Lords Sitting of 6 November 1986

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Ely.

Ruskin College, Oxford: Funding
Lord Boyd-Carpenter: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the annual cost to public funds of Ruskin College, Oxford.
Baroness Hooper: My Lords, a total of £674,100 has been allocated to the college for capital and recurrent expenditure during the 1986–87 academic year. Costs of £365.000 are likely to be incurred on adult education state awards for students studying at Ruskin during the same period.
Lord Boyd-Carpenter: My Lords, while I thank my noble friend for that Answer, may I ask whether she can add to it by indicating whether the Government are satisfied that this is a proper expenditure in the light of recent revelations about the denial of academic freedom in this institution?
Baroness Hooper: My Lords, the facts surrounding the issue are in dispute, and my honourable friend the Under-Secretary of State has sought further clarification of some aspects of the matter. He met representatives of the college on Monday and has also offered Mr. Selbourne the opportunity, to comment on these issues.
Lord McIntosh of Haringey: My Lords, it may be helpful to your Lordships' House to know that we are talking about Mr. David Selbourne. Can the noble Baroness confirm that the contract of employment for academic staff at Ruskin College, in contrast to many other academic institutions, guarantees the freedom of expression of points of view by academic staff? Is it not the case that the college has imposed no disciplinary action of any kind on Mr. Selbourne? Is it not also the case that any attempt at collective action by students to boycott Mr. Selbourne's lectures has been opposed forcefully by the college authorities? In those circumstances, does the noble Baroness consider that there is any strength at all in the case made by the noble Lord, Lord Boyd-Carpenter?
Baroness Hooper: My Lords, the Government are always disturbed by any allegations of interference in academic freedom or in freedom of speech. We are committed to supporting freedom of speech, whether for invited speakers or the academic staff who are going about their proper business. However, I understand that Mr. Selbourne has instructed his solicitors to undertake legal proceedings against
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Ruskin College. In that case, I do not wish to comment on detailed aspects of the situation, since to do so could be prejudicial to the outcome of any court action.
Lord Beloff: My Lords, is my noble friend aware that despite what the noble Lord, Lord McIntosh, said, public pronouncements have been made by members of the staff of Ruskin College that trade union solidarity and trade union principles must rank as more important than other aspects of freedom? If that turns out to be the case, is it not proper that the trade union movement, rather than the public purse, should support this no doubt very valuable and important institution?
Baroness Hooper: My Lords, we are of course aware of the public comment that has been made. We recognise that while the college clearly has strong links with the trade union movement, its aim is to provide courses for liberal adult education which are open to all applicants, and primarily for people from economically and socially disadvantaged areas. That is why the Government have supported the college.
Lord Mulley: My Lords, in considering the amount of public money devoted to this college, rather than take an isolated incident should not the noble Baroness and her colleagues reflect on the distinguished history of the college in giving higher education opportunities to many who would not otherwise have had it? The college has produced many distinguished leaders of the nation, including former Members of this noble House.
Baroness Hooper: My Lords, successive governments have recognised that the provision of long-term residential education for adults by such colleges as Ruskin College is a valid and valuable contribution to the range of educational opportunities available for adults in the United Kingdom.
Lord Boyd-Carpenter: My Lords, can my noble friend say whether, particularly in the light of the last supplementary question, any expression of regret for the recent incident has been made by the principal or by the college?
Baroness Hooper: My Lords, I understand that the meeting with my honourable friend the Under-Secretary of State on Monday constituted a full and frank discussion, but I am not at present able to inform the House of the details.
Lord Taylor of Gryfe: My Lords, may I ask the Minister whether the present difficulty will prejudice the Government's support for this distinguished college which has contributed so much, particularly in the important field of industrial relations, to preparing people for responsibilities in that field?
Baroness Hooper: My Lords, as I have said, the situation is rather difficult, particularly as we understand that legal proceedings might be about to commence. Perhaps the less said at this stage which might prejudice the outcome of those proceedings, the better.

South Africa: EC Sanctions
3.12 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
[he Question was as follows:
To ask Her Majesty's Government when the limited sanctions against South Africa agreed by the European Economic Community in September will be fully implemented.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we have fully implemented the package of restrictive measures adopted by the Twelve on 15th and 16th September.
Lord Molloy: My Lords, is the noble Baroness aware that that is a most welcome reply she has been able to give? Is she further aware that this will now encourage the United States of America, which is profoundly opposed to apartheid and indeed at one time was more determined than the British Government to see apartheid opposed? Will the economic sanctions that are now to be imposed also be increased so that we can show our solidarity both with the United States of America and with the victims of apartheid?
Baroness Young: My Lords, the Question relates to the measures agreed by the European Economic Community. The question of measures taken by the United States is, I think, outside the terms of the Question.
Lord Elwyn-Jones: My Lords, will these sanctions be phased in or will they be brought in at once and, as far as practicable, together? Have any preparatory steps already been taken by the Government in this regard?
Baroness Young: Yes, my Lords. We have implemented them and, as I am sure the noble and learned Lord will be aware from the Written Answers given to Questions in this House on 30th October, we have indicated our view and what has happened on new investment and on tourism.
Lord Paget of Northampton: My Lords, can the noble Baroness assure us that these sanctions will not in any sense be applicable to Namibia, which has taken rather splendid steps to bring apartheid to an end?
Baroness Young: My Lords, the measures apply to South Africa.
Lord Gridley: My Lords, perhaps I may ask my noble friend the Minister whether she or any member of the Government saw the broadcast on Channel Four television last night (which I understand was not connected with the BBC) in which there appeared to be hopeful signs that various communities in that part of the world were coming together. For instance, I believe that the ANC were there to hear the opinions expressed and they felt that in order to avoid having excessive sanctions, or sanctions of any type, applied
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to them they should now try to work out something wherein whites, Africans and even the ANC are present to hear what has been decided.
Baroness Young: My Lords, the point that my noble friend raised is wide of the Question, but I can say to him, as I have said on many occasions, that as a Government we wish to see an end to the system of apartheid.
Lord Hatch of Lusby: My Lords, can the noble Baroness inform the House of the Government's strategy so far as concerns the advocation of sanctions? Is the objective to express disapproval of apartheid—which has been done in words many times—or is it to reduce the power of the South African state to oppress its own citizens? If the latter is the case, would it be advisable for Her Majesty's Government to follow the lead of the American Congress and greatly strengthen the sanctions that are to be imposed?
Baroness Young: My Lords, at Brussels the Twelve decided to send a further signal to the South African Government indicating the need to change. The impact of the measures is not only economic: it is also a political signal.
Lord Monson: My Lords, can the noble Baroness say what good will actually be achieved by these sanctions? They will kick the increasingly prosperous black middle-class off the ladder which they are rapidly climbing at the moment, particularly in the hotel industry, and will force talented whites to emigrate. They also happen to be a good deal more anti-apartheid than the less talented whites who will remain.
Baroness Young: My Lords, I think the answer that I gave to the noble Lord, Lord Hatch, indicates the purpose of the measures that we have agreed to take in conjunction with our Community partners.
Lord Orr-Ewing: My Lords, can my noble friend say where one could obtain a list of the results of past sanctions and these sanctions to see whether they are being effective and are producing some results? For instance, in this country we read nothing about the degree of mixed sports which now take place on a very wide basis. We read nothing of the way in which some action has already been taken to lessen the severity of the well-despised and disliked methods of apartheid. We read nothing about any changes. Is there any way by which we can measure what is happening as a result of the actions taken by the EC and ourselves?
Baroness Young: My Lords, the particular point raised by my noble friend is of course wide of the Question. If he would like to put down a Question on that subject. I shall try to answer it. We have welcomed the steps that the South African Government have taken toward ending some aspects of apartheid, but we believe that they have been too few and too slow.
Lord Molloy: My Lords, is the noble Baroness aware that even these limited sanctions in a way are

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supportive of the very brave speeches made by the Foreign Secretary when he was in South Africa? Not only was he appallingly snubbed then, but it is now clear that the recent changes in Mr. Botha's Government include people who helped to create apartheid. There is very little chance that they will voluntarily try to dismantle it, and the only hope for South Africa—and indeed it could be said for all mankind—is that black people all over the world will unite and that something will be done. We are on the right road with sanctions and I hope that we shall not be diverted from it.
Baroness Young: My Lords, I do not think that the noble Lord actually asked a question.
Lord Gisborough: My Lords, would my friend agree that the South Africans are fed up—
Lord Molloy: My Lords. we should not be diverted—
Noble Lords: Order, order!
Lord Molloy: My Lords. I asked a question in reference to the British Foreign Secretary. I asked whether the Minister was aware of the courageous statement of the British Foreign Secretary. She may not think that it was a courageous statement, and she is allowed to remain silent if she thinks fit.
Baroness Young: My Lords, the answer to that question is yes.
Lord Gisborough: My Lords, does my noble friend agree that the South Africans are fed up with trying to break down apartheid in small ways and never getting any credit, and that if they were given credit when they did make progress they would be more inclined politically to go still further?
Baroness Young: My Lords, I hope my noble friend Lord Gisborough appreciates that in fact I indicated that the South African Government had taken a number of steps to break down apartheid. We wish that they would move faster and do more.

Commonwealth Games: Financial Loss
3.18 p.m.
Lord Mackie of Benshie: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they accept any responsibility for the events contributing to the large financial loss incurred by the Commonwealth Games.
The Earl of Dundee: My Lords, the Government have at no stage accepted responsibility for the finances of mounting the Thirteenth Commonwealth Games and do not do so now.
Lord Mackie of Benshie: My Lords, I congratulate the Minister on the admirable way in which he gave that appalling Answer. May I say, in the light of the previous Question, that the antics which have been seen all around in trying to pay off this debt are quite extraordinary and most undignified? There was the appeal to a Japanese philanthropist and all sorts of other manoeuvres. However, everyone appreciates—I am coming to it!—does the Minister realise that it is quite obvious to the ordinary citizen that the failure of the Government and the Prime Minister to convince our Commonwealth partners that we dislike apartheid was the main reason for the departure from the games of so many countries which did such enormous harm? Surely the Government must accept responsibility for that. Does he agree that they should pay at least a part of the debt?
The Earl of Dundee: My Lords. first I should like to thank the noble Lord for his kind remarks. But I do not think that I agree with what he says. The organisers were aware that political boycotts were one of the risks they had to face. The Government did everything in their power to prevent the boycott of the games from spreading. Her Majesty's Government are not responsible for the consequences to third parties of the actions of overseas governments who seek to change the will of Her Majesty's Government by boycotting international events. The overseas governments concerned are responsible for their own actions.
Lord Taylor of Gryfe: My Lords, is the Minister aware that there is considerable resentment in Scotland over the fact that the Government are doing nothing in this case, although they agreed to underwrite Birmingham's bid for the Olympic Games?
The Earl of Dundee: My Lords, had Edinburgh been bidding for the Olympic Games and Birmingham for the Commonwealth Games, government policy towards both events would have been the same. Both the Commonwealth Games Company and the organisers of the Birmingham bid understood that funds from central government were not available. Neither was offered support for an operating deficit or help with capital expenditure. A so-called Doomsday guarantee was given to Birmingham to cover any loss in excess of £100 million caused by the last minute cancellation of the games for reasons beyond the organisers' control. That was a requirement of the Olympic Committee to cover the possibility of cancellation. A similar guarantee was not required for the Commonwealth Games.
Lord Carmichael of Kelvingrove: My Lords, I also congratulate the noble Earl on his first appearance at the Dispatch Box and on the way he has so quickly fallen into the negative attitude of the replies that we normally receive. Surely the Government's lukewarm attitude towards sanctions and apartheid, as seen by many Commonwealth countries, affected support for the games. He spoke about Doomsday support for Birmingham, had the games been affected by some outside force. Surely what happened over the Commonwealth Games was not caused by an outside force. It was a direct result of the Government's

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attitude and the feeling of African and coloured countries about the working of sanctions and apartheid. Has the Minister made any summation about the shortfall of money required to pay those involved—the local authorities and the many small traders, as well as the large? Would it not be a good gesture for the Government to clear the debt once and for all?
The Earl of Dundee: My Lords, the aim of the proposed settlement by the Commonwealth Games Company is, as I understand it, that all small creditors will be paid 100p in the pound. Major creditors are being asked to make substantial donations to help organisers bridge their deficit, towards which a charitable donation of £2 million is already available from the Japanese philanthropist. Mr. Sasakawa, who has provided £1.3 million, and Mr. Robert Maxwell, the company chairman, who has given £700,000. I am sure that your Lordships will join me in paying tribute to those who have contributed to the costs of mounting the games, including those who donated to the earlier public appeal which raised £l.5 million.
Lord Underhill: My Lords, do the Government appreciate that the public were delighted that the games proceeded? They were a good sporting spectacle. Will it not be harmful to the general atmosphere of the Commonwealth if the Government do not give some assistance?
The Earl of Dundee: My Lords, the Government's position has been clear from the start. No government guarantees or contributions were to be available. Creditors should therefore address themselves to the games organisers, who fully understood the position and who knew that they would have to mount the games within the resources they could raise. I am sure that noble Lords will share my confidence that the Government's policy will be vindicated by events.
Lord Paget of Northampton: My Lords, is it Her Majesty's Government's intention to continue payments of aid to countries which flagrantly repudiate their contracts here?
The Earl of Dundee: My Lords, I think that that is slightly outside the Question.
Lord Rodney: My Lords, is my noble friend aware that the so-called Japanese philanthropist is a close friend and colleague of the Reverend Moon, who is head of the Moonies?
The Earl of Dundee: My Lords, that is perhaps also outside the Question.
Lord Underhill: My Lords, did the Minister say that the Government's policy would be vindicated by events? If so, to what was he referring? Was he referring to the financial loss on the games, or what? It is the loss on the games and this country's attitude about which we are concerned.
The Earl of Dundee: My Lords, the signs are that satisfactory arrangements are being made between the games company and the creditors.
Lord Mackie of Benshie: My Lords, would the noble Earl not feel happier if the Government had contributed even a little?
The Earl of Dundee: My Lords, if the Government had contributed only a little, that would still have been inconsistent with the premise and the starting point.

County Hall, London: Use
3.26 p.m.
Lord Airedale: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will ensure that consideration is given to devoting to the arts some of the large rooms in County Hall, situated as it is close to the Royal Festival Hall and the rest of the South Bank arts complex.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale): My Lords, this is at present a matter for the London Residuary Body, in whom County Hall is vested. The London Residuary Body is now marketing County Hall. The future use of any of the rooms will be for the new owners of the building to determine. subject to the granting of appropriate planning and listed building consents.
Lord Airedale: My Lords, I am obliged for that Answer, but is the Minister saying that the fate of that magnificent building on that splendid site in the heart of the capital city is not a matter of national interest and concern, and therefore of concern to the Government on behalf of the people?
Lord Skelmersdale: My Lords, the fact that there is national interest in this subject was given point to, first, by the noble Lord's Question, and, secondly, by a Question of my noble friend Lord Boyd-Carpenter the other day. It is government policy, which was clearly stated during consideration of the abolition Bill, that all the assets and debts of the metropolitan counties, including Greater London, would go to the various residuary bodies, and that it would be for the various residuary bodies to determine what to do with them.
Lord Strabolgi: My Lords, who is to give planning consent? Is it Lambeth Council?
Lord Skelmersdale: My Lords, yes.
Baroness Phillips: My Lords, will the Minister explain what he meant by "marketing"? Did he mean selling? Why cannot he say that?
Lord Skelmersdale: My Lords, I thought that was a perfectly normal English word. Yes. I do mean selling.
Baroness Birk: My Lords, is it not true that the building will not be vacated and can be used until March 1988? Would it not make economic and artistic sense for those rooms to be used during the interregnum as concert rehearsals rooms, of which the South Bank is short: or for the National Theatre; or for the exhibitions that the GLC promoted, which London misses, as it does its tremendous support for the arts? Will the Minister tell us what can be done in the interregnum?
Lord Skelmersdale: My Lords, as I hoped I had made clear in my original answer, what happens in the interim is a matter for the residuary body. If the South Bank Board or anyone else is interested in obtaining rehearsal or any other facilities in County Hall, they should express their interest to the London Residuary Body, in whom County Hall is now vested.
Lord Dean of Beswick: My Lords, is the Minister not aware that some chairmen of residuary bodies in other parts of the country, where districts wish to purchase or take over public assets left by the counties, are acting like little dictators? Was that also the intention of the Act?
Lord Skelmersdale: My Lords, I was not aware of that slur on chairmen of residuary bodies in other parts of the country. If the noble Lord can substantiate what he says. I shall look into the matter.
Lord Dean of Beswick: My Lords, I shall certainly do so with regard to Wakefield and what was West Yorkshire's County Hall.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 p.m. this afternoon my noble friend Lord Trefgarne will, with the leave of the House, repeat a Statement that is being made in another place on the Autumn Statement.

Channel Tunnel Bill
Viscount Davidson: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That, if a Channel Tunnel Bill shall be brought from the House of Commons in the next Session, any notices published and served and any deposits made in respect of a Channel Tunnel Bill in the Session 1985–86 shall be held to have been published, served and made for the Bill in the next Session.—(Viscount Davidson.)
On Question, Motion agreed to, and it was ordered that a Message be sent to the Commons to acquaint them therewith.

European Court: Nationalisation Judgment
3.31 p.m.
Lord Harris of High Cross Lord Harris of High Cross rose to ask Her Majesty's Government whether they accept that the findings of
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the European Court of Human Rights on the terms of compensation under the Aircraft and Shipbuilding Industries Act 1977 (c.3) provide a precedent for the expropriation, nationalisation, or renationalisation of British-owned assets at home or abroad, and are contrary to the principle of prompt, adequate and effective compensation which British governments have previously supported as a rule of law.
The noble Lord said: My Lords, this Question was framed with the assistance of my noble friend Lord Shawcross, who has sent me a communication, since he is unable to be with us, that he has authorised me to read to the House. It goes to the heart of the Question. My noble friend says:
"The problem created by the Strasbourg judgment was discussed at a recent meeting in Copenhagen of the International Association for the Promotion and Protection of Private Foreign Investments, APPI.
"I should explain that this organisation was founded in the 1950s by Herr Hermann Abs, the famous German industralist and banker, Monsieur René Massigli, the French ambassador, and Sir Hartley Shawcross, as he then was, for the purpose precisely indicated by its title. It was set up because of the number of nationalisations and expropriations taking place in various foreign countries and to support what its members considered the established rule of international law about the payment of adequate, effective and prompt compensation.
"The council of APPI expressed concern at its meeting that the majority judgment of the European Court would give foreign countries some justification for expropriating property without the payment of proper compensation. It felt that the matter was one on which representations should be made to the Government as the danger of confiscatory cases of nationalisation remains a real one in many parts of the world.".
In raising this Question, I feel that I should start by setting out some of the facts as briefly as the complexity of the situation allows. It started in 1974 with the election of a Labour Government—a minority Labour Government—committed to nationalising the aircraft and shipbuilding industries. Over a year later, in March 1975, Mr. Wedgwood Benn announced that the compensation would be based on the value of 43 companies in the six months' reference period preceding the election; that is to say, from September 1973 to February 1974. Values would be based on Stock Exchange prices for the one quoted company and on agreement or arbitration for the remainder which were either unquoted private companies or subsidiaries of public companies.
In March 1977, after delay s to which I shall return, the Aircraft and Shipbuilding Industries Bill received Royal Assent. In April 1977, the aerospace companies were vested in the state, followed by the shipbuilding companies in July. Negotiation over compensation was thereafter conducted between the Department of Industry and representatives of stockholders with an arbitration tribunal in reserve. In May 1979, it may be recalled, a Conservative Government were returned to power. Sir Keith Joseph became the Secretary of State responsible for continuing the negotiations with the outstanding companies which accounted for by far the greater part of the assets.
Between September 1977 and June 1981 a number of plaintiffs petitioned the Commission of Human Rights in Strasbourg for a declaration that the proposed compensation terms violated a number of articles of the European Convention for the Protection of Human Rights and Fundamental Freedoms. In

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January 1983, the commission declared most of the applications to be admissable, thereby completely rejecting Her Majesty's Government's argument that the case depended entirely upon the 1977 Act and was therefore out of time. The commission invited the petitioners and the Government to seek to resolve their differences by the established procedure known as a friendly settlement. Alas, it takes two to make friends, and the Government declined to play their part.
Accordingly in March 1984, over a year later, the case returned to the commission, which, by a majority vote, expressed the opinion that there had been no breach of the convention but that such important issues were raised that it should be referred to the European Court for a final judgment. Then in 1985 the case was heard against Her Majesty's Government, who conducted a vigorous defence and even asked the court specifically to declare that the compensation met the international law standard in that it was "prompt, adequate and effective".
Finally, on 8th July this year, the court found by a majority decision against the plaintiffs on the six alleged breaches of the convention. However, on the central issue of Article 1. Protocol 1, which entrenches the general right of every person "to the peaceful enjoyment of his possessions", five out of 18 judges found that a violation of the convention had taken place. They criticised the compensation provisions of the Act because of the remoteness of the reference period, and they criticised the way that the Secretary of State had applied those terms five and more years later to produce what they called "unreasonable and disproportionate distortion" in the payments made to at least three applicants: namely, Kincaid, Vosper Thornycroft and Brooke Marine, all of which were paid compensation less than the value of the cash in their accounts.
Due to the untiring efforts of Sir William lithgow, a major shareholder, the most famous case is that of Kincaid, a successful manufacturer of diesel engines. Sir William claims that assets valued at £18 million in 1977 including £5 million in ready cash were seized in exchange for compensation of a paltry £3.8 million. Other less publicised examples included Vospers which received £5.3 million for assets valued at £37 million including £5.5 million in cash. There was Yarrows, the naval shipbuilding firm, who were paid £6 million for assets valued at £16 million, later sold to GEC for £34 million. For the outstandingly successful British Aircraft Corporation, Vickers and English Electric claimed £350 million compensation and were awarded £95 million.
It is only since the July judgment this year that it has been revealed that Her Majesty's Government achieved this pyrrhic legal victory by relying entirely on the papers prepared by Mr. Wedgwood Benn and by trying to persuade stockholders' representatives to take less than the Government's advisers suggested as a fair minimum. I need not remind some noble Lords that back in 1976 when the Bill to nationalise these industries was before the House, leading Conservative and Cross-Bench Peers vied with one another in denouncing the provisions for compensation in such
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choice terms as derisory, disastrous, a disgrace, unfair, confiscation and expropriation. However, I wish to be fair in the matter to the Labour Party and to the noble Lord, Lord Bruce. w ho is to take part later in the debate. The Labour Party was far from being wholly to blame for this unfair final outcome. Nationalisation is, after all, a legitimate if not entirely sensible course that governments may pursue. It does not necessarily involve the punishment of the shareholders.
Likewise, the court and others have accepted in principle that the choice of a "reference period" before Stock Exchange prices were affected by the threat of nationalisation is a tolerable starting point. Again, the Labour Party can hardly be blamed that spirited opposition, both in the Commons and in this House, over the important matter of hybridity as well as over the issue of compensation, led to a long delay from the first introduction of the Bill in April 1975 until March 1977 when it passed through the Lords only under the provisions of the Parliament Act. Nor I think was the Labour Party to be held responsible for Mr. Heath's three-day week and control over dividends, which inevitably depressed the value of productive assets in the reference period. However. if the Labour Party was not responsible for the explosion of the oil price, it must accept some blame for the accelerating inflation to record levels which debased the value of the 1974 compensation pound to 55p by 1977 and to 40p by 1980 when much of the compensation was still outstanding.
It was as a result of these developments that most companies were plainly worth a great deal more in money as well as in real terms in 1977 than any necessarily arbitrary estimate relating to a vanished world of 1973 prices and values. Obviously, a Conservative Government had good cause to reconsider the outcome of blindly applying the 1973–74 formula. Indeed, at the very centre of the European Court's divided verdict was the unanimous judgment that a sovereign government enjoy a wide margin of discretion in assessing compensation.
Thus, on page 44 of the judgment we read:
"The Court's power of review … is limited to ascertaining whether the decisions regarding compensation fell outside the United Kingdom's wide margin of appreciation; it will respect the legislature's judgment in this connection unless that judgment was manifestly without reasonable foundation".
Thus the difference between the majority and minority verdicts on this central issue might be simply expressed by saying that 13 judges thought that the compensation was at least above the lower limit of discretion, while five judges thought that it was below that minimum. The paradox which we have to raise is that Sir Keith Joseph, as Secretary of State, on 7th August 1980, in a Written Answer in the House of Commons, seemed to have conceded the minority view against his own decision. In the Official Report in another place, at col. 290, Sir Keith wrote:
"We recognise that some previous owners and many members of this House and of the public believe that the terms of compensation imposed by the 1977 Act were grossly unfair to some of the companies and we share this view".
However, he went on to regret that,
"amending legislation to establish new compensation terms retrospectively would be unjust to the many people who sold shares on the basis of the previous terms".
From long personal acquaintance with and great affection for Sir Keith Joseph, I have sadly come to the conclusion that his quite exceptional integrity led him here into a double error. His first error was in thinking that retrospective legislation would then have been necessary when, as the European Court unanimously agreed, he enjoyed a wide discretion in applying the 1973–74 formula. The second misconception, which is plain to almost any observer who will contemplate the matter, was pointed out by Sir Nicholas Goodison as chairman of the Stock Exchange. He explained in September 1980 that all dealings in shares can take place only on the basis of information and expectations available at the time and can never be invalidated or challenged in the light of subsequent events. Incidentally, on retrospection the Employment Act 1982 showed how compensation could be made available to remedy past injustices.
It must be remembered that the majority of the European Court did not say that the terms were fair but only that they were above the lowest conceivable margin of the wide discretion available to Sir Keith. For obvious reasons an international court will be reluctant to appear to direct an elected government on how they should exercise an acknowledged element of discretion. Even so, five of the 18 judges explicitly condemned Her Majesty's Government for failing to give their subjects the protection of their property guaranteed by the European Convention.
In the final reckoning, therefore, I am arguing that it is not the Labour Party as instigators, but the Conservative Government as implementors, who are principally guilty of invading the property rights of Sir William Lithgow and others. Whatever the legal quibbles offered to deflect responsibility from Her Majesty's Government I would, as a layman, take my stand with the distinguished Supreme Court Judge, Sir Robert Megarry, who on another occasion declared:
"The Crown is the traditional fountain of justice, and justice is not confined to what is enforceable in the courts.".
As must already be apparent, my interest in this issue is that of neither a lawyer nor a politician but as a citizen and only after that as an economist. As a citizen I have an urgent concern shared by all others—including, I suppose, the Duke of Westminster—that such possessions as I may build up or legally acquire shall not be forcibly taken from me by another (not even by the Government) on arbitrary terms that would widely be judged unjust. Where others may not share my objections to the court's view—for example, on leasehold enfranchisement—I venture to say that most impartial observers who grasped the essential facts of this case would conclude that Sir William Lithgow and others have been unjustly treated. They have been cheated of a large part of the value of their possessions.
Yet security of private property is the bastion of individual freedom, which chiefly distinguishes our Western societies from the slave states of Eastern Europe. Our superior economic and social progress depends on harnessing the energies, thrift and enterprise of free people, to maximise long-term future social output. Governments may tax, they may regulate, they may even nationalise, but civilised governments may not pillage and should not do so
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even in their own interests. If their exactions undermine every man's expectation of continuing to enjoy sufficient of the fruits of his own efforts, then short-sighted politicians will have struck at the roots of long-run economic and social progress.
I would argue that both principle and expediency point to the need for secure entrenchment of property rights. As an economist, I would briefly assert that the reason Hong Kong flourishes and is free, while much of Africa languishes and is in chains, is that Hong Kong guarantees the sanctity of property even including the property each has in his own person, whereas many African governments notably fail to provide security of person or property.
Her Majesty's Government have been congratulated that the Hong Kong treaty commits China, after 1997, to the principle of paying "the real value of the property" as compensation in similar circumstances to those before Strasbourg. Yet, I ask this question: Is it realistic to expect a Communist power to honour property rights which the British Foreign Office, in this case, before the Commission, in camera, explicitly said did not exist in Britain? My question is whether Her Majesty's Government accept that, even by inadvertence, or through the misplaced political scruples of Sir Keith Joseph, they have set a thoroughly bad example at home and abroad for the further undermining of property rights on which the liberties and future prosperity of every one of us chiefly depend.
Lord Bruce of Donington: My Lords, before the noble Lord sits down, in order to clarify a point and to save time, will the noble Lord say whether or not he accepts the earnings basis as being a valid way of determining the true valuation of a concern and of the shares in it?
Lord Harris of High Cross: My Lords, I would not wish to get involved in a long argument on matters of accountancy with the noble lord. However, as I understand it, in the absence of a Stock Exchange quotation, which applied to only one of the 43 companies, an attempt was made to create hypothetically a Stock Exchange valuation on the basis of the assets in 1973–74. When we look at the progress of many of these companies after 1974, until 1977, the whole issue is that where a share price might at least be enlarged for those companies that had the prospect of good future earnings, the cash assessment of the asset value at the time of 1973–74 might miss out that factor. The British Aircraft Corporation was a highly successful, expanding and growing company and to value it on an asset basis would not take into account the prospective earnings in future years, as a share valuation would have done.

Autumn Financial Statement
3.50 p.m.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, with your Lordships' permission. I should like to repeat a Statement being made in another place by my right honourable friend

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the Chancellor of the Exchequer. The Statement reads as follows:
"Cabinet today agreed the Government's public expenditure plans for the next three years. In the normal course of events that would be followed by the publication of the printed Autumn Statement, accompanied by an oral Statement to the House, next Tuesday. For obvious reasons that is not possible this year. So while the Autumn Statement will be printed in the normal way and presented to Parliament as soon as the House reassembles next Wednesday. I thought it would be for the convenience of the House if I made my oral Statement today.
"This will cover all three of the key elements in the printed Statement: the Government's outline public expenditure plans for each of the next three years and the expected outturn for this year; proposals for next year's national insurance contributions; and the forecast of the economic prospects for 1987 required by the Industry Act 1975.
"The full text of the economic forecast, together with the public expenditure figures and the rest of the information customarily published with this Statement, will be available from the Vote Office as soon as I have sat down. They will also appear in the printed Autumn Statement to be published next week.
"I turn first to the outturn for the current financial year, 1986–87. The public expenditure planning total now looks likely to amount to almost £140½ billion—£1¼ billion, or a little less than 1 per cent. above what was allowed for in this year's Public Expenditure White Paper. The main reason for this excess is a 9 per cent. rise in the current spending of local authorities—far more than was provided for. However, other items on the expenditure side, the largest of which is debt interest, are likely to fall short of what was forecast at the time of the Budget, thus reducing the total overrun on the expenditure side to about £½ billion.
"On the receipt side, the North Sea tax take is likely to be even lower, by about £1 billion, than I envisaged at the time of the Budget, largely because for a long period the oil price has been below the 15 dollars a barrel level on which the Budget arithmetic was explicitly based. This shortfall, however, is more than offset by the continuing buoyancy of non-oil tax revenues, in particular VAT and corporation tax. Non-oil revenues now look likely to exceed the Budget forecast by £2 billion. This would imply a net overrun on the receipts side of about £1 billion, rather more than that on the expenditure side. But this will be reduced by a change I propose to make to the North Sea fiscal regime. The collapse of the oil price has led to a sharp cutback in investment activity in the North Sea, with inevitable consequences for the UK offshore supplies industry both in Scotland and the North East of England.
"I therefore propose, on a carefully targeted basis, to accelerate the arrangements for the repayment to the oil companies of advance petroleum revenue tax
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due to them. The details of this change, which will require legislation early in the new Session of Parliament, are set out in a press notice which the Inland Revenue will be issuing as soon as I have sat down. The new arrangements will have a revenue cost this financial year of some £300 million, which will be fully, recouped over the next three years. Taking this into account, the public sector borrowing requirement for the current year is still forecast to be about £7 billion, the figure I set in the Budget.
"I turn now to the public expenditure plans for the next three years. Since 1982–83, public spending, both before and after deducting the proceeds of privatisation, has been declining as a proportion of national output. It is set to be lower still this year. The Government are determined to ensure that this trend continues: to see to it that total public spending, even without taking account of privatisation proceeds, continues to decline as a percentage of GDP. The plans I am about to announce for the next three years secure that objective. Indeed, they show that by the end of the period the ratio of public spending to national output will be back to the level of the early seventies.
"But within this overall constraint, and in the context of its policy priorities, the Government have felt it right to allow an increase in the previously announced planning totals for 1987–88 and 1988–89. Compared with the prospective outturn for the current year, we are now planning for an average growth in the public expenditure planning total of about 1¼ per cent. a year in real terms, well within the prospective growth of the economy as a whole.
"The new planning totals have thus been set at £148¼ billion for 1987–88 and £154¼ billion in 1988–89, an increase of £4¾ billion and £5½ billion respectively over the totals previously published. For 1989–90 the planning total has been set at £161½ billion.
"As usual, these totals incorporate estimates for the proceeds of privatisation. Last year I increased the estimate of these proceeds very substantially to £4¾ billion in each of the three survey years, a figure which I expect to be duly achieved this year. Although the privatisation programme is now moving ahead more strongly than ever before, I have decided to make only a modest further addition to this estimate, bringing it to £5 billion in each of the next three years. The new planning totals also contain substantial reserves, rising from £½ billion in 1987–88 to £7½ billion in 1989–90.
"The public expenditure increases I have announced allow us to make realistic provision both for local authority current expenditure, over which the Government have no direct control, and for demand-led programmes such as social security, while still leaving scope for increased spending on services to which the Government attach particular priority.
"But before referring to some of the more important changes, let me make one thing absolutely clear. There can be no question of allowing the projected increases in public

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expenditure over the next two years to undermine the prudence of the Government's overall fiscal stance. The Government's fiscal stance has been clearly set out in the medium-term financial strategy published at the time of this year's Budget. There will be no relaxation of that stance.
"Within the totality of public expenditure, the largest increase is for the local authorities, whose current spending next year is now put at £4 billion above the previous provision. This in part reflects the fact that the previous plans simply carried forward the same level of cash spending as in 1986–87. At the same time, we are increasing next year's aggregate exchequer grant—the contribution that taxpayers make to local government spending—by almost 10 per cent. over this year's settlement. a rise of almost £1½ billion.
"These substantial sums demonstrate in particular the priority the Government are giving to education, which, including the new proposals on pay and conditions of service for teachers announced last week, accounts for about half the increase in provision. There is also a substantial increase in provision for the police.
"On top of the increased provision for the cost of education in schools, which is contained within local authority current spending, there will be additional spending on the universities of £60 million in 1987–88 and £70 million in 1988–89.
"Spending on the health and personal social services will be increased by more than £600 million. For the National Health Service alone, the increase in England amounts to over £300 million a year. Combined with the additional resources being generated by greater efficiency, this will not only enable the health service to cope with the growing number of elderly patients but will also allow it to improve services.
"Gross provision for housing investment is being increased by £450 million. This will sustain the rising trend of spending on local authority renovation and improvements and provide additional resources for the housing associations.
"In the light of this year's experience, £1¾ billion has been added to next year's provision for social security, most of which represents a greater expected expenditure on existing means-tested benefits.
"Provision for investment in roads in being increased by £65 million next year and £75 million the year after, mostly for local authority roads.
"For defence, the provision remains as planned in the last White Paper after allowing for minor changes, including a reduction in the estimated cost of the Falklands deployment. The defence programme will continue to benefit from the substantial real growth in previous years and the wide-ranging action to improve efficiency and value for money.
"Taking all programmes together, the additions to planned capital expenditure amount to getting on for £1 billion in 1987–88, of which about two-thirds is local authority spending.
"Further details of these and other changes will be contained in the printed Autumn Statement which
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will be published as soon as the House returns next week. In addition, full details, together with information on running costs and manpower, will be given in the public expenditure White Paper early in the New Year.
"I now turn to national insurance contributions. The Government have conducted the usual autumn review of contributions in the light of advice from the Government Actuary on the prospective income and expenditure of the National Insurance Fund, and taking account of the benefit uprating which my right honourable friend the Secretary of State for Social Services announced on 22nd October.
"The lower earnings limit will be increased next April to £39 a week, in line with the single person's pension, and the upper earnings limit will be similarly raised to £295 a week. The limits for the reduced rate bands which I announced in last year's Budget will also be increased again in April, but by proportionately larger amounts. The upper limit for the 5 per cent. and 7 per cent. bands will be raised to £65 a week and £100 a week respectively, and the upper limit for the 9 per cent. rate for employers will be raised to £150 a week.
"The taxpayer's contribution to the National Insurance Fund—the so-called Treasury supplement—will be reduced by 2 per cent. to 7 per cent., but this will not require any change in contribution rates. Thus the main Class I contribution rates will once again remain unchanged at 9 per cent. for employees and 10.45 per cent. for employers.
"Finally, I turn to the Industry Act forecast. Both growth and inflation have turned out to be slightly lower this year than I envisaged at the time of the Budget. Growth now looks like turning out at 2½ per cent. against a budget forecast of 3 per cent., and inflation in the fourth quarter of this year is likely to be 3¼ per cent., against the Budget forecast of 3½ per cent. The principal reason for this slower growth has been the disappointing performance of exports, which were hard hit by the cutback in spending by OPEC and other primary producers affected by the sharp fall in commodity prices in general and the oil price in particular.
"Combined with a halving in the value of our own oil exports, this has meant a significant deterioration in the current account of the balance of payments, from a surplus of some £3½ billion in 1985—and a cumulative surplus of £21 billion over the six years from 1980 to 1985 inclusive—to a forecast of broad balance for 1986. Looking ahead to 1987 the prospects are generally encouraging. While the necessary adjustment of the exchange rate to the oil price collapse has now taken place, it will inevitably take time before the full benefits come through in higher non-oil exports and lower import growth. This means that we can expect the current account of the balance of payments to go into deficit next year, for the first time since 1979, to the tune of some £1½ billion.
"Even so, non-oil exports are forecast to rise next year by 5½ per cent., compared with an increase of only 1 per cent. this year, with manufacturing output, in consequence, up by 4 per cent. And with

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domestic demand continuing to expand at the same rate as this year, the economy overall is likely to grow by a further 3 per cent. next year—the sixth successive year of steady growth at an average annual rate of almost 3 per cent.
"Recorded inflation is likely to edge up a little, to 3¾ per cent. in the fourth quarter of 1987. This is almost entirely due to the effect on the RPI of the timing of mortgage rate changes. The Government's commitment to a monetary policy that will squeeze out inflation remains unabated.
"Meanwhile the likelihood of faster growth next year, coming at a time when unemployment already appears to have stopped rising, suggests that the prospects for some fall in unemployment are now more promising. But this promise could still be frustrated by excessive pay settlements.
"The strategy that we have followed since 1979 has brought inflation down to the lowest level for two decades, combined with sustained growth and steadily rising living standards. This is a combination that has eluded successive governments for a generation. We have brought it about by the determined pursuit of free markets and sound money. And that is what we will stick to".
My Lords, that concludes the Statement.
Lord Bruce of Donington: My Lords, we on this side of the House are most grateful to the noble Lord for repeating the Statement which was made in another place. Your Lordships will recall that last year the Autumn Statement had to be interposed in the middle of a debate on the Address on the home front and the environment, and it is obviously to the convenience of the House that the Statement is made today. Moreover, in view of the attack of jitters that has taken place since the speech of the Chancellor of the Exchequer at the Mansion House, I expect that the City wants to be reassured as to what the noble Lord's right honourable friend the Chancellor of the Exchequer is likely to do.
I deeply sympathise with the noble Lord in reading a Statement of this kind, which I am bound to say is much more elegant than the statements made by his own right honourable friend, the former Minister for the Environment, immediately prior to the 1983 election, when he advised his colleagues to "Spend, spend, spend". The result of course was that there was a certain increase in government expenditure. There was a slight buoyancy in the economy as a result, and in the event the party opposite was quite successful in the 1983 election. The noble Lord will note—and I believe that the country will also note—that there should be an election every year on this basis, because when an election appears to be imminent all kinds of goodies which were formerly reckoned to be impossible are apparently within easy achievement.
Indeed we on this side of the House, and I am sure the House generally, will most certainly welcome the increased expenditure on education; the extra grants to local authorities; the extra money to be made available to universities; the small extra amounts available to the National Health Service; the albeit marginal increase in investment in roads, and so on. All these
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are extremely promising, and of course the Government themselves have consistently fought against them all these years.
The Government now claim in this Statement that all these goodies are the result of a sound financial policy and a sound economic policy. But I am afraid one thing that is not mentioned in the Statement itself, and perhaps it will be elaborated on later, is that despite all these "goodies" and all the manipulations that have taken place in the figures as distinct from the real numbers. unemployment still remains at 3¼ million at the least, and probably somewhere near 4 million. This is not exactly the best testimonial that the Government can lay before the country.
One thing requires to be made clear. Do the Government—and it is not clear from this Statement, apart from their usual self-congratulatory noises about the success of the medium-term financial strategy—still believe in M3? Do they still believe in the limitations that they have hitherto regarded as almost axiomatic? I well recall, as will the House, the almost dogmatism, if one could use the term. of the noble Lord, Lord Cockfield, on this subject when he occupied the Bench opposite for this purpose. Is M3 still the be all and end all of government policy in their financial and fiscal stance, because some doubt has been cast on this by none other than the Governor of the Bank of England?
How far does the medium-term financial strategy have any significance at all, particularly in view of the fact that broad money targets, as the noble Lord well knows, have grossly exceeded the band forecasts that were put in the medium-term financial strategy at the time of the Budget? Could the noble Lord give us some firmer indication of what the public sector borrowing requirement is likely to be next year?
There is one other point, which is a point of detail but on which I should be glad to have the noble Lord's reaction: do the existing expenditure figures take any account of the massive overspending in contemplation in the European Economic Community next year? The forecast overspend on the CAP is something like £2 billion, which of course gives this country a share of approximately £600 million. Do the figures make allowance for that contingency? Could the noble Lord give us some information as to whether this expectation of a deficit of that magnitude has any effect at all on the prospects of our receiving our due refund for the current year, which I believe is put at some £486 million? We should be glad to have information upon that point.
Speaking personally, I would much prefer to examine this Statement in conjunction with the detailed figures that are going to be produced later in order that I may compare them, and the House may compare them, with the forecast that appeared at the same time last year, so that we can see what the Government's record is like in the forecasting game. Therefore, I shall refrain from asking the noble Lord any more detailed questions and just give a general view that, compared with the needs of the country, compared with the requirements as already spelt out by both the CBI and the TUC and by most informed economic opinion in this country, this series of expenditure plans will do nothing at all to revive the prosperity of this country.

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The prosperity of this country is not by reference only to the fortunes of 200 or 300 large companies; in our view it is by reference to the welfare of the people of the country as a whole, and in particular those 3½ million people who are condemned at the present time to unemployment and idleness.
4.15 p.m.
Lord Diamond: My Lords, may I too thank the noble Lord the Minister for repeating this Statement and for helping the House in a sphere with which perhaps he is not wholly familiar? I must say, if I may borrow from the well-known advertisement, that it appears that becoming a junior Minister in the House of Lords is very much a gymnasium of the mind. The noble Lord has to turn his attention to a great variety of matters.
So far as the Statement is concerned, we are glad that there will be an early opportunity for debating both the principles of it and the detail, no doubt on the last day of the debate on the Queen's speech. Therefore for that reason and the fact that it is never wise to make too many comments off the cuff immediately one hears a Statement. I have not too many comments to make on the detail at this stage.
However, there emerges from this Statement a major question. One notes, and one is grateful for, the increase that is proposed for education, for which we on these Benches have been pressing hard. We also welcome an increase in the provision for the police, although until we see the figures we very much doubt whether it is adequate to meet the rise in crime with which we are all faced. We also welcome the increase in spending on health and personal social services. All these we welcome very much indeed. We welcome the gross provision for housing investment, although it is very small. We have been pressing for that, and will continue to press for it, from these Benches.
All these we welcome. But has the Minister observed the economic background produced by this Statement against which these increases in expenditure are inexplicably proposed? Has he noted, for example, that the Statement says that growth next year is expected to fall to 2½ per cent. from the figure of 3 per cent. given in the Budget? Has he noticed that exports are down, so much so that the current account this year is expected to be flat, and there is expected to be a deficit next year in our current account of £1½ billion? Has he noticed—it is not in the Statement, but we are all very much aware of it—that interest rates are not only at a fantastically high level but in real terms (I imagine the noble Lord will correct me if I am wrong: I am sure he has the figures) must be the highest they have ever been? I repeat they must be the highest they have ever been, or very nearly that in real terms.
Against that background how have the Government come to the conclusion that now—just now—is the right time (and of course politicians are concerned with timing above everything else) for announcing all these increases that the noble Lord from the Front Bench of the Labour Party has accurately referred to as "goodies"? Why has the Minister announced that now? What is the explanation for the sudden change in the Government's stance?
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Does the noble Lord remember what the Chancellor said last year, as repeated by the noble Lord, Lord Young of Graffham? I am looking at column 153, the Autumn Financial Statement, on 12th November 1985. I have no need to read out the detail unless the House desires it, but the Government reaffirmed in the strongest language their determination to keep public expenditure flat in real terms, and therefore at a decreasing level, and gave the figures for the years which are under consideration now.
Why have the Government suddenly decided now, of all times, when there can be no question of a general election in the immediate future, that there should be an increase in all these expenditures for which we have been pleading year after year ever since the last general election, and which have been denied to us with all the usual excuses of "firm monetary policy" or "sound monetary policy"? It is the kind of sound monetary policy that enables the Conservative Government, to my continuing amazement, and to their own shame, to continue to sell the assets of this country wholesale (£5 billion a year for the next three years) and use the money for ordinary current expenditure or for buying the goodwill of the voters or both. That is what they call "sound monetary policy".
I am asking the Government, against the background that has come out clearly in this Statement: why have they chosen now to alter their oft-repeated statement as to their position to announce all these "goodies", unless I am perhaps wrong and perhaps there is a general election in the year after all? That is my main question.
May I also ask, with regard to the public sector borrowing requirement, because it is not made clear in the Statement, what would the position be this year and next year if no credit were taken for privatisation? That is a simple arithmetical question.
The final comment I have to make is that your Lordships will accept it from me when I say that the Statement which has just been read out covers more than seven pages, four and a quarter lines of which are devoted to the most pressing and urgent social problem of all, unemployment. Why is that? Does that give a proper indication of the Government's priorities?
Lord Trefgarne: My Lords, I am grateful to both noble Lords. The noble Lord, Lord Bruce of Donington, opened his remarks by speaking about some sort of bonanza, some sort of spend, spend, spend. This is no bonanza. As the Statement makes clear, the proportion of GDP which is being devoted to public expenditure as reflected in the Statement is a declining not an increasing proportion. If the noble Lord wants to talk about spend, spend, spend, I would remind him of the commitments which his party has apparently entered into, which amount to some £28,000 million. That is if one excludes the undertakings given by Mr. Meacher, the status of whose assurances is never entirely clear.
As for unemployment, it is a most serious matter, but as the Statement also indicated—this matter was raised by both noble Lords who have spoken—there are signs that the unemployment figures are now flattening out. Nearly 1 million new jobs have been

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created since June 1983, and these are not reflected in lower unemployment because the labour force has been growing even more rapidly. Budget measures and pick-up inactivity mean that the immediate prospects of reducing unemployment are now more favourable. Slower growth of the labour force is projected for the rest of the decade and should improve the chances of reductions over the next few years. But as the Statement also makes clear pay developments remain critical.
The noble Lord, Lord Bruce, asked me about the position of sterling M3. As the Chancellor explained in a recent speech, the trend of sterling M3 growth affected by the freeing-up of the financial system over recent years and the shift from negative to positive real interest rates since the 1970s, makes interpretation more difficult. So the messages from M3 need to be continuously tested against the evidence of other indicators.
The noble Lord, Lord Bruce, asked me too about the position of our rebates from the European Community. The United Kingdom 1986 rebate is 1,900 million ecus, which is approximately £1,250 million and is the largest abatement or refund that we have ever received. In other words, the United Kingdom VAT contributions to the Community are being reduced by over £100 million each month. As for the 1987 European Community budget, which is still in draft, that I understand was agreed by the Budget Council in September, drawn up within the 1.4 per cent. ceiling, and agricultural provision is the financial guideline figure and the total for non-compulsory expenditure is consistent with the maximum rate provisions of the treaty. The calculation of what the United Kingdom rebate might be next year is a particularly complicated matter. I think the noble Lord might prefer that I did not delay your Lordships on that; but I should be happy to write to the noble Lord, Lord Bruce, if that would be of assistance.
The noble Lord, Lord Diamond, offered a number of welcomes to the provisions in the Statement which I have just repeated. Indeed some of the points that I have replied to from the noble Lord, Lord Bruce, were raised too by the noble Lord, Lord Diamond, particularly the point about unemployment. I have said that we have generated a very large number of jobs since 1983. The fact is that the total number of people seeking jobs has increased even faster. As for interest rates, that again is a rather technical matter. I have a page of detailed information which I could give the noble Lord, but your Lordships may prefer that I write to him on that matter as well. I hope that I have endeavoured to cover the main points raised by noble Lords.
Baroness Seear: My Lords, how can the Minister maintain that the monetarist policy and the medium-term financial strategy are in place when he surely recognises that the consumer boom, in which he seems to rejoice, is being financed by excessively easy credit and a very large increase in personal indebtedness?
Lord Trefgarne: My Lords, the public expenditure increases, which were referred to in the Statement,
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have been contained within what is a declining proportion of the gross domestic product generally. I do not think there is anything particularly wrong in the matter to which the noble Baroness referred. The provision of consumer credit has long been a feature of the high street.
Baroness Seear: My Lords, I am so sorry to come back to this, but the Minister really has not answered my point at all. How can he claim that the monetarist policy of controlling the money supply is in place when it is in fact being refuelled by consumer credit which is outside the control of the Government?
Lord Trefgarne: It is not being refuelled by that at all, my Lords. It is being fuelled by increased prosperity of our companies, not least in the export field.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that many people outside and many people inside this House will feel that the improvements in various areas which the Statement contains have been earned by the steady and consistent policy of the Government over the last few years, and by their determination not to be pushed into excessive public expenditure? Is he also aware that some of us would be a little unhappy about one aspect of the Statement: that is, its apparent acceptance of a very substantial increase in local government expenditure? Can we have some assurance that the Government will not relax their efforts to prevent gross overspending by quite a number of local authorities?
Lord Trefgarne: My Lords, my noble friend is quite right to point to the fact that the Statement referred to a considerable increase this year in local government expenditure and an undoubted increase next year along the lines that the Statement reported. Certainly the Government will not relax their efforts to ensure that local authority expenditure is contained within reasonable limits. There is a limit to the controls that the Government have over local authorities, as my noble friend will be aware, but we have moved into an era of rate-capping which can be applied where appropriate.
Lord Renton: My Lords, will my noble friend bear in mind that a number of the factors with which the Chancellor has to contend are quite beyond his control? Is he aware that many of us are full of admiration at his having achieved the Statement which we have heard? On this question of local government expenditure, could my noble friend give some idea of the actual and estimated effects of the changes in local government which have been made by legislation the year before last?
Lord Trefgarne: My Lords, I think that I should need to have notice in order to give a reply to the question which my noble friend has put to me. I shall certainly make inquiries and see what information I can give him.
Lord Ezra: My Lords, I should like to put a particular question and also a general question to the noble Lord arising from the Statement which he has just read out to us. The particular question relates to the North Sea. I was glad to note that the Government have recognised that it was harmful that there had been such a reduction in investment in the future development of oil resources. Is he satisfied that the changes now proposed will deal sufficiently with the question? There has been a massive reduction in investment, having a harmful effect on current employment and a harmful effect on our future prospects for oil production. Is this something which the Government will review again at a later date?
My second question relates to the forecast for the balance of payments. The balance-of-payment figures for the last two months have been, to say the least, very discouraging. There is a view that we could run into a deficit this year and a rather higher deficit than the noble Lord has indicated from the Statement next year. If those developments were to occur, are the Government's financial policies sufficiently flexible to take them into account?
Lord Trefgarne: My Lords, the Government's policies will always be sufficiently flexible to take whatever changes occur fully into account. If I may seek to reply to the first point that the noble Lord raised about the special arrangement for the advanced petroleum revenue tax which was announced in the Statement, that proposal is designed precisely to deal with the matters to which the noble Lord referred, although I must say that I do not think that I would have referred to them in quite the apocalyptic terms used by the noble Lord. I understand that there is to be a detailed press release by the Inland Revenue this afternoon giving the details of those arrangements, which I hope the noble Lord will feel able to look at.

European Court: Nationalisation Judgment
4.33 p.m.
Debate resumed.
Lord Peyton of Yeovil: My Lords, I am sure that your Lordships' House will be grateful to the noble Lord, Lord Harris of High Cross, for raising the matter earlier this afternoon. He dealt clearly and at some length with the facts so that it is not necessary for me to take up more than a very limited amount of your Lordships' time. I myself do not propose to delve into the matter of how the question was handled by the European Court, for that court seems to have handed the matter back to this country more or less untouched. After a prolonged legislative wrangle lasting some years, the Government acquired in 1979 the assets of the Kincaid company. They paid for those assets £3.8 million and they received £5 million of cash and £13 million of trading assets. That seems to me to be the cardinal fact with which we have to deal.
In August, 1979, Sir Keith Joseph—and I should like to take the opportunity of endorsing the remarks made by the noble Lord in opening the debate, remarks referring to the respect which we all have for
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his intelligence and his integrity—gave a Written Answer to Parliament. It is a well known practice for governments which wish to dispose of an awkward and unpleasant Question to do so by means of a Written Answer immediately before the Summer Recess. This matter was one which I think was very well fitted to that kind of manoeuvre.
I should like to quote briefly from the Written Answer which Sir Keith gave on that occasion for it is very germane to the matter we are now considering. Sir Keith said:
"We recognise that some previous owners and many members of this House and the public believe that the terms of compensation imposed by the 1977 Act were grossly unfair to some of the companies and we share this view. We have explored every possibility to right the injustice done by the previous Government, but to our very great regret we have concluded that amending legislation to establish new compensation terms retrospectively will be unjust to the many people who sold shares on the basis of the previous terms".
One comment which must immediately be made is that, so far as 1 am aware, no shares in the Kincaid company changed hands—or at least the shares were not subject to a public quotation.
There are a number of questions which I hope the Government will answer and which I hope my noble friend will answer clearly. Who arrived at the figure of £3.8 million? By what process was the stockholders' representative convinced that this was the best that he could do? One understands very readily how the majority of the stockholders may have been convinced that the game was not worth the candle and that to argue at length with a government would be to take on an opponent whom they could not beat. But they needed the money and it was better to get the whole matter settled for good.
I take it that the Government accept that in these matters the question of fair dealing is of some importance. So I would ask this: Who, during this whole saga, ever applied his mind to the question of how far the compensation offered could possibly be described as fair and adequate? And if that were so, how on earth could that person have come away satisfied! I say with some unease that if the Government cannot address themselves to that question and satisfy your Lordships' House upon it, it would be very difficult to avoid the conclusion that the present Administration followed the example of their predecessors in regarding the question of fairness as being unimportant. I hope that that is not the case.
4.40 p.m.
Lord Monson: My Lords, we are indebted to my noble friend Lord Harris of High Cross for giving us the chance to discuss this important ethical question this afternoon. I should like to assure the House that I have no personal axe to grind. On the contrary, the compensation terms for the one shipbuilding company in which I had a miniscule interest were generally agreed to be not unreasonable.
There are a number of things which I submit are beyond dispute. Whatever the perverse interpretation, or at any rate the highly curious interpretation, of Article 1 of Protocol 1 of the European Convention on Human Rights by some of the judges at Strasbourg, the compensation terms for a number of the

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companies concerned undoubtedly contravene the principles of the 1948 United Nations Universal Declaration of Human Rights as well as contravening the Washington Convention, both of which have been ratified by the United Kingdom. The fact that they may have no force in law is neither here nor there when we are discussing matters of principle.
Secondly, the compensation terms (or the confiscation terms as they might more accurately be called) for the unluckier shipbuilders were condemned throughout the length and breadth of the Conservative Party during the mid-1970s, the late 1970s and indeed into the 1980s in both Houses of Parliament, as well as in public. I have hundreds of quotations that I could cite to your Lordships in support of this, if time permitted. Of course, much criticism came also from the Liberal Benches and from these Benches, notably from my distinguished noble friend Lord Goodman, the late Lord Robbins and the late Lord George-Brown.
The Conservative Government, when they came to power in May 1979, had the power, and the majority, to reopen past cases if the political will had been there. Even more so did that Government have the power to ameliorate, or at least compromise upon, those cases which were still in the pipeline in late 1979 and early 1980, if the will and determination had been there. But the Government evidently did not have that will or that determination. What is more, ironically but shamefully, the compensation terms finally agreed after May 1979 were even more confiscatory on balance than those finalised before that date.
The practical consequences of this have been mentioned on earlier occasions both in Parliament and in the press: such as the fact that the Conservatives, unlike the Liberals, the Independents and members of the SDP, will not have a moral leg to stand on if a future government of the extreme Left starts to nationalise everything in sight and in so doing fixes compensation at less than one-fifth of asset value, or the fact that overseas governments may well see this as a green light to renege on their commitments to Britain: their commitments in respect of Hong Kong, for example.
However, there are further adverse consequences to be expected of a less tangible but equally worrying nature. A great many people are deeply concerned about the continuing erosion of what we loosely term "middle-class morality"—which of course was never strictly confined to the middle classes as such. It may be that middle-class morality is dying; but it is ironic that it should be a Conservative Government, ostensibly devoted to Victorian values (and charitably I have always assumed Victorian values in this context to mean Victorian virtues rather than Victorian vices) which hammers the final nails in the coffin of middle-class morality. A Conservative government which makes a complete U-turn on the fundamental matter of property rights—fundamental to individual freedom, that is—is hardly likely to dispel the pervasive and all-prevailing cynicism that we see in this country today and the consequent determination to get rich quick by any means while the going is good. It is not as if the Government's opportunist rejection of property rights was an aberration. On the contrary,
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it represents the culmination of a series of decisions in financial and fiscal fields which seem to indicate a lack of consistent principle on the part of this Government.
To give a few examples at random: householders who apply for social security benefits are treated a good deal more favourably than those people who have the misfortune to rent their houses, where capital disregard is concerned. Men or women earning £14,000 a year pay a lower marginal rate of tax cum national insurance than people earning only half that amount. An elderly person who has held a share for 25 years which has shown a 50 per cent. capital loss in real terms may nevertheless be liable for substantial capital gains tax upon that loss as a result of the inexplicable refusal by the Chancellor to index pre-1982 acquisitions; whereas short-term speculators, who may well be aided by inside information, can make short-term speculative gains up to £6,300 a year without paying a penny in capital gains tax.
On the other hand, a man or woman in a 9 to 5 job has to pay tax cum national insurance at a marginal rate of 34 per cent. on every penny they earn over £2,250 a year or so, assuming that they are single. And we all remember the fiasco over mortgage tax relief and relief on pension contributions at the time of the 1985 Budget Statement. The whole pattern seems to be governed by expediency and by whichever powerful pressure group has shouted the loudest most recently, rather than being determined by a consistent philosophy and morality.
To reiterate, my Lords, this breeds cynicism, coupled with a resolve to make money fast while the going is good, rather than to invest and plan for the longer term, in case the rules which people hitherto imagined to be immutable turn out to be transient and subject to capricious alteration or reversal. Unless this tendency can be halted, things do not look good for the long-term future of this country.
4.47 p.m.
Earl Ferrers: My Lords, I think the House owes a great debt of gratitude to the noble Lord, Lord Harris of High Cross, for introducing this topic today on the matter of compensation which has been paid to companies taken over by nationalisation. I am bound to say that I feel a certain tinge of sorrow for my noble friend Lord Lucas. It fell to a Conservative Government—the last one—to administer a law which was passed under a Labour Government and to which the Conservative Party when it was in Opposition and indeed later when in government, was deeply opposed. My noble friend will no doubt seek to defend what the Government have done. I am motivated to take part in this debate because there has been manifest unfairness, and I should like to see that unfairness aired, debated and rectified.
The unfairness which has been ascribed to certain companies indicates the unfairness of nationalisation. The party opposite has always been a protagonist for nationalisation. It has wanted it and has succeeded in drawing into public ownership a number of different companies. It is absolutely entitled to do that; it is entitled to its views and entitled to take that action. The fact that between the two sides of the House there are different views on the merits of the case for

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nationalisation is neither here nor there as regards this debate. It is solely to do with the compensation which was applied on the basis of the nationalisation when it took place.
However, what is important—and I am sure noble Lords opposite will agree—is that when companies which have quite properly and legitimately traded in the private sector find that they are involuntarily taken over and taken into the public sector, those companies should be fairly treated as regards compensation. That, I suggest, has not been the case.
The basis of the compensation to be paid to the companies taken over under the Aircraft and Shipbuilding Industries Act was the value of the average price on the Stock Exchange for six months ending in 1974; and of the 43 companies taken over, only one had such a quotation. The value of other companies which were taken over had therefore to be determined—not agreed, but determined—by the Secretary of State for Trade and Industry in consultation with the stockholders' representative who was to look after the interests of stockholders. The Secretary of State had discretion to fix the values. He had discretion to fix them above the minimum and he alone had that discretion.
The first unfairness is that, whereas public companies tend for obvious reasons to publicise their successes, private companies tend for equally obvious but different reasons to be more modest about their successes. Therefore, to ascribe to an unquoted private company the sort of share figure which it might have had had it been a publicly quoted company (which it was not) is obviously unfair, inaccurate and indeed invidious. That is what happened to 42 companies. Only one was a quoted company.
Their values had to be determined by the Secretary of State for Trade and Industry or by arbitration; but the arbitration was to invent the value of a share which did not in fact exist. It had to be invented according to the Act's supposition that the company was a public one. The tribunal had no powers of discretion. It was the Secretary of State who had those powers, and they were wide powers.
It is this value for different companies which has been the cause of such bitterness and controversy—so much so that some companies felt the injustice to be so great that they took their case to the European Court of Human Rights. The Conservative Government who had by then come into office had to defend the case for compensation which they had inherited from the previous Labour Government and which they had resolutely opposed. That is a somewhat bizarre state of affairs but that is life.
I am not a lawyer but as I understand it the judgment, in which five judges dissented, did not say that the Government were right and that the appellants were wrong, but merely said, in effect "This is a domestic matter for the United Kingdom in which the court does not have the locus to interfere". The unfairness therefore comes back again into the area of responsibility of the Secretary of State for Trade and Industry, and there are a variety of aspects to this unfairness. By the time that the payments were made it was 1979–80.
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On the values which had purported to obtain in 1974, no allowance had been made for inflation which by then had been about 80 per cent. No allowance had been made for the fact that certain companies—Kincaid being one—were undergoing developments in 1974 which resulted in profits being less than they might otherwise have been. Therefore, their successes were modest and profits and earnings formed a major plank in arriving at valuations. As the noble Lord, Lord Harris, said, in the case of Kincaid, the Government obtained the business in 1977, which at that time consisted of £13 million of assets and £5 million of cash, or a total of £18 million, for £3·8 million. So for £3·8 million the Government acquired immediately £5 million of cash, making thereby an immediate profit off £1·2 million, and they also had the whole of the rest of the business whose assets were worth £13 million thrown in for nothing. By no conceivable stretch of the imagination can that be said to be fair.
In the case of Vosper the vesting date was July 1977 and, as the noble Lord, Lord Harris, reminded us, (and it does no harm to remind ourselves again), Vosper had assets of £37 million and cash in the bank of £5½ million. It was making pre-tax profits at the annual rate of £7 ·85 million. The Government paid £5·3 million. That cannot possibly be said to have been fair. It is not surprising that in desperation these companies went to the European Court of Human Rights to ask whether it could help. However, as I said earlier, the court concluded that this was a domestic matter for the United Kingdom.
The fact that the Government's compensation levels have been unfair can be instanced by Lithgow Drydocks. The Government offered £800,000; the shareholders said that this was inadequate and elected to go to arbitration. The Government said "If the shareholders go to arbitration, our offer lapses". When the shareholders went to arbitration, the Government offered not £800,000, but £500,000. The shareholders asked for £3 million. The arbitration tribunal awarded not £500,000, which the Government had offered, but £3,500,000, which was even more than the shareholders themselves had asked for.
These are merely examples and it gives me no pleasure to say that the Government, of whom I had the honour to be a member (or some may uncharitably say of whom I was an ornament) have acted unfairly. However, they have. The noble Lord, Lord Peyton, mentioned that Sir Keith Joseph, who was then Secretary of State for Trade and Industry, referred to the fact that there was unfairness, and he said "We share this view".
If something has been unfair, it is always possible to right it or at least to ameliorate the unfairness. I ask my noble friend to have an open and a generous mind in his consideration not just of the figures but of the grievance as a whole. I ask him two questions. Does he consider that these companies have been treated fairly in compensation? If he does not think so, or if he is even in doubt, I ask him whether he will undertake to look into the matter to see, even now, whether steps can be taken to rectify what seems to many people to be a manifest unfairness and even an injustice. The request that I make to him is whether he will undertake to look into this matter and see what can be

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done. I do not ask him for a guarantee to alter the situation, because that would be asking too much, but I ask him to look into it.
4.57 p.m.
Lord Denning: My Lords, as this Question concerns a decision of the European Court of Human Rights, I have taken the opportunity of reading the whole 80 pages of the decision. It is most instructive, and having read the judgment of the 13 judges and the dissenting judgment of the five judges, my view (and I think I will be supported by many) is that the five dissentients were right. I ask Her Majesty's Government to implement the views expressed by those five dissentients.
This matter needs a little explanation for laymen as well as for lawyers, but the salient facts are these. When the Labour Government for the first time obtained a majority (though not an overall majority) in Parliament in February 1974, they announced that they were going to nationalise the shipbuilding and aircraft industries. It was then asked, "What is the compensation to be?". The answer was, "We will base it on the previous six months' share values, because share values will be distorted by the prospect of nationalisation and we are therefore going to take the base figures as those of the six months at the end of 1973". If that had gone through promptly and effectively within a few months, it might have been fair compensation. But owing to parliamentary and other troubles it took three-and-a-half years before the shares were taken over and nationalised.
In those three-and-a-half years up to July 1977, values had altered dramatically. For instance, in the Kincaid case, instead of being worth between £2 million and £3 million at the end of 1973, by the time they were vested their value was far more—over £5 million in cash at the bank and £14 million in trading assets. So it was nearly £20 million as against £3 million. All that had taken place because of the delay in vesting. So the value that the Act contemplated was entirely different from what it was when vesting actually took place. Was that right or was it not?
I now come to the very difficult question of what the European Court of Human Rights had to say. They had to go to a most general and illusory article in the convention. Paragraph 1 of Article 1 states:
"No one shall be deprived of his posessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law".
That does not give much help until you have the lawyers or the court to interpret it. I shall not go into all the interpretations.
One of the key passages was, according to the "general principles of international law". I may say in passing that that is a very debatable area. But I think it is generally accepted that a person should not be deprived of his property or possessions except in the public interest and having—these are the important words—prompt, adequate and effective compensation for his property. Would compensation based at the end of 1973 be prompt, adequate or effective when the takeover was not until July 1977? There is a little controversy over those applications of international law, but I am told that our Government accepted that it had to be prompt, adequate and effective.
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There are quite a lot of technicalities, but what did the majority 13 say! They said that that article had not been broken. But what did those other five say? They said, "It is all very well to put that 1973 valuation in at the beginning, but owing to the lapse of time that took place before it was settled there ought to be provision for reconsideration of the amount before it came to be paid".
I shall read two passages from that minority judgment. First:
"No one can deny that it was possible to introduce some mechanism whereby a financial adjustment would have been made to take account of the increased remoteness of the reference period … Such a course was all the more necessary because it had been argued in Parliament that certain of the Act's provisions were unfair, a fact which the Government did not contest at the hearings."
Secondly, they went on:
"by virtue of the prolongation of the internal initially envisaged [there was] unreasonable and disproportionate distortion".
That is what they said. As time went on, there ought to have been provision put into that Act before it was passed to make adjustments, so as to make allowances for the difference that had arisen. But there it was. The Act went through without the adjustments being made. That was a mistake. I do not say which Government it was that made the mistake.
But then we get on to the position after the Act was passed. On principle, and in view of what was said by those five, ought not account to have been taken of the lapse of time? In the ordinary course of events in the courts, we take account of that when we are assessing personal injuries. If someone is awarded compensation five years after his accident, we always take inflation into account. We take into account other factors which have appeared in the interval. In the case of Kincaid, that company had improved their business; they had worked hard; they had a good business and they had saved money. As I said, they were not allowed to part with it. They had over £5 million in cash and £14 million in trading assets. Clearly, common justice required that their position should have been reconsidered in the light of the intervening events.
I am afraid that that is what Sir Keith Joseph virtually said in reply to a Question for Written Answer on 7th August 1980. At col. 290 of the Official Report, he said:
"We recognise that some previous owners and many Members of this House and the public believe that the terms of compensation imposed by the 1977 Act were grossly unfair to some of the companies and we share this view. We have explored every possibility to right the injustice done by the previous Government, but to our very great regret we have concluded that amending legislation to establish new compensation terms retrospectively would be unjust to the many people who sold shares on the basis of the previous terms".
I do not agree for one moment with that last bit. What we ought to consider are the people whose property has been taken and paid for on the basis of a gross undervalue, because there was no intervening provision for readjustment.
If the Conservative Government at that time took the view that it was grossly unfair to the companies, they did not need amending legislation for something like that. Whether or not it was called an ex gratia payment, the Government could do what was fair without amending legislation. They admitted that

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there was gross unfairness and they ought to have done something. If only those five had been in the majority, the Government would have been compelled to do it. If those five had been in the majority they would have held that our legislation did not comply with the European Convention on Human Rights, just as we said in the case of those railwaymen. There was legislation about the closed shop and so on, and the Court of Human Rights said it was not right and it had to be remedied by giving those railwaymen compensation. So if those five had been in the majority, those people would have had to be paid because their property was taken on the basis of a gross undervalue.
In a way, I am speaking of the European Court of Human Rights. The question they ask is: is it to be a precedent? I suggest that that decision is not binding on your Lordships. It is no part of our law. On the other hand, I think that your Lordships, or the Government, can give a good example to the world by going by the views of the dissentient majority. Indeed, I gather that my noble friend Lord Shawcross, whose memorandum was read out, says that all the investors in companies and so on want to know what is the position. If they have shares in companies which are to be nationalised—whether they are overseas or inland shareholders; it does not matter which—the compensation has to be prompt, adequate and effective.
I suggest that the Government could give a good example to industry and to the world in general by ensuring that on nationalisation the compensation is fair, adequate and effective. In this particular case, where it has not been fair or adequate and as so much time has passed, it ought at least to be remedied now.
5.11 p.m.
Lord Diamond: My Lords, having given notice to both Front Benches, and having listened to a series of speeches from the Conservative and the Cross-Benches, all criticising the Government, I hope I will be forgiven for saying a few words in favour of the Government's point of view. I had some experience of and responsibility for these matters in my time, which was of course a long time ago.
The most recent development is the Big Bang and the way in which the Government—and indeed some of the Opposition—are encouraging people to buy shares and to become shareholders. The test is going to be shares and a market in which one can deal in those shares. That is going to be the one main aim. People are being encouraged to invest in shares. Let us all be shareholders and all be part of this market where we know that it is not unwise to go in because you can always get out; you can always sell. At which price do you sell? It is the ruling price on the market.
Therefore when compensation was being considered long before the 1970s, as the noble and learned Lord mentioned—because this matter has a much longer history than that—what could be fairer for compensation than the price at which people voluntarily and willingly buy and sell their shares? If I may say so with the greatest possible respect to those who do not think that that is the best test and who have
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some anxiety about what a future Labour government might do: do you think it wise to suggest to a Labour government of the future that paying the fair value as shown by the market quotations on the relevant day should be discarded as a method of paying compensation? Should some other scheme be invented—God knows what it might be—which the government might feel appropriate, having regard to their general policies and the pressures put upon them at the time by some of their Back-Benchers?
I should have thought that we would be far better off—many of us who are shareholders, possibly holding shares in a company which might be taken over and compensation paid—having regard to a price at which we are willingly buying and selling those shares, day after day. That is my first point.
Criticism has been made against that for a number of reasons. One reason is that no provision was made in the Act which provided for what I can only repeat I regard as a very fair form of compensation which I had the good fortune to adopt when I was responsible for these matters. The complaint is that no allowance for any variation was made in the relevant Act. The noble and learned Lord spoke about variation upwards. He did not utter one syllable about variation downwards and what would happen if the value dropped to one-tenth of what it might otherwise have been or was at the relevant date.
The government might then say, "Ah, we were foolish. We must look after the nation's assets. We promised X pounds per share because that was the market price but now that we are actually paying over the cheque the shares are being quoted at one-tenth of X; so here is one-tenth of X". Your Lordships can imagine the row that would occur if the Government went back on the Act, passed by Parliament, on the method of compensation.
Another complaint is being made—an unusual complaint, but one that I welcome from these Benches—that in future we should have regard to the minority vote rather than the majority vote. I welcome that with open arms. I hope that every time I find myself in the minority we shall, with the assistance of the noble and learned Lord, convert that into the decision of your Lordships' House and march merrily on with legislation on that basis. I wish that were so, but I dare say the noble and learned Lord will not go as far as that. Therefore I am afraid I cannot feel totally convinced by that argument.
The criticism is then made, "But what about the delay? You could have brought in a new Act and done something about it". I refresh your Lordships' memories about the delay that occurred on the nationalisation of the steel industry. Steel was to be nationalised and the compensation formula was again this same formula—the price at which people would buy and sell steel shares willingly up to the point of time when nationalisation was notified and, therefore, would affect the price. Obviously, in such a case the price falls immediately and, equally obviously, shareholders regard it as unjust that they should be required to accept the reduced price when it is only a political effect. Therefore you stick to the price before nationalisation is announced. Of course you do not take one day, but a period. In fairness, you must

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average it over a period. I am sorry that I do not know what was done in this particular case, but my recollection is that in the case of steel the period was six months, and that seems to me to be a reasonable period.
Any of your Lordships who are octogenarians will remember as well as I do that what happened was that two members of the Labour Party, which was the government party at that time, did not share the view of their colleagues. Nobody will recollect more than the noble Lord sitting on the Woolsack that at that time the government majority was two. That had an impact because we had not adopted the noble and learned Lord's theory that you should go by the minority. On the contrary, at that time the other place went on the basis of the majority. But there was no majority, so the matter was delayed and the Act was not passed.
After the return of a new Labour Government which had, in the vote of the people, authority to continue with the nationalisation of steel, that legislation was resumed and a new Act was passed with the same formula. However, a delay having taken place the Act then applied to the new date on which it had been announced. Therefore the relevant compensation was calculated on the six months prior to the new date, not the old date. What was the result of that? Whereas the previous formula referred to a date on which the share prices were on a plateau, and then came down, the new formula referred to a date on which the prices were partly on a plateau and partly in a valley.
As a result, your Lordships will be pleased to note that those two dissenting Labour Members saved the country and the Exchequer a great deal of expenditure. To put it the other way round, the shareholders obtained less than they would have received had nationalisation taken place earlier. That was the effect of bringing in a new Act, and that refers to the philosophy which has been promulgated by the Cross-Benches only this afternoon. So I am bound to say that I regard the fairest way of giving compensation as the price at which a willing buyer and a willing seller exchange the property in question. That is what a free market signifies. That is what we have all been spending weeks and weeks on in the past few months in order to try to achieve that the market will be free, working properly and unbiased.
Earl Ferrers: My Lords, I should like to put a question to the noble Lord before he sits down. Quite correctly, he has addressed his mind to the fact that the price should be what a willing buyer will pay to a willing seller. He has not addressed his mind to what is the price of a certain article which has no willing buyer and willing seller because it is not quoted.
Lord Diamond: My Lords, it was because I did not want to detain your Lordships further. The answer is such an obvious one: one goes to arbitration. As every practising accountant knows, it is very difficult to value private shareholding. I am sure my professional colleagues will confirm that immediately. It is terribly difficult. One has to have something on which to anchor it, on which to hang it. There can be argument after argument and a minority shareholding in a
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private company can be valued at anything from X down to literally nothing. So what way can be found other than both parties putting their points of view to an informed and able judicially-minded individual, letting him listen to the arguments and decide?—and that of course is what happened.
Lord Monson: My Lords, before the noble Lord sits down, will he agree that he has said nothing about the three-day week which was in force at the time compensation was fixed and which greatly depressed share prices at the time? Nor has he said anything about the enormous inflation which took place between the date when the compensation was fixed and the date when it was actually paid out and for which no allowance whatsoever was made.
Lord Diamond: My Lords, with the greatest possible respect, that is just not accurate. It is not accurate to say that no allowance was made for the intervening period. As my information goes, the full interest was payable from the date that the compensation was payable until the date that it was actually paid. The full interest took account of inflation. It is the only way one can take account of it. That is the normal way of taking account of it. So I am afraid that I am not affected at all by that situation.
If the noble Lord should say, "Why didn't you take account of a situation which was exceptional and arose for a very short time?" the answer is that one spreads over six months. That is the argument for doing it. It is what we did, and, as I understand it, it is what happened in this case.
5.23 p.m.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord, Lord Harris of High Cross, for having drawn its attention to what, after all, is a very serious matter. No one in your Lordships' House wants any individual in the United Kingdom to suffer an injustice. A sense of justice and fairness is one of those elements that should be, and very often is, enshrined in the British character. We like to be fair.
Sometimes I wonder whether this sense of fairness comes directly into our consciousness when, if ever, we contemplate the fate of those people in our country who are less fortunate than ourselves and are not fortunate enough to be shareholders in either public or private companies. If it is to be pursued as an end, justice ought to be thoroughgoing and extended to the lowliest people in our country. I should like to think that some of the enthusiasm for justice to shareholders that has been expressed today is capable of more universal and generally perceptible application. However, this does not affect the issue before us.
Your Lordships will be aware that one of these cases is again coming before the European Court of Human Rights. At least one company intends to have another attempt in that Court. Perhaps it behoves us therefore to be a little careful in what we say today. I am very sorry that the noble and learned Lord, Lord Denning, who is erudite on these subjects, is not present to give me the necessary legal backing, but your Lordships will recall that under the Continental system evidence is not restricted in the same way as it is before the British courts and that parliamentary proceedings and

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what is said in Parliament are taken into account in judgments that emanate from both the European Court of Justice and the European Court of Human Rights.
Like the noble and learned Lord, Lord Denning, I, too, have read through the judgment—some 77 pages of it—and I have also acquainted myself with the broad provisions of the appropriate sections in the Aircraft and Shipbuilding Industries Act 1977. Perhaps I may say immediately that reading through the judgment of a case before either the European Court of Justice or the European Court of Human Rights does not give one all the information required to form an objective judgment of whether the decision was right or wrong. That is unfortunately the case.
This afternoon I listened carefully to the noble and learned Lord, Lord Denning, and I thought that perhaps he was speaking in the role in which I knew him before the war when he was a KC, acting as a leader in the King's Bench Division. He was indeed a brilliant advocate, and today I thought that he was speaking in the role of advocate rather than talking in a judicial capacity, because on the basis of the judgment itself I do not see how he could possibly have come to the quick decision that the five dissenting judges were right and the 18 judges—as they are altogether—were wrong.
I found it very difficult to make up my mind, and I speak as an accountant concerned with the true and fair valuation of the assets of companies involved in this kind of operation. Those of us who have read the judgments will have been made aware of a very eminent firm of accountants—which will be known to practically all noble Lords who have any connection with the City or commercial and industrial affairs—called Whinney Murray. In every case they were the accountants appointed by the Government to arrive at a true and fair valuation of the business as a going concern, based upon the earnings and the likely future earnings of the various companies.
Many figures have been quoted this afternoon. I cannot reply to them because I have not seen the balance sheets of the companies involved. I have not seen, as is customary in British cases, a transcript of the case put forward by the plaintiffs and the respondent. All one can see is what appears in the judgment.
Noble Lords have referred to the value of the assets of the various companies. Without seeing the complete case and the balance sheets, I do not know whether they have taken account of the liabilities, because the judgment nowhere states "net assets"; it merely points out that assets are involved.
We are in a little difficulty. All governments, of whatever political complexion, should seek always when they bring in such legislation, to see that the persons whose assets or claim to assets are being taken over are properly compensated in line with the circumstances explained to them at the time that they acquired the assets; for example, if they are involved in privatisation terms.
It is true, as the noble Lord, Lord Harris of High Cross, pointed out, that some of the leading representatives of the party opposite committed themselves to
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rather extravagant observations at the time that the compensation proposals were originally published and debated in both Houses. Mr. Nigel Lawson, the present Chancellor of the Exchequer, described the compensation proposls as grossly inadequate. The right honourable Member for Henley, Mr. Michael Heseltine, described them as more like confiscation than compensation. Mr. Norman Tebbit, who expressed himself with a degree of moderation that one would find difficult to recognise in current circumstances, contented himself with the observation that there was no equity in them. Mr. Tom King was extreme about the matter; he spoke of outright confiscation.
We can understand the chagrin of the noble Lord, Lord Harris of High Cross, when a Conservative Government came into office and proceeded apparently to renege on their somewhat extreme political observations, which on reflection I suppose they must have regretted. Another factor is ignored. As I said, we have not seen the accounts. We do not know whether the assets referred to by noble Lords are net assets. We do not know whether they have taken liabilities into account.
The noble and learned Lord, Lord Denning, does not know whether the figures quoted as assets are net assets or whether the liabilities have been taken account of. Therefore, he is in no position to say what the valuation of the assets is. Although as an advocate he may be entitled to his opinion, as a man speaking in a judicial capacity it is not worthy of judicial observation in the absence of information. I shall not go through the judgment in detail because of the time. I shall refer to pages in the judgment where details can be found. Kincaid is dealt with at page 17; Vosper Thornycroft at page 19; Yarrow at page 27; Hall Berrill at page 25; Vickers at page 29; and the final one is at page 30.
If your Lordships read the transcript, you will find that in all those cases there was an initial valuation by that eminent firm of accountants, following which the Government made an offer to the shareholders or to their representatives. It is interesting to observe from the judgment of the European Court of Human Rights—this will be of considerable interest should another case go before it involving a different government—that it recognised the right of the majority of the shareholders of a particular class to arrive at a valid decision on behalf of them all.
That is enshrined in the 1977 Act. It will not lie within the precedent that has been created by the European Court of Human Rights for any shareholder of a class that has already agreed by a majority to the acceptance of a figure to go to that court because it protects the majority as against the minority of a particular class of shareholder.
A valuation on the basis described by the noble Lord, Lord Diamond, and elaborated on a little by me was arrived at by that eminent firm of accountants. The Government made an offer to the representatives. There were subsequent discussions about it. In some cases, reference was made to arbitration. In the case of Kincaid, a shareholders' meeting was held on 21st November 1979, to consider a resolution approving the agreement arrived at with the Government.

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Sir William Lithgow and eight other stockholders were present, but he abstained from voting because he considered that the information available on the settlement was insufficient and that the figure did not represent Kincaid's value during the reference period or on vesting day. If he was dissatisfied, there was nothing to prevent him from dissenting and recording his dissent to the resolution approving the agreement.
In the event, in every case negotiations took place between representatives and the Government and a figure was finally arrived at. In all cases, the Conservative Government upped the figures beyond those originally contemplated by them.
The noble and learned Lord, Lord Denning, whose legal opinions are almost written on blocks of stone in my opinion, says that in his view—he speaks as a lawyer of some eminence—there was nothing to stop the Government from making an ex gratia payment. They did not need an amending Act. I took down his words as he said that. I am glad about that, because it seems to me that the Government did that. On the basis of the valuation prepared by Whinneys anything beyond the valuation that they had determined and negotiated upon was in the nature of an ex gratia payment.
I have not seen all the papers; I have seen only the judgment and therefore I cannot say whether the ex gratia payment made by the Conservative Government, in conformity with the suggestions made by the noble and learned Lord, was adequate or otherwise. This is one of the defects of accepting the Continental legislature over the top of our own.
English law tends to be precise. It requires evidence, cross-examination and everything else. One can achieve ultimately what is a reasonable and equitable view. But, after all, we accepted the ruling in advance by agreeing the whole covenant of the European Court of Human Rights in exactly the same way that we accept apparently the going and extended rights of the European Court of Justice in connection with Community matters. It may well be that the court made a mistake. There is no way of evaluating the decision made by the European Court of Justice unless one sees the arguments put forward by the respective parties.
I have, however, come to the conclusion that it would be most unlikely for a Conservative Administration—not unmindful, some might think, however unfairly, of the protection of property, especially the property of those who comprise a comparatively small minority of the population—to be unmindful of the claims made upon them not only by the individuals concerned but also their own philosophy. I cannot bring myself to think that within their own canons of justice, with which I do not always agree, they would act unfairly. I cannot believe that the trivial claims of the Treasury—what people sometimes regard as its mercenary penny-pinching attitudes—to safeguard the nation's finances down to the last £10 million or whatever, could ever overcome the profound sense of justice of the government of the day, who, after all, always seek to protect property interests wherever they can.
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There is a lesson. The lesson is that one has to be very careful when one subordinates the system of British justice to systems that are apparently more flexible and often more ambiguous than our own. However, this is the way we are in modern civilised society. At least the British Government have been honourable in this. Unlike some governments that opt out of verdicts of the European Court of Justice when they think the judgment is going against them, at least the British Government had the good sense and the honour not to announce in advance that they would not accept the judgment of the court. For that, they deserve to be congratulated by us. I doubt very much, however, whether that will be much comfort to those who, even on the basis of what I consider to be insufficient evidence, still feel aggrieved about the money they might have lost.
5.43 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, I am grateful to all noble Lords who have contributed to the debate on the Question raised by the noble Lord, Lord Harris of High Cross. I am not proposing in any way to discuss with your Lordships the amounts of compensation, the amounts of claim, or so on. I shall, if there is sufficient time, address myself to questions of substance raised by noble Lords. At the outset, I wish to deal specifically with the words contained in the noble Lord's Question. There has been speculation from time to time about the implications of the judgment in the case of Lithgow and others. The Government consider that this speculation is without foundation. I hope that my response will put the matter firmly in perspective.
The House will recall that the Lithgow case arose from seven applications lodged with the European Commission of Human Rights. The principle complaint was that the Aircraft and Shipbuilding Industries Act 1977 did not fulfil the Government's obligations under Article 1 of the First Protocol to the European Convention on Human Rights. The relevant part of that article—I appreciate that some noble Lords have already quoted it—reads,
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law".
It is important to recall that the issue before the European Court of Human Rights was whether the 1977 Act was so open to objection as to show that the United Kingdom acted outside the margin of appreciation which the convention leaves with member states. As the House knows, the court found in the Government's favour by a large majority, as the commission had done before.
The court decided that the general principles of international law of prompt, adequate and effective compensation do not apply to the taking by a state of the property of its own nationals. In doing so, it reaffirmed the position in its judgment in the case of James and others, more commonly known as the Duke of Westminster's case.

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I should recall in this regard that it was common ground between the Government and the applicants that the general principles of international law stipulate that a state may only take the property of a foreigner if the taking is for a public purpose, is not discriminatory and is accompanied by adequate, prompt and effective compensation. This has been the consistent position of British Governments, and it remains the position today. It is simply not true to suggest that the court's judgment constitutes any precedent for the expropriation of British assets abroad.
The European Court further held, again consistent with the previous case law, that the taking of property without payment of compensation of an amount reasonably related to the value of the property would normally constitute a disproportionate interference which could not be considered justifiable under Article 1.
In the particular circumstances of the Lithgow case, the court held that its power of review was limited to ascertaining whether the decisions regarding compensation fell outside the United Kingdom's wide margin of appreciation under the convention. Here, the court held that it would respect Parliament's judgment in this connection unless that judgment was manifestly without reasonable foundation.
It still is for the electorate and Parliament to decide whether any further nationalisation should take place and, if so, on what terms. The judgment of the court does not change this. Indeed, that is why prospectuses for privatisation draw attention to the statements of the Opposition so that investors can take such statements into account in deciding whether to subscribe. The noble Lord, Lord Diamond, and the noble and learned Lord, Lord Denning, drew attention to that point.
Of course, I realise that some may feel disappointed that the European Court did not give a judgment which would ensure that compensation in the event of nationalisation would aways be at a level which those affected would willingly accept. But the court itself commented that the valuation of major industrial enterprises for the purpose of nationalising a whole industry is in itself a far more complex operation than, for instance, the valuation of land compulsorily acquired and normally calls for specific legislation which can be applied across the board to all the undertakings involved.
I would suggest therefore that it is unrealistic to suppose that any method of valuation will be accepted as fair by all. Nationalisation is normally not a bargain struck with a willing seller.
The House will recall that the Strasbourg case arose from the Aircraft and Shipbuilding Industries Act 1977, which the Conservative Party when we were in Opposition vigorously criticised during its passage through Parliament, both as regards the merits of nationalisation and the compensation provisions.
We have not changed our minds in the slightest that there was much in that Bill to criticise, but we reluctantly had to decide in 1980 that we could not amend the compensation provisions. No practical and fair way of amending the terms could be found.
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Contrary to what has been suggested, there was nothing in the arguments submitted by the Government to the court in Strasbourg that was incompatible with the earlier criticism of the compensation terms. Those arguments were directed to a quite different question. That is, whether the 1977 Act contravened Article 1 of the First Protocol. The court's judgment, in the Government's view, does not in any way adversely affect the position of British investors, whether at home or abroad.
I turn briefly to some of the comments that have been made this afternoon. I turn immediately to the report in Hansard in another place of 7th August 1980 at cols. 289 and 290, to which my noble friend Lord Peyton referred. He read a paragraph from that, as indeed did the noble and learned Lord, Lord Denning. However, both noble Lords ended their quotation at the end of the second paragraph. They failed to go on and quote what my right honourable friend Sir Keith Joseph, then the Secretary of State, said. He went on from the paragraph that the two noble Lords have quoted to say this:
"We had to recognise, moreover, that had we wanted as an alternative to offer the companies back to the former owners legislation would have been required. This would inevitably create a long period of uncertainty for the industry during the passage of legislation, the preparation of the detailed offer to the former owners and the consideration of the terms. Moreover He cannot return to the former owners that which was taken from them because the assets and liabilities of the companies concerned have changed. In the case of the aircraft industry the changes are quite clearly irreversible. We have therefore come to the most reluctant conclusion that there is no satisfactory way to alter the 1977 compensation terms—.
The noble Lord, Lord Diamond, underlined this.
I have to say with the greatest respect to the noble Lord, Lord Harris of High Cross, that he was not quite correct in all that he said this afternoon. The wide margin of appreciation referred to in the court's judgment relates to the right of any contracting state to decide on the method and terms of compensation. But the 1977 Act did not give a wide measure of discretion. Compensation had to be within the confines of the statutory formula. In part that is an answer to one of the comments of my noble friend Lord Ferrers. Discretion to alter the compensation terms would have needed new legislation and the Government decided against this course, as I have reminded your Lordships by completing the quotation in Hansard of 1980.
I cannot help the noble Lord, Lord Monson, other than to suggest that his contribution was an interesting commentary on Government financial policies, with which he obviously does not agree, and some of the social consequences of those policies. I fear that it had little to do with the court's judgment.
My noble friend Lord Ferrers spoke of the unfairness in compensations. As other noble Lords have suggested, applicants' estimates of value relate to 1977. But, again, the noble Lord, Lord Bruce of Donington, reminded us that there was at the disposal of the Govenment of the day an eminent company to help in the valuation. The Aircraft and Shipbuilding Industries Act stipulated a reference period of six months ending 28th February 1974 for valuation for the purpose of compensation. The Secretary of State at the time had no discretion whatsoever to alter this. It was enshrined in the Act.

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My noble friend Lord Peyton asked me about three specific matters. First, how was the compensatory formula arrived at? It was in fact arrived at by negotiation on the hypothetical base value of the unquoted shares, again as required by the Act, and I think that he will probably recall that. Secondly, how were the shareholders' representatives persuaded to accept ultimately the offers made? It is not for me to answer for the shareholders' representatives. Presumably they were ultimately satisfied that they would not do better if they went to the tribunal. Thirdly, the noble Lord, and indeed my noble friend Lord Ferrers, said that this was unfair. Again I refer to the Hansard report of 1980.
However, in addition perhaps I might say this to my noble friends. Sir Keith was faced with the problem of balancing one unfairness against another. No satisfactory base could be found for amending the terms. There was the probability of unfairness if they were to be changed. My noble friend Lord Ferrers asked me to be open minded and generous. But I have to say to him, with all the openness and generosity that I can muster, that I cannot give him the undertaking that he seeks. I am sure my noble friend will appreciate the reasons for my being unable to do this.
Earl Ferrers: My Lords, may I ask my noble friend one question? I am very grateful to him for giving way. Does the noble Lord mean by that answer that he therefore considers it fair to pay £3·8 million for £5 million of cash and £13 million of assets?
Lord Lucas of Chilworth: My Lords, I said at the outset that I was not going to involve myself in figures, for the same reason that the noble Lord, Lord Bruce of Donington, did not do so. I do not have the balance sheets. I do not have personal knowledge of the situation in 1974 when the valuations were made. It would be quite wrong with hindsight to make the kind of judgment my noble friend seeks from me.
I turn to the points made by the noble and learned Lord, Lord Denning. He spoke with hindsight. The Government have made plain their views at the time on the merits of the 1977 Act. The question was whether the harm it did could be repaired. The Government decided that repair was not possible. The noble and learned Lord said that we could have legislated. If the court's decision had been against us then we would have felt bound to seek ways of meeting the court's judgment. It is not for me this afternoon to determine by what means that would be done.
Perhaps I may turn to the noble Lord, Lord Diamond. From the reference point of vesting day, dividends could be paid subject to the safeguarding provisions. However, after vesting day interest was payable on the compensation and the court observed that this gave some shelter against inflation from then until the date of payment. The noble Lord questioned his own memory of this fact, and I can confirm that his memory is correct. It is, of course, exactly the answer to the question raised of him, by the noble Lord, Lord Monson.
I should like to turn lastly, but not least, to the noble Lord, Lord Bruce of Donington. I am grateful to the
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noble Lord for referring the House to the passages concerning the judgment of the court, as to how the amount of compensation was arrived at in each case. I believe that those noble Lords who still feel some disquiet in this matter should take the judgment and read it most carefully, as it puts into perspective a number of the figures and the suggestions that have been made.
I recognise, as does the noble Lord, Lord Bruce of Donington, that the judgment is no comfort to all those who feel very deeply that they were unfairly treated by the provisions of the 1977 Act. I repeat that we were unhappy at the time about many of the provisions of that Act, and remain so. However, I have said and given the reasons why it is with reluctance that the Government decided as soon as they came to power, after a very full and exhaustive review in 1980, that the compensation provisions could not be altered.
Lord Harris of High Cross: My Lords, before the noble Lord sits down finally, I should like to ask whether or not he accepts that what was on trial both at the Commission and at the international court was not the precise terms of the 1977 Act for the reason that they would have been out of time, more than six months having elapsed. I should like to ask the noble Lord whether or not he agrees that what was under consideration was the implementation of that law, and that was still being moulded at that time in 1980, 1981, or 1982, by his colleague the Secretary of State for Industry.
Lord Lucas of Chilworth: My Lords, I am not a lawyer or in any way connected with the legal profession. However, what the court had to determine was whether or not the 1977 Act, and those matters that flowed from the Act, were in contravention of our obligations under the 1952 European Convention on Human Rights, and in particular Article 1 of Protocol 1, which we have read out. That is what the court had to determine and they have given their judgment upon that matter.

Personal Information: Accessibility
6.3 p.m.
Baroness Ewart-Biggs Baroness Ewart-Biggs rose to ask Her Majesty's Government what steps they intend to take to increase the accessibility of information of concern to members of the public and, in particular, access to their personal files.
The noble Baroness said: My Lords, I should like to say how grateful I am to noble Lords who have stayed behind, though I quite understand if some noble Lords are now disappearing. However, I should like to say how grateful I am to noble Lords who are remaining to this last business at the end of a long and arduous parliamentary session. I think it shows a great fidelity to the subject that I am raising.
There are many views on what we should do about official secrecy—what information should be open and what should be protected. I have no doubt that most people believe that they ought to see the information public authorities and other institutions hold about themselves or regarding their own personal affairs:

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information which schools keep about their children; which doctors and hospitals keep about their health; which public authorities keep about their entitlement to housing and various benefits; the personnel records which employers keep or the records which social workers and other professionals hold.
I should like, as briefly as I can, to cover the following points. The first is my reasons for believing that a freer disclosure of such information would not only be right in principle but would also be advisable from a practical point of view. Secondly, I wish to describe the level of support which such a proposed measure is attracting. I should also like to outline the safeguards as contained in the draft Access to Personal Files Bill, safeguards which would counter any adverse effects that this great freedom would bring about. Lastly, I should like to say that I feel that the time is right to make progress of this kind.
From a moral point of view, I believe most sincerely that people should have a legal right to see records about themselves or their children. I think this is right in principle. I also think the practical arguments for freer access are overwhelming. I should like to describe some of these arguments. Such records are the basis often of crucial decisions about our lives and it is essential that we should be able to check them to make sure that any mistakes or false impressions are corrected.
One has recognised the fact that many people do not even realise that the authorities and institutions with whom they have dealt briefly at some time in their lives, hold files on them. Still less do they realise that information from such files may be passing from one agency to another. For example, when a person applies for a job or for life insurance it is usual now to be asked to authorise the taking up of a medical reference. The doctor is asked to give the employer or insurance company a report on his patient's health. In some cases the doctor may barely know him. He may just have arrived in the practice. However, the doctor will report on his physical health and perhaps also his mental health, using the records passed to him by a former doctor. The record may describe a condition which existed some time ago, but fail to report that that condition has since been completely cleared up. There may be mistakes. The person's employment or insurance prospects may thus be damaged. At the moment he is not entitled to see the report the doctor writes or the medical records the report is based on. There is no chance of any errors being corrected.
Another danger is that mistakes can affect the medical treatment that people are given. This is a very important point. If past symptons, treatments or tests are wrongly described an incorrect diagnosis may be reached and the real cause of illness may be overlooked. On a further point, a small survey of records at one medical practice reported in 1978 that doctors were ignorant of much of the information considered to be important for the clinical care of patients. The survey found that 50 per cent. of women who have suffered complications of pregnancy, miscarriage, stillbirth, terminations, have no note of this on their medical records. Ten patients in this practice had known allergies to drugs. However this was not recorded on their medical files.
There are many examples of these mistakes that I could give your Lordships. However, it is sufficient to say that one general practice in London which does encourage patients to look at their own records reported recently that as many as 12 per cent. of their patients discovered errors on their medical notes. Many of the errors were minor, but some were not. Some of these files had details relating to other patients which had been misfiled, and were included in their own notes. Mistakes are found not only in medical records; they can also occur in social services files. I know of one instance of an elderly lady whose file contained wildly different accounts of her supposed age. Her entitlement to various benefits depended entirely upon her age. The taking up of these benefits could well have been jeopardised by the false information. There can be little doubt that the most effective way of maintaining accurate records is by allowing the relevant person to correct the mistake himself or herself.
There is another reason why people may want to see their records; that is, to learn about themselves. To a person who has spent his or her childhood in care, the record kept by the social services department may be a very real and vital source of personal history. Denying such people access to their own records when they grow up seems a particular injustice. Others may wish to see their records because they are suspicious about their contents. They may think that decisions are being taken behind their backs, or that they have been misrepresented or ignored altogether.
Indeed, it has been shown that authorities which do allow access to their records report that it often works wonders in removing misplaced suspicion. People are able to see precisely how their affairs are being looked after and dealt with. Sometimes they have not realised what considerable efforts are being made to help them, and therefore they are greatly impressed by what they learn from their records.
It is sometimes suggested that a right of access to medical records would cause special problems. I am quite sure that most of us would prefer to learn about our health by asking our doctor directly. No one would suggest that we should stop doing so and turn to our records whenever we want information. There are all kinds of reasons why most of us would not wish to do so, not least of all perhaps the difficulty of reading the doctor's handwriting, though I must ask my noble friend Lord Rea to forgive me for saying that. However, there are times when people simply do not get the information they need from their doctors. The British Medical Journal reported this June on the results of a study into the way in which young doctors handled consultations with patients. It found that very few provided information about the cause or likely prognosis of an illness or about any tests that were being done.
To put the problem from the patient's point of view, I know of a woman who, when in hospital—and it has happened to many of us—described how she obtained information about her blood pressure. She looked at her chart when the nurse was not looking, and when the doctor came in, instead of finding out from him, she listened to the information that he was giving the students. I know that I have done that, especially when

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I have taken my children to hospital. I have obtained my information through listening to what the students were being told by the doctor.
Moreover, there are still too many cases of patients not being told their diagnosis when they are seriously ill, and too many cases of people learning not from their doctor but from some other source that they have a serious condition. Indeed, examples have been given in the Lancet of how people have learnt of their serious illness from a receptionist, or indeed in one case from a home help. Many of these patients had questioned their doctor about their illness, but had been put off, perhaps because the doctor feared that an emotional scene would result. Some patients may not want to be given such bad news, and of course it should never be forced on them. However, equally, patients should not be put in the position of having to force it out of the doctor. Surely the best solution must be that the person should be given the option of either informing himself through his records or remaining in ignorance. However, it is his decision rather than the doctor's.
I should like to say a few words about the attitudes of the medical profession, though of course my noble friend Lord Rea will be doing this. I regret the fact that the British Medical Association's annual meeting this year voted, by the narrowest of margins, against allowing patients any right to see their records. However, on the other hand, it is encouraging that the BMA's GPs' committee and also its ethical committee both recommended that patients should have a right of access, though they wanted the doctor to retain the opportunity to withhold information where it was felt that disclosure would harm the patient's health.
I should like to comment briefly about the support there is for the measure that I am suggesting. It is particularly encouraging to see that there is a high level of support from the professions for this principle of opening up the records. This has come from such bodies as the Institute of Management, the Institute of Housing, the British Association of Social Workers, the Royal College of Midwives, the Health Visitors Association, and many others. This morning, I received a letter from the National Consumers Council, which of course was very supportive of this particular measure.
Still more significant are the steps that some authorities have already taken, on their own initiative, to allow access to the records that they hold. This has been done by a number of education and housing authorities and by some doctors, whose patients are given their records to see while they wait. Also, a number of employers, including the IBM, British Coal, Swan Hunter Shipbuilders and British Gas allow employees to see their own personal records. Such records are on occasions also open to officers and soldiers in the army.
Therefore I think that this shows that the process of allowing greater openness has been started, and I am sure that it will come as no surprise to your Lordships to know that the measure is enormously popular with the public. A MORI poll commissioned in July this year found that of some 1,900 people questioned, as many as 73 per cent. wanted a right of access to their medical records. In the same survey, 67 per cent. Of
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those asked favoured a right of access by parents to their children's school records.
As your Lordships know, from November 1987 the Data Protection Act will give us the right to see and correct personal information held on computer, and this is a very important step. However, our concern today is that the Act does not extend to records kept on paper, and I have no doubt that as people begin to exercise their new right, this anomaly will strike them forcefully. Perhaps it will even seem ridiculous. Why should their right to ensure that decisions about them are taken on the basis of accurate information depend on the form in which the information is recorded? Indeed, it seems ironic that this right should be determined according to whether or not a particular authority uses a computer. I cannot help feeling that it will be a great struggle to have two systems—one of open files held on the computer and one of closed manual files.
There are disturbing signs that some computer users are considering deliberately transferring what they regard as sensitive information from computer disk onto paper solely in order to avoid having to disclose it. Therefore it seems inevitable that soon there will be a very strong demand for the right of access to be extended to paper records. It is for this reason—in order to complete the process started by the Data Protection Act—that the Access to Personal Files Bill has been prepared.
I shall not go through the provisions of this Bill, but I should like to conclude on the protections that are being offered in the Bill by way of safeguards. The first safeguard protects personal information on a file which may relate to some third party—perhaps another member of the family. The second would protect the identity of members of the public who had provided information to an authority about the subject of the record. The third would allow information to be withheld where disclosure might expose someone to the risk of physical attack. The fourth would allow information to be withheld from the subject of the record where a doctor believed that he or she could be seriously harmed by the disclosure. This recognises that there may be occasions—for example, if a person is already in the midst of a severe emotional crisis—when it would be better to defer access to information about a particular traumatic event until the crisis had passed or counselling to help the person cope with the revelation could be provided.
Therefore I think that everything is moving in the same direction. We have a Data Protection Act; we have a Department of the Environment which has provided for applicants for council houses to check that the information they have supplied has been accurately recorded. The Education Act 1981 provided the right of access to some information to parents of children with special education needs. In 1983, the DHSS launched a consultation process on access to social work records and in a circular encouraged local authorities to adopt a more open approach.
As I say, I think that everything is now coming together to show that we want to go this last step and make files open for people to see, whether they are on computer or on paper. I believe that that would really

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show that the public are becoming a great deal more interested in health and medical information. They are showing a great deal more sophistication in this matter. Therefore the right of access would be to the benefit of everybody and it would support those individuals who, after all, wish to be more responsible for themselves. I very much hope that the Government will do everything possible to further this aim.
6.20 p.m.
Lord McNair: My Lords, this is not the first occasion, and I am sure it will not be the last, on which the House finds itself very much indebted to the noble Baroness, Lady Ewart-Biggs, for bringing before it an interesting subject and one which is of deep personal concern to a considerable number of people. She has covered the ground so comprehensively that she has not left a lot for the rest of us to say, but on past form I doubt whether we shall find that too inhibiting. There will be many specific areas in the much wider area, that she has covered that we can amplify or underline.
The first thing I want to do is to assure her that my noble friends on the Alliance Benches fully support this freedom of information campaign of which she has spoken. Indeed my Liberal Party has chosen as its president for this year Mr. Des Wilson, who is the chairman of the campaign committee. However, our support for this campaign should not, and does not, blind us to the fact that some progress has already been made in desirable directions.
I want to talk today about children, and it would be most ungenerous if I failed to remind your Lordships that the Children Act 1975 considerably increased the right of adopted children to discover their origins. I suggest that it is difficult to exaggerate the importance of measures of this sort. Those unforgettable words "know thyself", which were written for all to read in Apollo's Temple in Delphi, must surely be the best advice ever given to anybody by anybody else. For children who, through no fault of their own, have had a chequered upbringing self-knowledge may very likely be the essential prerequisite, without which they have little or no hope of achieving a sound, rational and non-neurotic attitude towards other people and towards the world into which they have, often so unthinkingly, been brought.
Under the Children Act an adopted child on reaching the age of 18—and I wonder whether perhaps it ought to have been 16—has a legal right to receive a copy of his or her original birth certificate, but only—and this is important—after careful counselling. He or she will at least learn from that the name of the natural mother and is then free to pursue what further inquiries he or she may wish. I am told, incidentally, that only a very small proportion of such children go so far as to seek out and confront their natural mother, but the Act is still young, it is only about 10 years old and it would probably be premature to draw statistical conclusions.
The adopted child, particularly in cases of what one might call traditional adoption, where the baby joins its adoptive parents at a very tender age, is in many ways in an enviable position compared with some others. If you have had a happy childhood and if your
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adoptive parents have correctly given you as much information as they can about your origins as and when you ask for it, you may well in your teens be interested to find out more about your genetic inheritance but you probably will not be unduly bothered about it. The much more worrying case is what one might call the young human shuttlecock; the child who has been batted to and fro, in and out of care, fostered here and fostered there, with periods in between in various children's homes.
Imagine the questions which may ferment, perhaps possibly even fester, in your growing mind: "I wonder why they chucked me out?" "Where on earth was I between that family and that home?" "What went wrong? I quite liked it there. I can't remember". You are almost in the position of one of these fictional characters who comes round after some physical or mental shock and cannot remember who he is. You are a young person with a half-remembered, patchy past; and the answers to all these questions are locked up in the files of perhaps several social service departments.
These will almost certainly not be computerised, and so the Data Protection Act will not help you. You are one of the many kinds of person who would be helped by the sort of draft Bill to which the noble Baroness referred. The schedule to that draft Bill mentions among the records to which access, apart from essential safeguards, would be open to all, the following: records relating to any individual who has been or is in the care of a local authority; and, in the private sector, records relating to any individual in residential accommodation for orphans or other children no longer being cared for by their parents or adoptive parents.
There are many other categories of person who would benefit from such a Bill. For example, people who have either been rejected or struck off the list of possible foster parents. Should they not have a right to know why, to see the record and, if it is wrong, to correct it? In conclusion, the sooner we get some such Bill the better. I hope that the noble Lord, Lord Belstead, will be able to tell us that the Government are contemplating some steps in this humane and, I would hope, politically uncontroversial direction.
6.28 p.m.
Lord Denning: My Lords, the law has often had to consider the confidentiality of reports. It is important in nearly all cases that the person who makes the report should be able to do it fully and frankly without fear of a libel action being brought against him. Therefore in many cases the public interest requires the report to be kept confidential. But there are cases when it should be made open. It depends so much on the individual cases.
Let me take the first matter, employer and employee. It is everyday practice for reports to be made to the manager or superior officer on the conduct and efficiency of an employee. Often they are confidential and are not disclosed. In one case we had, a man after he had been dismissed managed to get sight of a confidential report which said that he was unstable, highly sensitive and the like. He brought a libel action on account of it, and the jury awarded £15,000. We had to reverse it afterwards. But that is employer and employee.

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We had other cases concerning employer and employee where a lady complained that she had not been promoted, whereas two men had been promoted and she was much better than they were. She said "I want to see my reports and the reports on those two men, because I am sure that they were not as good as mine". She was allowed to see her report but the men said that theirs were confidential and that she must not see them. We said it was to be left to the discretion of the chairman to decide. But in another case we were told (I hope it is right still) that the Civil Service and many other big employers allow the individual person to see all his own personal reports. I believe that is the practice in the Civil Service and in many of the big companies. I should have thought that was a good advance, but I do not think that I would make it a legal obligation.
Then we have social workers reporting on whether a couple are fit to adopt a child. Social workers say whether a child has been maltreated or not, reporting to the council what they find. I am afraid that some parents say "We want to see all those reports. They must be untrue. We want to sue for libel". In most Cases the reports must be full, frank and honest. It would be quite a mistake to allow the parents or other people to have complete access to them. If it comes to a court or inquiry, whoever it is will use his discretion to say whether that should be allowed or not. It may be the worst thing possible to let the proposed parents, or whoever it may be, see the reports.
What about medical reports? How often have we come across those? They often come up in actions against doctors or hospitals for negligence. Continually it is the case that they disclose where agreeable the hospital records and reports, subject to the medical report being full and frank. We had one case of suspected cancer. Was it right for the patient to see that and be worried accordingly? Quite often doctors for the sake of their patients do not tell them the whole truth. It is a question of medical knowledge and expertise as to how much the patient should be told. But when the doctor is making the report so that those advising or following on can see it, he ought to make it full and frank, not having to worry whether the patient will see it afterwards.
In a way it is a delicate matter of judgment. It would be a pity to give every patient a right to see every medical report made upon him. Doctors would not be fair and frank or give a proper report if they thought that a patient would be worried out of her senses if she knew the truth. In other words, it is a delicate balance to take in all these cases, whether one is to protect these confidences, which are vital in many cases, or whether one can have open information.
I should like to have whatever is in the best interests of those concerned. I suggest that it is not a matter in which the courts or even the law or Parliament can intervene. I should like those immediately concerned to lay down rules of guidance about what should be done and when there should be disclosures, not in the law but as a matter of guidance in all the difficult and infinitely varied problems that may arise in life.
This is a most important question. I should be against any lawmaking upon it. We should leave it to
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the good discretion of the professions and of others concerned.
6.36 p.m.
Lord Rea: My Lords, the Question which my noble friend has raised has been discussed at great length by professionals from a number of disciplines, including legal experts. We have heard a notable contribution from one of the most eminent of these. Also lay people representing the general public have thought deeply about these matters. As has been mentioned, there is a campaign for freedom of information which has produced a draft Bill on this subject. I have not been at the forefront of these discussions, but I feel qualified to speak in support of my noble friend's Question because I am a member of a profession that probably makes and holds records about more people than any other. Almost everybody has a general practitioner and some sort of note is usually made at each consultation. About 200 million consultations occur with GPs every year. The records of some patients contain long and detailed letters and reports to and from specialists giving in-depth assessments of a particularly personal nature. The notes of hospital patients are sometimes even more complex and often impossibly bulky. Sensitive information of a similar kind is also held in the files of social service and education departments, housing authorities and other bodies and professions which deal with people and their problems.
Because nearly everybody has a medical record held by his GP it is not surprising that in the recent MORI poll mentioned by my noble friend it was general practice records that most people wanted to see. It was 73 per cent. as she mentioned. It is traditional to regard medical files as sacrosanct. However, they are obviously of enormous interest. I have often gone out of my consulting room to fetch something and on my return found the patient guiltily flipping through the notes—like a naughty schoolchild caught smoking behind the bike shed. I think we should remove that guilt. The tradition that "doctor (or nurse) knows best" was always accepted rather reluctantly and was imposed by a profession which relied on a mystique for its authority because until 50 years ago it had very few scientific remedies to offer. Notes were more scanty—and often in Latin—and the traditional bad handwriting of doctors, which I own to, was an aid in perpetuating professional mythology. But, as diagnosis and treatment have become more rational and the importance of social factors in medicine has become increasingly recognised, more complete notes are needed, especially as medical practice becomes more of a team effort. This applies to other professions as well, especially to social work. I personally believe that the patient, as far as possible, should be a member of that team.
If that became the case, should they not have the right to know what information is held about them? I should like to be able to give an unqualified "yes" because of the apparent justice of the principle and because there are many advantages to be gained by adding the patients' scrutiny of their notes to that of the professional. There has necessarily to be some qualification of the principle, and I shall go into this a little bit later, but, first, the advantages of patients

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having access to their records include, for instance, from a purely practical point of view the fact that records are likely to become more factually correct even on something so simple as date of birth.
There are sometimes quite glaring inaccuracies in people's notes which may affect how other doctors and professionals approach them. One unusual example that has been brought to my attention was that of a woman who was recorded in the medical notes as being a registered drug addict, which she was not. In fact, she had been impersonated by a drug addict who had used her name while the patient had been out of the country for three years.
More open records lead to greater trust between the client or patient and the professional worker and this particularly applies in the social-work field. Another problem is that professional records today all too often contain judgmental and opinionated statements and I think that that goes beyond what is "fair and frank", in the words of the noble and learned Lord, Lord Denning. I personally have to confess that I have recorded derogatory remarks in a patient's notes on occasions when I have felt that someone is going on too long when there is limited time at my disposal. Of course, it might be possible that if a patient should read the derogatory remark a difficult area might be opened up, beneficially.
I consider that it would be very salutary for doctors to consider carefully the effect of what they write on the future doctor/patient relationship should the patient read it. Sometimes patients read things even now, and the effect is not always good. Also, such remarks when read by the next professional may well bias him or her against patients before even meeting them. That is something very much to be deplored and which more open access to records would avoid.
People sometimes need to read their records to find out important things about themselves, as the noble Lord, Lord McNair, has pointed out. It so happens that only yesterday a patient of mine, a woman of 26, came to see me and said that she was trying to complete a record of her origins and childhood so that her son, who is now a baby, could read it when he was older, as she knew very little about her early life. I was able to go back into her records and show her a report which had been made when she was two years old which was a summary of her admission to the Whittington Hospital. The report read:
"Diagnosis: generalised bruising and cephalhaematoma. History: child of problem family, mother known to knock the children, particularly Ann (a fictitious name), about. Father had found the child crying, bleeding from the right ear with a large bruise in the occipital region."
This woman, apart from always having had a bad relationship with her mother, knew nothing about this episode. I was able to advise her on how to get further information from the Social Services Department about her early history and how to get details about her birth.
People can make important decisions more easily if they know the full truth about their medical condition—the fact that they are suffering from multiple sclerosis, for instance. I take the point of the noble and learned Lord, Lord Denning, that sometimes doctors are not certain of the diagnosis and
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that it is perhaps right not to divulge their degree of uncertainty if it is going to worry the patient greatly. But I shall go on to that in a moment because there is another side to it.
Medical opinion is coming round to agreeing to patient access to records, but with safeguards. The most important group backing the principle of freer access is the inter-professional working group established by the BMA and chaired by Sir Douglas Black. Their report says:
"Access encourages openness and can improve the quality of the record by correcting factual errors and reducing misunderstanding."
They go on to discuss the safeguards which they feel are needed to prevent disclosures causing distress, harm the breaching of other people's privacy and to ensure that information is properly explained.
These safeguards have been spelt out in the draft Bill mentioned by my noble friend and seem to me to provide reasonable protection. The most difficult area—and I do not think that the proposed Bill as it stands has fully cleared the difficulty—is in deciding when disclosure might cause distress or harm to the patient or client and, I might add, alter the professional relationship in an unhelpful way. This might occur, for example, in a psychological or pschyiatric framework when the patient is still in a vulnerable, disruptive or disturbed state. Here I think there is a case for a degree of paternalism, or maternalism if you like, if the doctor or therapist is consciously using it appropriately as a therapeutic tool.
I am not sure that, if the right to access were declined and the patient used his suggested "right to seek access through an independent health professional of his choice", this situation would be adequately covered. Faced with this situation, the notes that the professional concerned makes during a consultation could be modified so that remarks could be made which mean one thing to patients and another to a fellow professional. And to some extent this is already done, although considerable difficulty could arise with regard to information that is already recorded in notes were clients to have access to their entire records. My noble friend has mentioned that the proposed Bill has thought about this and that it is only from the date of the legislation becoming law that patients will have full access, or even modified access, to their records.
I am inclined to agree that the professionals concerned should be able to prevent past records which were thought to be damaging from being divulged and that only information which was recorded from the date of the Act should be covered. It certainly would be a formidable operation to "vet", if one may use that word, all the records held relating to past events, and I think that some such rule would be necessary. I hope that the further discussion which will doubtless take place if legislation along these lines is introduced will result in a clearer solution to the kind of problems I have been mentioning.
As I have said, the medical profession is now on the brink of accepting the principle, with safeguards, and the BMA's annual representative meeting only just failed to agree to this by a vote of 183 to 169 at the Scarborough meeting this June.

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The General Medical Services Council of the BMA, which represents GPs, is in favour of modified access and has accepted the principle, as has the Royal College of General Practitioners. Hospital doctors are not so much in favour, and the Royal College of Psychiatrists, while in principle in favour of free access, felt that greater safeguards would be required in the case of psychiatric problems, not least because so many people other than the patient are involved in giving information on the understanding that it is confidential. I very much hope that the Government will look favourably on any legislation based on this draft Access to Personal Files Bill which may be proposed in either House in the next parliamentary Session. Of course it would be better still if they were to introduce such a Bill themselves, but I shall be very interested indeed to hear the views of the noble Lord, Lord Belstead, when he replies tonight.
6.50 p.m.
Lord Jenkins of Putney: My Lords, I hope your Lordships will permit me to make a brief intervention. My name should have been on the list but, because of inadvertence and an error, it was missed off. Nevertheless I will endeavour not to detain your Lordships for too long. I should like to join those who have congratulated my noble friend on introducing this subject. It is an important one and she has performed a service in bringing it before us this evening, even if we are getting towards the end of our present Session.
As my noble friend has said, next year personal records are to become available where they are kept on computer; but there seems to be no reason why they should not continue to be concealed by keeping difficult or sensitive cases off the computer and in typescript, which is still the normal means of recording the bulk of official information. I therefore think that this proposed Bill is necessary for that purpose alone, if for no other, because it would be an absurd anomaly that the whole issue should depend on what particular form of record was adopted. One can easily envisage a situation where it would become the norm to have one form of computerised record of anything which could be released without any problems at all, and to have a second, non-computerised record of things which might give rise to difficulties or problems.
However, our discussion tonight has concentrated very largely upon the medical aspects of matters, and there are other things as well. In particular, so far as the Data Protection Act is concerned and also so far as the draft Bill is concerned, there are some areas of exclusion. Oddly enough, there is one particular area of exclusion—a normal area of exclusion—which I particularly think should not be excluded. It is a difficult area, certainly: it is the problem of national security. Because national security is, as it were, not to be looked at, not to be investigated and to be put on one side, there are good grounds for believing that much more evil and much more error exist in this area—for the simple reason that none of the ordinary means which exist in all other areas, medical or otherwise, for keeping an eye on the scene is permitted to occur in this area.
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There is reason to believe that error in this area is not unusual. Indeed, there are those who suspect that it is the norm. The difficulty arises in distinguishing between a desire to improve the world and a determination to destroy it. At first glance this may seem a simple distinction to make, but in practice the line between seeking to change society and overthrowing the establishment is not always an easy one to draw.
So far as the secret services are concerned, socialism and subversion are virtually synonymous. Indeed, it is said that there are a number of files in the secret service on a substantial number of Labour Members in another House, and indeed even on one or two Members of your Lordships' House, I am sorry to say that the time when I was myself regarded as a danger to society is probably long past; but unless they have been shredded, I suppose the files are still available.
The secret service was a nuisance to me for a number of years with their tapping, bugging and so on—and even burglary on one occasion. They affected the course of my post-war career quite substantially, and indeed my presence here this evening is probably due to the secret service more than to anyone else. That may be regarded as a benefit or otherwise, according to how your Lordships may look at it, but the secret service brought this about by advising the BBC in the immediate post-war period that, as a security risk, I could not be employed by them. I therefore turned to trade unionism and politics, and thus ended up in your Lordship's House. So you have the secret services to thank—if that is the right word—for what has happened: otherwise I might now be a long-retired disc jockey!
Seriously, the problem is the total lack of supervision and the inability of the suspect to know that he is suspected, let alone of what he is suspected. This is the problem. If a freedom of information Bill were to come before your Lordships' House, I should take the view that every voter in this country is entitled to know whether or not he is regarded as a security risk and whether the security services are storing information about him or her. In this case it may be difficult to give every suspect access to full information. As I say, it is a difficult area and the right to see files is one which I think would have to be looked at with some considerable care. But in view of the belief—we cannot say whether it is a fact or not because we simply do not know—that a lot of the alleged information held in these files is inaccurate, something must be done to bring the security services under parliamentary supervision, as is done in many other countries.
Before I sit down—and I promised that my intervention would be short—I should like to draw to your Lordships' attention the report by Richelson and Ball on the intelligence co-operation between the United Kingdom, the United States of America, Canada, Australia and New Zealand and to give your Lordships a short quote from it. They are talking about the degree to which throughout the world there exists a framework of communication of security services which, for the most part (and particularly in this country) nobody knows anything about. More is known in the United States and in Australia and the other countries I have mentioned. In those countries examinations have taken place. The report says:

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"In each case, also, the investigating bodies have discovered a wide range of security service activity which would generally be considered either improper or clearly illegal".
I know this to be the case from my own experience. Improper and illegal activity, I suspect, while not necessarily the absolute norm, is a pretty frequent occurrence in the secret service area; and I think it is time that Parliament took a look at this problem. Parliament should decide that we really cannot any longer go on in this way whereby something is happening all the time which we know nothing whatever about because there is no effective control over it.
This Bill, which we hope will become before us, may or may not be the right way to approach this problem, but if we are going to move into a more fully informed society then we ought not to put on one side the one area of which we know least about of any. We ought to make some movement into this area and try to bring it under some more rational control, because the most peculiar and odd things take place at the present time which have no rhyme or reason in them whatsoever.
I again congratulate my noble friend on introducing the subject and I hope we are going to hear much more about it. I look forward to the Government's reply and, in particular, as to whether the noble Lord will say anything at all about the aspect of the problem which I have briefly introduced this evening.
7 p.m.
Lord Silkin of Dulwich: My Lords, my noble friend is to be thanked for bringing to the attention of this House the question of accessibility of information, which is of concern to members of the public, and in particular the question of access to personal files. It is a wide subject and both my noble friend's speech, which was extremely, thoughtful and delivered with great feeling, and the other contributions which the House has heard concentrated for the most part on the second part of the Question, with regard to access to personal files. The notable exception was my noble friend Lord Jenkins of Putney who, as I think he will agree, somewhat widened the area of discussion.
In the discussion before the present one the House was concerned with the provisions of the European Convention on Human Rights and it is perhaps of interest to observe that the right to information is not one of the fundamental rights and freedoms enshrined in the convention and that such a right could therefore not become part of our law if the convention were simply enacted in United Kingdom law. If anything, the convention rather leans the other way and tends to favour the protection of citizens' correspondence and indeed subjects even the right of freedom of speech to restrictions to prevent the disclosure of information received in confidence. However, I think it has become more and more widely recognised that the fundamental freedoms—freedom of speech, the right in a democratic society to exercise one's vote and the right to impart or receive information—must, in order to be fully effective, be informed freedoms. The citizen cannot make an informed choice without the necessary knowledge of the issues before him, and similarly he cannot effectively exercise his right to the
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measures to protect his reputation without having the right to become aware of what is said about him and the record about him which may be to the detriment of that reputation. Hence the two pillars upon which my noble friend's Question is founded are bound up with the preservation of our freedoms. They are necessarily ancilliary to the freedoms which the convention safeguards.
I want to say a word or two on each of those pillars, although I have recognised that the debate has been mainly about the personal files aspect of information of concern to the public. Dealing with that aspect first, I am bound to say that, like my noble friend and others who have spoken in this debate, I have never understood the logic of giving access to computer data but not to manual records which relate to precisely the same information. The ability to defend oneself against attack, and indeed even to know in what respect an attack is being made, has no reality if one cannot find out the nature of the attack. Unless files are open to inspection there can be a great temptation to make careless and unjustified comments. I am sure that that is not a temptation confined by any means to doctors, but is one which may affect very many people.
There are indeed a number of examples given in the well-argued report issued by the Campaign for Freedom of Information and the noble and learned Lord, Lord Denning, referred to the possibility of opinionated statements which may not have any apparent basis of fact but on which others may rely. I hope the House will allow me briefly to give an example of that which affected my own family—with what consequence I think it is for each person to judge for himself.
It is part of the lore of my family that in the first decade of this century, when my father was coming to the end of his schooldays, he sat for and won a mathematical scholarship to Worcester College, Oxford, but his means were such that without a grant from the local authority he would not be able to take it up. To get that grant he had to have a recommendation from his head teacher. His head teacher gave a recommendation that stated that in the head teacher's opinion "this boy would not benefit from a university education". That was a matter of opinion and not of fact. My father always used to say, in a somewhat sceptical way, that had that not been done and resulted in his not going to the university, he would have probably lived his life doing the very important task of a mathematics teacher rather than as Minister of Town and Country Planning. Being an opinion, that could not be demonstrated to be false—at least not until later on.
It is quite clear that the right to examine records cannot be wholly unlimited and the report of the campaign very fairly recognises this. Indeed it considers with very great care the exemptions that would be necessary. It would be wrong in this debate for me to go into those in detail, because we may at some time in the future have either a Government Bill or a Private Member's Bill and that will be the time to work out the precise boundary lines. I think it is sufficient to say that the balancing of public interest has always been a problem which has delayed legislation in fields analagous to this one, particularly on the subject of freedom of information. The

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question is always where the line is to be drawn. While I agree with the noble and learned Lord, Lord Denning, that it does raise extremely difficult questions, I do not myself think that one should therefore fight shy of legislating at all. I think that this is the difficulty which Parliament has faced in other fields and which it ought to be prepared to face in this one.
Perhaps I may say a word or two about the more general question of freedom of information. The Labour Government issued a White Paper (Cmnd. 2285) in 1978 which traced the long history of this problem and made the pertinent comment that:
"Recent Governments have, in fact, done more and more to provide information to the public".
One ought not to assume that things have stood still through the report of the Franks Committee and the events of the years that followed it. Whether in the form of White Papers, consultation papers, briefings, evidence to Select Committees or otherwise, far more information has been made available to Parliament and to the public than was made available 30 or more years ago. I hope we would all agree that Parliament, above all, is entitled to information, and that we need to be very wary of any Government seeking to circumscribe the information that may be revealed to Parliament through Select Committees.
However, the Command Paper went further. It emphasised the very close connection between that which, whether for security or other essential reasons—my noble friend Lord Jenkins will forgive me for saying "essential"—must be protected by the criminal law, and the residue of information which cannot be released to the public under the most liberal system that one could enact. Indeed one has to recall that even in the United States and Sweden, which are usually held up to us as being countries where liberality in this field goes furthest, there are exemptions for security and other reasons. The White Paper went on to advocate a system of the kind indicated, though possibly, but not necessarily, that was for future discussion to be embodied in statute law.
To give it credit, the Conservative Government that followed tried, though unsuccessfully, to embody the form of Section 2 of the Official Secrets Act in statute form. But in doing so they demonstrated that today reform of Section 2 must go hand in hand with positive legal rights for the citizen to obtain information. Since then the Government seem, naturally, to have been a little shy of this subject.
My noble friend has done a service by bringing it back to your memories, particularly perhaps with a general election in the offing, even if the Question was concentrated more particularly on the matter of personal files. When we come to the general election, I for one hope that all the parties will subscribe to the proposals made by my noble friend, and will indeed go further and subscribe to the idea of a general increase of information available to the public, so that when the election manifestos are prepared this subject will not be a party political one. I have no doubt that my own party will present a manifesto in those terms.
7.12 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, I join in expressing my gratitude to the noble Baroness, Lady Ewart-Biggs, for raising for debate this evening a subject which is of great interest and covers a vast range, from access to government information to access personal data, whether held manually or electronically, whether held by government or some other official body, or by private firms or individuals.
The noble and learned Lord, Lord Silkin, in making the final speech from the Opposition Front Bench, referred briefly to the aspect of access to non-personal government information and I think it would he your Lordships' wish this evening that I follow the noble and learned Lord in only a sentence or two, simply saying that the Government's policy on access to general information held within government is to make as much information as possible available, while preserving the confidentiality essential to the effective working of government. As well as stating this publicly, my right honourable friend the Prime Minister has made sure that the Government's policy is known to Ministers in charge of departments and through them to their officials.
But the Government are opposed to a statutory right of access to official information and the two reasons which we have given again and again, and which I shall not embellish this evening, are, first, that we feel, as the noble and learned Lord, Lord Silkin, said, that there is now an enormous amount of official information being made available, the best example being the work of the Select Committees which, after all, the previous Conservative Government in 1979 helped to set up, and which make available interviews, memoranda and other documentation from the Executive. We see good examples of that from the Select Committee reports in your Lordships' House and from the other place. The other reason that the present Government have always given is that we think that a statutory right of access to official information would be inappropriate because it would cut across our system of parliamentary democracy. I do not think all noble Lords will agree with me on those two legs of the reasons I have given for that, but, as this evening's debate has centred upon personal files, perhaps your Lordships would prefer that, having said what I have just said, I should try to answer the debate by sticking to that subject.
Let me say a few brief words about the Data Protection Act 1984, which comes into force, as some of your Lordships have said, in November next year. As your Lordships will well know, the Act works through a system of registration by data users with the Data Protection Registrar. Individuals are already entitled to compensation if they suffer damage as a result of inaccurate data or because data have not been properly protected. There is also a right to the correction or removal of inaccurate data or data held in breach of any of the principles of data protection set out in the Act. As I think the noble Baroness said, the rights under the Act are of considerable significance and importance.
The Act again, as your Lordships will remember, extends to data held by government departments, local authorities and other official organisations. There are

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inevitably exemptions from the rights of access; for example, data held for law enforcement and revenue purposes, if access to them would be likely to prejudice law enforcement or revenue collecting. But overall I am confident that the rights being introduced under the 1984 Act are a significant addition to the freedom of information in this country.
I think it right that I should just say this evening in this short debate that, whereas some critics have said that the Act does not go far enough in protecting the interests of data subjects, most of the complaints which have been received by the Home Office and the registrar have come from people and organisations that feel that the registration requirements are an unnecessary burden on the business community. It is argued that the form-filling required and the fee demanded for registration run counter to the Government's general intention of lifting burdens of this kind from industry in general and in particular from small businesses.
As I said and as some of your Lordships have said this evening, a considerable number of exemptions from the requirements of the Act have been devised, but what has proved impossible is to provide a general exemption for the small-scale user. In speaking about small businesses in this connection, I simply say that the Government do not think that in practice the registration requirement will prove to be such an onerous burden. After all, the Act sets out very real rights that data subjects will acquire. They will have great advantages and we look forward therefore to the coming into force of the Act.
The same system of registration would plainly, I suggest, not be appropriate for manually held records. It requires only a moment's thought to imagine what a bureaucratic nightmare would be created if everyone had to identify and register the information they held on normal files. It has to be borne in mind that the impetus behind the European convention and our legislation springs from people's concern about the use and potential for abuse of computers. It is their ability to hold vast amounts of data, to process it rapidly in so many different ways and then to transmit it elsewhere with great ease and rapidity which gives rise to concern. These considerations do not apply to manually held data.
There are nevertheless, and understandably, pressures to allow rights of access to manually held records. The noble Baroness drew attention to the Bill of the Campaign for Freedom of Information with that object in view. I find it interesting that the Bill does not, as I understand it, propose a registration system but simply provides a right to receive copies of certain defined types of records. The Government's view is that even a right of this kind would impose considerable burdens on the organisations holding the records, especially in government departments themselves. It could also prove very costly. I have to say to your Lordships that some departments have said that the scheme would require yet more staff and the Government would not be prepared to agree to extra public expenditure for this purpose.
The noble Lord, Lord Jenkins of Putney, touched on the very difficult subject of security services. I must
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say that I cannot share his views that those individuals who are regarded as a security risk to their nation should be given warning of that fact. I suggest to the noble Lord that on reflection he recognises the serious risks that that would entail.
In trying to make progress so far as manually held files are concerned we are very much bearing in mind the warning which I understood the noble and learned Lord, Lord Denning, gave, that some advice of this nature needs to remain confidential while other advice needs to be made available. It is in pursuit of that that as long ago as 1983 the Department of Health and Social Security issued a circular setting out the general principles for access by clients to local authority social services manual records; and authorities generally are already on the way to implementing arrangements for access.
The Government have already announced their intention to make regulations during the first half of next year to allow access to the educational records of pupils. Consultations have recently taken place on the practical means to implement access to housing records. Following the report of the Royal Commission on Environmental Pollution, steps are now beng taken to improve public access to information obtained by pollution control authorities. Indeed, the importance the Government attach to this last field is shown by the resolution tabled only last week for consideration by the European Communities' Environment Council urging all member states to adopt the same approach.
The noble Baroness and the noble Lord, Lord Rea, spoke about medical records. Health records are, of course, maintained by health professionals to help them in the care and treatment of their patients. It is a matter for professional judgment whether in particular cases it is in the patients' best interests to have access to their own records. Although there is no automatic right of access to medical records it is recognised as good practice for health professionals to be as open and informative to their patients as possible. The Government support that, but do not think that legislation or blanket coercion are the best routes.
The process of greater openness is accelerating in, for example, the field of maternity care; and on computerised records the DHSS has circulated a consultation document to a wide range of professional bodies and consumer groups. The overwhelming majority favour access to computerised health records in one form or another, as do DHSS Ministers. They have therefore decided that patients should have access to their own personal health records held on computer, subject to the condition that doctors may withhold information which is likely to cause harm to the wellbeing of the patient or of others. The DHSS is discussing with the medical profession how best the twin concerns of access and protection for those in need can be accommodated.
In this general context, let me add to what the noble Lord, Lord McNair, said about the careful arrangements that are provided for counselling young adopted people before they are shown their original birth certificates. I think that underlines very clearly how careful one has to be to balance the interests of the individual in being given information about himself or

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herself and the emotional harm that can be caused if that information is disclosed in an unprepared or thoughtless way.
Finally, let me thank the noble Baroness and noble Lords who have spoken in this debate. There is, rightly, considerable concern that information should not be withheld unnecessarily from the public. As a result of my reply I trust that your Lordships will feel that, although I have by no means completely gone along with the noble Baroness, the Government nevertheless share the concern that has been expressed and are taking steps to ensure that more information is made available both by government and others in ways that are appropriate to the information in question.

Brighton Marine Palace and Pier Bill [H.L.]
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      London Underground (Goodge Street)
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Aberystwyth Harbour Bill
  British Railways (No. 2) Bill
    London Docklands Railway (City Extension) Bill

      Pontypridd Markets Fairs and Town Hall Bill
      A message was brought from the Commons that, having considered the resolutions of this House relative to the Bills communicated in the Lords messages of 29th October and 3rd November, they have come to the following resolutions:
      That the Promoters of the Bills shall have leave to suspend proceedings thereon in order to proceed with the Bills in the next Session of Parliament, provided that in the case of each Bill the Agents for the Bill give notice to the Clerks in the Private Bill Office of their intention to suspend further proceedings not later than the day before the close of the present Session and that all fees due on the Bill up to that date be paid:
      That on the fifth day on which the House sits in the next Session the Bills shall be presented to the House;
      That there shall be deposited with each Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the present Session;
      That each Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first, second and third time and shall be recorded in the Journal of this House as having been so read;
      That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
      That these Orders be Standing Orders of the House.

Channel Tunnel Bill
A message was brought from the Commons that they have made the following orders:
That, when the Committee on the Bill reports the Bill to the House, further proceedings on the Bill shall be suspended until the next Session of Parliament:
That if a Bill is presented in the next Session in the same terms as those in which the Channel Tunnel Bill stood when proceedings thereon were suspended in this Session—

(a) the Bill shall be ordered to be printed and shall be deemed to have been read the first and second time;

(b) if the Committee has reported that it has gone through the Bill, the Bill shall be deemed to have been reported from a Select Committee;

(c) if the Committee has reported that it has not completed its consideration of the Bill—

(i) the Bill shall stand committed to a Select Committee of the same Members as the Members of the Committee in this Session;

(ii) all Petitions presented in this Session which stand referred to the Committee and which have not been withdrawn shall stand referred to the Committee in the next Session;

(iii) any minutes of evidence taken and any papers laid before the Committee in this Session which have been reported to the House shall stand referred to the Committee in the next Session;

(iv) the Instruction [17th July] shall be an Instruction to the Committee;

(v) only those Petitions mentioned in subparagraph (ii) above, and any Petition which may be presented by being deposited in the Private Bill Office and in which the Petitioners complain of any matter which has arisen during the progress of the Bill before the Committee in the next Session, shall stand referred to the Committee;

(vi) any Petitioner whose Petition stands referred to the Committee in the next Session shall, subject to the Rules and Orders of the House and to the Prayer of his Petition, be entitled to be heard by himself, his Counsel or Agents upon his Petition provided that it is prepared and signed in conformity with the Rules and Orders of the House, and the member in charge of the Bill shall be entitled to be heard by his Counsel or Agents in favour of the Bill against that Petition;

(vii) the Committee shall have power to sit notwithstanding any adjournment of the House, to adjourn from place to place within the United Kingdom, and to report from day to day the Minutes of Evidence taken before it;

(viii) three shall be the Quorum of the Committee;

(ix) any person registered in this Session as a parliamentary agent entitled to practice as such in opposing Bills only who, at the time when proceedings on the Bill were suspended in this Session, was employed in opposing the Bill shall be deemed to have been registered as such a parliamentary agent in the next Session:

(d) the Standing Orders and practice of the House applicable to the Bill, so far as complied with or (in the case of the Standing Orders relating to Private Business) dispensed with in this Session, shall be deemed to have been complied with or (as the case may be) dispensed with in the next Session; and

(e) if the Bill is reported, or is deemed by virtue of paragraph (b) above to have been reported, from a Select Committee in the next Session, it shall thereupon stand re-committed to a Standing Committee.

That this Order be a Standing Order of the House.

National Health Service (Amendment) Bill
Returned from the Commons with the amendments agreed to.
House adjourned at twenty-five minutes past seven o'clock.