Lords Sitting of 25 November 1986

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

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Hailsham of Saint Marylebone: My Lords, before the commencement of business, I should like to take the opportunity to inform the House that tomorrow I am to have the honour of attending upon His Royal Highness the Duke of Kent when he opens the new Crown Court at Guildford. Accordingly, I trust that the House will agree to grant me leave of absence tomorrow.

Financial Services Act: Authorisation Decisions
Lord Parry: 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 are satisfied that the Financial Services Act 1986 will promote open authorisation decisions by regulatory bodies.
Lord Beaverbrook: My Lords, I have nothing to add to the Answer given on 6th November to the noble Lord's identical Question.
Lord Parry: My Lords, the House will know that I am grateful to the young Minister for his full and clear response. However, in view of the welcome provision in the Act, which gives SROs the right to establish independent complaints schemes, and of the Minister's confirmation in another place that applicants for authorisation could have recourse to such schemes if they wished to complain about the practices of the SRO, will not the noble Lord express the hope—and note the hope expressed by Members of both Houses—that such schemes will be established and invested with real powers? Moreover, will he press SROs speedily to take up the opportunity offered by the Act?
Lord Beaverbrook: My Lords, under the Act, the SROs are required to act fairly and reasonably in recognising businesses applying for authorisation. As a self-regulating organisation, it is the criterion of recognition that its rules and practices about admitting or expelling members must be fair and reasonable and there must be adequate provision for appeals.
Lord Williams of Elvel: My Lords, in the light of yesterday's reported request by a major investment bank for a judicial review of the decision by the Takeover Panel, will the noble Lord confirm that the operation of what he describes as "fair and reasonable" rules and practices will also be open to judicial review?
Lord Beaverbrook: My Lords, I am not able today to confirm whether they will be open to judicial review, but your Lordships' House passed the Act which provides for many functions to be transferred to a designated agency composed of experienced practitioners and independent lay members. It would be for the agency to assess the organisation's rule books and to decide whether the rules on admission are fair and reasonable.
Lord Hacking: My Lords, will the Minister accept that this is a problem that needs tackling, and tackling soon? Accepting that proposition, will the Minister also accept that at present potential SROs are not only formulating their rules but are accepting members into their company? Is this not the matter which directs itself to the problem of authorisation?
Lord Beaverbrook: Yes, my Lords

South Africa: UN Sanctions Resolution
2.39 p.m.
Lord Hatch of Lusby: 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 their attitude to the UN General Assembly resolution of 11th November 1986 calling on the Security Council to adopt comprehensive, mandatory sanctions against South Africa.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we voted against this resolution because we oppose general economic sanctions which we believe would only serve to stiffen the South African Government's resistance to ending apartheid; to undermine further the stability of the region; and to destroy the jobs of large numbers of ordinary people in South Africa, in neighbouring countries and in Britain.
Lord Hatch of Lusby: My Lords, is the noble Baroness aware that in the commercial and financial world organisations such as Barclays Bank, IBM, General Motors, Kodak and many other such corporations take a different view from Her Majesty's Government? Is the noble Baroness prepared to take into consideration the rapidly increasing view of the commercial world so far as South Africa is concerned when this Motion is debated, as I believe it is due to be, in the Security Council?
Baroness Young: My Lords, our attitude to any possible motion in the Security Council is something that we would have to decide when such a resolution appears. At present, it is a hypothetical question.
Lord Cledwyn of Penrhos: My Lords, is the noble Baroness able to say whether the Government supports the action of Barclays Bank in withdrawing from South Africa? Would the Government be prepared to support other large British companies if they so decide to withdraw from South Africa? Finally, is the noble Baroness able to say whether the

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Government were consulted by Barclays Bank prior to the withdrawal, and what advice they gave?
Baroness Young: My Lords, the action of Barclays Bank is a matter for Barclays. It is a commercial decision for them. As regards the point about whether we were informed in advance, we were warned in very general terms.
Lord Mackie of Benshie: My Lords, would the noble Baroness care to say what alternative measures—assuming that the Government disapprove of apartheid—they think the world and the British Government should take, apart from sanctions?
Baroness Young: My Lords, the attitude of the British Government has been very plain. We joined with our Community partners in a statement of the measures that we were taking in September. On the positive side, we have given considerable financial support to the black African community within South Africa.
Lord Mellish: My Lords, is the noble Baroness aware that sanctions are designed to help the coloured people? Would the noble Baroness like to make a comment as to whether they do?
Baroness Young: My Lords, as a general principle we have taken steps to help black South Africans within South Africa. As regards the particular issue of Barclays' disinvestment in South Africa, that, of course, is a matter for Barclays.
Lord Williams of Elvel: My Lords, will the noble Baroness answer my noble friend's second question, which was whether Her Majesty's Government would encourage other firms and other industries to withdraw from South Africa?
Baroness Young: My Lords, the question of whether a company should disinvest from South Africa is a matter for the commercial judgment of companies and not for Her Majesty's Government.
Lord Parry: My Lords, is it not a fact, however, that the judgment was taken on the grounds that apartheid is no longer profitable, not that apartheid is evil?
Baroness Young: My Lords, it is, I think, for Barclays to answer why they took the decision.
Lord Kinnaird: My Lords, would the noble Baroness perhaps not agree that it is about time that some of us stopped meddling in other countries' business?
Baroness Young: My Lords, I think that the attitude of the Government to South Africa, and particularly to the policy of apartheid, is well known, but of course my noble friend makes an important point.
Lord Hatch of Lusby: My Lords, is it not the case that the chairman of Barclays Bank has already stated that the decision taken was not taken solely on commercial grounds, but also on political grounds? Is the noble Baroness aware that Barclays Bank have
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already announced that there is no reason to suppose that any employee will lose his job because of this disinvestment? When the noble Baroness speaks of the end of apartheid and the improvement of conditions in South Africa, is it not the case that just this week the Presidential Council's report on the Group Areas Act, which is a foundation stone of apartheid, has been shelved, and that therefore the hope expressed by Her Majesty's Government that the South African Government will get rid of apartheid is still as remote as it ever has been?
Baroness Young: My Lords, it is not my business to speak on behalf of Barclays and the reasons which led them to the decisions which they have taken, and I do not intend to move from that point. On the second point that the noble Lord, Lord Hatch, raised, the fact of the matter is that the South African Government have taken a number of steps to end apartheid but, as I have said to him on many occasions in the past and I say again, we think that they have been too few.
Lord Gisborough: My Lords, would my noble friend agree that there is a lot of evidence that the South African Government would like to have dismantled apartheid more quickly than they are doing but that they are held up by their electorate, who are insisting that apartheid remains? Therefore, is it not important to play to the electorate as much as it is to play to the government?
Baroness Young: My Lords, I think that the policies of the South African Government are again a matter for them, but, as I have said on many occasions, the British Government would like to see an end to the system of apartheid.
The Earl of Halsbury: My Lords, is it not time that we allowed Barclays Bank, General Motors, old Uncle Tom Cobbleigh and all to get on with their own business and leave us to get on with ours?
Baroness Young: My Lords, I can only say, "Well said!"

Freight Transport
2.46 p.m.
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they are taking to prevent environmental damage by promoting freight travel by rail rather than by road.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, it has been the policy of successive governments that industry should be free to choose the most suitable and cost-effective freight transport. At the same time we recognise that heavy flows of lorry traffic on unsuitable roads can damage communities and this Government have made full use of their grant powers under the freight facilities scheme to encourage the use of rail where it makes good environmental

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sense. So far 177 grants totalling £61 million have been approved, removing 34 million tonnes of freight a year from unsuitable roads.
Lord Gainford: My Lords, I thank my noble friend for that Answer. Has he any information as to what Her Majesty's Government may be able to do for companies which have a factory where there is no easy access to railway sidings, which have to use a lorry to get their freight to the railway and which then perhaps face the prospect of having to use a lorry at the other end? Those companies may think "Well, why not let us go the whole hog and take it by road anyway".
Lord Brabazon of Tara: My Lords, this scheme is primarily for those companies that have reasonable access to the railway system and therefore can either build a siding from the main line to their factory or perhaps build some form of conveyor belt system. If the factory is too far away from the railway and it requires road transport to and fro, it would not be suitable for this scheme.
Lord Underhill: My Lords, would the Government be prepared to review the rate of grants for the freight facilities to which the Minister referred in his main Answer? Secondly, as transport by rail is profitable over 200 miles, will the Government take a look at the possibility of having transhipment centres outside the main conurbations, bearing in mind that at least in Paris two have been established which are a great success commercially? Would that not relieve the situation and enable the speedy transfer of goods from rail to road in the conurbations?
Lord Brabazon of Tara: My Lords, on the noble Lord's first question, we keep the criteria for the grants under consideration. The main criteria are that there should be worthwhile environmental benefits and that the traffic would otherwise go by road in the absence of a grant. But we must not forget value for money and the fact that the grant is for capital expenditure only. On the noble Lord's point about transhipment centres, that is something I shall have to look into. I do not have details of that with me at the moment.
Lord Mellish: My Lords, the Minister said in his reply that it is a matter of freedom of choice for those who wish to convey goods, but is he aware that the position is now absolutely chaotic? Rail and road have been mentioned, but what about river transport? The River Thames is empty today. Noble Lords can go out to have a look. It is absolutely empty, and yet all our bridges and roads are choked up. Does the noble Lord agree that at some stage, somewhere, some Minister has to have the courage to say to those who deal with freight, "Look, that sort of freight is either going by rail or by river"? No other country in the world would stand for this situation.
Lord Brabazon of Tara: My Lords, as I said in my original Answer, it has been the policy of successive governments that freight should be moved by the most suitable and cost-effective means. The noble Lord may have his views on that. I would point out, however, that there is another type of grant available for inland waterways transport under Section 36 of the Transport
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Act 1981. A number of schemes have been approved for grant under it, but not a great many.
Lord Somers: My Lords, has not this subject been raised countless times in the last two years? Since it has been proved that heavy road traffic does considerable damage to many buildings, some of them very valuable, when will the Government do something about this? Are they going to wait until all these buildings have tumbled down and are completely irreparable?
Lord Brabazon of Tara: The noble Lord asks what we are doing about the situation, my Lords. First, we have this grant, and since it came into operation over 34 million tonnes of freight a year have been removed from unsuitable roads. I should have thought we were doing something about it.
Viscount Massereene and Ferrard: My Lords, my noble friend referred to unsuitable roads, but it is not only that. Is he aware that the situation is absurd? Bulk cargoes such as iron and timber travelling over 100 miles ought to go by rail. Does he also agree that to a certain extent it is a question of life and limb? If one travels on some of these motorways in the pouring rain, in the dark, with these vast lorries weighing 40 tonnes and doing 70 miles an hour, it is a question of life and limb. I have nearly been killed two or three times.
Lord Brabazon of Tara: My Lords, I am sorry that my noble friend has had these experiences. I trust that he will therefore draw attention to the possibility of these grants to any shipper who is involved in this sort of business and make sure that everyone knows they are available.
Lord Taylor of Gryfe: My Lords, does the Minister agree that the transport of coal is the biggest contributor to British Rail revenue so far as freight is concerned, and that that revenue was lost to some extent during the miners' strike when traffic was transferred to road transport, which is environmentally damaging? What steps are being taken to ensure that coal is now transported substantially, or overwhelmingly, by rail, which is less offensive to the environment?
Lord Brabazon of Tara: My Lords, I am afraid that I do not have the figures for what proportion of coal transport moved to the roads during the miners' strike has since returned to British Rail. British Rail can compete successfully with road transport for the movement of coal and the more that goes back to rail the better. On the other hand, we know very well why the freight was transferred from railways to road, and from that point of view the railways, or their employees, have only themselves to blame.
Viscount St. Davids: My Lords, does the Minister have figures for the damage done to the environment by the accidental spillage of dangerous and poisonous cargoes from road vehicles compared with comparable dangers from spillage from road or water transport? Are there figures that he can give the House on this subject?
Lord Brabazon of Tara: Not without notice, my Lords, but I shall look into the matter and see whether I can find such figures.

Navigation Light Dues: Policy
2.54 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they intend to spread the costs of lights for navigation more widely, so that an inordinate burden does not fall upon the British merchant fleet.
Lord Brabazon of Tara: My Lords, the Government are aware of the burden these charges impose, both on the shipping industry and on United Kingdom ports, and are giving close consideration to means of reducing it.
Lord Campbell of Croy: My Lords, I thank my noble friend for that reply. However, is he aware that the tax in question, light dues, is levied on merchant shipping but not on other categories of vessel which also benefit from these navigational aids, and that some neighbouring countries that compete with our ports and shipping raise the costs of lighthouses from general taxation?
Lord Brabazon of Tara: My Lords, I am aware of the point my noble friend makes. It is true to say that we are the only Western European country which charges light dues to users rather than the taxpayer. As regards other classes of users, we have looked into the possibility of charging yachtsmen; but we recognise that would be administratively very difficult and would be unlikely to secure a positive benefit. So far as charging fishing vessels is concerned, we are considering that problem at the moment, particularly in regard to the services of the Decca navigation system.
Lord Simon of Glaisdale: My Lords, have not the Government had the report, which they themselves commissioned on this matter, for a year now? Even if there are administrative and political difficulties in implementing some of the recommendations, is not the figure of 14 light due free entries—free passage after that number of entries—grossly anomalous? Should not that anomaly be dealt with right away by substantially raising the figure of 14?
Lord Brabazon of Tara: My Lords, I must confess that I am not entirely clear on the figure of 14 to which the noble and learned Lord, Lord Simon of Glaisdale, referred. He spoke about the Arthur Anderson Report, which was issued some little time ago. We are looking into this. A further study is under way at the moment. I shall make a statement on it in due course.
Lord Lloyd of Kilgerran: My Lords, can the Minister help on how long it will be before the matter relating to fishermen will be dealt with and published?
Lord Brabazon of Tara: My Lords, regarding the payment of light dues when the lighthouse authorities take over the operation of the Decca navigation system, there is an order currently before the House and I believe it will be debated before long.
Lord Greenway: My Lords, will the Minister agree that the burden mentioned in the original Question falls upon foreign flag shipping as our Merchant Navy has dwindled to a shadow of its former self?
Lord Brabazon of Tara: My Lords, it falls on all shipping which enters our ports, whether they be foreign or British.
Lord Campbell of Croy: My Lords, is my noble friend aware that that means there is a temptation to shipping to go to Rotterdam and other ports nearby rather than to our ports? Also, is he aware that he has not mentioned the Royal Navy or other ships owned by the Government which do not have to pay these dues?
Lord Brabazon of Tara: My Lords, on my noble friend's first point, yes, we are well aware of the difficulties this causes our ports in comparison with those of our Continental competitors. As far as the Royal Navy is concerned, Parliament decided in 1894 that the Royal Navy should not pay, and that remains the position at the moment.
Lord Strathcona and Mount Royal: My Lords, can the Minister give the House any information as to how these charges compare with the costs of pilotage which we shall discuss later this afternoon?
Lord Brabazon of Tara: My Lords, light dues, or the provision of lights, currently costs about £60 million in the current year, of which the amount actually paid by users is some £44 million.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Davidson will, with the leave of the House, repeat a Statement that is to be made in another place on the "Kowloon Bridge".

Local Government Act 1986 (Amendment) Bill [H.L.]
The Earl of Halsbury: My Lords, I beg to introduce a Bill to restrain local authorities from promoting homosexuality. I beg to move that this Bill be now read a first time.
Moved, That this Bill be now read a first time.—(The Earl of Halsbury.)
On Question, Bill read a first time, and to be printed.

Brighton Marine Palace and Pier Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Pilotage Bill [H.L.]
3 p.m.
Lord Brabazon of Tara: My Lords, I beg to move that this Bill be now read a second time.
This is an important Bill on an important subject. It concerns the marine pilots, who are a body small in number—currently about 1,300 in the whole country—but with a distinguished tradition of service to shipping. Few of us come across the work of the pilots in our day-to-day lives, yet their services are vital to the safe movement of many of the ships which enter and leave our ports. They are an important element in the transport system on which our ability to export and import successfully depends. And they will remain so in future. Despite the increasing sophistication of traffic management techniques in the ports, and of the equipment available to masters, it is still true that for many ships and in many ports there is no substitute for the combination of up-to-date local knowledge and shiphandling competence which the pilot can offer.
However, the way in which pilotage is at present organised has long been recognised by almost all who are familiar with it to leave much room for improvement. There was a series of reviews during the 1970s, culminating in some legislative changes through the Merchant Shipping Act of 1979 since consolidated into the Pilotage Act 1983. But the reforms which are needed are still not being carried out. The pilotage authorities (or the committees through which they exercise their responsibilities) are generally composed of representatives of the main parties with an interest in pilotage, principally the pilots, shipowners and port authorities. Each party tends to try to protect its own interests and the pilotage authorities have generally found it difficult to agree on the far-reaching reforms which are needed in some cases to improve local pilotage arrangements. Even where such proposals for reform are put forward, the existing legislation gives all the main interested parties the opportunity of objecting to the draft bylaws and orders necessary for change. A situation of stalemate has resulted in which progress towards reform has been minimal. The present structure certainly provides for full, indeed almost interminable, discussion of the problems of pilotage. What it does not do is give anyone the ability to take clear decisions and the power to carry them through.
Perhaps this would not matter very much if it were not clear that the inflexibilities of the present system are imposing a greater cost/burden on shipping using our ports than it need. In 1985, pilotage cost shipping using UK ports some £47 million. Productivity is in a number of cases low, working practices are often archaic, and all dispassionate observers agree that there are many more pilots than are needed. Even so, charges for pilotage in the main ports are set so as to pay for some 15 per cent. more pilots than there actually are.
It became clear in the early 1980s that, although the pilots are, technically, self-employed, a scheme would be needed to compensate pilots who were made redundant if any progress was to be made to reduce their numbers more quickly than natural wastage
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would allow. Proposals for such a scheme were drawn up by the merchant bankers, Samuel Montagu, but ultimately one of the parties involved, the General Council of British Shipping, decided that they could not accept the scheme which was being proposed. A Subsequent attempt by my honourable friend Mr. David Mitchell to achieve an agreed compensation scheme also foundered because the GCBS found the terms unacceptable. The inability of the main interested parties to agree on a compensation scheme led directly to this Government's publication of a Green Paper at the end of 1984, which proposed a greatly simplified system under which pilotage would become the responsibility of individual harbour authorities and would be treated as one of the services provided by them for vessels using the port.
Following consideration of the comments received in response to the Green Paper, and of the recommendations made by the transport committee in another place in their report on pilotage in 1985, we remain convinced that such a transfer will lead to pilotage services which meet local needs in a flexible and cost-effective manner, without any detriment to the safety of shipping or to the protection of the local marine environment. The central proposal of the Bill which we are now putting forward is that this transfer of responsibility for pilotage should take place.
What are the main advantages which we see these proposals as bringing? First, harbour authorities are ideally placed to take responsible decisions on safety and on the pilotage requirements of ships using their ports. They already have responsibilities for safety of navigation. They will be keen to ensure that services are efficiently provided and at a cost no higher than is necessary. At the same time, they will see it as in their own commercial interests to safeguard the safety of shipping using their ports.
Secondly, with the development of shore-based management systems for shipping entering and leaving ports and the prospect of their becoming increasingly sophisticated and widespread, there is likely to be scope for integrating the management of such systems with the management of pilotage services, as is the case in some ports where pilots are already employed.
Thirdly, the harbour authorities will be in a position to provide proper direction and effective management of their pilotage services, with clear-cut decisions, in a way which has not been possible for pilotage authorities under the present legislation.
Fourthly, decisions will be taken locally, with a minimum of interference from bodies with national or other wider responsibilities, including my own department and, if I may say so, my right honourable friend the Secretary of State. I am sure this is right. Local pilotage requirements should be related to the risks to navigation in the particular harbour and harbour approaches and the volume and nature of traffic using the harbour.
Fifthly, pilotage is at present regulated in every detail by the complex body of legislation and regulation. One commentator has even suggested that an Act of Parliament would be necessary to alter the length of bootstraps of a Southwold pilot; this is an exaggeration, but it sometimes seems not much of one. Under our proposals, the legislative framework

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governing pilotage will be greatly simplified with, we hope, a great saving in bureaucracy for all the parties concerned. Lastly, our proposals include provision for a statutory compensation scheme, to be laid down by the Government, for pilots who would be made surplus under the new regime.
It has sometimes been suggested that the mainspring of our proposals is in some sense an attack on the pilots. Nothing is further from our thoughts. We have every respect for the difficult and sometimes dangerous job which the pilots do. Out aim is to reform the system of pilotage and to provide the pilots with a firm and lasting basis for the future conduct of their profession and to put an end to the doubts and uncertainties which have dogged pilotage for so many years.
I shall now turn to the provisions of the Bill itself. Part I of the Bill sets out the functions that harbour authorities will in future have in respect of pilotage. Clause 1 defines the harbour authorities which will have pilotage responsibilities, and which, for these purposes will be known as "competent" harbour authorities. These are authorities which have statutory powers over the movement of ships and in relation to safety of navigation. Harbour authorities outside areas where pilotage services are at present provided will not qualify as competent harbour authorities, since there is no prima facie need for pilotage services in their harbours. Nor will certain other authorities, including own-account operators. But it will be possible for such authorities to seek orders making them competent harbour authorities if they think it necessary. The clause also provides an order-making procedure under which responsibility for pilotage can be assigned to a particular authoritiy in cases where more than one harbour authority in a locality fits the statutory definition and it is not sensible for them both to consider the need for pilotage; there are also one or two minor ports where there is no statutory harbour authority, and an order providing for pilotage to be handled by another authority will have to be made.
A list of the authorities which we believe will fall within the statutory definition has been published as an annex to the Government's recent White Paper on pilotage. This is not a definitive list, since qualification as a competent harbour authority depends among other things on what the authority's governing legislation says. And the list will in any case be subject to amendment by orders made under the powers sought in Clause 1.
Clause 2 lays down the central duties which competent harbour authorities will have—those of considering whether it is necessary for a pilotage service to be provided, and whether it should be compulsory and, if so, in what circumstances, for ships to be required to use it. The authority will also be required to provide such services as its consideration shows are necessary. One point I should emphasise is that the duty to consider pilotage needs is not confined to the authority's present harbour limits—they will also have to look at the approaches to their ports.
Clause 3 deals with the authorisation of pilots by competent harbour authorities; this will follow much the same practice as the present licensing of pilots by
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pilotage authorities, with qualifications being set locally. Unlike the present licensing arrangements, however, an authority will be able to withdraw an authorisation if at some future date there are too many authorised pilots or they wish to change the arrangements for pilotage in their district.
I should like to draw attention to two important features of this clause. Under subsection (3), the existing licensed pilots will have priority for authorisation under the new régime for the first four years and harbour authorities will be obliged to offer employment to the pilots needed in their areas, unless a majority of local pilots have agreed that some other arrangement, perhaps involving self-employment, should be made. Subsections (4) to (6) are the rather complicated provisions necessary to achieve this. This of course strengthens the position of the pilots in negotiating future arrangements with the harbour authority.
Clause 4 places a duty on authorities to approve or license vessels being used as pilot boats. It goes further than existing legislation in that it requires the authority to satisfy itself that such boats are tit for this purpose.
Clause 5 introduces the concept of a "pilotage direction", by which an authority will be able to direct that such types of vessels as are specified in the direction shall take a pilot while navigating in the harbour. Within its harbour area, an authority will be free to make such a direction when it judges necessary: if it considers compulsion is needed outside its current harbour area, it will first need to obtain a harbour revision order to extend its jurisdiction to the area concerned. Paragraph 1 of Schedule 1 provides a simplified procedure which will be available to authorities seeking such extensions before the appointed day, provided that the area concerned is already subject to compulsory pilotage under the existing régime. As at present, fishing vessels of less than 47·5 metres in length will be exempt from compulsory pilotage, as will be Her Majesty's ships, by Crown exemption which does not need to be specified in the Bill.
Clause 6 requires a competent harbour authority which has imposed compulsory pilotage to issue pilotage exemption certificates to masters or first mates who can meet their reasonable requirements concerning skill, experience and local knowledge. The restrictions on grounds of nationality, or based on the number of local pilots, which are provided for in the existing legislation will not be retained, although the Secretary of State will be able to relieve authorities of their obligations to issue certificates where there are unusual hazards.
Clause 7 prevents an authority discriminating in favour of its own ships. Under Clause 8, authorities may charge for their pilotage services. Such charges must be reasonable, and will be subject to appeal to the Secretary of State by port users and other authorities affected, in the same way as appeals may already be made against certain other port charges. As at present, authorities will have the option of making charges on users of pilotage exemption certificates where they believe it is reasonable to expect them to contribute towards the cost of the pilotage service.

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Clause 9 allows an authority to arrange for certain of its functions to be carried out by an agent or another harbour authority, or to make joint arrangements with another authority.
Clause 10 deals with those areas, including certain major estuaries, where the pilotage activities of one authority may affect the interests of another authority or port operator. What is the best arrangement will depend on local circumstances, and the Government do not think it right to force these authorities into one particular mould. However, there is a natural concern that the interests of all the authorities and operators should be protected, and that the most sensible and economical arrangements for the estuary as a whole should be made. Accordingly, the Secretary of State will have a power to call for information on these arrangements and, if necessary, to change them.
Clause 11 provides for the resolution of disputes between authorities. Clause 12 concerns accounts. In order that port users may be able to judge the reasonableness of charges for pilotage, authorities will be required to make their pilotage accounts available for inspection.
Part II of the Bill includes the provisions necessary if authorities and their pilots are to be able to operate pilotage services effectively. Clauses 13 to 18 deal with detailed matters of day-to-day pilotage operation and largely following existing practice. Clause 19 sets out the limitations which will apply to the liability of pilots and the harbour authorities; these are on broadly similar lines to those in the existing pilotage legislation, although the monetary sums have been increased.
Clause 20 concerns deep sea pilotage, that is pilotage carried out beyond harbour limits. Such pilotage is not regulated by legislation, and this clause merely provides for the continuation of the present arrangements under which certain bodies are approved for the purposes of issuing certificates to deep sea pilots.
Part III of the Bill deals with the winding-up of the existing pilotage organisation. Clause 21 abolishes the existing pilotage authorities, and requires the Pilotage Commission to draw up proposals for the transfer of their assets and liabilities to the appropriate harbour authorities, These transfers will be effected by a scheme or schemes made by the Secretary of State. Where there is more than one harbour authority who succeeds to a pilotage authority, the commission will need to allocate the assets and liabilities between them.
Clause 22 sets out how such schemes shall apply to the staff of the pilotage authorities: in general, they will simply be transferred to the harbour authority's employment; but where, as with Trinity House, a body which is at present a pilotage authority is to continue in other capacities, it will be for them to decide whether staff shall be retained or transferred to a harbour authority. Where a pilotage authority's pension obligations are not fully funded, a scheme may require the harbour authorities to rectify this.
Clause 23 provides for the abolition of the Pilotage Commission once it has completed the tasks assigned to it under this part of the Bill. Clause 24 provides for alterations to the functions and constitution of the Pilotage Commission during the period after enactment of the legislation.
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Clause 25 requires the Secretary of State to make a scheme for the compensation of pilots who are surplus to requirements once the harbour authorities have authorised the pilots they think necessary in their areas. Harbour authorities will be required to make payments as set out in the scheme. The terms to be available were announced by my right honourable friend the Secretary of State on 23rd May, and were reproduced in our recent White Paper. Pilots will receive a lump sum calculated on the basis of a year's recommended earnings. In addition, the Pilots' National Pension Fund have agreed to make available to surplus pilots early retirement benefits within a total of £15 million, funded from the surplus within the fund.
Clause 26 provides for the Pilotage Commission's expenses and other costs to be recovered from harbour authorities and authorities may recover such costs, and the cost of compensation payments, from port users.
Part IV is supplementary, and Schedule 1 contains transitional provisions. As well as the simplified procedures for obtaining a harbour revision order for the extension of compulsory pilotage, which I have already mentioned, I should draw attention to paragraph 2 of this schedule, which ensures the continuance in being and contined operation of the Pilots' National Pension Fund after the repeal of the legislation under which it was established.
That, then, is the Bill which we have placed before your Lordships. I have not thus far mentioned Trinity House. We of course recognise that, as authority for nearly half the present districts, Trinity House has accumulated immense experience and expertise in pilotage. I believe that Trinity House itself accepts the logic of the harbour authorities deciding what pilotage requirements should be placed upon shipping, but it would, of course, be a great pity if we were to lose the experience of Trinity House in the provision of pilotage services.
I was very pleased to hear, therefore, that Trinity House is establishing a new subsidiary company—Trinity House Agency Services Limited—through which it will be able to operate services for competent harbour authorities, not just in the areas at present served by Trinity House, but throughout the country. I understand that there have already been discussions with a number of ports, and I am sure that all competent harbour authorities would be well advised to look at the possibility of making use of Trinity House's unrivalled experience in pilotage matters.
I should also like to say a word about the vexed question of the employment status of pilots. Although there are some ports where pilots are already employed, the great majority of pilots have a status which the Inland Revenue have classed as self-employed. There has been a lot of debate, generating more heat than light, about whether this status is comparable to self-employment as the term is generally understood, and even pilots themselves have been known to argue either way. Be that as it may, the present legislative provisions laying down the framework within which the pilots currently work will be removed under our proposed legislation, and in future a variety of arrangements will be possible.

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A competent harbour authority or its subsidiary company will be able to employ the pilots, and I have referred to the provision in the Bill which offers authorised pilots a right to insist on such employment. But pilotage services can alternatively be provided in a number of other ways—by agreement between individual self-employed pilots and the authorities, by pilots' co-operatives, by contracts with Trinity House, or with another agent, who may in turn employ pilots to make agreements with self-employed pilots. In all these cases it will, of course, be for the parties concerned to reach agreement on the terms and conditions which will apply, and this seems to us much more likely to lead to arrangements which fit local circumstances than detailed regulations of the kind which have proved so inflexible in the present legislation.
I believe that this Bill will allow pilotage better to meet current need, and indeed that the structure we are proposing will allow efficient services to be provided for as far ahead as any of us can see. The Bill also provides, I believe, for fair treatment of all those, pilots and others, who work in the present system. They will need to be prepared to accept changes, and some may find the period of transition to the new system difficult to adjust to. But the long-term future of our ports, and hence of the pilotage services, depends on adjusting to modern circumstances and operating efficiently.
I commend this Bill to your Lordships' House, but before the Question is put I should also like to say a brief word about the second Motion standing in my name on the Order Paper; that is, That the Bill be committed to a Public Bill Committee. Last Session a number of your Lordships suggested that the congestion of business might be relieved by taking the Committee stage of a Bill off the Floor of the House. Subject to the agreement of the House, it is accordingly proposed that the Pilotage Bill be committed to a Public Bill Committee. The procedure is clearly set out in The Companion to the Standing Orders at pages 152 and 153, but I should like to draw your Lordships' attention in particular to the fact that Lords not named in the Committee may attend, speak and move amendments, though they may not vote. The Committee normally sits between 3.15 and 5.45 p.m., except on Thursdays when it sits from 3.45 to 6.15 p.m.
The Government are fully aware of the advantages and disadvantages of Public Bill Committees, and we realise that many of your Lordships feel that the scope for the usefulness of this procedure is limited. But, as many of your Lordships also feel that there may be something to be gained by it, we are happy to refer the Pilotage Bill to such a Committee, if the House agrees. My Lords, I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read a second time.—(Lord Brabazon of Tara.)
3.23 p.m.
Lord Underhill: My Lords, I first thank the noble Lord the Minister for so clearly explaining the Bill, and also the Government for issuing the
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memorandum on the legislative proposals, which I found extremely helpful. As the noble Lord, Lord Brabazon, has said, this is an important Bill. While it is not politically controversial, there are sections of the Bill which may prove to be controversial. The reference to the Public Bill Committee is one that we on this side of the House accept. Consideration as to whether it is successful or useful can be determined after the Committee's deliberations, as can consideration of whether it is the right way to do things, at the right time or otherwise.
We had an initial canter on this matter in the debate on 25th June, which was opened by my noble friend Lord Shackleton, who I am pleased is to speak in this debate. The Minister has reminded us that the British Ports Association and the General Council of British Shipping were in support of the report of the Select Committee of the other place, to the effect that pilotage should be transferred to harbour authorities. I think that those noble Lords who have read the Commons Transport Committee's report will agree that it is an excellent report.
In our previous debate, Trinity House was said to have expressed some criticism, and I questioned, in the course of that debate, what use would be made of the expertise that Trinity House has given in the past and undoubtedly can still give in the future. I am pleased to have the communication to which the noble Lord, Lord Brabazon, has referred, stressing that Trinity House now supports the need for ports to have pilotage responsibility and has formed the company which, under Clause 9 of the Bill, ports are free to use as agents, if they so desire. I gather that Trinity House has reservations, particularly on Clauses 21 and 22 with which I shall not deal, but no doubt my noble friend will be dealing with those in the course of his speech.
Lord Shackleton: My Lords, may I interrupt my noble friend? Trinity House has always been in favour, certainly in recent years, of transfer to the harbour authorities.
Lord Underhill: My Lords, I think I am being corrected on that. It was critical of certain aspects of the proposed transfer. In that debate I also stressed the view of the Opposition that it would not necessarily oppose the transfer of pilotage to harbour authorities, but would want very carefully to see exactly what would be the proposals in the Bill and exactly how matters would work out. That still remains our view. We have a very sympathetic attitude to the Bill, but there are certain points, to some of which I will refer, which can be dealt with fully in Committee.
I support the view of the pilots' organisation that a pilotage scheme should meet the needs of industry and the environment, and ensure fair and equitable treatment for the pilots. I was very pleased that in our previous debate a number of noble Lords emphasised the importance of environmental considerations. I will come back to that later on.
With regard to Clause 1, I note that the memorandum issued jointly by the Ports Association and the General Council of British Shipping points out, in its paragraph 4, that pilotage authorities at present include representatives of pilots, shipowners and the harbour authorities. Then, paragraph 13 of

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their joint memorandum stresses that one of the deficiencies of the present pilotage authorities is that,
"They are composed of representatives of often conflicting interests.".
How is such conflict of interest to be avoided under the Bill, merely by transferring responsibility for pilotage to the harbour authorities?
I understand that under Clause 1 of the Bill the Secretary of State is to be given powers to consider whether the competent harbour authorities should be pilotage authorities; and, under Clause 10, to determine schemes of pilotage which cover more than one authority. Then I note that under Clauses 24 and 25 the Pilotage Commission will have the responsibility of advising the Secretary of State, at his request, on matters connected with the reorganisation of pilotage. That would appear to be rather too indefinite with regard to central administration and direction, because Clause 23 provides that the Secretary of State will determine the date on which the commission shall be wound up.
What, then, will be the position as regards advice to the Secretary of State once the Pilotage Commission is wound up? The pilotage organisation is very concerned that, in particular, the Bill will lead to a fragmentation of administration. Clause 3, which gives power to the harbour authorities to determine the qualifications of pilots, means that this is a decision set completely locally. I think that point was emphasised by the noble Lord, Lord Brabazon. Where are there to be criteria laid down as to the determination of the qualifications of pilots? So far as I can see, there is no provision for this, in this clause or elsewhere, or for any regulations on the matter. Similarly, in Clause 4, the competent harbour authority is to have the duty—I noticed these words were particularly used by the Minister—to satisfy itself as to the fitness of boats to be used for pilotage. Again, I can see no reference to any statutory standards laid down.
Paragraph 20 on page 9 of the British Ports Association memorandum of 17th June last, before its current joint memo with the general council, referred to criticism that port authorities may lack the skill or the will to provide suitable pilot boats. Although that memo provided an answer, the very fact that the point was raised by the association suggests that this is an important issue.
I noted that the Transport Committee of the other place strongly recommended that responsibility for both licensing and manning standards should rest with the Department of Transport. That proposal has not been accepted by the Government and it is not in the Bill. I hate to refer to the speeches of noble Lords who are to speak later in this debate, but I noted in particular that my noble friend Lord Shackleton said:
"We are waiting for a satisfactory code of practice and draft pilot boat construction, survey and certification regulations".—[Official Report, 25/6/86; col. 379.]
We note that there is no reference at all to that in the Bill.
Similarly the issue of pilotage exemption certificates is to be the sole responsibility of the harbour authorities, provided that the skill, experience and
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local knowledge of the master or first mate are to their satisfaction. Will there be any criteria laid down? There is no reference to them in the Bill. If there are to be criteria, how are they to be laid down?
I now come to the question of compulsory pilotage, which is covered in Clause 2 and later in Clauses 5 and 7. In our previous debate I questioned whether there should be particular areas or classifications of ships and cargoes where compulsory pilotage should be required. As noble Lords will have heard from the Minister, the Bill leaves this solely for the harbour authority to determine.
As I stated earlier, various noble Lords stressed in the debate in June the important question of the environment. Again, I am pleased to note that some noble Lords who stressed that are to take part in this debate. But I note that there is no reference whatever in the memorandum of the Government to the important questions of the environment or the public interest. As I said, a number of noble Lords regarded this as very important when considering compulsory pilotage.
I note that Clause 5(4) provides that before giving a compulsory pilotage order a harbour authority shall consult the relevant shipowners and others who may carry on harbour operations in the area. Will that mean that proper regard will be paid to the public interest? That appears to be missing from the clause. If a harbour authority should decide to remove the present compulsory pilotage, will the pilots' organisations be consulted? Your Lordships will notice the reference to consultation with shipowners and others before a compulsory pilotage order is made. What about consultation with the pilots' organisation should a present compulsory direction be removed? There appears to be no reference whatever to this.
Clause 8 refers to pilotage charges and there is provision for a right of appeal by shipowners and harbour operators to the Secretary of State. Noble Lords will have listened carefully to what the Minister said about the earnings of pilots, and this is to be left solely to the harbour authorities for local negotiation with pilots. Until 1984 pilots' earnings were subject to what was known as the Letch agreement. That was an agreement between pilots and shipowners, but the shipowners withdrew from that in, I think, 1984.
The British Ports Association's briefing of 17th June, to which I referred, stated in paragraph 20:
"Ports authorities must be allowed to negotiate reasonable terms and conditions for their new employees".
I can see nothing in the Government's memorandum which refers implicitly to that matter, although the noble Lord, Lord Brabazon, indicated that it will be a matter for local negotiations. Shipowners will have the right of appeal on the question of charges, but there seems to be nothing in either the Government's memorandum or the Bill giving the right to the pilots' organisation to make any appeal if it is dissatisfied with any negotations that are conducted locally. That would be on a very small scale indeed in the case of a number of pilots employed by certain pilotage authorities.
Lastly, in our previous debate a number of noble Lords emphasised that any pilotage legislation must be

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fair and equitable to the pilots. That was emphasised in a letter which the Prime Minister wrote on 21st April. The final paragraph, paragraph 41, of the Government's memorandum on the present proposals stated:
"It is confident, too, that the legislation will provide a lasting basis for the future of marine pilotage, while at the same time providing equitable treatment to the present and future members of a distinguished profession".
To be fair to the Minister, he emphasised the importance of this fair and equitable treatment. I ask whether the Bill provides for this fair and equitable treatment for pilots which everybody seems to favour.
Paragraph 2 of the introduction to the Government's memorandum states:
"protracted attempts to reach agreement on a voluntary early retirement scheme for surplus pilots finally broke down in 1984".
On 23rd May this year the Secretary of State announced that agreement in principle on a compensation scheme had been reached between the pilots' organisation and the ports association, but, as the Minister informed the House, the general council had not been prepared to agree with these proposals. We find in Clause 25 that a compensation scheme will be made by statutory instrument and nothing definite is laid down in the Bill, although it has been stated that the scheme will be on the basis of a Statement made by the Secretary of State on 23rd May, which is included as Annex A to the Government's memorandum.
It is emphasised that some £14 million is to be set aside from the pilots' national pension fund, but the chairman of that fund, in correspondence with the noble Lord, Lord Brabazon—who will be more aware of it than I am—has set out circumstances in which that sum may be exceeded. That could present a problem which does not appear to be covered. There is nothing in the Bill to provide any assurance that existing benefits, including those relating to early retirement schemes, will be preserved. We have argued before on privatisation schemes that a scheme of reorganisation of this kind, which everybody agrees is a desirable objective, should make absolutely clear that existing benefits, including those relating to early retirement schemes and their general conditions, will be preserved.
I noticed in the recent statement by Trinity House—I am certain that my noble friend Lord Shackleton will not mind my referring to this, because it is dated 21st November and I received it only yesterday—that it is stated:
"It will also be financially impossible to create a commercial company able to offer advantageous rates if that company has to assume the financial burden of superannuation and/or redundancy payments to its staff".
In the absence of anything clear and specific in the Bill—the statement from Trinity House would appear to be a strictly good, commercial one—I ask again, is fair and equitable treatment of pilots fully guaranteed?
It is unfortunate that the Government stated in their original Green Paper that there is no justification whatever for public funds to help in this way. As I said at the outset, we give general support in principle to the Bill, but there are issues, some of a controversial nature, that we will wish to see thrashed out in Committee.
3.40 p.m.
Lord Walston: My Lords, I too should like to thank the noble Lord, Lord Brabazon, for his very clear exposition of the Bill. At the same time, to set at rest any doubts that he may be having, I may say that we on these Benches support the general principles of the Bill and look on it as an improvement in what he himself described as the present cumbersome system of organising pilotage. That does not mean to say that we do not have some rather serious reservations and some criticisms, some of which I will briefly mention, and on which I am sure my noble friends Lord Grey and Lord Simon will elaborate in more detail. I also support strongly the proposal that the Bill should have its Committee stage under the new procedures. This, I hope and believe, will be a considerable improvement and will save a lot of the valuable time of the House.
We have a very long and maritime tradition and the safety of our seafaring folk, our ships and our coasts is something of which we are rightly proud, going back as it does to the days of Henry VIII and the beginnings of Trinity House. The Merchant Navy, although declining in importance, is still of the greatest importance to this country, so that our shores and the access to our harbours should be above all safe, with that safety ensured at the lowest cost consistent with fair treatment and fulfilling the obligations.
Safety must be paramount in this matter. I think it is absolutely right, both in principle and in practice, that the safety of individual harbours should be in the hands of the harbour authorities, whether it be safety from noxious substances or of ships when navigating or when tied up in harbour, including—and I am glad that the noble Lord, Lord Underhill, mentioned this—the safety of the environment. That is clearly a responsibility of the local authority.
The Bill puts squarely on the shoulders of the competent harbour authorities their obligations in this respect. But it is perfectly right to say that some harbours are too small to fulfil their functions adequately or consider that they do not have the proper facilities for so doing. The proposals that Trinity House should continue to fulfil its traditional obligations for pilotage by setting up a company to offer services to those harbour authorities is surely the right arrangement for such places.
It is very good to know that Trinity House itself, with certain reservations, approves of the Bill and that in principle the pilots do also. I think that much credit should go to the noble Lord, Lord Brabazon, and his officials for having overcome the reasonable and justified fears expressed in earlier debates and elsewhere concerning these matters.
On the point of safety, I am not very clear about the responsibilities of the competent harbour authorities for the waters outside their own existing demarcations. I am afraid that Clause 6 is somewhat unclear to me. I refer particularly to those areas outside the haven ports, the area that I personally know best, the Goodwin Sands and so on and the Thames estuary, where there are very great hazards to shipping well known to competent masters and masters used to that type of navigation. However, given the type of ships that come into those waters from time to time, particularly those carrying dangerous cargoes, I hope

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that the noble Lord will be able to assure us that the pilotage of those areas and the wider waters is fully taken care of. I should have thought that this is one of the areas where Trinity House has a vital role to play.
In connection with Trinity House, it is essential that it should continue to retain, or acquire, the resources to enable it to do its job properly. The financial obligations on Trinity House and its ability to acquire the funds to carry them out, as mentioned in Clause 21, are not entirely clear to me. I hope that we can receive assurances that this problem has been adequately taken care of; or possibly it should wait until Committee stage when it may be necessary to table some amendments to ensure that this is done.
When all is said and done, pilotage must depend upon the pilots themselves. They play the vital role in the safety of shipping in approaches to harbours and within harbours. They are, I am sure all noble Lords agree, a very fine—if occasionally somewhat difficult—body of men who fulfil their highly responsible functions with enormous skills. These people must be fairly treated.
There are doubts—I think that some of them are justified—that under the new arrangements there may be additional difficulties that are not at present experienced. I know that the present system is not the right one—I fully accept that. There are too many pilots. It is always difficult to reduce the numbers in any profession, particularly in a profession as skilled as pilotage. The rewards of pilots show an enormous variation that to my mind cannot be justified simply by the differences in their jobs. Some figures which I have been given show that in Neath, for instance, the net earnings of pilots are £46,000.
Lord Strathcona and Mount Royal: My Lords, perhaps I may interrupt the noble Lord to say that I saw those figures as well and was staggered by them. I asked a question and those of whom I asked the question fell about laughing. They said "Oh, everybody knows that Neath is a husband and wife and they own the port".
Lord Walston: My Lords, I do not know whether it is the husband or the wife who is the pilot, but whoever it is at Neath appears to be doing rather well—as indeed are the husband who lives at Barrow and the wife who lives at Heysham, where the earnings are £37,000. We should compare those situations with Londonderry and Tyne, where the earnings are in the neighbourhood off £11,000. I am not saying that Neath and Barrow and Heysham are too high and I am not saying that Londonderry and Tyne are too low; I do not know. However, I cannot believe that it is right that there should be these enormous discrepancies. I suggest that that is something which the new proposals will overcome to some extent, always in consultation with the pilots.
Redundancies have already been talked about. I think there will have to be redundancies, as there are in many professions these days. It is essential that the redundancies resulting from these new arrangements should have sufficient funds available to make sure that the full commitments are properly met and are met out of central funds rather than out of the
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funds of the individual harbours. Many of those harbours will not have such funds available.
There is the further question of certificates of exemption. Here again I think the principle is right. The masters of vessels coming or going regularly from Continental ports—and I speak again of Harwich and Felixstowe—should, if they fulfil the various qualifications, have certificates of exemption, as they do indeed at the moment if they come from EC countries. However, that should be extended to the Scandinavian countries, from where vessels come with exactly the same type of skill and frequency as they do from Holland and Belgium.
I therefore support the proposal which I think is a good one. However, it must not be overdone or done too rapidly because once again it will diminish the amount of work available for existing pilots, cause unhappiness and dissatisfaction and very probably put an undue strain on the amount of money available for redundancies. I hope that, while the certificates of exemption will be granted as proposed, that will be done in a gradual manner.
The next very important question is that of the safety of pilots. Some people may think that the job of a pilot is to go out on calm harbour waters in a pleasant launch, climb up a companionway, have a drink with the master and take over on the journey into harbour; or, if the journey is out of harbour, climb down the companionway, get into the launch and, as the sun sets, float back happily to home and family. That does sometimes happen but there are many occasions when it does not. The seas may be rough, conditions difficult, a blizzard may be blowing and there may be fog. It can be a very uncomfortable and hazardous job. It is absolutely essential that there should be safeguards to ensure that the vessels in which pilots are transported are not only sound and seaworthy —as I am sure they are in all major ports—but also that there is an adequate crew on board in case some accident should occur which would mean that the coxswain would be left in sole charge while the pilot floundered in the water. I think that matter also needs looking at.
I know that the main objective of this Bill is a reduction in costs. That is an admirable objective. The other objective (which appeals to me rather more) is to place responsibility squarely on the shoulders of the harbour authorities themselves. I cannot say to your Lordships that I believe there will be any immediate reduction in the costs of pilotage in the short term. In the long term, there will be. I hope that will take place and I believe that it can if the matter is worked out properly.
I was very glad to hear the noble Lord, Lord Brabazon, mention that, with the advent and the growth of new techniques for navigation, it is very important that individual harbours should have the independence to try out new systems which are particularly suitable to their areas and which might, with or without modifications, be adopted elsewhere. I trust your Lordships will not think it is too fanciful to draw an analogy, looking far into the future, between Heathrow and Gatwick, where airplanes are brought down with no need for a pilot to go on board the 707 as it comes in. That is all done by remote control.

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I am not for a moment suggesting that a time will come in the lifetime of even the youngest of your Lordships when pilots will no longer be needed. However, there is undoubtedly enormous scope for the introduction of new technologies at a more rapid rate than is happening at the present time. Those will make the task of pilotage somewhat simpler and more sure and will contribute to the overall necessity of safety within harbours and in surrounding waters. I believe this to be a good Bill, full of good intentions and well expressed. I believe that after the Committee stage it will be a still better Bill.

"Kowloon Bridge"
3.57 p.m.
Viscount Davidson: My Lords, with the leave of the House, I shall now repeat a Statement on the "Kowloon Bridge" which is being made in another place by my right honourable friend the Parliamentary Under-Secretary of State, Mr Michael Spicer. The Statement is as follows:
"My department was advised of reports of structural damage to the Hong Kong registered vessel 'Kowloon Bridge' late on Tuesday, 18th November. In view of the possible connection with the loss in 1980 of the sister ship 'Derbyshire', the department agreed with the Hong Kong authorities that the department's inspectors should investigate the damage to the 'Kowloon Bridge' and conduct an inquiry on their behalf.
"An inspector was immediately appointed to conduct a full investigation into the damage and report to the department: he boarded the vessel at some personal risk on 20th November in Bantry Bay, where she had put in for repairs. Although the inspector's report has not yet been finalised, early indications are that the damage to the 'Kowloon Bridge' was entirely consistent with the very severe weather conditions encountered during the voyage across the Atlantic.
"Late on 22nd November, 'Kowloon Bridge' broke away from her anchor. The master decided to put out to sea. She then suffered a loss of steering and a 'Mayday' call was put out. The house will wish to acknowledge the skill and bravery with which the crew were taken off by RAF Sea King helicopters with no loss of life. The vessel eventually drifted onto rocks near Baltimore after drifting for 24 hours in severe weather conditions. She has since broken her back between No 2 and 3 holds.
"Inspectors from my department have also been appointed to investigate on behalf of the Hong Kong administration the vessel breaking free from her anchor, the loss of steering and the subsequent grounding. The inspectors will complete their work and submit reports on the two investigations as soon as possible. These reports will be published. When I have received them, I will consider what action needs to be taken and whether they indicate any link with the loss of the 'Derbyshire' in 1980, which might be cause for appointing a formal investigation into the loss of that ship."
My Lords, that concludes the Statement.
4 p.m.
Lord Underhill: My Lords, the House will be grateful to the noble Viscount for repeating the Statement. We heartily endorse what is said about the skill and bravery of the RAF personnel in being able to save the whole crew of the "Kowloon Bridge". We all appreciate that.
I note that in the first paragraph of the Statement the damage to the "Kowloon Bridge" is linked to the loss of the sister ship "Derbyshire" in 1980, when all lives were lost. The Statement says that it was agreed that the department's inspectors,
"should investigate the damage to the 'Kowloon Bridge' and conduct an inquiry on their behalf—.
The last paragraph of the Statement says:
"The inspectors will complete their work and submit reports on the two investigations".
Does that mean that there is now to be an investigation not only into the "Kowloon Bridge", but also into the tragic loss of the "Derbyshire" in 1980?
Until we get official replies from the Minister we can only work on what the media tell us. I gather that an inquiry of some kind into the "Derbyshire" was commenced but it was stated then that there was no conclusive evidence. As they were sister ships it is necessary to clear up the position completely. Is there a difference between an inspector's report and a full inquiry? I recognise the expertise of the inspector, but I am sure that the public will wish to have their fears allayed by a full inquiry. Will either the report or, as I hope, an inquiry look into the allegations that the "Kowloon Bridge" put to sea against advice? What advice was that, and why was it given?
It has been suggested—and again we can only go on the media reports—that there were structural faults to the "Tyne Bridge", another sister ship, in 1982, following which structural alterations were made to two vessels. It is essential that everything possible should be done to clear up the whole of this question of structural faults; first, to allay public concern, and, secondly, in the interests of the shipbuilders themselves. Until the position is clarified they will be under a cloud.
I understand that there is only slight oil spillage from the "Kowloon Bridge". What is the position with regard to pollution in a case such as this, which involves a vessel off the coast of a foreign country? Whose responsibility is it?
Lord Walston: My Lords, we too on these Benches endorse strongly the praise that has been given to the brave and skilful men who, in appalling conditions, rescued the crew from the "Kowloon Bridge". I should like to ask for a little more amplification than the noble Lord, Lord Underhill, has asked for, with regard to the inquiry. The inquiry will look at the structural condition of the "Kowloon Bridge". The Statement says that,
"early indications are that the damage … was entirely consistent with the very severe weather conditions encountered during the voyage".
While undoubtedly the weather was very severe and that area of the Atlantic is an extremely awkward one, surely such a bulk carrier should have both design and construction to enable it to survive, without severe

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damage which renders it unseaworthy in waters and gales of that kind.
I agree with the noble Lord, Lord Underhill, about the inquiry into the loss of the "Derbyshire" in 1980. It is not clear from the Statement who is going to carry out the investigation and what co-ordination there will be between that investigation, which, apparently, according to the last paragraph of the Statement is going to take place, and the present inquiry into the "Kowloon Bridge".
Some of your Lordships may have seen a small paragraph in The Times today which suggests that there were weaknesses in bulkhead 65 in two other of four similar ships. It would be valuable for us to have further information about this. Is it the case that weaknesses in the bulkheads have been found and that weaknesses were found in identical bulkheads? If so, when were the ships built? Were they also built in the same yard as the "Kowloon Bridge" and the "Derbyshire"? Are these structural or design faults? Assuming that there are two other ships with these weaknesses, what is the position in regard to them? Are they still free to sail on the high seas without further inspection?
Again, I reiterate what the noble Lord, Lord Underhill, has said. It is essential that these investigations should be carried out fully and speedily to allay any fears in the seagoing fraternity; and to reassure those who are contemplating placing further orders for tonnage in British yards that this situation cannot possibly be repeated, and that the high standard of British yards is as good as ever it has been.
Viscount Davidson: My Lords, I should like to thank the noble Lords, Lord Underhill and Lord Walston, for their reception of this Statement and underline once again the admiration and high regard which your Lordships have for the skill and courage shown by the crews of the Sea King helicopters.
I may not have made it completely clear that two investigations have been put in hand. The first one mentioned refers to the inquiry into the damage to the "Kowloon Bridge" after it had crossed the Atlantic and arrived at Bantry Bay. Regarding the severe damage, I would say to the noble Lord, Lord Walston, that an Italian tanker was much more severely damaged than the "Kowloon Bridge". It was when it arrived at Bantry Bay that an inspector was appointed to go out and see how bad the damage was. That damage was entirely consistent with storm damage after the weather the vessel had encountered. I am advised that this inquiry will report within a week.
The second investigation relates to the loss of the vessel after it left Bantry Bay. As the Statement said, it is a question of looking at the loss of steering, the breaking free from her anchor and the subsequent grounding. That will take a little longer and I cannot at this stage say when the report will be received. It will certainly be published.
With regard to comparisons with the "Tyne Bridge" and the "Derbyshire", I can only draw your Lordships' attention to the fact that everything to do with any previous incidents involving similar vessels has been covered in detailed reports which are all to be found in
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the Library of the House. The present incident is the subject of the two inquiries I have mentioned, and I am unable to prejudge the result of those inquiries. I am therefore unable to speculate on any of the points of detail which noble Lords have raised and therefore am unable to make any further comment about that.
As regards pollution, I should add that the vessel was carrying iron ore and the only oil on board was the oil fuel, in bunkers, used for propulsion. I am advised that there is very little danger of pollution of United Kingdom beaches.
Viscount Massereene and Ferrard: My Lords, I was a director of a company which owned ships carrying iron ore, although they were only small ships of about 12,000 tons. In the Statement my noble friend said that the "Kowloon Bridge" lost her anchor. However, if there is any wind at all a ship does not rely on just one anchor but always has two anchors out. Ships have other anchors on board, too. The ship also had her engines. In fact, because it is cheaper to build them so, most of these iron ore carriers and tankers have only one screw. I know that some have two. If the ship had suffered damage coming across the Atlantic it was rash of the captain to take to the open sea.
There is another point. Presumably the ship drifted in the night, but the captain ought to have taken his bearings on the shore. If there was no light from which to take bearings he should have arranged for that. The situation seems most odd to me.
If the ship's rudder jammed when the captain got out to sea and the ship had only one propeller, he was then in a hopeless position. A ship with twin screws can to some extent steer even with a jammed rudder. I should just like to make that observation.
Viscount Davidson: My Lords, my noble friend has made certain observations but I will not comment upon them because, obviously, we are awaiting the result of the inquiry. However, I am sure my noble friend's remarks will be noted.
Lord Campbell of Croy: My Lords, is my noble friend aware that the only debate which took place on the loss of the sister ship, the motor vessel "Derbyshire", was the debate initiated by me in this House on 13th May 1981? Concern was expressed at that time about the possibility of defects in the hull. However, the only common fact appears to be that both vessels were carrying iron ore. Will my noble friend take into account in the inquiries the investigations which the Minister who answered at that time promised would be made into the loss of the motor vessel "Derbyshire"?
Viscount Davidson: My Lords, I can assure my noble friend that that will be taken into account.
Lord Greenway: My Lords, is the noble Viscount able to tell the House—I suspect that at such short notice he cannot—that the reason the ship had to put to sea after she lost, as I understand it, one of her anchors and, therefore, in the existing weather was unable to lie to her remaining anchor, was due to the fact that since the closure of the Whiddy Island oil refinery there were no longer any tugs available in that area?
Viscount Davidson: My Lords, again I find it extremely difficult, if not impossible, to comment on that. All I can do is repeat one sentence of the Statement which says:
"the master decided to put out to sea".
Lord Cayzer: My Lords, is it not a fact that there are six sister ships which were built at Swan Hunter?
Viscount Davidson: My Lords, I believe that is the case.
Earl Attlee: My Lords, can the noble Viscount confirm that in the Statement he mentioned loss of steering, while the newspaper reports that I read stated that the ship had lost her rudder? A rudder post is a massive item and it would seem to me that if a ship loses her rudder she would almost certainly go down by the stern.
Viscount Davidson: My Lords, it is up to the noble Earl to decide whether he wants to believe the Statement or the press.

Pilotage Bill [H.L.]
Second Reading debate resumed.
4.14 p.m.
Lord Greenway: My Lords, we seem to be having a rather nautical afternoon, but perhaps we may now return to the Pilotage Bill.
I welcome the introduction of this Bill, so ably done by the noble Lord the Minister. I think that all parties have reached what I might call a grudging acceptance of the fact that the Government have won their way on this Bill and that what remains to be done is to make the best of what we have before us. I particularly welcomed the remarks of the Minister regarding Trinity House, and I shall have more to say on that subject later. I also welcome the fact that, provided the House wishes, this Bill is to go to a Public Bill Committee. Without wishing to blow your Lordships' trumpet too much, a committee of that sort in your Lordships' House is perhaps an ideal vehicle for sorting out some of the problems that still exist with the Bill.
Perhaps I may be permitted to make one or two observations by way of background. First—and I do not think that any noble Lord has referred to this—it seems to me that the Bill has come to your Lordships' House with slightly indecent haste. I realise that the Government have to get on with their legislative programme, but I think I am right in saying that the Bill was printed only a week ago and it has allowed very little time for some of the interested parties to muster their thoughts.
The other point that I make as a general background observation, and one I made during our debate last summer, is that sadly the British Merchant Navy is rapidly declining. Some people have even forecast that it will consist of as few as 100 ships by 1990. Therefore, today's percentage, which I think is around 10 per cent. of ships under the British flag using British ports, may well be considerably lower by 1990.
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Both the noble Lords, Lord Underhill and Lord Walston, spoke extremely well. They covered most of the salient points. Therefore, I shall merely make one or two observations on what they have said. Incidentally, the noble Lord, Lord Underhill, spoke so well on behalf of Trinity House I begin to wonder whether he is making a bid to join his two noble and distinguished friends as an Elder Brother.
Looking to the Bill itself and to several of its provisions, I think that certainly the directions concerning ships should be enlarged upon. We have heard reference made to safety and I intend to come on to that subject in a moment. However, I believe that we should write into the Bill a wider description of the term "ships", especially with regard to those which may carry dangerous or noxious cargoes.
The noble Lord, Lord Underhill, made a very relevant point when he touched upon public interest concerning whom a competent harbour authority shall consult. I appreciate that the harbour authorities themselves feel that it would be much better if they could be allowed to get on with running the ports in the way that they want to; but there is a legitimate public interest. I cite as a possible example the situation a few years ago when a foreign company wanted to moor a gas tanker permanently in the Solent areas. There was an enormous public outcry and the ships were never moored there.
In some of the harbour areas we are discussing ships like these potentially dangerous gas carriers come very close to areas of population. Therefore, when considering this Bill in Committee it would be wise to look at what interest there may be—whether from the point of view of the local authority or an environmental concern—to ascertain whether those interests should not have some say in the matter of how the harbour authority is to run its pilotage limits. It also seems to me, if I read the Bill aright, to be slightly strange that a harbour authority has to have the support of the Secretary of State if it wishes to extend its present pilotage limits, but not if it wishes to reduce them.
Mention has been made of cost. I do not want to dwell too long on this subject but I was pleased to hear the remarks of the noble Lord, Lord Walston, with regard to ports not being able to reduce costs, certainly at the outset. It is a great temptation to a port—and, as I have said before in this House, running ports is a very competitive business—either to reduce its limits or to extend the number of pilotage exemptions in order to save costs, and both these measures have a bearing on safety.
Turning to the question of exemption, so far as I can make out there is no direction in the Bill to state that any master or mate coming up for a pilotage exemption certificate must be able to speak English. I think that such a provision ought to be written into the Bill. With regard to the renewal of exemption certificates after a one-year period, I should like to quote from Clause 6(4) of the Bill:
"A pilotage exemption certificate shall not remain in force for more than one year from the date on which it is granted, but—
(a) if the holder continues to be the master or first mate of a ship, may he renewed annually".

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There again, I think that we are using "ship" in a very loose sense, and I think it would be better if the phrase "a ship of substantially the same type or substantially the same tonnage" were written into the Bill. This would be an extra safeguard.
I mentioned the possible issue of a large number of exemption certificates—indeed the Bill almost requires harbour authorities to issue such certificates. In itself this can give rise to dangers with vessels, not necessarily ships, which have on board a person who has a pilotage exemption. I have cited instances before in this House, and I shall now give another. We all remember the poor unfortunate skipper who cut Southend Pier in half earlier this year. I believe he was asleep at the time. That is an example of a ship which used a port frequently. The master may well have had a pilotage exemption certificate, or perhaps he was merely operating within the port limits, in which case he would not have needed one. But next time it may easily be a ship coming from abroad, which has on board an exempt master who may fall asleep and—who knows?—he may run into a gas tanker rather than Southend Pier. The consequences are appalling to contemplate.
Let me cite another example. I think it was two or three years ago that a small coaster called the "Sea Ems", which was in-bound from Germany and had a German master who had a pilotage exemption, ran between the outer piers and the sea wall at Coryton at the Mobil Oil Refinery, neatly cutting all the oil lines as he went through. I believe that he, too, was asleep. I find it amazing that he passed through without hitting anything else but he did so and, luckily, on that occasion there was no tanker unloading at the berth. That is another instance of what can happen if too many exemption certificates are issued.
While on the subject of exemption and the limits of pilotage, perhaps I may just recall the current talk about the Minches area of North-West Scotland, where steps are being taken to move further out to sea large tankers and ships with dangerous cargoes. What happens if the Port of London draws in its pilotage limits to the Nore from Harwich and Folkestone, where they are at the moment? The big tankers and ships with dangerous cargoes will be passing up the Thames estuary, which is notoriously shallow in some places. Surely that is a much greater potential problem than in the Minches?
May I now turn briefly to the subject of pilot boats, which has already been mentioned. As I understand it, at the moment the pilot boats owned by Trinity House are to be transferred lock, stock and barrel to the harbour authorities at a certain date. Contrary to what some people think, pilot boats are very specialised craft which have been developed over a number of years. In effect they have to make what I can only describe as a "controlled collision" every time that a pilot boards or disembarks. In some busy areas this can mean up to 100 contacts a day with ships. In such circumstances Tom's fishing boat just will not do. I believe that the Government should take note of what was said in the Transport Committee in another place about some kind of conditions regarding the construction of pilot boats. Before I leave the subject, may I ask
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the Minister what happened to the draft code of practice on pilot boat construction survey and certification regulations which was produced in October 1983 and which, so far as I know, has not since seen the light of day?
As a parting shot, and using Heathrow and Gatwick as an analogy, the noble Lord, Lord Walston, mentioned VTS (vessel traffic services). Despite his optimism, I must sound a note of caution about such schemes because I can foresee all sorts of problems in which a shore-side operator, who may not be well versed in how ships work and manoeuvre, does not have a pilot on board and is giving instructions to someone who is a stranger to the port, which could hinder rather than expedite navigation. Before such schemes are introduced I think that they should be discussed very carefully with the pilots themselves, because in my opinion one cannot do better than the man on the spot, and in this case the man on the spot is the pilot who is qualified and who knows all the ins and outs of that particular port.
Turning now to the question of Trinity House operating as an agency, this is something which I very much welcome and I am pleased that the Minister gave a little time to it. However, as has been stated by the noble Lord, Lord Underhill, what worries me is how, under the Bill as it is presently drafted, this will work. The Bill seems to me to be very woolly, and I do not see how Trinity House can operate this agency without some extra wordage being written into the Bill to make sure that it maintains some of its pilot boats and staff in order to be able to fulfil this agency requirement.
Before concluding I should like also to agree with what the noble Lord, Lord Underhill, said with regard to the pilots themselves. They have many years of expertise in their own particular field and I think that many will not intend to stay on after this Bill comes into force. The surplus of pilots which has been mentioned briefly will probably disappear at that time, because I think that a lot of the older pilots will say, "I have had enough" and will leave. I believe that the surplus problem will disappear as soon as the Bill comes into force. Those who are left, the pilots who will have to work with Trinity House as an agency, with the ports or with some of their fellow members in a loose association have, on the whole, been rather hard done by through the Bill. The Committee must bear that in mind in its deliberations.
To sum up, it is now vital to get all interested parties working together. That has been one of the big problems hitherto. It was one of the main reasons why the pilotage section of the Merchant Shipping Act 1979 did not work. That Bill, as your Lordships may remember, went through Parliament on the nod, despite strong objections from some of the pilotage authorities, on the last day of a Labour Administration. It was not even discussed in your Lordships' House. The Committee which is to consider the Bill should be made well aware of that fact because this time we must get it right. I think all interested parties agree on that.
4.30 p.m.
Lord Strathcona and Mount Royal: My Lords, the Minister is right. There is general agreement that some

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reorganisation of pilotage is long overdue. As the noble Lord has just said, it is perhaps a measure of the difficulty that it has taken seven years, and I think five Ministers, for the Government to offer us a solution to the problem.
Most of us can support the principle of devolving authority to the ports. They will make commercial judgments. Thereafter, the details become more contentious, in much the same way as the Government have often said that they would like local authority spending to be related to its tax raising powers. The difficulty is how to achieve that in detail. There is a real danger in trying to oversimplify something that is inherently a complicated problem. I agree with the noble Lord, Lord Greenway, and I have said this before, that it is a pity that the Government have never managed to get all interested parties round a table to see whether or not they could reach agreement. Again, as he rightly said, we have to deal with the Bill that is put before us.
The question is whether the detailed provisions of the Bill, as part of a totally radical approach, will achieve the Government's laudable claims of bringing about an economic, effective and safe pilotage régime, with due regard paid to the interests of the public and the people who work in the system. The danger is that we may provoke the maximum of disruption for the minimum of benefit.
It is worth remembering that the British system is much admired abroad. At least one nation is seriously contemplating copying the system that we are about to sweep away. There are major issues of safety and potential environmental damage involved. Pilotage is about safe and expeditious navigation. It arose because of a perceived need for the service by shipowners and shipmasters. I did not succeed in flushing out the figures that I wanted from the Minister during Question Time, but my understanding is that pilotage costs are not large in relation to overall port costs. They amount to something of the order of 10 per cent. if we exclude the labour costs of discharging the vessel. If we include the cost of discharging the vessel, my understanding is that overall costs go down to about 2 per cent.
We must therefore be careful not to chase after comparatively minor savings and create great potential difficulties in the process. The earnings of pilots are not excessive. I was glad the noble Lord, Lord Walston, made the point that distribution appears to be somewhat inequitable, without suggesting that overall levels are excessive. Let us remember that the present system works on the basis that many of us in industry would like to achieve—no work, no pay. That is a sound basic system even if there are anomalies which need to be ironed out.
If it has not already become clear, I should mention that I have discussed this matter with the United Kingdom Pilots' Association whose honorary, and I stress "honorary", president I have been for some years. I hope that I do not speak about a complicated matter from a biased point of view, but I suppose that it is inevitable that that is my departure point.
I shall try to group my misgivings about the Bill under three headings. The first, which has been
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mentioned by all noble Lords who have spoken since the Minister, is the worry as to whether it is fair, legitimate or wise to hand over unfettered authority for pilotage to straight commercial interests.
In an increasingly competitive environment, it is inevitable that commercial interests will be pulling in the opposite direction from considerations of public safety and environmental protection. The Minister was being a little naive or over-optimistic in some of the comments he made about that. As the noble Lord, Lord Greenway, postulated, is it acceptable that dangerous cargoes such as those carried in liquid natural gas carriers, chemical carriers or even nuclear waste carriers should, on a purely commercial basis, be allowed to lay down conditions under which they come into a port? We think of Flixborough. We think of Bantry Bay, not the recent incident, but an earlier explosion. It is worth remembering the point that come out a moment ago in the Statement, that even when we do not have dangerous vessels, the damage that can be caused by the rupture of a ship's hunkers can be severe.
There are two dangers that we should face. The ship operator may say to the port, "I shall take my ship elsewhere if you insist on me having over-expensive pilotage provisions". What will the port operator do? Furthermore, the hard-headed shipowner—regrettably we must face the fact that the majority of shipowners are not now British, although I am not suggesting that British shipowners are any less hard-headed than foreign ones—may say to his shipmaster, "You are the shipmaster. You are paid to be the shipmaster. Do not incur a lot of extra cost by taking on one of these expensive pilots. You take the ship in. That is what you are meant to do". Those are possible real commercial pressures. It is an over-simplification to say that the commercial interests of the port operator are sufficient safeguard with regard to dangerous cargos.
This leads me to a more general point that arises throughout the Bill. The Bill makes clear that it is sweeping away all existing legislation regarding pilotage and starting again. One cannot call it a green field situation; one might call it an open water situation. We are starting from scratch. We are not simply making changes or tinkering. This means that the legislation when it become an Act has to do two rather different jobs. It has to set out the regime that will apply to pilotage for many years ahead. It has to deal also with the transitional period before we reach what one might call the steady state. If the competent harbour authority is to produce regulations that set out the terms under which the port will be used, there should be consultation with outside interests.
I should like here to address one small point to the noble Lord, Lord Walston. The noble Lord talked about the local authority rather as though it was the same as the port. It is not. It is true that the local authority should have an input into what the port authority lays down as conditions that apply to the port. There are also environmental considerations, particularly as regards dangerous cargoes. I suggest to the noble Lord that a serious problem arises, certainly in the transistional period.
May I suggest a way out of the problem? I put my proposal in the form of a question. One has to balance

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the need for consultation against the possibility of continuous consultation leading to frustration and inaction. I wonder, however, whether it would not be sensible to charge the Pilotage Commission with the task of considering the regulations that the competent harbour authorities produce. That task will be substantial. Within the White Paper there are over 100 separate ports. We shall presumably, therefore, have 100 different sets of regulations. How are we going to give other people the chance to vet the regulations in order to see whether they are acceptable? I wonder whether this might not be a suitable task for the Pilotage Commission. I do not expect the Pilotage Commission to be entirely "gruntled" with the idea. Nevertheless, I put the idea to the Minister as something that he might consider.
There is one rather strange provision in the Bill. Clause 8 singles out shipowners as people who have the right to object to harbour charges. Does not that proposition lie rather oddly with the Government's declared intention that commercial judgment is to be the guiding criterion? If charges are unreasonable, will not shipowners go to another port? It looks very much as though the shipowners have been getting at the Government and have managed to get this provision specially written into the Bill. Has it not emerged this afternoon that a number of other people might like to be consulted? I feel that the Minister will have to be consistent in regard to this matter when we come to the Committee stage.
A worry connected with the chance for shipowners to object to charges is the possibility that the CHA will fix the remuneration of pilots having in mind the amount of charges that it is hoped to levy on shipowners, and then, if the shipowner objects, it will have to go back to the pilots and say "I am terribly sorry. The wretched shipowners have objected to our charges. They have beaten us down and we shall therefore have to reduce what we can offer you in the way of earnings".
While on the subject of consultation and opportunities to object, I should like the Minister to tell me whether the words in Clause 8(6)(a),
"any persons who carry on harbour operations within that harbour",
include, for example, wharf owners or people who have an individual business associated with the transfer of cargo within a harbour. That is a specific point. It can no doubt be dealt with at Committee stage if necessary.
A second area of concern is the danger of proliferating administrative cost and losing both operational flexibility and economies of scale as a result of fragmenting pilotage organisation right down to individual ports. There are, as I have said, over 100 ports mentioned in the White Paper. A number of other issues arise under this general heading, some of which have already been mentioned. Is there not a danger of under-utilisation or proliferation of pilot boats? Will it not be more expensive for each port to have a pilot boat and a standby pilot boat? Similarly, a number of other provisions will have to be made.
As the noble Lord, Lord Walston, I believe, mentioned, the subject of pilot boats is probably the
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single most emotive subject to pilots. Pilotage is the second most dangerous maritime activity after North Sea diving. At least one pilot is killed every year. Pilots would prefer to see the standards and the manning of pilot boats made the responsibility of the Department of Transport. We come back to the commercial pressure arguments. I put it to the Minister as a matter that needs to be seriously discussed.
The question of fragmentation also touches upon a matter mentioned by the noble Lord, Lord Greenway. It is what I call the estuarial problem. The Government make a curious statement in the White Paper. Paragraph 21 on page 4 states:
"The Government does not consider that a single authority for each major estuary is necessarily the best way of organising pilotage".
I do not believe that many people will agree with that statement. I am pretty sure that Trinity House does not. The noble Lord, Lord Shackleton, will perhaps be able to enlighten us in a moment. Would the Minister care to say why the Government make that unsupported statement?
It has, I believe, a much wider implication than might at first appear. All kinds of potentially difficult situations will be created. What happens to Perth in relation to Dundee? Is it expected that Perth will ask Dundee to provide a pilot when it is trying to suck away some of the trade from Dundee? Is it expected that Ipswich will ask Harwick and Felixstowe if it will loan a pilot, saying "Actually, we are going to cut our charges old boy, but you don't mind lending us a pilot and pilot boat, do you?" That does not sound like a sensible regime. If responsible for a small port, I should be pretty worried.
The third area of misgiving concerns the conditions of employment of the pilots themselves. Luckily the noble Lord, Lord Underhill, has already said almost everything that needs to be said on that subject. There are two issues. First, there is the question of compensation for those who will be made redundant as a result of these proposals. Secondly, there is the question of safeguarding the earnings of those who will continue. The difficulty is that the Government say all the right things but then do not appear to be willing to follow them up in the Bill or, indeed, when it comes down to hard negotiations.
The pilots say, "The Government, by their actions, are undermining our livelihood. Surely it is their responsibility to compensate those who are going to lose their jobs and to safeguard the earnings of those who are going to continue in their jobs". Throughout the Government have resolutely refused to put up a bob in compensation. One way or another they have put up millions for the steelworkers, for the miners and even for the farmers, but because there are ony 1,200 pilots they have refused to bother at all. I do not want to sound too provocative, but they have tended to take shelter behind the question of self-employment, and the Prime Minister herself has admitted that that is a pretty poor excuse. However, she has also said that she recognises the need for safeguarding the livelihood of those who will stay in the business. All that seems to have happened so far is that the Government have found a convenient milch cow in the shape of the pilots' pension fund. They have made a massive raid on that and said that that has bailed them out of the

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trouble. I do not think that we can expect the pilots to be very chuffed by that.
Some protection for pilots needs to be written into the Bill because they feel that up to now their negotiations both with the Government and with the ports have been less than satisfactory. We have already talked about the Government, but the port operators and the shipowners unilaterally abrogated the alleged earnings agreement and told the pilots that they just have to get on with it. If that is to be the way in which negotiations are to be conducted in the future, small wonder that pilots will be seeking to write some protection of their position into the Bill.
The pilots do not like the Bill; it is no use pretending that they do. However, throughout all these negotiations they have tried to be co-operative and I hope and believe that they will continue to be so. Certainly I have no intention of trying to wreck this Bill, but I believe that we shall have to write into the Bill provisions for the compensation of people who lose their jobs and for the protection of the earnings of those who stay in the business. There are also misgivings about the safety implications and the cost-effectiveness of the way in which the Government are applying the provisions for devolving the authority to the ports.
I conclude by quoting—and one word needs altering—from the last paragraph of a recent leader in The Times which referred to the Peacock Report on the BBC. It said:
"At bottom, today's debate is about the management of change, an art which British institutions—parliamentary as well as broadcasters—still have much to learn".
I believe that that is exactly where we are today.
4.55 p.m.
Lord Shackleton: My Lords, so excellent and detailed have been the various speeches that the House will be glad to hear that I shall make a very short speech indeed, but not an entirely friendly speech so far as the Government are concerned. Unlike Trinity House—of which, as noble Lords know, I am an Elder Brother—I am not at all content to accept this Bill, because in my view some quite major aspects of the residual problems have not been worked out.
However, I should like first to congratulate the Government on getting the Bill to start in your Lordships' House. I know what a struggle it always is in the legislative committee to get anything to start here and we have to do a proper job. On the other hand, we have not had very long in which to prepare, as has been pointed out by the noble Lord who has made such an excellent speech. At the outset I should like to make one correction. A letter did go round from Sir Frederic Bolton saying that Trinity House had specifically asked that their brief be amended to record that it too warmly welcomes the Bill. That, I think, arises entirely out of a misunderstanding and I am not accusing the British Ports Association of trying to put words into the mouth of Trinity House. It welcomes the transfer of responsibility to the harbour authorities, and this is a course that it has advocated for many years. However, there are serious objections, and I think that I would be critical of Trinity House for thinking it just so easy to set up a new body—the
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technical services company, the pilotage company—to operate under a Bill which they had not seen.
I believe that Trinity House is now well aware that there are serious defects in this Bill. However, it is anxious to co-operate with the Government—everybody always tries to co-operate with the Government if they possibly can. I must say that I should personally find it very difficult to co-operate with the Government unless they are prepared to recognise some of the anxieties which have been expressed, particularly by the noble Lord who has just spoken, and which have been aired in a quite admirable speech by my noble friend on the Front Bench in which he raised all the issues which the Government will have to face.
I hope that, when we deal with the matters which concern pilots or pilotage authorities, the Government will be prepared to lend their help in the drafting of certain amendments. They have a responsibility. We do not have much in the way of resources for drafting these amendments and we do not have a long time in which to do so and, as the Government are taking this initiative, it is right that they should help.
For my part I regret that it has been necessary to introduce this legislation at all. As I advocated on an earlier occasion, with sensible co-operation the necessary reforms could have been carried out without introducing this complicated Bill. Nonetheless we have the Bill. We shall no doubt give it a Second Reading today, although I wish we were not going to do so. I ask the Government to go back and look at some of the points that have been raised and maybe the noble Lord will be able to resolve some of my anxieties.
The Government have encouraged Trinity House—and now I would like to speak very much in the interests of Trinity House—to seek to provide a service. The then Minister—the noble Earl, Lord Caithness—on the last occasion said that he saw a useful role and that it was important that the harbour authorities should consider whether it would be better that Trinity House should provide some of these services rather than that the harbour authorities should take them on. We have had no financial arguments, no financial figures, to justify what the Government are doing and we do not know whether the transfer to the harbour authorities will save money. If the Minister has any estimates as to what the Government, or rather the shipowners, hope to save, it would be helpful.
The Minister today mentioned the need to make use of the experience of Trinity House, and of course Trinity House has sought to set up something called Trinity House Agency Services Ltd. under the chairmanship of Sir John Cuckney. The question is, is it going to be able to function at all? Its assets are to be expropriated, and I use that word deliberately. This is in fact a confiscation Bill. Let us not mince words on this. They are to be expropriated and handed over to the Pilotage Commission, a kind of residuary body which is not a residuary body. The Government like residuary bodies. We have one for London. From all accounts I do not think they are very satisfactory, but they may go on for ever. Unless the Pilotage Commission can come up with some satisfactory

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solutions, I can see the Government increasing their responsibilities for pilotage rather than diminishing them.
I should like to ask the noble Lord—and maybe he can give an answer—how is he going to be able to float a company when the resources and assets are about to be taken away? In addition, the staff at Trinity House tend to have anxieties and they will begin to move out, and how does Trinity House carry on in the interim? This is not only a matter of timing; it is a matter of practicality.
Until the Pilotage Commission have approved the proposals, the company will not know what assets it will have to work with, nor what liabilities it has to cover. Many of the pension arrangements—and I have not got the details—in Trinity House are unfunded, for obvious reasons. Trinity House followed past Civil Service practice, and it has operated very much under Civil Service rules.
Under Clause 22—which I think will need rewording—what will happen to the existing Trinity House staff of acknowledged expertise, and their centralised planning location in London, if they are going to be dispersed all over the world to a hundred different competent authorities? This is a serious problem if the Government wish Trinity House to continue. It will not be able to continue unless there is clarity about the assets and some reasonable arrangement with regard to the staff.
I think that the Government are giving the Pilotage Commission a frightfully difficult job. They are shuffling off responsibilities on to them. If the new company has to assume the financial burdens of superannuation and redundancy payments due to its staff for their former service to Trinity House as the pilotage authority, it is difficult to know how the sums will come out.
This has been a great public service and a great individualist service. The pilots have been individuals, and have been brave and dedicated men. Let us not play around too much with some of the excess profits that a few pilots have made. At least they are not anything near what is being made in regard to takeovers in the City. It is proper that they should have remuneration, and it may be that there are details that need to be sorted out, but I suspect that one of the consequences of this Bill is that the Government will have to fulfil a bigger role.
There will be no main, sizeable pilotage centre in this country to develop pilotage services. The fact that Trinity House looks after only 50 per cent. of the pilotage has not stopped it pioneering the design, for instance, of pilot launches. As I understand it, there will be no single body—perhaps the Minister can say that there will—that will be looking at this across the board and doing necessary research. An agency could not now be created under the proposals. I shall wait with a good deal of interest to hear what the Minister can say about the prospect of a new pilotage service being financed when the assets and staff are being taken away from it.
5.5 p.m.
Viscount Rochdale: My Lords, when I first became aware that this Bill was to be introduced into your
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Lordships' House by Her Majesty's Government I doubted very much whether I should be able to make a useful contribution as I was so out of date on this subject. However, on looking through some of my old papers I came to the conclusion that I wanted to make a brief speech at Second Reading.
I must admit to having somewhat of a shock that these proposals should have emerged only during the last two or three years, first, with the Government's Green Paper, then with the House of Commons report, then with the White Paper, and now with the Bill. Your Lordships may wonder why I was shocked. My noble friend Lord Brabazon has given a certain amount of fairly recent historical background to this Bill. He went back about six or seven years. But I should like to call your Lordships' attention to a report on the major ports of Great Britain published in 1962 and subsequently debated in your Lordships' House. If I may say this with reasonable propriety, it came to be known euphemistically as the "Rochdale Report".
The Rochdale report was primarily concerned with the creation of estuarial port authorities, grouping together in the main estuaries the great multiplicity of smaller authorities into single estuarial authorities. For instance, we suggested the Clyde, the Forth, the Tyne and Tees, the Humber and Southampton, and to some extent it covered even changes in the Port of London. For the most part our report was accepted by the government of the day. Although the inquiry was set up under a Conservative Government, the report was accepted by a Labour Government.
Our report was not primarily concerned with pilotage. I cannot just recollect whether we were gently warned off pilotage; that may be so. But inevitably we had something to say about pilotage. At that time the only port authorities of any significance which were also pilotage authorities were those of Bristol and Liverpool. The others for the most part had their separate pilotage authorities with, as has been mentioned, self-employed pilots.
So far as the general principle of who should be responsible for pilots was concerned we had this to say:
"the question of pilotage should be borne in mind when the organisation and responsibilities of any Port Authority are under review".
That was in 1962.
We made specific recommendations with regard to particular estuarial authorities, most of which have subsequently been established, but in those recommendations invariably we urged that the responsibilities for pilotage should be under the estuarial authorities. The principle was that harbour authorities should be responsible for pilotage. In a way that is what the present Bill is all about.
However, I find it difficult to understand how then it came about that in Her Majesty's Government's Green Paper it says:
"Organisation of pilotage has remained substantially unchanged since the implementation in the 1920s of the Pilotage Act 1913".
That was a long time ago. Why has the matter emerged just now? My noble friend Lord Brabazon went some way to answer that question. But the answer is obvious. We must all be perfectly well aware of the tremendous changes there have been in shipping throughout the world in recent years.

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I refer not so much to the alarming reduction in the British merchant fleet. That to my mind is only partially relevant to the matter we are discussing now. What I have particularly in mind is the change in the pattern of world trade, the change in the pattern of port usage, the change in the number, size and presumably draught of ships and, with all that, the lack of adjustment of pilotage facilities to match present-day reduced pilotage requirements. That has resulted in a very substantial increase to shipowners of pilotage costs and is therefore a deterrent to our trade both inwards and outwards. That applies whether they are British ships or ships from anywhere else round the world.
As we all know, pilotage is not the only cause of the increase in costs compared with other European ports. My noble friend Lord Campbell of Croy referred to the cost of lights. The high costs of United Kingdom ports was a year ago forcefully brought to the attention of your Lordships' Select Committee on European Affairs when that committee was examining the Commission's draft directive on European maritime transport policy. The report came out in March this year. In the evidence submitted to the committee by the British Ports Association it stated:
"unacceptable charges on ships calling at United Kingdom ports also arise from the operation of the current system of marine pilotage in the United Kingdom".
It went on to indicate some of the related points which it saw as necessary and which are largely dealt with in one way or another in the present Bill.
I make no apology for mentioning those historical references, and I do so with no sense of criticism. This has been going on since 1962. I mention those points not by way of criticism but rather to emphasise the urgency of something being done by way of change now. That point is unanswerable and change is overdue. I welcome the Bill, though I realise, as other noble Lords do, that it needs careful consideration on a number of points when it reaches its later stages.
I think I am right in saying that the Bill coins a new phrase "competent harbour authorities". They will have the responsibility for pilotage squarely placed on their shoulders. Their experience should help them to decide—whether or not through an agency such as has been discussed earlier today—that pilotage is necessary; what pilotage is necessary; whether it should be compulsory; what area it should cover, and so on. That will be their responsibility. That should add greatly to the flexibility of the service. It should in due course—I emphasise "in due course", because I am inclined to agree that the reduction in costs will not occur immediately— produce a reduction in costs and do so with no loss of excellence of service or safety. I therefore give a strong welcome to the Bill.
However, I have one or two further points to make. I should like to emphasise, as other noble Lords have done, the importance of Trinity House. It should continue to provide its services from its centuries of expertise and do so in an important way. I think the initiative of Trinity House in the organisation it has in mind to set up under Sir John Cuckney must be for congratulations. Problems will arise, such as those mentioned by the noble Lord, Lord Shackleton, as to
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how the organisation will work and how it will be set up. I think I am right in saying—perhaps my noble friend when he replies will confirm this—that Trinity House will still be responsible for deep-sea pilotage.
There are a great number of points to be considered at Committee stage. They will be difficult, but I do not think they will involve party political considerations. I want to refer particularly to one point to which nearly every other noble Lord has referred. I think it is important to do so, and it is the question of compensation. It will be difficult and complex, much more complex than might be apparent on a superficial reading of the Bill. There will be redundant pilots. There will perhaps be redundant Trinity House staff with their accrued service entitlements. Compensation must be fair and be seen to be fair. I believe it will be costly, but it will be much more costly as a result of the many years it has taken to arrive at what we are discussing today. If it could have been done in the late 1960s or in the 1970s it would have cost a great deal less.
The other point related to compensation is that of uncertainty. There will need to be careful consideration not only for potentially redundant pilots and staff but also for the port authorities themselves. The Bill refers to a period of transition. I do not know how long the transition will take, but if it is too long the uncertainty will grow. Many pilots will not know what their future is and they may look for employment elsewhere. Port authorities may as a result lose people that they anxiously would have liked to have kept on. Therefore it is urgent to try to remove the uncertainty.
That is all I want to say. I welcome the Bill. I hope it will have a rapid passage and a safe berthing in the statute book.
5.20 p.m.
Earl Grey: My Lords, I wish to confine my brief contribution to the environmental aspects of the Bill. This Bill has the qualified support, with many reservations, of the United Kingdom Pilots' Association, in that a reform is needed to improve the safety and protection of our seaways. In a reference to Clauses 2 and 5, which give total power to port authorities to decide which vessels should be subject to compulsory pilotage, the danger is that costs could be reduced by cutting back on the pilot strength of any given area.
The United Kingdom Pilots' Association would like recommendations to provide that other bodies such as themselves or local councils may report to the Secretary of State in the event of a harbour authority failing to provide a responsible service. Would it not be advisable to have compulsory pilotage for ships carrying noxious and dangerous cargoes? A major accident in our waters could have catastrophic consequences on our environment and safety as ships pass very close to our urban areas.
Over the years, we have experienced and suffered from accidents on a large scale though, luckily, very rarely in our Channel waters, although I am led to believe that it could only be a matter of time before a major accident occurs. I should like to see in this Bill stronger legislation governing any ship that passes through our waters. There is the obvious question of ships carrying nuclear waste, although I would

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assume, in that circumstance, that a competent, qualified pilot would be in charge. I only hope that I am correct in that assumption. I trust that the Minister would confirm that.
Ports have to consult only with commercial users in these matters. I should like to see the ports having a legal requirement to provide pilots under certain conditions. The public interest is of prime importance and must therefore override any commercial interests.
The concern that has been put to me regarding the livelihood of pilots is with reference to those pilots who accept early retirement. There is no safeguard in the Bill against pilots, who work in another area, retiring but continuing to exercise their profession elsewhere, thus endangering the livelihood and the profession of existing pilots. Would the Minister be prepared to consider this?
I should also like to support the noble Lord, Lord Strathcona, and others in what they have said about the lack of compensation. There is nothing for me to add, except to ask the Minister to give this matter a great deal of consideration. We recognise that pilots provide a valuable and necessary service and are considered to be of the highest quality. Their contributions and ideas must be welcomed and considered, as it is their experience which is vital to our wellbeing and safety.
5.23 p.m.
The Duke of Norfolk: My Lords, some of your Lordships might be surprised at my speaking on this Bill. My reason for doing so is that I live six miles from Goole on the Humber, which is 50 miles inland and a port as old as any in the Kingdom established by the Danes in rather awkward circumstances about a thousand years ago. I familiarised myself with the latest situation about six weeks ago by going on a pilot launch with two Members of the other place. We had a most intriguing trip from Flamborough Head, up past the great port of Hull, that is rather slumbering along, and up the Trent, where the private wharves are booming. We passed the private wharves that had been set up where the Hull ferry used to cross to Lincolnshire. They have now been overtaken by the great Humber Bridge. We then came on to Goole. I disembarked at a private wharf called Howden Dyke, which is beyond the port of Goole on the way to Selby, which is also six miles from my home and a very famous private wharf at the moment, for it is literally booming with trade.
I shall talk about private wharves in a moment but I should like very much to welcome this Bill because it seems to me that there is considerable muddle at the moment with the Merchant Shipping Act, 1979 and the Pilotage Act, 1983. I feel there is much room for legislation to tidy up everything.
Although I approve of the Bill, I feel that there are many worrying points. In the first place, the Bill seems to have been put together after talking to the shipowners and the port authorities. I do not think that either of these bodies has the greatest of records in public relations. They have had strikes and other unpleasant situations, which has usually meant that something was wrong.
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The people who do not seem to have been consulted very much are the pilots themselves. The pilots—towards whom I am biased, for they took me on this trip—are members of a wonderful profession. It has already been said by several noble Lords what a proud and wonderful people they are. They all must have become masters of ships before they can acquire a pilot's certificate; they have to know the whole of their estuary or port really well, and they have to keep themselves up to date. They are self-employed members of a proud profession and I hope that they will be consulted in far greater detail by the Minister, that they will not be made merely employees of the competent harbour authorities and that their contracts as self-employed professionals will be allowed to continue, with very special positions.
I think that the pilots should themselves have the chance to regulate the affairs of the ports in which they work. They are represented by the Transport and General Workers Union. Your Lordships may be surprised at my talking about unions from this side of the House; but that is the union to which they belong. I think that that union, which has a sub-branch, should be consulted in the making of the Bill. I am glad to see noble Lords opposite nodding in assent—a rare sight when it concerns me!
Let me turn to the question of private wharves. It may interest your Lordships to know that the private wharves of the Trent and the Ouse have a greater tonnage going through them than the port of Goole. The ways that these private wharves have been set up are individual histories. They are creations of free enterprise, they are dynamic, they work all day and night. At Howden Dyke (where I got off) they used to load fertilisers for farmers. Now it is a teeming beehive of activity. They do not have port cranes; they have the kind of cranes that builders hire, wheeled cranes or cranes on tracks. How they do not collide when they are on shipping work, I do not know. Everybody works in together; there is much profit sharing; great sheds are being built one behind another. These are the people who are taking the trade now.
Selby is a booming port because of the private wharves there. Again, if one goes over Selby toll bridge (as I frequently do) one can see these cranes unloading the ships by means of driving to the ships that come alongside. The pilots like working with them because they are spur-of-the-moment activities and the pilots like that sort of intensity of work. I need hardly say that the great port of Felixstowe started, I think, as a private wharf. Be that as it may, it is not in my province. Certainly, the private wharves are a new creation, new since the war, and should be taken into consideration; although I seem to have been the first peer to have spoken of them.
My next point deals with pilotage direction and Clause 5 which lays down laws about dangerous and hazardous cargoes. Again it does not appear that pilots are going to be consulted. The pilots should be consulted about all laws made in pilotage direction by these competent harbour authorities. The pilots are the people who know whether some sandbank has shifted or not, by crude experience, and they certainly should be consulted on such things.
I very much welcome the Bill. I welcome in particular the way it is going to look after the question of

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redundancy of pilots. On the east coast they are working very hard. It is on the west coast—the Mersey and the Clyde—where there are too many pilots. The east coast, as we all know, is shipping to the Common Market and has far greater activity taking place there.
I can remember the awkward strikes which occurred when I was working as a young officer in the London Docks. In those days we unloaded at London and transhipped to Rotterdam. Then, I am afraid, the London Docks and many other docks closed down. However, I believe that if this Bill shows initiative in regard to the future of our country we might find ourselves unloading again, for Asia, in our ports and shipping the goods through the Channel Tunnel to the Continent. I hope that is exactly what will happen in our country in years to come.
I have one final point to make. I am afraid that I have a very long-standing engagement, and I hope that your Lordships will not mind if I ask your permission to leave before this debate comes to an end.
5.32 p.m.
Lord Blease: My Lords, first of all I should like to apologise to the Minister and to other noble Lords for my absence from the Chamber during the earlier parts of this debate. I had unexpected and urgent business to attend to.
My intervention in this Second Reading debate will be brief. I wish to indicate, from the representations made to me, that many of the proposals in this Bill have caused much concern among the members in Northern Ireland of the United Kingdom Marine Pilots' Association. Much of that concern has been expressed by my noble friend Lord Underhill in his speech from the Opposition Front Bench. I have been encouraged by the very practical and helpful points that I have heard made by many noble Lords from all parts of the House since coming into the Chamber and listening to the debate.
However, in addition to the points already dealt with, the members of the pilots' association in Northern Ireland are particularly concerned about the future of this vital service to industry and trade in the Province. The port navigation channels at Belfast, Kilroat, Ballylumford, Larne, Londonderry and Coleraine are among the critical transport sea links that provide for trade and commerce to the heart of Northern Ireland's industry.
It is the view of many that the Bill puts at risk these vital sea routes. It is the considered view of professional marine officers that this Bill attempts to put a passage through on purely uncharted waters to an unknown future for the pilotage service. The paper that has been presented to me by the pilots' association indicates concern about the future standards of the pilotage service and the necessary professional training and experience; and also about the proposed system of payments, negotiations, accountability, the rights of appeal and pensions. These have been dealt with by other noble Lords, and perhaps I might have the opportunity of referring to these matters in more precise detail during the future stages of the Bill in your Lordships' House. In the meantime, I hope that the Minister may be able to bring forward more
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satisfactory assurances than those contained in the Bill about the future of this distinguished public service and the future wellbeing of the officers in the pilotage service.
5.35 p.m.
Lord Simon of Glaisdale: My Lords, in addressing your Lordships I must make the same declaration of interest as was made by the noble Lord, Lord Shackleton, though I should add, if I may, that I only became an Elder Brother of Trinity House after ceasing to be President of the Admiralty Division. I add that because my own view, for what it is worth—and it is worth very much less than that of my noble and learned friend Lord Brandon who is sitting beside me—is that the subsisting system of pilotage was very much over-criticised. I think that was the view of the noble Lord, Lord Shackleton, too, and I believe that was shown by the trouble which arose during the 1970s when attempts were made to make improvements.
I tend to take the same view as the noble Lord, Lord Shackleton, that a great deal could have been done by administrative actions. Nevertheless, the Government have brought forward this Bill and I think they are very much to be congratulated in having got the consensus that they have managed to accumulate. This Bill in today's debate has really been praised with faint damns, and sometimes the damns have been more than faint! But at any rate it must be a rational scheme to bring pilotage nearer to the ports. After all, pilotage is a function of harbour management.
Secondly, the Bill does provide flexibility and, thirdly, it does provide potential competition between rival ports in the facilities and the service that they can offer. I think that point was really implicit in the excellent speech that we had from the noble Duke. The noble Lord, Lord Shackleton, has said everything from the point of view of Trinity House that I would have wished to say. It has been encouraging that virtually every noble Lord who has addressed your Lordships has been loud in praise of the service that Trinity House over the centuries has vouchsafed to our maritime interests. The very first of the Pilotage Acts—that of 1806—had a long Preamble which is really nothing more than a panegyric of the way Trinity House was providing a service, as it said, "from time immemorial". That seems to have been the case up to today.
I do not wish to enter into any details on the Bill, but I would say this. I have frequently been a critic of the drafting of our statutes, and so it is only right to say that this seems to me to be a well drafted Bill. I think it is important to recognise that because there has been hardly a speaker in today's debate who has not wanted to inscribe something extra into the Bill My own view is that we shall certainly have to look seriously at dangerous cargoes. Probably there will have to be a specific reference to that. But as for all the administrative details, they are far better kept off the face of the statute. The noble Viscount, Lord Rochdale, with his great experience, mentioned the potential—in fact, anticipated—complexity of compensation provisions. If we try to write them into the Bill we shall grossly overload it and, in effect, wreck it for all ordinary purposes.

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The other thing that I wanted to do was to refer to the accompanying White Paper. Your Lordships had an admirable exposé of the Bill from the noble Lord the Minister; but there can be no doubt, as the noble Lord, Lord Underhill, pointed out, that we have an immense advantage in the White Paper. The noble Lord, Lord Houghton of Sowerby, used to ask for a White Paper to accompany the Finance Bill. I expect that the noble Lord, Lord Aldington, will remember that. The Treasury were always against it. I always suspected that that was largely because they thought they would get a Finance Bill more easily through the other House if it was not understood. But I hope that other departments will, on other Bills, consider what has been so successfully done on this Bill. I join your Lordships in hoping that the Bill will be given a Second Reading and will not on the face of it be too violently improved in Committee.
5.42 p.m.
Lord Swinfen: My Lords, during the debate on marine pilotage that we had last summer on, I think, 25th June, I asked the Minister at the time, my noble friend Lord Caithness, whether he would convene a conference of all interested parties. He was not very keen on doing it. I got the impression that he did not think it was necessary. Again, on 25th July, I put down a Question for Written Answer to Her Majesty's Government to ask what progress had been made in their consultations, and whether they would convene a conference of all interested parties. My noble friend on the Front Bench will recall his reply, that he had agreed to take the chair in a meeting between Trinity House and the British Ports Association. So there has been some consultation with the pilots; not, however, I think, a very great deal.
I get the feeling that this Bill has really come about as, in many ways, rather a hotch-potch and that there has not yet been sufficient consultation between all parties. I am sure that if all parties had got together in the drafting of the Bill we would have a very much shorter time in Committee, Report and Third Reading stages than I suspect we are going to have. I think there is still time to arrange such a conference, if the Minister is prepared to act faster than most government departments are normally prepared to do. He has to get up and go. I am sure he will do it. I am sure it is worthwhile. I issue that to my noble friend as a challenge. It certainly will not do any harm.
I have been briefed on this Bill by representatives from the five different groups comprising the London district pilots organisation. They are very willing to co-operate with the Bill. They do not like the way it has been prepared. While they know that change is necessary, they feel that there are certain improvements which need to be made.
I am rather worried about the environment, as anyone who reads what I said last June will see. I am very concerned that the competent harbour authorities will reduce the area of pilotage from the present pilotage districts only to their own legal harbour authority areas, which are very much smaller. I know about the Thames estuary. I do not know about other estuaries and approaches to other harbours, but I suspect the problems are the same. A lot of the
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serious and dangerous parts of a sea voyage are outside the harbour authorities' areas.
It is a lot cheaper to run a pilot in a smaller area. He will not be working such long hours, he can do more trips every week and, therefore, fewer pilots will be needed. I think this is something that needs to be looked at, and I hope my noble friend can confirm that the Minister will ensure that the competent harbour authorities make certain that their pilots go out far enough to do the job properly. It may even be necessary to extend the harbour areas to do that.
Other noble Lords have talked about noxious and dangerous cargoes. I think that some of the chemicals being produced by scientists nowadays, and used industrially, are so dangerous that, as well as the crew, there must be a pilot on board, just as an insurance. We could kill our fish stocks; we could make a total estuary dead for years with some of the chemicals that are transported today. Someone has already mentioned the Flixborough disaster. Similar things can happen at sea. It is not so easy to get the emergency services there to deal with them—there are no roads.
Another point that worries me is exempt vessels, which have already been mentioned by the noble Lord, Lord Greenway, and others. I realise that it is irritating for masters and mates of relatively small vessels, who are trading in and out of the same ports the whole time, to have to get special exemption certificates, but I feel that it should be the individual men who have the certificates, not the vessels.
Lord Simon of Glaisdale: My Lords, is the noble Lord right in implying that it is the vessel which has an exemption? Under, I think, Clause 6, it is the captain or the first mate.
Lord Swinfen: My Lords, I took advice on that matter, and I understood that for vessels under 6,000 tonnes, it was the vessel that was exempt if it was used for coastal traffic. I honestly do not see how a vessel can steer itself. I have met men in the past who have said that their cars know the way home late on a Saturday night. I have never believed it. Even less do I believe it of a ship at sea where there is wind and tide affecting it. This is something that we need to look at, possibly in Committee. I think there should be no great hardship to seamen, who are constantly trading in and out of the same ports, in taking examinations in regard to those ports.
The other point is the pilotage exemption certificates for masters and mates of larger vessels trading in and out of the same harbours the whole time. That is fine when they are all using the same boat or a similar boat. But, as I understand it—and I stand to be corrected on this—at the moment a master who has an exemption certificate on a relatively small vessel can be transferred to a super-tanker (I can never remember the correct name for such ships) and he will still have a valid exemption certificate, although he is in charge of a very much larger and less manoeuvrable vessel. If it happens to be loaded with gas, he is in charge of a floating bomb.
Another important point is that anyone from any nation who is granted an exemption certificate should have a competent knowledge of the English language. More and more advice is being given to ships over the radio. We expect aircraft crews coming into this

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country to be able to speak in English to the aircraft controllers. It should be exactly the same for a ship. It is no use trying to help a ship coming in from South Korea to one of our ports, if the only language that the person speaks is South Korean. An exemption certificate is no help when he is in trouble, and he may not get into trouble until it is too late to put a pilot on board, because of the positioning of the pilot boats.
Clause 14(5) refers to the control of a vessel by someone who is not on that vessel. I think it refers to the new vessel traffic services system that is being set up in some ports. I believe it is necessary that, whoever is controlling those systems, should themselves be fully qualified pilots, experienced in handling different sizes and types of ships and of the way in which the currents run and the wind affects vessels in the area where they will be operating the services.
I now move on to the competent harbour authorities. They are not all on their own. Look, my Lords, at the Thames. The inner Thames will, I think, have nine. If you take the whole of the current pilotage area, there will be 14 competent harbour authorities. Some of them are fairly close together. Would it not be sensible to make certain that they have a common pilotage service which will serve them all and cut down costs? What is the point in having a pilot who operates only into Gravesend when Tilbury is virtually across the river? As your Lordships know, the Thames pilots are at present in five groups—the river pilots, the Medway pilots and the London sea pilots South, North and West. They are already working together, so that they operate as a team and can operate in different directions.
Today, if you take a ship down the Thames you can only use a pilot who takes the ship out. In the future, if there is no legislation, there will be a pilot who can take the ship out and then bring another one back home again instead of having to return home by train or road. A similar sort of system can be used in any other area, so that ports will combine and work together. I am sure that that would be a lot cheaper and more economical. I know that ports are competing with each other for business, but that is no reason why they should not cut their own costs by co-operating on that point.
Pilot boats have already been mentioned. It is absolutely essential that we have safe, secure vessels to get our pilots out to the ships that they are going to help. If we do not, we shall end up with a dead pilot, with dead pilot boat crews and possibly with a disaster, because the vessel that they were going to help runs aground. It is essential that the Department of Transport keeps control of the quality and number of crews on these vessels, and also of their training.
I am not sure who under the Bill will license the pilots. If the competent harbour authorities are the people who will issue the licences, will they cut their costs yet again in training them? There is a danger there. Possibly the licensing for all the ports should be by Trinity House. It has the expertise and, I understand, trains pilots for various nations overseas as well, so that it has a service which it is already running.
Another point that we shall need to go into in Committee concerns conditions of service. I
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understand that the staff of Trinity House who will be transferred to the competent harbour authorities will be guaranteed employment for four years. There is no such guarantee for pilots, possibly because they are self-employed at the moment. Also, I am not sure what is the position of the pilot who takes employment with the harbour authorities, does not like it and then leaves. We have to make certain that his pension arrangements are satisfactory and are transferred properly to the new competent harbour authorities.
5.56 p.m.
Lord Mottistone: My Lords, I think my noble friend Lord Swinfen will find many of his questions, including that on the exemption certificates, answered by this White Paper in the comments on Clauses 3, 6 and 10. I should like to start by congratulating my noble friend the Minister on the particularly clear and convincing way in which he introduced this Bill. I am entirely behind it. I have been advised by many sources, particularly the General Council of British Shipping. I have also had advice from Trinity House, for which I am most grateful. This whole subject has a long and tangled history and it has been clear for some time that the present pilotage arrangements are outmoded and expensive to users.
Unlike many noble Lords who have been talking about the pilots with such support and encouragement, saying how splendid they are—which might well be so of Trinity House pilots, but I have not had occasion to work with them—I have to say that my experience with pilots has not been at all a happy one. I had occasion to take on a pilot when I was commanding a ship in the Persian Gulf and I had to have compulsory pilotage going into the oil port of Bahrein. I should mention that all the pilots concerned were British and they all had to have a master's certificate.
It soon became obvious that the pilot had no knowledge that, when he ordered "Full Ahead" in a destroyer with 40,000 h.p. and weighing about 2,000 tonnes, he was calling for a great deal more power than he had ever seen in his life. We hastily put that right, but it was a very dangerous situation. It was a great eye-opener to me that anybody who was put on board a ship of that shape and size would go there without at least knowing that the Royal Navy had different helm orders from the merchant service.
My next experience was taking that same ship into Colombo where there was also compulsory pilotage. Having been warned from the time before, and seeing the pilot getting into extreme difficulty going into what was admittedly a very difficult berth, I asked him whether I could take over because I thought I knew the ship better than he did; and he was sensible and reasonable enough say yes. Therefore, it is not surprising that I am not so carried away with enthusiasm or believe that pilots always do the right thing when they are given the chance.
My first experience of pilots was not of that nature but was of Suez Canal pilots. That is much more relevant to what we are debating, because they were paid enormous sums of money as they had convinced everybody that their art was so skilful that nobody else could possibly do the job. I had occasion to meet some of the pilots. When we were on the third whisky, they

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did express a little shame. They were on to a jolly good thing. It might be said that, because they convinced everybody in the outside world that they were the only people who could do the job, they contributed quite considerably to the Suez campaign in the 1950s. People were very frightened as to what would happen if they were removed.
I knew, partly from later personal experience of taking a ship through the canal but also from wise and experienced naval officers who had had occasion to take their ships through the canal during war when for one reason or another a pilot was not available, that it is a skilled job but not something that a competent sea captain cannot do at any time. We must not be too carried away with the thought that only pilots can do these things. I welcome the exemption certificate—which, as my noble friend will see when he reads the White Paper, is strictly for people, not for ships—as an example of where captains will be allowed to take their own ships if they satisfy the competent harbour authority that they are appropriate to do so.
I suggest that there is not much dispute between us. The changes in the pattern of trade and the increases in the size of ships mean that there are several hundred pilots too many for the work being done. The noble Lord, Lord Greenway, said that he thought that all the superfluous pilots would leave automatically when the Bill became law. I hope that he is right. Obviously it is not economical.
The real flaw in the present arrangements is that there is no incentive for the pilotage authorities to provide a cost-effective personal service. For this reason above all others I welcome the Bill's central proposal to transfer responsibility for pilotage to the ports. They compete with each other and will have a direct commercial interest in providing a good quality, low cost service. They will compete not only with each other but with the Continental ports, which at present they do not. The noble and learned Lord, Lord Simon of Glaisdale, said much the same. I think that it is central to the subject.
I was sorry that my noble friend Lord Strathcona made a great issue about the dangers of commercial pressure. One has to have some commercial pressure in the modern world. I would go so far as to say that one has always to have commercial pressure to get the most efficient results out of people. The degree to which commercial pressure should be applied could be a matter for discussion. It is my belief—I think all the evidence confirms this, certainly the Green Paper and all that it says—that there has not been enough. That is why we have to have this new system.
I would argue, for example, that safety will not be prejudiced as the result of a transfer to the ports. I think that it will probably be enhanced. As the Green Paper says at paragraph 3.2:
"This is the natural choice: the authorities have responsibilities for the safety of navigation within their boundaries; they have the capability to manage pilotage services; they have a direct concern in the efficiency of operations within their ports; some authorities have developed sophisticated systems for monitoring and managing traffic for ensuring its safe passage into and out of port, and with the development of new technology there will be advantages in placing the pilotage service under the same authority as shore-based traffic management systems".
Lord Strathcona and Mount Royal: My Lords, has the noble Lord, Lord Mottistone, ever heard the story of the shuttle pilot who was asked what he thought as the shuttle took off? He said, "I remind myself that every component on this ship went to the man who put in the lowest bid", and we know what happened to the shuttle.
Lord Mottistone: My Lords, I think that is irrelevant. One can produce that sort of argument for anything that one wants to. If my noble friend's argument was taken to a logical conclusion, when the pilots came to him and said, "We want to have £1 million a year like certain top businessmen do", he would give it to them. There must be a limit to this and a system that imposes limits. One cannot control things entirely by hoped-for good will. Sadly in the modern world we do not always get good will; nor do we always get people who are thoroughly dedicated to their jobs and totally unselfish and ungreedy. These things, I am afraid, do not happen.
I welcome the opportunity for Trinity House to act as agent for ports if it is the ports wish. I suggest that, despite occasional disputes, there is no animosity as such between the shipping industry and Trinity House.
In consequence of these points—which I am rather rushing, because it is helpful to be able to get this out of the way with other business to come—I welcome the Bill as providing an acceptable instrument for tidying up this essential area of maritime activity. On the whole I think that there is a fairly wide consensus that it is acceptable. We have heard that the pilots are not wholly behind it. Indeed, some are probably dead against it. Naturally one would expect that because, on the whole, their way of life is having a measure of control put upon it which it has not had in the immediate past.
Although I welcome the Bill as a whole, there are still dangers of monopoly and therefore of abuse lurking in some corners of the proposed system. I welcome the safeguard that it contains, for example, for appeals against pilotage charges. I am less certain that the issues of compulsory pilotage and charges for the use of pilotage certificates for ships' masters have been thoroughly thought through.
I have three areas in which I hope to have amendments in due course. The noble and learned Lord, Lord Simon of Glaisdale, commented that other noble Lords have been saying that they want to add to the Bill. I agree with him that it might get spoilt thereby. I want to take from it. For example, I should like to see Clause 8(3) removed. It empowers the competent harbour authority to make charges for the use of a pilotage certificate. If a master or mate has been able to obtain a pilotage certificate to navigate his ship without engaging a pilot, why should the port be able to make a charge? I accept that the cost of granting, renewing or altering the certificate should be recovered, but that charge is already dealt with in Clause 6(7). It seems to me that the only money that the CHA should get is the cost of granting a certificate. One of the objects of the Bill is to make the whole matter more economical for shipping. Albeit the amount involved is relatively small, a ship whose master or mate has a pilotage certificate ought to be allowed not to pay anthing for pilotage.

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Another part that I think could well be omitted is Clause 3(11) of the Bill. This provides that a pilot will not be barred by reason of being a pilot from membership of any committee with a pilotage function of a local authority; that is, a harbour authority. I question whether it is reasonable that active pilots should be entitled to participate in committees that might be dealing with matters in which they have a direct interest. Maybe it is a matter of rewording rather than cutting out Clause 3(11), but I think that at present it is leaving it wide open for pilots to be able to go in and have a hand in committees that decide, among other things, their own incomes.
Clause 26 deals with the funding of expenses and liabilities on the winding-up of pilotage authorities. Clause 26(5) provides that a competent harbour authority can recover such expenses, together with the cost of financing the pilots' compensation arrangements by increasing any charges, dues or fees payable to them. Leaving aside the question of financing the pilots' compensation, which is another matter, I believe that there is a strong case, if this extra financing has to be handled in the transitional phase, for government financial assistance towards the cost of these changes rather than that it should all come back on the unfortunate ships. Once again the ships have to field the financial bill. I think that the object of this exercise is to try to reduce unnecessary costs for ships so as to make our harbours more competitive both among themselves and with Continental harbours and to enable our shipping lines to pay less so they can operate more competitively in the world at large. That is surely what this Bill is all about and anything which does not work towards that end needs to be looked at very seriously.
Finally, on. a matter of technical detail, when my noble friend comes to reply will he be able to give us some idea of when these special committees will sit? I believe he told us that the time of day would be from 3 to 4.30 p.m. There is the usual gap of a fortnight between now and the beginning of the Committee. However, following that, will it go consecutively day by day, or, as in an ordinary Committee stage, will it happen on set days planned through the usual channels? Knowing that would be most helpful in arranging one's programme.
I wish the Bill every success, and I hope your Lordships will not be carried away too much by my noble friends who are dedicated supporters of the pilots.
Lord Swinfen: My Lords, before my noble friend sits down, is he aware that when I was talking about exempt vessels I was talking about existing legislation and not the Bill? Under Part IX of the London Pilotage District By-Laws it is stipulated that vessels under 3,500 gross registered tonnes (and I did say 3,000 earlier; I apologise to the House) trading coastwise are exempt from the need to take a pilot. They must use a pilot for 60 days before the exemption applies, but once the exemption applies it is the vessel—no matter who is in charge of the navigation—that is exempt. That is my understanding of the position. I am sure that the Minister will be able to put us both right.
Lord Mottistone: My Lords, surely we are talking about the Bill and not what is happening now. What is happening now is to be swept away by the Bill.
Lord Swinfen: My Lords, that is not as I understood it. I think it is absolutely essential that we make sure that this point is in the Bill before it becomes an Act.
6.15 p.m.
Viscount Simon: My Lords, we have had a very interesting discussion on this Bill. It has lasted longer than I thought it would. A great many important points have been made, mostly points of detail. I think that the best comment I can make on them is to say that each of them is a marker for discussion in Committee or later, and I shall not refer to any of the suggestions unless they come up against what I wish to say on the general issues raised by this Bill.
As has been made perfectly clear, the primary objective of the Bill is to reduce the cost of pilotage services. To do so will in a small way improve the competitive position of our ports and therefore the competitive position of British exports and the cost of our imports. I say "in a small way", because pilotage dues, although they may seem large when they appear on a bill, are small in relation to all the other expenses that have to be incurred. I do not think we should be too concerned about that.
The noble Lord, Lord Shackleton, asked whether there was any estimate of what saving might be achieved. I doubt whether it is possible for anyone to work that out; if anyone has, no doubt the Minister will tell us when he comes to reply. I think he will agree that the savings, assuming that they are all achieved, would be very small.
The method proposed in the Bill is contained in Clause 2 and that is that the new pilotage authorities shall keep under review the need for pilotage, including the need for compulsory pilotage, and keep the numbers of authorised pilots in line with needs. I take it for granted that all this is to be done without endangering the high safety standards we require and have enjoyed under the present system.
I am sure that your Lordships will agree that the criticisms which gave rise to this whole inquiry and the Bill which is now before us were against the system but not against the pilots themselves, for whom we all have the very highest approval. The noble Lord, Lord Mottistone, told us that he had not found pilots as satisfactory as he had expected. We then discovered that one of them was in Bahrain, one somewhere else and another in the Suez Canal. I could not agree more than the Suez Canal pilots are very much overpaid. However, their pilotage was not unimportant because it was in fact traffic control. They were needed because traffic control had to be maintained and that was done by Suez Canal pilots.
In this country as well the pilot's job is very often a matter of traffic control. At one time I had a connection with the port of Poole and in that port the pilot's job was almost entirely one of traffic control and making sure that the very narrow principal channel was not blocked by two ships proceeding at one time.
Perhaps I may make one point about the suggestion that the number of authorised pilots should be

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adequate to meet needs. It should not be forgotten that the pilotage service must deal with peaks of traffic. I think it has been mentioned by one noble Lord already that there is a good deal of difference in demand at different times and the pilot service must be large enough to handle the peak traffic without delay. That means that there will be more people on the roster than will be required every day of the year.
The debate of 25th June has been mentioned several times already with regard to the Unstarred Question asked by the noble Lord, Lord Shackleton. In that debate my noble friend Lord Kennet said at col. 389 of the Official Report:
"safety is not for sale".
I like that expression. The noble Lord, Lord Strathcona, (at col. 392) said:
"we should be wary of a relentless and unreasoning pursuit of … unproven cost savings at the expense of efficiency, safety and the disruption of the … lives of dedicated professionals".
I wish to speak particularly of safety. I disagree with the noble Lord, Lord Mottistone. I am concerned that port authorities, with the new responsibilities they will be getting at a time when so much emphasis is being laid on reducing costs, may find themselves under intolerable pressures to discount risks which they have been protected from for many years by efficient pilotage. I wonder whether it would not be desirable to include in the Bill a provision that any reduction which might be contemplated by the new pilotage authorities in an area where pilotage is at present compulsory or even where it is normally provided to be proposed should be subject to approval from the Secretary of State in whatever way is thought best. I am speaking of approval by some independent body with knowledge of existing conditions. I do not want, from this Bench, to invite any more government involvement than is necessary, but I can imagine cases where pilotage authorities, in their drive for economy in a highly competitive field, ought perhaps to be curtailed in the public interest.
We have heard a good deal today about the opinions of licensed pilots, although the shipowners and port authorities are in general agreement about the proposals and Trinity House, on whose behalf much was said in the debate on 25th June, is now satisfied. I have been told, although at second hand, that Trinity House warmly welcomes the Bill. The noble Lord, Lord Shackleton, thought that that had been slightly overstated. I have had words with one of the elder brethren about the Bill and he was reasonably content, if I may put it that way.
Before we started with the Bill I sensed a feeling, which has since been confirmed by several noble Lords, that existing licensed pilots are not altogether happy. As someone said not very long ago, this is not surprising when one of the objects over the years is to reduce the numbers and perhaps in some districts make the duties of those who transfer to the new pilotage authorities more onerous than they were. Nor is it surprising that a good many licensed pilots feel rather sore. I appreciated very much what the noble Duke, the Duke of Norfolk, said. These people are highly professionally trained and are used to going on board ships and talking to the master in language
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which both of them understand. They ask whether they are now just to be servants to go out and do what they are told to do. I do not think it will happen that way but I can well understand the feelings that this has produced in a number of the pilots.
What we can do about it, apart from gradually educating people by experience to the new system, I do not know. The White Paper ends with a promise to provide equitable treatment for the present and future members of a distinguished profession. That promise must somehow be put into effect. It is natural that details of what can be done are not available at this stage. Clause 25 indicates in broad outline what is intended in the way of compensation for pilots leaving the service. That outline will have to be put into some form. I agree with my noble namesake that it is not desirable to put such matters into the Bill itself; but the outline is there and it is to be followed.
What about those who transfer to the new pilotage authorities as authorised pilots? There is nothing in the Bill about them. They are given priority over other applicants when they first apply for positions as authorised pilots but nothing is said about the terms. When as a result of an Act of Parliament people are transferred from one employment to another—and while this is a little different because they are being transferred from self-employment to another employer, the principle is the same—is it not usual for some guarantee to be given to the people transferred that they will not be any worse off? I should like to see something of that kind written into the Bill. These and other matters will no doubt be considered in Committee or in subsequent stages of the Bill.
I conclude with one comment. It seems to me, as was mentioned by another noble Lord, although I cannot remember who, that there is no party political content to the Bill. I hope that when it goes into Committee and on to subsequent stages your Lordships will consider on their merits any proposals that are made by way of amendments and will vote upon them on their merits irrespective of the stable from which they come.
6.24 p.m.
Lord Carmichael of Kelvingrove: My Lords, that was a felicitous note on which to finish this part of the general debate. This is basically a non-party political measure and I hope that when the Bill reaches Committee it will be treated in that way.
The Bill has been brought forward because there is a surplus of pilots. I have read the report of the earlier debate initiated by my noble friend Lord Shackleton and I was struck by the figures given by the noble Lord, Lord Walston. He said that between 250 and 400 pilots were surplus to immediate requirements. The Select Committee which reported in June 1985 said much the same thing. It was suggested in an intervention by the noble Lord, Lord Mountevans, that this is because we have too many ports. Perhaps we have too many ports, but there is no doubt that ships are becoming much larger and modern mechanisation of the ports means that ships are turned around faster.
The growth of air cargo has a part to play as well. In tonnage terms Heathrow is one of the largest ports in

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the country. In addition, large lorries bring cargo over on ferries from the Continent. Nowadays, many of the large ships from abroad go only to a single port in Europe or in the United Kingdom. In this connection, I can certainly understand the worry of my noble friend Lord Blease about Northern Ireland. Many of the goods for Northern Ireland which used to go directly by ship now go by road from the South to Liverpool or come down from Glasgow and cross over via Stranraer. All these developments have no doubt affected the loading of British ports.
Since the days when the noble Viscount, Lord Rochdale, made his impressive report, shipping has changed out of all recognition. The issue of the report coincided with a sail down the Clyde. There was great jubilation and pleasure at the idea that we were to have a Clyde port authority instead of all the little ports. That was looked upon as one of the salvations, but in some ways the Clyde is now a sadder river than it was then. It is an example of how time has caught up with so many of our plans.
The noble Lord, Lord Walston, gave the figures for European pilotage fees and British pilotage fees. He suggested something with which perhaps the noble Viscount, Lord Simon will agree. He suggested that it was asking too much to believe that the reduction of pilotage fees would greatly change the costs of British shipping. It obviously has some effect, and if anything can be done both to reduce the costs and to increase efficiency, it should be done. A 12,000 tonne vessel coming into London pays pilotage fees of £2,500. The same vessel going into Rotterdam pays £800. I shall not make the party political point that Rotterdam is a municipal port, but that happens to be the case. A 1,500 tonne vessel coming into London pays £1,180. The same vessel going into Rotterdam pays £300. Even if one reduces pilotage fees slightly, something other than those fees encourages ships to go into Rotterdam and Le Havre. It may well be that pilots are not required for as long. Certainly the figures are very different. The ports are busier. They may have a better system.
The Select Committee asked that ships should give better advance notice of their estimated times of arrival and departure. I understand that there is considerable wastage of pilotage time because, under the present conditions, a ship can arrive and demand a pilot and a pilot must be available on the spot. Perhaps those tidying up measures would be helpful. They were all suggested in the Select Committee report.
I am perhaps more familiar with Select Committee reports, particularly this one, because I was on the committee for many years. I believe that, by and large, it has done a fairly efficient job. The noble and learned Lord, Lord Simon of Glaisdale, mentioned the White Paper. I think that between the White Paper and the Select Committee report there is a much better understanding of the Bill than we get even from the Notes on Clauses—possibly because the Notes on Clauses are compiled by draftsmen and the White Paper is done in a much more general way. I certainly found it extremely helpful.
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The debate has shown a remarkable example of how governments of all parties can go wrong in their estimation of the feelings of the House. I hope that that will not be the case here, but I believe this Bill was selected for a Public Bill Committee on the basis that it was reasonably uncontroversial and that there was general agreement on the principles of the Bill, with no real party involvement. Today's debate shows that we are likely to have a fairly long Committee stage. I am sure that at the end of it I will be much better informed on pilotage, judging from the great expertise shown in the House today. The Minister went through the Bill fairly and helpfully. We shall read his speech before we come to the Committee stage and I am sure it will be of great help to us.
All noble Lords have paid tribute to Trinity House, its experience and accumulated knowledge. Obviously that is something which should not be thrown away. I am glad—perhaps because in some ways I am a sentimentalist—that the name of Trinity House is to be continued in the new company which is to be set up. Many speakers obviously have great experience of this subject and, as I said, I am sure this will be a better Bill after the Committee stage.
My noble friend Lord Underhill raised many questions on various parts of the Bill which emphasised the need for detailed consultation. The debate generally indicated that detailed consultation will still be required. The noble Duke, the Duke of Norfolk, suggested that he would be leaving early, so perhaps while he is still here I could say that I cannot add to what he said, and certainly not with the authority that he can bring to the subject, except to say that I hope the Government will have considerable consultation with the Transport and General Workers Union, particularly concerning the pilots. I understand that many of the pilots, particularly those in the port of Goole, as the noble Duke, the Duke of Norfolk said, are concerned about the situation. Incidentally, Goole is one of the ports that I have visited, and it is interesting to find that, in what one considers almost the centre of England, large ships are moored.
All this emphasises the fact, as the debate clearly showed, that although the Government have consulted a great deal on the Bill, more consultation is needed. Of course, in the last debate initiated by my noble friend Lord Shackleton, we heard that Trinity House had been consulted only a few days earlier. That emphasises the point that the Government could perhaps have been a little more careful.
My noble friend Lord Underhill, and others, were particularly concerned about fair treatment for the pilots. As regards pilot earnings, I do not know how important this is but certainly in the fairly detailed Table 4, on page 7 of the Select Committee report, there is no indication of earnings of the class referred to in the debate. I agree that in a certain number of ports, and for pilots individually and independently employed, earnings may be a great deal more. However, they are nothing like the earnings for much lower skills in many other parts of the country.
The noble Lord, Lord Greenway, referred to safety. The Select Committee report emphasised the importance of safety when it said that the question of safety is the most important point and that the second

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most important point is pollution. The report was referring particularly to the hazardous cargoes which many ships carry today.
I have mentioned pilotage charges, but a study of port charges is also interesting. I understand, again from some European countries, that pilotage charges are reckoned to be only 1 per cent. of total port charges, whereas in the United Kingdom, for whatever reason, the Select Committee puts it at between 7 per cent. and 12 per cent.; and in some cases even higher than that.
I am sorry that my noble friend Lord Shackleton appeared to be so antagonistic towards the Bill. I look forward to reading his speech more carefully to see on what points he disagrees. He has had considerable experience in this matter and as an Elder Brother of Trinity House his views cannot be ignored. I had believed that although some people were perhaps slightly worried about the future of pilotage, and particularly the treatment of individual pilots, there was general agreement between the Government and the pilotage authorities, and the pilots themselves, about the need for such a Bill.
A great deal was said by a number of noble Lords about pilots and their redundancy payments. Perhaps the Minister will take note of the fact that there is a feeling that, in many cases, people have said that the Secretary of State does not have enough power; but I should have thought that Clause 25(4), which deals specifically with redundancy terms, possibly gives the Secretary of State too much power. The Bill proposes that the Secretary of State will decide excactly what will be the terms and conditions, and the times of payment, for redundancy and compensation. This will all be decided by the Secretary of State without being spelt out. That is a point which should be taken up in Committee.
I am trying to rush ahead as quickly as possible. The noble Lord, Lord Mottistone, questioned the whole basis of a pilot's income. He said that he is glad that a commercial element will be involved—I think I heard him correctly. He said that there is to be a competitive and commercial element in pilotage. I hope that, despite the experiences the noble Lord described, the sheer professionalism of pilots will overcome any disadvantage that pure commercialism might bring to a situation where saving money was the only criterion.
The noble Lord raised a point which, again, the Select Committee clearly brought out. There needs to be a redefinition of the relationship between the pilot and the master of a ship, and a much clearer understanding of what is that relationship. I am sure that where pilots are familiar with ports, ships and their masters there will already be an arrangement. They will know how each other thinks, particularly if they use the port regularly. However, perhaps there should be a much better definition of that relationship.
I said at the beginning that I think that the Committee stage will be fairly long. I am speaking with very little experience of your Lordships' House, but I am not sure whether I generally agree with the suggestion of a committee of this House, which I think is perhaps not the best way to proceed. However, from what has been said in this debate today, obviously the
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nitty-gritty of the matter can only really be satisfactorily threshed out in committee. I look forward to that, but hope that it is not the thin edge of the wedge to send to a committee other types of Bills that are rather more party political.
I look forward to the Minister's reply and perhaps to a letter or some further explanation in writing of the very important points that have been raised today. Perhaps a way of shortening the Committee stage would be for the Minister to explain more clearly some of those points that have been raised.
6.40 p.m.
Lord Brabazon of Tara: My Lords, I am most grateful to all noble Lords who have taken part in this debate this afternoon. It has certainly been a most interesting debate. I was particularly glad that my noble friend Lord Strathcona and Mount Royal was able to speak with the authority of his role as honorary president of the United Kingdom Pilots' Association, and of course the noble Lord, Lord Shackleton, and the noble and learned Lord, Lord Simon of Glaisdale, gave us the benefit of their knowledge as elder brethren of Trinity House. Many other noble Lords have also made most useful contributions.
As the noble Viscount, Lord Simon, said in his speech, many of the matters raised were Committee points. This observation was also made by the noble Lord, Lord Carmichael. If I tried now to cover every point that has been raised during the debate we should probably be here all evening and I am fully conscious that there are two more debates to follow after this one. If I may therefore I shall answer the main points that have been made and maybe write to noble Lords; obviously, other points will be raised in Committee. As I and other noble Lords have said, we greatly welcome the constructive approach which Trinity House is adopting in the formation of their new subsidiary company to carry on agency work for the ports. The noble Lord, Lord Walston, credited me with some of the initiative taken toward moving in that direction but I have to tell the noble Lord that the credit is due to my predecessor and noble friend the Earl of Caithness, since this happened before he moved. Trinity House of course have accepted, since the publication of the Green Paper, that changes to the present arrangements need to be made. Whatever doubts they may have had about the precise remedies that we were proposing, I believe that it is absolutely right for them to seek to ensure that their expertise remains available to the pilotage service and to show that, as in other fields, their long tradition can adapt to changing circumstances.
How the provision of agency services will work is a matter on which a great deal of detailed work needs to be done in quite a short time. I think that this is the point that the noble Lord, Lord Shackleton, was making. Some of the provisions in Part III of the Bill may well have a bearing on the terms of an agency operation. In particular, I am thinking of the provisions concerning the transfer of staff, and assets and liabilities. Those points were also raised by the noble Lord, Lord Shackleton. We believe that what is in the Bill is sufficiently flexible to open the door to successful agency services; but if Trinity House—or better still, Trinity House and the ports in

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concert—feels that amendments are needed, we shall be prepared to look at them as favourably as we can. However, there is nothing in the Bill which will compel Trinity House to dispense with staff with whom it does not wish to dispense, nor does it necessarily deprive it of its pilotage assets. That depends on the terms of the scheme to be proposed by the Pilotage Commission and approved by the Secretary of State.
Lord Shackleton: My Lords, I am sorry to interrupt but it is a very crucial amendment. Can the Minister say whether it is possible that Trinity House will be able to retain its assets until such time as it has been able to get its company going and start debating approaching the market? If it does not have those assets, it cannot get the company going and will not be able to approach the harbour authorities.
Lord Brabazon of Tara: My Lords, I take the point about which the noble Lord asks. That is what I am saying: we must do some detailed work on this matter in a short space of time. Obviously, if the noble Lord is right, Trinity House would not be able to perform these agency services. It is our intention that it should be able to perform these agency services, so something must be done to make sure that is possible.
Many noble Lords—notably the noble Lords, Lord Underhill, Lord Walston, and Lord Greenway and my noble friend Lord Strathcona—talked about the safety of pilot boats. The safety and manning of pilot boats is a matter to which a great deal of attention has rightly been given. The provisions in Clause 4 of the Bill are intended to replace the provisions in the present Pilotage Act requiring authorities to approve the boats. They certainly do not rule out specific regulations and guidance on such matters from the department and we are still pursuing this actively, as we told the House of Commons Transport Committee.
As regards the particular point of the manning of pilot boats, we are about to circulate to the interested parties for comment a draft merchant shipping notice—I think the noble Lord, Lord Greenway, was asking about this—which says that in the great majority of cases the Department of Transport accepts that it is right for pilot boats to be manned by at least two people in addition to the pilot but that a statutory requirement to that effect would not be right because of the variety of types of pilot boat and the differing conditions in which they operate. Therefore, the proposal is that the manning of each pilot boat will be determined by the department's district surveyor after consultation with the pilotage authorities concerned.
Much attention has also been given in the debate to the question of the areas of compulsory pilotage. It has been suggested that the proposal that competent harbour authorities should be given the responsibility for deciding on the extent of compulsory pilotage in their areas will mean that corners will be cut on safety and that there should be some requirement on them to seek the approval of an outside body—perhaps the Pilotage Commission, which my noble friend Lord Strathcona and Mount Royal suggested—before their plans are finalised. I think that a requirement of this kind would run the grave danger of recreating the present system under which local problems have
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become the battleground for national arguments. I know that the Pilotage Commission, which has borne the brunt of trying to make such decisions at the national level, feels that these are local decisions which can best be made by the harbour authorities themselves.
Of course commercial interests have a part to play and no authority will want to charge more than is necessary for pilotage, but commercial interest and statutory responsibilities for safety need not he in opposition, and a harbour authority has as great an interest as anyone in ensuring that pilots are available where masters need them, that masters are required to take a pilot where safety demands it, and in general that the smooth operation of the port is not put at risk by unsafe navigation. I think that my noble friend Lord Mottistone made that point most clearly. There can be nothing less commercially successful for a harbour than to have its entrance blocked by a ship that has run aground or which is carrying hazardous material that has caused pollution or something of that kind. It would simply not be in the interests either of the harbour authorities or the shipowners.
Reference has been made to certain hazards which are outside present harbour authority boundaries. The Bill takes those boundaries as its starting point, and I believe rightly, since we intend that the authorities should take a fresh look at the pilotage requirements of ships using their ports and should not be constrained by limits set many years ago when shipping movements and navigational equipment were quite different and reflected patterns of operation which are not necessarily the most sensible ones today. I believe that all accept that some of these limits are now outdated: for instance, the compulsory areas of the London district from Margate to Dungeness. However, the Bill places a clear statutory duty on the authorities to look beyond their port limits and consider what is needed in the approaches. In Schedule 1 we have offered them a very much simplified procedure for extending their jurisdiction to any areas beyond their boundaries where pilotage at present is compulsory and where they believe it should remain so in the future, and even where they do not judge compulsory pilotage to be necessary they will he able to authorise pilots to cover those areas on a non-compulsory basis.
Much attention has also been given in the debate to the question of pilots' guaranteed earnings levels. I listened carefully to what was said about the need to include in the legislation a requirement that, where they are to be employed in the future, pilots should receive what are termed their "current entitlements" as to earnings levels. By "entitlement" is meant the recommended levels for each district agreed under the former Letch arrangements, updated since the agreement ceased to operate. Those levels are not the same as those that pilots have been earning. I am not sure that "entitlement" is the right term, as pilots have never had a guarantee that those levels would be achieved, although in practice they have usually been exceeded. I can understand the pilots' wish that some such requirement should be included, with the aim of ensuring that levels of earnings under the new régime are comparable with those that they enjoy at present.

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As regards a right of appeal for pilots, I understand that the British Ports Association has accepted, in discussions with the pilots' union, the UKPA, that disagreements on earnings levels should be referred to an independent third party and that that procedure is to be available during the initial shake-down period of the new system. Whether such arrangements should continue after that period will be a matter for subsequent discussion.
I do not believe that the changes that we are proposing will, in practice, generally make any great difference to pilots' earnings. Our contacts with the ports suggest that the savings that they are looking for will come from the retirement of surplus pilots, more efficient working arrangements and the review of pilotage rules, rather than by attempting to depress pilots' earnings; but, nonetheless, I remain unconvinced that it would be right to constrain the ports in that way. They should be free to negotiate with pilots on a basis which, as well as earning levels, can take into account considerations such as how much the port can afford and what productivity is being achieved.
I know that representatives of the ports and pilots have been discussing those issues. I hope that some form of mutually satisfactory assurances can be arrived at. Obviously, this is a subject on which there will be much further discussion as consideration of the Bill proceeds into Committee.
The noble Lord, Lord Walston, and others asked about the possible compulsory redundancy of pilots. I hope that compulsory redundancy among pilots will turn out to be a non-problem. Many pilots will of course be ready to accept the compensation terms already announced. We are in discussion with the ports and pilots to establish transfer arrangements so that surplus pilots who wish to carry on are offered every chance of moving to other ports, so enabling pilots in those ports to take early retirement when they would not otherwise have been able to be released. That seems the best way of tackling the imbalance between the places where there will be a surplus of pilots who would like to carry on working and those where there is no surplus but where pilots would be prepared to retire early. It is the aim of us all to avoid any compulsory redundancy if at all possible.
I turn now to other points which have been raised. My noble friend Lord Strathcona and Mount Royal did not agree with the statement that a single authority is necessarily the right solution in all estuaries. I shall ask him to look at the Thames and the Medway. Pilotage into the port facilities operated by the PLA and the Medway Ports Authority could be provided by a single workforce or by two separate forces. At this stage we cannot say which is the more sensible arrangement. It would be wrong for the Bill to force the two ports concerned to organise in a way which may not be the best answer to local needs. In some cases a single pilotage operation may be the right answer but not in every case.
My noble friend asked about Clause 8(6) and whether private wharves would be included. Yes, my Lords, they will be able to appeal against pilotage charges.
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The noble Lord, Lord Shackleton, asked me to put a figure on the cost savings that we expect to achieve. I am reluctant to do so because the future cost of the service will depend upon a large number of variables upon which the harbour authorities will have to make local decisions: on the area the pilotage service needs to cover; the number of ships which should be required to take a pilot and the number likely to do so from choice; the number of masters likely to qualify for exemption certificates; and the number of pilots needed for the service to be provided.
Although the ports are doing much preparatory work, they are not yet in a position to provide firm data on which cost estimates could be based. I think any general figure at this stage may well prove misleading. However, as an indication of the number of costs involved, I can say that if 350 pilots were to leave the profession, annual savings of about £7 million, out of a total pilotage cost last year of £47 million, should follow once short-term costs have been met. I hope that authorities will be able to find other areas for savings—for instance, in the provision of pilot boat services.
My noble friend Lord Rochdale made an excellent speech. I am sorry that it has taken us so long to produce the legislation. I know the marvellous work he did on the report in 1962. He asked me whether Trinity House would continue to be responsible for deep sea pilotage. The Bill provides for the future licensing of deep sea pilots and allows Trinity House to continue with that function.
The noble Earl, Lord Grey, expressed concern that pilots may be transferred to other ports, depriving pilots there of their jobs. We intend that there should be a transfer system which will help avoid the need for any compulsory redundancies. I can assure him that there is no question of forcing any pilot to retire against his will in order to make way for a pilot being transferred from elsewhere. The noble Earl and other noble Lords talked a great deal about dangerous cargoes. The noble Earl suggested that all ships carrying dangerous goods should be compelled to take a pilot. There may well be special hazards associated with such cargoes. We see no reason why the harbour authority should not be capable of assuming the responsibility of deciding whether compulsion is needed. It is by no means true that such vessels are always subject to compulsory pilotage at present. For instance, Tees and Hartlepool handles a great deal of that traffic with a non-compulsory pilotage service. Its safety record is as good as any one else's. It is worth making the point that although there is no compulsory pilotage at Tees and Hartlepool, over 70 per cent. of ships entering the port choose to take a pilot.
My noble friend Lord Swinfen among other things, talked about the exemption of vessels from compulsory pilotage, and whether the certificates were attached to the vessel or the master. They can be both. Ships below a certain size can be exempt from compulsory pilotage, and there are good reasons why that should be the case. It is presumably easier to navigate a small ship than a large one.
The compulsory pilotage certificates provided for in Clause 6 would be attached to the master or mate and not the vessel. I take the point about whether someone

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could obtain an exemption certificate for a car ferry and then pilot a supertanker. I wish to study that point.
I should like to thank the noble and learned Lord, Lord Simon of Glaisdale, for his kind words about the drafting of the Bill and the White Paper. It has been useful to us all to have the White Paper produced at the same time as the Bill. The noble Lord, Lord Carmichael, did not think that we now needed Notes on Clauses. I propose that Notes on Clauses should still be available so that noble Lords who wish to have them for the Committee stage will be able to have them. But I agree that the White Paper has done a valuable job.
May I say a final word or two about why we regard it as so important to make the changes proposed in the Bill? As my noble friend Lord Rochdale said, pilotage is a cost on that great part of our trade that travels by sea. It may not be the largest cost but, to the extent that it is an unnecessary burden, our exporters and importers are being placed at an unnecessary disadvantage. We have taken a number of steps to make our ports more competitive with one another and with those abroad, and there are areas that still need working on. Pilotage is inextricably part of the ports' scene and cannot be seen in isolation from the success or otherwise of our ports. This Bill will permit pilotage to adjust to changing circumstances and offers those who work in the service a secure and well founded base for their activities. It also deals fairly, I believe, with all concerned.
Turning quickly to the question asked by my noble friend Lord Mottistone about arrangements for the Committee stage, it is hoped—provided that your Lordships give the Bill a Second Reading and agree to the Motion that I am about to move—that the Committee will meet, in respect of the first two days, anyway, on Tuesday, 9th December and Wednesday, 10th December, at 3.15 p.m. Following upon what has normally been the case, I understand that on those days—I said this in my opening remarks—the Committee will sit from 3.15 p.m. to 5.45 p.m.
With those remarks, I hope that your Lordships will agree that the Bill should be read a second time.
On Question, Bill read a second time.
Lord Brabazon of Tara: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Bill be committed to a Public Bill Corn mittee.—(Lord Brabazon of Tara.)
On Question, Motion agreed to.

Privileges and Immunities of MEPs: ECC Report
7.1 p.m.
Lord Templeman Lord Templeman rose to move, That this House takes note of the Report of the European Communities Committee on Privileges and Immunities of MEPs (8th Report, 1985–86, H.L. 105).
The noble and learned Lord said: My Lords, the eighth report of the Select Committee on the European Communities deals with the privileges and immunities
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of Members of the European Parliament. The present privileges and immunities derive from the protocol of 1965 which was then annexed to the European treaties. That protocol can only be amended by proposals submitted by the Commission to the Council and accepted by the unanimous agreement of member states endorsed by their national parliaments. It is therefore clear that this is a subject in which power will remain with the Government and with the United Kingdom Parliament to say "Yea" or "Nay" to the proposals put forward.
At the request of the European Parliament, the Commission has drafted proposals. It is those proposals that have been considered in the 8th Report. The European Parliament in general wishes to make clear that its Members owe a duty to the Community as a whole and not only to the member states from which they derive their power. It wishes to ensure that those Members are free to travel and carry out their work throughout the Community forming and testing views that they can then present to the European Parliament.
In that respect the principles that animate the European Parliament are no different from the ancient principles that your Lordships will find set out in Appendix 6 to the 8th Report. That appendix consists of a helpful note by a legal adviser on the history of United Kingdom parliamentary privilege and forms a useful background to the report with which your Lordships are concerned. On page 57, the appendix points out that,
"In connection with civil proceedings the fundamental principle of the ancient law and custom of parliament was that 'Unless Parliament could keep its membership intact, free from outside interference, whether or not the interference was with the motive of embarrassing its action, it could not be confident of any accomplishment'".
It is that principle that has been put forward by the European Parliament in its suggestions.
The existing position, the proposals of the Parliament and the suggestions of the Commission will be found set out in Appendix 3 of the report of the Select Committee. Appendix 3, on page 24, sets out the three articles—Articles 8, 9 and 10—to which particular reference is necessary. Article 8 sets out that under the existing arrangements covered by the 1965 protocol, the immunities and privileges of Members of the European Parliament include the fact that no. restriction
"shall be imposed on the free movement of members of the Assembly travelling to or from the place of meeting of the Assembly".
It is the wish of the Parliament that that privilege shall extend not only to travelling to and from the meeting place of the Assembly but also in travelling throughout the Community gathering information necessary for the purposes of MEPs. The Parliament has therefore made the request set out on page 24 that,
"No administrative or other restriction shall be imposed on the free movement of members of the Assembly travelling within the Community".
The Commission's proposals limit that request. It suggests that the immunity should extend to
"administrative or other restriction imposed on the free movement of members of the Assembly travelling within the community in connection with the performance of their duties".

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In other words, there will be no immunity of privilege allowed to an MEP who is off on a holiday or frolic of his own. As regards that proposal, the committee, in paragraph 47, on page 19, agrees with the suggestion put forward. It says,
"This would ensure that no restriction is imposed on the free movement of MEPs travelling within the Community in connection with the performance of their duties".
But it makes one suggestion in respect of which I would be glad to hear the Government's reaction. It is that the freedom must be made subject
"to considerations of public policy or public health which a Member State considers to be of overriding importance".
That suggestion is made against the possibility that the Government may have sure information that some terrorist has succeeded in obtaining membership of the European Parliament, and it will also enable the Government to have control over parts of the Community where there is perhaps some disease in respect of which vaccination or other precaution is required. That is the suggestion made by the committee in regard to Article 8.
Article 9 is also set out on page 24 of the 8th Report. At present it provides that,
"Members of the Assembly shall not be subject to any form of enquiry, detention or legal proceedings in respect of opinions expressed or votes cast by them in the performance of their duties".
That corresponds, of course, to the privileges of members of the United Kingdom Parliament. It is suggested that there should be added the provision that,
"Members of the Assembly may withhold evidence insofar as such evidence has a bearing on their activities as Members of the European Parliament. To that extent the impounding of documents shall also be forbidden".
The Commission approves of that request, and the committee likewise approves. Its views are set out in paragraph 48 on page 19, where the committee says,
"A right to withhold evidence about opinions expressed and votes cast would follow naturally on the immunity from any form of enquiry which MEPs already enjoy and is similar in kind to the privilege enjoyed by United Kingdom Members of Parliament in legal proceedings in this country".
We hope to be informed of the Government's attitude to that recommendation.
I come now to Article 10, the most controversial of the existing articles and the present proposals. At the moment, under the 1965 protocol, Members of the European Parliament enjoy two distinct and rather contradictory immunities. In the territory of their own state, they shall enjoy immunities accorded to Members of their Parliament. But, in the territory of any other member state they shall enjoy immunity from any measure of detention and from legal proceedings, whatever immunities may be accorded to Members of the national Parliament.
There are two existing safeguards. First, the immunity cannot be claimed when the Member is found in the act of committing an offence. That deals, broadly speaking, with MEPs committing acts of violence who can be arrested straightaway and who cannot rely on their immunity in that respect. Secondly, there is the precaution that the immunity shall not prevent the Assembly exercising its right to waive the immunity of one of its Members. To anticipate the policy of the Parliament, it waives the
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immunity of any of its Members unless there is some evidence that the work of the Member as a Member of the Parliament is being impugned or threatened. Parliament and the Commission wish to broaden that to make the immunities of Members of the European Parliament the same throughout the Community. The European Parliament's request is set out at page 25 of the report and says:
"Members of the Assembly shall enjoy in the territory of the Member States immunity from any measure of detention and from legal proceedings".
When the committee examined that proposal they were of the opinion that it did not differentiate between arrest for civil and arrest for criminal offences, and it seemed to apply to civil proceedings as much as to criminal proceedings. Therefore, the immunity might extend, for example—to take a reductia ad absurdum—to the claim for maintenance by a wife of a Member of the European Parliament. However, on taking evidence from the European Parliament, we found that that was not the intention, and since then the Parliament has been recommended to amend the suggestion so that the immunity shall only be from prosecution, arrest or other measures which are limited to criminal offences and clearly do not come within civil proceedings.
They will continue the reservation that a Member found in the act of committing an offence shall not be entitled to immunity, and they will continue the provision concerning the right and duty of the Parliament to waive privilege in a proper case. It is that proposal which has caused the greatest amount of controversy.
I should point out that the existing arrangements have had some strange results. For example, a Member of the European Parliament appointed by the United Kingdom Parliament, who committed a crime in the United Kingdom could be arrested and tried in this country and could not plead immunity. However, a Member of the European Parliament—appointed, as is now the case, by the United Kingdom electorate—who committed a crime in France, could not be arrested or tried. Similarly, an MEP appointed by the French, who committed a crime in the United Kingdom, could not be arrested or tried.
These differences stem from Article 10 and also from the different rules of different member states with regard to the rights of Members of their own respective national Parliaments. Your Lordships will see that set out at Appendix 5 at page 53. Appendix 5 sets out in the table the rights and immunities accorded by each member state to the Members of its own Parliament. For example, Belgium grants freedom of speech and voting to its Members and protection of sources of information However, the most relevant ones are these. Belgium grants freedom from arrest or detention and freedom from criminal prosecution. Turning to page 54, your Lordships will see that those same immunities are granted by all the member states with the exception of the United Kingdom, the Netherlands and Ireland. All other member states grant immunity from arrest and prosecution to their own Members, and the reasons for that are largely historical.
Freedom from arrest and from criminal proceedings was originally claimed on behalf of Members from the

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United Kingdom, but it no longer exists and the reason is that in the long period of 800 years which has seen the development of parliamentary government in this country, two basic principles have been accepted. The first basic principle is that no one is above the law and therefore a Member of Parliament should not be given immunity; he is subject to the law like everyone else. The second basic principle is that everyone is equal before the law and therefore a Member of Parliament does not require any extra immunity; he is subject to the law but will receive free and fair treatment, and he will not suffer from the fact or be disturbed from exercising his power as a Member of Parliament.
In other parts of Europe arrest and prosecution have, from time to time, been used to hinder or to intimidate Members of national Parliaments. The European Parliament does not believe that the danger is passed, nor that it is impossible, even in the United Kingdom, for arrest and prosecution to be used as political weapons. I am touching on delicate ground, but those of your Lordships who are familiar with the history of France beginning with the Dreyfus case and ending with the explosion on board the Greenpeace ship in New Zealand, will recognise that in that country it is not always possible to divorce politics and law. One has examples through to the end of the Second World War of the grievous wrong suffered by Opposition Members of Parliament under the dictatorships in Germany, Italy, Spain and Portugal. Therefore, it is not surprising that in member states other than the United Kingdom and those which have the common law, there has been this express exemption from arrest or prosecution.
Since the 1965 protocol, the European Parliament has been asked to waive the claim to immunity, and through the cases which it has heard there runs the theme of the anxiety of the European Parliament to make sure that none of its Members suffer from political persecution. If your Lordships will look, for example, at page 78 of Appendix 7, there is set out the speech made to the European Parliament by the rapporteur in the Zahorka case. He says that the principle is that there is an old Latin concept, fumus persecutionis, which really means the suspicion of persecution, and it is that which the European Parliament is enthusiastic to suppress.
He continues:
"The fact is that really, if you look a little further into the origin of fumes persecutionis, you realise that, except perhaps in Great Britain, it goes back in fact many centuries in our national parliaments. The fact is that in every age certain persons have tried to hinder parliamentary activity or political activity, certain persons have wanted to damage the parliamentarian, the politician, to hinder him from exercising his mandate in the normal way, and from conducting democratic political activity".
Therefore, I am not merely being chauvenistic when I say that there is an historical difference between Great Britain and the other member states. That was recognised by the European Parliament and it remains anxious to see that, as the rapporteur puts it, no one can:
"hinder parliamentary activity or political activity".
It is for that reason that the European Parliament and the Commission have suggested a widening of the immunity granted to all Members of the European Parliament.
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There is one other difference between the United Kingdom Parliament and its means of protecting its Members, and the European Parliament. Over the years, the privileges and immunities of Members of the United Kingdom Parliament have really fallen into desuetude. However, both Houses of Parliament—and in particular the House of Commons—have retained, and will from time to time exercise, the powerful weapon of committal for contempt. If there were any danger of any interference with any Member of the House of Commons, that House has its own power to commit for contempt and thus to prevent any threat or any limitation on the freedom of a Member of the United Kingdom Parliament.
Of course the European Parliament has no such power. It has no jurisdiction; it cannot make any order; it cannot commit anybody for contempt committed in any of the member states, and quite rightly so. It has no power, and therefore if European Members of Parliament are to be protected, then (unlike the situation for Members in the United Kingdom Parliament) that protection must take the form of the grant of immunities and privileges. It is with those considerations in mind that the Select Committee, having considered the very powerful evidence of those Members of the United Kingdom Parliament who, quite naturally, could see no reason why there should be any difference between their privileges and those of Members of the European Parliament,made its recommendations in Paragraph 54 of the report. Your Lordships will find the summary of the committee's recommendations beginning at page 20. The committee were willing to accept that
"Members should be immune from arrest or criminal proceedings";
and then made one important safeguard that it should be
"in respect of any acts except crimes of violence".
We see no reason why there should be any privilege extended to a crime of violence for which, in any event, waiver ought to be made automatically.
We suggest
"There should be no corresponding immunity from civil proceedings".
And, as I have indicated, the European Parliament, having considered the views expressed by the Select Committee, have so provided.
Then paragraph 55 stipulates:
"Immunity should not apply to the arrest of a Member committing, about to commit or having just committed an offence."
That is the existing law accepted by the European Parliament, and nothing turns on that.
Then Paragraph 56 says that:
"Parliament should have a power to waive a Member's immunity from arrest and criminal prosecution."
That power of waiver exists and is exercised whenever the Parliament is convinced that there is no question of possible interference with the political activities of a Member.
Then the committee go further and say:
"There should be a duty to waive the immunity where this would not he contrary to the interests of the [European] Parliament. This

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should apply in particular in every case where a Member is charged for an offence which is unrelated to the activities of the Parliament or any aspect of Community law or practice and where a Member is asked to give evidence not bearing on these matters."
Then we make suggestions with regard to the procedure for waiver. We say:
"The procedure for waiver should be simple and quick, and there should be machinery for provisional waiver in urgent cases."
Finally, although the power of waiver lies with Parliament, we have said that the exercise of that power must be reviewable by the European Court of Justice so that one gets consistency and overview by a European Court of Justice who will consider whether the European Parliament is in fact exercising its descretion in a proper manner.
We shall be interested to learn the views of her Majesty's Government both on the proposals put forward by the European Parliament and the Commission and the suggestions made by the Select Committee. In the final analysis it will be for Her Majesty's Government and the United Kingdom Parliament to determine which, if any, of the extension of the immunities and privileges they are prepared to support. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Privileges and Immunities of MEPs (8th Report, 1985–86, H.L. 105).—(Lord Templeman.
7.23 p.m.
Lord Silkin of Dulwich: My Lords, I know that the House will wish me to thank the noble and learned Lord, Lord Templeman, for the clear explanation both of the problem and of the committee's proposals. I hope I shall not embarrass him if I mention that after three years he is ceasing to be Chairman of Sub-Committee E, and also if I thank him for the work he has done as such and the numerous cogent reports which have come from his chairmanship.
While the dual mandate existed before the advent of directly-elected MEPs it was natural enough that MEPs desired equality with their national colleagues at least within their own territories, and in addition they needed further immunities, as the noble and learned Lord, Lord Templeman, explained, to protect them when carrying out their European duties elsewhere.
However, the picture was necessarily changed by direct elections. Equality with national colleagues ceased to be relevant. Equality between MEPs became indispensible. As M. Georges Donnez, the rapporteur of the Parliament, said to the members of the Sub-Committee, that was the corner-stone of the system. The question that your Lordships' Select Committee had to consider was at what level of protection that equality should be achieved. It did a considerable amount of work on the subject, hearing a number of witnesses and receiving a number of representations, and I very much hope that that work will be fruitful.
Representatives of Parliament who gave evidence accepted one fundamental principle which governs our own system in this country and which, in my view at any rate, is appropriate to any democratic legislature. M. Donnez put it clearly, and what he said is repeated at paragraph 17 of the report on page 10:
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"Parliamentary immunity is not, as we all know, the privilege of individual Members of Parliament, but is a guarantee for the institution which has the purpose of protecting that institution from any outside authorities or bodies. In the Parliament's view, the integrity of the institution had to be protected by conferring appropriate freedoms and immunities on its Members, enabling them to move freely throughout the Community, to act freely in their duties as a Parliamentarian and to be free from any form of intimidation in connexion with those duties.".
The noble Baroness, Lady Elles, whom I am glad to see in her place, agreed—and this is reported in the same paragraph—that privileges and immunities,
"should only be such as is absolutely necessary for the execution of the powers of the Parliament".
In other words, these privileges so called, perhaps more accurately immunities, are not for the glorification of individuals but simply to ensure, and no more than to ensure, that the parliament is able to carry out its functions.
I believe that both those MEPs and others who support that view are to be congratulated on their willingness to adopt that approach—the approach which has for long been that of our own Parliament, as is made clear both in Erskine May and in the report of the Select Committee on Parliamentary Privilege in 1967, a committee which I had the honour to chair and whose members included the noble and learned Lord the Lord Chancellor and other noble Lords.
While the principle is clear, its application causes problems. There appear to be two major difficulties. First, as the noble and learned Lord, Lord Templeman, reminded us, the European Parliament does not enjoy those powers of committal for contempt which are the principal means of protection developed by the high court of Parliament. It therefore possesses no means itself of preventing, or deterring, individuals or organisations from exercising or threatening pressure.
Your Lordships' Select Committee has drawn attention at Paragraph 39 to this deficiency, as did the noble and learned Lord in his opening remarks. In that paragraph can be found the comment that this is,
"a marked gap in the protection enjoyed by the European Parliament".
Without it there are no effective means of preventing attempts to bring improper pressure so as to influence the parliamentary action of MEPs.
Certainly my own view from my personal experience in dealing with privilege in another place is that protection against improper pressure is more important than any other aspect of privilege. Indeed the privileges committee in the Commons has, on a number of occasions considered and condemned such pressures, and there is an appendix in the report which indicates the kind of matters about which I am speaking.
We cannot expect to transplant into a different system the system that we have here. I believe that the European Parliament and our Government ought to be thinking about the matter in order to consider whether it is possible to devise a system which would have an equivalent effect, though obviously not in the same form. If it became successful, that system ought to be given legislative effect so that this marked gap in the protection would be removed.

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The second major difficulty, again referred to by the noble and learned Lord, is that, illogically but inevitably, representatives of different member states look at the systems in those states in formulating their ideas on what is the minimum desirable or necessary protection. The noble and learned Lord has drawn attention to Appendix 5 of the report, which is a useful tabulation of the systems in those states. The most noticeable difference which has already been referred to between systems in other states and our own is that nine of the states provide freedom from arrest, detention and criminal prosecution. Apart from ourselves, the Netherlands and the Republic of Ireland, they all do. Those three have no such privilege. The justification for that privilege is, as I understand it, the history of those countries and the fear that, without it, arrest, detention and criminal prosecution might be used to create an improper obstruction of an MEP in the performance of his duties.
In this case improper obstruction can be dealt with, notwithstanding the lack of committal powers of the parliament, because the parliament is dealing directly with the prosecuting authority in the national state. The existence of that immunity brings with it the need for exceptions. Immunity from arrest and detention does not prevent the apprehension of those who are said to be in flagrante delicto, actually committing or having just committed an offence. It is not wholly clear either what that expression means or what further consequences may flow from it once the apprehension has taken place. Indeed it is not easy to follow why it should have an effect on the question of prosecution, however important it is to have an effect on the question of arrest to prevent the continuation of the offence.
More important in my view is that immunity from prosecution could not work without a system of waiver of immunity. In the cases which arose in the 15 months between November 1984 and February 1986, which are listed in the report, the immunity has been waived live times and a waiver has been refused six times. It would take up much too much time if I were to examine those cases in detail. Suffice it to say, so far as one can understand the decision, decisions have not plainly followed a single consistent path. The principle which I applaud is to prevent the use of prosecution to obstruct legitimate political activity. The problem is to define "legitimate political activity". The more controversial the issue the harder it is to define fairly and the more diverse the results are likely to be.
For my part I am bound to say that I should prefer to solve the problem by removing the immunity altogether as in this country and by leaving the law to operate without impediment as we are able to do here. But I appreciate the difficulties that other member states would find about accepting that now, though one would hope they could move towards it. If it is unacceptable because of the different conditions in other member states then it seems quite essential that the decisions on waiver, though initially taken by the Parliament itself, should, as the Committee has proposed, be open to review by the European Court of Justice so that a body of European jurisprudence may be established to deal with what is essentially a European problem.
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I hope that we shall hear what is the view of the Government on that issue in particular. It seems to me that, if in the future we are to have decisions which are not open to the suspicion that different decisions are made in different circumstances which might have a political consequence and a political reason, then uniformity is necessary.
The noble and learned Lord has given exhaustive consideration to the points made by the Committee in dealing with the proposals, complicated by the fact that not only the European Parliament, the Commission and in due course the Council and the national parliaments will have to consider each point and will not necessarily agree to go further. Like the noble and learned Lord I am impatient to hear what is the Government's approach to the points where the Committee has made recommendations.
7.37 p.m.
Baroness Elles: My Lords, I should first like to thank the noble and learned Lord, Lord Templeman, and the members of Sub-Committee E of the Select Committee on the European Communities for the courtesy with which they received Members of the European Parliament and heard their evidence—in particular the valuable evidence given by M. Donnez, the rapporteur. I am also grateful for the recommendations contained in the report and the introduction of this subject by the noble and learned Lord. I shall try not to be too long so that noble Lords can quickly hear the views of Her Majesty's Government, but I wish to deal with one or two points that have arisen.
First, we welcome this report very much in the European Parliament. I should like to say to noble Lords—I think I have said this every time I have spoken on one of the reports coming from your Lordships' House—how immensely valuable we find these reports for their objectivity, their power of analysis and the clarity with which the case is always presented. Even if Members do not always agree with all the contents (and that is not the case with this report) the reports are enormously appreciated and serve as a guide to decisions we take on matters that have been discussed in your Lordships' House.
We particularly welcome the recommendation which recognises the need for equality of treatment. Clearly this could have had a certain political implication and perhaps Members of another place might not agree with that conclusion. But for those who serve in the European Parliament it is an essential ingredient of our work as parliamentarians. Anybody serving in the House of Commons, for example, would not expect separate treatment for people coming from Scotland, from Wales or from England. One would expect the same treatment with regard to privileges and immunities. We in the European Parliament take the same view.
What was surprising when the report was published was the reaction of Members of another place. They appeared to think that all had changed with the report, but since 1973, when we became Members of the European Community, delegates from both Houses of Parliament to the European Parliament have had the same immunities and privileges as Members of our

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national Parliament when we are in the United Kingdom, and still do for the time being. But the minute we cross to Calais we have the immunities and privileges which are spelt out in Article 10(b). From that point of view there is no change in our position.
Similarly a French MEP, as the noble and learned Lord, Lord Templeman, implied, would have the privileges and immunities of a French Deputy. But the minute he comes to Dover, he has all the amenities and privileges spelt out in Article 10(b), which are considerably wider than many privileges and immunities for national Parliaments.
As the noble and learned Lord, Lord Silkin, pointed out, since the direct elections in 1979, the position for MEPs has changed, as also has their status. Whereas we were all Members of our national Parliaments up to 1979, now, since the 1984 European parliamentary elections, there are only 42 Members who have a dual mandate out of the 434, excluding the special case of Portugal and Spain, where, although some are no longer Members of their national Parliaments, they were originally elected from that national Parliament. But only about 10 per cent. of the 434 Members now have the dual mandate.
As to the work of the Members of the European Parliament, I hesitate to say how much we travel, but even in my political group we have Members from Denmark and Spain as well as from Britain. In the normal course of our parliamentary year we can have meetings in Madrid, Copenhagen, Brussels, Strasbourg and London. As to members of committees, for instance, the Legal Affairs Committee met in Athens three weeks ago. All this takes place in the normal course of our work. We must be able to cross frontiers, go through Customs, have our ordinary passports treated in the normal way and not be hindered or restricted in any way in the course of our European parliamentary work. If I may use the phrase, our work patch is not the United Kingdom, as it is for the MP in Westminster; it comprises the 12 member states of the European Community and we have to be able to move freely, as is intended under Article 8 of the 1965 Protocol, which is, of course, subject now to amendment.
But there are one or two specific points that I should like to raise, particularly because the working paper, the document which is under the name of the rapporteur, M. Donnez, is to be debated in the European Parliament in its plenary session in December. Whereas the original amendments from the Parliament are contained in your Lordships' report (together with the amendments proposed by the Commission)—there are new amendments which have been voted in by the Legal Affairs Committee of the European Parliament and which eventually are to be debated.
Therefore, with permission, I should like to raise these as problems which we shall have to be discussing and considering. The first is whether under Article 8 immunity applies in all cases as it now stands in the proposal from the European Parliament. I very much support the view which has been expressed both by the noble and learned Lord, Lord Templeman, and by the noble and learned Lord. Lord Silkin, that this should
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only be in cases where Members of the European Parliament are travelling in connection with their parliamentary duties. The argument has been that, because we travel so much, very often one may tag on a holiday at the end of one's travels and it would be difficult to prove. But I would rather that the onus was on the MEP to prove that he was on business rather than on holiday than to have free travel throughout the Community, regardless of the purpose for which the MEP is travelling.
Similarly, there is the question of immunity from prosecution, arrest or legal proceedings. We assured the noble and learned Lord, Lord Templeman, and members of that sub-committee that this only applies to criminal proceedings; and there will be an amendment, if it is deemed necessary, to explain that this applies only to criminal proceedings and not to civil proceedings.
I should be grateful if, when the noble and learned Lord, Lord Templeman, winds up, he would perhaps comment on the fact that the memorandum from the Lord Chancellor's office on civil liability may give the wrong impression. Civil liability is not in question in this case. It simply is not relevant to the protocol either as it stands or as we intend to have it amended. No doubt my noble friend the Minister will be commenting on this problem.
The other problem which we have and which has already been raised is the basis on which a decision to waive immunity is made when it is requested by the relevant national authority. This raises a problem. At the moment we have three criteria with which I shall not take up the time of your Lordships. They are contained in the various reports produced by M. Donnez concerning political activity, a point on which the noble and learned Lord, Lord Silkin, touched.
At the end of the day, the report is presented to the European Parliament on a Monday evening. I must inform your Lordships that it depends upon how many people are in the House at that time and it is decided by a simple majority vote. That is a democratic way of proceeding, but in a matter which is as important as this, where the waiving of immunity is concerned, possibly the European Parliament could be advised to find a more strict and coherent way of deciding. I do not think it should be left to chance or to a political group decision at that stage. It is more important; it is for the Parliament itself as a whole to be able to take that decision.
In conclusion, I confirm that I consider that the waiving of immunity is a very important issue at which we should be looking a little more seriously in the Parliament. Noble Lords will understand that the way in which the privileges and immunities of the European Parliament have, so to speak, grown and been adapted from the protocol of 1965 must take into account the practices and traditions of other member states. I consider that Members of the European Parliament who come from the United Kingdom and who represent the electorate of this country are privileged and honoured to come from a country which for some 800 years has had an elected Parliament and which recognises (and has recognised for centuries) the rights and freedoms of individuals and Members serving in the Westminster Parliament.

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Noble Lords will know that this is certainly not true of many of the member states with which we are working. I acknowledge and accept that many of them have anxieties—legitimate anxieties—as to the rights of their parliamentarians, who must be able to get to the European Parliament, just as we in this country have always been able to come to our Parliament. If there is a slight balance in favour of the MEP, I beg noble Lords to recognise that the privileges we have in this country are inestimable and have not been shared by others. It is in this spirit that I very much support the recommendations of this report and will listen with great interest to the reply of my noble friend the Minister.
7.48 p.m.
Lord Cledwyn of Penrhos: My Lords, may I, too, thank the noble and learned Lord, Lord Templeman, and the other noble Lords who sit on Sub-Committee E for this excellent report. I should also like to thank the noble and learned Lord, Lord Templeman, for the instructive speech with which he opened this debate. The task of the Committee was not an easy one, as the report shows, and it has sensitive political implications, but I think that the noble and learned Lord and his colleagues showed a sure touch, and we are all very grateful to them.
They make plain in paragraph 3 that they are "concerned only with immunities" and, in paragraph 4, they define the extent of the new immunities and privileges now sought by the European Parliament for its Members. These, in my view, are very substantial and go far beyond those which were enacted in 1965. As the noble Baroness, Lady Elles, who makes so distinguished a contribution to the European Parliament, has said, the chief argument in favour of change is that whereas in 1965 the Members were indirectly elected, today (and since 1979) they are elected by direct universal suffrage.
This sounds like a reasonable argument, and it must be given due weight. In the democratic system, people who are freely elected deserve respect and the facilities to enable them to perform their duties and to discharge their responsibilities to those who elect them. Like many others, I take the view that the immunities and privileges must relate to those duties and responsibilities—that is, to the functions which the elected representative has to carry out.
This Parliament and indeed every other Parliament in the Community must therefore consider these recommendations carefully on the basis of this principle and on what privileges and immunities are really necessary. They must also consider these in relation to the immunities granted to national Members of Parliament.
We in this Parliament know from our experience of diplomatic immunities and privileges how they can be misused and abused, and the Government are currently considering what changes are needed to tighten up diplomatic privileges. We recognise of course that European Members of Parliament need the appropriate degree of immunity to do their job but it would also be a mistake to extend that immunity
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beyond what is essential or to define it so loosely that undue advantage can be taken of it.
As the noble and learned Lord, Lord Templeman, said, we have a great deal of experience of immunities and privileges in this country. The noble Baroness, Lady Elles, has just referred to uniformity in this country as between Englishmen, Scotsmen, Welshmen and Irishmen. There was a time when immunities and privileges were granted to Englishmen in Wales which Welshmen did not enjoy, and I can assure the House that that was a source of endless trouble. Mercifully, that was a long time ago. But we read with great interest the history of United Kingdom parliamentary privilege in Appendix 6 to the report, and I think your Lordships will agree that after centuries of custom and practice we have got it just about right in this Parliament. The note on page 56 of the report sums it up succinctly. It reads:
"the main privileges of Parliament and its Members concern immunity from legal process which might keep a Member away from his parliamentary duties; freedom of speech and proceedings within Parliament; and sanctions imposed by Parliament for contempts".
The report discusses arrest on criminal charges, and, as we know, the Standing Orders of this House except arrest or detention on a criminal charge. My own experience over 36 years in both Houses is that privilege is a mantle to be worn very lightly. Some Members—very few—take themselves too seriously. I recall a Member who, on being stopped by the police in connection with a possible motoring offence, said to the officer, "Do you realise who I am?" That was a revealing thing to say.
As the report says, the most fundamental privilege concerns the need for Members to be able to attend Parliament. It quotes White from his book, The English Constitution, where he said:
"Unless Parliament could keep its membership intact, free from outside interference … it could not be confident of any accomplishment."
It is freedom of access to the Parliament and freedom of speech in that Parliament which are crucial. It is when you extend those freedoms that you begin to get into difficulties. This is especially true when you are operating in 12 countries over half a continent.
Evidence was given by the Foreign and Commonwealth Office and the Home Office upon this proposal that MEPs should be granted immunity on all journeys within the Community, provided they could be defined as proper duties of an MEP. The Commission defined a journey "in connection with" the performance of the duties of the MEP. I regard that as too wide and open to abuse. The Foreign and Commonwealth Office rightly argued that a member state should be able to preserve a residual power to prevent the entry of any person. The Home Office also thought the words "in connection with" were far too elastic. Article 8 therefore needs very careful study and I hope the noble Baroness will elaborate on the Government's view of its implications.
On Article 9, which deals with freedom to withhold evidence, I note that the Lord Chancellor's Department had a very proper reservation to make. The Commission had agreed with the European Parliament that evidence could be withheld if it had a bearing on the activities of an MEP. The noble and

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learned Lord the Lord Chancellor pointed out that the words were imprecise because they failed to make it clear that such right would be applicable to criminal proceedings only and also that immunity could be claimed even if the activities of the Member were marginal to the case. These are very important distinctions which need to be recognised.
Article 10, which, as the noble and learned Lord, Lord Templeman, pointed out, is probably the most important, deals with immunity from detention and prosecution; and there were interesting exchanges on this article between the Committee and the witnesses. The point which caused concern was that immunity might apply to civil proceedings, but this fear seems to have been allayed by those who gave evidence to the Committee.
Finally, the Commission's proposed formulation of Article 18 on waiver has caused confusion, and here again the noble Baroness's observations will be appreciated. There are therefore a number of very important reservations which must be made, and the noble and learned Lord and his noble colleagues have made this plain in their report. We must also take into account in our consideration of these problems the 18th Report of the Select Committee on European Legislation in another place. However, I return to paragraph 40 of the report because it enunciates the basic principle on which the European Parliament and the Commission should proceed. It says:
"The Committee consider that immunities should not be designed for the benefit of individual members but solely for the benefit of the European Parliament as one of the Communities' institutions."
I think Mr. Peter Shore's oral evidence to the Committee was both interesting and important. He said that the most important point was "functional need". He said, in answer to Question 178:
"The politician outside Parliament seems to me to be unprotected by privilege in any way, and has to behave himself according to the law of the land".
I agree with that. I agree with paragraph 50 of the report that the United Kingdom and the other Parliaments must take care not to create a supranational élite with a supra-national privilege and immunity. That is what we must guard against.
To return to paragraph 50 of the report, while I support it, I still have doubts as to whether the changes—even those suggested by the Committee—are absolutely necessary. I am open to conviction. In his evidence for the Foreign Office, Mr. Robin Renwick said this:
"So far as individual cases are concerned, we are not aware that the existing arrangements have caused any serious difficulty in respect of MEPs carrying out their normal functions".
That is a very important statement from the noble Baroness's department and I shall be grateful to her if she can confirm that departmental opinion. Is there in fact any evidence that any MEP has been frustrated in his obligation to represent his constituents or to perform his proper duties because of the inadequacy of the 1965 protocol? These are substantial privileges and they should not be amended without good cause.
I certainly agree with the remarks of my noble and learned friend Lord Silkin about the need for some parliamentary power to deal with the possible use of
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improper pressure upon MEPs. That is not dealt with in the draft or the report but I think the point made by my noble and learned friend is a very important one.
I recognise that there is a desire in the European Parliament for uniformity. I understand that perfectly well; but if uniformity is imposed then a new and complex situation could arise, in that national Members of Parliament and MEPs of the same country could enjoy different immunities and privileges. That is a possibility as things stand at the moment. There are distinguished Members of the European Parliament in this House but under these new proposals they would enjoy wider privileges than Members of the British Parliament. After centuries of developing parliamentary privilege, we should pause before we allow this paradox to emerge, because it may have unpredictable consequences at some time in the future.
I do not want to dwell on these possibilities because, if certain things happened in certain countries, not excluding our own, it is possible that the European Parliament and indeed the Community could be damaged beyond repair. One hopes that that will not occur but, in my view, it would be more sensible if Members of the European Parliament sought privileges and immunities which approximate to those we enjoy. I wish the European Parliament well, but it is young in years. It comprises members from 12 nations, each with their own political tradition, which we recognise and respect. Our fervent hope is that it will develop into a strong, democratic and enduring institution, but that will not come overnight, and we must move slowly and surely. It is for this reason that this report is so important and why the questions raised in it must be given the most careful consideration.
8 p.m.
Baroness Young: My Lords, this has been a most interesting debate on a highly technical subject. It has given us a useful opportunity to reconsider the functions and needs of the European Parliament and indeed, of parliamentary bodies in general. If I may do so, I congratulate all your Lordships who have taken in this debate this evening on the careful contribution which each has made.
I should, however, right away like to congratulate the noble and learned Lord, Lord Templeman, and the Select Committee for the characteristic clarity and thoroughness of the report. I was impressed by the committee's analysis of the Commission's proposals. It has correctly identified the major problems. If I express disagreement with some of the recommendations made by the Select Committee, this in no way lessens my respect for the coherence and integrity of the conclusions which the Select Committee has reached. It is largely a matter of political judgment how a balance can be struck between the need to guarantee the effective functioning of the European Parliament and the need to respect our national parliamentary traditions.
At present MEPs' privileges and immunities are laid down in a protocol signed by the member states in 1965 and to which the United Kingdom subscribed as part of the legal framework of the Community by its

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ratification of the Act of Accession in 1972. Members of the European Parliament currently enjoy three types of immunity under the 1965 protocol. First, under Article 8, their freedom of movement when travelling to or from a place of meeting of the Parliament cannot be hindered by any administrative or other restriction. They also have certain special customs and exchange control facilities which, in the Select Committee's judgment, add little to the general freedom from such controls enjoyed by all Community citizens.
Secondly, MEPs' freedom of expression: under Article 9, MEPs are protected from any form of inquiry, detention or legal proceedings in respect of opinions expressed or votes cast in performance of their duties. Thirdly, under Article 10, MEPs enjoy immunity from detention and legal proceedings outside their own country and, insofar as their national MPs enjoy such immunity, within it.
The Commission proposal before us today was made at the request of the European Parliament, which has been discussing changing its privileges and immunities ever since it was directly elected for the first time in 1979. The proposal includes amendments of all three relevant articles (8, 9 and 10) of the existing protocol.
For Article 8, the Commission propose widening MEPs' freedom of movement to cover all travel in connection with the performance of their duties, and certain provisions assisting MEPs who wish to reside in one of the Community's working places. The noble and learned Lord, Lord Templeman, asked me whether freedom of movement should be made subject to the requirements of public order and public health. Perhaps I could say that, as regards Article 8, the Commission propose, as I have mentioned, a working which is much wider than the present article. I should be more prepared to consider a change if I felt that MEPs were suffering difficulties in respect of their freedom of movement, but I do not think this is the case and I agree with the Select Committee that freedom of movement of MEPs cannot be absolute. It must be subject to considerations of public policy and public health which an individual member state considers to be of overriding importance. I am glad that the Select Committee recognises the need for this qualification.
Secondly, the Commission proposal would apply Articles 12(b) to (e) and 14, to enable Members of the European Parliament to set up their homes near one of the working places of the Community institution. The Government do not regard these changes as raising any difficulties for our own taxation and customs requirements, since they would apply to MEPs residing outside the United Kingdom.
For Article 9, the Commission would extend the protection of MEPs' freedom of speech, to allow them to withhold evidence having a bearing on their parliamentary activities, and forbidding the impounding of relevant documents. For Article 10, the Commission suggest a uniform immunity from detention and legal proceedings which would abolish the present distinction between the immunity that MEPs enjoy outside and inside their own countries.
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Finally, the other substantive Commission proposal is to amend Article 18 of the protocol to provide that privileges and immunities should be accorded to MEPs solely in the interests of the Community.
The main problem raised by the Commission proposal is the provision for uniform immunities for MEPs; that is, immunity against legal proceedings and detention applicable in all member states—a point I think made by the noble Lord, Lord Cledwyn. Your Lordships' committee has pointed out that non-British MEPs already enjoy immunity from detention and legal proceedings in respect of acts committed in this country, unless they are caught in the act.
I understand the argument for consistency. In this instance, however, I do not believe consistency is a sufficient argument for extending such privileges to British MEPs in this country. To do so would mean that British MEPs enjoy greater privileges and immunities in Britain than do Members of Parliament. The political and practical significance of that cannot be overlooked. Nor do I believe that such a step is needed on functional grounds. We should need to be persuaded that any great difficulties have arisen from the operation of the present protocol. Even if the present protocol is imperfect, that is no reason to extend its coverage and create fresh problems.
One of these problems is that a widening of MEPs' immunities will introduce risks of delay in national judicial procedures caused by the speed at which the European Parliament decides whether or not to waive immunity. At the moment, immunity procedures in the Parliament take six months or even longer. The Select Committee quite rightly underlines the need for more rapid procedures in the Parliament. But I must point out that the member states cannot themselves determine the European Parliament's rules of procedure which are, quite properly, for that body itself to decide.
Baroness Elles: My Lords, would the Minister give way? I am most grateful. One of the reasons for delay is, of course, the delays by the national authorities, who are not always very quick on the uptake in coming to the European Parliament, asking for waiving of immunity. The other reason is that where the Member has the dual mandate, in each case every time the European Parliament waits for a decision from the national Parliament before taking any decision, because it is usually left to the national Parliament to decide whether or not they wish to waive the immunity. I think, on an analysis of the cases before the European Parliament, these have been the main reasons why there have been delays, and not because of any internal procedure within the European Parliament. I am most grateful to my noble friend for giving way.
Baroness Young: My Lords, I am most grateful to the noble Baroness for that point of explanation as to why the particular situation has arisen. I think it is certainly something to bear in mind, but I will continue with the point that I was making. It is essential that the immunity procedures should be accelerated before member states decided on any expansion of the immunities conferred under the protocol.

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One might also fear that an extension of immunities could increase the abuse of the system. This is the most difficult of all. The Select Committee points out that the present protocol gives very broad immunity indeed; that is,
"from any measure of detention and from legal proceedings".
This could easily be interpreted as applying to civil as well as criminal proceedings. I welcome the Select Committee's suggestion that Article 10 should, by its express terms, confer immunity only in respect of arrest or criminal proceedings, excluding crimes of violence, and should not therefore apply to civil proceedings—the point, of course, which the noble and learned Lord, Lord Templeman, explained. But I doubt whether it would be possible effectively to enforce the limitations it desires.
I understand that, for example, the distinction between criminal and civil proceedings is drawn very differently in member states of the Community. Only this month, the Parliament has refused to waive the immunity of Lionel Jospin, a French Socialist MP and MEP charged with defamation. One might also wonder about definitions of violent crime. So the feasibility of ensuring uniform treatment of MEPs in these circumstances must remain open to doubt.
The general problem of abuse of immunities is well illustrated by Appendix 7 of the Select Committee's report. Since 1984, immunity has been upheld in several cases which relate to an MEP's activities going well beyond strictly parliamentary functions; for example, publishing articles advocating violent demonstrations and attacks on public buildings—that was the Kloeckner/Haerlin case; supporting an illegal abortion clinic—the first Pannella case; and stealing passports for Czech refugees—the Zahorka case.
The Select Committee recognises the problem over the obligation to waive and the judicial review. Under the present provision in the protocol, there is no obligation on the European Parliament to waive the privileges and immunities of MEPs where such a waiver is not contrary to the interests of the Community. The European Parliament should not be the ultimate arbiter in respect of its immunities (as this Parliament is). It should be duty bound under Article 18 of the protocol to waive immunity where this would not be contrary to its interests and there should be the possibility of review by the European Court of Justice of its immunity decisions. Again, this is an extremely useful suggestion which should be a basic component of any Commission proposal on this matter brought to the Council.
Before I conclude, I should say a word about any likely progress on the Commission proposal. The prospects for a full Council discussion look relatively remote at present. The European Parliament still has to give its opinion on the Commission proposal. Its original request was adopted by only 93 votes against 83 in 1983—as my noble friend Lady Elles told your Lordships' Committee—so the Parliament may now suggest further amendments. This could in turn lead to a revised Commission proposal which would delay consideration by the Council. Finally, it is important to remember that any change to the protocol counts as treaty amendment (under Article 236 of the EEC
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Treaty) and would require the common accord—that is, unanimity—of the member states.
The noble Lord, Lord Cledwyn, asked whether there was any evidence that any MEP has had difficulties because of the inadequacies of the 1965 protocol. I cannot, of course, answer for non-British MEPs, but in respect of British MEPs, I know of no case of difficulty since the United Kingdom acceded to the Community in 1973.
To conclude, I hope I have made clear our view that the present protocol—although it was framed in its original form over 30 years ago—still performs a useful function. We need an effective, directly elected European Parliament to enhance public awareness of Community activities. Our MEPs—and I think we are all very pleased that one of our MEPs was able to take part in this debate—can act as a check on Community decision-taking and promote useful change within it. The Single European Act, which your Lordships debated and approved only recently, will enable the European Parliament to fulfil its role still more effectively. That seems to the Government to be the right route to follow. We are not persuaded of the wisdom of a change in privileges and immunities which would not significantly improve the ability of MEPs to represent their electors. Indeed, it might merely promote a sense of alienation between elector and elected.
Finally, may I say that I shall of course read carefully the report of the debate, but I express once again our gratitude to the noble and learned Lord, Lord Templeman, and to his committee for the work that they have done. I hope that I have answered the points that have been raised—the points on which we are in agreement with the committee, the points on which the Government's view differs from that of the committee—and have explained fully the reasons for our differences of opinion.
8.14 p.m.
Lord Templeman: My Lords, the Select Committee will be gratified at the informative and knowledgeable debate which has taken place in respect of their report. The noble and learned Lord, Lord Silkin of Dulwich, has great experience in this field and is well appraised of all the constitutional and historical bases for the privileges and immunities of Members of Parliament in this country and abroad. Then we had the noble Baroness, Lady Elles, and the noble Lord, Lord Cledwyn of Penrhos, putting succinctly and well the two different—though I would not say opposing—views of a Member of the European Parliament on the one hand and, on the other, the view of a Member of the House of Commons. There is a conflict of history and a conflict of approach between those two.
That brings me to the Minister. I quite agree with the noble Baroness that this is a question of political judgment. That is why I began in opening by stressing the fact that it is for Her Majesty's Government, with Parliament, to determine what they are prepared to accept and what they are not prepared to accept. But the Select Committee felt that it would be most useful to the House and, we hope, to the Government, if we expressed our prima facie views, always being prepared to be differed from, either in principle or in

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detail, and I am very grateful to the noble Baroness for the detailed and frank answers which she has given to the problems which we have raised.
May I conclude by saying that I feel just a tinge of regret that, as happens on so many occasions, at the end of the day we will probably say: the European Community is all very well but we insist on being slightly different. I can understand the approach but I feel a slight regret that we cannot go along, as I feel a regret on other subjects when some of the Members of the Community will not go along with us. It is only a slight regret, because I recognise the very different approaches and the very real concern which is felt on both sides of the House and by Cross-Benchers at the proposals which have been put forward. I am very grateful for the debate.
On Question, Motion agreed to.

British Art Market: Safeguards
8.17 p.m.
Lord Fanshawe of Richmond Lord Fanshawe of Richmond rose to ask Her Majesty's Government whether they will take steps to safeguard the British art market in the negotiations within the Council of Ministers of the European Community over the 7th and 18th VAT Directives.
The noble Lord said: My Lord, some noble Lords may be wondering why I have put down a Question this evening on a subject (namely, the arts) which will be discussed at some length tomorrow. My reason is that this subject which I hope to explain to your Lordships this evening, is so important,and is particularly a Treasury matter, that I felt —and I think many people who are interested in the arts world in London felt—that we should have a specific discussion on it. I also ask the Question in an endeavour to remove uncertainty on an issue which is causing concern at the moment throughout the art market in Britain.
First, perhaps I may ask why Britain is the centre of the world art market. As Paul Whitfield of Christie's said in an outstanding speech at a recent seminar arranged by the European movement:
"The British have always been great collectors. Rather as some countries always seem to produce composers, and others performers, the British have since the seventeenth century been known for the richness and quality of their collections. Fortunately, during the last three centuries, or at any rate up until the last war, we were, nationally, able to afford the hobby—and also as great travellers had the knack of being in the right place at the right time, which for the collector is as important as the wherewithal itself. The countries which we colonised and which became pink on the maps also made their contributions: Moghul jade and Hindu bronzes in exchange for the English language, our legal system and Brown Windsor soup. Not a bad bargain, but perhaps not everyone would agree.
"And so the great houses of Britain, and tens of thousands of smaller mansions, villas and retired sea captains' cottages, became a bulging treasure trove of everything imaginable, not just the home-produced Georgian furniture and silver, nor the classic Italian and Dutch old masters, but also of German porcelain, Italian glass, Persian carpets, Chinese porcelain, Maori feathered cloaks and Japanese ivories. And when it came to trading these treasures and curiosities, the British evolved a system in the eighteenth century—the time when the great auction houses sprang up—a system which has survived and prospered to this day. There is something about the open and simple bargain, binding both parties in a relaxed but efficient market place which appeals greatly to our national temperament.
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"The development of the Stock Exchange, and of the other great exchanges, Baltic, coal and so on; and of Lloyd's insurance market, and of the auction system, all seem to point to this. Hand in hand with this expansion of the basic wholesale market has come a tremendous proliferation of antique dealers in the widest sense. There is certainly no city in the world with as many specialists in such an incredible range of subjects. Certainly not in New York. I do not think that Paris could be included: there is not the sheer spread that is to be found here in London. Figures for the whole of this market are not easy to come by—so some informed guesswork will have to do".
Mr. Whitfield estimated,
"the combined total of United Kingdom fine art auction sales to be in the region of $460 million. Sales by dealers will, naturally enough, come largely from this figure, or rather the proportion of it not accounted for by private or overseas purchases, plus a percentage mark-up. But it will also include a significant amount of purchases made outside the auction market here or abroad—private purchases, for instance. And it is therefore possible to infer that the total annual value of the UK art market is somewhere in the region of £800 to £900 million. Of this figure, the major auction houses consistently report that their sales in London include roughly 30 per cent. of consignments from abroad. A somewhat similar level of purchases abroad by the dealers can be assumed. These are direct imports, many of which may be re-exported. After, that is, the London art market has earned its share of commission, insurance premium, restoration costs, packing and shipping, advertising revenues and so on. Not to mention the considerable but unquantifiable sums spent in the West End hotels, restaurants and shops by the overseas dealers here to attend the sales. One has only to stand in King Street or Bond Street after a major picture sale to realise this.".
I have made a very lengthy quotation from Paul Whitfield's speech, but it is a most impressive description of what we see in London today of an art market that is not just the centre for Britain but the centre for the Community, and it is important to realise this.
The proposals of the draft 7th European Community directive seem to bring about the imposition of a 15 per cent. value added tax to the importation of works of art into this country as well as to other countries of the Community. The 18th directive, which may be puzzling some of your Lordships, ends derogations that were allowed under the 6th directive and would have a similar effect, particularly for the treatment of auctioneers. The implementation of this directive will mean that the sale of any work of art will start with a premium on its total market value, and this premium will double when an item is sold by a private UK collector. In the past VAT has been levied at auctions not on the estimated market value but on the service charge and as far as registered dealers are concerned on what is termed the margin, the profit on their purchase price.
Mr. Denys Sutton, who is a most distinguished editor, writes in his magazine Apollo in an article which is to be published next month:
"This charge initiated in 1973 has been accepted as a compromise but it is still opposed by our national museums who maintain that they should be freed from VAT on a par with overseas buyers. In fact what is now being proposed is that on each occasion that a work of art passes from one European Community country to another, or enters the European Community from outside, it will carry VAT. Every time it is sold within the Community it will attract more VAT. In other words the work of art will be subjected to the 'cascade principle' so that before long the VAT payment could well be greater than the intrinsic market value of the work of art in question".
The latest draft 7th directive will impose VAT on the full sale price whenever a work of art comes to market. That is bad enough, but in addition the 15 per cent. charge on imports would, as Geraldine Norman wrote recently in The Times, "be lethal". The loss to

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this country and the damage to our centre as a world market will be underlined when your Lordships realise that for the first time for many years the Impressionist sales planned for London this autumn will outclass New York. Somewhere between 60 million and 70 million dollars is thought to be the figure that could be raised between the two leading auctioneers, Christie's and Sotheby's.
If the proposal is agreed in Brussels, what will happen? The international art market will move not to Paris, not to Brussels, not to Rome, not even to Munich; it will move to New York or to Geneva. Not only Britain but Europe will be the loser. In addition, import tax will deter those wishing to bring or sell works of art into this country. We have only to remember the sale last week of a Constable for £2.5 million at Christie's and ask ourselves whether that private owner or collector in New York would have shipped the picture to London to be sold in Christie's, with all the benefits that provided for Britain and the Community, if he was to be charged 15 per cent. on the value before he brought it through Customs. I very much doubt whether he would. He would have flogged it in New York or sent it to Geneva or somewhere else where he would not have to pay that sort of tax.
I am not suggesting that we should have a tax advantage over our European friends. I wish Her Majesty's Government to stop the European Community putting itself at a disadvantage against the rest of the world. Either Europe goes our way or we lose. I hope that I have made it clear that the reason for that happening is because—this is a fundamental point—it is the United Kingdom tax regime that sets the environment for our success as a world centre.
I am glad that the noble Lord, Lord Diamond, who played such an important part in our Treasury as a Minister some years ago, is planning to take part in this debate. He knows how important the tax regime is in maintaining an international art market in London. In order to keep it that way, it is most important not only that we have the advantage of the entrepot of experts in London but that works of art move in and out of the country without restriction.
What am I asking tonight? I am asking Ministers this evening to fight our corner and that of the interests of the European Community as a whole. I also hope that my noble friend Lord Cockfield who is one of our Commissioners in Brussels, will take the same view. There are rumours in London that he is responsible for pressing for action that will damage Europe's international market. But where is Europe's international market in the art trade? It is here in London, in Britain. We are members of the Community, and we are managing to bring a great deal of profit and help to the Community as a whole, not just to Britain.
Your Lordships expressed your concern some years ago in the 1977–78 31st Report of the Select Committee on the European Communities entitled VAT on Second-Hand Goods at page vi, paragraph 15. As on other issues in our political and public life, your Lordships' House was ahead of the game as usual and in 1977–78 had already realised how important this issue was.
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I have two important questions to which we need a reply this evening. First, I hope that my noble friend the Minister will tell us the position under the Single European Act, which was passed in the last Session of Parliament. Does this mean, in the final analysis, that the United Kingdom will be voted down in Brussels? This did not seem to be indicated in the letter sent to Hugh Leggatt, a leading dealer and a member of the Museums and Galleries Commission, on 6th November of this year by my right honourable friend Richard Luce, Minister for the Arts. He states in his letter:
"Decisions on the implementation of this would be for unanimous decision by the Council of Ministers".
I should be grateful for an explanation from my noble friend.
Secondly, the same letter goes on to suggest:
"The appeal procedure through the European Court of Justice could overrule the views and decisions of the United Kingdom Government".
Is that correct? I must assume that it is since it has been written in a formal ministerial letter. If it is correct, it will result in a very grave situation in the long term and I should like to know this evening how this will affect the position of the United Kingdom Government. I assume that we will continue to fight, if necessary, in the European Court of Justice on the European case, because (as I hope I have indicated this evening) I am making a European as well as a British case. I believe that case would stand up in the European Court of Justice if, as I hope it never will, the case ever gets there. I should be grateful for clarification from my noble friend.
It is rare that the art world is unanimous about anything, but on this occasion it is. I have not mentioned furniture dealers this evening but there is a very important letter in today's Financial Times from Mr. George Levy of Blairman's. Auctioneers, dealers, galleries and collectors are all deeply concerned. They are supported by Members of both Houses of Parliament and I suspect by all political parties.
While encouragement of our cultural heritage and the build-up of our new European collections is a keystone of Government policy, this proposal will be disastrous for the private European collections. As Professor Brian Morris, chairman of the Museums and Galleries Commission, will confirm, it will have a grave effect on museums throughout Britain. My noble friend Lord Windlesham, chairman of the British Museum, is unfortunately unable to be here tonight. He would, I know, fully support my remarks on this subject, as I have discussed it with him prior to this evening.
I apologise for the time I have taken, but this is an important issue and a complicated one. In conclusion, I should like to say how particularly glad I am that my noble friend Lord Poltimore is making his maiden speech this evening. I know that his first hand knowledge gained working with Christie's will be of great value to our debate tonight and I look forward to hearing his views. I should also like to say how glad I am that my noble friend Lord Beaverbrook is making his maiden speech on an arts subject at the Dispatch Box the evening. All of us in all parties tonight will expect him and the Government to fight and win our

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case in Brussels. I hope that the reply of my noble friend will make clear the attitude of the Government on this matter.
8.33 p.m.
Lord Poltimore: My Lords, this is the first time that I have had the honour of speaking in your Lordships' House. Perhaps I may thank noble Lords in advance for listening to what I have to say. I fully agree with my noble friend Lord Fanshawe, who, in his excellent speech, dealt with most of the points I wished to raise with an eloquence that I cannot match. I know little about many of the subjects which are debated in this House, but, having worked in the art trade for almost 10 years, I feel I can speak with some knowledge on this subject. I also declare an interest in this matter.
In the face of considerable opposition from America and Switzerland, London has since the war established its position as a centre of the art world, largely due to being free of import and export taxes. If VAT is charged on the import of works of art into this country and indeed on the sale of any work of art, London will cease to be an international market-place and millions of pounds worth of trade will not be imported into this country. This does not include invisible earnings generated by the successful market from air tickets, shipping, restoration and the foreigners who, as my noble friend Lord Fanshawe has said, shop in our cities, stay in our hotels and eat in our restaurants. Without doubt it would be bad for Britain in terms of national income and aesthetic pleasure.
Although it may be tempting to feel that taxing the full value of works of art every time they appear on the market would increase tax revenue, I personally would argue that such a move would kill the goose that laid the golden egg by driving the market out of this country and with it many of the fiscal and other benefits the country derives from such a successful market. Harmonisation for harmonisation's sake seems to be the motive behind the draft Seventh Directive, but how short-sighted can this be? If VAT was introduced, the centre of the art market would move to New York or Geneva. Although London would suffer most, the whole of the EC would also suffer.
It is difficult enough, due to lack of money and the strong purchasing power of the American dollar or Japanese yen, for a museum in this country to buy works of art on the open market; now life will be made even more difficult for our museums by giving them a 15 per cent. disadvantage. Similarly, collectors and dealers alike will find that the Americans, the Swiss and the Japanese will have a 15 per cent. advantage every time they raise their hand at auction or walk into a gallery. Today's private collectors who enrich the museums of the future will certainly be at a disadvantage.
It is often said that our national heritage is being sadly depleted and it seems illogical to impose a system of taxation which gives non-EC buyers an advantage. I have spent many hours in my attic looking for hidden treasures to sell. Alas, there is
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nothing but dust. However, some noble Lords and many others who have to sell a treasured possession to pay death duties or install a new roof or central heating will, if they want to sell in London under the new tax scheme, suffer from the VAT imposition. One does not need to be a mathematician to work out how much money this entails for a work of art worth thousands of pounds.
If the draft Seventh Directive is passed in its present form I should have to advise anyone to consider selling in America or Switzerland or some other non-EC country. They will be the future centres of the art world. Owners often say they hope their treasured possessions will be bought by a museum in this country or find a good home here. They may well be disappointed.
The magnificent Rubens of Samson and Delilah which was imported into this country was sold to the National Gallery some years ago for almost £2½ million. Only last Friday, as my noble friend Lord Fanshawe said, a picture of Flatford Mill by John Constable which came from America was sold in London for a world record price of £2·4 million, and was secured for England. A Rembrandt, two Franz Hals and some £70 million-worth of Impressionists are coming up for auction in London at the beginning of December alone. This may never happen again. English museums, collectors and the trade will find it almost impossible to compete under the threatened scheme.
A foreign vendor, faced with the prospect of an import tax on his property into the UK, even though the tax payment may be deferred for six months, is likely to decide to sell in other centres where there are no such barriers. In respect of the Rubens which sold for £2½ million, a deposit of £375,000 would have had to be paid to HM Customs well in advance of the sale. In the case of the Constable, some £360,000 would be left at the customs, only to be reclaimed if the object was resold to a non-EC country.
There is a solution which works well in Britain and which we think should perhaps be introduced throughout the EC—the so-called margin scheme, which was so well explained by the noble Lord, Lord Fanshawe. The auctioneers should be taxed in accordance with their status as agents. This would stimulate the art trade in the EC, arguably bringing more tax revenue to the various EC governments, and would enable the EC to compete with the rest of the world. This would be sensible harmonisation.
In conclusion, I must say that we are proud that London is still the centre of the art world and by and large has the best expertise and knowledge available anywhere. The art world, consisting of museums, collectors, auctioneers and dealers, is united in its opposition to the draft Seventh Directive. I urge noble Lords and the Government to oppose the draft Seventh Directive and the introduction of VAT in this manner, to oppose the centre of the art world moving to America or Switzerland, to oppose this needless incentive for the export of works of art and to oppose the consequential cultural depletion. I urge noble Lords to oppose the draft Seventh Directive, not just for Britain's sake but for the sake of the EC as a whole.
8.41 p.m.
Lord Strabolgi: My Lords, it is a great pleasure and a privilege to congratulate most warmly the noble Lord, Lord Poltimore, on his excellent maiden speech. The noble Lord has spoken with deep knowledge and great sincerity and conviction about a subject on which he is an expert. I understand that the noble Lord is in charge of 19th century paintings at one of our oldest, most respected and most important auction houses in London. I cannot claim the experience or expertise of the noble Lord although I have some knowledge of this field. I agree wholeheartedly with everything he said and I hope that he will speak to us on many other occasions. I hope too that the Government and indeed the Commission will take heed of what the noble Lord has said.
The House is grateful also to the noble Lord, Lord Fanshawe, for asking this Unstarred Question tonight, and from this side of the House I should like to say that I strongly support his speech. I agree with him that the matter is so important that it merits a separate debate.
As has been said, works of art and antiques have hitherto been allowed to be imported without restriction. There are at present no customs duties or import taxes. The draft directive proposes the imposition of VAT on all imports of works of art and collectors' items into this country. This proposal, which amounts to an import tax, would be detrimental to our art trade. As has been said, many sellers would bypass London altogether and sell direct to the United States, Switzerland or Japan. An import tax would deter many collectors in this country, and in the long term our national collections would suffer. As VAT is waived for exports from Britain there would be a great increase in applications for export licences, and a further drain on our national heritage.
Why is it not possible for the EEC to develop its own free market? Why should VAT not be waived on works of art imported between Community countries? This might make some sense and be an encouragement to the free movement of works of art between these countries, to the enrichment of European culture and eventually to that of other countries as well outside the Community.
I should like to ask the noble Lord who is to reply for the Government how many times VAT is to be levied on the same object. The noble Lord, Lord Fanshawe, just touched on this. I should like to ask the noble Lord, Lord Beaverbrook, how many times it is going to be levied. Is it to be three times initially; once when bought on the Continent, twice on import into the United Kingdom, and three times on resale to a client in this country—and on further sales as well, so that eventually the amount of VAT could be greater than the value of the work of art, particularly if it is not in the highest category?
I should also like the Government to confirm that books will continue to be zero rated, as they have always been. Perhaps I may remind the House that during the darkest days of World War II there was a proposal to make books subject to purchase tax. This was heavily defeated in another place when Members on all sides combined to vote down what was considered a short-sighted and philistine measure. Ever since then books have been exempt from
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purchase tax and VAT. I mention this because I hear perturbing rumours that the Commission in Brussels is planning that by 1991 nothing, not even children's shoes, should be zero-rated or exempted. Rather than harmony, this will bring discord and will have an adverse effect on education and culture. There will be many practical problems if books are to be liable for VAT on importation.
The same thing goes for far cheaper works of art. Noble Lords have spoken tonight about the expensive paintings sold at our large auction houses, but many works of art are bought by tourists when they go abroad. They may want to buy a water colour of Venice to hang on their wall. What will happen if they buy a French book to read on holiday? Are they supposed to go through the red channel when they return? Are they supposed to declare it? Is the customs officer supposed to charge them a small sum in VAT and then to account to his department? While all this is going on people trying to smuggle drugs and so on will be able to steal through unsupervised. The whole thing is ludicrous and clearly has not been thought through.
Concerning our home art trade, the proposed tax will have a disastrous effect on the British art market, both on dealers and auction houses. At present, as your Lordships are aware, VAT is charged on the dealer's mark-up or on the auctioneer's commission, and not on the selling price. When the noble Viscount, Lord Eccles, was a Minister—and I am sorry that he cannot be with us tonight—and this proposal first reared its ugly head he managed to get it altered so that it was not on the selling price but on the auctioneer's commission or the dealer's mark-up, and that has been accepted by the trade.
As we all know, prices today for many works of art are extremely high, as there is a world demand. Fifteen per cent. on an auction selling price of £1 million or more is a pretty hefty sum. Why should buyers come to London to pay this? They will not, of course, and the major auction sales will be held in future in New York, Geneva or Hong Kong. This has already happened with the Brussels art market, which accepted this proposal some years ago. This would be catastrophic for London, which is an even bigger art market and is a world art centre, and would be a serious loss of invisible earnings to this country.
A further disadvantage would be that our museums and private collectors here would not be able to compete with foreign buyers, who would not be liable to VAT and would have a 15 per cent. advantage at any auction. This of course would result in the further loss of our heritage overseas. As the noble Lord, Lord Fanshawe, said, I understand that VAT is a fiscal matter. I believe, too, that unanimity among member states is required under Article 99 of the treaty. I too ask the noble Lord, Lord Beaverbrook, if he will confirm this. If it is so, as I believe it is, there therefore seems no reason why the Government should not object, and I hope that they will show great resolution over this ill-founded proposal.
8.50 p.m.
Lord Charteris of Amisfield: My Lords, perhaps I may first add my congratulations to those of the noble Lord, Lord Strabolgi, to the noble Lord, Lord

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Poltimore, for his admirable and extremely well-informed maiden speech, which was most enjoyable.
As I understand the position, the United Kingdom is being required to alter its existing régime for VAT on works of art for the sake of harmonisation with the other countries in the Community. The concept of harmony is indeed beautiful, but to harmonise when it is clearly against one's interests to do so is another story. Your Lordships may remember from your youth the story of Struwwelpeter and the long-legged scissor man. It seems to me that that is a story which might apply to harmonisation. It is like having all your fingers chopped to the same size for the sake of tidiness.
Everything that there is to be said against this regulation has already been said better than I can say it, but I have been specifically asked to speak by my friend and colleague Professor Brian Morris of the Museums and Galleries Commission. He and I, as Chairman of the National Heritage Memorial Fund, both believe that the imposition of this VAT directive will have very unfortunate results. As has been said, saleroom prices will rise by 14 per cent. to United Kingdom purchasers, who will thus be at a disadvantage compared with overseas buyers. This will make it increasingly difficult for works of art to be acquired by museums and galleries and for agencies such as the National Heritage Memorial Fund to prevent the export of works of art which are of importance to the heritage.
Acquisition grants available to museums and galleries are, sadly, low in relation to the escalating prices in the salerooms. The added burden of 15 per cent. will make matters even worse. As has been said already this evening, if that happens, London will cease to be the premier centre of the art market, which will most likely move to New York. For many reasons, that will be a great pity. At present, museum directors quickly get to know what is coming up for auction in the London salerooms. They can easily arrange to view an item that they need for their own collection and to bid for it. If New York instead of London becomes the centre of the art trade they will not know nearly so easily what is coming up for sale and, if they do, will not be able to afford the air fare to view it—and if they paid the air fare they would probably not be able to afford to buy the item!
The point that Professor Morris particularly asked me to make is that it will not affect only the national museums. Last year, through its local museum purchase grant, the Museums and Galleries Commission helped provincial museums to buy no fewer than 585 items for their collections, many in the open market. The National Heritage Memorial Fund was involved in quite a number of those purchases and also helped with others. There will be a temptation for owners of heritage property to sell abroad rather than in London. That, I believe, will put a great strain on the export control system.
Apart from those considerations, the imposition of this directive will have a grave and depressing effect on all museums and galleries which are doing everything they can, under difficult financial circumstances, to keep heritage items in this country. This will be particularly regrettable at a time when they are doing
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so much more to mobilise private money. They are doing this with the inspired support of the Minister for the Arts, whose department has introduced new schemes such as the business sponsorship incentive scheme. Therefore, I very much hope that Her Majesty's Government will decline to accept these EC proposals and, by doing so, bring much comfort and encouragement to all who are concerned with the preservation and augmentation of the nation's heritage.
8.55 p.m.
Lord Diamond: My Lords, I hope your Lordships will be good enough to allow me to say a few words at this appropriate break point, for reasons which I shall explain in a moment. However, perhaps I may first say how grateful I am—and, from what has been said, I am sure is the whole House—to the noble Lord, Lord Poltimore, for his very informed speech. On such an issue—if I may be so bold as to say this to him—it is of more than usual importance that someone so well versed in the practice of what we are discussing should come to the Chamber and, so to speak, give evidence on what really goes on.
It is very easy in this sphere of taxation to do enormous damage unintentionally, with the best will in the world. This is a very sensitive market and I suggest to the Government that they should proceed in a very sensitive way.
The reason why I sought this opportunity of addressing your Lordships is because I wanted to make quite clear to your Lordships' House that we on these Benches—the Social Democrats and the Liberals—are strongly in favour of, and support everything that the noble Lord, Lord Fanshawe, and others have said. I say that to make it quite clear, as the noble Lord anticipated, that those views are expressed from all sides of the House. It is now complete, with Cross-Benches, both Opposition parties and Conservative Back-Benches. I am sure that the Government will take that unanimous point of view well into account.
This is a very complex issue. One could take almost hours to go fully into all the complex detail. However, your Lordships will be glad to hear that I suggest there is no reason for that because the issues are really very plain. The issue is not one of harmonisation, with respect to all those who have cast doubts on that. Harmonisation is a good proposition and there is no earthly reason why we should not harmonise in the Community on the basis of what has been shown to work, and work very well, in this country. In my view, harmonisation is not the issue. It is the simple issue—and the noble Lord, Lord Fanshawe, put it very well indeed—of whether a most important market stays in London, and therefore in the Community, and benefits London and the Community, or whether it goes outside the Community probably to New York or, more likely, mainly to New York and partly to Geneva. That is the issue we are discussing tonight.
What are the arguments against it? What are the arguments in favour of doing what the Commission suggests? I do not believe that there is a revenue argument. Of course, without access to all the statistics and estimates made by the Inland Revenue I am not able to assert this; but my feeling is that the damage

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caused by this directive will in the long run more than outweigh the extra revenue which would be obtained. Of course that is an issue which every Treasury Minister has to consider. Noble Lords in this House have been through the same process. Every government must consider, at Budget time, when proposing and suggesting to the other place that certain taxes should be altered, how much it will affect the situation in the long run.
I should be quite surprised if the Government can say that they have worked out the estimates with great care, with all the knowledge that they have behind them, and have come to the conclusion that, in the long run, there is a great deal more revenue to be gained than lost by carrying out what is proposed in the directive. Therefore I hope very much that the Government will listen to the views that have been expressed on all sides of the House and really endeavour to harmonise on the basis of the proven practice which we have had for some considerable time in this country. It always raises a question-mark in my mind when there is a proposal to move forward in taxation in a particular form and a particular way which has to depend on pretending that the law is not what it is. One should always say to oneself, "Wait a bit! Is this the proper way to proceed?"
Here we have a proposal which depends on the assumption that an agent is a principal. I am no lawyer but it seems to me that there can be no simpler state of the law than the difference between a person who is an agent and a person who is a principal; but in order for this measure to work it is assumed to be deemed that the agent is the principal and therefore he is deemed to buy and sell goods instead of merely handling them and never takes on the ownership of them at all. That can only be justified, as I say, by the pretence that the agent in question is the principal. One should always hesitate when a suggestion of that kind is put before one which depends upon going along the road that is marked "Danger. Do not proceed this way unless you jolly well have to".
So for those reasons, and all the reasons that have been put before your Lordships with such clarity and forcefulness, I hope that the views of the Committee of your Lordships' House which were expressed in its report published in June 1978 will still prevail. They read as follows:
"For all these reasons"—
and the Committee have listed the reasons—
"the Committee conclude that the Commission should be asked to reconsider its position, and to seek ways of harmonising in this instance Community practice on the lines of the prevailing system in the United Kingdom".
That is why we find that good Europeans like the noble Lord, Lord Fanshawe, whom, if I may say so, I have known for years as a good European, and others as well as myself are all saying the same thing: there is nothing inconsistent with our European approach and with the desire that the trade should be kept where it properly belongs, which is in London, in the Community.
9.3 p.m.
Baroness Birk: My Lords, we are all extremely grateful to the noble Lord, Lord Fanshawe, for raising
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this matter tonight. Perhaps I may also add my congratulations to the noble Lord, Lord Poltimore, on his excellent and knowledgeable speech, which I think he found as enjoyable to make as we did to hear.
When notice of this debate appeared on the Order Paper and I started looking into the question, what struck me was the way in which this subject was described on the document that recorded the Select Committee's work. First, in bold letters appears "VAT on Second-Hand Goods", and then we read:
"Draft directive on a common system of value added tax to be applied to works of art, collectors' items, antiques and used goods".
Somebody, somewhere, either has a tremendous sense of humour or is not really sure what we are talking about, because while there may be some reason—though I do not say that there is necessarily—for arguing a different case for a second-hand 'fridge, there is certainly not the same case to be made when talking about works of art and antiques.
The noble Lord, Lord Fanshawe, pointed out the importance of the art industry to our country and to Europe, so I shall not go over the same ground again. As I understand it, the draft directive comes under Article 99 which requires a unanimous decision. The proposal is now before the Council's working party, and I hope for some clarification on this point from the Minister when he replies, because there have been different ideas put forward in various newspaper reports from which noble Lords have quoted. As this directive comes under Article 99—and it is not for instance like air transport matters where rules have to be enacted by a certain date—it is my understanding that this matter could not find its way very easily to the European Court, and that in the end it will be a matter for the Ministers of this country to hold out and, if there is a difference of opinion, for the question to be resolved within the Cabinet. I think it is extremely important that we should have some very clear answers to this question.
I should like to add some questions so that the Minister has them before him now. It will also give him a chance to obtain some of the answers if they are not immediately at his fingertips. Do the Government intend to use their veto? I am not talking just about the statement made by the Minister for the Arts, which was most felicitous and encouraging, but which, to be perfectly honest, is not good enough for the matters that we are discussing tonight. If they are, then the Government have to make it quite clear that they will use their veto in order to have sufficient clout. Then if the Government do use their veto, what are the next steps? Ministers may disagree. Here I am thinking that perhaps the Chancellor of the Exchequer may not take the same line as the Minister for the Arts, and it has also been pointed out by other noble Lords that our Commissioner in Europe (who is engaged on behalf of the EC and not this country) takes a view which sounds as though it may be very different from that taken by all noble Lords who have spoken in this debate on this question of harmonisation. Like other noble Lords who have spoken, I have always been in favour of entry into Europe right from the early days.
My view has always been that we should have been in Europe many years before we were. It would be wrong for anyone—I do not mean here—to make out

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that there is anything anti-European in what is being said tonight, because there is not. A great deal has been said about the commercial side of this matter and the effect that there will be on dealers and auction houses. I should like to underline what has been said about the cultural and educational side and how the proposal will affect our museums and galleries if by any mischance—it could be a mischance—it gets through.
As we know, our galleries and museums depend to a great extent on benefactors. They are encouraged by the Government. Private collectors have given 80 per cent. of the National Gallery collection. As my noble friend Lord Strabolgi pointed out, benefactors make small contributions as well as large.
We know that the National Art Collections Fund depends upon the money which is contributed to it. It buys the picture or object and under this directive it will have to pay 15 per cent. VAT. The noble Lord, Lord Fanshawe, asked the Minister a question about this, but, as I understand it, it is almost a rolling 15 per cent. which will be imposed every time the picture or object is sold, whether or not it comes into this country.
The British Museum has been mentioned. I am a member of the council of the British Museum Society. We try to make gifts to the museum. When we make purchases ourselves I believe that at the moment we can recover the 15 per cent. tax because we are a registered charity. I am not sure whether that will apply if the directive comes into force. I should like to know the answer.
Another way we help the museum is by contributing money so that it can buy an expensive or much wanted object or picture. In such cases we shall have to find more money, which is unlikely because we are a small society, or the museum will have to make up the financial gap. If the directive comes into force museums and galleries will not be able to make acquisitions. They are not treated generously by governments in their arts allocations. The increase to museums and galleries announced the other day was 3.75 per cent. When they have paid increased wages, they will be denuded of the means to buy pictures and sculptures.
There is another point. Part of the work of curators is educational, for them and for the people whom they serve. That depends on their having access to works of art from which they can choose pieces to buy for their museums. This proposal will almost completely dry up that outlet. If the Government do not want to see our culture shrink almost to a pinhead they will have to make up the difference between what the museums and galleries can afford and will have to pay if they are not to be put into a straitjacket with regard to new purchases.
The directive will have not just a commercial, material effect; it will alter people's attitudes towards collecting and donating to museums and galleries. As my noble friend pointed out, people have great pride and take pleasure in thinking that they can donate or leave something to a museum. It may not be worth hundreds of thousands of pounds; it may be worth only a fairly small amount. They will not be encour-
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aged to do that. People will have a different attitude. They will shut their minds and not want to do that.
That could undermine our position as the centre of the art trade. From the point of view of young people, this would be a tremendous educational loss. There would gradually be less to see in the galleries and museums. I am not saying that this would happen overnight. There are, after all, stocks. But instead of art being a lively, spirited and growing occupation, it would tend to taper out. This would not entirely eliminate, but would certainly bring about shrinkage of, the considerable education schemes and plans for young people that constitute one of the objectives of our museums and galleries today. It would make this function extremely difficult.
As we are all at one in this debate, our discussion may not have proved all that interesting but at least there has been unanimity of view. No one has said that we are talking nonsense and that the proposal is absolutely essential to our continued relationship with Europe. Nothing along those lines has been heard. We look forward now to hearing the answers of the Minister to the various questions that have been put. We want to be clear on events up to date, what options are open to us and what the future may hold.
9.15 p.m.
Lord Beaverbrook: My Lords, we have had a most interesting debate, and I should like to thank those who have taken part, especially my noble friend Lord Poltimore who made an excellent maiden speech. I am sure that I speak for all your Lordships when I say that we look forward to hearing him in the future. We welcome particularly his considerable knowledge of fine art.
The House is also grateful to my noble friend Lord Fanshawe of Richmond for raising today the important issue contained in the Commission's proposals in the draft seventh and eighteenth VAT directives. The absence of representations in the House today in support of the Commission's proposals, which bear among other things on the taxation of all secondhand goods, including works of art, antiques and collectors' items, is, to say the least, a strong indication in itself that the proposals might be detrimental to the interests of the British art market.
Perhaps I may say a word about the background to this issue. The sixth VAT directive, which is the basis of Community VAT law, requires among other things that the Council should adopt a harmonised system for taxing secondhand goods, including works of art. The Commission first presented its proposal for the harmonised system in 1978 in the form of a draft seventh directive, modifying it in 1979. Until the directive is unanimously agreed by the Council of Ministers, member states may retain their existing schemes. The special scheme for works of art in the United Kingdom includes exemption at importation.
In a similar way, the sixth VAT directive provides for temporary derogations which the Commission's proposals in the draft eighteenth directive seek to eliminate. In that draft directive, as in the draft seventh directive, proposals are made which bear on the tax treatment of agents, who, in many other member states at present and in the Commission's

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proposals, are frequently seen as principals in taxation matters. The obvious example in this aspect is the position of auctioneers, including auctioneers who handle works of art.
The draft eighteenth directive is relatively new, and initial discussions in Brussels have not yet focused on the proposals affecting agents. On the other hand, the draft seventh directive has clearly been the subject of considerable discussion over a number of years. The fact that little progress has been made is an indication of the difficulties which member states have with the proposals. The key factors for the United Kingdom lie in three areas: first, the fundamental nature of the Community scheme for taxing secondhand goods; secondly, the taxation status of agents; and thirdly, the treatment of works of art, antiques and collectors' items, particularly at importation.
I will not dwell long on the nature of the proposed Community scheme. Suffice it to say here that the proposal would not affect the amount of tax chargeable on an internal transaction. Minor technical difficulties lie in the fact that, at exportation, residual tax in an item—that is, tax remaining, in taxation parlance, "unconsumed"—is not removed in the United Kingdom scheme which could, if not recognised, lead to double taxation in an importing member state. But as I say, these are minor difficulties. Similarly, although the importance of this aspect to the fine arts trade is fully recognised, I do not intend to spend much time on the question of agents.
The principal concern to the British art market, as demonstrated in your Lordships' House today, lies in the question whether or not works of art, antiques and collectors' items should be subject to taxation upon importation. As I have said, as part of the existing scheme for secondhand goods in the United Kingdom, we do not subject such items to import VAT. The thought that this tax exemption might be lost had led to claims that the flourishing London art market would be irrevocably harmed, to the detriment not just of the fine arts trade, but also to United Kingdom and Community cultural interests. Let me therefore turn to the nature of the British art market.
The centres of the world are market are few. Pre-eminent among them are New York, Geneva and, of course, London. Indeed, London may well be the foremost market attracting the finest examples of fine arts for sale, whether to British or to foreign collectors. The reasons why London has survived while so many have failed lie in its long-standing reputation for expertise and reliability in identifying important works of art; and in marketing those products to the best advantage. Buyers and sellers alike are attracted to London: the sellers in the knowledge that the London market will attract those willing to pay the full market price, and the buyers in the knowledge that the product will be what it is held out to be. Both parties can rely on the service and fair dealing of the auction houses.
Those then are the primary trading strengths of the British art market. But, undeniably, there is also a fiscal reason why the London art market has flourished, particularly in relation to other centres in the Community. This has to be so, because if the market sees the loss of a fiscal provision—the import
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exemption—as detrimental to its interest, then the presence of it must have been an advantage.
The essence of the case being made on behalf of the British art market is that, notwithstanding the fact that a large proportion of imported items are, upon sale at auction, subsequently re-exported without bearing VAT, the fact that an item may remain in the United Kingdom bearing tax under the proposals in the seventh directive, will be sufficient to deter and deflect the would-be seller from sending the item to London in the first place.
As several of your Lordships have pointed out, the seller could instead select other market centres, such as Geneva or New York, where taxation upon importation would not act as a deterrent. This is so because the seller would assume that the liability to pay VAT on an item sold for retention in the United Kingdom would depress the bid which the home buyer could make. The argument concludes that not even the exemplary standing of the British art market could withstand this perceived detriment to our market.
Not unnaturally, the representatives of the fine arts trade are concerned to protect their pre-eminence in the world market. But their motives are not entirely self-protectionist. Any loss to the United Kingdom market would be a loss to the Community, as trade would be driven to New York, Geneva or other centres outside the Community. Despite the mobility of buyers in this sector, the tendency would be to diminish the opportunities to purchase fine arts goods, and the loss in cultural terms to the Community would follow. With this in mind, and without fear of competition within the Community, the Fine Arts VAT Working Party has proposed that the exemption at importation should be available to all member states. I have to say, however, that other member states do not at present seem inclined to support that suggestion.
The House need hardly be reminded that the Government will continue to take account of trade interests and representations in responding to all Community proposals. This principle will be observed in relation to discussions on the seventh and eighteenth VAT directives as in all others. I would observe, however, that the fine arts trade would do well to put flesh on the bones of its arguments by submitting to officials a promised paper commissioned to analyse in detail the prospective economic impact of the Commission's proposals. The paper has been slow to emerge, and its absence does not assist in preparing and presenting a fully effective response to the Commission's proposals. It is absolutely essential to shed light as well as heat on the issue.
My noble friend Lord Fanshawe of Richmond has raised two interesting points. On the question of the Single European Act, I can assure my noble friend that the Act does not affect the need for unanimity—that is, the unanimous agreement of the member states on fiscal matters.
The noble Lord and the noble Baroness, Lady Birk, raised the question of Article 99. So far as the prospect of the Commission going to the European Court of Justice is concerned, there is no question of the United Kingdom being taken to the court for failure to agree

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to harmonisation. Article 99 of the Treaty of Rome gives power to the Council to adopt legislation to the extent necessary to ensure the establishment and functioning of the internal market. Once such legislation is adopted—and it needs unanimous agreement—any member state alleged not to be complying with it can be taken to the European Court, but not for refusing to agree to adopt a proposal.
The noble Lord, Lord Strabolgi, brought to our attention several important points. On his point on the taxation of books, I can tell him that the present zero rating of books in the United Kingdom will not be affected by the proposals of the draft seventh or eighteenth VAT directives, nor are there any other proposals which would affect the zero rating of books. The noble Lord also mentioned the question of the cascade effect, as did my noble friend Lord Fanshawe. I can assure the noble Lords that there will be no question under these directives of double taxation. The draft seventh VAT directive contains specific provisions to avoid this possibility.
The noble Lord, Lord Strabolgi, made a point on private importation of items such as water colours that have been bought on holiday. Under the seventh VAT directive the present limited relief for private importation of works would in fact be abolished.
The noble Lord, Lord Diamond, raised a point as to whether the revenue collected under the proposals would in fact not be outweighed by damage done in the long run. We are awaiting economic analysis from the Fine Arts VAT Working Party, and it is difficult to calculate without this information. Nevertheless, we recognise that this argument has merit.
The noble Baroness, Lady Birk, brought up the matter of whether the British Cabinet could use its so-called veto to block progress. At this stage there would be no point in expressing a veto before we have had the opportunity to put fully and effectively this country's view, and other member states might yet well be won over. On the noble Baroness's point about the British Museum getting its VAT returned, this is a complicated matter and I shall write to the noble Baroness on the point.
Noble Lords have raised other questions. In order not to delay the House tonight I hope that noble Lords concerned will forgive me if I write to them on their particular points. In closing, I can give the assurance that no decisions on these matters are imminent in Europe. Indeed, I again emphasise that without the unanimous agreement of Ministers in Council no value added tax directive can emerge. We would hope to convince our Community partners of the force of our arguments in agreeing finally a scheme which served the dual purpose of satisfying harmonisation goals with the preservation of a major fine arts market, to strengthen rather than diminish cultural aspirations of the Community as a whole.
Baroness Birk: My Lords, before the noble Lord sits down may I put one point to him? He said several times that the Government were awaiting the report of the Working Party. That worries me a little. The effect of this directive going through, if it does, is much wider than concerns just the fine arts dealers in London
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should have thought also that the Government would have ways of getting this information for themselves. This makes me a little uneasy.
Lord Beaverbrook: My Lords, these directives apply to secondhand goods in their entirety, not just the question of works of art, collectors' items. The Government see it necessary for the fine arts market industry in London to make available, as soon as possible, its own figures so that the Government can have at their disposal the best information when going to make our country's proposals to our partners in the Community.

Chevening Estate Bill [H.L.]
Referred to the Examiners.
House adjourned at half past nine o'clock.