided.
We can have some industries regulated by wages councils and others not, but what we cannot have are two different wages councils systems in existence at the same time, which is what the new clause and the amendments that go with it would achieve if they were adopted. What is much more important is that they would deny the benefits of increased employment opportunities, which we are convinced will arise from the proposed reforms, to the vast majority of employers and workforces in the industries concerned.
As far as concerns Clause 22, I appreciate that noble Lords opposite would be reluctant to lose it, since it is wider in its application than the corresponding provisions of the 1979 Act. Perhaps its presence will prove to be of some small consolation when the Bill comes into force. I hope that the noble Lord will not press his amendment.
Lord McCarthy: I must ask the Minister, in the light of what he has just said, what his answer would be in relation to the Agricultural Wages Board. The Minister says that one cannot have selectivity; that one cannot have two systems. However, he has two systems, because the Government are not designing to do away with the Agricultural Wages Board or to impose upon it that which they are proposing in respect of all the other wages councils in this Bill.
Lord Dean of Beswick: I should not want to develop the line of argument so ably and well put by my noble friend on the Front Bench, but having heard the Minister's reply, I should like to study some of his comments, bearing in mind that he clearly indicated that the employers in clothing factories certainly did not want to go as far down the road as this Bill will take them. On that basis, I beg leave to withdraw my amendment, but I shall consider what the Minister has said and perhaps return to this point at a later stage.
Amendment, by leave, withdrawn.
The Chairman of Committees (Lord Aberdare): I have to point out that if Amendment No. 72 is agreed to, I cannot call Amendments Nos. 73, 74 or 75.
Lord McCarthy Lord McCarthy moved Amendment No. 72:
Page 14, line 23, leave out subsection (3).
The noble Lord said: In rising to move this amendment I should like to couple with it Amendments Nos. 73 and 106. This amendment is designed to put young workers back into the wages councils regulations. The present Bill proposes that they be taken out. I must make it clear that if this amendment and the consequential amendment were passed, it would not mean that there would be nothing left of the Wages Bill. The Wages Bill, so far as concerns Part II, would still include, for example, the direction to the wages councils, which would now be considering also the position of young workers, to consider the employment effect of what they did. There would still be the limitation to a single rate and to a single overtime rate. We are not suggesting at this point, by this amendment, that we should tamper with those parts of the Bill. So the Bill would still represent a considerable modification so far as concerns Part II and the present system. Nevertheless, young workers would be back in the Bill.
There are three broad arguments that we would suggest to the Committee today for putting young workers back into the Bill. The first is that the position of young workers is particularly weak in the labour market vis-à-vis employers. The second argument is that any justification that there may have been at certain times in the past—for example, in the early 1970s—to suggest that youth rates were pricing people out of jobs because they were advancing faster than adult rates is no longer the case in effect. The situation was the result of developments that are no longer in existence and affecting the labour market. So it is not an argument for today. The third argument is that the Government continue to make confused claims about the overall effect of the Bill, and in particular about the employment effect, especially, the employment effect of taking young workers out of the Bill.
So far as concerns the special weaknesses of young workers, I cannot see how any reasonable person could doubt that weakness. It is already clear that the majority of wages councils workers and the great majority of young workers covered by wages councils are below the decency threshold fixed by the EC. In hairdressing, the youth rate starts at £31.16 per week. The average youth rate in wages councils industries is under £50 per week. The rate of entry of youth employment to wages councils is much lower than that and has been calculated at somewhere in the region of £35 per week. The overall level of unionisation in the wages councils trades is about 15 per cent., and among young workers, especially among very young workers of 15 or 16 years of age, it cannot be more than a few per cent.
So that is a group of workers who are badly paid, underpaid, weakly unionised, and who are relatively more badly paid and badly unionised than even adult workers in the wages councils industries. We would say that without regulation there is no chance for that group of workers to maintain what they have at the moment in respect of, for example, holiday pay or even in respect of holidays themselves, or even in respect of Bank Holidays, overtime premiums, protection against exorbitant living-in charges, and so on.
The weakness of young workers is widely accepted, at least outside the ranks of the Government, and it is always justified in virtually every other country of the world—certainly in every country that has minimum wages regulations and specific regulations to defend young workers.
I turn to the Government's argument that youth rates have been pricing the young themselves out of employment. I suggest to the Committee, as I said on the Second Reading of the Bill, that that is essentially an argument from the early 1970s. It was true then that a combination of factors significantly narrowed the youth differential, and it was for a short time reasonable to suggest that the youth differential had perhaps narrowed to a point where there was a disincentive to employ young workers.
We can now see that that situation was the result of more or less one-off events. It was partly the result of the introduction by successive governments of flat low pay incomes policies that disproportionately supported the badly paid and particularly supported, therefore, young workers. It was due also to the collapse of training provisions for the young and the collapse of training rates. The fact was that the overwhelming majority of young workers, and particularly those in wages councils industries, were, within a few months or so of entering an industry, doing, for all intents and purposes, adult work. For that reason they tended to receive something nearer to the adult rates. The situation was due also to the implications of equal pay regulations and to the very high levels of inflation at that time, which undoubtedly persuaded some independent members of wages councils to take the view that they had to do something about paying young workers something approaching a living wage at a time when inflation was moving upwards in double figures.
Nevertheless, all those arguments, tendencies and trends are now much weaker, and many were reversed in the late 1970s and 1980s. Meanwhile, youth unemployment has doubled since 1979, and without the youth training scheme it would be nearer the rate of 20 per cent. The youth differential widens every year, and since 1979 the male youth rates of pay have risen by 30 per cent. less than the average and female rates by 24 per cent. less than the average. Therefore, if there ever was an argument about the unusual youth differential, both as between youths and adults and youths in this country and in other countries, I suggest that the Government cannot have this argument today.
I come, therefore, to the third heading of my approach to this amendment—the confused claims that Government spokesmen have made about what they expect to happen if this amendment is defeated and the Bill is passed unamended. These relate to three aspects of what they have said. First, how much employment will this Bill actually create among young workers? They refuse to tell us. Secondly, how much must the pay of young workers fall to produce this employment effect? They refuse to tell us. Thirdly, let us suppose that the rate of pay of young workers falls and that the employment of young workers does rise. How much of that rise will be compensated for and disallowed because there will be an equal fall in the employment of adults?
That, after all, is the logic of the Government's argument. That is the experience we have had with previous attempts to shift pay in this way. If it be argued that as pay falls relative to other pay, people are priced into work, then if you take action through legislation to push down the rates for young workers, they will become cheaper and more advantageous to employ; and, if the labour market works in the way that the Government think it does in so far as employers do employ more young workers, then they will not employ so many old workers. Therefore, will it in fact be a shift from one section of the population to another?
It is because the Government accept that there is a great deal in this alternative argument, and it is because they accept that the more one accepts a price effect on employment, then the alternative argument becomes coercive, that we have these constant shifts in their statements as to what they think the level of employment will be among young workers if the Bill is passed.
On Second Reading I tried to clear up the position. At that time I referred to a statement for which I only had the authority, as I said, of a report by the Low Pay Unit. As I remember, the Minister spoke to the Secretary of State who was sitting by him and then told the House that the Secretary of State did not remember such a statement being made. That is understandable because it was not made by that Secretary of State. The statement was made by the previous Secretary of State, Mr. King.
On 17th July, as reported in col. 334 of Commons Hansard, the then Secretary of State said, when he was announcing his intention to introduce this Bill:
"We believe that the measures will lead to increased job opportunities for youngsters, but it is impossible to predict how many will be affected".
He then held a press conference and spoke to journal-ists. According to the distinguished correspondent of the Daily Express, Mr. Barrie Devney, he said:
"Between 50,000 and 100,000 young people overall could get jobs as a result of the changes".
Between 50,000 and 100,000 young people, said the then Secretary of State. This was also reported by Mr. David Thompson, the distinguished Daily Mirror industrial correspondent, who said in his paper:
"The Government hopes an extra 50,000 to 100,000 jobs will be provided".
The Daily Telegraph's even more reputable Mr. Maurice Weaver said that it,
"could produce between 50,000 and 100,000 jobs".
Finally, of the papers to which I have had access, the doyen of industrial correspondents, Mr. John Lloyd, who has received awards for his veracity, said in his column:
"Mr. King said the Government's overriding concern was to create more jobs—and that a drop in wages of young recruits in the councils' sector could mean the creation of somewhere between 50,000 and 100,000 jobs".
These are my questions to the Minister. Was this an over-estimate? Was it an under-estimate? Was it an estimate which the Minister has subsequently abandoned? Was that why he did not say it in Parliament? Surely it will not be denied that he said it to those distinguished journalists. If that was the figure, is it a net figure or a gross figure? What will the level of wage reduction have to be in order to create between 50,000 and 100,000 jobs?
I suggest that even if we take that figure, that minute figure, and if we allow for roughly the same amount of displacement as was discovered by the Government in their research paper concerned with previous attempts to operate policies in this way, then we find that we are considering a reduction in unemployment of about 25 per cent. of one month's rate of increase in the present level of unemployment. Is that what this is about? Is that what the Government say? Are the Government going to produce this dangerous, unjust, unsubstantiated, implausible and tenuous set of arguments in order to make the group of workers in this country who are most liable to be exploited certainly exploited by the efforts of the labour market and small employers? We say that there is no case for this subsection to be in the Bill and I move that it be deleted. I beg to move.
Lord Rochester: I support this amendment. As Amendment No. 75 implies, young people aged under 18 are now largely taken care of by allowances under the youth training scheme. At least, that is what I thought until I read in the press this morning (I hope that indirectly the noble Lord the Minister will have had some notice of what I am about to say) that Ministers are considering plans to abolish legislation restricting the hours and times of work of young people aged between 16 and 18 and that the Government are seeking the views of the Manpower Services Commission on the proposals.
I must therefore ask the noble Lord, Lord Trefgarne, whether that is the case. Among other statutes, the Factories Act, the Shops Act and the Employment of Women, Young Persons and Children Act now
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protect the working hours of young people. They cannot at present work for more than 48 hours a week in shops, factories and mines. Overtime of more than six hours a week in factories and 12 hours in shops is banned, as is all work in factories between 10 p.m. and 6 a.m. Young workers are also prohibited from working on Saturday afternoon and on Sunday in factories and other industrial undertakings.
There may well be a case for reviewing some of this legislation; but in doing so it is, in my view, imperative that at a time of high unemployment—particularly in industries covered by wages councils where employees are largely unprotected by trade unions—we ensure that unscrupulous employers do not exploit young people. Therefore, I hope the Minister will be able to make some response to that point.
The Government's case for removing the shield of wages councils from those aged between 18 and 21—as I believe the noble Lord, Lord McCarthy, was saying at one point—is that the high minimum rates set by councils for them have damaged their job prospects in the past and that this reform will substan-tially improve their prospects of getting that vital first foothold on the ladder of employment.
However, a substantial number of reputable organisations think differently. The National Economic Development Office—a body which is representative of government, employers and trade unions—set up a working group to examine the employment effects of wages councils. It concluded:
"The research that has been examined has, in the group's view, left largely unproven the assertions that the wage rates determined by wages councils are substantially reducing the employment prospects of young people".
The CBI carried out a survey of its members on this subject, and they reported little evidence that wages councils had priced young people out of jobs. It added that among its members,
"There was little enthusiasm for the suggestion that all young workers should be excluded from coverage of wages councils".
The Institute of Personnel Management also carried out a survey of its members' attitudes to wages councils, and stated:
"Many respondents argued against removing young workers from the purview of the machinery, stating that they doubted if they would be able to recruit at rates lower than those now in force".
The fact is that evidence on this point is inconclu-sive. Nevertheless, the Government claim that the wages of young people should be freely negotiated with their employers. But how free is that negotiation likely to be in the present state of unemployment and in circumstances in which so many of those concerned are unprotected by trades unions? The contrast between them and the after-tax position of people enjoying high salaries is such that many people known to me who are highly paid are feeling increasingly uncomfortable about the situation. I was interested to learn that that feeling appears to be shared by a majority of Conservative Party supporters, to judge from the findings of an opinion poll that was published earlier this week.
In the past I have gone out of my way to support, and on occasion to advocate, the view that in the interests of our international competitiveness young people should receive a lower percentage of the adult wage rate than has often been the case. Under too

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many wages councils even now, as I understand the position (and I am open to correction) the full adult rate is payable at the age of 18. In my view that is not a sufficient reason for allowing the pay of people in this age group to be altogether unregulated.
I believe that there is a strong case for empowering wages councils to make orders for graduated scales of payments to be made to people aged between 18 and 21; hence my support for Amendment No. 73. Yet there is more to it than that. What is to happen under the Government's present proposals when someone reaches the age of 21? The young person concerned may indeed have a foot on the first rung of the employment ladder but that will not be any consolation when he or she is thrown off the ladder and replaced by some other young person on what may be a much lower rate of pay.
I have consistently allied myself with those who consider that a slower rise in real pay for all in employment would enable more jobs to be provided for the unemployed; but I do not believe that such a situation will come about by placing the power of determining wages solely in the hands of employers. In our free society it will only be achieved when government, employers and trade unions become sufficiently aware of their responsibilities to make it happen.
Lord Sainsbury: I should like to speak very briefly in support of my noble friend. As we all know, one of the justifications for the Bill is the claim made by the Government that the existing wages councils have hindered job creation and caused unemployment. I support Amendment No. 72 because in my opinion there is no evidence that can be produced to support that claim. However, if minimum rates do not operate until the age of 21, in some cases there will certainly be a substitution of younger workers in place of those aged 21 or over, especially if they have not worked for their employer for a period of two years and therefore are not covered by employment protection rights.
Rather than having one rate at 21, surely a graduated incremental scale operating, say, between 18 and 21 would be much more satisfactory. The 16 and 17 year-olds are of course effectively governed by the Youth Training Scheme. I think that the whole Bill shows little concern for the low paid and there is plenty of evidence that there are too many in that category.
4.15 p.m.
Lord Murray of Epping Forest: In addition to the reasons for supporting this amendment that have been so ably advanced by my noble friend Lord McCarthy and other noble Lords who have spoken, there are the implications that this clause carries for Britain's standing in the world. Historically, other countries have looked to Britain to set and maintain decent and civilised standards of employment, not least by way of the conventions established by the International Labour Organisation, which is a body composed of governments, employers' associations and trades unionists.
I am sure that the noble Lord the Minister will bear out my statement that in this organisation the standing
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of Britain has historically been pre-eminent. Indeed, other countries have looked to Britain to give a lead and set a standard. Sadly, that is now no longer true and the change has come about not least because of Britain's denunciation of ILO Convention No. 26 on minimum wage-fixing machinery.
One of the main reasons for the Government's denunciation of that convention was the need to avoid what had always been regarded as their responsibilities—our responsibilities—towards young workers. It would not have been possible for the Government to implement this particular change and at the same time maintain their obligations in respect of the ILO. Convention No. 26 has been ratified by 94 other countries including the overwhelming majority of Western industrialised countries, but not one country—not a single other country—has joined Britain in denouncing the convention or suggesting that the removal of minimum wage protection should be regarded as a means of helping to reduce unemployment or that it will in fact help to generate employment. Not one of those countries has seen fit to support Britain's action.
The ILO, which is an independent body of impecca-ble standing in the world, has said:
"Almost all countries in the world now operate minimum wage systems, and none to our knowledge exclude young workers. The latter are more vulnerable to possible exploitation due to their inexperience and perhaps because of their very desire to earn a living by finding a first job".
In supporting the amendment the Committee will also signify its disapproval of, and indeed its distaste for, the Government treating their ILO conventions as mere scraps of paper to be torn up at a whim.
Lord Vinson: I am sure that on all sides of the Committee we share a deep concern to try to improve the job prospects of young people. That must be completely common ground. I wonder whether it would be helpful if I gave an example of the adverse working of the law as it stands at the moment, and how in many instances it prices young people out of work.
At 16, and not particularly skilled or bright, my neighbour's daughter did not have a job. Her next-door neighbour worked in a shop and thought that it would be possible to get her fixed up. She was told that if she came down to the village shop it may be possible to find her a job. "What is more", she was told, "I will give you a lift each morning and bring you back". That is what they arranged. She worked in the shop. It was her first job, and she was extremely happy. The shop even gave her lunch free.
About three months later along came the wages inspector. He accused the shop—and technically within the law he was right—of underpaying that young person to the extent of about £7 a week. The shop owner said, "I am sorry if we do, but our margin in this business is so thin that if we have to find another £350 a year we simply cannot employ the child. We just do not make that margin". As a result the girl had to be dismissed. She was in tears; the father was furious; and the wages inspector knew that he had not helped the world go round.
Somehow we have to ease the rigidities which in many instances are pricing young people out of work. The market used to work quite naturally, and young

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people were absorbed into it. Of course sometimes on the margin there is the problem of displacement and additionality, but overall more jobs are created. I think that the Government are right to bite the bullet in that difficult area, and I am convinced that the provision will lead to more jobs, not less.
Lord Trefgarne: A central purpose of this part of the Bill is to promote employment, particularly employment for young people. The Government are convinced of the link between pay and jobs. I am grateful to my noble friend Lord Vinson for his intervention. No one could have explained the position more graphically.
Evidence can be found in all the studies on the effects of wages councils that they have inhibited employment prospects. We believe that in wages council industries employment of young people has been inhibited by rates set too high in relation to those for competing adults. All the pay protection in the world is worthless to the young person who cannot get a job because it is illegal to pay him at a rate which he is prepared to accept. Employers will not offer employment to anyone unless they are confident that the workers will at least add their own value to the business. Most young people would rather have a job at a starting rate of pay which is somewhat lower than they would have hoped than no job at all.
We accept that some of the additional jobs for young people may be at the expense of adults, but it is our overriding concern to help young people gain access to the crucial first rung of the employment ladder, and that is why the Government are proposing to remove them from regulation by the councils. This vital measure will be achieved by Clause 12 (3).
I have been asked about the number of jobs that would be created by these arrangements. The Committee will understand that there can be no certain answer to such questions. Pay is not the only matter which determines the level of employment, and we have never maintained or supposed that it was. I can only repeat to the Committee that research has shown that pay is a significant factor, although estimates of its effect vary widely, as the Committee knows. If research did not exist, common sense would surely tell us the same thing.
Lord McCarthy: If we rely on common sense we could have it any way we liked. The question that I ask the Minister is whether he will cite that research.
Lord Trefgarne: I made it clear during Second Reading and on our last Committee day that a lot of research had been done. I have recited it, and I dare say that the noble Lord recalls that.
Lord McCarthy: Which research?
Lord Trefgarne: There was a Gallup poll, for example, last summer which showed clear evidence that young people preferred low paid jobs to no jobs at all.
There was a proposition by the noble Lord, Lord Rochester, that young people might be sacked at age 21, but that is not borne out by the young workers
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scheme report, which states that at least 90 per cent. of young workers have continued or have been expected to continue in their current jobs beyond their period of eligibility for YWS support.
The noble Lord asked me about press reports that he had seen today to the effect that the Government were planning to abolish legislation on young people's hours of work. I assure him that the Government have no current plans to abolish the legislation controlling the hours of work of young people aged 16 to 18, or to issue a consultation document on the subject. However, as is made clear by the White Paper, Building Businesses not Barriers, we are looking at that legislation, some of which parallels the legislation on women's hours which is being repealed in the Sex Discrimination Bill. The review is not yet complete, and it is too early to anticipate conclusions. But Ministers will consider its report later this year and will decide whether the legislation serves a useful purpose nowadays.
The noble Lord referred, too, to the attitude of the CBI. Following publication in March 1985 of the Government's consultative paper on the future of wages councils, the CBI consulted again, this time seeking only the views of those companies and employer organisations most affected by the operation of the wages councils. It was those views that were the basis of the CBI's response to the consultative document, which was approved by its council in May 1985. That response, which shows a certain shift in opinion, states:
"Current youth rates should be frozen and young people should be excluded from the wages council remit".
Incidentally, following up the remarks made by the noble Lord, Lord McCarthy, the typical minima for young workers (that is to say, 16 to 17 year-olds) in wages council trades are £47 to £57 per week and may indeed reach the full adult minimum of about £75 to £80 a week at the age of 18.
In the light of those difficulties which I have explained about the amendment, I hope that the noble Lord will not wish to press it.
Baroness Phillips: I find the arguments of the Minister and the noble Lord, Lord Vinson, almost Dickensian. They were advanced many years ago about the employment of women. Women were cheaper—we all know that—particularly in the clothing and catering trades. They were the only labour that the employer could afford. The danger to the older worker must be obvious. The shop that the noble Lord cited would not be able to employ somebody beyond the age of 18. There would have to be a constant supply of young people. What, then, of the young person who had been working there?
Lord Trefgarne: I do not think that the noble Baroness has fully taken the point on board. The problem is that younger people are less experienced and less skilful. It is inevitable that they are not able to earn so much.
Baroness Phillips: If I may say so, the Minister has not taken the point on board. Young people are of course not as experienced. But the noble Lord, Lord

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Vinson, said that the shop owner could not afford to pay more, and so he would not be able to continue to employ the young person when she became more experienced. That is an ingenuous argument. It is the basis of many of the reforms that we have had over the years. It will be a backward step if we accept such an argument in relation to the Wages Bill.
4.30 p.m.
Lord Vinsonn: The point I am trying to make is that in this instance the introduction of a statute destroyed a small job. There are hundreds and thousands of half jobs with half-skilled people at half rates. That is inescapable. If we deny or frustrate that market, it will not operate properly. I object to people who brand everyone else as taskmasters wishing to grind down the faces of young people. None of us in this chamber is like that. We are trying to get young people started. We are trying to make the market operate sensibly, reasonably and fairly. We believe that this reform will do that. Leaving things as they are will continue to price people out of the jobs that they would like to have at the rate the job can afford.
Viscount Massereene and Ferrard: I support my noble friend. I have come across many such instances. A young person of 16 is not experienced and the wage for him laid down by statute is too much. The wage depends upon the individual and his ability. The statute definitely prices a great many people out of jobs. With due respect to Members opposite, I often wonder how many of them employ people and pay them directly out of their own pockets. I do not know whether the noble Lord, Lord McCarthy, employs many people. It has been a fact for years that if someone is paid a high wage for doing a small job, he will be priced out of a job.
Lord McCarthy: The Committee will not be surprised to find that I am not convinced by the Minister's arguments. Let us make clear what we are saying. We are not saying, and I have never said, that there is no employment effect. I am not saying that we can double and treble people's wages and there will not be an employment effect. I am not saying that if their wages are cut in half there will not be a reverse employment effect. Of course there is an employment effect. Somewhere, out there, there is an employment effect. I keep asking the Government what they say the employment effect is, and they keep refusing to answer the question.
No one should say that we say that there is not an employment effect. I stress that what evidence there is, is evidence of where wages councils have been abandoned. The Department of Employment has done a series of research studies where wages councils have been abandoned. The result of wages councils being abandoned is that the wages go down but the declining employment trend is not reversed. There is not an employment effect big enough to reverse the overall level of decline in the industry and the general employment level in the economy. That is the evidence from studies done by the Department of Employment.
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The studies that go the other way are, for the most part, done by those who put such assumptions into their econometric models. Anyone can have an econometric model and make an assumption that there is a positive employment effect and a positive elasticity so that a 1 per cent. reduction in wages produces a 50 per cent. increase in employment. Anyone can put that in the model. There will then be a tremendous employment effect. That is what Professor Minford does every day of the week. But that is not evidence. The only evidence is of what has happened when wages councils have been abandoned. The general trend is that that has reduced pay but has not significantly increased employment. The overall level has continued to be down.
I do not deny, as the noble Lord, Lord Vinson, says, that we can find people—he clearly has—who will employ other people only if they can pay them £8 less than the minimum rate. Of course there are such people. It is most remarkable for the wages councils inspectorate to find them because the inspectors get round to the average employer only once in 17 years. Even if they do find them, nothing happens. Nothing would have happened in the example given by the noble Lord, Lord Vinson, because there were only two prosecutions last year. At the present rate of decline there will be no prosecutions. The penalties at the moment for those who pay under the rate are weak, but the Government want to get rid of them altogether.
Lord Vinson: Something did happen. In that instance, that young person lost her job. She was extremely happy in her job. In relative terms, because she had a free meal and free transport, she was probably doing rather better than she would have done had she been on the statutory minimum and not had free transport and a free meal. Jobs are relative to one another. I know that we do not have to argue that among ourselves. Severe damage was done. In that instance, the girl was happier to have a job at marginally less than the statutory rate than not to have a job. The problem with leaving matters as they are is that we shall cause great damage to the economy.
Lord McCarthy: I do not deny that that is an example. I do not deny that such things happen. I do not deny anything that the noble Lord has said, but that is not the general trend. Of course there are individuals who will not employ people unless they can pay them less than the wages council rates. There are many people now who are employing people below wages council rates and they are very unlucky to be caught. If that girl walked down the street she would probably find an employer who would pay her less than the wages council rate, and he would not get caught.
We are not saying that there are no indications of such things. We are saying that it is not a general trend and that what evidence there is goes against that. The closer the Government get to the introduction of the Bill—the Minister has done it again today—the more they back off from giving us any figures. They do not just back off from giving the figures of the employment effect; they back off from telling us what the elasticity is—how much we would have to drive down pay to

437
make it 50,000 or 100,000. Since the Government will not put any figures on that and they stick to their position out of prejudice and in defiance of the evidence, we intend to divide the Committee.
4.36 p.m.
On Question, Whether the said amendment (No. 72) shall be agreed to?
Their Lordships divided: Contents, 84; Not-Contents, 110.

DIVISION NO.1

CONTENTS

Airedale, L.

Lockwood, B.

Alport, L.

Lovell-Davis, L.

Amherst, E.

McCarthy, L.

Aylestone, L.

McNair, L.

Banks. L.

Meston, L.

Barnett, L.

Milford, L.

Birk, B.

Mishcon, L.

Brockway. L.

Molloy, L.

Bruce of Donington, L.

Morton of Shuna, L.

Burton of Coventry, B.

Murray of Epping Forest, L.

Caradon, L.

Nicol, B.

Carmichael of Kelvingrove, L.

Northfield, L.

Cledwyn of Penrhos, L.

Oram, L.

Crawshaw of Aintree, L.

Parry, L.

David, B. [Teller.]

Phillips, B.

Dean of Beswick, L.

Ponsonby of Shulbrede, L.

Denington, B.

[Teller.]

Diamond, L.

Rathcreedan, L.

Elwyn-Jones, L.

Rea, L.

Ennals, L.

Rochester, L.

Fisher of Rednal, B.

Sainsbury, L.

Foot, L.

Seear, B.

Gallacher, L.

Sefton of Garston, L.

Graham of Edmonton, L.

Serota, B.

Grey, E.

Shepherd, L.

Hampton, L.

Silkin of Dulwich, L.

Hanworth, V.

Simon, V.

Harris of Greenwich, L.

Stallard, L.

Hatch of Lusby, L.

Stewart of Fulham, L.

Hirshfield, L.

Stoddart of Swindon, L.

Houghton of Sowerby, L.

Strabolgi, L.

Hughes, L.

Taylor of Blackburn, L.

Hunt, L.

Tordoff, L.

Irving of Dartford, L.

Turner of Camden, B.

Jeger, B.

Underhill, L.

Jenkins of Putney, L.

Wells-Pestell, L.

John-Mackie, L.

White, B.

Kaldor, L.

Williams of Elvel, L.

Kilmarnock, L.

Willis, L.

Kirkhill, L.

Wilson of Rievaulx, L.

Leatherland, L.

Winterbottom, L.

Listowel, E.

Ypres, E.

Lloyd of Kilgerran, L.

NOT-CONTENTS

Alexander of Tunis, E.

Caccia, L.

Ampthill, L.

Caithness, E.

Auckland, L.

Cameron of Lochbroom, L.

Bauer, L.

Campbell of Alloway, L.

Beaverbrook, L.

Carnock, L.

Belhaven and Stenton, L.

Cottesloe, L.

Beloff, L.

Cowley, E.

Belstead, L.

Cox, B.

Bessborough, E.

Craigavon, V.

Birdwood, L.

Cullen of Ashbourne, L.

Boyd-Carpenter, L.

Davidson, V.

Brabazon of Tara, L.

De Freyne, L.

Braye, B.

De La Warr, E.

Brookes, L.

Denham, L. [Teller.]

Brougham and Vaux, L.

Digby, L.

Broxbourne, L.

Dilhorne, V.

Bruce-Gardyne, L.

Dundee, E.

438

Ellenborough, L.

Merrivale, L.

Elliot of Harwood, B.

Molson, L.

Elton, L.

Monk Bretton, L.

Fanshawe of Richmond, L.

Montgomery of Alamein, V.

Fisher, L.

Murton of Lindisfarne, L.

Foley, L.

Napier and Ettrick, L.

Fortescue, E.

Norfolk, D.

Gainford, L.

Norrie, L.

Gardner of Parkes, B.

Nugent of Guildford, L.

Glenarthur, L.

Orr-Ewing, L.

Greenway, L.

Pender, L.

Gridley, L.

Polwarth, L.

Hailsham of Saint

Porritt, L.

Marylebone, L.

Portland, D.

Hardinge of Penshurst, L.,

Rodney, L.

Harmar-Nicholls, L.

Rugby, L.

Hayter, L.

St. Aldwyn, E.

Hives, L.

St. Davids, V.

Home of the Hirsel, L.

Sandys, L.

Hooper, B.

Savile, L.

Hylton-Foster, B.

Sempill, Ly.

Ilchester, E.

Shannon, E.

Killearn, L.

Skelmersdale, L.

Kimball, L.

Stodart of Leaston, L.

Kinnaird, L.

Strathspey, L.

Kitchener, E.

Sudeley, L.

Lane-Fox, B.

Swansea, L.

Lauderdale, E.

Swinton, E. [Teller.]

Layton, L.

Teviot, L.

Long, V.

Thomas of Swynnerton, L.

Lucas of Chilworth, L.

Trefgarne, L.

McFadzean, L.

Trumpington, B.

Macleod of Borve, B.

Vaux of Harrowden, L.

Malmesbury, E.

Vickers, B.

Mancroft, L.

Vinson, L.

Marsh, L.

Vivian, L.

Marshall of Leeds, L.

Whitelaw, V.

Massereene and Ferrard, V.

Young, B.

Maude of Stratford-upon-

Avon, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.44 p.m.
[Amendment No. 73 not moved. ]
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 74:
Page 14, line 24, after ("workers") insert ("other than homeworkers").
The noble Lord said: It may be for the convenience of the Committee if we also discuss Amendment No. 108. We have just had quite a long debate on Amendment No. 72 which sought to retain young workers within wages councils. If that amendment had been carried, the amendment that I am now moving would not have been necessary. However, as the Committee, in its wisdom, decided not to support the previous amendment, we have to move this one to try to retain some protection for the most exploited group; namely, young home workers. It may be the case that there are not great numbers of young home workers. Most are aged over 21. A large proportion are aged between 25 and 44. They are women with young children to look after who take in homework not for pin money but because that money is needed to sustain the family. But there are some young home workers, a proportion of them disabled. They need some protection against exploitation by unscrupulous employers.
Rates of pay for home workers are abysmally low, as most noble Lords, I believe, will know. A survey

439
carried out for the Low Pay Unit in 1983 found that one-third of the sample earned less than 50 pence an hour while three-quarters earned £1 an hour or less. It is doubtful whether these rates have increased very much, if at all, since then. There is clearly a need, therefore, to retain protection for young home workers who are, in any event, the most vulnerable to exploitation because of their youth. They are least able to stand up to an employer, as already pointed out by my noble friend Lord Murray of Epping Forest who has great experience in these matters.
The prospect of home workers being exploited will be increased if they are removed from the protection of wages councils. I hope therefore that the Government will not only accept the amendment but will also give an undertaking that an adequate number of wage inspectors is available to see that wages councils' decisions are enforced. Again, as my noble friend Lord McCarthy pointed out, the number of wages inspectors is much too low. Indeed the number of enforcements is ludicrously low. I hope that the noble Lord will be able to give a sympathetic reply. I beg to move.
Lord Trefgarnen: During our discussion on the last amendment I deployed at a little length the argument against the proposition that the amendment contained; namely, that wages councils arrangements should remain in place for young people. The Committee was able to agree that the amendment should not be accepted. I hope that the Committee will likewise agree that this amendment should not be agreed to. The case for home workers is no different. While it is true that the earnings of piece workers—and virtually all home workers are piece workers—are governed by their productivity, that does not mean that there is no point in removing young piece workers from scope. If they remained within the ambit of the councils their pay would be related to the rates set by the councils for the ordinary worker. If they were as fast as adults, they would then be entitled to be paid the same amount. But the whole point of the Government's stance is that young workers should be given a competitive edge over their adult counterparts in their search for employment. In essence, therefore, the arguments against this amendment are the same as the arguments against the previous amendment, which Members of the Committee decisively rejected.
Lord Stoddart of Swindon: I understand perfectly well what the noble Lord has said. Of course it is true that most home workers, whether they are aged over or under 21, are piece workers. But my understanding is that wages councils, at least until now, have set out the minimum rates of piece work. That is what we are seeking to continue. That is the protection that this amendment would give.
I do not know whether the noble Lord has any further information about that. Before I withdraw the amendment—which I intend to do—perhaps he would like to comment on that.
Lord Trefgarne: I do not think that I can add to what I have already said. As I mentioned just now, if young people were as fast as adults then they would be
440
entitled to be paid the same amount. However, the whole point of the Government's stance is that we should give them a competitive edge to enable them to do a little better than adults in this situation. I cannot therefore accept the amendment.
Lord Stoddart of Swindon: I do not accept the logic of the noble Lord, Lord Trefgarne. However, whether or not I accept it, I still intend to withdraw the amendment. I beg leave to do so.
Amendment, by leave, withdrawn.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 75:
Page 14, line 25, leave out ("21") and insert ("18").
The noble Baroness said: I beg to move Amendment No. 75 standing in the names of my noble friends, and to couple with it Amendment No. 107.
Noble Lords have just voted on the amendment which would have given all young people protection from the age of 16 and above. This amendment is a variant of that. It accepts the argument that for the ages of 16 to 18 YTS schemes are in place, and therefore there may be some argument for not including workers of those ages. However, we do not believe that there is any reason whatsoever for excluding from the scope of protective legislation of this kind, young adults between the ages of 18 and 21. In this group we are talking of people who very often have chosen to live independently and are doing so. Sometimes they have had no choice but to do so. Often they have started families of their own. There is absolutely no reason for discriminating against them by exempting them from the scope of the legislation.
Nor do I accept the arguments already advanced this afternoon that one of the reasons for youth unemployment—including youth unemployment in these age groupings—is because wages council restrictions are pricing the young people out of the labour market. My noble friend Lord McCarthy has already referred to the fact that since 1979 youth unemployment has doubled. But during that period of time the relative pay of young people in this age grouping has fallen sharply. Young males have received 30 per cent. less in pay rises than the average increases for adult males. Young women's pay—and I believe this was mentioned earlier—has fallen 24 per cent. behind the equivalent increase for adults. There has been no indication whatsoever that these changing relativities with regard to salaries have affected employment opportunities for young people.
As has already been stated there is very little research data available to support that argument. Indeed, I think that the argument of the Government in these respects is a somewhat disingenuous one. The answer is not given to the question: to what level would pay rates have to be reduced on the Government's logic in order to create more employment? Indeed, the Government have been very silent on that point. Do the Government believe, for example, that cutting the current rate of £70 a week or thereabouts for a skilled hairdresser would lead to a call for more hairdressers? Quite obviously extra employment in this field depends on other factors. It depends on the skill of the hairdresser, the rate of growth of hair, and probably

441
the general economic climate which enables more women to go to hairdressers than did so a number of years ago. I do not think that those arguments hold water.
I do not think that the Minister has effectively answered the argument of my noble friend Lord Murray of Epping Forest on the matter of the ILO Convention No. 26 on minimum wages. I recently attended an international trade union conference as a delegate. I can confirm that there are questions being asked in international labour circles about exactly where the British Government are going. I was asked: what do the British Government think they are doing? They are denouncing this convention, which has been in operation since 1928. They are the only Government that have done so and they will be the only Government in the western world, so far as I can see, which have no kind of minimum protection for young adults at all. For all these reasons, I would commend Amendment No. 75 to noble Lords, and Amendment No. 107, with which it is coupled.
With regard to the point raised by the noble Lord, Lord Vinson, in connection with the young woman who failed to keep a job because of an inspectorate, and so on, I am sorry if this sounds harsh but if it is a burden on business to pay more than a sweat shop rate the individual running that business should be doing something else. It has always been possible to find people desperate enough to accept low pay. It is because of those reasons that we have to have protection, and wages councils. It seems to me that the argument put forward was not on the side of the Government but in favour of retaining basic protection. I beg to move.
Lord Vinson: I wonder whether I may return to this subject, and in particular the question of young people's wages differentials. The noble Lord, Lord McCarthy, has rightly said that these differentials are beginning to open out again. Historically it might be valuable to go back to the point where we on this side of the Committee believe that most of these problems began. When the age of majority was lowered from 21 to 18, that effectively meant that somebody leaving school at 16 had two years as a junior before he or she began to pick up an adult wage. The trade unions—as one can understand perfectly well—were always anxious to get rises at the bottom, as it pushed up the rates for everyone else at the same time. When young people were adult at 21—and in those days very often they left school at 15—there were then six years between starting work and reaching adulthood and an adult wage. This gave six years in which people gradually learnt, and improved their skills. By the time they reached 21 their earning power was the equivalent of an adult at 21. Therefore they were absorbed into the labour market so much more easily.
I believe I am right in saying that youth unemployment in this country—particularly if one rebalances the figures of the YTS scheme—is probably higher than anywhere else in Europe. One of the reasons for that is that the payment to young people relative to older employees of 21 or more is far too high. I think there is every indication that we have priced young people out of the market. This is reinforced by the fact that the highest consumer
442
spending group with the greatest disposable income is in that bracket as well. It seems to me rather crazy for any society to give people almost their maximum earning power in terms of disposable and discretionary income at 18 or 19—for those lucky enough to be in work—and as a consequence price out many hundreds of thousands of young people who would like work.
Therefore, I am sure that the Government are right to try to open up the period through which people can learn and through which, quite sensibly, they can reach a level at which they can genuinely earn a full adult wage at the age of 21. It is for that reason, and for no other reason, that I am sure the Government are right to stick to their principles, and I wholly support the Bill as it stands.
5 p.m.
Lord Boyd-Carpenter: I should like to take up the general proposition which the noble Baroness, Lady Turner, made when she said, in connection with the case which my noble friend Lord Vinson, so vividly described to us on a previous amendment, that if people could run their businesses only by paying sweatshop rates, they should close down their business. If that is really the policy of the party opposite, it is a very revealing observation indeed.
The case which my noble friend quoted was the case of a young person who, as I understand it, very desperately wanted to do this job and who, in fact, was in tears when the wages inspector stopped it. At the same time as that was happening the business was struggling, as many businesses are, to keep going. Is the Labour Party really saying that someone who wants to work should by law be stopped from doing so because the rate of pay is below that which has been fixed by some official body, and, equally, that someone who can keep a business going by employing that willing worker should be forced to give up that business and himself become unemployed?
If that is the policy of the Labour Party, it casts a very illuminating light on the statements that that party has made that a Labour government would deal with unemployment. Quite plainly it means that a Labour government would inflate unemployment.
Baroness Turner of Camden: Perhaps I may respond to that point. Personally I do not believe in the "Koreanisation" of the British economy. Is that the policy of the party opposite?
Lord Trefgarne: I very much share the view of my noble friend Lord Boyd-Carpenter that the remarks of the noble Baroness, in response to the description of the particular situation offered by my noble friend Lord Vinson, were quite extraordinary and I feel certain that, on reflection, the noble Baroness will regret that she made them.
The decision to exclude under-21s rather than under-18s, or any other age, reflects our desire to provide the flexibility needed if people in the younger age groups are to compete successfully with more mature and experienced workers. It really is no good imposing full adult rates at the age of 18 or 19, as many wages councils currently do, unless the youngsters concerned are in all cases fully competent to earn the full rate.

443
One of the messages that we received through the consultative exercise was that the steady reduction in the age at which the adult rate was payable had contributed to employers' reluctance to employ young people. It must surely be more sensible that employers should be free to pay increases in stages and to work up to the full rate as the young workers' value to the business increases. I believe that it was the noble Lord, Lord Rochester, who suggested that while we were discussing an earlier amendment. Again, for very similar arguments to the ones I deployed at some length earlier this afternoon, I would wish to resist this amendment.
Baroness Turner of Camden: I have to say that I do not regret the comments that I made. I do not believe in a low-wage economy. At the age of 18 young people are regarded as having attained majority; people mature much earlier now than they used to many years ago, and it is generally recognised that that is so. Many of them have families at quite a young age. I do not regret anything that I have said in defence of reasonable living standards and a living wage for people between the ages of 18 and 21.
We have only to look at the recent figures which have been issued in the new earnings survey and which appear in the TUC's consultative response to the Government's consultative paper to see the decline. Incidentally, when the noble Lord said that he had consulted a number of organisations prior to the introduction of this Bill, I notice that he did not mention the trade unions. Of course, the trade unions have made quite detailed responses to the consultative document.
As a percentage of adult pay, pay for men is only at 100 per cent. at 21 and over. In 1979 between the ages of 18 and 21 it was 61 per cent. of the adult rate and in 1984 it was 55·7 per cent. of the adult rate In 1979, for women in the age group 18 to 20, it was 74·6 per cent. of the adult rate and in 1984 it was 67·9 per cent, of the adult rate. Therefore, there has been a decline between 1979 and 1984 in the percentages of the adult rate earned by these groups of young people. I do not think that the case has been made out for excluding them from protection and I therefore wish to press my amendment.
5.6 p.m.
On Question, Whether the said amendment (No. 75) shall be agreed to?
Their Lordships divided: Contents, 81; Not-Contents, 98.

DIVISION NO.2

CONTENTS

Airedale, L.

Dean of Beswick, L.

Amherst, E.

Denington, B.

Annan, L.

Diamond, L.

Attlee, E.

Elwyn-Jones, L.

Aylestone, L.

Ennals, L.

Banks L

Falkender, B.

Barnett, L.

Fisher of Rednal, B.

Birk, B.

Foot, L.

Bruce of Donington, L.

Gallacher, L.

Caradon, L.

Graham of Edmonton, L.

Carmichael of Kelvingrove, L.

Gregson, L.

Cledwyn of Penrhos, L.

Grey, E.

David, B. [Teller.]

Hampton, L.

444

Hanworth, V.

Parry, L.

Hatch of Lusby, L.

Phillips, B.

Hirshfield, L.

Ponsonby of Shulbrede, L.

Houghton of Sowerby, L.

[Teller.]

Hunt, L.

Rathcreedan, L.

Irving of Dartford, L.

Rea, L.

Jeger, B.

Rochester, L.

Jenkins of Putney, L.

Sainsbury, L.

John-Mackie, L.

Seear, B.

Kaldor, L.

Sefton of Garston, L.

Kilmarnock, L.

Serota, B.

Kirkhill, L.

Shepherd, L.

Leatherland, L.

Silkin of Dulwich, L.

Listowel, E.

Simon, V.

Lockwood, B.

Stailard, L.

Longford, E.

Stewart of Fulham, L.

Lovell-Davis, L.

Stoddart of Swindon, L.

McCarthy, L.

Strabolgi, L.

McNair, L.

Tordoff, L.

Meston, L.

Turner of Camden, B.

Milford, L.

Underhill, L.

Mishcon, L.

Wells-Pestell, L.

Molloy, L.

White, B.

Morton of Shuna, L.

Williams of Elvel, L.

Mulley, L.

Willis, L.

Murray of Epping Forest, L.

Wilson of Rievaulx, L.

Nicol, B.

Winterbottom, L.

Oram, L.

Ypres, E.

NOT-CONTENTS

Alexander of Tunis, E.

Kinnaird, L.

Auckland, L.

Kitchener, E.

Beaverbrook, L.

Lane-Fox, B.

Belhaven and Stenton, L.

Lauderdale, E.

Beloff, L.

Layton, L.

Belstead, L.

Long, V.

Bessborough, E.

Lucas of Chilworth, L.

Birdwood, L.

McFadzean, L.

Boyd-Carpenter, L.

Macleod of Borve, B.

Brabazon of Tara, L.

Malmesbury, E.

Braye, B.

Mancroft, L.

Brookes, L.

Marshall of Leeds, L.

Brougham and Vaux, L.

Massereene and Ferrard, V.

Broxbourne, L

Maude of Stratford-upon-

Bruce-Gardyne, L.

Avon, L.

Caccia, L.

Merrivale, L.

Caithness, E.

Molson, L.

Cameron of Lochbroom, L.

Monk Bretton, L.

Carnock, L.

Monson, L.

Colwyn, L.

Montgomery of Alamein, V.

Cox, B.

Murton of Lindisfarne, L.

Craigavon, V.

Norfolk, D.

Cullen of Ashbourne, L.

Norrie, L.

Davidson, V.

Nugent of Guildford, L.

De La Warr, E.

Orr-Ewing, L.

Denham, L. [Teller.]

Pender, L.

Digby, L.

Porritt, L.

Dilhorne, V.

Portland, D.

Dundee, E.

Rodney, L.

Ellenborough, L.

Rugby, L.

Elliot of Harwood, B.

St. Aldwyn, E.

Elliott of Morpeth, L.

St. Davids, V.

Elton, L.

Savile, L.

Fanshawe of Richmond, L.

Sempill, Ly.

Foley, L.

Shannon, E.

Fortescue, E.

Skelmersdale, L.

Gainford, L.

Stodart of Leaston, L.

Gardner of Parkes, B.

Strathspey, L.

Gisborough, L.

Sudeley, L.

Glenarthur, L.

Swinton, E. [Teller.]

Hailsham of Saint

Teviot, L.

Marylebone, L.

Teynham, L.

Hardinge of Penshurst, L.

Trefgarne, L.

Harmar-Nicholls, L.

Trumpington, B.

Hives, L.

Vaux of Harrowden, L.

Home of the Hirsel, L.

Vickers, B.

Hooper, B.

Vinson, L.

Hylton-Foster, B.

Vivian, L.

Ilchester, E.

Whitelaw, V.

Kimball, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.14
On Question, Whether Clause 12 shall stand part of the Bill?
Lord McCarthy: We naturally wish to oppose that this clause stand part of the Bill. We have opposed various bits of it, tried to improve it in various ways and we have failed. If we defeat the clause we shall not defeat the Bill, as I said in moving our first amendment. This clause takes young workers out of the Bill. We shall still have the single rate, we shall still have the employment test and we shall still have removal of all kinds of rates, premia and holiday arrangements which can be set under the existing wages council legislation.
The noble Lord has said that he has the evidence. He said that he quoted it to us. I have been looking at his speech on Second Reading and I find no evidence; I find no figures. I find assertions. If the Government have evidence and if the evidence is convincing we have to ask why the Government have convinced so few people? Why have we had the doubts of a Conservative-controlled employment committee in another place? Why have we had the doubts of the Institute of Personnel Management, of the CBI, of the Association of Small Employers and the Citizens' Advice Bureaux? Why have we had the publications of the NEDO office and the research papers of the Department of Employment? They do not prove the case that the noble Lord has submitted to us.
The empirical studies done by Wilkinson and Craig do not support the Minister. The general study by Christine Craig, Labour Market Structures: Industrial Organisation and Low Pay, does not support him. The report which the department authorised but did not publish until it could produce its own correction of the econometricians does not support him. The American work by Atkinson, Bazen and Poire on the American experience does not support him. The only evidence (and it is not evidence) is the notorious Treasury paper on the relationships between employment and wages. Messrs. Nicol and Leyard, who are the two economists whose work was the basis of that, have written to the Treasury and published letters denouncing the conclusions which the Treasury drew from their work.
Therefore the evidence does not support the Minister. There is no evidence that there is any significant employment effect. In the absence of convincing evidence there is no evidence in support of this part of the Bill and we oppose the Motion that the clause stand part.
Lord Trefgarne: Noble Lords and noble Baronesses opposite have, if I may say so, a remarkable capacity for ignoring the obvious and flying in the face of sensible pragmatic propositions. The sensible pragmatic proposition which I bring before your Lordships in this clause is that by ensuring that young people do not price themselves out of the market they will make the best of the employment opportunities that there are available to them. I ask your Lordships to hearken to the example proffered by my noble friend Lord Vinson a few moments ago, which graphically demonstrated, if the Committee will allow me to say so, the proposition enshrined in this section of the Bill.
446
The noble Lord, Lord McCarthy, is anxious to have statistics to back up the sensible proposition which I have offered. I have provided a number of statistics at various moments and now offer him another, if he is not yet convinced. He will have heard of the young workers' scheme, where some financial inducement is provided to employers to lower the cost of taking on young people. We estimate that that scheme has generated about 120,000 jobs for young people, of which at least 90,000 were brand new jobs and a quarter or less represented substitution. The 120,000 people who have taken advantage of that scheme would strongly resist the proposition offered by the noble Lord that the cost of their employment had no bearing on their futures.
Lord McCarthy: Will the Minister not accept that other studies have been quoted in this Committee which indicate that eight out of ten jobs were substitutions? If it is such a wonderful scheme why are the Government not continuing it?
Lord Trefgarne: Because we are bringing forward this legislation.
5.18 p.m.
On Question, Whether Clause 12 shall stand part of the Bill?
Their Lordships Divided: Contents, 93; Not-Contents, 74.

DIVISION NO.3

CONTENTS

Airey of Abingdon, B.

Halsbury, E.

Alexander of Tunis, E.

Hardinge of Penshurst, L.

Auckland, L.

Harmar-Nicholls, L.

Beaverbrook, L.

Hives, L.

Belhaven and Stenton, L.

Home of the Hirsel, L.

Beloff, L.

Hooper, B.

Bessborough, E.

Hylton-Foster, B.

Birdwood, L.

Ilchester, E.

Boyd-Carpenter, L.

Kimball, L.

Brabazon of Tara, L.

Kinnaird, L.

Braye, B.

Lane-Fox, B.

Brookes, L.

Lauderdale, E.

Brougham and Vaux, L.

Layton, L.

Broxbourne, L.

Long, V.

Caithness, E

Lucas of Chilworth, L.

Cameron of Lochbroom, L.

McFadzean, L.

Carnock, L.

Macleod of Borve. B.

Colwyn, L.

Malmesbury, E.

Cox, B.

Mancroft, L.

Craigavon, V.

Marshall of Leeds, L.

Cullen of Ashbourne, L.

Massereene and Ferrard, V.

Davidson, V.

Merrivale, L.

De La Warr, E.

Molson, L.

Denham, L. [Teller.]

Monk Bretton, L.

Digby, L.

Monson, L.

Dilhorne, V.

Montgomery of Alamein, V.

Dundee, E.

Mottistone, L.

Ellenborough, L.

Murton of Lindisfarne, L.

Elliot of Harwood, B.

Norrie, L.

Elliott of Morpeth, L.

Nugent of Guildford, L.

Elton, L.

Orr-Ewing, L.

Erroll of Hale, L.

Pender, L.

Fanshawe of Richmond, L.

Rodney, L.

Foley, L.

Rugby, L.

Gainford, L.

St. Aldwyn, E.

Gardner of Parkes, B.

Saint Brides, L.

Gisborough, L.

St. Davids, V.

Gray, L.

Savile, L.

Hailsham of Saint

Sempill, Ly.

Marylebone, L.

Shannon, E.

447

Skelmersdale, L.

Trumpington, B.

Stodart of Leaston, L.

Vaux of Harrowden, L.

Strathspey, L.

Vickers, B.

Sudeley, L.

Vinson, L.

Swinton, E. [Teller.]

Vivian, L.

Teynham, L.

Whitelaw, V.

Trefgarne, L.

Young, B.

NOT-CONTENTS

Amherst, E.

Lovell-Davis, L.

Annan, L.

McCarthy, L.

Attlee, E.

McNair, L.

Aylestone, L.

Meston, L.

Banks, L.

Milford, L.

Birk, B.

Mishcon, L.

Bruce of Donington, L.

Morton of Shuna, L.

Burton of Coventry, B.

Mulley, L.

Caradon, L.

Murray of Epping Forest, L.

Carmichael of Kelvingrove, L.

Nicol, B.

Cledwyn of Penrhos, L.

Oram, L.

David, B. [Teller.]

Parry, L.

Dean of Beswick, L.

Phillips, B.

Denington, B.

Pitt of Hampstead, L.

Diamond, L.

Ponsonby of Shulbrede, L.

Elwyn-Jones, L.

[Teller.]

Ennals, L.

Rochester, L.

Falkender, B.

Sainsbury, L.

Fisher of Rednal, B.

Seear, B.

Gallacher, L.

Sefton of Garston, L.

Graham of Edmonton, L.

Serota, B.

Grey, E.

Shepherd, L.

Hanworth. V.

Silkin of Dulwich, L.

Hirshfield, L.

Simon, V.

Howie of Troon, L.

Stallard, L.

Hunt, L.

Stewart of Fulham, L.

Irving of Dartford, L.

Stoddart of Swindon, L.

Jeger, B.

Strabolgi, L.

Jenkins of Putney, L.

Tordoff, L.

John-Mackie, L.

Turner of Camden, B.

Kaldor, L.

Underhill, L.

Kilmarnock, L.

Wells-Pestell, L.

Kirkhill, L.

White, B.

Leatherland, L.

Williams of Elvel, L.

Listowel, E.

Willis, L.

Lloyd of Kilgerran, L.

Wilson of Rievaulx, L.

Lockwood, B.

Ypres, E.

Longford, E.

Resolved in the affirmative, and Clause 12 agreed to accordingly.
5.28 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 76:
After Clause 12, insert the following new clause:
(" Establishment of Wages Councils.
. —(1) The Secretary of State may by order establish a wages council to perform, in relation to the workers described in the order and their employers the functions specified in relation to wages councils in this Part of this Act.
(2) An order establising a wages council may be made by the Secretary' of State after either—

(a)a recommendation made to him by the Advisory Conciliation and Arbitration Service ("the Service"); or

(b)an application to him by a joint industrial council, conciliation board or other similar body constituted by organisations representative respectively of such workers and their employers; or

(c)an application to him jointly by any organisation of workers and any organisation of employers which appear to him habitually to take part in the settlement of remuneration and conditions of employment for those workers.

(3) In deciding whether to establish a wages council the Secretary' of State shall have regard to—

(a)the extent to which the existing machinery for the settlement of remuneration and conditions of employment for those workers is likely to cease to exist or is adequate for that purpose;

(b)the current levels of remuneration and the level of employment among those workers;

448

(c)the current levels of remuneration and the level of employment among workers in the same trade or industry who are under the age of 21; and

(d)Such other matters as appear to him to be appropriate. —and he shall consult such persons or organisations as appear to him to be appropriate.

(4) Where an organisation of workers or an organisation of employers notifies the Secretary of State that it is desirable to establish a wages council, he shall refer that notification to the Service which shall within six months report to him upon the desirability of so doing.").
The noble Lord said: In moving Amendment No. 76,1 want to take with it and to speak to Amendments Nos. 78 and 79. This amendment is designed to remedy a situation which is there as a result of the Bill, where, under Clause 13, the Secretary of State is taking a power to abolish or vary the scope of a wages council but, so far as we can see on our reading of the Bill, has no power to create a new one. This must be nonsense. It must be nonsense unless—and I am reluctant to assume that this is the case—the present Bill is a preparation, a dry run, for abolition and that what the Government are doing, because so many employers did not want to see the abolition of the wages council system, is to let the wages councils wither on the vine. If that is the case, then I consider that the Minister should say so tonight.
If that is not the case and if the Government believe that the attenuated wages council system should continue, then—while they may not like our amendment and our amendment may be badly drafted, though no doubt the Parliamentary draftsman could improve on it in many ways—if they like to give us some indication that they will take this away and look at the problem, naturally enough we shall be pleased to withdraw the amendment.
However, I must say just a little about what the amendment is designed to do and what it proposes should be the procedure for the creation of a new wages council, and why we believe it is particularly important that there should be a way of creating new wages councils, given what the contents of the Bill imply.
The procedure that we propose is to some extent a new one: that there should be a recommendation process and that the recommendation for the creation of a new wages council should be from bodies such as ACAS or any voluntary joint bargaining body, joint industrial council, a trade union or an employers association. All these people could recommend the possibility of a new wages council for a new category of workers who are unprotected by the dependent position of themselves in the market in relation to the employers.
There should then be an investigation process and the obvious people to do this, where the investigation does not come from ACAS, would be ACAS itself. There would be criteria, cited in the Bill, whereby you could decide whether there was a case for creating a new wages council. You would look at the state of the existing joint determination machinery and at the existing system for collective bargaining, if one existed. In many areas there might not be any system of collective bargaining. You would look at the levels of remuneration among adults affected by a new wages council. You would compare them, say, with the general earnings level, about which I shall have more

449
to say later; or you would look at the level of remuneration of young workers and see whether there was any indication that, in general terms, there was a case for a new wages council. Unless it is the Government's job to let the wages council system wither on the vine, as I say, I do not see why in principle they should not accept a move of this kind.
My second argument would be that it is particularly important to do this, given what is being done in the rest of the Bill and given what is being said about some of the reasons—admittedly subsidiary reasons—why wages councils should be dealt with in this way. Government spokesmen and their supporters on the other side are very fond of saying that they have to simplify the scope of wages councils because they are too complicated or too rigid and because small employers cannot understand the wages orders.
As I said on Second Reading, if wages councils orders are complex (and I wonder how many people in this Chamber have read such orders) they are complex for the most part because the wages council itself is trying to combine a whole series of things which might be better separated into different wages councils. So if one is saying they are too complex, too rigid and too general, it may be that what is required is a more tailor-made and specialised approach. But if there is no possibliity of creating new wages councils and if one can simply break up one wages council into two, three or four, but never extend it to fit into new groups, the chances are that the wages councils we have left will be felt by employers to be increasingly irrelevant, increasingly rigid and increasingly anomalous if the Government deny themselves any generous measure of reform. And without the possibility of new wages councils within the existing structure—for example, in a very large wages council like the Retail Wages Council—the insistence upon a single rigid rate must produce a very low minima, must squeeze out premium payments, overtime, differentials and that kind of thing, so far as the enactment of statutory regulation is concerned. On the other hand, within a system of a single rate which is itself rigid, to break up the wages councils and create new ones might be thought to be one way in which one might make the system more flexible.
Finally, of course we know that, in comparative terms, in this country we have a very bad minimum wage regulation system. It is not to the credit of previous governments that they did not reform this system. There are many low-paid workers, for example, in engineering or launderettes or in large parts of the public sector, who are low paid on any objective measurement and who are not covered by wages councils. Some people have calculated that about one-third of workers in the lowest decile of the earnings survey are not covered by wages councils, so we have what is very far from a perfect system. And if we are to put a lid on it and say that it is only to produce a single rate, only to decline and never to renew itself, spread itself or try to bring itself up to date, then indeed the Government will be creating the kind of rigidity which they say they want to remove. I beg to move.
Lord Trefgarne: As the Government have repeatedly made plain—and indeed I said this on
450
several occasions earlier this week when we were considering earlier parts of this Bill—we believe that the terms and conditions of employment are best left for agreement between employer and employee without statutory intervention. Where this results in difficulty—for instance, among workers who have heavy domestic responsibilities which are difficult to maintain on low pay—there is support such as family income supplement and, in due course, there will be the much improved family credit system. It must be abundantly clear that we do not see the extension of regulation as furthering our aims of promoting enterprise and employment. For this reason we are not prepared to extend the system by creating new councils. These arguments apply equally to all the circumstances specified in the amendments which we are addressing in this group.
The continuation of the existing wages council system rests on the outcome of the consultative exercise we conducted in March last year. This indicated a preference among employers and unions in most of the trades concerned where there is a history of this form of trade regulation for the system to continue.
The majority of employers favoured the reforms proposed in the consultative paper, which are reflected in Part II of the Bill. It is of major importance to everyone concerned that we simplify procedures in connection with wages councils, including the way we deal with changes which become necessary in the scope of operation of wages councils. At present the Secretary of State may refer to ACAS for a report before making an order to abolish or to vary the scope of operation of a wages council. This is part of a complex and convoluted procedure (which, incidentally, took three pages of type to describe in summary) which we intend to avoid in the new legislation. However, the Bill provides for the Secretary of State to confer with such organisations as appear to him to be appropriate. Therefore he may continue to refer to ACAS as at present if he considers it appropriate to do so.
Amendment No. 78, which would require reference to ACAS before an order could be made to abolish or vary the scope of operation of a wages council, would defeat the purpose of the revised procedures which are intended to simplify the processes of abolition and variation of scope when these are appropriate.
The requirements the Secretary of State must observe before making an order, as set out in Clause 13, are substantial and do not allow him to use his powers capriciously. They rely on a commonsense interpretation of the circumstances of each case which comes up for consideration. They do not preclude consultation with ACAS, if that would be helpful. The best protection for the workers who are affected is that orders abolishing wages councils, made under the new legislation, which do not transfer any of the workers concerned to another council, would require approval by affirmative resolution of both Houses of Parliament. The requirement proposed by the amendment is therefore superfluous and I hope the noble Lord will not persist with it.
Lord McCarthy: The noble Lord the Minister says that these things are best left to the employer and the

451
employee, even when the employee is in a dependent situation without a trade union in which all the power in effect in the labour market is with the employer. As I say, the Minister says that these things are best left to the employer and the employee. Of course, I do not expect him to say that they are best left to the employer and the trade union. That is the last thing that this Government would say. It is a mystery—but perhaps it is just a question of time—why we do not get rid of the Factories Acts, because that is best left to the employer and the employee. It is a mystery—but perhaps it is just a question of time—why we do not get rid of unfair dismissal, because that is best left to the employer and the employee. Even this Government, at this moment, believe that some things are not best left to the employer and the employee, but every time they want to get rid of something they trot out this argument.
The Minister says that people can use family income supplement and social security. He says that they can go to the DHSS when they cannot get decent pay. This Government cannot see the difference between pay which you put into your pocket and spend as you like, and dole for which you go round to the social security. If people are getting starvation wages it does not matter, says the Minister, they can always go on the dole. We think that this is disgraceful.
If the Government are saying that they want simplicity but go on to perpetuate complexity, we can come to only one conclusion—the conclusion that I sought to avoid in moving this amendment. This Bill is a precursor to the withering away of wages councils. Because of the degree of resistance by employers, we cannot have that just yet. But that is what the Government want. Because of the time, and because of the number of amendments still to come, I must now beg leave to withdraw the amendment. But that should not be seen as meaning that we agree with the Government.
Amendment, by leave, withdrawn.
[Amendment No. 77 not moved.]
Schedule 2 [Constitution etc. of wages councils]:
Lord Trefgame Lord Trefgame moved Amendment No. 77A:
Page 34, line 26, leave out ("3") and insert ("5").
The noble Lord said: This amendment will enable the Secretary of State to appoint up to five independent members to sit on a wages council instead of a maximum of three as at present. This does not of course mean that the Secretary of State is going to rush to appoint five independent members on each council. Three members may well continue to be adequate for many councils, especially the smaller ones. The purpose of the amendment is simply to make it easier to achieve a reasonable degree of attendance of independent members on councils, where this has sometimes proved difficult in the past with only three members to draw on.
I am sorry that this amendment appeared on the Marshalled list rather late. The amendment is in response to representations from many of those involved in the work of wages councils and we did not envisage that it was in any way controversial. I hope,
452
nonetheless, that the Committee will feel able to agree to it. I beg to move.
Lord McCarthy: I have three points to make about this late amendment, but first—and I do not like doing this—I must protest at the lack of notice that we have had not only in relation to this amendment, which is the first new amendment that we have had to protest about, but also in relation to the other late amendments which the Government have put down. In some ways the case against the lateness is worse on this amendment, because I think I am right in saying that this is the first time in my period in the Committee—but other Members go back much longer than me—that an amendment has been printed not as an amendment but in a Marshalled List; and not even in the first Marshalled List, but in the second Marshalled List. This amendment first appeared in the second Marshalled List this morning. I think that that is something to complain about. The advantage is that it is at least a simple amendment.
That brings me to my second objection. The amendment is contrary to what the Government led us to expect. Far from what the Minister said about people suggesting it to the Government, and people sayng that they would like to have the numbers of independent members of wages councils expanded, I do not remember the Secretary of State in this Chamber, or the Minister responsible in another House, mentioning that on Second Reading. If that had come about in the consultative process, surely it would have been reasonable to expect something to be said at Second Reading. Indeed, it might have been introduced in another place if it had come out of the consultative process.
I do not believe that it came out of the consultative process. I believe that it came out of Standing Committee K. If Members of the Committee read the report of the 18th sitting of Standing Committee K in another place of Tuesday, 15th April, they will see that the Conservative Back-Benchers were complaining at that stage about the composition of the present wages councils. Many nasty things were said at that stage about the mixture of lawyers, academics and businessmen, with the very occasional trade unionist, who now operate wages council systems at the princely rate of £64 a day; and, if they read the papers and participate in the decisions, that works out at about £5 an hour.
Many nasty things were said about those distinguished people and Conservative Back-Benchers moved a number of amendments. They wanted to insist that certain people who are employed and sit on many wages councils, such as the distinguished arbitrator, Sir John Wood, should only be allowed to serve on one wages council. They wanted to say, in all kinds of ways, that there should be a restriction on the extent to which people could work on one wages council or another. They wanted to say that these people should have practical experience of business. They wanted to say that they should be small businessmen—the smaller the better. They wanted to ensure that if there were any who were not small businessmen, they should have practical experience of small businessmen's problems.

453
Mr. Trippier, for the Government, in Standing Committee K rejected all these proposals and he rejected them on various grounds. The ground on which he rejected them which is of most concern to us is at col. 604 of the Official Report of 15th April for Standing Committee K. He said:
"We have difficulty in finding people who are prepared to devote time to the wages councils".
Now they are going to have to find more. He went on:
"It is not easy to get such people whatever the fees may be".
They are £64 a day—
"They are still only a drop in the ocean".
Then he went on, almost as if he knew what the Minister was going to say today and wished to contradict him. He said at col. 605:
"We have received few letters about the composition of wages councils".
He was obviously referring to the consultative process.
"There does not seem to be dissatisfaction with their composition. That in itself is compelling".
On 15th April it was compelling, but it is not compelling today. He went on:
"I wish to see independence".
The Government do not necessarily wish to see independence any more. I suppose that they wish to pack the wages councils with their friends. I suppose we must assume that, in addition to the present three members of the wages councils, they will be asked, "Can we have two people, each one of which is one of us?", and they will pack the wages councils. Otherwise there would appear to be no reason why at this late stage we have this amendment without consultation.
The CBI knew nothing of this change, the TUC knew nothing of this change and ACAS knew nothing of this change. This change was never mentioned until this amendment was published today. So it is not enough to take young people out; it is not enough to abolish holiday minimums; it is not enough to direct them to beware of creating unemployment; we must also tamper, in a most suspicious and devious way, with those who sit on wages councils. We oppose this amendment.
Lord Rochester: I feel that I must join the noble Lord, Lord McCarthy, in registering a protest about the tabling of this amendment. As he fairly said, it was available to us only this morning. The noble Lord, Lord Trefgarne, has apologised for that and he has explained why it is that the amendment has been put down. The concept lying behind this was not available to us when the Bill was debated in principle at Second Reading, as the noble Lord, Lord McCarthy, has said. There has been no consultation about it. What is now said—and I, too, have in my hand the minutes of the relevant Standing Committee—appears to be at variance with what the Under-Secretary of State said on that occasion. It is unfortunate, to say the least, that we are required to take a decision on this today at such short notice.
Lord Trefgarne: I am very sorry that the noble Lord, Lord Rochester, takes that view. One would think that I was proposing some cataclysmic change to the arrangements. What I am actually proposing is that the independent members be increased from three to
454
five, because out of the three there are at present some of them have occasionally had difficulty in attending all the meetings of the council and we wish to ensure that they are not put to undue inconvenience.
This proposal did not arise out of Standing Committee K. The inspiration for it came from employers in the retail trade with, we understand, the support of the workers' side of the council. The noble Lord, Lord McCarthy, may not be aware of that. But in the light of the modest and sensible nature of the amendment, I hope the Committee will agree to it.
Lord Sainsbury: I heard a different version. I heard a version from the retail trade body that it wanted five because the existing three so often sided with the workers.
Lord McCarthy: I have heard that story, too. We can all retail stories. What is remarkable is the way the Minister keeps changing his reasons. I must congratulate him. He now says—he did not say it before—that they are doing it because people do not turn up. If people do not turn up, you sack them. It is only £64 a day. You would not be sacking them from anything they would not want to be sacked from.
If wages councils have meetings and they cannot get quorums and there are people who do not attend at stated meetings of wages councils, then you should just say to them, "I am afraid we cannot continue because you do not attend". You do not get more people who also may not attend; you get people who can attend, and you let people know that one of the conditions of membership of a wages council is that you do attend. I say quite frankly that I do not believe the Minister when he says they do not attend. This is just the latest excuse, and we are not having it. We are going to divide.
5.53 p.m.
On Question, Whether the said amendment (No. 77A) shall be agreed to?
Their Lordships Divided: Contents, 91; Not-Contents, 71.

DIVISION NO.4

CONTENTS

Airey of Abingdon, B.

Dilhorne, V.

Aldington, L.

Eccles, V.

Auckland, L.

Elliot of Harwood, B.

Belhaven and Stenton, L.

Elton, L.

Beloff, L.

Erroll of Hale, L.

Belstead, L.

Fanshawe of Richmond, L.

Boyd-Carpenter, L.

Foley, L.

Brabazon of Tara, L.

Gainford, L.

Braye, B.

Gardner of Parkes, B.

Brookes, L.

Gisborough, L.

Brougham and Vaux, L.

Gray, L.

Broxbourne, L.

Hailsham of Saint

Caithness, E.

Marylebone, L.

Cameron of Lochbroom, L.

Halsbury, E.

Carnock, L.

Hardinge of Penshurst, L.

Colwyn, L.

Hives, L.

Craigavon, V.

Home of the Hirsel, L.

Craigmyle, L.

Hooper, B.

Cullen of Ashbourne, L.

Hylton-Foster, B.

Davidson, V.

Kinnaird, L.

De La Warr, E.

Lane-Fox, B.

Denham, L. [Teller.]

Lauderdale, E.

455

Lawrence, L.

Pender, L.

Layton, L.

Rodney, L.

Long, V.

Rugby, L.

Lucas of Chilworth, L.

St. Aldwyn, E.

Lyell, L.

Saint Brides, L.

McFadzean, L.

Saint Oswald, L.

Macleod of Borve, B.

Savile, L.

Malmesbury, E.

Seebohm, L.

Mancroft, L.

Sempill, Ly.

Marshall of Leeds, L.

Shannon, E.

Massereene and Ferrard, V.

Skelmersdale, L.

Maude of Stratford-upon-

Stodart of Leaston, L.

Avon, L.

Sudeley, L.

Molson, L.

Swinton, E. [Teller.]

Monk Bretton, L.

Teviot, L.

Monson, L.

Teynham, L.

Montagu of Beaulieu, L.

Trefgarne, L.

Montgomery of Alamein, V.

Trumpington, B.

Mottistone, L.

Vaux of Harrowden, L.

Munster, E.

Vickers, B.

Murton of Lindisfarne, L.

Vinson, L.

Norfolk, D.

Vivian, L.

Norrie, L.

Young, B.

Nugent of Guildford, L.

Zouche of Haryngworth, L.

Orkney, E.

NOT-CONTENTS

Airedale, L.

Lovell-Davis, L.

Amherst, E.

McCarthy, L.

Attlee, E.

McGregor of Durris, L.

Aylestone, L.

McIntosh of Haringey, L.

Birk, B.

McNair, L.

Bruce of Donington, L.

Meston, L.

Caradon, L.

Mishcon, L.

Carmichael of Kelvingrove, L.

Morton of Shuna, L.

Cledwyn of Penrhos, L.

Mulley, L.

David, B. [Teller.]

Nicol, B.

Dean of Beswick, L.

Oram, L.

Denington, B.

Parry, L.

Diamond, L.

Phillips, B.

Elwyn-Jones, L.

Pitt of Hampstead, L.

Ennals, L.

Ponsonby of Shulbrede, L.

Falkender, B.

[Teller.]

Fisher of Rednal, B.

Rochester, L.

Foot, L.

Sainsbury, L.

Gallacher, L.

Seear, B.

Graham of Edmonton, L.

Sefton of Garston, L.

Gregson, L.

Serota, B.

Grey, E.

Shepherd, L.

Hanworth, V.

Silkin of Dulwich, L.

Hatch of Lusby, L.

Simon, V.

Houghton of Sowerby, L.

Stallard, L.

Howie of Troon, L.

Stewart of Fulham, L.

Hunt, L.

Stoddart of Swindon, L.

Irving of Dartford, L.

Strabolgi, L.

Jenkins of Putney, L.

Tordoff, L.

John-Mackie, L.

Turner of Camden, B.

Kaldor, L.

Underhill, L.

Kirkhill, L.

Wells-Pestell, L.

Listowel, E.

White, B.

Lloyd of Kilgerran, L.

Williams of Elvel, L.

Lockwood, B.

Willis, L.

Longford, E.

Wilson of Rievaulx, L.

Resolved in the affirmative, and amendment agreed to accordingly.
Schedule 2, as amended, agreed to.
6.2 p.m.
Clause 13 [Abolition, or variation of scope of operation, of wages councils]:
[Amendments Nos. 78 and 79 not moved.]
Clause 13 agreed to.
[Amendment No. 80 not moved.]
Clause 14 [Wages orders]:
Lord McCarthy Lord McCarthy moved Amendment No. 81:
Page 15, line 34, at end insert—
("and such separate rates for different occupations as appear appropriate to the council").
The noble Lord said: In Clause 14, we are moving a series of amendments, each one of which is designed to put back into the Bill something that has been taken out by the Government, thus reducing the scope of wages councils' awards in relation to what they were under the 1979 legislation. The first amendment is to insert at the end of line 34 on page 15 the words:
"and such separate rates for different occupations as appear appropriate to the council".
In other words, the Government are now saying that there should be one single basic rate and that one cannot have rates for different occupations. We are suggesting that one should do so, and that would be the effect of voting for this amendment. The justification is that it is necessary and sensible to have different rates for clearly-defined occupations and not a cause of complexity or rigidity. The justification is that the wages councils know their job; whether or not they all attend, they know their job. Indeed, in the case of most wages councils, so far as I can tell—and I do not claim to have inspected the awards of all wages councils but I have examined quite a few—there are not different occupational rates.
There are no different occupational rates that I can see in laundries, hairdressing, toy manufacture, in the button wages council, in the hat and cap wages council, or in my favourite wages council—and it is my favourite because I do not know what it does—which is the sack and bag. They do not have separate occupational variations in the sack and bag wages council; they do without them in sack and bag.
In cases where there are occupational variations, those variations are simple. They are divided into two. There is an interesting differentiation in the licensed non-residential trade. There is a rate for club stewards and a rate for the club steward's spouse. That seems to be a reasonable differential, and it appears to represent a reasonable difference in the rate, because the function and job of a club steward is quite different from that of the club steward's spouse.
In boot and shoe they have a variation. They have a rate for foremen and managers and a rate for all other workers, because in boot and shoe they wish to improve the differentials; they want a decent rate for managers and they believe that in that way they will attract better people into the industry.
The most complex of all is in retail food. It is not really a vast and complex differential, and it should not cause difficulty to anybody who is in the industry. There are effectively only three different rates. There is the manager's rate, a street vendor's rate, and a number of other rates that are extremely close together—for general assistants, transport workers, roundsmen, and so on.
All of that is related to the need to have reasonable differentials. It is related to the requirements of the employers and the unions in those industries. There is no indication or sign, and certainly the Government have never argued, that one or another of those

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differentials—for example, that between the club steward and the club steward's spouse—is misused, prices people out of work, or provokes one of the Government's other famous myths.
Therefore, why should those differentials not remain? Why should there not be those distinctions? If they have stood the test of time among the parties and independent members who introduced them for what seemed to them to be valid reasons, then why should they not remain? The Government may say—I suppose because it is the only argument they could cobble together—that it should be left to the parties concerned, to the employers and the employees, and that it can all be done by voluntary regulation. Once again, we say what we have said repeatedly in this Chamber: that in those industries, and for those workers, voluntary regulation is not enough. It will not protect differentials. It will not protect the manager's rate. It will not protect the reasonable differences between general assistants, transport workers, street vendors and roundsmen. Those differentials have been decided by the parties concerned and there are good reasons for them. We propose that that provision should go back into the Bill. I beg to move.
Lord Trefgarne: Current wage orders are lengthy and complex and, despite what the noble Lord has said, they tend to deal with all pay and related conditions of employment. Employers and workers can have great difficulty in interpreting them. Responses to the consultative papers show almost universal support for simplifying wages orders.
Pay differentials for different grades of worker imposed by orders can be expensive and can deter employers from providing jobs. In future, there will be only one minimum basic rate and one minimum overtime rate for workers undertaking different types of work. The Bill does not remove workers' rights to differential pay rates. The majority of workers are likely to continue to be entitled to their current rates under the terms of their contracts of employment. Limiting councils to setting a single basic and overtime rate is central to the Government's policy of reform.
If the amendment were carried it would undo one of the prime objectives of the Bill; that is, releasing employers from unnecessary burdens and enabling them to give more time to running their businesses. I hope that the Committee will reject the amendment.
Lord McCarthy: The noble Lord is better than he was; his response is better than saying that people do not attend wages councils, but still it will not do. Wages councils' orders are not all lengthy and complex. Most are very short and are only a few pages long. In the case of orders that are lengthy, one does not have to read all of them because they are the same year after year after year. You need only read the parts where the rates change. Sometimes the orders are in different colours. The Government would be doing something much more useful if they said that the orders ought to be in different colours; then even the smallest or dwarfest of businessmen could understand a wages council order.
The Minister does not give any reasons why people should not be doing what they have been doing for years—an argument which has always been useful for
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previous Conservative governments. We cannot agree with the noble Lord, but we do not intend to divide the Committee. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rochester Lord Rochester moved Amendment No. 82:
Page 15, line 41, after ("(ii)") insert ("save as provided below").
The noble Lord said: This is a paving amendment to Amendment No. 84 which, as the Committee will see, seeks to insert in this part of the Bill a provision for a single minimum hourly overtime rate of remuneration in respect of time worked on a Sunday.
I should first say that in proposing this amendment, designed to enable a wages council to make an order fixing a single rate for work done on a Sunday, it is not my intention to minimise the importance of other amendments which are to follow dealing with, for example, annual holidays. Indeed, much of what I have to say on this amendment could equally be applied to others. It may cheer the Committee a little to learn, therefore, that I shall not be constantly rising to my feet to say much the same thing time after time.
In view of our recent discussions on the Shops Bill it seems appropriate to draw special attention to the need for Sunday working to be adequately rewarded. For a long time I worked in the chemical industry where it was necessary to have a continuous process of work. However, there were elaborate shift rotas designed to ensure that people were not obliged to work on more than one Sunday in three or four. What is more, they were protected by strong unions, as I know from experience in having had to deal with them in these matters. Invariably, the people concerned were paid at the double-time rate when they worked on a Sunday.
The position of people who work, for example, in the clothing, hotel and catering industries, on the other hand, is quite different. They are largely unorganised. They depend on wages councils for protection and, in the case of retail workers, on the Shops Act. Of course, Clause 14 of the Bill—the clause we are now discussing—was drafted in the expectation that the Shops Bill would be enacted. The employment and conditions of shop workers would then have been even worse than they now will be. It was intended that the two Bills should run together. Events did not work out quite like that in practice, but that does not help the people—many of them women working part-time who have family responsibilities—who will be affected by this Bill. If they work on a Sunday, that will not necessarily be because they want to do so, but because they need a job and have to work.
I know that people who are currently employed under a contract incorporating the terms of existing wages orders can expect their employment to continue on that basis unless the terms of their contract are changed by agreement; indeed, the noble Lord, Lord Trefgarne, said as much on the previous amendment. I know, too, that if an employer seeks to change the terms of an employment contract unilaterally, remedies are available to the worker, in theory; but under present conditions of unemployment it must be very doubtful as to how far they will be utilised in practice.
However, in my view that is beside the point. We are legislating for the future. People who work on a Sunday should be adequately paid for so doing. That is what this amendment is designed to achieve. I beg to move.
6.15 p.m.
Lord Sainsbury: I support this amendment because I believe that workers who work unsocial hours on Sunday, which may keep them away from enjoying the company of their families, are entitled to a special rate. I understand that in Scotland where, as the Committee know, Sunday trading is not against the law, under existing wages council legislation retail employees who work on a Sunday as an additional day are paid double time.
Baroness Turner of Camden: I rise from these Benches to support both amendments of the noble Lord, Lord Rochester. As he rightly says, the principle of higher rates for antisocial hours or for an awkward shift pattern is one that has been accepted for a long time throughout industry. In many places, of course, the workers are covered by union-negotiated agreements. It is accepted that if people work these hours, they should have a premium rate for doing so.
The Government proposals in the Bill, however, would remove such entitlement for many of the lowest paid. As we have said many times in this Committee during discussion of the Bill, we are talking about vulnerable people who are, generally speaking, not unionised. In industries such as the hotel and catering trades, as the noble Lord, Lord Rochester, said, the very nature of the trade requires antisocial hours and shift patterns of working. As the Committee knows, we had a discussion about this on the Shops Bill and despite the fact that the Bill was not enacted there is still the situation in many places where there is Sunday working for people in the retail trade. It does exist. For those reasons it seems to us that it would not be appropriate to remove from such people the right to some kind of premium arrangement in regard to antisocial hours, particularly for Sunday working.
Paradoxically, it seems to me that the removal of the right to shift premia and the reduction of overtime provisions could have a directly negative effect on the number of jobs available, with employers being encouraged to rely on job cover, through long and exploitive hours, with existing staff rather than with realistic staffing levels by offering work to other people who are available. For all those reasons we support the amendments tabled by the noble Lord, Lord Rochester.
Lord Trefgarne: I have listened carefully to the arguments which have been adduced in support of these amendments which would, as has been explained, have the effect of maintaining the power of wages councils to set special higher minimum rates for work done on Sundays. However, I am afraid that I have heard nothing to persuade me that a departure from the course on which we are set would be justified.
The Bill already recognises the claims of those who have already worked a full week for some special higher payment for work done beyond their normal
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hours. These amendments would restore the power of councils to provide for extra payment simply because the work is done on a particular day of the week. It would mean that even those who work only on Sundays would also be entitled to a higher rate.
This Bill is about a basic level of protection. That is what the employers in the trades concerned wanted us to retain. Very few of the respondents who replied to our consultative exercise were prepared to countenance more than that. Ministers have frequently received complaints about the levels of pay which councils such as the retail councils have set as minima for Sunday work. At least double pay is required for the great majority of Sunday workers in these trades and the rules are such that a worker who attends even for only one hour on a Sunday must be paid for nine hours.
It is no part of our policy to support such dubious propositions in this way. We have no mandate from employers responding to our consultative paper to do more than provide a minimum level of protection. That is what the Bill does and I hope that the Committee will reject the amendment.
Lord Rochester: I did not really expect to hear anything else from the noble Lord, so I can hardly claim to be disappointed. If I may respectfully say so, I thought that part of his brief was scarcely relevant to the amendment. However, it is only one of a series under Clause 14 that we are now debating. I do not want to be constantly driving members of the Committee in and out of the Division Lobbies. If we are to have a vote it may be that it would be better to take it under the Question whether Clause 14 should stand part of the Bill; but that procedure should not be taken as an indication of satisfaction with the Government's response. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 83 and 84 not moved.]
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 85:
Page 15, line 43, at end insert—
(" ( ) a single minimum hourly rate of remuneration in respect of time worked by a piece worker (to be known as a piece work basic time rate; ").
The noble Baroness said: In moving this amendment I should like to speak also to Amendment No. 98, because both amendments cover the same point. These amendments seek to ensure that piece-rate wage systems cannot be used to undermine that statutory minimum rates. The first amendment allows wages councils to continue to set higher piece-work rates, as is the long-standing practice in the clothing and made-up textile sectors. The second amendment states that no piece worker shall be allowed to fall below the minimum time rate set by the relevant wages councils. Again, this is the current protection in the clothing and made-up textile sectors.
It seems to me that the Bill, as at present drafted, provides a weaker form of minimum wage protection for piece workers than it does for those on time rates. Instead of using the time rate as a floor above which employers and employees are free to negotiate piece-work rates, as is the current practice in wages council

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industries where piece work is important, the Bill will mean that many piece workers will fall behind the minimum rate. This is because, while Clause 15(2) brings piece-work earnings into line with time rates, this is only the case in relation to a hypothetical ordinary worker, who is referred to in the clause as "a worker of ordinary competence".
In our view, this provision will have two damaging effects. First of all, it will introduce unnecessary legalism into the wages council system. The notion of an ordinary worker is subjective and will inevitably be the basis of dispute. It will open the door for piece-work structures to be set at levels that will undermine the time rate, thus driving a coach and horses through the legal minimum protection. The ordinary worker concept will enevitably be applied to the average worker and so large numbers of people will be paid below the minimum rate.
The wages council sectors where piece-rate working is most common are the clothing and made-up textile industries. In both these sectors the ordinary worker notion is incorporated in the wages council order, but within a structure of rates that allows for a higher minimum piece-work basis time rate than the general time rate. Thus the minimum earnings yardstick for an ordinary piece worker under the wages councils at present is higher than for time workers, thereby minimising the danger that significant numbers of workers will fall below the minimum hourly rate of pay. Even so, the problems outlined in respect of the use of the ordinary worker concept have still emerged and as a result the wages councils for clothing and made-up textiles have both ruled that no piece worker should fall below the minimum time rate. It is with a view to continuing to have that protection that we are moving these two amendments. I beg to move.
Lord Trefgarne: I had hoped that by now I would have been able to assure the Committee that we were not seeking to abandon piece workers to their fate. I think that the noble Baroness would have us introduce a universal fallback rate for piece workers in terms of a minimum earnings limit. Were we to do so, we should be extending protection beyond the basic protection which this Bill seeks to provide. I do not believe that we should depart from this fundamental principle. The consequences could be serious in terms of opportunities for employment.
The degree and nature of the protection that we have retained for this group essentially reflects that which has obtained for many years. We have adopted in the primary legislation the concept of the ordinary worker which has been used by the wages councils themselves over many years. We do not claim that the concept is perfect. But we have not come up with a better way of seeking to protect their interests. Had there been one, I am sure the councils themselves would have found and developed it. I must say to the Committee that despite anxieties the concept has proved workable, and by and large experience has shown piece workers to be less vulnerable to statutory underpayment than those employed on time rates.
I believe that the mischief which the noble Baroness seeks to correct by means of this amendment is largely imaginary. I hope that she will not press the amendment.
Baroness Turner of Camden: I am disappointed to hear what the noble Lord has said because it seemed to me that he was agreeing with me that there was or could be a problem about piece workers, and of course the amendment seeks to ensure that those workers will be adequately protected. The two Amendments, Nos. 85 and 98, seemed to be a very simple and easy way of doing that. However, at this stage I shall not press the amendment. I shall look carefully at the noble Lord's reply in Hansard and I may come back to this point at Report stage. For the time being I shall not press the amendment.
Amendment, by leave, withdrawn.
Lord Trefgarne Lord Trefgarne moved Amendment No. 85A:
Page 16, line 1, leave out ("section 17(4)") and insert ("section (Computation of remuneration) (2)(a) and (3)(a)").
The noble Lord said: I rise to move Amendment No. 85A and with the Committee's permission I shall at the same time speak to Amendments Nos. 99 A and 100A. I should also like to speak to the Motion that Clause 17 stand part of the Bill, which, the Committee may be surprised to hear, I shall oppose because we intend to suggest an alternative.
These two new clauses replace Clause 17 and subsections (3) and (4) of Clause 25 of the Bill, which deal with the calculation of the amount the employer has paid the worker and how that sum is to be apportioned where a worker's employment is not wholly in scope of a wages council. Some expansion of the Bill has resulted—we now have an extra clause—and I concede that the drafting appears complex, but our objective is to ensure that the amount the employer has paid to the worker can be fairly and properly assessed in all circumstances, for the purpose of comparison with the remuneration due under the relevant wages order or orders, in order to ensure that the legal entitlement has been paid to the worker.
In the great majority of cases there will be no difficulty in judging how much the employer has paid for work done—it will be the gross pay that the worker has received—but it is necessary for the Bill to be clear in circumstances where doubt may arise. It may help the Committee if I begin by setting out briefly the principles on which the clauses are based and then explain the steps by which those principles are brought into play.
First, as I am sure all sides of the Committee recognise, the amount to be taken as paid has necessarily to include deductions of various kinds, the obvious ones being tax and national insurance. We all know that a salary of £5,000 per annum does not mean that £5,000 is paid over. The bill does not spell out all the deductions which it would be appropriate to count as pay, but starts from the opposite position; in other words, it specifies those which are not to count for the purposes of assessing the remuneration the employer has paid.
Secondly, it is obviously appropriate that expenditure which the worker must necessarily incur in order to do this work should not count as part of the remuneration paid to him. The new clause makes it plain that that principle applies regardless of whether the expenditure takes the form of a payment to the

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employer himself or of a payment to a third party. In doing so it meets a criticism levelled by the Opposition in another place.
The new clause embraces these principles in setting out a series of logical steps which involve adding together the money payments the employer has made and the allowable deductions and then removing from that aggregate any necessary expenditure the worker has incurred. It also provides for the further deduction from that aggregate of any payments made by the worker to the employer and which need to be taken into account in computing the amount to be regarded as paid. For example, if the employer has charged the worker more for living accommodation than the amount allowed by the wages order, it is right that the excess should be deducted from the aggregate.
The new clause rounds off the provisions of the other clause by specifying what is to happen where a worker's employment is only partly within scope of a wages order or within scope of more than one such order. Essentially this is a matter of apportioning the remuneration calculated as paid between the in-scope and out-of-scope work. The apportionment is to be made according to the proportion of time spent on work of each type unless the contract provides otherwise. In the event that any element of the remuneration is attributable wholly to work of one type the calculation of the apportionment has to take account of that fact.
These amendments improve the present terms of the Bill by clarifying its intentions and I commend them to the Committee. I beg to move.
6.30 p.m.
Lord McCarthy: The Committee will not be surprised to hear that I have not yet understood the clause and the amendments. What is surprising is that my noble friend Lord Wedderburn of Charlton, who is unfortunately not in his place, tells me that he has not yet understood them. They are extraordinarily complicated. I can say without fear of contradiction that we are frequently told that Sir Humphrey Appleton is in the House and that he has done this, that or the other. Sir Humphrey was not responsible for this. He would have done it much more simply. In fact, he might have done it much in the way that the Minister did it: money plus justifiable deductions and payments minus unjustifiable deductions and payments equals minimum pay entitlement. Had it been done like that, we might have known where we are, but what we have is a formula.
I should ask the Minister whether I have the correct formula if I thought that he could understand it. I make it:
la + lb (-2a and 2b + 4abc) - li = pay.
I do not know whether that is right. I do not claim to understand it and I do not believe that the Minister understands it. I do not even believe that the parliamentary draftsman is sure. But if la + lb, and so on, is correct, certain things about the formula give us cause for concern.
We shall come back to this on Report when we have understood it. It cannot defy all understanding if one works long enough. But at this level of our comprehen-
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sion several things worry us. The provision seems to us to some extent to go against what Mr. Trippier in another place wrote to the general secretary of the tailor and garment workers union about necessary expenses. It seems somewhat narrower. It seems to go against what the same Minister told Miss Short at col. 788 on 14th May about the ability to challenge illegal underpayment in industrial tribunals.
As a result of leaving in subsection (4)(a), (b), (c) and (d), it seems to be allowing for a certain species of truck. I do not believe that the Government want to bring truck back in while they are abandoning the Truck Acts. They say that they do not.
We are worried, for example, about subsection (4)(c):
"any goods or services supplied by the employer (whether in connection with the worker's employment or not)".
If that can be allowed as part of pay, we see that as a sign of truck. Similarly, subsection 4(a) states:
"any conduct of the worker or any other event in respect of which he (whether together with any other workers or not) has any contractual liability".
That seems to bring fines in again and to bring fines in whether or not it is in the contract. The Government told us throughout Part I of the Bill—and we accepted it as being right—that it was not their intention to go beyond contract. They would not put reasonability in but they put contract in, and you could not make a deduction without it being in the contract.
I could go on. On the present level of our understanding there are certain things about this series of amendments which bother us. That is why we put down our amendment. I thought that the Minister was to speak to that, too. I am in fact speaking to our Amendment, No. 99B, which was drafted in the early stages of our misapprehension of the clause, late in the night, when we thought that probably the main thing wrong with it was subsection (4)(b) and if we could get the reference to truck out, we could say that the amendment was fair. But it seems much more complicated and difficult than that.
I ask the Minister whether he can comment on the objections that I have so far raised. But we shall have to look at this again and come back to it on Report.
Lord Rochester: I cannot add much to the sum of the knowledge of the Committee. I do not understand this provision either. The Minister gave every indication that he did, but I am not quite sure about that. In my case I think that it has to do with, in part, the complexity of the amendment and in part no doubt with my slow wittedness. But it seems to me important that we should have an opportunity to study closely what the Minister has said and will again be saying in a moment, read it in Hansard, and have the facility to come back on Report when perhaps we can discuss it a bit more sensibly.
Baroness Seear: Since we are repeatedly told that wages councils are manned by men and women with many other occupations and who are certainly not lawyers, does the Minister agree that they should attempt to draft provisions in language which is reasonably comprehensible to reasonably ordinary people?
Baroness Phillips: Can the Minister explain a small point of procedure? Did 1 get it wrong? He said that he would be moving that the clause did not stand part of the Bill. What is the point in discussing the amendment and making a decision on it if he is to move that the clause does not stand part of the Bill anyway? It is an unusual procedure. I have never seen it before in all my years in the Chamber.
Lord Trefgarne: I hope that I did not inadvertently mislead the Committee. I am seeking to put a new provision into the Bill to replace an old one. Having persuaded the Committee, if I can, to agree to the new provision, I shall not want to insist on the old one staying in the Bill.
In replying to the noble Lord, Lord McCarthy, I at once confess that this is not straight forward. I am sorry if I did not explain it carefully. The noble Lord's amendment is an amendment to my amendment. Subsection (4)(c) of the new clause in Amendment No. 99A provides that where an employer supplies goods or services to a worker, the amount paid for them, whether by deduction from wages or paid by the worker to the employer, is not to be treated under subsections {2)(b) or (3)(b) as an amount retained by the employer for his own use and benefit. The amount deducted or paid has therefore to be included as remuneration paid. The practical effect of that is that if a worker buys groceries from his employer, the payment made for them is solely a matter between the employer and the worker. The transaction cannot in itself lead to the worker being paid less than the statutory minimum.
If subsection (4)(c) were left out, as proposed by Amendment 99B, the effect would be that an employer could not charge a worker for goods or services supplied if by doing so the worker's remuner-ation fell below the statutory minimum due. I am sure that such a provision is not one which the noble Lord would wish to see part of the Bill. I hope that he will not persist with it. If the Committee were willing to agree to the amendment that I propose, and the noble Lord, Lord McCarthy, were willing not to move or to withdraw his, we could return to this matter at a later stage of the Bill.
Lord McCarthy: I cannot quite follow what the noble Lord said. Surely in that situation the employer would be able to ask for payment for anything he has supplied. If the worker agreed that that payment should be made in the form of a deduction, that would not be illegal. It would be wrong to do that whether or not the worker agreed and then to say "You have your minimum". That would be wrong, but let us not go into that.
I meant to ask the Minister earlier whether he would undertake to give us some further information about the meaning of this clause. After all, the Government were good enough to issue Notes on Clauses which were extremely useful in finding our way through the Bill. There were no notes on this clause; there was merely the clause. Will he consider issuing Notes on Clauses on this clause?
Lord Trefgarne: I am very willing. Perhaps I may do that by writing to the noble Lord and giving him
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further clarification of the clause. There were more points that I should have wished to make, particularly on the point that he raised just now about the need to ensure that we are not returning to the provisions of the old Truck Acts.
Lord McCarthy: It is one thing to write to me, but many other Members of the Committee are interested in the clause and I think it should be published.
Lord Trefgarne: I should be happy to place a copy of that letter in the Library.
On Question, amendment agreed to.
[Amendment No, 86 not moved. ]
Lord McCarthy Lord McCarthy moved Amendment No. 87:
Page 16, line 9, at end insert—
("( ) fixing a minimum period of annual holidays and the minimum remuneration payable during such holidays".).
The noble Lord said: The amendment brings back annual holidays and the minimum remuneration payable for such holidays. Typically, in wages council trades, there are four weeks' holiday after one year's service. That compares quite well with the average of holidays in industry generally for manual workers, both in the private and the public sector. It does not compare favourably with many of the provisions made for executive, management or some other higher paid groups. Nevertheless, it is considerably better than those of many low-paid workers who are not covered by wages councils and who cannot be covered by them now because the Government have shut the door on new wages councils.
For example, in the mushrooming security industry, where there is no wages council, there are few guaranteed holidays. The mushrooming launderette industry is not covered by a wages council and there are virtually no paid holidays. A recent survey shows that three out often instant print workers have no paid holidays.
Those workers have no statutory, regular or contractual holidays. They get what they can and what the employer allows them, according to the business. That is not fair or reasonable. Even this Government, so far as I know, do not say that if a minimum period of holidays is abolished that will price people into work. Even they have not given us figures, or they refused to give us figures or refused to tell us what the elasticity assumption is for pricing people into work if they are not to be given statutory holidays. Even this Government have not yet said (of course the Minister may say) that the smallest of small businessmen is so small-minded and stupid that he cannot read a wages council order and understand that he must give people four weeks' holiday. Surely that is not beyond him.
Surely the Government could allow their new wages councils, which will be full of their friends, to give minimum-period holidays and put that provision back into the Bill. I beg to move.
Lord Rochester: I support the amendment. I am impressed by the argument that the United Kingdom is apparently almost alone among European countries

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in not providing an overall statutory entitlement to a minimum holiday.
In this country there are legal holiday rights only in industries, as I understand it, which are covered by wages councils. If those are withdrawn, there will be no such entitlement in future. Far from creating new jobs, abolition of the holiday provision may even produce a net job loss in industries covered by wages councils by encouraging unscrupulous employers to make do with fewer people on the payroll.
Viscount Massereene and Ferrard: I should like some clarification. We always give agricultural workers four weeks' holiday. I also give them—I understand that this is the law—an extra £25 a week for their holidays. I have always understood that that applied to agricultural workers. Does it apply to all workers?
Lord Trefgarne: No.
Viscount Massereene and Ferrard: It applies to agricultural workers. They receive their full wages plus £25 a week.
Lord McCarthy: I agree with the point made by the noble Viscount. As I said earlier, the Government will not touch the Agricultural Wages Board because they have too many friends among the farmers. They will be all right. It is the the industrial workers who are for the dark.
6.45 p.m.
Lord Trefgarne: I hope that the noble Lord will forgive me if I resist the temptation to fight the social battles of the last century when discussing the amendment. If this amendment were accepted it would enable wages councils to continue setting the complex rules about holidays and payment for holidays which bedevil the present wages orders.
We strongly believe that this is a matter which should be left for agreement between employers and workers, and that it is indefensible for such matters to continue to be the subject of detailed statutory prescription. There was almost universal support among employers for the view that the wages council system must be drastically reformed if it is to remain. Many of the underpayments which occur are attributable to misunderstanding, and miscalculation and payment for holidays figure prominently among these underpayments. We really cannot continue to put businesses in a straitjacket in which they are breaking the law if, for instance, they pay a higher rate than that fixed by a wages order in exchange for fewer holidays than the order requires.
If this amendment were carried it would undo one of the prime objectives of the Bill—releasing employers from unnecessary burdens and enabling them to give more time to running their businesses. I must ask the Committee to reject it.
Baroness Seear: Is the noble Lord asking us to believe that to write into the Bill that people must have four weeks' holiday is so complicated that it will put industry into a straitjacket? That stretches our belief beyond endurance. The noble Lord keeps on telling us that such matters must be left to negotiations between employer and employed. Surely he knows that to be fair negotiations must be between evenly weighted parties. That is what makes for respectable collective bargaining—people of even strength negotiate quite properly and come to a proper decision.
But negotiation between people who have all the strength and people who are weak is not negotiation between evenly weighted parties. It is this that collective bargaining has come into existence to redress. I find myself unconvinced on being told that in the survey that the Government have done the employers have told them that they want the matter greatly simplified. We have not heard what other people have told the Government they want in respect of the reform of wages councils. Of course, the Government get this kind of advice from employers. But the employers are not the only interested parties.
Lord Harmar-Nicholls: I find frustrating the lack of realism shown by the noble Baroness whom I so much admire, in respect of this matter. Was she being told, the noble Baroness asked, that by putting in statute that there should be four weeks holiday, this was putting it in a straitjacket. If this was the only worry that small employers had to contend with, there would be no problem. The noble Baroness has to remember the innumerable other instructions in statute or near statute that have to be takan into account. When we consider all of these, we find that it is the straw that breaks the camel's back. It works much better when employer and employee have a relationship which means that they can make a mutual arrangement and dispense with statute especially when that statute may not accord exactly with the type of work they perform. I hope that my noble friend will not be diverted. This is another example of statutory obligations that make it almost impossible to run many small businesses. I am certain that it can be dispensed with, without any hardship to anyone. I am convinced that people in employment nowadays are well aware of their rights and that they are capable of negotiating a mutual agreement that will be much more suitable than a quickly drawn up statute passed through this House.
Lord McCarthy: It almost takes one's breath away. I am prepared to make an offer to the Government if they will read our amendment. If they are serious, they have delivered themselves into our hands. The amendment states,
"fixing a minimum period of annual holidays and the minimum remuneration payable during such holidays".
Almost everything that the Minister said dealt with the second half of the amendment. The noble Lord dealt with the complexity of remuneration. He spoke about the poor, small employer who does not understand whether it is time and a fifth or double time, or for how long it is double time, and so on and so forth. All right, let us concede that for the purposes of the amendment: What is wrong with the first half of

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the amendment? Let us suppose that the amendment was to stop at fixing a minimum period of annual holidays. Would the Government object to that? Are the Government seriously saying, as the noble Baroness, Lady Seear remarked, that giving people a holiday bows down business and puts it out of account? If the noble Lord, Lord Harmar-Nicholls, says that this is not the only thing, what is he saying? It is the only thing we are asking for in the amendment.
We are not talking about VAT. That is what the small businessman complains about in most of the surveys. If the noble Lord brings forward a Motion on VAT, we will vote for it. We are talking about fixing a minimum period of annual holidays and the minimum remuneration payable. We would be willing to remove the amendment and to come back on Report with another that dealt with fixing a minimum period of annual holidays—full stop, end of message. If we did that, can the Minister say whether the Government would oppose it with the same vehemence with which they oppose the amendment now being discussed? If so, I just do not understand it. The noble Lord, Lord Harmar-Nicholls, said that there would be no hardship—no hardship with no holidays. I consider no holidays a hell of a hardship. We are saying that people should not be allowed to give no holiday.
Lord Harmar-Nicholls: I am not saying that we should have a statute that says people cannot have a holiday. I am saying that they can have a holiday that they have mutually negotiated. They know more about it than anyone else.
Lord McCarthy: What the noble Lord will not let them have is a statute that says they must have a holiday. I am saying that British industry, God above, can stand and can understand, and will not fall down, if a few workers have a statute that says that they can have a holiday. I want to know what the Minister would say if we came back with that proposal.
Lord Trefgarne: The noble Lord, on more than one occasion during the passage of the Bill, having heard some of the shortcomings of his amendment, has then sought to seek my views on some other amendment, not that on the Marshalled List. The amendment to which the noble Lord invites our agreement retains the whole mish-mash of arrangements regarding payment and minimum period for holidays. As I said earlier, this has been one of the main difficulties encountered on wages council orders. The detail has been such that even large firms have had difficulties sometimes in understanding the orders and a number of errors have inadvertently occurred. It is this inordinate detail that we do not think should stand between an employer and employee and that we seek to sweep away by this measure. This amendment would prevent us doing so. I invite the Committee to reject it.
Lord McCarthy: I am sorry to keep going on this, but we are due to stop at seven o'clock anyway. I am not saying that the amendment is a bad amendment. It is a very modest amendment. What I am saying is
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that the Minister seems to object to the second half, and only the second half, of the amendment. Does he really want to be Mr. Gradgrind? Is that how he wants to go down in history, saying that there will be no minimum period of annual holiday? Is he asking us to believe that if that is what we were saying, he would oppose it? Of course, we shall come back on Report. Of course, that is what we are going to say. I want the Minister to tell me what he will say.
Lord Trefgarne: I am again answering the amendment on the Marshalled List. The amendment does not have one part; it has two. The second part in particular I find most objectionable.
Viscount Massereene and Ferrard: If a worker does not want to take his holiday but would rather have the money, as frequently happens, where do we go from there? Does the noble Lord agree that that is all right?
Lord McCarthy: If that is what the worker wants and if the worker is in a position to influence the employer as to what he wants and is not so dependent on the employer that he has to take what the employer gives him, I have nothing to say about it. I beg leave to withdraw the amendment, but we shall come back to the matter on Report.
Amendment, by leave, withdrawn.
Viscount Long: I feel that this is the moment for a little light refreshment. In moving that the House do now resume I suggest that we do not return to consideration of this Bill in Committee until eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Horticultural Development Council Order 1986
6.58 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, I beg to move that the draft Horticultural Development Council Order 1986, which was laid before the House on 3rd June, be approved.
This order is presented in accordance with the requirements of the Industrial Organisation and Development Act 1947. Its purpose is to establish a Horticultural Development Council for Great Britain, the primary function of which will be to commission research and development in horticulture. The order will empower the council to raise a levy for this purpose on sales of horticultural produce.
Before going into the details of the order I should like to explain a little of the background, and in doing so I should like to emphasise that there have been full consultations with the interested parties as required under the 1947 Act, and the draft order takes account of the views expressed. After taking soundings of their

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members, the National Farmers Union, supported by the Horticultural Trades Association, asked my right honourable friend to conduct a poll of growers with a view to ascertaining whether they would support the establishment of a development council under the Industrial Organisation and Development Act 1947. A similar approach was made to my right honourable friend the Secretary of State by the Scottish NFU, and parallel polls were conducted in Scotland and England and Wales.
The result of the poll was a majority of roughly 2 to 1 in favour of a development council among those growers who were eligible to vote and did so. Having consulted further with the representative interests in the industry, my right honourable friend and the Secretaries of State for Scotland and Wales were satisfied, as the 1947 Act requires them to be, that the development council was desired by a substantial number of persons engaged in the industry, and they accordingly decided that a Horticultural Development Council should be established.
Perhaps I may say now a word or two about the substance of the order. This follows very closely the proposals put to growers in the prospectus which accompanied the poll forms. I would draw your Lordships' attention first to some of the definitions which are contained in Article 2 of the order. The terms "grower" and "horticultural produce" define those in the industry who will be liable to pay levy to the council. They are persons who grow any of the horticultural produce listed in Schedule 1 to the order and whose sales of such produce, excluding VAT, were more than £25,000 in the accounting year to which the levy relates.
The terms "levy period" and "relevant accounting year" relate to the levy collection arrangements which are detailed in Article 9 of the order. The levy will be collected in respect of "levy periods" from growers who in their "relevant accounting year" had sales of more than £25,000. When the council is fully in operation, it will collect its levy each autumn on sales in the growers' accounting years which ended in the preceding calendar year. Collection in the autumn will coincide with the period when most growers' cash flow is near to its peak.
Your Lordships will see that the period from the commencement of the order until 30th September 1987 is split into two levy periods, which will mean that growers will be called upon to pay two lots of levy during 1987. The reason for this is that the council needs to collect some money to fund R & D projects commencing in April 1987 but will not have compiled its register of growers and assembled the necessary staff and other things in order to do this in the autumn. Therefore, the collection in the spring of 1987 is in effect a deferral of the 1986 collection, and it is anticipated that it will be at a rate somewhat lower than the one-quarter per cent. maximum.
I apologise for having taken so long over that. Perhaps I may finish by saying a word or two about the articles in the order. First, the functions of the council are dealt with in Article 3 and Schedule 2 to the draft order, and are to promote or undertake scientific research and other inquiries, and to promulgate the
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results obtained. Article 4 specifies the number of members to be appointed to the council and that all appointments shall be made by ministers. Articles 6 and 7 set out the arrangements for the registration of growers. Article 8 provides for returns and information to the council.
Article 9 provides for the council to raise a charge on sales of horticultural produce for the purpose of meeting the cost of carrying out its functions. Article 11 provides for returns of these sales. Article 9(2) provides for two deductions from the value of a grower's sales. The purpose of the first, which is the cost to the grower of any horticultural produce which he has brought in, grown on, and resold, is to ensure that levy is not paid twice on bought-in produce. The purpose of the second is to avoid the levy being paid on the value added by any processing of horticultural produce carried out by the grower. These allowances have been arrived at in consultation with growers' representatives, who agree that they are appropriate. Article 10 contains standard provisions permitting the council to borrow money and create reserves. Article 12 deals with offences under the order.
Finally, may I say that the Government are very encouraged by the positive way in which the horticultural industry has demonstrated its commitment to the importance of research and development. We believe that those who benefit most from R & D should contribute more directly to the cost, and growers are to be congratulated on being far-sighted enough to see the benefits of having their own body to decide on what R & D they wish to carry out and how to finance it. I am convinced that this is the right course for the industry to take, and I look forward to the council getting down quickly to its work on the industry's behalf. I commend the draft order to your Lordships' House.
Moved, That the draft order laid before the House on 3rd June be approved. [27th Report from the Joint Committee.] (Lord Belstead.)
Lord John-Mackie: My Lords, we must thank the Minister for explaining and putting forward the order to us. As usual, he has done it very clearly. It is a fairly straightforward order to which we can agree. It is simply to raise money to help to pay for research and development in the horticultural industry. This is to cover the £10 million and £20 million cuts which the Government made between 1986 and up to 1988.
I should like to ask the Minister this question. We had the argument when this cut was brought forward about two years ago as to whether it is £10 million and then another £10 million making £20 million the second year, or whether it is £10 million and £20 million the second year, making £30 million. I have just read the speech made by the Parliamentary Secretary to the Select Committee in another place, and it is not very clear. Reading what he says it looks very much like £30 million. I should like this cleared up for the benefit of everyone concerned.
As the Minister said, it has been agreed and all the bodies concerned, particularly the NFU, are reasonably happy about it. The Minister said that it

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was a two to one majority in the poll, but I understand that it was a very low poll. Nevertheless, it is the fault of the industry if it did not take advantage of the vote.
The order covers a tremendous number of points which might arise. There is provision for someone who gets in produce, processes it and sells it again, so that he would not have to pay twice, and various matters such as that. As the Minister said, the industry is very satisfied with the order, and no doubt it will look forward to having some say in its research and development. I gather that the estimate is to raise about £3 million to replace the cut that was made—whether it is £20 million or £30 million; once we decide that. We cannot object to the order, and we give it our blessing.
There is a question I should like to raise on this order, and it concerns people who feel that their conscience will not allow them to join such a body. I have been approached by members of the Plymouth Brethren, and although I do not profess to understand their attitude I respect their sincerity. I have questioned them very carefully. They base their objections to joining such a body not only on their religious beliefs—which are very firm on the subject of being forced to join a body that they do not wish to join—but also on the EC Declaration of Human Rights. Article 18 says:
"Everyone has the right to freedom of thought, conscience and religion; this right includes freedom… to manifest his religion or belief… in practice".
Then Article 20(ii) says:
"No-one may be compelled to belong to an association".
The Human Rights in the United Kingdom pamphlet also makes the point about everyone having the right to freedom of thought, conscience and religion, and this right includes the freedom to manifest this in practice.
It seems to me that they have a point here. They are not in any way not wanting to pay the levy. It was brought up in the Select Committee of the House of Commons. They make it perfectly clear that they want to pay the levy but to pay it direct, not through an association of which their religion prevents them becoming members. I should have thought that it would not be outwith the wit of the Government to find some way to satisfy these people on their rights that they have very clearly put to me, as well as their religious beliefs.
Lord McNair: My Lords, in general, we also thank the Minister for introducing the order so clearly, and we welcome it. I think the Minister has satisfied me that it is desired by a substantial number of people engaged in the industry.
If I may go straight to the details of it, in Article 4, "Constitution of the Council", I ask whether two persons are enough to represent the interests of persons employed in the industry. There are a fair number of employees in horticulture, and to have two out of 20 representatives on the council does not seem to be very generous representation for them.
In paragraph (4) of the same article it says:
"two persons having special knowledge of matters relating to the marketing or distribution of products of the industry".
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Perhaps I should declare a defunct interest in that up to about 15 years ago I was a grower and in those days I used to regard greengrocers as my natural enemies because of the exorbitant mark-ups they put on my produce, especially in the case of florists engaged in the ghoulish trade of wreath-making. However, I recognise that these people are necessary, and above all that packaging is extremely important. I should like to ask whether distribution and marketing somehow includes packaging. I take it that it does.
Articles 8 and 11 deal with returns. We must hope that the Minister will exercise a restraining influence on the council to thwart the inevitable bureaucratic tendency to ask for more returns than are strictly necessary. Growers are not very good at paper work and they do not like it. The council will be far more effective and successful if it can win and deserve the goodwill of the growers.
In the schedule of the different products I looked very hard to see whether I could find any omissions. The only possible one I found is that, whereas roses include stock for budding, the same inclusion is not made for fruit trees, ornamental trees and shrubs, all of which are frequently budded or grafted.
Finally, I shall refrain from asking the Minister whether he agrees that, whereas a tomato is undoubtedly a fruit rather than a vegetable, rhubarb cannot possibly be described as a fruit and therefore presumably must come under the heading "Vegetables".
Lord Belstead: My Lords, I am grateful to the noble Lords, Lord John-Mackie and Lord McNair, for their reception of this order. The noble Lord, Lord John-Mackie said—and it is true—that this is in the context of reductions in government funding. It is a fact that £10 million has been cut from the provision for R & D expenditure in the current financial year, 1986–87, and £20 million will be cut from the provision for next year, 1987–88. However, I would make the point that we shall still have some £21 million of government money flowing into research and development for horticulture. In addition to that, it is hoped that this levy will raise an amount in excess of £2 million. I think that the noble Lord was perhaps £1 million too high in his estimate. Those who are planning the council hope for a figure in excess of £2 million. Undoubtedly there will be some overheads to meet, although I am glad to be able to tell your Lordships that the ministry will certainly try to give some assistance with the setting up of the council.
Specifically, we intend to provide an interest-free loan of £130,000 to be repaid before the end of this financial year. In addition, provided they are wanted, the ministry will provide conference facilities and support services until the council is in a position to provide these facilities from its own resources. Therefore, we shall try to do our bit to get the council off to a good start.
The noble Lord, Lord John-Mackie, then asked me a specific question about Plymouth Brethren, the Exclusive Brethren, who, as he has said, have not said that they do not wish to pay the levy, but do not wish to belong to an association which would collect the levy. My honourable friend the Parliamentary

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Secretary, in speaking of this order recently in another place, gave an undertaking that we would try to find a solution to the problem, which might be an administrative arrangement whereby some members of the Exclusive Brethren could perhaps pay the levy via an intermediary. I should like to endorse that undertaking to your Lordships today and give an assurance that we shall try to find a way through this particular problem. I am grateful to the noble Lord for raising this point.
The noble Lord, Lord McNair, asked whether two representatives of the interests of the employees on the council were enough, and the noble Lord also referred to the two representatives who will have knowledge of marketing and distribution, which I am advised does indeed include packaging. There was of course quite a bit of consultation about this before the poll was conducted. I think that we should wait and see how the council progresses. The representatives of those who are employed will be on all fours with those who will be independent—there will be only two independents—and those who have knowledge of marketing and distribution. It is only those who run into double figures, who will be representative of the growers, who will be in the majority. I like to think that the other representatives will think that the composition of the council will be fair, but no doubt that is a matter to which we can return if, within the industry, it is felt that the balance is not right.
I have noted what the noble Lord said about trying to make sure that there is not too much bureaucracy. I am sure the noble Lord has noticed that the order contains articles enabling the council to collect information; otherwise the council would be in an almost intolerable position. However, I am sure that on its side it will try to keep down its costs, overheads and bureaucracy. I am sure that the noble Lord, Lord McNair, would say that that will be for the benefit of growers as well.
Finally, as the noble Lord knows, the produce covered excludes apples and pears because of the Apple and Pear Development Council; it excludes mushrooms, because the mushroom growers are carrying out their own research and development; and it excludes hops, because the hop growers are also carrying out their own research and development. There is one other exclusion.
Lord McNair: Potatoes, my Lords.
Lord Belstead: Yes, my Lords. As I understood it, the noble Lord asked me a question about hardy nursery stock. I hesitate to suggest that I am the possessor of knowledge of which the noble Lord is not, considering that the noble Lord has personal experience of this, but I believe that the particular examples he gave me fall within the hardy nursery stock category. The nursery stock people were very closely consulted before this order was brought before your Lordships' House.
Lord John-Mackie: My Lords, I should like to thank the noble Lord the Minister very much for his assurances to the Plymouth Brethren; I am sure that they will be delighted. At the same time I should like
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to ask why he is imposing a levy to raise money for this R & D when he turned down my suggestion of a levy to pay for ADAS.
Lord Belstead: My Lords, that is an ingenious question and rather a fast ball. As we shall have the pleasure of dealing with the Report stage of the Agriculture Bill next week, perhaps I may consider my reply and deliver it when we next meet on that Bill.
On Question, Motion agreed to.

Protection of Children (Tobacco) Bill
7.19 p.m.
Report received.
Clause 2 [Amendment of section 18 of the Children and Young Persons (Scotland) Act 1937]:
The Lord Advocate (Lord Cameron of Lochbroom)The Lord Advocate (Lord Cameron of Lochbroom) moved the following amendment:
Page 2, line 43, leave out ("time") and insert ("date").
The noble and learned Lord said: My Lords, at last week's consideration of this Bill in Committee I undertook to look at Clause 2(9), which creates presumption as to the date of receipt of a notice under subsection (7) of that clause. This amendment has been brought forward since that time as a result of a suggestion made to me by the noble Lord, Lord Airedale, in writing, pointing out that the execution of recorded delivery, which is referred to in these subsections, refers only to a date stamp as proof of posting and does not refer to an exact time. Accordingly, the calculation of the period of notice will, if this amendment is accepted, be upon the basis of the date on which the information was posted. I am grateful to the noble Lord for having brought this matter to my attention.
However, as I said at Committee stage that I would consider the matter further, I should indicate that, as I said then, this provision has a statutory precedent. The equivalent provisions which I referred to in Committee have operated successfully in Scotland and those who advise me have not discovered any case in which a requirement to give notice within the prescribed period has given rise to any problem. Indeed, the system appears to have worked well. As I indicated in writing to the noble Lord, Lord Airedale, I shall look further at the matter in a much more general context. At present I accept that it would be tidier if this amendment had been made.
The noble Lord, Lord Airedale, voiced concerns about the situation when an accused person does not receive the notice that the prosecutor intends to rely on for the presumption in subsection (6), at least until such time as it is too late for him to give notice that he intends to challenge that presumption. In that circumstance I can offer some reassurance to the noble Lord.
The provision in Clause 2(9) is indeed only a presumption. If an accused person at a trial were to indicate that he had received the notice late and that is

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accepted, then the presumption would be overcome and the intimation would be defective. In such circumstances the trial might be adjourned to another date to allow the matter to be cured. Alternatively, it might be heard in part so that the evidence of witnesses who had attended the court that day (I have in mind particularly children) could be heard and inconvenience avoided. Then the trial would be adjourned to another date for the purposes of dealing with scientific evidence which it would have been intended to challenge.
In the circumstances I have outlined it would be inconceivable that the trial judge or the prosecutor would do other than agree to such a course. The principle of fairness to the accused person would dictate that that was the proper course to be followed. I hope that that gives certain reassurance to the noble Lord, Lord Airedale, in particular on the matters that he raised at Committee. With that, I beg to move this minor amendment.
Lord Airedale: My Lords, I am grateful to the noble and learned Lord the Lord Advocate for this small crumb of comfort arising out of the fuss I made about subsection (9) when we were in Committee. I am also very grateful that he has agreed to have another more general look at this subsection. It has not really been cured yet by this small amendment. The difficulty is what we were told by the noble and learned Lord the Lord Advocate in Committee. Noble Lords may think this is a surprising proposition. I quote his words:
"the execution of the recorded delivery is that document which is handed over at the time of posting and is not the document which is available at the time when the notice is delivered to the addressee".—[Official Report, 19/6/86; col. 1155.]
If that is right, it follows that the Post Office could throw the letter into the rubbish basket and still claim to have executed a recorded delivery. I cannot believe that the Post Office would ever have the temerity to make such a claim, and if it did I simply cannot believe that the court would accept a claim so grotesque. I still say that this subsection is founded upon a misconception. I trust that the earliest opportunity will be taken to redraft it to cure its defects. In the meantime, I am grateful for my crumb of comfort.
On Question, amendment agreed to.

Surrogacy Arrangements (Amendment) Bill [H.L.]
7.26 p.m.
The Earl of Halsbury: My Lords, I beg to move that this Bill be now read a third time. In rising to move this Third Reading I am aware that this is a debatable Motion and that certain noble Lords will wish to enter into a debate upon it. I shall therefore make a few brief introductory comments before I move the Motion.
This all starts with a committee chaired by my noble friend Lady Warnock, known as the Warnock Committee, in which the subject of inquiry was, first, experimental research on embryos, and, secondly, surrogacy arrangements where one woman acts as the incubator for another woman's egg. The Government
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have merely said that at some stage in the future they will consider legislation to implement the findings in the Warnock Committee's report with respect to experiments on embryos.
However, in the last Session of Parliament they introduced a Bill which implemented those issues where the Warnock Committee was unanimous. There were other issues where the Warnock Committee voted by a majority in favour of certain recommendations which were not included in the Government Bill but were proposed as amendments to a Bill in the last Session. It was very late in the Session. It was undesirable that the matter should be referred back to another place and the Government Bill went through unamended. At that time, I undertook to introduce a Private Member's Bill to give effect to the amendments that had been proposed to the Government Bill in the last Session, and that is the Bill before the House tonight.
There is little I need say on the subject apart from recapitulating the history of the matter. The Bill may have its friends and it may have its opponents. If its opponents choose to cast down the gauntlet I shall pick it up and we shall have a Division in the dinner hour. Otherwise it will go through, I hope, on the nod. I beg to move.
Moved, That the Bill be now read a third time.—(The Earl of Halsbury).
Lord Ennals: My Lords, in speaking on this Third Reading I am speaking only for myself and not for the massed ranks of my colleagues behind me. I have several times in the consideration of this Bill thanked the noble Earl, Lord Halsbury, for introducing this Bill because it has given us the opportunity to discuss issues of very great importance. But I have also expressed grave personal reservations about passing this Bill into law. I must admit that I should have fought harder against this Bill if I had thought that it had any chance of becoming part of the law of the land. I think it is unlikely that that will be the case.
There are two reasons that I have set out before, but I think that I should do so again on Third Reading. We shall have a measure before us eventually. Perhaps the noble Baroness may help us with the timetable. She may say that she expects that next year, or sometime or soon (that is a popular word with your Lordships) we shall have major and comprehensive legislation on the issues raised in the committee presided over by the noble Baroness, Lady Warnock.
Basically, I do not favour legislation in bits and pieces. When we have a major problem, as with the reform of the child care legislation, the best thing to do is to try to deal with it all at once. There was one emergency piece of legislation that we needed to get through quickly, and we did so. I fully supported it and so too did my colleagues. But I want this issue of surrogacy to be taken as part of the legislation to be introduced by the Government. That is my first argument.
My second argument is one of substance. I do not want to close the door totally at this stage to any form of surrogacy. At Second Reading I quoted—and I hope the House will forgive me for doing it again, but it

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seems to be quite appropriate—what the noble Earl, Lord Caithness, had said in the course of a debate in your Lordships' House on 28th June 1985. His words were quoted during our debate on 11th March at Second Reading. He said:
"We can easily envisage a circumstance where a close friend or sister of the infertile woman voluntarily agreed to bear a child for the childless couple. She might, on reliance of a promise of reimbursement, incur considerable expenses as a result of the pregnancy and birth or cease work during the period. The couple might then renege on their agreement. They might refuse to accept the child or to pay medical or other expenses. They might even take the baby and refuse to pay the expenses. We ought to consider this question: do we want to deny a surrogate mother all legal redress, because that is what the amendment does".—[Official Report, 11/3/86; col. 585.]
I agreed with the noble Earl. I said that I did not want to close the door totally to this possibility.
I suppose that my views are really close to those of the minority report which was presented by Dr. Wendy Greengross and Dr. David Davies. Perhaps I can quote just three paragraphs which express the view that I hold and which, of course, they hold. The second paragraph said:
"We… share with our colleagues many of the concerns expressed in Chapter Eight [which is dealing with surrogacy]. The practice of surrogacy could lead to serious problems"—
and that has been pointed out to us very well in earlier debates by the noble and learned Lord, Lord Denning.
"Equally we regard it as of immense importance that people considering getting involved in surrogacy, in whatever way, should be fully aware of the complications that could ensue".
That puts one side of the argument, and it is very much that which is shared by most Members of the Committee.
Perhaps I may quote a sentence from paragraph 5 of the minority report. It reads:
"Having considered the risks on both sides of a finely balanced argument we have come to the conclusion that it would be a mistake to close the door completely on surrogacy being offered as a treatment of childlessness".
In each of the opportunities we have had for debating this issue, I have always expressed my sympathy for the childless couple.
My last quotation is from paragraph 9 of the minority report. It reads:
"We do not believe that public opinion is yet fully formed on the question of surrogacy, which has burst into prominence only in the last year or so".
It was more than a year ago that the report was published.
"Thus we think it is too early to take a final decision one way or the other. We wish to have the opportunity in the next few years to see what the demand is, whether an agency is prepared to come forward to satisfy it, and whether the consequences are generally acceptable or not. We simply ask that the door be left slightly ajar so that surrogacy can be more effectively assessed".
In my view, if the Bill presented by the noble Earl, Lord Halsbury, were to be carried, it would not leave the door ajar in any way—which is my objection to it. I simply ask that the door be left slightly ajar so that surrogacy can be more effectively assessed.
Lord Denning: My Lords, I hope that your Lordships will pass this Bill this evening and that it will
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go through another place equally quickly, for this simple reason. The law should not be left uncertain for years. It is most important for the community that the law should be declared now on these important matters. It is two years since the Warnock Report was produced, and, goodness knows, it may be another two years before the Government (or whoever it may be) propose further amendments to it. Are we to wait all that time before we have a Bill and law dealing with the matter?
Let me take some elementary points which are provided for in this Bill and which were left open the last time, in the 1985 Act. This is the simple question. Is a surrogacy arrangement lawful or unlawful? The last Act left it uncertain. The Warnock Report said quite clearly that the law would hold, they thought, and should hold, that it is unlawful, and for this simple reason. If you have a surrogacy arrangement like that, suppose the mother wants to keep the child and the commissioning parents say, "We want it. You are breaking your agreement", and they sue her. If it were a lawful agreement, they could do so.
On the other hand, if they do not want the child after it is born and the woman who bore it says that they ought to have it because they commissioned it then, if it were a lawful agreement, she could sue them. It is imperative in this first clause to follow out the Warnock recommendation that any arrangement which is a surrogacy arrangement is unlawful, whether or not made with a view to payment. The law must be clear upon it, and it should be declared in this Bill as soon as may be.
Then comes the next question. What is the position of the child who is born of a surrogacy arrangement? Take the instance where a woman cannot have her own child for some reason or another, the egg is taken from her, mixed with a man's sperm and put into the womb of what I would call the real mother. The law should be clear here and now who, in law, is the mother of that child. Who is the parent of it? The answer at the moment, as I would give it, is that the mother of the child is the mother who has borne that child in her body from the very moment when it was put there and conceived until the time when it is born.
The Warnock Report recommended that a child born to a surrogate mother in pursuance of a surrogacy arrangement shall for all purposes in law be regarded as the child of that mother. Surely that is right. The law should be clear about it. The woman who has borne the child in her womb from the first moment to the date of birth surely, in law, is the mother of that child; and the man who has provided the semen can have no right in the matter whatever. That is an important point of law to be decided at once in those first two clauses.
Then we come on to the rest of it. It is dealing then with surrogacy arrangements for money, for commercial purposes. As the Bill originally went through before these amendments, it hit only at the organisations themselves who made the arrangements

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if you could get at them at all. As we know, most of them have come from America, where, I am sorry to say, this is all lawful. Are we to have it here in face of the clear recommendation of the Warnock Committee, which recommends that the legislation be sufficiently wide to render criminally liable the actions of professionals and others who knowingly assist in the establishment of a surrogate pregnancy? We can see what has happened since the original Act was passed in 1985 and before we have got this Bill on to the statute book. There was a heading in the Daily Telegraph of 15th May which read:
"Two surrogate mothers defy legal ban".
What happened was that there were two women, and apparently an American agency arranged for pregnancies of those two women from other men's sperm. They were both British, living in London, and they would be paid fees for taking part in this matter and for keeping a diary.
Lord Ennals: My Lords, would the noble and learned Lord give way for a moment? I am grateful to him. He is describing a very grim situation, and of course this House and Parliament have already abolished agencies—and thank Heavens they have. I wonder what the noble and learned Lord's comment is on these two sentences from page 45 of the Warnock Report:
"Moreover, the bearing of a child for another can be seen, not as an understanding that trivialises or commercialises pregnancy, but, on the contrary, as a deliberate and thoughtful act of generosity on the part of one woman to another. If there are risks attached to pregnancy, then the generosity is all the greater".
Could not the noble and learned Lord look at it in that light rather than in the rather fearsome and bloodcurdling light that he has described so far?
Lord Denning: My Lords, we can each read paragraphs from the Warnock Report to our liking. I am quite clear about this. The present Act does not go far enough. The case I was telling your Lordships about, whether done by an American agency or not—arranging for women to be impregnated with other men's sperm in order to get a child and being paid £7,000 each if they kept a dairy of their experiences—are we to allow that sort of thing in this country? No, my Lords.
Each part of this Bill as we would seek for it to go through is dealing with an immediate danger, an immediate harm to society and immediate things which are going wrong. We ought to make the law clearer upon that, as it is indeed made clear in this amending Bill which has been presented to your Lordships and which is now on its Third Reading. I hope your Lordships will not hesitate, because it is vital that the law should be made clearer now, rather than waiting for two or three years. If it waits for two or three years a lot of these harmful effects on society will go on and almost become established, as they have in America. For goodness sake! Let us get this amending Bill through now. I hope the other place will also get it through quickly. I will certainly support the Bill in every part.
7.45 p.m.
Lord Swinfen: My Lords, if we wait for the Government to produce legislation on the whole of the Warnock Report I think we may well have to wait a long time. These are moral issues and, as such, throw up important decisions of principle which make drafting extremely difficult.
The noble Lord, Lord Ennals, said that he did not like legislation in bits and pieces. What does Parliament do but legislate all the time in bits and pieces? It is our task continuously to amend the laws that are out of date and to bring in new ones to cater for new circumstances. The noble Earl, Lord Halsbury, is catering for new circumstances thrown up as a result of the passing of the Surrogacy Arrange-ments Act. Things were found not to work. Other people will come in with other Private Bills, I am sure, to deal with other parts of the Warnock Report. Medical and scientific advances will go on: they seem to be going on at an increasing pace. If we wait for a Bill to deal with the whole of the Warnock Report, that report will be well out of date. We shall need another Warnock and another report on a totally different issue. I do urge your Lordships to pass this Bill and to give it a fair wind. Then let us move on.
Lord Edmund-Davies: My Lords, the noble Lord, Lord Ennals, seductively said that all he seeks is to have the door left open. Left open to what? Left open for indefinite length to the present state of affairs? Can anybody contemplate the position in this country at the present time with any degree of complacency, or are we not bound to be convinced that it is a most undesirable and unsettling position which is full of foreboding for the future? The problem confronting this House tonight, in my submission, is not a grave or difficult problem. This Bill should be adopted.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, I, too, am not absolutely sure whether I speak for the even more massed ranks on this side of the House, but I do speak for the Government. First of all, I am sure the House would wish me to thank the noble Earl, Lord Halsbury, for giving us, through this Bill, a further opportunity to debate the issues of surrogacy. We have had a number of useful debates, and the proceedings on this Bill are, I think, a good example of how the issues that arouse public concern and deeply-held views can benefit from careful and considered debate in this Chamber.
I made clear when we debated this Bill on its Second Reading that the Government have adopted a neutral stance for the present, as they are considering the matters dealt with in the Warnock Report, including those concerning surrogacy. It remains our aim to introduce a comprehensive Bill on all these issues as soon as practicable. There is no need for me to stress the point that such legislation will be complex and will touch on several ethical issues on which many people, quite properly, have strongly-held opinions. While this may not hold true to the same extent in the case of surrogacy as in the case of embryo research, it is

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nevertheless the case that there is a wide range of opinion on some of the matters dealt with in this Bill, as demonstrated by the views expressed by the noble Lord, Lord Ennals, on one side and the noble and learned Lord, Lord Denning, on the other. I understand that the activities reported in the Daily Telegraph, to which the noble and learned Lord, Lord Denning, referred, concerning the involvement of American women in surrogacy cases, are being examined by the Director of Public Prosecutions.
I am very much aware that there is little of substance I can say to day about this Bill, nor indeed about the detailed timing of future government legislation about these matters. However, whatever the fate of this Bill, it will have been valuable as a vehicle for the discussion of these issues and as a stage in the development of further consultation and research into these matters. We will pay particular attention to the views expressed during these debates in considering the content of future legislation. Even if the Bill does not make further progress on this occasion, I am sure that this has been a most useful exercise. I would therefore end by repeating my gratitude to the noble Earl, Lord Halsbury, who is one of the most respected Members of your Lordships' House.
The Earl of Halsbury: My Lords, I will wind up very briefly and thank the noble Baroness for her kind remarks about the part I played in this matter. The issues between myself and the noble Lord, Lord Ennals, are very simple: he wants to keep the door open and I want to keep that door shut until the future adumbrated by the noble Baroness bears fruit in this House and in the other Place.
What happens if you leave doors ajar? Vested interests flourish behind them and once you have allowed vested interests to establish themselves they are very difficult to get rid of. If I may mix my metaphors, a fine crop of weeds you will find growing behind that door left ajar for a very short time. I do not think I need to say more than that.
On Question, Bill read a third time, and passed, and sent to the Commons.
Baroness Hooper: My Lords, I beg to move that the House do now adjourn during pleasure until eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.50 until 8 p.m.]

Wages Bill
House again in Committee on Clause 14.
[Amendments Nos. 88 and 89 not moved].
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 90:
Page 16, line 9, at end insert
(" ( ) fixing appropriate premia payments other than overtime rates in respect of time worked in excess of basic hours;").
The noble Lord said: I was not expecting to move this amendment but I shall do so. We have had a discussion on various payments that should be made on the fixing of holidays and on what should be paid for holidays. This amendment seeks to fix premium payments for hours worked in excess of basic hours other than overtime. We are talking here about things like nightwork or split duties.
Once again, the people who are covered by wages councils are the weakest among the working population, without the opportunity of negotiating, without the opportunity of ensuring that there are proper payments made for nightwork and for split duties, and without other payments which are in the natural course of events on the shop floor in large places where there is a good trade union organisation. I feel quite sure that my noble friend Lord McCarthy will have something more to say about this amendment in due course, but for the time being I beg to move.
Lord McCarthy: As my noble friend Lord Stoddart said, this amendment is about fixing appropriate premium payments other than overtime rates. Therefore, it is right that we should look at what the wages councils orders do in particular cases, to see what it is that the Government are taking away. As I argued earlier, the occupational variations which wages councils fix are sensible and so are the premium payments which they fix for things other than overtime rates. What the Government are saying is that none of these things can be fixed by wages councils in future.
The licensed trade wages council fixes a rate for rest day work and a rate for working public holidays. The laundry trade wages council fixes a separate rate for waiting time, a rate for a two-shift system and a rate for night work. The boot and shoe wages council fixes a waiting time rate, guaranteed pay for casual workers and a guaranteed week payment for time workers. The hairdressing wages council fixes a rate for a weekly short day and a rate for waiting time.
All these different wages councils fix appropriate premium payments which are designed to fit their particular circumstances. Even my old friend the sack and bag fixes very complicated overtime and premium rates which mix days of the week with hours worked. They are all designed carefully by those who sit on the wages councils to meet the actual circumstances of the workers in those industries. They fit circumstances; they fit the case.
These kinds of variations are not complicated for the industry concerned and usually consist only of two or three variations for each trade. They avoid exploitation where workers are especially weak and especially subject to pressure. Once again we would argue, as we have argued before, that there is no reason why wages councils should not have the power to do this. These differentials have been fixed for many years in many cases. Most workers and all employers by now should be very much aware of the differential structure in their industry. In some cases it has been like that for 70 or 80 years or so. There is no reason, no sensible reason, why the new wages council system should not

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be allowed to make those appropriate premium payments that they traditionally have made. I support the amendment.
Lord Trefgarne: I am not likely to get much support from my own side just at the moment; nonetheless I make no apology for restating once again the thought which underlies Part II of this Bill: the radical reform and simplification of the wages council system. The Government are responding to the almost unanimously held view of employers who commented on the consultative paper. There could be no mistaking their message. The system was in urgent need of fundamental overhaul and if this could not be achieved, then it should be abolished. It is clear from this and other similar amendments which we have been discussing that noble Lords opposite are not concerned with whether employers are encumbered by unnecessary burdens. They would have them spend valuable time digesting unduly complicated regulations which inhibit them from getting on with the real job—that of creating wealth and jobs.
The Government are not prepared to see that happen. In future there will be only one minimum basic rate and one minimum overtime rate, irrespective of the time at which the work is undertaken. The Bill does not remove workers' rights to premium rates. The majority of workers are likely to continue to be entitled to their current rates under the terms of their contracts of employment.
Limiting councils to setting a single basic and overtime rate is central to the Government's reform policy and still keeps in place basic protection. It is therefore a balanced measure, contrary to what some noble Lords opposite have suggested. Employers must be allowed to get on with the job of running their businesses, free from constricting bureaucracy. The Bill achieves that objective. The amendment would have the opposite effect and I must therefore ask the Committee to reject it.
Lord McCarthy: The Committee will not be surprised that we are not convinced by the Minister. He uses these arguments about fundamental overhauls. We are never told precisely what the employers said and precisely what they meant by fundamental overhaul; and we are never told why a fundamental overhaul could not in fact allow us to have appropriate premium payments. Nevertheless, we are not going to force a Division on this tonight. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCarthy Lord McCarthy moved Amendment No. 91:
Page 16, line 15, at end insert—
(" ( ) provide for the protection of existing rates of pay for a period of not more than three years after the day on which this section of this Act comes into force; ").
The noble Lord said: This amendment, the Minister may or may not be pleased to know, as the case may be, actually does change the emphasis. We are not now trying to put little bits back into the Bill, though we may come back to that. We are trying to provide for
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the protection of existing rates of pay for a period of not more than three years after the day on which this clause of the Bill comes into force. That is the substance, and those are the terms, of Amendment No. 91.
The aim of the amendment is to provide for the possibility of a transitional period, to control the rates at which the real value of pay declines in particular wages councils. The Minister has frequently told us of the desires of the employers. He told us that their latest desire was for a fundamental overhaul of the system. That is very much the desire of the trade unions. It is representing the views of, as they see it, the workers on their side.
The request was made in many of the representations by individual unions to the Government that anything that might be done to remove the protection of the 1979 Act should at least be done gradually, in view of the fact that real rates might decline and rates of increase might fall. And we have it on the authority of the Chancellor himself that, unless the rates of increase do fall in real terms, there can be no improvement in employment. He has said repeatedly that only if real wages decline in relative terms can there be any significant increase in employment. If that is done, then at least it should be done in a staged and transitional way.
We have other amendments on the Marshalled List which we may not move tonight but which aim to achieve such a transition in various different and more complicated ways. I choose to focus on this particular amendment because I believe it suggests the simplest way. It is the way that even the smallest of businessmen would understand. It provides a limited but clear form of protection.
Clause 14 enables the wages councils of the future to carry on, but to do so on a more limited basis. It states in subsection (4) that the Secretary of State shall have the power to do various things in order to facilitate the transition from the old system to the new. We propose to add, as it were, an additional facilitating formula or power; that the Secretary of State could provide that wages councils themselves may provide for the protection of existing rates of pay for a minimum period, by orders where appropriate, to ensure that none of the existing rates of pay now paid by the wages councils is reduced in money terms.
In other words, the club steward's rate of pay—the high rate of pay in the licensed trade—could not be reduced in money terms. It might not advance as fast as it has advanced before, but it would not be reduced in money terms. The differential between, say, foremen and managers in boot and shoe could narrow because the single rate could be increased, whereas the foreman's and manager's rate could not be increased—but it could not be decreased. Therefore, over a three-year period the rate might be squeezed in real terms relative to the basic rate but in money terms it would remain where it was. The rate for managers and for street vendors in retail food would again be in a similar position. The rate could decline in real terms but it would not fall in money terms.
Indeed, the basic rate itself would not decline in money terms. But then we do not expect—although we have no experience of the new people with whom the Secretary of State will now pack the wages councils—that the existing members of the wages councils will seek to bring about a reduction in money terms. I suppose that what they will seek to bring about over a period of time is some decline in the rate of increase in money terms.
We are suggesting in the amendment that there should be some simple practical index of what the Government expect to do and of the rate at which the Government expect the real level of wages council wages to fall. In the absence of any attempt by the Government to give a figure for what they expect to happen, the least they can do is to support this amendment. I beg to move.
8.15 p.m.
Lord Trefgarne: This amendment would give wages councils the power to provide for workers employed at the time when Clause 14 comes into force to continue to be entitled for a period of not more than three years to minimum rates of pay laid down in the current wages order relevant to their employment. The Committee will wish to know that many of the arguments advanced today in support of the amendment were debated at length in another place, and I shall be happy to restate the Government's position.
Part II of this Bill is about deregulation and simplification. Wages councils have been able to fix a wide range of terms and conditions. That has had the effect of putting employers in a legal straitjacket, which has made it all but impossible for them to negotiate with their workers in a way that is more closely tailored to the needs of their businesses. The majority of employer responses to the consultative paper were clearly in favour of radical reform and simplification if the wages councils system were to be retained.
The Committee will wish to be aware that workers currently employed under a contract of employment incorporating any or all of the terms and conditions of existing wages orders may expect their employment to continue on that basis, unless the terms of their contracts are changed. A contract cannot be changed unilaterally but either party may seek at any time to change the terms of contract by agreement, subject to the minimum level of protection laid down in the current wages order. That has always been the position.
If an employer seeks to change the terms of a worker's contract and the worker is unwilling to accept the new terms, whether or not his employment has terminated, then he can sue in the civil court for breach of contract. I hope that in the light of those reassurances the noble Lord will not wish to pursue this matter.
Lord McCarthy: I do not wish to pursue this matter but I am not convinced by what the noble Lord has said. This is an extremely modest amendment, and the next amendment is even more modest. Nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Wells-Pestell): In calling Amendment No. 92, I must point out to the Committee that, if it is agreed to, then I cannot call Amendments Nos. 93 to 97.
Lord McCarthy Lord McCarthy moved Amendment No. 92:
Page 17, line 6, leave out subsection (6).
The noble Lord said: This amendment does direct itself to one of the central thrusts of the Bill, and it is one that has not been the subject of a great deal of discussions until now. Indeed, it was not discussed at any length in another place. It concerns the reference in the Bill that instructs the new members of the wages councils to pay particular regard to the level of employment, and to ensure, I suppose, that nothing that they do has the slightest chance of increasing the rate of unemployment.
Strangely enough, for reasons that have never been clear to me and which have not been sufficiently explained, the clause in question goes on to suggest that the wages councils should pay particular attention to that criterion,
"where the remuneration received by such workers is generally less than the general average for such workers".
Such phrases are not generally known in the industrial relations business. I repeat,
"generally less than the national average for such workers".
We wish to make a number of points about that particular form of words and to argue the case for leaving out the whole of subsection (6), which would strike from the Bill the special consideration for the level of employment.
There are three points to be made. First, there is no evidence known to me or offered by the department, to suggest that, at the moment, members of wages councils do not take into account the effect of their decisions on the level of employment. Wages councils' rates, on the whole, follow other rates. In recent years, they have on the whole increased rather less than the rates in industry in general. Certainly they have increased much less than the rates of increase among higher paid workers—particularly among non-union workers and those in executive capacities, on the boards of industries, managing directors, and so on. That is where the contemporary inflation of the wage system is being germinated.
As I have argued before in this Chamber, if there is wage inflation, and if wages in this country are being dragged up above the rate of increase in prices, then they are being dragged up from the top and not pushed up from the bottom. All the evidence suggests that over the past six years we have become a more unequal society, and that down among the wages council rates

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the increases are now significantly below the increases for the better paid, non-unionist, white-collar executive class.
There is certainly no evidence that the present members of the wages councils are disproportionately pushing up rates and not taking into account the possible employment effect of what they do. It is, of course, true that they have not done this at a rate which satisfies the Government. It is, of course, true that no Government that I know of has so peppered the chairmen of wages councils with gratuitous instructions as to what they ought to do about their rates of increase. Nevertheless, there is no evidence that these people do not take into acccount the general level of employment and the level of employment in their area, together with the effect of remuneration which, in their area, is generally less than the national average for such workers.
This brings me to my second point. As, in effect, quasi-arbitrators who have to produce some kind of acceptable level, wages councils take other matters into account, too. That is the Government's problem. I suppose that if the Government were bluff enough and tough enough and sufficiently straightforward, they would not have this clause at all. They would say to the councils, "You must take into account the level of employment and nothing else. The only thing you are allowed to take into account is the possibility that the award you give might take into account some other factor". But the Government do not. They just say that the level of employment should be taken into account although, as I have said, members of the wages councils take into account all kinds of factors.
Often those other aspects are taken into account because one of the parties before them has made a particular mention of one of them in its submission. For example, employers frequently argue that there is a problem of recruitment and that particular categories of workers—perhaps not the lower paid but the managers—require their differential to be widened. They put forward a recruitment argument. The employers may use a quality of labour argument. The unions may argue that there is a high rate of labour turnover and that the wages council must increase the rate for a particular group of workers under their control in order to reduce the rate of labour turnover. All kinds of arguments can be put to wages councils at the moment, and within their context the argument about employment takes its place. That is what a wages council system is. That is what third party dispute resolution involves.
What the Government want to do, and what they do in this clause (and the reason why we are moving that it should be left out) is put a differential special statutory emphasis on the employment effect to the automatic and natural exclusion or down-grading of any other matters which the wages council might take into account. It is unclear—and I ask the Minister to answer this—exactly how the two halves of this clause are designed to work. If the wages council takes into account the effect of employment, particularly where remuneration is generally less than the national average, does that mean that if it is generally less than the national average there should not be an increase?
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I should have thought it was the other way round. I should have thought that where it was generally much less than the national average there should be an increase, even if that affected the level of employment. So are the two halves of this clause complementary or do they both lead in different directions? How are the unfortunate members of the wages councils intended to balance them, or are they supposed to reinforce themselves?
This arises because the Government want to give instructions to these people. They want to give instructions and at the same time, in general debate in this Chamber, they are always saying that they do not want to give instructions, that they do not want rigidity, that they do not want to bind hands, and that they want to take hands off—but not off the people who run the wages councils. The wages councils are going to be instructed precisely on what they must take into account and, I suggest, by inference, what they must ignore. We think that that is an unnecessary and unjustified interference with what wages councils do, and I therefore move that the clause should be left out of the Bill. I beg to move.
Lord Trefgarne: Subsection (6) of Clause 14 requires councils, before making a wages order, to have regard to the effect that the rate they fix will have on the level of employment among workers covered by the wages order, particularly in those parts of the country where the remuneration of such workers is generally lower than the national average for the workers concerned. Councils must also have regard to any other factors which they consider appropriate—and that, of course, is only common sense. Amendment No. 92 would remove those sensible requirements, and I must therefore ask the Committee to resist it.
Noble Lords have agreed in the past that the wages councils system provides a safety net through the setting of minimum rates. For the system to operate on a national basis allowance must be made for the effect the order will have in those areas where the pay rates are traditionally lower than the national average. I hope that the amendment will not be agreed to.
Lord McCarthy: The noble Lord said something interesting. He now says that the two halves of the clause are complementary; that they are not alterna-tives which balance but that they reinforce each other. I understand. I think that late at night, at twenty-five minutes past eight o'clock, we are having a statement of policy. We are now being told that where rates are generally low—let us use the crude words: where they are near starvation level—one would particularly take into account the factors which are likely to lower them still further. That is what is being said. We are being told that where they are generally low one should take into account the possibility of a negative employment effect; and the lower they are, the worse they get.
That makes sense of a great deal of Government policy. I now understand why it is we do not worry about what happens to company directors; that we do not worry when we give special awards to judges: that we did not bother ourselves when executive increases last year went up by 11 per cent.—because up at that

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end of the scale nothing disastrous occurs. There cannot be an employment effect on directors. There cannot be an employment effect on the higher paid. We are not bothered about them because, after all, some of us qualify. But for the lower paid workers we have to protect them from themselves. There is a disproportionate employment effect. The elasticity works only at the bottom.
That is a strange economic theory. But the theory is that the rich can get more and more and we shall employ more and more of them; but if we allow the poor to get a penny more we shall not want any at all. However, I shall not press this amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendments Nos. 93 and 94 not moved. ]
8.30 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 95:
Page 17, line 13, leave out ("national average") and insert ("general level").
The noble Lord said: This is our old friend the general level of pay. In this part of the Bill the Government want to keep in the "national average" and we want to insert the "general level" of pay. We want to substitute the test of the general level for the Government test of the national average when the members of the new wages councils decide whether rates of pay should be raised, and by how much.
The Government say that they are concerned about wages councils pricing workers out of jobs. As I said, they wrote many letters to the chairmen of the wages councils complaining of this. They are now going to give councils this statutory direction under Clause 14(6) that they must have regard to the effect of the proposed increase on the employment of the workers and make special note of the position where the pay is generally less than the national average.
In this amendment, and it is partly a probing amendment, we propose to find out what the Government have in mind. To some extent in his previous answer the Minister has told us something of what the Government have in mind, but we are still seeking enlightenment and we are trying to find out by asking a series of questions.
The first question has probably been partly answered. Is the assumption that if wages are generally less than the national level they are not likely to be raised or increased at all, and if so by very little? The Minister seems to have told me that that is the case. Secondly, is it the case that if they are not generally less than the average level, the worker can expect the wages council to give him a reasonable increase? Does the reverse happen? Is it the case that when they look into the average level of payment and find that it is not bad, they will say, "We therefore assume that there is not a negative employment effect and can allow an increase, say, like the RPI"? Is the obverse the case in the way that the Minister seemed to suggest in an earlier answer? Thirdly, what does the Bill mean—what do
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the Government mean—by the national average for such workers, and how does one discover it?
Take the laundry hands or the sackers and baggers under the sack and bag wages council. How does one discover the national average for those workers? They should be getting what the wages council determines. If the wages council system works and if it operates effectively—and we assume that the Government do not accept what we say: that there is a great deal of evasion at the moment because the inspectorate is constantly being reduced—then most people in the wages council industries should be getting on average more or less what the wages councils award—perhaps a little more. Not many of them should be getting less.
So what is this average that we are discussing, and how does one arrive at it? What about those workers who are below the average? Since only one rate is to be allowed, what rate do the Government think should be applied to those people who are below the average? Suppose that the rates are substantially higher than the wages council rates, as indeed they are in one or two wages councils. Does that mean that there will be no increase at all?
We suggest that many of these questions arise because if the members of the wages councils take this part of the Bill seriously they will be searching for a meaningless average, which in some cases nobody is actually being paid because it is made up by taking all the payments made to all the workers and dividing that figure by the number of workers in the industry, in so far as we have the figures.
What is much more realistic and is generally applied in collective bargaining is the concept of the general level, which was introduced into previous legislation. The general level takes account of distribution. It does not add up every worker and then divide the total by the number first thought of. What one is thinking about in the general level is some notional figure which most people are receiving most of the time, below which very few people are falling and above which there may be a minority of people. It is a distributive and not an averaging concept and it is a much more sensible concept to have in the Bill.
We are trying to help the Government on this occasion because it is arguable that what we suggest will not, in their terms, be any more inflationary than what they suggest. It is rather easier to work out and rather more what industrial relations practitioners would expect; and it does not depend on artificial attempts to calculate and divide by an arbitrary number. I beg to move.
Lord Trefgarne: As I have said in speaking to an earlier amendment, Clause 14(6) requires councils, before making a wages order, to have regard to the effect that the rate they fix will have on the level of employment among workers covered by that wages order, particularly in those parts of the country where the remuneration of such workers is generally lower than the national average for the workers concerned.
For the system to operate on a national basis, allowance must be made for the effect that the order

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will have on those areas where the pay rates are traditionally lower than the national average. The term "general level" is one of uncertain meaning, and amending "national average" to "general level", as Amendment No. 95 requires, would mean that the councils would have no clear bench-mark upon which to base their deliberations. I think that the proposal of the noble Lord would add considerable uncertainty and confusion and I hope that it will be resisted.
Baroness Seear: I am genuinely very confused about this matter because if one has a single wages council figure then it is illegal if anybody falls below it. I think that is agreed between us. But anything that is above that figure is what the employer has seen fit to pay. However, I do not see where the low pay comes in. Except by breaking the law, one cannot be below what the wages council has laid down.
So what is the Minister really talking about? Is he taking into account those places where the employer is paying considerably above that amount and so raising the average figure above the minimum laid down by the wages council? Nobody can be below it except by being in breach of the law, as I understand it. I am genuinely confused about what he is trying to say, or rather about the sum that he is trying to do. What is the arithmetic of it? That is the point.
Lord Trefgarne: As I understand it, wages councils set different rates for different parts of the country.
Lord McCarthy: On the contrary, there are very few wages councils so far as I know—maybe there are one or two—which set a London rate. The general practice in wages councils is not to set premia which are related to different parts of the country. Anyway, the Government would be taking this provision out, because even if it were done, under this Bill it will not be allowed in the future. Under this Bill there will be one single rate. With her usual preciseness, the noble Baroness has made the point much better than I did in a much longer and more flaccid way.
One of the reasons I say that the word "average" is meaningless is that people should not be below the average. They could be below the general level but they could not be below the average.
Lord Trefgarne: If the word "average" is meaning-less, the words "general level" are worse than meaningless.
Lord McCarthy: On the contrary. The noble Lord cannot get away with that remark. There was a general level referred to in the 1978 Act. This was applied by the CAC for years and years with no problem whatever. It is a concept that is very generally known in industrial relations. I am not trying to correct the noble Lord's ignorance, but he cannot come along and say that a phrase such as "general level" is unknown in industrial relations. It is very well known in industrial relations, whereas the concept of the average is just a statistical, isolated nothing. As the noble Baroness has said, unless one is facilitating the breaking of the law
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then "average" cannot be put in. Will the noble Lord try to answer the point before I withdraw this amendment?
Baroness Seear: There is genuine confusion over this point. I ask the Minister whether he will please take this matter back and look at it again because in industrial relations terms it does not make sense. Honestly, it does not make sense. We have a great deal of sympathy with the Minister. His mind is on defence, and that is enough to keep anybody very busy. He cannot be expected also to be a great expert on wages councils, which is an irritating and fiddly subject, as we all know.
While the Minister is thinking about this point, will he also think about another point? The noble Lord, Lord McCarthy, did not give me a chance on a previous occasion to say this, but while I am on my feet I shall say it now. Will the Minister take back subsection (6) and look at it again? Will he look again at the extraordinary remark:
"such other matters as appear to it to be appropriate"?
What on earth are members of wages councils expected to do except to take into account such matters as appear to them to be appropriate? The Government soon will be telling them how to breathe. I ask the Minister to please have a look at this matter again; I beg him. It is ridiculous as it is.
Lord Trefgarne: I do not think that it is ridiculous at all. Indeed, in many respects it largely mirrors the arrangements that have been in place for a long time. The new factor here is the employment factor.
Perhaps I may clarify what I said earlier. It is perfectly possible to be paid below the average while being paid more than the wages council rate. That arrangement of course would be much more difficult to sustain if we accept the amendment.
Lord McCarthy: The noble Lord is clearly saying that he will not take this away and think again. Nevertheless, it is twenty to nine and I shall not divide the Committee. With great reluctance, because the Government are quite hopeless on the subject. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 96:
Page 17, line 13, after ("workers") insert—
("( ) the effect that that rate will have on the living standards, efficiency and rate of turnover of the workers to whom it applies;").
The noble Lord said: We on this side of the Committee have listened to the noble Lord with growing exasperation, tinged with admiration. He is batting on a very sticky wicket indeed. The noble Lord, Lord Young, is not here to deal with the matter. It is his business, but he has seen fit to put in the Minister of State for Defence Procurement, and he is not making a very good job of defending the noble Lord's Bill. I think that he has probably missed his

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vocation. This is where the admiration comes in. He has stonewalled so very well tonight that he should have been a cricketer. Had he been, I think that Trevor Bailey would have taken second place to him. He will be known after tonight as "Stonewall" Trefgarne.
Lord Wedderburn of Charlton: Or "The Night Watchman".
Lord Stoddart of Swindon: Yes, depending on how long we go! The noble Lord has not helped us very much tonight. We can only hope that he will help us on this amendment. It is related to all the others. My noble friend Lord McCarthy tried to help him by moving Amendment No. 92. Had he accepted that amendment, none of the others, including this one, would have been necessary. But he did not and so we have to move this one.
Had Amendment No. 92 been accepted, wages councils would not be burdened with the need to take into account unemployment in fixing levels of pay and could have continued to take a wide range of elements into account. Amendment No. 92 was not accepted, and that is a great pity. We must therefore seek to add to and clarify the matters that a wages council in fixing the rate of remuneration should take into account in addition to the effect that a rate of pay will have on the level of employment.
The phrase in the Bill is:
"such other matters as appear to it to be appropriate".
I read that as being matters appropriate to the level of unemployment; to reduce wage levels in order to achieve what the Government believe will be achieved—that is, a lower level of wage so that, on their theory, employment will be improved. We do not believe that.
Our amendment seeks to add three elements: the effect on living standards, efficiency and the labour turnover rate in respect of workers affected. A wages council ought to take into account the living standards that a rate of pay will provide for the recipient. In so doing it should have regard not only to the basic living standard that will be available on a given rate of pay but also the relationship of that standard to the generality of living standards and the standards in closely related employment. Regard must also be given to trends in wage movements, as well as to the cost of living and any especial trend; for example, in housing costs.
I now come to efficiency. Here it is vital to ensure that any rate of remuneration set will attract an adequate number of people with the proper skills to perform the tasks demanded for the job to be done efficiently and profitably. Sweat-shop wages produce a sweat-shop mentality. As we know from the clothing industry, good management and unions are united in demanding proper wage rates, which should be enforced rigorously. The sweat shop is not good for British industry. It is unfair to good employers and eventually drives them out of business. It is not good for British industry generally, because quick profits and shoddy goods are the objectives, and those in the
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long run injure Britain's ability to compete at home and abroad. That consequently damages the economy generally. The Prime Minister is in favour of a fair wage for a fair day's work. I understand, and we agree. This part of the amendment would achieve that objective which is so dear to the Prime Minister's heart.
Finally, the amendment refers to the,
"rate of turnover of the workers to whom it applies".
It must be self-evident that wages councils in fixing a rate of pay should have regard to the labour turnover rate. That indicates most positively whether the rate of pay, and to a lesser extent conditions at work, are sufficiently attractive to retain workers in any given employment. If the rate of pay is too low, the labour turnover rate will be correspondingly higher. That is an indicator to the wages council that something needs to be done.
I hope that the noble Lord will be rather more forthcoming on this amendment. As my noble friend Lord McCarthy said, we are trying to help the Government and prevent them falling into a pit which in the long term will injure the Government, work people, employers and the good name and economic performance of this country. If he continues to stonewall and will not accept anything that we say, we can only conclude that the Government's sole objective is to drive down wages in the economy. If that happens, it will accord with the doctrine of the Chancellor of the Exchequer, the Prime Minister and I suppose every other Member of the Government that what needs to be done to resuscitate the economy is to make those who are rich richer and those who are poor much poorer. I beg to move.
Lord Trefgarne: I am sorry that the noble Lord thinks that I have been unreasonably stonewalling, as he calls it, throughout this stage of the Bill. I assure him that had my instructions been to resist all amendments, regardless of their merit, I should not be standing before the Committee this evening. All the amendments tabled have been considered carefully. Had there been merit in any of them, we should have recognised that fact. I shall not tell him which one, but there is an amendment later this evening on which I shall be saying just that. If you are good boys and get there quickly, with a bit of luck you might get a lollipop at the end of it! But I am afraid that that does not apply to this amendment, which reflects an unacceptable interference in matters which can be of no concern to government.
In the new legislation we are retaining the protection of the two central elements of pay—the basic rate and the overtime rate—to protect those on low pay, who have heavy domestic responsibilities which they could not otherwise meet, through family income supplement and a range of concessions and exemptions. In due course there will be the much improved family credit system.
While the Government accept that the councils should be able to set basic minimum rates in respect of those two elements of pay, it must primarily be the business of employers, and not third parties, to decide

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the level of pay which will recruit and retain the right kind of worker and which will maintain company efficiency. The Government must concern themselves with other ways of helping the low paid, by reducing their tax burden and the level of national insurance contributions. Above all, we must consider the employment prospects of those with no jobs and no pay. That is what is expressed in the Bill, and I hope that the noble Lord will recognise that.
Lord Stoddart of Swindon: We are excited now. We are waiting with baited breath for the amendment which the noble Lord will accept—a lollipop, though I think an ice cream would be more appropriate today. We shall wait and we must not look a gift horse in the mouth in advance. I shall be on tenterhooks until that great concession comes.
There is a fundamental difference between us; there is no question of that. The noble Lord confirms what I said earlier. The Government's great hope for the economy is that they can force down wages. They have a one-track mind on that. They believe that the only way the economy can be resuscitated and be made competitive is to drive down wage rates. The Bill is the way in which they intend to do that.
The Government are saying to us that while they will drive down wages they will protect people personally, in their personal lives, through family income supplement and later through the family credit system. In other words, the Government are saying they are prepared to subsidise low wages and bad employers. That is what that means. Let us make no mistake about it. As I said earlier, there is no substitute for a fair day's pay for a fair day's work. In the Bill the Government are seeking to ensure that there is an unfair day's pay for a fair day's work. To help their employer friends they are prepared to subsidise them because that will help them to force down the general level of wages.
Later of course the family income supplement and the family credit, as I suppose it will then be, will also be reduced. Once the Government's objective of forcing down wages has been achieved, they will come along and say, "We can no longer afford to pay these high family credits. The PSBR is getting out of control. We shall have to do something about that. We shall have to reduce the PSBR, and the only way we can do that is by not increasing family income supplement or family credit, and perhaps other benefits as well, in accordance with the increase in the cost of living". That is what will eventually happen.
Lord Trefgarne: That dastardly plot is a total figment of the noble Lord's imagination, I am sorry to say. I can assure him that the Government have no such ghastly scheme in mind. The noble Lord has made much of the unfairness of the Bill. There is nothing fair about having no job and no pay. That is what in a small way the Bill seeks to correct. I hope that the noble Lord will recognise that.
Lord Stoddart of Swindon: I do not recognise that. I believe that the Government's strategy is not good. It
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is unfair, because it militates against those in our society who are weakest and those who are already the lowest paid. Whether the Bill will create more employment is debatable. It may create more employment for certain classes of people, but it may put other people out of work. There is no certainty about that. The Government are taking a huge risk. They have embarked upon a policy which is unfair to the people to whom it should be fair.
I do not believe that what I was relating as the Government's overall long-term strategy is a figment of my imagination. We have been able to see that strategy developing slowly but surely since 1979. The Wages Bill is just one part of that strategy. We shall see more as the Government's plan unfolds. We shall always see that the poorest and weakest in our society will be on the losing end.
Baroness Seear: We do not go along with the drama that has been unfolded before us by the noble Lord, Lord Stoddart. I agree with the Government. We on these Benches have always argued in favour of an incomes policy, because we agree that wage increases which greatly exceed the level of productivity affect our ability to increase our market share. That is an argument for a sensible incomes policy to prevent excessive increases such as we experienced in the days of very high inflation.
We do not agree that the way to tackle the problem is to attack the people at the bottom of the pile. That is the point. If the noble Lord and the Government could keep separate in their minds the perfectly legitimate argument—the correct one in our view—that it is extremely dangerous for earnings greatly to exceed the level of productivity, thereby enfeebling us in world markets, I would go along with that. One does not solve that by attacking the lowest paid people. That is what the Government are doing in the Bill, and hence our objection. It is not for the reasons given by the noble Lord, but because the Government are attacking the wrong target.
Lord Trefgarne: I am not attacking anybody, if the noble Baroness will forgive me. The purpose of the Bill is to unshackle the structure which surrounds all these issues. Over the years a great web of controls has been built up around the wages council system to the extent that not only are employers discouraged but so, too, are employees in many cases. I hope that the noble Baroness will understand that we are seeking to help the matter, not hinder it.
Baroness Seear: I believe that the Minister believes what he says because I am sure that he is an honest man. If I may be blunt, I do not think that he understands the intricacies with which we are dealing. In the past I have operated a wages council system. I agree that there were certain unhelpful complexities with which one was better without. But the Government are going to an absured extreme now in saying that all we need is a minimum rate and protection of the overtime rate. I agree that we do not want to return to all the detail. It was a confounded nuisance. I often said that about the detail that was woven into the wages council system.

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The Bill goes from one extreme to another. The noble Lord is telling us that the simple additional safeguards for which we are asking will so greatly increase the problems of the small businessmen that they will drive him out of business. My goodness, we are always being told from those Benches that this country's future depends on small businesses. If they are so stupid that they cannot understand such small additions to the basic minimum as a holiday requirement and premiums for which we ask, they will go out of business anyway.
9 p.m.
Lord Dean of Beswick: I have listened carefully to the Minister's replies to some of the points made on this amendment. I do not think that the Minister understands how many of the establishments which come under the different wages councils work. If the Minister and the Government are so convinced that wage rates decided by the boards are too high, can he explain why such a substantial proportion of people covered by the boards are paid wages so low that the establishments in which they work have to impose surcharges of 12½ per cent. in gratuities in order to attract people to the jobs? How does he relate the two if the base rate is overpaid?
Lord Trefgarne: I have never said that the rates are too high or too low, certainly not in the context of these amendments. We are talking about the complex-ity of the arrangements that surround setting the rates. I think that the noble Lord is mistaken.
Lord Dean of Beswick: The Minister, a few minutes ago, was philosophising on the main purpose of the Bill. He actually said that it was to lower rates of pay in order to spread jobs out. I did not draw any other conclusion. The Bill cannot have any other effect or intent.
Lord Trefgarne: I do not think that the noble Lord has been here all afternoon, although I dare say that he has for a large part of it. We are now dealing with a separate part of the Bill to that discussed earlier, when we were debating the rates set for young people. That is a rather different consideration.
Lord McCarthy: The noble Lord cannot get away with that. We are dealing with an amendment that asks the Committee to put into the Bill the effect that the rate will have on the pay, the living standards, the efficiency and the rate of turnover—that is what the amendment says—of the workers to whom it applies. The noble Lord says that he cannot have this because—these are the words that he has used—he wants to unshackle the workers and employers. He wants to liberate the workers and the employers. He want to get rid of the complexity that weighs down the workers and the employers. I agree with the noble Baroness, Lady Seear. When the noble Lord utters words like "unshackle", "liberate" and "complexity",
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he does not really mean "attack". He does not like us saying that unshackling, liberating and making less complex is an attack.
But the mechanism of the Bill and the reason why he will not accept the amendment—he has been saying this all day—is that the mechanism by which the Bill works is by lowering the wages of the workers. It is lowering the wages of the workers who are already in employment in the facile hope, as I would say, although he may not, that this will get some people off the dole queue.
We say that there are many other ways of getting people off the dole queue. If the debate tonight was about employment, we would be boring the pants off him with various ways in which this could be done. But the Government believe that the only way—this is all that they will accept—is by attacking the workers and by lowering their wages. The noble Lord does not like our calling it an attack. In the same way, the burglar does not like his activities being called burglary. He likes to say, "It fell off the back of a lorry". But for those of us who lose the stuff, it does not make any difference what it is called. You lose the stuff, you lose the pay, and you lower the wages. That is the way the Bill is designed to work. It lowers the wages of those in employment in the facile hope that it will put into employment people who are unemployed. If the noble Lord does not like to face it, he should not be on that side of the Table.
Lord Stoddart of Swindon: I do not know whether the Minister wishes to respond. This has been an interesting and a lively debate. The fact is that the Minister is virtually alone. He has no defenders. He has had to defend himself against a concerted attack. No one has come to his rescue because, I suppose, no one agrees with him. The noble Baroness, Lady Trumpington, is sitting there looking very beautiful, but she has not come to his assistance in any sense at all. The fact is that the noble Lord, whether he understands this or not, is in charge of the Bill. He has been handling it tonight. It is a Bill that inevitably is going to drive down wage rates. The noble Lord believes that by driving down wage rates, people will be placed in employment. If that were true, Germany, which is a high wage rate economy, would have twice the unemployment that we have instead of having an unemployment rate of 8.6 per cent. whereas ours is 13.2 per cent. Bombay, instead of having mass unemployment, would be the richest city in the world and would have no unemployment. Those facts militate against the noble Lord's argument and his reasoning.
I feel sorry for the noble Lord because he is such a nice chap. I really do feel sorry that he has had to sustain this attack on behalf of his noble friend Lord Young, who, really, we would like to have got at. He is the chap we are after. In the light of what has been said—
Lord Trefgarne: Will the noble Lord remind me to which amendment he is speaking?
Lord Stoddart of Swindon: It is Amendment No. 96, the same one. We have had a good debate. In the face

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of his obduracy—it is, I understand, obduracy on behalf of his noble friend—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 97 not moved].
On Question, Whether Clause 14, as amended, shall stand part of the Bill?
Lord McCarthy: We wish to oppose that the clause stand part of the Bill. It is nice to be told that at some time this evening we shall get a little sugar loaf, a little knob of sugar of the kind that you might throw to the dog. It is nice to be told that it is coming, but it has not come yet. It has not come on this clause. We have moved a whole series of amendments, but the Government have been obdurate. The noble Lord does not like us to say that he has stonewalled, but the fact that he has stonewalled cannot be in doubt. He has offered us absolutely nothing. One might argue about whether, when he stonewalls, he is reasonable or justified, but that he stonewalls cannot be in doubt. We have tried to put back occupational rates, Sunday premia, piecework minima, holiday pay and shift premia, and he has said "No" every time. We even tried, in a very modest attempt to concede something, to say, "What about just putting in holidays without holiday pay?"
It is perfectly normal in this House as we all know—it has happened hundreds of times—that governments get up and say, "I do not like that part of your amendment, but I do not mind that other part. If you leave it with me I shall see what I can do." But the noble Lord did not say that. The noble Lord said, "I speak to the amendment". He tried to fence us off by saying, "That is the amendment. I am not going to say what I shall do if you gave me a slightly different amendment". That is a most untypical thing to do. That is because he does not have an inch to move. He has been told to stand there and stonewall, whether it is reasonable or unreasonable, and, apart from the sugar plum that is to come, he will go on being unreasonable, I have no doubt.
We even tried to get the Government to accept a three-year period of easing in. We tried to get them to take into account factors beside employment. We tried to get them to consider a very common concept in industrial relations: the general level. This concept was somewhat unknown to the Minister. Nevertheless, he would not take it on board or consider it, and he would not even say that he would go away and look at it.
The Bill now remains with this clause as it was when it came to the Chamber. There is to be nothing more than a single rate. There are no premia, there are to be no regional differentials; there is to be nothing but the single rate. It gets darker and darker. The water rises higher and higher. Soon it will be absolute night. Before it is night we have to divide against this amendment. We do not believe in it. We do not believe that it is justified. We do not believe that the Government have made any case at all.
There is the possibility that we shall be in total darkness, and while I can see my notes I must say that
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I do not accept that the Government believe they will solve the unemployment problem by this Bill. 1 have never believed it. I think they are in a hole. They are in a corner. They have ruled everything else out. When they came to office they thought they could solve their problem by M3, and M3 vanished. Now they do not like us to talk about it. The whole of the monetary basis of the Government vanished. They were not talking about wages councils when they came into office. It was not in their first manifesto but in their second, when their discredited monetarist policy collapsed. Then they believed that they could do it by reducing Government expenditure. They never reduced Government expenditure and now they feel in order to keep themselves in office they will have to raise Government expenditure. There are only the workers left. The Government cannot get up and say, "We have no solution for unemployment", because it keeps rising. Therefore they are forced to say that they will get back to full employment by driving down wages. I prefer to believe that those who understand it do not believe it; and those who believe it do not understand it. We oppose this clause.
Lord Trefgarne: Oh dear, oh dear, oh dear! When the noble Lord, Lord Stoddart, was speaking a few moments ago he referred to some of the actions this Government have taken. Just now the noble Lord, Lord McCarthy, was also referring to such matters. When this Government came into power in 1979 after five years or so of Labour party rule we found that the economy was grinding to a halt, to put no finer word on it.
Over the period of their administration, and indeed in earlier years—for some of which I dare say earlier Conservative governments were responsible—a great web of controls was being applied to businesses of every kind, not least to small businesses which are least able to bear them, least able to see their way through, and who suffer most grievously from them. Among the great web of controls to which businesses of every kind have been subjected over the years, I accept, has been that of the wages councils. They have been justifiably criticised, in the Government's view, for allowing themselves to lose touch with the needs of their industries by legislating in great detail and complexity for an enormous variety of terms and conditions of employment. The result has been wages orders which are, to a large extent incomprehensible to the audience at which they are aimed. I dare say that the noble Lord, Lord McCarthy, understands them. He is a distinguished practitioner in these matters, and I should not be surprised if he had not written many of them.
Not surprisingly there has been widespread confusion and many underpayments attributable to misunderstanding of these great works of art. In short, wages councils have brought themselves into disrespect in this regard. The responses to the consultative paper on wages councils showed a substantial measure of support for the proposition that wages councils' powers ought to be limited to fixing a single minimum hourly rate for basic hours. The Government took the view that it would also be sensible to provide for a single minimum overtime rate

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to apply in respect of time worked after basic hours, and to enable councils to set a daily limit on deductions for accommodation provided. The noble Lord will be aware that that is a particular feature of the hotel business.
Together, these would enable the core of the minimum wage-fixing system to be preserved, but allow employers and workers to agree other terms and conditions to suit their particular needs. This is in line with the Government's commitment to deregulation and lifting the burden from business, and that is an endeavour to which we are totally committed.
These reforms are important in the context of providing a framework within which employers in wages councils' trades can get on with running their businesses without having every conceivable detail of their workers' terms and conditions rigidly laid down without regard to the circumstances of small firms in particular. In that sense they are what the Government believe to be the correct balance between the twin needs of cutting out unnecessary bureaucracy and retaining basic safeguards for workers. I very much hope that the Committee will agree that this clause should stand part of the Bill.
Lord McCarthy: Before the noble Lord sits down, he is very fond of saying, and has been saying all night, that nobody can understand wages councils' awards. I wonder whether the noble Lord has ever tried to understand a wages council award. I happen to have by me a good 15 or so wages councils' awards, and most of them are very short. For example the mutton award covers only two pages and the toy award covers only two pages. Most of these awards are very simple and the great majority do not change year in and year out.
I shall present these documents to the noble Lord, so long as I can have them back. I should like him to read them and tell us at the Report stage whether he finds the slightest difficulty in any of them. I do not believe that the noble Lord is stupid and I do not even think that the average small businessman is stupid. I think that it is a put up job. There is nothing complicated about these wages councils' awards, and the noble Lord should try reading them.
Lord Trefgarne: I am grateful to the noble Lord for offering me some short, sharp documents. Whether or not they are the ones in which he had a hand I do not know. However, in return I should be happy to send the noble Lord some which are long and incompre-hensible.
9.16 p.m.
On Question, Whether Clause 14, as amended, shall stand part of the Bill?
Their Lordships divided: Contents, 37; Not-Contents, 20.

DIVISION NO.5

CONTENTS

Belstead, L.

Hooper, B.

Boardman, L.

Long, V.

Brabazon of Tara, L.

Lyell, L.

Brookes, L.

Macleod of Borve, B.

Caithness, E.

Masham of Ilton, B.

Carnock, L.

Monk Bretton, L.

Coleraine, L.

Montgomery of Alamein, V.

Craigmyle, L.

Mottistone, L.

Crathorne, L.

Murton of Lindisfarne, L.

Davidson, V.

Shannon, E.

De La Warr, E.

Skelmersdale, L.

Denham, L. [Teller.]

Stodart of Leaston, L.

Elliot of Harwood, B.

Swinton, E. [Teller.]

Elton, L.

Teviot, L.

Fanshawe of Richmond, L.

Trefgarne, L.

Ferrers, E.

Trumpington, B.

Gardner of Parkes, B.

Vaux of Harrowden, L.

Gray, L.

Zouche of Haryngworth, L.

Hives, L.

NOT-CONTENTS

Airedale, L.

Ponsonby of Shulbrede, L.

Carmichael of Kelvingrove, L.

[Teller.]

Dean of Beswick, L.

Rochester, L.

Grey, E.

Seear. B.

Hatch of Lusby, L.

Stoddart of Swindon, L.

McCarthy, L.

Tordoff, L. [Teller.]

McNair, L.

Turner of Camden, B.

Morton of Shuna, L.

Underhill, L.

Mountevans, L.

Wedderburn of Charlton, L.

Parry, L.

Wells-Pestell, L.

Pitt of Hampstead, L.

Resolved in the affirmative, and Clause 14, as amended, agreed to accordingly.
9.23 p.m.
Schedule 3 agreed to.
Clause 15 [Application of wages orders to piece workers]:
[Amendment No. 98 not moved.]
Clause 15 agreed to.
Clause 16 [Effect and enforcement of wages orders]:
[Amendment No. 99 not moved.]
Clause 16 agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 99A:
After Clause 16, insert the following new clause:
("Computation of remuneration.
.—(1) For the purpose of determining, for the purposes of this Part, the amount of remuneration paid to a time worker by his employer in respect of time worked by the worker in any week there shall be added together—

(a) the total amount of any money payments made by the employer to the worker, on or before the relevant pay day, by way of remuneration in respect of time worked by him in that week, and

(b) the total amount of any deductions made by the employer (whether in accordance with Part I or not) when making the payment of wages which consisted of or included those money payments, apart from deductions falling to be left out of account under this paragraph by virtue of subsection (2), and then, from the aggregate of those amounts, there shall be subtracted the aggregate of—

(i) the worker's necessary expenditure in connection with his employment to the extent that such expenditure is attributable to that week and is not met, or designed to be met, by an allowance paid to him by the employer, and

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(ii) the total amount of any payments received from the worker by the employer (whether in accordance with Part I or not) and falling to be taken into account under this paragraph by virtue of subsection (3).

(2) The following deductions shall be left out of account under subsection (1)(b), namely—

(a) any deduction in respect of the provision of living accommodation for the worker by the employer to the extent that the deduction exceeds any limit for the time being in force in relation to the worker by virtue of section 14(l)(c), and

(b) subject to subsection (4), any other deduction made by the employer for his own use and benefit (and accordingly not attributable to any amount paid or payable by him to any other person, or to any authority, on behalf of the worker).

(3) The following payments by the worker shall be taken into account under subsection (l)(ii), namely—

(a) any payment made by the worker to the employer in respect of the provision of living accommodation for him by the employer to the extent that the payment exceeds any limit for the time being in force in relation to the worker by virtue of section 14(l)(r), and

(b) subject to subsection (4), any other payment made by the worker to the employer and retained by the employer for his own use and benefit (and accordingly not attributable to any amount paid or payable by him to any other person, or to any authority, on behalf of the worker),

being in each case a payment due from the worker in the week in question.
(4) Subsections (2)(b) and (3)(b) do not apply to deductions made or payments received by the employer on account of any of the following matters, namely—

(a) any conduct of the worker or any other event in respect of which he (whether together with any other workers or not) has any contractual liability,

(b) any advance under an agreement for a loan or any advance of wages,

(c) any goods or services supplied by the employer (whether in connection with the worker's employment or not), or

(d) the purchase by the worker of any shares or other securities or of any share in a partnership; and accordingly any such deductions shall not be left out of account under subsection (l)(b) and any such payments shall not be taken into account under subsection (l)(ii).

(5) The preceding provisions of this section shall apply to a piece worker as they apply to a time worker but as if, in subsection (1), any reference to remuneration in respect of time worked by the worker in any week were a reference to remuneration in respect of—

(a) work executed by him in any week, and

(b) any such time as is mentioned in section 15(4) that occurs during the week.

(6) In this section—
"deduction" does not include any such deficiency in the payment of wages as is mentioned in section 8(3);
"money payment" means—

(a) a payment in cash,

(b) a payment by cheque or by a money or postal order issued by the Post Office, or

(c) a payment (however effected) into any account kept with a bank or other institution;

"relevant pay day", in relation to any week of a worker's employment, means the day on which his remuneration in repect of that week is payable;
"wages" has the same meaning as in Part I.").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 99B not moved.]
Clause 17 [Computation of remuneration]:
[Amendment No. 100 not moved.]
Clause 17 disagreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 100A:
After Clause 17, insert the following new clause:
("Apportionment of remuneration
.—(1) This section applies where—

(a) in respect of part of the time worked by a time worker in any week ("the relevant period") the worker is entitled to the statutory minimum remuneration provided for him by an order under section 14, and

(b) in respect of the remainder of the time worked by him in the week ("the remaining period") the worker is not entitled to any such remuneration or is entitled to any such remuneration by virtue of another such order;

and in this section any reference to the worker's computed remuneration is a reference to the amount of the remuneration paid to the worker in respect of the time worked by him in the week in question as determined in accordance with section (Computation of remuneration).
(2)Subject to subsections (3) to (5), the amount of the worker's computed remuneration that is to be attributed to either the relevant period or the remaining period for the purposes of this Part shall, if not apparent from the terms of the worker's contract, be the amount which bears to the total amount of the worker's computed remuneration the same proportion as the relevant period, or (as the case may be) the remaining period, bears to the total time worked by the worker in the week in question.
(3) Where any particular amount falling to be added or subtracted under section (Computation of remuneration) (1) as it applies to any week is exclusively referable to the relevant period, the amount of the worker's computed remuneration to be attributed to that period for the purposes of this Part shall be determined by either—

(a) adding the unattributed balance of that particular amount to the amount to be attributed to that period in accordance with subsection (2) above, or

(b) subtracting the unattributed balance of that particular amount from the amount to be attributed to that period in accordance with that subsection,

according to whether that particular amount falls to be added or subtracted under section (Computation of remuneration) (1); and a corresponding adjustment shall be made in the amount of the worker's computed remuneration to be attributed tor the purposes of this Part to the remaining period.
(4) In subsection (3) "the unattributed balance", in relation to the particular amount in question, means so much of that amount as is not taken into account for the purpose of determining the amount to be attributed to the relevant period in accordance with subsection (2).
(5) Where any particular amount falling to be added or subtracted under section (Compulation of remuneration) (1) as it applies to any week is exclusively referable to the remaining period, subsections (3) and (4) shall apply to any such particular amount as if—

(a) any reference to the relevant period were a reference to the remaining period; and

(b) the reference in subsection (3) to the remaining period were a reference to the relevant period.

(6) The preceding provisions of this section shall apply to a piece worker as they apply to a time worker but as if—

(a) any reference to time worked by the worker in any week were a reference to work executed by him in any week; and

(b) the word "work" were substituted for the word "period" wherever occurring;

and for the purposes of those provisions as they apply to a piece worker in accordance with this subsection the worker shall be treated as executing work during any such time as is mentioned in section 15(4).").
The noble Lord said: Again, I have spoken to this amendment. I beg to move.
Lord McCarthy: The noble Lord said when he moved this amendment that he had spoken to it. I accepted that, but we wanted to have this clause moved separately. I do not want to quarrel over that at this time but I should like to ask him whether he would

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do the same thing in respect of this clause as I asked him to do in relation to the earlier clauses that he moved at that time; that is to say, that we should have notes on the clause. It is just as complicated as the previous clause, if not more complicated.
I should like to return to the answer that he gave me on that occasion because, with respect, I do not think that he quite said that he would give us Notes on Clauses. First of all, he said on these new clauses that he would write to me. Then he said he would write to me and that he would put a copy of what he wrote to me in the library. With the greatest respect, I do not think that that is enough. There are many people in this Chamber—some of them are here tonight and some may not be here—who would like to have an amplification of what these new clauses mean.
We had Notes on Clauses circulated for all the other clauses in the Bill and I believe that it would be only reasonable to ask that the Government do exactly what has been done in regard to all the rest of this Bill. In respect of these two complicated amendments— there is one about putting five people on the wages council; and even we can understand that—I want to ask him once again whether he will publish Notes on Clauses.
Lord Rochester: I should like to support that and to ask that a copy of any letter going to the noble Lord,
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Lord McCarthy, on this subject should come to me as representative of those of us who have been involved in the Bill from these Benches; and, it may be, to other noble Lords who have taken a prominent part in the proceedings.
Lord Trefgarne: I am happy to assist the noble Lord, Lord McCarthy, and other noble Lords in this way. May I suggest that I write to the noble Lord, Lord McCarthy, in a very full way, certainly no shorter than he would expect from a note on a clause, and copy that letter to every noble Lord who has taken part in this debate today?
Lord McCarthy: My noble friend Lord Stoddart is a much older hand and is shrewder than I am about these matters. I wonder whether the noble Lord the Minister can let us know whether we passed the sugar plum. We are, at this time of night, trying to help the Committee and so we are not moving everything. It would be a tragedy if, as a result of not moving a particular amendment, we were to lose the sugar plum.
Lord Trefgarne: I do not think the noble Lord has passed the sugar plum, but if I find that, inadvertently he has, I will try to find another one.
On Question, amendment agreed to.
Clause 18 [Obligation to keep records etc.]:
9.30 p.m.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 101:
Page 22, line 6, at end insert—
("(2A) The employer of any such workers who are homeworkers shall give to those workers a statement in writing informing those workers—

(a) of any order under section 14 or proposal under para-graph 1 of Schedule 3 that affects them, and

(b) of such other matters as may be prescribed.").

The noble Baroness said: I rise to move Amendment No. 101 and to return again to the question of home workers, which was touched upon earlier, notably on an amendment which dealt with young home workers. This clause deals with home workers generally, and the object of the amendment is to attempt to write in some continuing protection for home workers. I do not want to repeat what we have been saying on this side of the Committee almost all afternoon, but we are again talking about vulnerable and often badly exploited people. In the case of home workers we are in fact talking mostly about women. As I understand it, there are approximately 30,000 home workers covered by wages councils today. Their wages are notoriously low. A survey carried out by the Low Pay Unit in 1983 found that one-third of the sample still earned less than 50p per hour, while three-quarters earned £1 or less.
Home workers, more than any other type of worker, find themselves vulnerable to exploitation by low wages. They are a captive workforce and their child care responsibilities are normally the reason why they are unable to go out to work and so they have to seek work that can be done at home.
A number of surveys of home workers have been conducted in recent years. An ACAS survey of the toy industry, for example, found that 58 per cent. of home workers in the industry were mothers with young children. The Department of Employment has found that most home workers, though not all of them—as was stated earlier, there are some young home workers —are aged between 25 and 44 and have dependent children of school age.
It is generally supposed that home workers are employed on simple, unskilled work, but a surprising proportion, according to studies carried out, have prior industrial experience and skills. Home workers are trapped in their homes and are therefore non-unionised and work in isolation. However, it should not be thought from that that the trade unions and the trade union movement have paid no attention to them. Indeed, I was myself a member of a TUC committee some years ago which did extensive work into the conditions of home workers and produced much documentation on the subject.
Although the hour is late, because it gives some indication of what conditions are applicable in certain types of this work I should like to read a very short extract from the results of the research that we then carried out. This concerns a woman engaged in this sort of work and she describes what it is like—
Lord Trefgarne: I wonder if I may interrupt the noble Baroness. I apologise for intervening in her most
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interesting speech, but it may assist her to know that the sugar plum is in front of us now.
Baroness Turner of Camden: In that case, I am so happy to give way. I should like to hear what that is and I am most grateful to the noble Lord. I wait with great interest to hear what he has to say. I beg to move.
Lord Trefgarne: I am sympathetic to the proposi-tion in this amendment. I am advised that the words are not entirely perfect, but if the noble Baroness will withdraw this amendment I will undertake to bring one back at the next stage which achieves what she desires.
Baroness Turner of Camden: I really am most grateful to the noble Lord. With great pleasure 1 beg leave to withdraw the amendment and I await his wording with keen anticipation.
Amendment, by leave, withdrawn.
Clause 18 agreed to.
Clauses 19 and 20 agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 102:
After Clause 20, insert the following new clause:
("Unfair dismissal and Wages Council.
.—(1) The dismissal of an employee to whose remuneration a wages council order relates shall be regarded as unfair for the purposes of Part V of the 1978 Act if the reason for it (or if more than one, the principal reason) is that the employee has made, or proposes to make, a complaint or other communication to an officer appointed under section 19 of this Act.
(2) Section 64(1) (a) (qualifying period) of the 1978 Act shall not apply to a dismissal to which subsection (1) above applies
(3) In section 71(2)(6)of the 1978 Act, after the words "section 58 or 59(a)", there shall be inserted the words:
"or by virtue of section 20A of the Wages Act 1986".
(4) An employee shall have the right not to have action (short of dismissal) taken against him as an individual by his employer if the reason (or if more than one, the principal reason) falls within subsection (1) above.
(5) Sections 24 to 26 of the 1978 Act shall apply to action which contravenes subsection (4) above as they apply to section 23 of that Act.").
The noble Lord said: I feel sure that the noble Lord, Lord Trefgarne, when he reflects, will feel that he gave only half the lollipop, in the sense that he has gone away to find a better one. So he has a bit left in the bottom of the barrel and I feel sure that, if he looks hard, he will see that it was reserved for this important amendment, which is concerned with a general point for the workers covered by wages councils.
Workers covered by wages councils are relatively unprotected by many of the other mechanisms of our industrial society—a point that has been flowing through many of the debates about the specific workings of the wages councils. One essential step which such a worker will have to take in order to protect his position, whatever is left of the wages councils, is a communication to an inspector or other officer appointed to enforce the mechanisms. If that worker is then victimised for so doing, he is a precise parallel to someone who is victimised for trade union activity, because the justification for wages councils —at least, in large measure—has historically rested, whether they did it well or did it badly, upon the fact that they stood in place of collective bargaining.
So that since the Government have not seen fit, in their long period of office, to take out the protection of workers from unfair dismissal—which is automatically unfair if they take part in union activities or have trade union membership—although they have added non-unionism as a parallel, here is the third part of the tripod: the case where the worker is trying to enforce the basic mechanism by which his conditions can be upheld against (it may be rare, or it may be frequent in his part of the industry) the employer who will not observe the basic conditions.
On that basis we have constructed this amendment, which is precisely parallel and analogous to the position in other parts of industry, outside wages councils; that is to say, there is no qualifying period, because there is no qualifying period where the dismissal of a worker for trade union activities takes place, as that is such a bad reason for dismissal that Parliament in its wisdom (and it appears to be bipartisan in that no-one seems to want to change the fact that the worker who is dismissed for trade union reasons needs no qualifying period) has decided that you do not require a qualifying period of two years or any other period of service.
So for the same reason we have included here the enhanced compensation, because if you are dismissed for a trade union reason you get the enhanced compensation, to which the Government have added—we think unwisely—if you are dismissed for non-unionism. Nevertheless, there it is. Here we say that if someone is victimised by dismissal (to which we add action short of dismissal in the last subsections of the amendment, because it is only logical that what you do for dismissal you do for action short of dismissal, on the pattern of our employment protection legislation) then what we do in those circumstances in the area of trade union dismissals we do here; that is to say, if a worker is victimised because he has taken a step which it is necessary for him to take to enforce the position of a basic—as it will be if the Government get their way—one-rate remuneration in the wages council.
I hope that this very simple and very moderate amendment will not meet the regiment of the new, young liberation army which is marching across industry to liberate employers from every possible complexity. At least if it does, the Government had better tell us when they are going to get rid of the rest of the unfair dismissal legislation, because there is absolutely no case for opposing this amendment unless you believe that unfair dismissal should go and more particularly that unfair dismissal for trade union reasons, or non-union reasons on the Government's logic, should also go from its special place. It is a perfectly normal logical amendment which simply makes sense of the position. I beg to move.
Lord Trefgarne: The effect of this new clause, as the noble Lord has said, would be that dismissal or action short of dismissal taken against employees covered by a wages council (with the exception of those aged under 21) would automatically be regarded as unfair if the reason for it (or, if more than one, the principal
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reason) was that the worker had made or intended to make a complaint or other communication to the wages inspectorate. I do not consider that the provisions of Part II of this Bill are in the same category as fundamental rights such as the right not to be discriminated against on grounds of sex or race or the right to belong or not to belong to a trade union. I dare say that the noble Lord does not share that view and I shall not attempt to persuade him to change his mind. But I am sure he recognises the protection which currently exists for a wages council worker who finds himself in this situation.
If a worker is dismissed for having made a complaint to the wages inspectorate and he has the necessary qualifying service, he can take his case to an industrial tribunal. The onus would be on the employer to show that in the circumstances he had sufficient reason for dismissing the worker. Where as a result of having made a complaint to the wages inspectorate the employer's conduct towards the worker is such that the worker terminates his contract of employment, again he can complain to a tribunal on the grounds that he has been constructively dismissed. It would be for the tribunal to decide whether the employer's conduct amounted to constructive dismissal.
These are substantial protections which strike the right balance between the legitimate interests of workers and the burden the legislation places on employers. I do not believe that there is any justification for special provisions of the kind proposed. I hope that the noble Lord will not press the new clause.
Baroness Seear: I am afraid that I find it very difficult to follow the Minister's logic. You have a wages inspectorate here in order to enforce the legislation, just as you have a factories inspectorate in order to enforce the factories legislation. In both cases one of the only ways in which it can operate is for people who think an offence is being created to go and tell the inspectorate.
It used to be a requirement to have the address of the factory inspector at the works in order that people could do precisely that. There is no other way. You cannot have the inspectorate crawling all over industry the whole time. The information that comes from people who think they are affected by a breach of regulations is a major method of enforcement. You will have to treble the inspectorate if you are going to attempt to make the wages council orders enforceable but are not going to allow people without protection against dismissal to write to the inspectorate and say "Look, I have been cheated". For decades and decades this has been a traditional way of enforcing legislation. It saves an enormous amount of manpower in the inspectorate.
Lord Trefgarne: I would not want the noble Lord to think that I am unsympathetic to the predicament in which a worker might find himself in these circumstances. The noble Lord and the noble Baroness will understand the philosophy that lies behind this Bill and which I have repeated on a

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number of occasions during the course of this evening. I shall spare the Committee another repetition of that. But if it will help the noble Lord perhaps I may consider the matter a little further and see whether there is any accommodation I can suggest.
Lord Wedderburn of Charlton: I am grateful to the Minister and will confine myself merely to one remark which is meant to help him in his mature reflections and his search for other plums. It is the case in the Government's own consultative document that two-thirds of the wages councils' workforce is part time and that four-fifths of the workers are women. When one adds to those the other well-known facts concerning the situation of continuous employment, the idea that such workers are well served, while the rule is that they should have two years' continuous employment before they can go near a tribunal, will perhaps give the Minister pause for thought. I am grateful that he will look at this matter again and I look forward to the results of that scrutiny. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 21 and 22 agreed to.
9.45 p.m.
Clause 23 [Transitory provisions relating to existing wages councils and wages orders]:
[Amendment No. 103 not moved.]
Lord McCarthy Lord McCarthy moved Amendment No. 104:
Page 26. line 1, leave out subsection (4)
The noble Lord said: I am not sure what one keeps plums in. One does not keep them in barrels, one does not keep them in tins, and one does not keep them in jars—and when one eats plums, they do not usually come off trees. But whatever the Minister keeps his plums in, I can only hope that he has one or two left. These two amendments are in a sense probing amendments that do slightly different things. However, we agreed through the usual offices that they should be taken together.
Both amendments are an attempt—and I make no bones about this—to reassure those trade unions who have told us that they are worried about the transitional period. They are worried that it seems, from the face of the Bill, that the Secretary of State can unilaterally, the, day after the Act is implemented, act so as to cancel existing orders and impose new ones. That worries the users of the wages councils system, and they have asked us to find out whether the Government are prepared to consider some way of avoiding such a possibility.
The aim of Amendment No. 104 is to prevent the Secretary of State from taking such action altogether. The aim of Amendment No. 105 is not to prevent him from taking such action altogether but to provide that:
"On a date not less than two months before introducing an order under subsection (4), the Secretary of State shall notify the relevant wages council and provide them with an opportunity to voluntarily vary the terms of an existing order".
Therefore, there are two ways of achieving such a
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safeguard. Amendment No. 104 is a much more draconian and, one might like to say, extreme way of achieving it. If the Minister were to say to me that he does not like Amendment No. 104 but would think about Amendment No. 105, then we would in fact find another plum.
The situation is that the present expiry dates for wages councils orders are for the most part late in 1986 or early in 1987. For example, the expiry of the wages council order for the clothing industry is December 1986; for hairdressing, April 1987; for the licensed non-residential wages council, January 1987; for the licensed residential wages council, October 1986; for retail food, April 1987; and so on. Surely it would be feasible to give those involved time to establish whether, through the voluntary system and through the wages council itself, it would be possible to adapt to the new system. Otherwise, it is possible that the day after the Act is implemented, the Secretary of State himself could instantly and unilaterally act to cancel the existing orders and impose new ones. I beg to move the first amendment standing in my name, though I have spoken to them both.
Lord Trefgarne: Clause 23(4) enables the Secretary of State to make an order, (a) disapplying all or any of the provisions of an existing wages order, and (b) restricting the operation of such an order between the date of the passing of the new legislation and the coming into force of a wages order made under the provisions contained in Clause 14.
Amendment 104 would remove this power. This could mean that the existing wages orders might be preserved in their entirety for a prolonged period, possibly a year in some cases, if the councils so chose. By taking the power embodied in subsection (4). we can, if we consider it necessary, act in order to pursue our deregulation policies at a more vigorous pace. Though no decisions have been taken on how it might be used, this is not a power we are prepared to surrender.
Amendment 105 would simply delay the speed with which the Secretary of State could make orders under the subsection and, even though the delay would be shorter, the same objections apply. Wages councils have in the past been given ample opportunity to simplify and streamline their procedures, but sadly with little result. I see little point in consultation for the sake of consultation when it is known by everyone that the end result will be the same. I therefore hope that your Lordships will not accept these amendments.
Lord McCarthy: I should like to be absolutely clear on what the noble Lord is saying, because it may be worse than I feared. I had thought that the intention was that after the Bill became law the Government would not seek to impose new orders without the intervention of the wages councils. Of course it might be the case, as he says, that a dilatory wages council would sit around and try to delay matters for 12 months, or so. The Government would therefore need, as the noble Lord said, this reserve power in subsection (4). Of course, they could always replace the members.

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Surely it is not the intention of the Government not to give existing wages councils any time at all. Surely it is their intention that, in the move from the old system to the new system, the fixing of a single basic rate—which is the most important effect and, one might say, the only significant function left to these poor bodies—would be decided by the councils and not by the Government.
If the councils are dilatory the Government may step in, but if they act within normal periods and renew the wage orders as they normally do at twelve-monthly intervals, surely that would be all right. Some of these wages councils I have mentioned have six or seven months before they introduce their next order —for example, retail foods, which has until April 1987. Surely there will be no objection if it introduces the next order in April 1987. Are the Government going to rush the council and say that they want the order by next week otherwise they will invoke subsection (4)? One hopes that the normal expectation of the Government will be that these councils will have the normal period and will do it their way.
It is a very critical first decision that the councils have to make. They have to decide where to fix the rate, knowing that it is to be the only rate they will be allowed to fix, particularly if they have differential rates. Will they seek to fix it slightly above their lowest rate? Or will they think they have somehow to move, in some way, at the lower end, the lower quarter, of their series of rates? Surely that is a job for the wages councils. It would be most inappropriate, and the Government have certainly not suggested it, if the Government suddenly pre-empted the one thing left to the retail non-foods wages council and did not give them until April 1987 to decide what to do but said that the Minister was going to do it for them next week. Surely that is not what the noble Lord is saying.
Baroness Seear: Once again I find it extraordinarily difficult to follow what the noble Lord the Minister is saying. We understood that the Government wanted to get off industry's back. The Government claim that they are not a centralising government but my experience has been that they are an extremely centralising government.
We have heard the word "philosophy" which I must say is a rather gradiloquent word for what is proposed in the Bill. The philosophy of the Bill is to free industry, and having set up a wages council to do that job the Government then proceed to say that they will override it and tell it what to do. I really must tell the Minister that if he intends to restrict the work of the wages councils so much and if he then gives the Secretary of State powers to override them, he will not get any people of any calibre whatsoever to agree to sit on his wages councils.
Lord Trefgarne: I believe that the noble Lord and the noble Baroness have perhaps read more into this provision than is really there. We have been discussing the provisions of this Bill for a long time and I dare say that, despite my inadequacies, the Members of the Committee are now coming to understand the essence of our intentions.
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The fact of the matter is that without the powers contained in these particular clauses we shall not be able to ensure that the decisions taken by the Committee and Parliament can be implemented in a timely way. I am sure that wages councils will now understand the way in which we wish to proceed and the way in which I hope Parliament will decide that they should proceed, and I dare say that by and large they will do so with proper expedition. But where there is some improper or excessive delay we want to be in a position to deal with that difficulty, and these clauses provide for that situation.
Lord McCarthy: With very great respect, it gets worse. I do not want to hound the noble Lord, but he has done it again. He has replied to Amendment No. 104, and everything that he says fits Amendment No. 104—it is rather like holidays again—but he does not reply to Amendment No. 105. Amendment No. 105 was tabled precisely because we thought that the Minister might very well say just what he did say about Amendment No. 104.
Let us look at Amendment No. 105. All that he is being asked to agree to on Amendment No. 105 is that,
"On a date not less than two months before introducing an order under subsection (4)".
So his power to stop the wages council mucking him about is still there; he has the power under subsection (4), but two months before invoking that power he will, you might say, have the courtesy to,
"notify the relevant wages council and provide them with an opportunity to voluntarily vary the terms of an existing order".
So, two months before he feels that he has to kick them up the backside, he writes them a letter and says, "In two months' time I propose to kick you up the backside if you do not move. Will you please voluntarily vary the terms of the existing order and not muck about?" That is reasonable enough. Surely the noble Lord can accept that.
Lord Trefgarne: Amendment No.105 is indeed a little less awful than Amendment No.104, but awful it is nonetheless! The fact is that if we were to agree to that amendment we should simply be accepting a delay in the way that the Secretary of State could ensure that the will of Parliament wasimplemented. I proceed. do not think that is a sensible way to proceed.
Lord McCarthy: Is it being said that the Government will not write the letter? If the noble Lord were to come to me and say, "We shall do that anyway" (because they often say that over there; they say that they will do it anyway so why put it in the law), it would not convince me but it would be a little more defensible. Is the noble Lord really telling me that they do not intend to write to them but that it will come out of the dark if they decide to violate the rights of the wages councils, even if the wages councils are only saying, "We shall do it on the due date"? Maybe they will do it in January 1987 and the Minister cannot wait that long. Is he saying that the Government cannot agree to that amendment because in those circumstances they do not propose to write to the damned fellows—let them stick it?
Lord Trefgarne: By virtue of this legislation we are inviting Parliament to change the arrangements. The noble Lord is suggesting that we should put some further delay between the decision that Parliament has taken and the implementation of Parliament's decision. I do not believe that that is a very good idea. After all, these wages councils—the ones about which we are particularly concerned—over a number of years have been generating the complex orders to which I referred at an earlier stage of this Bill. They are well aware of the anxieties about their shortcomings which are felt by the Government and which I believe Parliament will feel when the passage of this legislation has been completed.
They have had ample opportunities to overcome the difficulties and have not taken advantage of them. All that the noble Lord's amendment does is to see that those great disadvantages are perpetuated yet longer. I do not think that that is a good idea.
Lord McCarthy: I do not see that, but we shall not get anywhere on this. I would say that we shall come back to the matter on Report, but there are now so many things that we are to come back to that I do not know whether we shall have time, and so although I am very unsatisfied, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 105 not moved.]
The Deputy Chairman of Committees (Lord Airedale): I have to point out that if Amendment No. 106 is agreed to, I shall not be able to call Amendments Nos. 107 or 108.
[Amendments Nos. 106 to 108 not moved.]
Clause 23 agreed to.
Clauses 24 and 25 agreed to.
Clause 26 [Restriction of redundancy rebates to employers with less than ten employees]:
10 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 109:
Page 29, line 36, leave out ("nine") and insert ("199").
The noble Lord said: We are now into something quite different, although it is related. The Minister will explain this to us in so far as I get it wrong or leave things out, but in Part III of the Bill the Government are to do away with redundancy rebate, with an exception, and this amendment is concerned with the exception. I preface what I shall say by simply stating to the Minister that, having read what occurred in another place, I do not have a clear picture of the philosophy precisely lying behind the abolition of the redundancy rebate. He will no doubt explain that to us.
Perhaps it is partly because I do not understand the philosophy of the withdrawal of the rebate that I do not understand exactly why it is that new Section 104A, which Clause 26(3) is to insert into the Employment Protection (Consolidation) Act 1978,
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makes an exception of employers who will go on receiving the redundancy rebate by reference to:
"A payment made by an employer to an employee [for redundancy] and falling within subsection (1){a) or (b) of section 104 shall be treated as a qualifying payment if at no time on the appropriate date did the number of employees employed by the employer, added to the number employed by any associated employer, exceed nine".
Employment law has in the past been littered with exceptional provisions for small firms or small employers which have sometimes not had a great deal of explanation or reason. It is not a one-party matter. Although there was some reason given for it, from 1975 the need to present a written statement of health and safety policy was applied by a Labour Government, but not to those employers with four or fewer employees. The Sex Discrimination Act had certain exceptions in regard to small firms, again related to five employees, which had to go.
However, this Government made the situation very much worse. In 1980 they caused employees in firms with 20 or fewer employees to have two years' qualification before they could complain of unfair dismissal. They told us that that would produce jobs. I do not know what they have done to prove that since. They applied a similar cut-off point to work-place balloting, and they applied a similar set of limits in regard to employees of firms employing five or fewer employees when they cut down women's rights to maternity leave in 1980.
There was not a great deal of justification of the specific figures on those occasions as I remember it. Here the Government come up with another figure. It is because I have been unable to find an explanation of the calculations that they did, and the reason for choosing this figure, that my noble friends and I have put down the amendment in the form it is in. It will of course be obvious to the Minister that we chose 199 for the simple reason that that is the cut-off point that the Department of Trade and Industry uses for a small firm in a number of its presentations of figures and descriptions relating to small firms.
Is that figure as good as nine or does it merely save a great deal of money? Is there some functional justification in nine as against 10, 20 or 199? How many employees are involved? Some colleagues of mine in some universities have tried to do some calculations as to how many employees are employed in various types of small firm. The calculations are not very firm. They show that if one takes a cut-off point of 10 and 24, one is probably moving from about 1.75 million to 1.5 million excluding farming, fishing and forestry.
The Minister must have better figures than that. He should be able to tell us how many workers are involved. He could perhaps tell us about one or two other matters in relation to the clause. In moving to a different number I obviously increase the importance of new Section 104A. That makes me ask: if it is convenient for the Minister to include it here, why is the new subsection phrased as it is? There are two important things about the numbers game of exceptions in labour law. We have to know how many are involved and whether associated employers are included, and they are here. Then we have to know what period of time to count.
There is an interesting phrase which I do not think is matched in previous clauses. It says that the qualifying payment will arise,
"if at no time on the appropriate date".
One would normally find, "on the appropriate date". If we look at the definition of "appropriate date" in Section 104, we go to Section 104A and then back to Section 104 and then on to Section 90, because that is the route that must be taken. We find that they all refer to "a date". Presumably the Minister's phraseology,
"at no time on the appropriate date".
imagines that there will be great mobility of labour during the day. If that is not so, the phrasing is very strange. The courts may have some trouble with that.
There is a final point. However we do it—and it may be that that is clever phrasing—those cut-off points, especially with small firms, have a great deal of arbitrariness necessarily associated with them. It seems odd that if there is one small firm employing nine employees, run by one man who is a director and manager but who is not an employee—perhaps for tax reasons—and next door there is a firm employing nine employees and the manager-owner, or whatever he is to be called, is also a director and employee, which he may well be in law, those two firms will now be treated differently.
Any legal test has a line, and there are always cases on either side, but there is no need to have anything quite as arbitrary as that with regard to redundancy rebates. That is also a case for having a higher figure because the more employees one has, the less arbitrary the line is likely to be in that respect. One can think of many legalities which would be arbitrary as between one very small firm and another, which would make for great unfairness as to who received a redundancy rebate, whereas if we had a slightly higher cut-off point those arbitrary factors would be less likely to apply.
On the central point, I look forward to what I think would be the first explanation of the Government's choice of a number. I beg to move.
Lord Rochester: This is, I believe, the only amendment at this stage that refers to Part III of the Bill. With the agreement of the Committee, I should like to widen the discussion a little to take account of the philosophy underlying this Part, if only to save having a further debate on clause stand part, if that is acceptable to the noble Lord the Minister in particular. At the same time, I wish to support what the noble Lord, Lord Wedderburn, has said and to amplify his remarks by way of another example.
Part III of the Bill, as the Committee will remember, restricts the payment of redundancy rebates to firms employing less than ten people. The Government claim that the 35 per cent. of the cost of redundancy payments to employers now repaid from the redundancy fund should, in their view, be put to a different and better use. But people continue to be made redundant in large numbers. The effect of this part of the Bill must be either to make overall redundancy payments smaller or add to employers' costs.
Another factor, I suggest, that we need to bear in mind is that the redundancy fund is one to which both
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employers and employees have contributed in the expectation that they will receive some benefit. If this part of the Bill goes through, they will be denied that benefit. There was, at the last audit, a substantial surplus in the fund—some £9 million, I believe. If payments from that fund are to be eliminated, it would surely be more equitable and serve better to maintin our competitiveness if the surplus was distributed to employers and employees by providing for a reduction in their contributions.
Following upon what the noble Lord, Lord Wedderburn, said, I have received a communication from the National Farmers Union which is concerned that, as the clause is now drafted, it appears that casual and seasonal workers will count towards the number of employees who can be taken into account in deciding whether a rebate can be claimed. Since employees are not entitled to a redundancy payment unless they have been continuously employed for a period of two years under a contract of employment normally involving work for 16 hours or more, it seems logical that employees who do not qualify for such payments should not be counted for the purposes of the exemption under Clause 26, which we are now discussing.
What this means, if I may take the example that the NFU has given, is that where a business employs five full-time employees and five casual or seasonal employees, that business would be ineligible for a redundancy rebate if it is necessary to make one or more of the full-time employees redundant even though some of the other employees would have been ineligible for a redundancy payment. It seems that the clause should be interpreted to ensure that businesses with fewer than ten full-time employees are still eligible for redundancy rebate whether or not they employ casual or seasonal workers in addition. I should like some thought to be given to that point. I would be grateful for any comment that the Minister feels able to offer at this stage.
Another communication that I have received comes from the Association of County Councils. Its concern is this. The purpose of the clause is, basically, it is claimed, to effect savings in public expenditure. County councils will lose the right to claim redundancy rebate, and there will therefore be no saving in public expenditure overall in the case of a redundancy within a county council which will often, obviously, employ relatively few people. Instead, an increased financial burden will fall on the county councils.
Their concern is that if this is not adequately recognised within the overall framework of local authority expenditure, it could even inhibit proposals which might otherwise come forward for restructuring within a local authority in order to achieve value for money. They feel—and I must say I share the feeling on the face of it—that this would be an unfortunate side effect, to say the least, of the removal of the redundancy rebate. I am sorry to have wearied the Committee with this, but those are examples of bodies and people affected adversely by this part of the Bill. It may be that the Committee will find it helpful if the Minister makes some response to those points.
I think I speak for my noble friends in saying that we are not happy with Part III for the reasons I gave at the

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beginning of my remarks. I take this as the only opportunity, without spending even longer on it tonight, of saying that to the Minister.
10.15 p.m.
Baroness Seear: As a very brief supplementary point to what my noble friend has said, may I ask the Minister whether he will give us a clear statement in answer to this question? I am sure that there must be an answer, and it would be valuable to have it on the record. It is accepted on all sides that employers and employees have paid into the fund. As I understand it, this is a form of insurance: they pay in advance when times are good so that when they are confronted with redundancy they can take some money out. It is now normal suddenly to say that the insurance will not pay. What is the Government's legal justification for denying employers the right to draw out of the fund into which they have paid, when they are faced with the circumstances for which the fund was created? That is the first question I wish to ask.
I feel that this removal of the right to withdraw one's money from the fund is extremely questionable economically. When a company is faced with redundancy it is, by definition, in a bad way; otherwise it would not be making workers redundant. A firm is concerned about coming out of the redundancy situation in as good a shape as possible in order to recover. This is no moment at which to withdraw from it money which it very badly needs if it is to be success-ful in the future and overcome the difficulties which have created the redundancy. First, what is the legal justification for denying these payments? Secondly, what is the economic justification for crippling a firm still further when it finds itself in a bad way?
Lord McCarthy: I have no intention of intervening in this debate, and the Committee will be glad to learn that I shall not make another speech. I had thought that we would keep this debate to the narrow issue of the amendment. It has now rightly widened, as I suppose was inevitable, to encompass the whole question of Part III of the Bill.
The noble Lord, Lord Wedderburn, has dealt in detail—and no doubt will again—with the illogicality of this part of the Bill. I just want to say that we detest the whole of Part III of the Bill for exactly the same reasons that have been given by the noble Baroness, Lady Seear. We think that it is a detestable, unnecessary part of the Bill. We do not say so much about it only because it may do less damage to fewer people than the even more detestable Parts I and II. There is nothing to be said for it, and I thought that I should make that clear at this point.
Lord Trefgarne: There are no sugar plums, I am afraid. Perhaps I may first deal with the general proposition contained in this part of the Bill. This clause brings to an end, except for the very smallest employers, the insurance arrangement whereby part of the cost of statutory redundancy payments is rebated by the Government. This arrangement may have been justified in the labour market conditions of the 1960s when it was necessary to encourage the shedding of surplus workers who could be redeployed in unfilled
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jobs. In present circumstances, apart from a few exceptional cases, there is no justification in subsidising employers' redundancy costs, particularly as redundancy payments are in any case allowable against tax. The Government believe that a decision to make people redundant is a commercial judgment which the employer should make and pay for without subsidy from other employers or the state.
Nevertheless we have decided to make an exception in the case of firms with fewer than 10 employees because we recognise that the cost of redundancy payments can bear relatively heavily on employers running very small businesses. For this purpose, a casual part-time employee at the employer's home is disregarded, as long as he works fewer than eight hours per week, and there is no more than one other person so employed.
This step may be seen as the logical consequence of a series of reductions in the level of rebate which have been implemented over the past 20 years by governments of both parties. Those reductions have been absorbed by employers without any significant difficulty and we are clear that this compulsory pooling of redundancy costs has outlived its usefulness.
I stress that the change relates to the employer's rebate only, not to the employee's entitlement, and that where an employer fails to make the payment —for example, because of a serious cash flow problem —the employee can apply to the department for the payment to be made in full direct from the redundancy fund and leave the department to try to recover the payment from the employer later.
I turn now to the amendment. As I have said, the Government's intention in restricting redundancy payments rebates to the very smallest of employers is to mitigate the effects of the loss of rebates upon those for whom redundancy costs are most burdensome. Whatever threshold or cut-off we had chosen, someone would have been calling for a higher figure. I believe that the threshold that we have chosen concentrates the relief we are able to afford on the employers who most need help from the fund. The amendment proposed has the effect of raising the threshold for the payment of rebate. The direct consequence of this would, of course, be a considerable increase in public expenditure. This increased cost would need to be found from within current allocations and could only be found by making savings elsewhere.
The threshold that has been chosen serves to focus relief on those firms most likely to need help without adding unduly to public expenditure or to the adminis-trative burdens of employers. The noble Lord, Lord Rochester, gave a particular example about a fanner with seasonal workers. It is true that part-time and seasonal workers are to be included in the count. However, I would suggest that it is unlikely that a farmer would want to make his full-time employees redundant at his busiest time—that is, when he was employing seasonal workers for his harvest, etc. Therefore, I do not think that the noble Lord really painted a realistic picture.
The noble Baroness, Lady Seear, spoke about the consequences of this for the fund. The fund will, of

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course, still have to find money for direct redundancy payments where the employer cannot pay and indeed for rebates to very small firms. However, the fund also pays arrears of wages and other payments to employees whose employers have become insolvent. The fund has only recently moved into surplus after a long period in deficit. The level of contribution will of course be kept under review for the future.
Baroness Seear: The noble Lord really has not answered the point that employers have paid into this fund. It may well be that an employer has paid into this fund for 20 years. Now, for the first time, he needs to draw out. What legal justification is there for denying someone who has paid into what is virtually an insurance fund any right to draw out from that fund?
Lord Trefgarne: To be truthful, I am not quite certain what the position on past contributions is. Perhaps I can look into that matter and let the noble Baroness know. That is the essence of the provision in this part of the Bill. I have also recited the basis of our difficulties with the noble Lord's amendment.
Lord Wedderburn of Charlton: I think that, in fact, the noble Lord has invited us all to come back to Part III on Report. In order to be helpful, I put again the question that he did not answer: how many workers are involved?—that is to say, what sector of the workforce are we talking about if we talk of firms with a workforce of up to nine? What are the other details? It is no good merely saying that these are the firms most likely to need help, as against those employing 11, 12, 20 or 30, unless we are told why. I agree with the Minister that any line drawn has an arbitrary element in a certain sense; but this appears to have such a high arbitrary element that we are bound to come back to it at Report stage.
My amendment drew lots of plums because it was, in effect, a mini "Clause stand part" debate. We shall have to take in what the noble Lord the Minister has said. He has to consider past contributions and the case made by the noble Baroness, Lady Seear, about the legal and economic reason (which has not been answered). We have to consider the different levels of rebate, which it is true have varied over the years—41 per cent. and 37 per cent.—but that is a very different thing from taking it away altogether, and doing that on a discriminatory basis. If I were a middle employer I cannot see how I should not be walking up Whitehall screaming, "Burdens on business!" at the noble Lord and at his noble friend the Secretary of State. But he can think about that.
With that reflection, that we are inevitably bound to look at it again, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 26 agreed to.
Clauses 27 to 31 agreed to.
Schedule 4 agreed to.
Schedule 5 [Repeals]:
[Amendment No. 110 not moved.]
Schedule 5 agreed to.
Schedule 6 [Transitional provisions and savings]:
[Amendment No. 111 not moved.]
Schedule 6 agreed to.
Clause 32 [Short title, commencement and extent]:
[Amendments Nos. 112 to 115 not moved.]
Clause 32 agreed to.
House resumed: Bill reported with amendments.
House adjourned at twenty-nine minutes past ten o'clock.