Lords Sitting of 21 April 1988

Preamble
The House met at three of the clock (Prayers haring been read earlier at the Judicial Sitting by the Lord Bishop of Salisbury): The LORD CHANCELLOR On the Woolsack.

EC Child Safety Campaign
Baroness Burton of Coventry Baroness Burton of Coventry asked Her Majesty's Government:
Following their answer about the EC child safety campaign on 3rd December (col. 1134), what progress has been made in setting up a committee of statutory and voluntary organisations to co-ordinate the campaign and its activities in the United Kingdom; and whether the next meeting of the European Consumers Affairs Council will be held on 3rd May.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, the EC Commission has not yet produced its revised proposals for an EC child safety campaign. Discussions between the Commission and officials from member states has led to a significant change in the Commission's thinking on this proposal. But until we receive the details, it is clearly not possible to decide what committees or organisational structure would be appropriate.
I understand that the German Presidency intends to hold a Consumer Council on either 7th or 22nd June.
Baroness Burton of Coventry: My Lords, that is a most disappointing Answer, and I hope the Minister agrees. Am I correct in saying that in general the Government have approved and supported this campaign but have always maintained that activities connected with it should be run by the member states themselves? If that is true, would it not be possible for the department for enterprise to use its initiative to get something going in this respect especially as the campaign itself should have been launched this month.
Lord Young of Graffham: My Lords, yes. I cannot speak for other member states, but we are not simply waiting for the Commission to come forward with ideas in this important safety field. We have planned a number of initiatives for this year, including two new child safety booklets produced with the Child Accident Prevention Trust, the annual fireworks campaign and a toy safety campaign in the run-up to Christmas. Other safety campaigns will include material on child safety. The voluntary safety organisations are also active in this area and I should like to pay tribute to their work.
Lord Nugent of Guildford: My Lords, is my noble friend aware that one of the most successful and effective measures for child safety is the RoSPA organisation of the Tufty Clubs? Will my noble friend ensure that the RoSPA organisation has sufficient
1616
financial support to ensure that these are effectively maintained and expanded?
Lord Young of Graffham: My Lords, I shall certainly look to see what the position is at present.
Lord Williams of Elvel: My Lords, is the noble Lord aware that the noble Lord, Lord Beaverbrook, on 3rd December, in reply to a Question by the noble Baroness, said:
"I understand that discussions between member states … have resulted in an improved set of proposals"?—[Officio Report, 3/12/87; col. 1134.]
Is the noble Lord telling us that the improved set of proposals has not emerged? Are the Government doing all in their power to ensure that there will be an improved set of proposals as soon as possible?
Lord Young of Graffham: My Lords, yes. The discussions which have taken place between my officials and officials of other member states with the Commission have led to a significant change in the Commission's thinking on the position. We are now awaiting its conclusions, and until we hear what they are we cannot take the matter further. In the meantime, we are carrying on with our own efforts.
Baroness Burton of Coventry: My Lords, believing that the Minister must be as weary of waiting for some progress as all of us, perhaps I may ask whether it is possible to make some progress with setting up a committee as referred to in the Question. Is he aware that the voluntary organisations do not believe that progress is being made and are looking to the department for enterprise, which has a very good title, to get on with the matter?
Lord Young of Graffham: My Lords, I hate ever to disagree with the noble Baroness, but it is the Department of Trade and Industry. We are for enterprise, as I am sure are all in your Lordships' House. The German Presidency is planning to hold a Consumer Council on 7th or 22nd June, and although that is some way distant I hope that these matters can be resolved in time for that. If not, we shall have to look again to see what is the position.

DES Officials: Teaching Experience
3.5 p.m.
Baroness David Baroness David asked Her Majesty's Government:
In the light of the increased burdens to be placed on the Department of Education and Science by the Education Reform Bill, how many officials of the rank of principal and above have had experience of teaching in schools.
The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper): My Lords, this information is not readily available.
Baroness David: My Lords, I cannot bring myself to thank the Minister for that totally unsatisfactory Answer. Is she aware that I have already asked two

1617
Written Questions to try to obtain this information and that when I asked the same Question in 1981 the noble Baroness, Lady Young, was able to supply the information? Is the Minister not aware that the DES will have a great deal more to do with schools if the Education Reform Bill now before the House becomes an Act? It is extremely important that the civil servants in her department have some knowledge of teaching, in schools and are not just civil servants.
Baroness Hooper: My Lords, without proper research we can only guess the figure, and I believe that my noble friend Lady Young in answering the Question of the noble Baroness in 1981 made it clear that the precise information was not available at the time. That was the reason for my previous replies to the Written Questions of the noble Baroness, and that remains the case.
Of course we are aware that a number of additional burdens will fall upon the department as a result of implementing the proposals in the Education Reform Bill. However, we believe that the valuable experience which is represented on the many advisory bodies and working groups which advise the Secretary of State would be of invaluable help in this respect.
Lord Grimond: My Lords, is the Minister aware that I am rather intrigued by her inability to give this information? Does it arise because there are so many principals that they cannot he counted or because the Government have no idea what those officials were doing before they joined the department? Why does this situation arise?
Baroness Hooper: My Lords, perhaps I may inform the House that we have 220 people in the category of principal and above. To produce the precise information would involve a manual search of the confidential personal files of each official, and that would cost a disproportionate amount since only authorised senior officials could make the search. In this country we have a great tradition of a career Civil Service, and on that I rest my case.
Lord Elton: My Lords, does my noble friend accept that many of us feel that the Department of Education is best employed in helping to administer education and not counting heads and careers among the members of its staff? Will she recall the immense reservoir of professional knowledge available from Her Majesty's Inspectorate?
Baroness Hooper: My Lords, indeed. We have a wealth of experience of teaching in various institutions in Her Majesty's Inspectorate; indeed, most of the 220 officials in the grades referred to have been in the Civil Service for many years and their abilities, experience and training as civil servants are of the highest order.
Lord Taylor of Blackburn: My Lords, is the Minister aware that local authorities are making provision and have already made such provision in this year's Estimates for the additional costs and staff
1618
that will be required for training and for providing finance officers, bursars—call them what you will—in various schools? Surely if local authorities can do that, the department ought to be able to do it too.
Baroness Hooper: My Lords, that is an interesting question. Is the noble Lord suggesting that we duplicate the work of local authorities? After all, it is the local authorities which administer, and will continue to administer, the education service at the grass roots.
Lord Morris: My Lords, would my noble friend care to comment on what might happen if senior positions in the Ministry of Defence were solely staffed by old soldiers?
Baroness Hooper: My Lords, as I said earlier, my case rests on the fact that we have in this country a great tradition of career civil servants.
Lord Stoddart of Swindon: My Lords, surely the noble Baroness must be aware that this is an important question and the information called for is relevant. Does she not have computers in her department, and is not the necessary information on those computers? Could not the information be kept secret by the need-to-know key being used?
Baroness Hooper: My Lords, there is no reason to suggest that the information is or should be kept secret; it is simply not available at the moment.
Lord Hailsham of Saint Marylebone: My Lords, is my noble friend aware that some of us are as dubious as to the utility of principals and above having experience as teachers as of teachers having experience of being principals and above?
Lord Glenamara: My Lords, can the noble Baroness confirm that even under this interfering Government the inspectorate is not part of the DES but is still independent? Is it not a fact that the answer to my noble friend's Question is none?
Baroness Hooper: My Lords, Her Majesty's Inspectorate is indeed independent. However, we benefit in the department from its valuable advice.
Lord Dormand of Easington: My Lords, apropos HMIs, does not the Minister agree that it would be a good idea if they returned to schools for teaching from time to time? I have the highest regard for HMIs; I have had a lot to do with them. But is the Minister aware that teachers in schools dealing with day-to-day problems feel that HMIs from time to time become a little remote? Can the DES, and the Minister in particular, give some thought to that fact?
Baroness Hooper: My Lords, that is a separate question. Nevertheless, I am sure that HMIs are in close contact with schools and very much aware of remarks such as that which the noble Lord has just expressed.
Lord Mellish: My Lords, is the Minister aware that her reply is illogical in view of the fact that under the

1619
Bill it is proposed that education in schools and so on are to be handed over to local authorities in inner London and that some of the people in those areas can neither read nor write?
Baroness Hooper: My Lords, that may indeed be a problem. However, such people will have the benefit of advice from a small unit which is being set up in the department to assist them.
Lord Grimond: My Lords, does the noble Baroness agree that the Question asked how many DES officials have had experience in schools? It does not ask whether experience is a good or bad thing, or whether they should have experience, but simply how many have experience. That is the Question which should be addressed by the Government. Having spent many years in the other place I fully recognise the right of Ministers to evade questions, but it is becoming rather too prevalent in your Lordships' House.
Baroness Hooper: My Lords, I stand by my original Answer. The information is not presently available.

UK Shareholders: Statistics
3.13 p.m.
Lord Gainford Lord Gainford asked Her Majesty's Government:
What is the latest information they have on the number of adult shareholders in the United Kingdom.
Lord Young of Graffham: My Lords, the joint Treasury and Stock Exchange survey carried out in January and February this year estimated that 9 million people owned shares; 20 per cent. of the adult population. This represents a threefold increase since 1979.
Lord Gainford: My Lords, I thank my noble friend the Minister for that impressive Answer. Has he any information as to what impact the recent so-called Stock Market crash has had on share ownership?
Lord Young of Graffham: My Lords, I am glad to say that as far as we can tell the events of 19th October—the day when all the stock markets around the world seemed to fall substantially—have had no discernible impact. It seems that smaller shareholders have proved to be good long-term investors.
Lord Bruce of Donington: My Lords, can the noble Lord inform the House as to whether the figures he has just quoted, which relate to January and February, are in any way affected by the reported fact that as of Tuesday last over 700,000 new shareholders in British Gas were in default with their second instalment? On the assumption that they do not make good that default, is it not the case that the number of shareholders will have declined as of now compared with the year 1986?
Lord Young of Graffham: My Lords, frankly, no. I am sure the noble Lord, Lord Bruce of Donington,
1620
must be aware that last week was not January or February of this year, which was the date of the survey. Even if some of the shareholders decide not to take up their shares that may well not affect the number of shareholders in the country because they may already be existing shareholders.
Today, no less than 3 per cent. of the population hold shares in companies for which they work. We are finding that the desire to be a shareholder in the company for which one works, or in one of the other great companies in this country, is a desire which is spreading widely. Further, despite all the efforts of the noble Lords opposite, I suspect that that trend will continue.
Lord Bruce of Donington: My Lords, is the noble Lord aware that we on this side of the House are in full support of those people who have funds available to make what investments they choose? It is the availability of the funds to them that is important. Is the noble Lord further aware that the rate of savings under his administration has sunk to an all time low compared with the year 1960 and is at present running at roughly under one-half of the rate of savings achieved in 1979?
Lord Young of Graffham: My Lords, when I have the great pleasure of bringing to your Lordships' House the Bill dealing with steel privatisation I shall look to the noble Lord, Lord Bruce, for support, even if that support is limited to those who are willing to invest funds.
Lord Barnett: My Lords, I agree with the Minister about the goodness, so to speak, of having more shareholders. Nevertheless will he accept that it is not necessarily a good thing for someone who has the whole of his career invested in his own company as an employee to also have a major part of his own limited capital in that company?
Lord Young of Graffham: My Lords, I agree with the noble Lord, Lord Barnett, that of course prudence in investment is as good as prudence in anything else in life. However, it is indeed good that those who work in companies should feel that they have some stake in the future of the company with which they can identify.
Lord Taylor of Gryfe: My Lords, will the Minister comment on the geographical distribution of share ownership? Is he aware that in the South-East 25 per cent. of the population are share owners as against 12 per cent. in Scotland? Is not that further evidence of the North-South divide and does not that cause him some concern?
Lord Young of Graffham: My Lords, that could perhaps be evidence about Scotland. I do not see that it shows any evidence of the North-South divide. Looking at the figures of those people who own shares in this country, it seems to me that they are spread throughout all income groups. I hope that those in Scotland have as much faith as those in the South in the future of the private sector.
Lord Molloy: My Lords, while in my estimation, at least, the figures given by the Minister seem to be rather encouraging, is there not some apprehension that many adult shareholders are part of an organisation which might be controlled by foreign investment? Many other people have shares in what they think is a British organisation but in point of fact the controlling factor is a foreign organisation. Does he not agree that the situation might be looked into?
Lord Young of Graffham: My Lords, at a time when the United Kingdom is the second largest net overseas investor, it does not behove us to look at those companies in this country which have foreign control. If we were to do that, we as a nation would suffer far more.
Lord Winstanley: My Lords, I wonder whether the noble Lord can tell the House how many people have forfeited housing benefit as a result of having £6,000-worth of shares?
Lord Young of Graffham: My Lords, the noble Lord may care to put down a Question, as that is another matter.
Lord Monson: My Lords, does the noble Lord agree that the Big Bang has been a total disaster as regards small shareholders, given that the threefold to fourfold increase in the rate of minimum commission since that date makes dealings in a few hundred pounds-worth of shares wholly uneconomical?
Lord Young of Graffham: My Lords, I perhaps have greater faith in the workings of the market. If there is a demand for smaller shareholdings, I suspect that we shall find people who will be ready, willing and able to deal for such shareholders. We shall have to see how the situation develops.
Lord Bruce of Donington: My Lords, perhaps the noble Lord will now answer any one of the three questions that I put to him, which so far he has not answered at all.
Lord Young of Graffham: My Lords, my understanding is that I have answered two at the most. Since I have been unable to make up my mind which two of the three, I have decided to pass.
Lord Whaddon: My Lords, will the noble Lord accept congratulations from these Benches regarding the statistical competence of his department? He has been able to inform the House that 9 million people out of 60 million are shareholders, whereas his noble colleague could not give us any figures. Will he therefore consider taking over the statistics for that department?
Lord Young of Graffham: My Lords, I seem to recall a time when I had a certain reputation for statistics, and I have no wish to re-invent that.
Lord Glenamara: My Lords, why does the noble Lord take such pride and boast constantly about depriving all the British people of their ownership of
1622
the large public utilities and limiting ownership to a relatively small number of people?
Lord Young of Graffham: My Lords, I look at the progress that these public utilities have made since denationalisation and I take great pride in that.

Book Collections: Disposal
3.22 p.m.
Lord St. John of Fawsley Lord St. John of Fawsley: asked Her Majesty's Government:
Whether they will ensure that collections of notable books in government-funded institutions will not be sold or otherwise dispersed.
The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, the Government do not control the sale or dispersal of books from individual institutions. On the broader issue of specialised collections and their dispersal, my right honourable friend the Minister for the Arts is currently considering advice from the reviewing committee on the export of works of art.
Lord St. John of Fawsley: My Lords, may I presume to congratulate my noble friend on adding the arts to agriculture in her list of responsibilities in this House? Perhaps I may ask her whether she is aware that unfortunately last week one of the most scandalous acts ever perpetrated by an institution of higher learning took place when Manchester University sold 98 rare books from the Rylands collection contrary to the express wishes of the original owners. In view of what the Minister has said about export, can she ensure that these treasures are not exported and lost to this country? In future before such sales take place, would it be possible for an inquiry to be held, conducted by an independent group of scholars other than those concerned in the sale and dispersal of such a collection?
Baroness Trumpington: My Lords, despite the beguiling start to my noble friend's supplementary question, as regards the first part of it I wonder whether he has seen today's issue of Country Life in which the director of the John Rylands University Library of Manchester said:
"under no cirumstances would this library break the terms of a gift or bequest which required that collections be kept intact.
In founding this memorial to her late husband Mrs. Rylands made express provision that books might be sold, exchanged or otherwise disposed of. This provision was perpetuated in the legal document which transferred the John Rylands Library to the University of Manchester in 1972".
Books worth 16,000 or more and which have been in this country for over 50 years require an export licence. If any are referred to the reviewing committee they would be assessed against the Waverley criteria in the usual way.
Lord Strabolgi: My Lords, is the noble Baroness aware that notable books are rarely duplicates? That was the excuse made by Rylands for selling theirs. Is the Minister also aware that this is a breach of faith

1623
with those making bequests? Will the Government ensure that this kind of sale does not happen again mainly as a result of the starvation of funds.
Baroness Trumpington: My Lords, I have already said that my right honourable friend is looking at the submissions of the review committee. He will be making up his mind what further action to take when he has decided on the results of his considerations.
Lord Peston: My Lords, would the noble Baroness care to answer the second part of my noble friend's question and say whether the Government have any view as to why universities are having to sell these books? Is it not because they are desperately short of money, which is needed for serious higher education purposes.
Baroness Trumpington: My Lords, recurrent funding for universities is being increased by £61 million in 1988–89, which means an increase of some 8 per cent. following an increase of 10 per cent. which was made last year. The University Grants Committee has specifically made available from 1987–88 an additional £3 million per annum over three years for the purchase of books and periodicals. It is a matter for the universities. The UGC itself decides on how it allocates its resources.
Baroness Birk: My Lords, perhaps I may add my congratulations to the noble Baroness. I hope that she will fight as stalwartly in the interests of the arts as she does as regards all her other responsibilities.
Have we not been assured in this House that the Minister for the Arts intends to bring in legislation to allow the three great museums and galleries to sell paintings if they so wish? Does the Minister agree that it would be far better if this proposal were dropped and legislation brought in to prevent book collections being sold? Is it not the case—and this has already been briefly referred to—that since the universities are gravely underfunded, their libraries are completely starved of resources? This makes it difficult for them to allocate money to preserve the stocks of very old books, where conservation is essential. Therefore there will be a temptation in the future to sell collections, and that temptation may increase.
Baroness Trumpington: My Lords, I fear that I cannot go down the picture path this afternoon because in this Question we are dealing strictly with books. As I said, it is for the universities themselves to allocate their grant. The full details of university expenditure are published in Volume 3 of University Statistics, which is available in the Library. The final figures for the year 1986–87 and for the current academic year are not yet available. It is up to the universities and not the Government.

Associated British Ports (Barrow) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Regional Development Grants (Termination) Bill
3.30 p.m.
Read a third time.
Clause 1 [Termination of regional development grants]:
Lord Sefton of Garston Lord Sefton of Garston moved Amendment No. 1:
Page 1, line 8, leave out ("31 March") and insert ("30 September").
The noble Lord said: My Lords, first, I think I should apologise to the House for the simple fact that because of a previous commitment I was not able to attend the Committee stage, when I had hoped to move an amendment. I had arranged for an amendment to be moved, but in the event, due to a misunderstanding, that amendment was not tabled. Perhaps I may also explain why this amendment is being tabled at this stage.
After the preliminary debate at the Committee stage it would be foolish for anybody to try to change the date in the Bill. However, I attempted to put down an amendment for Report—and I should like to have this on the record so that the Leader of the House can have a look at the situation and perhaps advise me on the correct procedure—to change the date for the coming into operation of the Act. The date in the Bill is 31st March. I wanted to delete 31st March and substitute for it a certain condition with which the Government would have to comply. Once they had complied with it, the Act would then come into force. That was the purpose of the amendment. I considered it to be perfectly in order with the procedure of the House.
I was not seeking to wreck the Bill. I was not destroying any convention. I was not seeking to undermine any of the provisions of the Bill. I was seeking merely to change to a later date the coming into operation of the provision. That date would have been when the Government reported to Parliament on their proposals to decentralise and disperse government office accommodation out of London and the South-East to the provinces.
I raise that point now because, having spent half an hour in the Public Bill Office yesterday and been repeatedly told that that was not relevant to the Bill, I thought it right and proper to bring it to the Floor of the Chamber so that a decision could be made. I am still firmly of the opinion, though I have no doubt that many people will disagree with me, that the amendment was perfectly in order. I thought I would be entitled to move it either at Committee stage, if I had been present, or at Report stage.
However, the net effect of what I was told yesterday is that the Bill cannot be amended unless we take each word in its literal sense and that we cannot aim our amendments at its fundamental proposals. That is one of the points I want to make in discussing the three amendments. I should perhaps say that I am speaking to all three amendments. I want to make the point so that the Leader of the House can have a look at the situation and in his kindness advise me about the correctness of my amendments.
The Association of County Councils, which is not entirely of my political persuasion, is worried about the possible effects of the Bill becoming an Act. It was worried about the possibility of acquiring other investment from abroad in the development areas of this country. It takes the view, which I share, that the mere fact that there is no automatic grant in those development areas is a deterrent to anybody coming in the first place. As I and others mentioned during the debate on the Channel Tunnel Bill, there is a real possibility that at the other end of the tunnel automatic grants will be available. I am not sure why the noble Lord, Lord Young of Graf ham, is shaking his head. I shall give way if he thinks there is no possibility of an automatic grant in France. Surely anybody with experience of developments throughout the world will know that there is that possibility.
Under the Bill there will be no automatic grants and a long process of determining who should get grants. The investment we are talking about is the kind that would lend itself to the channelling of communications from the United Kingdom through the tunnel into Europe. It is almost certain that investors will go to France rather than face the long, searching inquiries into whether or not they will qualify for a grant in Great Britain. That is the fear I express. The fear is also expressed by the Association of County Councils and indeed by the Association of Metropolitan Authorities.
Having said that, I shall make only one other point about it. In view of the great concern shown about this matter we are entitled to ask the Secretary of State to make a statement. I could have gone further and first of all fought the issue of the amendment. However, I thought it would be more sensible, courteous and polite— an unusual step for me to take—to ask the Secretary of State to make a statement and say whether or not he thinks there is a danger of that competition. What does he intend to do? Will he reply to the fear expressed by the Association of County Councils? Will he give a firm and categoric assurance that the amount of money spent previously on development grants in the United Kingdom will not be reduced? Will that amount of money still be available?
I do not want to burden Members of the House, but there is no doubt that during the long debates that have taken place on this issue we have already had some kind of assurance. We have been told not to worry about regional development. We have been told that the Government are not scrapping it and are only changing the system. We have been told that the money will be there and in the same quantity. I believe I am perfectly entitled—indeed, I have a duty, in view of the letter I have had from the Association of County Councils—to ask the Secretary of State to make a statement answering those fears.
My final point—and it is unusual for me to be brief—concerns development area status. Merseyside, an area I proudly represented in local government, does not want development area status. Fifteen years ago Wigan received development area status. It was mentioned to me at a certain meeting, and I said, "Don't be too pleased about it.
1626
Merseyside has had some kind of development area status and assistance since 1948 and even before then. It does not seem to have done Merseyside any good".
If real assistance is needed to improve the lot of people within those areas, one should not look for development area status and put out one's hand with a begging bowl. One has to find a new kind of economic activity to replace the coal mines in Wigan and the shipping industry in Merseyside. One needs to find an area of the economy that will generate its own activity. On the back of that the whole of the area can pick up. We did not want development area status. I do not believe that giving this assistance to those areas is the answer.
So I come to my last point. It is one that I have raised over and over again since I have been in the House. I have raised it with governments over and over again ever since Harold Wilson was at the Board of Trade. For all who can remember, that is a pretty long time ago. But I have had no success. What we need in this country is not money pushed from one place to another and, in some cases, completely wasted when it gets to the other place; we need a shift of resources to provide prosperity in certain areas. One area of course—no one will deny this—is the South-East.
The point was brought home to me forcefully by a colleague of mine who had occasion some time ago to visit the Department of Employment in Tothill Street. He talked to a fairly senior employee, who used to travel quite a distance to get to the office and back again. He spent practically 12 hours every day working and travelling. He blandly told my colleague that everyone accepted that the job need not be done in the centre of London. It need not be done in Tothill Street; it could be done in Glasgow, Manchester, Birmingham or anywhere else in the United Kingdom, and probably done cheaper. That is the point.
Alongside the Department of Employment there is the DHSS, in an office that is so bad now that the powers that be at the top of the hierarchy decided to shift it all into a nice building costing £38 million which is the envy of everyone else. I understand that the DES is even now contemplating a new headquarters. I wonder where they will put that. May I suggest that it should be somewhere north of Birmingham, more central to all its activities? That is my final point.
The amendment I would have framed if I had not been ruled out of order would have said, first, that the Government should seriously examine the question of the dispersal of Government activity that need not be in the South-East. That would do two things. First, it would enliven the other areas of the country; and, secondly, it would make it much easier for the private sector, which considers that it must be in the capital, to site itself in the capital.
Only this week we have heard that one of the major television news gathering systems is proposing a new headquarters. Surprise, surprise, it will be in central London! Nowadays, that means "London Dockland". If the Department of Employment is moved out of Tothill Street a ready-made building would perhaps be provided for that purpose. If it did

1627
nothing else, it would at least mean that the Department of Employment was housed in a building which was worthy of being described as a building and not a piece of Legoland in that area that is called Dockland. That would be one advantage. The greater advantage is that by moving that Government department out and leaving room for the private sector, two things are done. Regional economies are assisted much better and much more cheaply; and the Government will save a considerable amount of money in London weighting if not in grant. That is all that I wanted to say.
I apologise if noble Lords came to the House and were suddenly presented with this large piece of paper which almost frightened the life out of me because it had my name to those three amendments. Before I decide what to do about the vote, I should like the Minister to reply, especially to my last two points.
Lord Taylor of Gryfe: My Lords, in Committee I raised the question of the date of operation of the Bill which is the subject of the amendment. I should have had more sympathy with my noble friend Lord Sefton of Garston—
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, the noble Lord is going to move his amendment, I think?
Lord Sefton of Garston: My Lords, I beg to move.
3.45 p.m.
Lord Taylor of Gryfe: My Lords, in Committee I raised the question of the date of operation of the Bill. Since then I have had some correspondence with the Leader of the House and the Minister in which precedents were quoted to me on the propriety of dating a Bill from 31st March when we are considering it on 21st April. I took independent advice on the matter, and I am satisfied that it is constitutionally in order; but while being constitutionally in order it is not a desirable practice. I hope that in future the House and its place in these matters will be respected and not anticipated in legislation that is brought before it. I received the assurance from the Minister and the Leader of the House that the procedure was in order, and I accept it.
I do not propose to follow the Second Reading debate speech made by my noble friend Lord Sefton of Garston. I might have had more sympathy with his amendment if he had made the date 30th September 1999, because I do not believe that the Bill is a good one, for the reasons that I have explained to the House. I am sorry that the Minister did not respond to the efforts we made in Committee to extract Scotland from the Bill to enable him to monitor the Bill's progress. I respect the Minister's confidence and enthusiasm, but it just could be that in making a dramatic change of this kind he might be wrong.
It is my apprehension over such a dramatic change in regional policy that makes me a little concerned. It is obvious that the Bill's impact will not be immediate. There will be a period during which the present system and the new system will coalesce. In
1628
three year's time much less money than now will be spent on regional development in this country.
In the Minister's statement I detected a feeling that we are now at the end of a positive regional policy. That is disastrous. Figures were quoted in Question Time today which showed that 25 per cent. of the population of the South-East owned shares as against 12 per cent. in Scotland. That is not a reflection of the political attitudes of people in Scotland; it is because they have a good deal less money to spend on buying shares. The North-South divide is a reality. I regret that positive measures to counter that North-South divide are being departed from in the legislation. At the same time, perhaps I may thank the Minister for all his courtesy and consideration when examining the Bill.
Lord Wilson of Langside: My Lords, not for the first time I have great sympathy with almost everything that my noble friend Lord Taylor of Gryfe said. Like him, at the outset I was concerned about the constitutional implications of the fact that in effect the Bill comes into operation before it has been finally approved by Parliament. I am most grateful to the Secretary of State for sending me a copy of the letter on that matter which he addressed to my noble friend.
I remain uneasy about this type of procedure. It reflects the extent to which Parliament's control of the Executive has been increasingly reduced. I do not intend to go on about that. I hope that the Secretary of State will appreciate that it is not a mere lawyer's quibble; much more than that lies behind the point with regard to the constitutional propriety of handling such matters in this way. I do not propose to take the matter further. I am most grateful to the Secretary of State for letting us have a note of the various precedents upon which he relies. Precedent of course is not everything in this context.
Lord Williams of Elvel: My Lords, I have very great sympathy with my noble friend Lord Sefton in the difficulty of framing amendments to this Bill. The Long Title of the Bill is very specific; the Bill itself is very specific. As the Secretary of State may have noticed, it is rather difficult for the Opposition to frame any amendments which attack the real substance of the Bill. So I am very sympathetic to the dilemma in which my noble friend found himself.
I am also sympathetic to the substance of Amendment No. 1. For the convenience of the House I shall also speak to Amendments Nos. 2 and 3. We disposed of the constitutional question raised by the noble Lord, Lord Taylor of Gryfe, earlier in our proceedings. The Secretary of State was kind enough to copy to me the letter which he had written to the noble Lord, Lord Taylor. I am satisfied that the question of constitutionality is not one which need concern your Lordships further.
There remains the question of practice. The cut-off date of 31st March which the Government introduced into the Bill, beyond which the Secretary of State has no power to grant regional development grants, seems to us—and I think that the noble Lord, Lord Sefton, was right about this—to be unduly restrictive. It is, as the noble Lord, Lord Taylor, has

1629
just said, a rather radical change in the method of making grants for regional systems available for regional policy. It is not a simple question of moving or adjusting at the margin; it is changing the whole system rather radically.
According to my information, the proposal has not been particularly well received in Scotland. It has certainly not been well received in Wales. I do not think that it has been particularly well received in the North of England and I doubt whether, when the equivalent order is produced for Northern Ireland, it will be well received in Northern Ireland. It is something which we shall have to look at when the Bill goes forward and becomes legislation.
Leaving that aside, it seems to us as a matter of fairness that the Government should at least give those firms who have in the past relied on the RDG time to put their affairs in order and make the necessary applications and not have this cut-off date which has already been passed. All that my noble friend is doing, apart from the questions which he quite legitimately asked the Secretary of State, is trying to amend the Bill to give back to the Secretary of State the power of which he has deprived himself or of which he is proposing to deprive himself so that firms can have an opportunity of taking advantage of an extra window. That is a proposition which we from these Benches would support.
Lord Young of Graffham: My Lords, this has been an interesting discussion because we have ranged far wider perhaps than the terms of the amendment appeared to justify. I am grateful to the noble Lord, Lord Taylor and the noble and learned Lord, Lord Wilson, for accepting that constitutionally the amendment is correct. The only point on which I would disagree with the noble and learned Lord, Lord Wilson, is that it is in any way new. The precedents go back some decades and it is one of the ways in which the Government can make changes of this nature.
What is at stake is not the question of regional aid itself. I pointed out on 12th January, when I first came to your Lordships' House to announce that we were making this change; during the Second Reading debate; and later, that over the next three years the amount spent on regional aid would increase. What is at issue is whether we spend the money in the best way possible.
It is significant, I believe, that those who have been in favour of the changes are the clients. From industry I have heard nothing but welcome for the changes that we have made. But those who somehow believe that this is some symbol of the Government's commitment to industry would like the present system to continue, irrespective of whether it would be the most effective way of giving the help which we want to give to industry.
Over the next three years some £900 million will be spent in total compared with some £700 million as planned in the 1987 White Paper. The way in which that is spent will, I believe, do the greatest good to the regions in their present circumstances. What we must accept is that the world moves on. If we look at the recent decline in unemployment and the ways in
1630
which the regions themselves have been making great economic progress, we realise that the time has come when, instead of looking for measures to encourage new firms to move into the regions, we should be doing just as much to encourage the firms which are there to expand and increase their employment.
When we consider that in Liverpool itself unemployment has fallen some 2.7 percentage points in the last year, we realise that the North-West is leading the country in the reduction of unemployment. When we look at the new companies coming into the area we see that they will be coming in because as a government we shall be using grants selectively. The regional selective grant is a method of helping the regions which has been in existence since the early 1970s. It has proved itself and shows that we get good value for money.
I suspect that more than for any other reason the noble Lord, Lord Sefton, raised his amendment once again to make the point that the Government should move civil servants to the regions. The noble Lord will recall from the many other times when this matter has been raised that I agree with him wholeheartedly. Where there are jobs that do not have to be done in London they could be done as well, and indeed better, in the regions. Nearly half my own department is located outside London. In my previous department, the Department of Employment, the vast majority of the civil servants were located out of London. The large offices tended to be in the North-West or the North itself. But of course there are a number of jobs which can only be done close to the location of your Lordships' House. That is why we have so many civil servants who are located in London.
Perhaps I may for a moment deal with the amendments that never were. The noble Lord, Lord Sefton, raised the issue of the Public Bill Office declining to accept the amendments which he raised. I believe that it is the practice of this House that amendments should be relevant to the Bill in question. The advice of the clerk was taken but of course I shall draw the attention of the Leader of the House to what the noble Lord, Lord Sefton, says and no doubt he will take up the matter.
We have decided to end the regional development grants scheme. I believe that the amount of notice we gave was sufficient. I can prove that it was sufficient for in those weeks from 12th January until the end of March my department received no less than a normal year's supply of applications. We received as many in those 10 weeks as we would normally receive in a year.
My right honourable friend the Secretary of State for Wales has recently paid tribute to the amount of new investment which has come into the Principality through those companies that will receive the money which will be spent over the next two or three years. I have little doubt that a similar amount of money has been spent in Scotland.
However, the scheme is now at an end. Assuming that all in your Lordships' House agree with us on this amendment, I should like to look forward to a time in which regional development grants will be no more than a memory and we shall see not the end of

1631
government regional policy but the Government's policy as regards the regions accelerating the process by which the regions employ more and more people until they become similar to the rest of the country.
I believe that there is no question that we are still and will continue to be the most attractive location within Europe for overseas investment. The facts bear me out. Through the use of regional selective assistance, I believe that we shall continue to attract those people who need further assistance in order to decide to come to the United Kingdom.
I should perhaps for the last time remind your Lordships' House that on my visit to Japan I met Japanese employers who had invested in this country without any Government assistance whatever. They said that the reason they did so was the economic climate and the benefits they saw in investing in this country. In those circumstances we really cannot see any justification at all for extending the closure date as the noble Lord has asked.
4 p.m.
Lord Sefton of GarstonMy Lords, I do not know whether what I propose to do is in order but I think that I should speak to all three amendments. The noble Lord raised the question of Liverpool's position and drew attention to a favourable aspect of it. That again in my opinion fails to appreciate the real problems about a place like Liverpool. The people of Liverpool feel alienated because there is a tremendous disparity between their prosperity and the prosperity of other regions.
It is not right to mention the small point of how much the unemployment position in Liverpool has improved. It would have been more telling if a comparison had been made between Liverpool's unemployment and the prosperity in the South-East. But of course the noble Lord dare not mention that because the disparity is so great that even he would then be confirming in the minds of the people of Liverpool how bad the situation was there compared to other parts of the country.
As regards Japanese investment I can speak with some authority. Some of us have been in this game for a long time. I was a member of the Runcorn Development Corporation when the first Japanese investment took place in Great Britain. I know that it would never have taken place in Runcorn if the automatic grant had not been available. Having said that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
Lord Young of Graffham: My Lords, I beg to move, That the Bill do now pass.
Moved, that the Bill do now pass.—(Lord Young of Graffham.)
Lord Dormand of Easington: My Lords, I point out to the Secretary of State that he has partly replied to the theme of the short contribution which I now intend to make. I thought that it would be more in order to make my remarks at this stage having heard the Motion, That the Bill do now pass.
1632
The main case in favour of regional development grants is their certainty and the stability which they have provided for the regions. It is those facts which give rise to the remarks which I make today.
The Government argue that the state can provide incentives to persuade companies to move to the hard-pressed regions but that—and we frequently hear this from the Secretary of State—at the end of the day it is up to the companies themselves to decide whether to move. I think that my noble friends and I would in general terms accept that proposition, although I have to say in passing that in spite of what the Secretary of State said a few moments ago the changes in regional policies since 1979 have considerably reduced those incentives.
But we hear little or nothing about one measure which is entirely in the hands of the Government. In this connection I support some at any rate of the remarks made by my noble friend who has just spoken. I refer to the relocation of government departments. I wonder how much dust has settled on the Hardman Report which is now no doubt tucked away on some inaccessible government shelf. That report, which the Secretary of State will know well and which was produced in the late 1970s, dealt specifically with the dispersal of government departments. In my view there has been no study either before or since which has dealt so effectively with the subject.
That report has been deliberately ignored by this Government. I well remember that one of its recommendations was to move the Property Services Agency to Middlesbrough in the hard-pressed North-East. That would have meant at least 1,000 jobs going to that region. The council there retained for a long time a site which was called the biggest car park in Europe. The council hung on to that site for a very long time but when the new government came into power in 1979 they immediately—and I mean immediately because they took action within a week or two—dismissed that site and other recommendations for the relocation of government departments to the regions.
The Labour Government of the 1960s did take action. I give only one example from my own part of the country. They brought the savings certificates department to Durham City. That provides some 700 jobs in the area. As I know from living there, the area would do very badly without those jobs.
Of course there is a hoary argument that Government departments must be situated in London because of the difficulty of communication if they were located in the regions. That view could never be sustained but in these days of super computers, fast travel and the like it would be an insult to use it as an argument.
I concede only one point in this matter. The transfer of civil servants to the regions can raise problems but they are certainly not insuperable and there is now considerable evidence to show how that can be facilitated. I remind your Lordships that financial and other incentives are effective in this regard. The Government have not hesitated to use those incentives in the closure of dozens of pits in this I country.

1633
Perhaps my noble friend will agree with me when I say that once families have moved out of London they prefer to live in their new locations. Again I mention my own area because I know it so well. At least two research projects were carried out whereby families who had been transferred were asked if they wished to return to London or the South-East. They said overwhelmingly that they preferred to stay in the North-East. Perhaps I should declare an interest here in that I am vice president of the Northumbrian Tourist Board. Everybody is welcome to come and see the beauty of that region. But seriously, it is a fact that those two research projects came up with those answers. I have no doubt that the situation would apply to other parts of the country.
The Guardian newspaper of 21st December 1987 reported:
"The Government is considering the dispersal of two ministries and six departments from the capital. … The ministries involved—the Departments of Health and Social Security and of Trade and Industry—are two of Whitehall's largest."
I need hardly remind the House that those are two of the biggest Ministries. Their relocation would indeed be proof that the Government meant business if they decided to move them. However, as my noble friend has already said, the fact that so many of the senior staff of the DHSS have recently moved to the new £35 million headquarters in Richmond Terrace, Whitehall—
Lord Sefton of Garston: My Lords, it is £38 million.
Lord Dormand of Easington: My Lords, my noble friend says £38 million, so perhaps he is right and I am wrong, but that is the price give or take a million or two. That move seems to suggest that once again the Government are merely flying kites and are not taking the matter of relocation seriously. We should not be surprised at that.
Nevertheless, in view of such a report from a serious newspaper I ask the Secretary of State to comment on it when he replies. Perhaps I should also say that one of the last things that I did when I was in another place was to ask about the relocation of government departments. I received a reply from a Defence Minister to say that the Government were seriously considering transferring some of that Ministry's departments or some of its civil servants to my part of the country. However, it looks as if that idea has also gone out of the window. A Minister recently told my noble friend Lord Sefton of Garston that 52 per cent. of all civil servants are placed in the South-East. Even those of us who have argued for the relocation of Government departments for many years found that answer quite breathtaking.
There may have been some justification years ago for such a figure but in these days of the so-called communication age it is deplorable that such a situation should be allowed to continue and indeed to become even worse. Those of us who support the dispersal of government departments do not for a moment suggest that the transfer of Civil Service jobs will solve the employment problems of the regions. But we do say that it will make a much needed contribution to the problem and equally importantly
1634
it will let the people of the North, the North-West and the other regions know that the Government have not forgotten them.
I make those remarks now for an additional reason, which I suspect will be of particular interest to the Secretary of State. There are clear signs that the economic boom is coming to an end. There is the growing balance of payments deficit. There is industry's continuing failure to invest sufficiently. The Governor of the Bank of England tells the Government frequently that the economy must be damped down. Perhaps most importantly, the Government are predicting a slow-down in growth. The economic history of at least the last 40 years demonstrates clearly that the areas which will be hit first and hardest are those regions which I have named.
I conclude by saying—I repeat it for the sake of emphasis— that in at least one respect the Government have in their own hands the means to make a direct contribution to the solution of regional problems. My noble friends and I feel strongly about the matter. However, we have chosen not to put down an amendment in those terms because we feel that the matter should be considered in the wider context of regional development, whatever the aspect of regional policy may be. There is a strong case for it and I urge the Secretary of State to bear that in mind when regional problems of any kind come before your Lordships' House.
Lord Peston: My Lords, perhaps I may intervene briefly. First, I hope that the noble Lord remembers that I took part in the Committee stage of the Bill, but I did not get a copy of the letter to the noble Lord, Lord Taylor of Gryfe. I am grievously disappointed.
More seriously, there is one aspect of the regional problem which is worth mentioning. There has been a great deal of research—mostly American—which refers to the so-called headquarters effect. There seems to be a considerable correlation between where headquarters are located and where economic performance occurs. Although one agrees that it is a good thing that civil servants generally are moved, it seems to me that it would be more significant to find a way of moving some of the centres of power and decision-making away from the immediate vicinity of your Lordships' House.
I am well aware of all the pressures to centralise decision-making here. However, I hope that whoever is concerned with regional policy—and not merely from the point of view of the dispersal of the public sector; it applies at least as strongly to the private sector—will take that aspect of the matter into account.
I am afraid that I have no obvious contribution to make on how that can be done. However, to take an extreme case which interests me, I can see no reason why the Department of Education and Science is centred in Elizabeth House. It could operate just as well somewhere north of Birmingham. I do not say that because I have any romantic view of the provinces. It seems to me to be a move in the direction of efficient operation which should appeal to the Minister.
4.15 p.m.
Lord Williams of Elvel: My Lords, in speaking to the Motion that the Bill do now pass, I have first to thank the Secretary of State for his patience and good humour in listening to the various arguments put forward by my noble friends and noble Lords to my right. It is a short Bill, as I said on Second Reading. However, it is a very important Bill. We have had fair and good discussions and I hope that the Minister understands that there are strong feelings on the matter on this side of the House.
We shall have to wait to see what the effect of the abolition of regional development grants really is. It is too early to make a forecast. We note that the criteria for regional selective assistance, which will be the main weapon in the Government's regional policy, are still too vague for our liking. No doubt they will be better crystallised as time goes on. We are still worried about the accounting and tax treatment of selective assistance. We believe that it should be treated as a grant rather than going through the profit and loss account of the company which is in receipt of assistance.
Above all, we remain concerned about the scope, extent and commitment of the Government to regional policy. The existing problems that we have to deal with in this country are bad enough. We must recognise that the problems of Scotland, Wales and the North and some of the problems to which my noble friends have referred are still with us and will be with us for a considerable period of time.
Those problems are bad enough. However, the future problems which we shall meet when the single internal market is realised and the Channel Tunnel is opened seem to me to be of even greater importance. As my noble friend Lord Peston remarked, it is vital for the economy and for society that we do not have branch economies in the regions simply servicing head offices which may be in London or even head offices which may be nearer the Channel Tunnel. At that time, there will be a strong magnetic pull towards the South-East and the Channel Tunnel. Strong government action is required to redress it. We shall be looking to the Government and pressing them to make sure that that is done.
We shall be watching carefully how regional selective assistance will work. We note in passing that it is a rather interventionist mechanism and perhaps not wholly in accordance with the philosophy of the Government. However, we must be grateful for small mercies and small chinks of wisdom when they appear in the mind of the Government.
My main problem with the Bill, as I said at Second Reading, is with the commitment that the Government have to regional policy. Our task as the Opposition will be to seek to persuade the Government on every occasion that we can that regional policy is necessary and will continue to be necessary as far as the eye can see. We cannot see any resolution to the slippage that is occurring and will occur towards the South-East. Far from being diminished, the policy should be strengthened. Any strengthening of the policy in financial terms will be supported from these Benches. That is what we shall work towards because that is what the country needs.
Lord Young of Graffham: My Lords, I do not propose at this stage to go into detail again on the principle of the Bill. We firmly believe that ending regional development grants and the system itself is the right decision. It is a decision which must be set against the framework of promoting individual enterprise which we have established through the enterprise initiative. It must also be looked at against the background of an improved and improving economy.
Regional development grant was a scheme of near-automatic grants which made no prior assessment of need or viability before it was given. The noble Lord, Lord Peston, referred to the headquarters effect. It was decades of automatic grant which led to that effect. It was that which led to factories being established in the regions and, all too often, head offices emigrating southward, along with all the additional employment they brought with them.
I hope that as the years go by we shall see the re-establishment of the regions, that head offices will once again be established there and that we shall see there the accountancy services, advertising agencies and all the other service sector jobs that go to add to the wealth of any region.
The noble Lord, Lord Williams, said that he would wait and see. I hope that he will see the chink of wisdom which he described opening into the greater glare of a new dawn, as he realises that this is the way to promote a regional policy. The purpose of our regional policy is to see an end to regional policy. I look forward to the day, whch may be long distant or which may be sooner than many people think, when more and more parts of our country will become indistinguishable and there will be no need for a regional policy.
I hope that the noble Lord. Lord Dormand of Easington, will brace himself for a shock. I am about to agree with him. That is not something which happens very often. The noble Lord is quite right. Those of our civil servants who have moved to the North find it extremely awkward, difficult and indeed undesirable to come back. Where I disagree with the noble Lord is in relation to the Hardman Report, which was followed through in many cases. I myself am responsible for one such case—the move of the Manpower Services Commission to Sheffield. That was done in the light of that report. Some 1,700 jobs were moved to Sheffield. As I recall, that was responsible for Sheffield house prices going up, but they have since stabilised. I can bear testimony to those of my civil servants in my last job in particular who just refused or found it difficult to come down South because the quality of their lives would have been adversely affected.
It is important that many departments which work directly with the centre of government and with your Lordships' House or the other place are in London. As an example, in my own department I have certain regulatory responsibilities. Those for companies generally—the Companies Registry—could be safely deployed to Cardiff. Indeed, there are many people now working in Cardiff and we have a very successful Companies Registry today. However, I could not disperse from London those hundreds of my civil

1637
servants whose principal responsibility is regulation of the City of London, because the City of London can only be regulated from London.
I am looking—and I am sure that many of my colleagues are doing likewise—at those jobs in my department which have to be in London and have to be near government and Ministers, if only to provide all the details for the many Questions which have to be answered each day in your Lordships' House. They have to be close at hand.
There are obvious advantages in being out of London, but at the end of the day what we want to see in the regions is not employment of civil servants but employment of people in private sector companies which help to create wealth in those areas. I should even go so far as to say that I should be perfectly happy to see both. However, we wish to see a wealth creating economy in the regions.
I believe that the effect of the single European market which is due to arrive in 1992 will be a tremendous boost for the regions. It is estimated in Brussels that it could lead to the creation of upwards of 5 million new jobs throughout the whole of Europe. If we have a competitive economy I believe that we shall get more than our fair share of the new jobs and the wealth which must come with the single market.
I should like to assure all in your Lordships' House that we shall continue to welcome and secure inward investment into the regions, and the new system which my department is now advocating will be as effective as any in the past.
Lord Sefton of Garston: My Lords, before the noble Lord sits down, perhaps I may first of all thank him for giving details about the people in his department who would have to stay in London because of their work. I should like to ask him whether he will use his good offices to ensure that the Government issue a report in regard to all government head office activities giving the same kind of detail and saying in particular which could operate outside London.
Lord Young of Graffham: My Lords, I hear what the noble Lord says and I shall discuss the matter with my colleagues.
On Question, Bill passed.

Public Utility Transfers and Water Charges Bill
4.24 p.m.
Read a third time.
Clause 1 [Power to act in relation to proposals for privatisation etc.]:
Lord Renton Lord Renton moved the following Amendment:
Page 1, line 6, at beginning insert—
("(1) The purpose of this section is to ensure that water authorities in England and Wales and electricity boards and the Electricity Council in England, Wales and Scotland have the necessary statutory powers to enable them to fulfil proposals made
1638
to any of them by the Secretary of State in order to prepare for privatisation and, in the case of water authorities, for the possible creation of a National Rivers Authority or other body corporate".
The noble Lord said: My Lords, the amendment was tabled in my name but I was glad to find this morning that the noble Lords, Lord Williams of Elvel and Lord Ezra, had added their names to it. The effect of the amendment would be to place at the beginning of Clause 1 a new subsection which would make clear its acknowledged purposes, which are not stated in the clause as it is drafted.
This is the second time of asking, because at Report stage—when distinguished support was given from both sides of your Lordships' House—I moved a similar amendment. My noble friend Lord Caithness told the House that his legal advice was against it and that he accepted that advice with some reluctance. He then asked me to withdraw the amendment on his undertaking to seek further legal advice from the ablest source. That is why we now have the pleasure and advantage of having my noble and learned friend the Lord Chancellor with us to say what he thinks about it. He is of course the ablest source, but I cannot undertake to agree with him until I have heard what he says. Meanwhile, I merely make the comment that none of us is infallible.
I must say that my noble friend Lord Caithness did his valiant best at earlier stages of the Bill, including his best on Clause 1 which many of us think is quite unacceptable as it stands. I need not repeat all the various criticisms that were made at earlier stages. However, I must point out that although the clause gives extremely wide powers to the Secretary of State to make proposals and to water authorities and electricity boards to implement them—whatever implement may mean in this context; and we do not know—it does not limit the use of those wide powers to purposes for which they are said to be intended; namely, privatisation and the possible creation of a national rivers authority or other body corporate.
We know that that is what is intended—not from the text of the clause itself but from speeches made by Ministers and from the Explanatory Memorandum attached to the first print of the Bill, though of course that memorandum very properly falls once it has gone through Committee. We also have some indication of the purpose from the side note to Clause 1. But none of those would be admissible for interpretation by the courts in any case brought before the courts with a view to challenging the use of the powers given by Clause 1. Therefore those powers could be used for purposes which are not intended.
Therefore as well as the clause being, I suggest, defective by not making clear, as we generally try to do in legislation, how far the powers extend or what they are to be used for, the clause runs the risk of enabling people who do not want the powers to be used to frustrate government policy.
In the course of the previous debate and in discussions which I have to confess my noble friend Lord Caithness was so kind as to arrange for me to have behind the scenes, it has been said that the clause has the advantage of being flexible and we must be careful not to lose the flexibility which it gives. I say that the necessary flexibility would not be lost if the amendment were accepted. However, if powers are

1639
used for purposes other than those intended then the flexibility would be lost, and rightly lost.
In moving the amendment I am trying to help the Government as well as Parliament and the courts and other users of statutes by making clear the purposes for which the wide powers in Clause 1 can be used. I promise your Lordships that although the committee on the preparation of legislation recommended that purpose clauses should be used where appropriate, I do not set about doing so on every possible occasion. In fact, my recollection tells me that in the past 12 years this is only about the fifth or sixth occasion on which I have suggested to Parliament that there should be a "purpose" provision. On this occasion it seems to me to be quite essential. I beg to move.
4.30 p.m.
Lord Williams of Elvel: My Lords, in supporting the amendment tabled by the noble Lord, Lord Renton, I must make clear that it is not my function at this Dispatch Box to help the Government. I am here to help Parliament. The noble Lord, Lord Renton, said that he was helping the Government but I am trying to help the noble Lord to shape the legislation in understandable, comprehensible and effective form.
This amendment has an interesting history. During our discussions in Committee we on these Benches moved a series of amendments in an attempt to define the nature of the proposals, the role of Parliament in any such proposals that might be made and generally to try to make sense of Clause 1. At that point the noble Lord, Lord Renton, came up with a suggestion that there might be some such preliminary subsection. The noble Earl responded that he would like to look at the matter very carefully. I think I am right in my recollection of our discussions at Committee stage.
When the Bill came back on Report my noble friend Lord McIntosh supported the noble Lord, Lord Renton, in his drafting. I remember him saying in Committee that he was drafting on the back of an envelope—even before the Committee rose, his agile mind was at work drafting a clause. We supported that provision at Report stage and we support it again.
We believe that the flexibility in Clause 1 referred to by the noble Lord, Lord Renton, goes too far. We should like to see sense made of Clause 1. We should like a number of amendments to Clause 1 but we understand that your Lordships' House has not accepted the proposals that we made and we shall not press them at this Third Reading of the Bill. Nevertheless we feel with a great deal of strength that in his original submission in Committee, which the Government agreed to consider, and in his final submission now, the noble Lord, Lord Renton, has a major point and a proper amendment which would give us at least some comfort in the knowledge that Parliament's intentions in respect of this clause are clear to the outside world. That is what we want to achieve.
I shall be interested to hear what the noble and learned Lord the Lord Chancellor will reply to the
1640
noble Lord, Lord Renton. It will of course become something of a distinguished lawyers' argument, if I may put it in that way. As I am not a lawyer I should not dream of intervening in such an argument, but, looking at this Bill and its subsequent enactment from the point of view of the layman, we should like to see in it a subsection of that nature. That is why we support the amendment of the noble Lord, Lord Renton.
Lord Ezra: My Lords, in supporting this amendment, I should like for my part to remind the House that on these Benches we have always felt that this first clause is too widely drawn in terms of both time and content. The purpose of the first clause was made very clear in debate, not least by the noble Earl himself. It is made very clear in the marginal note and on the first page of the document with the arrangement of clauses, but surprisingly it is not made sufficiently clear within the body of the Bill itself.
It is a simple thing for which we ask, which seems to me to be entirely in line with the role of this House as a revising chamber. It is that this purpose, which has been clearly stated and understood, should be incorporated in the Bill before it is enacted.
I recall that when we debated this point at an earlier stage the noble Earl said that the word "privatisation" was not one that had a legal significance. If that is so, perhaps I may suggest "private ownership", which I presume has a legal meaning. The Government intend to prepare these bodies for that and, if that is what needs to be said, then let it be said. However, whatever is done about this Bill, I ask noble Lords to ensure that there is greater clarity in Clause 1.
Lord Nugent of Guildford: My Lords, I took a small part in the debates at the earlier stages of this Bill and supported my noble friend Lord Renton in the wish, which is indeed now being echoed on all sides, that the Bill should be clearer than it is at present. I said—I think with some justice—that I had never before seen such a vague Bill, which seeks to give Ministers enormously wide powers in a way which I believe is most undesirable for Parliament. I trust that in the short time that this Bill has to be extant and working before the main Bill is presented in the next Session, it will not be challenged in the courts.
However, I am bound to say that if it is left in its present state, I defy any court to know what on earth this first clause means. That is my feeling about it. I am not wildly keen on the measure but I accept that my noble friends have the right to proceed with their measure of privatisation and that they intend to do so. However, it seems desirable that while we are deliberating on the shape of the Bill we should ensure that it is a Bill which is clear to the whole world and to the courts. I warmly support my noble friend Lord Renton.
I must say that I feel glad that my noble friend Lord Caithness, who up to now has dealt very adequately with our points in the debates, is now supported by my noble and learned friend the Lord Chancellor, which adds very greatly to the occasion. I realise that we are now about to be given advice

1641
from the highest authority and I look forward to hearing it. I suppose that I shall bow my head because I cannot think of anyone who is better able to give advice on a legal point than is my noble and learned friend. I know from a private note that he has written that he thinks the amendment is wrong and undesirable but I still believe that this is a very unlikeable clause and one which does not do credit to Parliament.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I think that we are all agreed about certain matters: first of all, that the Explanatory Memorandum forms no part of the Bill or Act and will not form part of any judicial material that is used in its construction. The same applies to the marginal note. My noble friend Lord Renton mentioned that none of us is infallible and I personally agree very heartily with that sentiment. I can think of nobody more fallible than myself. Therefore I propose to try to explain my reasoning so that noble Lords will have an opportunity of judging for themselves rather than attaching any particular importance to what I am giving as my view.
In response to the noble Lord, Lord Williams of Elvel, I should like to say that I hope I shall make the position clear. I trust that this will not be an argument between lawyers, although some of us happen to be lawyers. The matter is one which concerns the use of language and an understanding of the meaning of the Bill.
My noble friend Lord Nugent of Guildford said that this clause gave very wide powers to Ministers. I fear that there may be some misunderstanding among your Lordships about the effect of this clause, because it does not give any powers to Ministers at all. Perhaps I may take the example of the public utilities, the most typical of which are the water authorities. It complicates the argument to have to name the electricity boards very time, so let us stick to the water authorities. This clause gives power to the water authorities to do things which in their opinion it is appropriate for them to do.
The Committee of the noble Lord, Lord Renton, suggested that it is sometimes wise—not always—to have a statement of purpose. We have a statement of purpose. The purpose is to do things,
"for the purpose of facilitating the implementation of the proposal for the transfer"—
I shall return to that in a moment—
"or facilitating the implementation of, or securing a modification of, any related prosposals of the Secretary of State".
Perhaps therefore I may try to set this in its context.
What is in issue here is the future form of the water industry, if one is considering this part of it, and the electricity industry, although perhaps I may leave that aside completely. The Secretary of State has proposals for action to change the state of the water industry. They are not proposals to any particular person or body of persons. They are proposals for action; they are proposals for change. They include proposals that the property or functions of a water authority should be transferred to another body corporate. That is all. He is proposing that something of that kind should happen.
1642
I wish to make this abundantly clear. There is no question whatsoever of this clause containing any power to enable that to happen. This is a clause only to give the water authorities power in relation to proposals of the Secretary of State that this should happen. The power to implement the proposal will come in the main legislation, if at all, and certainly not in this Bill. There is no proposal in the Bill which will enable a water authority to transfer its property, assets or functions to anybody else. I should like to make that absolutely plain because it is fundamental. Possibly a misunderstanding of that point may underlie the concerns that have been expressed.
The clause provides that the Secretary of State makes a proposal that there should be companies incorporated under the Companies Acts set up to take over certain of the property and functions of the water utilities—the water authorities. In other words, that assets, property and functions of the water authorities should be transferred to bodies corporate, companies incorporated under the Companies Act, possibly in part to a national rivers authority or, depending on the ultimate shape of the proposals, possibly some other body or bodies corporate.
The local water authorities are creatures of statute. Therefore they are not entitled to spend money on anything which is not incorporated as part of their constitutional provisions. If an issue arises about the implementation of such a proposal to transfer the property or functions of a water authority to a new company incorporated under the Companies Act, questions of advice to the Secretary of State about the implementation of that proposal arise, for example, in relation to the technical possibility of separating out various parts of the property as between bodies incorporated under the Companies Act on the one hand and the National Rivers Authority on the other as to the value of the assets of the water authorities, and a multitude of questions such as the advice that might be given for the modification of these proposals.
Your Lordships will notice that paragraph (b) refers to securing among other things modification of any related proposals of the Secretary of State. The water authority might well think when it considers matters with its technical advisers that the proposal of the Secretary of State relating to the principal proposal for transfer should be modified; that a better proposal can be made. The purpose of this clause is to give the water authorities the necessary power to consider these matters and to do what they think fit, not for implementing the proposal but for facilitating the implementation of the proposal. That is what this clause provides.
The provision needs to be general because the question that will arise is whether a particular use of the water authority's funds is empowered or whether it is something that the water authority may properly do. A water authority may ask now: "Is this a proposal to transfer property or functions of this our water authority to another body corporate? If so, anything that we deem appropriate to be done to facilitate the implementation of that proposal may be done before there is any authority for the proposal to be carried out".

1643
Clause 4 makes it clear that this may well arise before the proposal is carried out. The carrying out of the proposal to transfer property or functions to a new body corporate will require another Act of Parliament. The principal Bill will provide that, if it is done, and not this Bill. Accordingly, I was somewhat astonished to read the amendment in its detail. It states:
"The purpose of this section is to ensure that water authorities in England and Wales … have the necessary statutory powers to enable them to fulfil proposals made to any of them by the Secretary of State in order to prepare for privatisation".
In other words, this provision will give them the power to fulfil the proposals. That cannot be right. The fulfilling of the proposals cannot take place until the main legislation comes along. Therefore this purpose clause, with the greatest possible respect—and I fully appreciate the effort that my noble friend has put into this—is directed to a different purpose from the purpose of the clause about which we are talking.
This clause is talking about an earlier stage. It is not the implementation of the proposals, but a consideration of whether the proposals should be made. To have in the purpose clause a provision that the water authorities should have the necessary statutory powers given to them under this section to fulfil the proposals is shortening the privatisation procedure a very great deal. I should be surprised if this purpose could be encompassed in one section; indeed I should be nothing short of astonished, but there it is. That is what this purpose clause states.
In my respectful submission to your Lordships, first, this purpose clause is misconceived for that reason. Secondly, the purpose for which the powers are given in this clause is,
"facilitating the implementation of the proposal for the transfer … or securing a modification of, any related proposals".
This clause refers to an earlier stage. It is plain that it has to be general because one has to relate it to the proposals when they come along. One has to relate it to the possibility—and surely it must be right to preserve this—that the Secretary of State's ultimate proposals may be affected by the advice he receives from local water authorities under this clause. He may then put forward modified, perhaps even better, proposals than at present. It cannot therefore be right to try to tie this to some form of present proposal. Part of the purpose of the clause is that the possibility of modification of related proposals should be open for consideration. Therefore, with great respect I would suggest to your Lordships that this amendment should not be passed.
I should perhaps say that when my noble friend Lord Caithness told your Lordships that he would seek to secure the best advice, he was of course referring to advice from the legal advisers of the Government. Therefore, your Lordships may take it that he has secured the best advice available to the Government including that of parliamentary counsel. I am now seeking to put before your Lordships these views in support of the rejection of this amendment and the passing of the clause in its present form.
Lord Renton: My Lords, perhaps my noble and learned friend would be good enough to explain this point. It seems to me from what he says (although it is very strange to hear when one reads Clause 1) that there is to be no transfer of functions or property until we come to the main legislation. Is he therefore saying that all that Clause 1 suggests is a mere paper exercise based on proposals made by the Secretary of State?
The Lord Chancellor: My Lords, I can answer the first part of that question absolutely plainly. There is no question whatsoever of a transfer of property by virtue of a power given by this clause. It contains no power to transfer a single iota of any property whatsoever.
I am not quite sure what is meant by a paper exercise. The Secretary of State has put proposals on paper for transferring certain parts of the property and functions of local water authorities to companies incorporated under the Companies Act and for transferring the balance of their property and functions to a national rivers authority. That is a paper proposal. It is written on a piece of paper.
However, the effect of that on any particular water authority is a complicated question. Nobody knows more about that than my noble friend Lord Nugent of Guildford. The operations of water authorities are complicated. The best people to advise on these matters are the officials of the water authority. They can advise as to the consequences of these proposals, what the value of the water authority's property is and the technical feasibility of the related proposals.
A question has arisen as to whether the water authorities have power, because they are statutory corporations, to use their money for the purpose of getting such advice on the paper proposals. I have no doubt that the advice will ultimately be written on paper also; but it is still valuable and vitally important as a prerequisite to privatisation.
The clause makes clear that the authority may if it thinks fit do things with a view to promoting the interests of a new body corporate to which the property or functions of the water authority may be transferred. However, the transfer cannot take place under any powers given in this Bill. If a transfer is to take place it will take place under powers granted by other Bills. The water authorities have no power under their present statutes, generally speaking, to transfer their property or functions to others. If they are to do so, statutory authority to that effect will be required.
With the greatest possible respect, this is an inept purpose clause. If the purpose stated in the clause were to be fulfilled, one would require more elaborate provisions than anything one finds in the main part of these provisions.
Lord Renton: My Lords, I am extremely grateful to those noble Lords who have supported this amendment. I am sure that we are all extremely grateful for the attempt by the Lord Chancellor to explain the Government's position with regard to this clause.
It seems to me, with deep respect to the noble and learned Lord—and there is nobody in this world for

1645
whom I have a greater respect as a lawyer—that his description of the effect of the clause is not borne out by the terms of the clause itself. Alas, I have to say that. The noble and learned Lord says that nothing is to happen by way of implementing the proposals until we come to the main legislation. I wonder whether he would read with me subsection (4) of this clause, which says:
"The powers conferred by this section in relation to any proposal shall be exercisable whether or not Parliament has given any approval on which the implementation of the proposal depends and shall be without prejudice to any power conferred otherwise than by virtue of this section".
That seems to me to carry us far beyond what my noble and learned friend has described as the very limited purpose of this clause. I also have to point out that Clause 1(1), which must be read along with subsection (4), which I have just read out, refers to,
"the purpose of—

(a) facilitating the implementation of the proposal for the transfer; or

(b) facilitating the implementation of, or securing a modification of, any related proposals of the Secretary of State".

If we in your Lordships' House are puzzled by the meaning of the clause—and I must confess that I am even more puzzled after the explanation given by my noble and learned friend—what are the courts, the water authorities and the users of the statutes going to make of this situation? They will not be able to say, "Oh, but it's all right; we have only to read the Lord Chancellor's speech, which has told us that in effect the clause does not mean what it says".
I am awfully sorry to have to say this, because, as I say, I respect my noble and learned friend and appreciate his coming to the Woolsack and explaining this to us very fully this afternoon. But I have to confess that I am not convinced. I have the misfortune to disagree with him.
I must take up one or two other points that have been made. The use of the word "privatisation" in the amendment to which the noble Lord, Lord Ezra, referred, cannot be regarded in any sense as being inappropriate because it is used in the marginal note. Therefore the Government know what it means. We were told by my noble friend Lord Caithness at Report stage that it is in the Oxford English Dictionary, and the courts are allowed to take notice of definitions in the Oxford English Dictionary. I should prefer that word to stay rather than the words "private ownership".
My noble and learned friend referred to the contents of the amendment and said that he was surprised by them. However, they are taken almost word for word from the Explanatory Memorandum which accompanied the first print of the Bill. They are consistent with what Ministers have said is the intended purpose of the clause.
My noble and learned friend says that no power is given to Ministers. However, when we say in Clause 1,
"where the Secretary of State is at any time proposing",
and we refer to the proposals, the whole foundation of the clause is that Ministers will be making proposals. Surely it cannot be said that no powers are given to Ministers.
The Lord Chancellor: My Lords, with leave of the House, could my noble friend point to the power which is given to the Minister in this clause?
Lord Renton: My Lords, I am very sorry; I did not quite catch that.
The Lord Chancellor: My Lords, I am wondering whether perhaps my noble friend would be kind enough to point to the power that he says is given to the Secretary of State by this clause.
Lord Renton: My Lords, we are asked to read a great deal into the clause anyway, but when we find the expression,
"Where the Secretary of State is at any time proposing",
that clearly expresses the fact that Parliament envisages that he should be given power to propose. I do not see how we can get away from that. We find that subsection (2) begins:
"The proposals which are to be treated for the purposes of this section as related to a proposal of the Secretary of State for the transfer of anything from a relevant public utility to a body corporate shall include"
so it is not only a power but an obligation which is conveyed here—
"any proposal relating to",
and it goes on. I do not think it can be said that the Secretary of State is exactly a lay figure in this matter. Indeed he is the initiator of the powers which are more specifically given to the water authorities by the clause.
One could go on, but I do not wish to weary your Lordships. I hope that I have said enough to indicate that I do not in conscience feel that it would be right for me to withdraw the amendment.
5.2 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 102.

DIVISION NO. 1

CONTENTS

Aylestone, L.

Hayter, L.

Bancroft, L.

Houghton of Sowerby, L.

Banks, L.

Hughes, L.

Blease, L.

Hunt, L.

Bonham-Carter, L.

Hylton-Foster, B.

Boston of Faversham, L.

Irving of Dartford, L.

Bruce of Donington, L.

Jeger, B.

Buckmaster, V.

Lawrence, L.

Callaghan of Cardiff, L.

Listowel, E.

Carmichael of Kelvingrove, L.

Longford, E.

Carter, L. [Teller.]

Lovell-Davis, L.

Cudlipp, L.

McIntosh of Haringey, L.

Dean of Beswick, L.

Mishcon, L.

Elwyn-Jones, L.

Molloy, L.

Ewart-Biggs, B.

Mountevans, L.

Ezra, L.

Nicol, B.

Falkland, V.

Ogmore, L.

Fitt, L.

Parry, L.

Foot, L.

Pitt of Hampstead, L.

Gallacher, L.

Ponsonby of Shulbrede, L.

Gladwyn, L.

Prys-Davies, L.

Graham of Edmonton, L.

Renton, L. [Teller.]

Halsbury, E.

Russell, E.

Hampton, L.

Sainsbury, L.

1647

Saint Brides, L.

Taylor of Blackburn, L.

Saltoun of Abernethy, Ly.

Underhill, L.

Seear, B.

Wallace of Coslany, L.

Serota, B.

Wells-Pestell, L.

Shackleton, L.

White, B.

Somers, L.

Williams of Elvel, L.

Stedman, B.

Willis, L.

Stewart of Fulham, L.

Winchilsea and Nottingham, E.

Stoddart of Swindon, L.

NOT-CONTENTS

Alexander of Tunis, E.

Macleod of Borve, B.

Ampthill, L.

Manchester, D.

Atholl, D.

Mancroft, L.

Auckland, L.

Margadale, L.

Bauer, L.

Marley, L.

Beaverbrook, L.

Merrivale, L.

Belstead, L.

Milverton, L.

Bessborough, E.

Monk Bretton, L.

Birdwood, L.

Morris, L.

Blatch, B.

Mountgarret, V.

Blyth, L.

Munster, E.

Borthwick, L.

Nelson, E.

Boyd-Carpenter, L.

O'Brien of Lothbury, L.

Brabazon of Tara, L.

Onslow, E.

Broadbridge, L.

Orkney, E.

Brougham and Vaux, L.

Oxfuird, V.

Bruce-Gardyne, L.

Pender, L.

Buckinghamshire, E.

Pennock, L.

Caithness, E.

Porritt, L.

Campbell of Croy, L.

Pym, L.

Carnegy of Lour, B.

Rankeillour, L.

Carr of Hadley, L.

Reay, L.

Coleraine, L.

Rees, L.

Colnbrook, L.

Romney, E.

Colwyn, L.

Rugby, L.

Constantine of Stanmore, L.

St. Aldwyn, E.

Craigavon, V.

St. Davids, V.

Craigmyle, L.

Sanderson of Bowden, L.

Crickhowell, L.

Sandford, L.

Cullen of Ashbourne, L.

Sandy's, L.

Davidson, V. [Teller.]

Savile, L.

Denham, L. [Teller.]

Sharples, B.

Dundee, E.

Skelmersdale, L.

Eden of Winton, L.

Strange, B.

Elton, L.

Sudeley, L.

Ferrers, E.

Suffield, L.

Ferrier, L.

Swansea, L.

Grantchester, L.

Swinton, E.

Havers, L.

Terrington, L.

Hesketh, L.

Teviot, L.

Hives, L.

Thomas of Gwydir, L.

Holderness, L.

Thomas of Swynnerton, L.

Hooper, B.

Thorneycroft, L.

Ingrow, L.

Trafford, L.

Kimball, L.

Trumpington, B.

Kitchener, E.

Ullswater, V.

Layton, L.

Vaux of Harrowden, L.

Long, V.

Westbury, L.

Lyell, L.

Windlesham, L.

McAlpine of Moffat, L.

Wise, L.

Mackay of Clashfern, L.

Wyatt of Weeford, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.10 p.m.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, I beg to move, That the Bill do now pass.
Moved, That the Bill do now pass.—[The Earl of Caithness.]
Lord Williams of Elvel: My Lords, in speaking to the Motion that the Bill do now pass, I express gratitude from these Benches to the noble Earl for his patience with our arguments—indeed, with many of our amendments—gratitude to the noble Lord the
1648
Leader of the House for his intervention on Second Reading and, of course, gratitude to the noble and learned Lord the Lord Chancellor for the exposition of his arguments against the amendment that has just been defeated.
I cannot say—I do not suppose that noble Lords opposite would expect me to say—that we wish the Bill well. We do not wish the Bill particularly well, first, because we disapprove of the policy. We do not like the idea of privatising utilities. The water and electricity utilities are two major utilities that the Government propose to privatise in a monopoly or quasi-monopoly situation. That is a policy of which we profoundly disapprove.
We also believe, in spite of what the noble and learned Lord the Lord Chancellor said earlier, that Clause 1 is still a mess. It gives fairly wide-ranging powers that we should like to have seen curtailed in some manner, but, having moved amendments in Commitee, on Report and now recently on Third Reading, we recognise that the Government have not accepted the position.
We have been told on a number of occasions that the Secretary of State would use the Bill's powers and his ability to make proposals under the Bill wisely. We are not allowed to know in what form or how the proposals will be made, but we are told that they will be made wisely. I suppose the least we can say is that the present Secretary of State did not try to prevent your Lordships from discussing the Bill at all, which he seems about to do on another Bill that will come before your Lordships' House shortly.
We were also told to wait for the principal Bill when all, apparently, will be revealed. We have had this refrain time and again. On Second Reading I compared the Government's privatisation programme with the closing scenes of the film "King Kong" when the giant gorilla crashed about pulling down skyscrapers in New York. It now appears that we have son of King Kong, a bigger Bill, a bigger gorilla, making an even bigger mess. We on these Benches shall do our best to stop the maniac in his tracks before he does too much damage.
Lord Ezra: My Lords, the Bill—particularly Clause 1, which has taken up so much of our time—is the precursor to two major Bills that will shortly come before us. I regret that we have not been able to agree at least on the wording of the clause. It seems to me a bad foretaste of what may come. I hope that, as regards clarity, the succeeding Bill will be clearer than this clause has been.
Furthermore, let us hope that any preparatory work that is done will be such as to enable us, when we consider the main Bills, to make modifications. I take it, following the noble and learned Lord the Lord Chancellor's remarks, that this does not confer any powers on Ministers and does not finalise anything; it is merely by way of preparation for something that in the event may be changed.
Lord Renton: My Lords, I should like to make it clear that I am in favour of privatisation and I look forward to the creation of a national rivers authority. I only hope to goodness that, when we have the main legislation and all other legislation that the

1649
Government put forward, it will be very much better drafted and clearer in its terms and in expressing its intention than Clause 1. I think that it is a disgrace. I have no hesitation in saying so. As to the other provisions of the Bill, they have been little discussed, but are of considerable importance and could be of great help, apart from the question of privatisation.
There is no doubt—I have come up against this in East Anglia where I was a Member of Parliament for many years—that water supply is a real problem. That is especially so with the rapid and considerable expansion of population that has occurred in East Anglia—large, new towns and the expansion of old towns to treble their size, such as Peterborough. The question of the use of water, especially in a dry season, raises a considerable problem.
Water metering is, I know, unpopular. I have water metering in the house in which I live; it works satisfactorily and I think is quite fair. However, from the logistic point of view, it is something with which we must experiment. I am glad that the Bill gives powers to do that.
In Committee, I mentioned a most unfortunate case that arose in Cornwall, which went to the Judicial Committee of your Lordships' House. I felt in that case that there was an injustice as regards the law as it now stands. The Bill does not specifically cure that, but it gives an opportunity for various anomalies to be ironed out—I hope that they will be.
I am grateful to the noble Earl, Lord Caithness, for his patience and hard work. Let me say again that I am grateful to my noble and learned friend the Lord Chancellor, although I had the misfortune to disagree with him.
The Earl of Caithness: My Lords, perhaps I can use this appropriate moment quickly to review the provisions of the Bill and the reception that they have had in your Lordships' House.
By far the largest part of your Lordships' deliberations on the Bill have borne won Clause 1, which provide the water and electricity supply industries with an express power to prepare for our proposals for their restructuring and privatisation. Those proposals were included in the manifesto on which the Government were returned to office in the general election only 10 months ago. The intervening months have seen major policy statements of our proposals for both industries. In the case of water, there was the statement on the national rivers authority published in December; in the case of electricity, there was the White Paper published in February. Those are the foundations upon which we are currently engaged in building up the necessary legislation that we intend to introduce as soon as possible.
As I have explained before, however, we need to be certain that the water and electricity industries can assist us fully both in the work of getting that legislation ready and in the preparations that need to begin in the immediate future if we are to realise our proposals in an ordered and timely fashion.
I would stress that it is not our intention to prejudge the consideration that Parliament will give
1650
to the main legislation on our proposals, nor is that the effect of Clause 1. If the main legislation is indeed approved by Parliament, we shall want to make the best progress in its implementation consistent with the complexity of these industries. However, we shall be able to implement our proposals only after they have been scrutinised and approved by Parliament.
I recognise the concern that has been expressed about the width of the powers conferred by Clause 1, a concern that has underlain several amendments that have sought to restrict those powers in various ways. Indeed, in Committee the noble Lord, Lord Diamond, divided the House on an amendment to time limit the powers. We have been unwilling to accept any of these amendments because of the need to preserve the flexibility that the clause gives to the water and electricity industries in using these powers. The arguments advanced so eloquently by the noble Lords who have moved the amendments have compelled us to test and test again our own conclusions about the way in which these provisions are expressed in the Bill. In the end, however, we remain clear in our view that to amend Clause 1 along the lines proposed by noble Lords could hamper, and might even defeat, the objective of enabling the water and electricity industries to play their full part in the work ahead.
I feel bound to say that no amendment has compelled us to think more deeply than that moved by my noble friend Lord Renton both on Report and today. In speaking to that amendment on Report I acknowledged my difficulty in responding as a layman to some of the more legal arguments advanced by my noble friend. In today's debate your Lordships have heard my noble and learned friend the Lord Chancellor respond to those arguments. The whole House must be grateful for the clarity with which he explained the purpose of Clause 1. I shall not seek to add to that response except to say that it has reinforced my conviction that Clause 1 is drafted as it needs to be. I trust that your Lordships share that view.
The other provisions of the Bill have generated less debate in your Lordships' House. They relate to charges made by water undertakers, to metering as a method of charge and to metering trial schemes. Of the two amendments which we made to these provisions in Committee, the first, to Clause 3, was a technical amendment designed to meet a concern expressed by the Water Companies Association, and the second, to Clause 4, fulfilled an undertaking given in another place to ensure that bodies representing the interests of consumers are consulted by water undertakers proposing metering trial schemes.
We consider that these provisions have been improved by the making of these two amendments. The first will reassure investors in statutory water companies that the companies will be able reasonably to remunerate capital. The second will reassure customers taking part in metering trials that the Government are concerned to have consumer interests represented as effectively as possible.
I should like to thank the noble Lords, Lord McIntosh of Haringey and Lord Williams of Elvel, for the constructive way in which they have approached this Bill. I thought that the noble Lord,

1651
Lord Williams of Elvel, was more constructive than usual at Third Reading but perhaps he has slipped back into his bad old ways when it came to the Motion that the Bill do now pass. I also pay tribute to the noble Lords, Lord Ezra and Lord Diamond.
I should particularly like to thank my noble friend the Leader of the House for undertaking Second Reading for me when I was at an Environment Council on the Continent; and, indeed, I thank my other noble friends Lord Nugent of Guildford and Lord Renton who have taken part in the proceedings. I have much appreciated the perceptive and challenging debates that we have had at the various stages of the Bill. I now look forward with great enthusiasm to the main Bill, which must be to the benefit of all consumers of the water industry.
On Question, Bill passed, and returned to the Commons with amendments.

Immigration Bill
5.23 p.m.
The Minister of State, Home Office (Earl Ferrers): My Lords, despite the fact that this is a short Bill, the subject of immigration is one which is exceedingly complex. If I may, I should like to offer a personal word of thanks to all who have taken part in our debates for the way in which they have conducted their arguments during the passage of the Bill through its various stages and for their deep knowledge of and interest in the problems associated with immigration.
The Bill has been subjected to pretty rigorous scrutiny. It has not gone through the House unamended. During the Report stage a clause was added to tackle the issues of those who seek to evade the immigration controls by taking employment with diplomatic missions.
An important amendment was made, which was put forward by the noble Lord, Lord Mishcon, to put beyond doubt the fact that overstayers could be prosecuted only once for any one offence. We heard of the genuine concern which existed on this point, and I am glad that we were able to find a way of amending the Bill to allay this concern.
We have also at the request of the Opposition been able to produce a draft of the order which will enable asylum-seekers who are liable to deportation to argue at appeal the merits of their claim to asylum. As a result of the attention which your Lordships have given this Bill, it leaves the House as a better measure than when it arrived.
In opening our Second Reading debate on 4th March I referred to the Bill as making modest but necessary changes to our immigration law. The further amendments which have been made to it even strengthen this assessment. The Bill is not a major piece of innovative legislation but it remedies a number of significant defects which have emerged in the past 15 years since the 1971 Act came into force. Its passage will enable the process of immigration control to be operated more fairly, and it will prevent some people from gaining an unfair advantage over others who wish to come or to remain here.
1652
The Bill meets a genuine need, and I am grateful to your Lordships for the way in which you have firmly but always cautiously dealt with it. I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read a third time.—(Earl Ferrers.)
Lord Elwyn-Jones: My Lords, perhaps I may in turn express our gratitude to the noble Earl for his courtesy and patience in the way in which he has steered the Bill through the House. I am bound to say that it has given us less than satisfaction and has sadly failed to live up to the expectations that we had that it would meet the sensitivity and consideration which he himself indicated to be important in dealing with matters of immigration. There has been common ground in our debates on the Bill that immigration control is a regrettable necessity but it must be even-handed and fair and be seen to be so. This Bill has not satisfied that necessity.
There are some Bills on which the House and the Government should make every effort to achieve consensus. I should have thought that the Immigration Bill was one of them. However, the measure of the failure to do so was indicated on Report when noble Lords on the Opposition side, both behind me and below the Gangway, felt it desirable and necessary to divide against the provisions of the Bill on no fewer than seven occasions as in their view the proposals contravened important issues and matters of human rights and civil liberties.
I believe that it is significant to look at the extent of the opposition to the Bill outside the House, which has been fairly widespread. It is right that I should start with the opposition of the major Church and race relations bodies. The right reverend Prelate the Bishop of Ripon referred to the opposition by responsible bodies from the Church of England, the Methodist Church, the United Reformed Church, the Baptist Union and Roman Catholic Church. There was hardly a believer left to believe in the Bill. However, the civil rights organisations outside the House also had grave doubts about the Bill.
The note of the Bill was struck in its very first clause repealing Section 1(5) of the Immigration Act 1971—the principal Act. If Clause I of the Bill becomes law, it will remove from Commonwealth citizens settled here before 1st Janaury 1973 the absolute and unqualified right to bring their families into this country. That right was conferred on them by Section 1(5) of the 1971 Act. It was solemnly reaffirmed by several Ministers, inlcuding the late Reginald Maudling and the noble Viscount, Lord Whitelaw. It is now to be repealed and one of the results will be that children who have certain rights to be united with their parents will be robbed of those rights.
An important part of our debate turned on the proposals regarding refugees. We were grateful for the initiative of the noble Earl in introducing us to an order which was not in final draft form in an endeavour to deal with our grave concern about the inadequacy of the Bill in its attempt to deal with refugees. We criticised that proposed order, and the

1653
fact remains that it was no more than an order—a statutory instrument. In an issue as vital as the rights of immigrants, it is our view that when it reaches an appropriate form—it is merely tentative now—it should be spelt out in the language of the Act itself.
Apart from the provisions with regard to citizens of the EC, the Bill is almost wholly restrictive in its terms. None of its provisions seek to extend human rights; on the contrary, they almost all tend to diminish them. As regards immigration, the family life and rights of appeal and all those matters, the provisions are restrictive and wholly ungenerous.
In our view, although it is sad to express it, we think the Bill will do serious damage to family life, community relations here and to our reputation abroad as a country which values justice and humanity.
5.30 p.m.
Lord Renton: My Lords, I very much welcome the Bill. We have heard a great deal about human rights and it is only right that we should do so. We also heard a great deal about keeping families united and that is an aim of all parties. However, there is another side to the coin and it is only right that we should not lose sight of it. This country has generously admitted hundreds and thousands of immigrants, mostly from the Commonwealth—or countries that were in the Commonwealth—for many years now.
We all know that many British people feel that enough is enough. Of course it is only right that the interests and feelings of the people who are already in this country, whether they can be called indigenous to it or whether they have come here in recent years, should also be respected. It is because the Bill bears in mind that side of the coin that I think it is fully justified and to be welcomed.
I should just like to add here that my noble friend Lord Ferrers found the Bill at the Home Office when he was appointed Minister of State. I think we should all be grateful for and admire the way he has conducted the proceedings on a difficult and controversial Bill which has been the subject of a great deal of detailed opposition.
Lord Bonham-Carter: My Lords, I should just like to add a few words at this late stage of what has been a long and detailed debate on this melancholy little Bill. I shall not take much time in pronouncing its obsequies; nor have I a great deal to add to the moderate and measured words of condemnation uttered by the noble and learned Lord, Lord Elwyn-Jones.
First, I must raise a matter concerning numbers and which arose between me, the noble Lord, Lord Renton, and the noble Earl, Lord Ferrers, in Committee. On 22nd March (Official Report, col. 147) I told the noble Lord, Lord Renton, that in this country we have net emigration and not net immigration. Later in the debate the noble Earl, Lord Ferrers, courteously suggested that I might have inadvertently misled the Committee and that between 1983 and 1987 there was net immigration of 180,000 people. He is of course correct, and I apologise for
1654
inadvertently misleading the Committee in respect of the years 1983 to 1987.
I must confess that the figures which he produced greatly surprised me because since about 1810, with some exceptional periods, this country has almost always been a net exporter rather than a net importer of people. However, though it is true that between the years 1983 and 1986, which is the period for which the latest figures are available, there was a net inflow of 149,000 people. I must add that if one takes the years 1976 to 1986, one finds that there was an outflow of 105,000 people. That figure is not enormously significant, it merely goes to show—as one always knew—that statistics depend largely on the base year from which one starts. I should also add that for the year 1986 the figures show a change in the pattern of immigration. Looking at the year 1986, in the table in Social Trends (Table 1.16), one discovers that those patterns have altered. In 1986 there was a net inflow of 37,000 people of which 25,000 were from the European Community; on the whole that is a substantial increase. Only 15,000—of whom 60 per cent., as a I understand it, were dependants; that is, either wives or children—came from the Indian sub-continent.
If the noble Lord, Lord Renton, who has expressed anxiety about numbers above all things, is really anxious about an increase in immigration, I do not think that he should look to the sub-continent of India or to the Caribbean from which it has almost totally stopped. However, he should advise his right honourable friend the Prime Minister not to encourage Turkey to join the European Community as she is reported to have done on her recent visit there. If you want to increase immigration into this country that is a sure way of doing it.
I return to the body of the Bill and to the comments made by the noble Lord, Lord Renton. He said that we had generously admitted immigrants into this country. Of course that is one way of putting it. We actually encouraged them to come here at a time of labour shortage. We encouraged them to come here during the war, and subsequently in post-war years in a period of labour shortage. It may have been generous, but it was also generously in our own self-interest. I do not think we should forget that.
He might also reflect on the history of this country which has been a history of immigration into our shores starting, if you like, with the Normans, Flemings, Huguenots, the Irish and perhaps most recently and most significantly, the emigration from Eastern Europe between 1870 and 1914. In almost every case at the time those people arrived there was resistance within the country. The only history to be written about immigration in this country was written in 1897 by Archdeacon Cunningham who was a great believer in what we now call monetarism—the free movement of goods, labour and capital. His history was meant to demonstrate the advantages which come from immigration. However, he wrote in his last chapter that he suddenly realised of course that he himself was living in an age of immigration and this immigration was quite different from any others. Those people would add nothing to the country. They brought no skills, talked foreign languages and brought no benefits.

1655
I suppose if one looks around this country today and indeed at this House, the benefit that this country has gained by generously admitting that immigration between 1870 and 1914 in our academic, artistic and business life is very difficult to overestimate. I do not believe that "generosity" is the only word to describe the immigration which we have always enjoyed in this country until today.
My reservations about the Bill are simply that it continues a process which has been going on for 25 years. Apart from the 1949 Act which introduced appeals and the 1976 rules which helped the admission of husbands, those 25 years have been years of restrictive legislation. I repeat the conclusion that Mr. Ian MacDonald comes to, that there is no other body of law in this country where the interests of those affected by it have been so unrelentingly ignored and left out of account.
Now that primary immigration is sharply declining, except from the EC, and secondary immigration is also sharply declining, and if indeed further legislation were necessary, of which I am extremely doubtful, the legislation could have moved in the opposite direction to that in which it has moved. It could have included provisions which would have secured and established rights. As the noble and learned Lord, Lord Elwyn-Jones, said, it has instead been wholly restrictive. I do not need to add much to that point because that is the gravamen of the argument against the Bill. Examples are not difficult to find and they have already been mentioned in the course of our debates.
The noble and learned Lord has referred to Clause 2 with its reaction to the ruling of the European Court on discrimination. Instead of levelling up wives to the position of husbands, it levels down the position of husbands to that which wives had before. It is that kind of provision which justifies noble Lords saying that the Bill is restrictive. If it does not restrict and remove, it certainly erodes the right of appeal. In earlier debates I quoted from the report of Sir Roy Wilson, on the basis of which the appeals system in this field was established. It seems to me that to erode the right of appeal is a grave and retrograde step. Nowhere is it more important that there should be a right of appeal established than in the case of refugees from political or religious persecution.
Finally, I revert to a point that I made at Second Reading. Given the declining numbers involved and the debate that we had earlier this week on education and the importance of educational attainment, it seems to me that it is in the interests of this country that the dependants of immigrants, particularly those who come from countries where English is not the mother tongue, should come here as early as possible so that they may learn the English language and benefit from a British education.
To make it more, rather than less, difficult—I go no further than that—for children to join their parents, which is the net result of the provisions in the Bill, is against the interests of those children and the interests of this country in the longer run. It is for those reasons of self-interest as well as of principle that I, my colleagues and others on this side of the House feel that the Bill is an unnecessary, ungenerous
1656
and melancholy measure to see inscribed on the statute book.
5.45 p.m.
Lord Hylton: My Lords, before this Bill leaves the House I should like to say a few words about genuine refugees who reach this country seeking asylum here or elsewhere. This is a small number of people, given the difficulties of reaching this island and the administrative barriers erected by Her Majesty's Government such as visa requirements and the Immigration (Carriers Liability) Act 1987.
I rise with a heavy heart and with a sense of shame and pain. I do so because things are not going right, as I shall explain, and this Bill does little to put them right. Before doing so, let me say that the great majority of immigration officers, adjudicators, civil servants and others who deal with refugees seeking asylum are decent, honest people trying to do a difficult job as best they can. However, the sad fact is that refoulement has occurred recently and is probably still occurring. I fear that it will continue unless the Government take adequate measures of prevention.
It is possible that not all your Lordships are familiar with the French term of art, refoulement. It means that the person who is seeking asylum because of a reasonable and well-founded fear of persecution is sent back to a country where he is at risk. This risk may be one of persecution, of unjust imprisonment, torture and even death. Refoulement may occur either directly by sending someone to the country from which he has escaped or indirectly by sending him to some third country which has not signed and ratified the relevant international agreements, which has little respect for human rights and which may send him on to his place of origin.
When refoulement occurs from Britain, Her Majesty's Government are in breach of their obligation under the UN Convention of Refugees of 1951, the protocol of 1967, the European Convention on Human Rights and various resolutions of the Council of Europe. Furthermore, total disrespect is shown to your Lordships' House. The solemn assurances given in 1971 by the noble Lord, Lord Windlesham, whom I am glad to see in his place, and repeated to me by the noble Earl, Lord Ferrers, on Second Reading (Official Report, 4/3/88; col. 401) are flouted and go for nothing.
This is a very serious matter. I ask what the Government are doing to put things right and to ensure that mistakes do not occur in future. They refused to accept a very modest amendment concerning codes of practice moved by the noble Lord, Lord McNair, at Report stage. They voted down amendments providing for an asylum review board and for rights of appeal in persecution and asylum cases.
I recently sent a list of 10 refugee and asylum cases to the noble Earl's honourable friend, Mr. Timothy Renton, the Minister who has direct responsibility for immigration matters. These cases arose in the last two years and in most of them refoulement occurred either directly or indirectly. In most of them there was no access to the office of the United Nations High

1657
Commissioner for Refugees or to the United Kingdom Immigrants' Advisory Service; neither was legal representation available nor was it possible in most of the cases for an MP to ask for a stay of removal.
The list was not an exhaustive one and there may well have been other cases. It seems clear that the existing safeguards, namely the UNHCR, UKIAS, legal advice, MPs etc., do not now function as they are supposed to. We do not yet know what the new arrangements forecast by the noble Earl (at col. 993 of the Official Report on 12th April) will be. They certainly need to be much better than those we have at present. At col. 994 the noble Earl said:
"a genuine refugee is normally easily identified".
The available evidence shows that is not always so. The proposed limited right of appeal against deportation orders to be provided by Order in Council is unlikely to cover all cases. Will the Government therefore please consult urgently with the relevant bodies to produce a better system? In addition to those already mentioned, the bodies include the British Council for Aid to Refugees, Amnesty International, the Medical Foundation for Victims of Torture and the Joint Council for the Welfare of Immigrants. I trust that consultations will cover the question of detention of refugees seeking asylum, since this seems to be both variable and arbitrary in its incidence. It should also extend to proper and humane treatment for people who may arrive here after long journeys, great sufferings and with little knowledge of English. The recent cases of Mr. Nader Afar-Azad and Mr. Soori Fahad give rise to great concern.
Consultation and thought is therefore what I urge on the Government. Your Lordships may perhaps wonder what individuals can do to improve an existing unsatisfactory situation. The answer is, for those who are willing, to join with Charter '87, an ad hoc campaigning body, in asking for a better and more humane system for handling refugees seeking asylum. I gladly undertake to place copies of the Charter '87 document in your Lordships' Library.
Viscount Buckmaster: My Lords, I rise to support my noble friend Lord Hylton. I have been in touch with individual refugees over the past nine or 10 years. I gave personal asylum to several of them, and I think I can say without hesitation that the refugees I know, who are probably typical of many in this country, are gravely disturbed by the provisions of the Bill. They are particularly disturbed about the erosion of immigrants' rights, the disruption of family life and, perhaps most important of all, the terrible sword of Damocles—that of refoulement—which my noble friend Lord Hylton mentioned so eloquently.
I do not wish to repeat what other noble Lords have said but I should like just to give one example—and I could quote several—of how this refoulement policy can work. I am quite prepared to accept that in many cases the policy works satisfactorily and refugees are able to re-establish themselves in their country of origin. However,
1658
frequently that does not happen. I can think of one particular case of a Ugandan who came to Great Britain seeking asylum. It was about nine or 10 years ago. He had come without the right papers. He had forced his way on to the aircraft without a visa and without adequate funds. Indeed, there was no reason why the British Government should have accepted him.
I intervened at that stage and said that it would be tantamount to signing this man's death warrant if he were to be repatriated to Uganda. The authorities at Heathrow—let us give them credit for this—went to great trouble to ensure that he was accepted by some other country. Eventually, after a great deal of to-ing and fro-ing—telegrams and so on—the Government of Zaire said that they would accept him. He was accordingly put on a plane for Zaire. However, what the authorities did not take account of was that the plane, bound for Zaire, stopped on the way at Entebbe, which is the airport for Kampala.
I suppose they might have assumed that it would be all right and that it was just a normal transit stop. Somehow or other the Ugandan Government had got wind of the fact that the man was on the plane and as soon as it stopped officials came in and arrested him. He was dragged away and imprisoned. He was threatened with death and was in fact tortured; I know that. Somehow or other he managed to escape, so that story had a happy ending. However, I can assure your Lordships that many similar cases have not ended as happily as that. The problem of refoulement is a very serious one indeed. It is probably the cause for the greatest concern among the refugee population. I very much hope that the noble Earl will consider these points and those which have been raised by other noble Lords.
Lord Mishcon: My Lords, my noble and learned friend Lord Elwyn-Jones has asked me to apologise to the House and to the Minister for the fact that he has had to leave before the end of the debate. He has a very important public function to fulfil.
Upon one matter, and unfortunately only one matter, will the House be unanimous as the Bill goes to a further stage before it reaches the statute book. It will be unanimous in acknowledging that throughout the proceedings the noble Earl has behaved as he always does with the utmost courtesy. He has given full consideration himself to the points raised on the many amendments to the Bill but unfortunately—and this is my own surmise—has been stopped from being his merciful self as a result of government decisions.
When I spoke at Second Reading I said on behalf of those on these Benches—and I do not withdraw one word of it—that this is a Bill without a heart and without a soul. I expressed the fervent hope that we in this House would be able to see that it left, in the main, without a body. Unfortunately, the body is the same except for some slight improvements in some spots upon that body which the noble Earl has enumerated. What a lost opportunity! This is the first Bill for 17 years to deal with immigration. The Secretary of State in another place, when dealing with this Bill, spelled out the numbers by which immigration had been reduced over the years and

1659
showed without any doubt that we were no longer at a critical stage. What a lost opportunity for the Home Office to show its other face, not just the face that stops immigration—and all of us have agreed that restriction on immigration is unfortunately necessary—but the face that would be both intelligent and kindly in the sense that it was looking at social problems in our country, especially among the ethnic minorities, and saying, "Well after 17 years we have reached sensible figures. We are now going to see to it that those in our midst who came as strangers will be properly integrated and will have the family life that goes so much towards integration and towards becoming good citizens". Not a bit of it!
Clause 1 of the Bill ratted on a promise solemnly given by the same party in 1971 as a result of an amendment moved in your Lordships' House. The Government are doing that on the basis of a judgment of the European court which says, "You cannot have the provision you have, because you are in fact prejudicing as against a woman, a man, or a man against a woman". The Government looked at that judgment and reacted by saying, "Right, then we will say that neither can come in as a result of the promise we made, enshrined in statute and with the backing of a government undertaking to those British Commonwealth people who were here in 1971 and who are settled here".
Then there are the rest of the clauses—I shall not go through them—which deal with the limitation on rights of appeal. They deal most generously, and properly, by a declaration, with Europeans who happen to marry wives outside the European Community and who come to this country without fulfilling any conditions as to means or as to residence. That could not of course be said in regard to a British subject who happened to marry someone whose citizenship was outside the Community. That British subject has to fulfil certain conditions. Those conditions are ones of residence and means.
The cruellest thing of the lot in this wild, savage world in which we live at this moment—we, who have just seen the end of a terrible hijacking tragedy, possibly an end for which some of us prayed, though we did not pray for it to end as it did—is that we passed an Act a little while ago which states, "If you haven't any documents and a carrier carries you out of mercy, or your documents are not in order, not only will you be sent back, but the carrier will be fined, and fined £1,000, each time. So please, carriers, be careful, won't you, about the people you carry".
If the refugee takes a chance and arrives in this country, most likely in fear of his life, and his papers are not in order and he is sent somewhere else, there is no appeal here; and that in the country which taught the world what justice and mercy ought to be. No, this is not a Bill with a heart or a soul. Those on these Benches for whom I speak mourn the fact that it was ever born, and look with some sadness now that it passes away.
6 p.m.
Earl Ferrers: My Lords, if I did not have such a tender heart, the noble Lord would have moved me almost to tears when at the end of that speech he told
1660
us that the Bill had no heart and no soul and he regretted that it still existed. When the noble Lord spoke, he said with some feeling how terrible it was if a person came to this country and was told, "If you haven't any documents, you will be sent back". I sometimes wonder whether the noble Lord lives in the real world. He knows that if he travels around the world he has to have passports, tickets and—the noble Lord shakes his head, but if he does not do that that is surprising.
Lord Mishcon: My Lords—
Earl Ferrers: My Lords, perhaps the noble Lord will allow me to finish, because he was slightly provocative. I do not blame him for that. It is not much of an excuse if one does not have the documents to say that one should be allowed in. The noble Lord knows as well as all of us that immigration law is highly complicated. He knows as well as all of us that there are people who will try to get round the immigration control law, which is why it is so complicated. If the noble Lord were to take the view that we should allow in people who did not have those documents he knows full well that there would be plenty of people who would take advantage.
Lord Mishcon: My Lords, the noble Earl may be aggressive, but he is always courteous. He has allowed me to reply to him. First, it is not I who am not living in the real world. The noble Earl may not know of the circumstances in which so many people have to leave in a great hurry without their papers being in order. I am not in that position, and hope never to be. I hope that the noble Earl will never be in that position either. I am sure that he will not be.
I was referring not to allowing people in, but to them having a fair right of appeal; to having the right to be heard in this country and to having leave to conduct that appeal themselves while they are here instead of being sent off to another country and told that they can conduct the appeal from there.
Lord Hylton: My Lords, before the noble Earl rises again to finish his speech, perhaps I may urge him to remember that this country had a policy of asylum long, long—perhaps centuries—before it had any policy on immigration, and that those two things are very different.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Hylton, for intervening before I ended my speech, which I thought that I had only just started. I should not wish to detain him unfairly. He and the noble Lord, Lord Mishcon, know that every application is considered carefully before a decision is taken. If appeal rights were granted to those applicants, we should be faced with a welter of bogus applications.
The noble Lord, Lord Hylton, referred to refoulement. He explained, rightly, that under the United Nations Convention on Refugees signatory states are prohibited, except under certain special circumstances, from sending a refugee who has demonstrated a well-founded fear of persecution back to the country in which he may be persecuted.

1661
I was shocked when the noble Lord said that the assurances which my noble friend Lord Windlesham gave during his distinguished period at the Home Office, and even such remarks that I have made, have been flouted. He said that the United Kingdom is flouting the convention. I am surprised at that. The United Kingdom most emphatically does not practise refoulement. We carry out our obligations under the convention. That is a totally different matter from returning to his own country a person who comes here but who does not qualify for refugee status.
There must be a qualification for refugee status. That is different from returning to a third country an applicant who had already found safety. Every signatory state must retain the right to take such action if it is to distinguish between the deserving applicant, whom we all wish to see looked after, and the undeserving applicant.
The United Kingdom meticulously carries out its obligations under the convention. The fact that we have granted refugee status to more than 8,000 people since 1979, as well as—let us remember this—allowing a further 7,000 to stay although they did not qualify for refugee status, demonstrates that we operate that policy fairly.
The noble Lord referred to asylum applicants. Decisions on whether to detain asylum applicants are taken by immigration officers on exactly the same basis as for all passengers about whose credentials there is any doubt. If they are given temporary admission they report back to the immigration service. The problems are difficult. They are bound to be individual. I can assure your Lordships that they are looked after and attended to carefully.
The noble Lord, Lord Bonham-Carter was kind, as one would expect, to apologise when he found that he had made an error. He said that we have always had a policy of immigration in this country, way back to the Normans and the Huguenots. That casts our minds back quite a long way in history. The noble Lord will be the first to recall that there was a little local difficulty between the Scots and the English when they tried to immigrate into other people's countries. There was a pretty fair degree of violence in those days.
We have moved on from then and of course there has been immigration and there will continue to be immigration. The whole purpose of any immigration is that it must be controlled not only for the benefit of those people who live in the country but for those who are coming into the country in order that they should be able to live in peace and harmony. There has to be control and this Bill just seeks to try to provide more control where loopholes have been discovered.
The noble Lord, Lord Bonham-Carter, said that this was restrictive legislation and that the interests of the immigrants were unrelentingly left out of account. I know that he will accept this in the spirit in which it is meant, but I am bound to tell him that the number of written applications which were made to Lunar House in 1984 was 180,000; in 1986 it had increased to 189,000. The number of letters on
1662
immigration matters, other than written applications, which are processed through Lunar House was 213,000 in 1984 and in 1986 it was 220,000. The number of callers dealt with at the Public Inquiry Office in 1984 was 132,000; in 1986 it had increased to 152,000. The number of telephone calls handled by the telephone inquiry bureau was 213,000 in 1984 and 210,000 in 1986. When the noble Lord realises and absorbs those figures, I cannot see that he could possibly say that the interests of the immigrants were "unrelentingly left out of account".
Lord Bonham-Carter: My Lords, perhaps the noble Earl will permit me to intervene. The quotation which I was making was from a lecture on the development of immigration law. Mr. MacDonald, president of ILPA, the Immigration Law Practitioners Association, said, in a survey of the development of immigration law:
"I know of no other body of law especially one affecting human rights and civil liberties as immigration law does, where the interests of those affected by it have been so unrelentingly ignored and left out of account by the legislators and rule makers".
I was simply making the point. I grant you I was making it as proof but it was a remark by someone of authority on these matters.
Earl Ferrers: My Lords, I am not quite certain whether the noble Lord is trying to oil his way out of his commitment. I assumed that he made that quotation in order to support the view which he was putting forward. All I was trying to do was to answer it and to show the noble Lord that a great deal of effort has gone into making quite sure that the immigrants are correctly and properly looked after. Perhaps I can also tell him, because he said that immigration is a necessary part of our life, that 578,000 people have been granted settlement here since 1978. There were about 700,000 applicants every 10 years and about 15,000 appeals. It is simply not true to say that we do not look after people.
We try to ensure that control which is necessary is fair and just. Inevitably, in the process some people will slip on to the wrong side of the line but that may be for a whole variety of reasons. Our job in the Home Office, in Government and in Parliament is to try to ensure that the rules are fair and just. I think that the Bill contributes to that and I am grateful to noble Lords for the parts which they have played.
I had not expected the Bill to be wholly welcome because I know that your Lordships take a variety of views. But those views have been properly expressed and despite what the noble Lord, Lord Mishcon, and others might think, those views have been very carefully considered. I commend the Bill to the House.
On Question, Bill read a third time, and passed, and returned to the Commons with amendments.

Airbus: Government Investment
6.15 p.m.
Lord Bruce-Gardyne Lord Bruce-Gardyne rose to ask Her Majesty's Government whether they are satisfied that their investment in the Airbus 320, 330 and 340 is a safe investment of taxpayers' money.
The noble Lord said: My Lords, let me begin by apologising to your Lordships and in particular to my noble friend for detaining noble Lords at the end of what has been a fairly strenuous week. I hope that my noble friend will not be detained for too long by the matter which I want to raise briefly this evening. It concerns the financing of the Airbus and its possible implications for British Aerospace, the British participant in the Airbus project.
I start by asking my noble friend whether it is correct, as I am led to understand, that the £250 million subvention from the British taxpayer to enable British Aerospace to participate in the A.320, the shorter range version of the family, is in effect guaranteed for repayment on the basis of firm orders and options already obtained for the A.320.
I think one has to note in parenthesis that even the firmest options have a way of sometimes melting away, as we discovered in the case of Concorde a few years back. Nevertheless, I am led to understand that if one takes the firm orders and options already achieved by the A.320, on that basis alone HMG are due to be repaid the £250 million in full in the early 1990s with some 30 per cent. interest.
There are two questions about that. The first need not detain us long, although I think it is fairly serious. I have also heard it suggested that as part of the deal which has been negotiated between HMG and British Aerospace regarding the acquisition of Austin Rover, HMG have agreed to waive the first £50 million of payment towards recovery of the £250 million launch aid on the A.320 which was not contingent upon sales of the aircraft. I am bound to say to my noble friend that if that is the case I should not have thought that it would make it any easier, to put it mildly, to sell the British Aerospace—Austin Rover deal to the authorities in Brussels.
However, the larger question to which I want to devote the greater part of my comments and questions this evening relates to British Aerospace's ability to fulfil its legal obligations as regards repayment of the launch aid of £250 million towards its participation in the A.320 and the £450 million of launch aid subsequently subscribed by the taxpayer, to enable British Aerospace to participate in the A.320 and the A.340.
It is my understanding—and again my noble friend will correct me if I am wrong—that the profile of repayment on the £250 million launch aid builds up steeply. As I understand it, there is no element of royalty due at all on the British Aerospace contribution to the first 75 A.320s delivered to customers around the world. Thereafter, however, the level of payment builds up very sharply until at some point—and perhaps my noble friend can shed some light on this—between the 76th aeroplane and the 600th, it is due to run at the rate of £1 million repayment to HMG for each plane delivered. After 600 have been delivered the rate, as I understand it, drops to £250,000 per plane.
I submit to your Lordships that this represents a pretty formidable repayment profile in the early 1990s. It is no less formidable when one bears in mind that this is the stage at which the A.330 and the A.340
1664
will be coming on stream and for those two longer-range aircraft there are, so far as I am aware, no certainly identified and firmly secured customers as yet in view.
Furthermore we have to look at the impact that the Airbus programme is already having on the British Aerospace balance sheet. For the year to March 1988 the British Aerospace annual report quantifies a loss of £38 million on deliveries of components to Airbus during that period. In addition there is a £180 million provision for exchange rate losses which British Aerospace calculates will occur or may occur between now and the delivery of components to planes currently on order.
When I dared to make my maiden speech on this subject in a debate on these matters early in 1984, I pointed out that at that time the exchange rate for the dollar stood at 1·40 dollars to the pound and that on that basis the prospects for profitable sales of the Airbus looked encouraging. But I asked what would happen if the dollar were subsequently to go up to 2 dollars to the pound. That may have looked at that time like pretty crazy speculation but unfortunately, or fortunately according to the way one looks at it, that has jolly nearly come to pass. I notice that in the latest report of British Aerospace the chairman, Professor Roland Smith, tells us that the provision of £180 million made to cover prospective exchange rate losses on Airbuses already ordered is based on the presumption that the dollar will "strengthen moderately". Those were the words used. From them I take it that since the exchange rate at the time of the compilation of this report was about 1·80 dollars to the pound, it is British Aerospace's calculation that over the next three to four years the pound exchange rate for the dollar will decline somewhat. That may be true but on the other hand it may not be true. I ask my noble friend what will be the implications for the balance sheet of British Aerospace in the early 1990s when its obligations to meet its repayment schedules to Her Majesty's Government materialise, should the dollar/pound rate happen to go in the opposite direction to the one which Professor Roland Smith is assuming?
The next matter to which I wish to refer is the actual construction of the Airbus Industrie Consortium. In his latest annual report Professor Roland Smith remarked that the implications of decisions taken in earlier years by the company with the support of Her Majesty's Government—those words are very important and I shall return to them in a moment—in the development of the Airbus Consortium were now coming through in the company's accounts. He remarked that the board of British Aerospace was seeking to achieve fundamental changes in the Airbus structure and financing arrangements.
I must say that I do not find that remotely surprising, as your Lordships may consider the relationship between Airbus Industrie and the component partners in the enterprise bizarre, to put it mildly. It is my understanding, and again my noble friend will correct me if I am wrong about this, that each of the partners puts in a bid for the price it expects to get for components that it is delivering to Toulouse for assembly in the planes that are to be

1665
ordered. Then a haggle takes place between the partners as to whose price is right. In this way a target price is arrived at for the assembled plane. It is then the duty of Airbus Industrie to go out and sell the plane. If it can sell the plane at the target price, I presume there is no problem. But I ask my noble friend whether he can indicate any single sale which has been made to date at the target price or anything like it.
The truth is of course that sales have been made by Airbus Industrie at vast discounts on the projected target price. So then, as I understand it, the provisional sale agreement is brought back to the partners, who have to decide whether they will scale down pro rata the prices that they have demanded for their components to enable the order to be taken. That seems to me a pretty good recipe for commercial trouble. However, it is also my understanding—and again my noble friend will correct me if I am wrong about this—that British Aerospace, in effect, has with its 20 per cent. of the votes a veto on the acceptance or rejection of any potential order which Airbus Industrie may propose to enter into.
I am not clear that it is entirely appropriate for British Aerospace to complain that Airbus Industrie is accumulating orders which impose the prospect of horrendous losses on the partners in the consortium, although that does seem to be the gravamen of British Aerospace's complaint. Nevertheless I certainly accept that there is much that is unsatisfactory about the construction of the Airbus Industrie Consortium.
We have had the report from the so-called four wise men. It may be helpful to your Lordships if I ask my noble friend whether it would be possible to have a copy of the four wise men's report deposited in the Library because so far we have had only rather limited accounts of what they have suggested to go by. Even so what we have been able to learn about the report does make rather scary reading. It is a picture of jobs being allocated on the basis of nationality, with a particular corner for Professor Franz Josef Strauss, who seems to regard the Airbus Industrie programme as being something akin to an extrapolation of the common agricultural policy—a technique for maintaining for his Bavarian CSU voters the standard of life to which they are accustomed. I must say that that does not seem to me to be a very good way of building an aeroplane.
The four wise men are apparently recommending the appointment of a powerful finance director. No doubt that would help. I notice that the Germans have already laid claim to the job—presumably for one of Herr Franz Josef Strauss's trusties. The four wise men are also suggesting that Airbus Industrie should be turned into a plc—as we would call it—by 1992. That still leaves four pretty crucial years to go before any such evolution would be designed to take place.
The four wise men are further recommending that there should be some kind of credit agency to assist with the achievement of sales, apparently along the lines of the American Export Import Bank. I wonder by whom that would be financed.
I raise a query in passing about what one might call the Boeing dimension. I want to make it quite clear that I am not for a moment arguing that the complaints of Boeing against Airbus Industrie are anything other than the pot calling the kettle black, because I do not believe that they are. Nevertheless I have to ask my noble friend whether in his estimation and judgment it would really be wise for us to face a serious risk—if there were to be a serious risk—of embarking on a war of trade protection across the Atlantic in defence of such a questionable commercial adventure as this. I think that the danger of repercussions has receded because of the weakening of the US dollar but nevertheless it does seem to me that this would be a pretty unsatisfactory casus belli.
Turning briefly to the A.330 and the A.340—the later long range versions—the justification for embarking on those seems essentially to be in order to stop Boeing cross-subsidising its short-range contenders from its virtual monopoly of long-range aircraft; in other words, tackling Boeing's soft underbelly. I understand the thinking behind that strategy. But I wonder whether it is really a strategy calculated to guarantee the security of the return of the £450 million made on behalf of the taxpayer.
Finally, I presume that the essential purpose of our investment of £250 million in the first programme and £450 million in the second programme was to secure jobs in the British aerospace manufacturing industry. It is my understanding that British Aerospace, like its other partners, is increasingly finding it necessary to source components from the Pacific rim, Canada and the United States. I do not criticise them for doing that. It is obviously an essential step towards improving their cost performance. However, is that really why we invested our £250 million and £450 million—to create jobs for the Pacific rim, Canada and the United States?
My right honourable friend the Prime Minister warned us before we embarked on financing those activities that we did not want another Concorde. I do not believe that we have another Concorde on our hands. What worries me is that we might have another RB.211, the aero engine project which the Labour government of the time encouraged Rolls-Royce to embark on for the United States market and which subsequently led to the bankruptcy of Rolls-Royce and its enforced nationalisation. I underline the reference from Professor Roland Smith's report to the involvement of HMG in the project.
I hope that my noble friend and his colleagues make it clear to British Aerospace at all times that the fact that we have made these launch aid provisions does not mean that we are in any sense, as taxpayers, committed to maintaining and sustaining what could prove to be a remarkably dangerous charge on the balance sheet of British Aerospace into the 1990s.
6.35 p.m.
The Earl of Bessborough: My Lords, I am glad that my noble friend Lord Bruce-Gardyne has raised this question. My view of the question is somewhat different from his. To put it briefly, I hope that my noble friend Lord Beaverbrook will be able to answer

1667
my noble friend's question with the word "Yes", or at least a qualified "Yes".
Having helped to launch, with my noble friend Lord Rippon of Hexham, the first Airbus, A.300, I hope that the Government will continue to support the later generation of Airbuses which contain many improvements—above all in electronics—on their mother, the original A.300, which is still a most effective and economic aircraft. When we learn that 40,000 people are employed on Airbus developments in the European Community and that soon 30,000 will be employed in Britain alone, I feel that they are eminently worthy of support by the Government, as well as by the aerospace industry.
It was certainly highly creditable that my friend Sir Arnold Hall, then chairman of Hawker Siddeley, was willing to go ahead with building the wings of the Airbus when, in 1968 when I was a shadow aerospace spokesman, the Labour government with Mr. Benn as Minister for Technology turned down any government funding. I am glad that a subsequent Conservative government, in which my noble friend Lord Rippon and I both served, agreed to assist. When I was a Minister in 1970 I was able to fly again to Toulouse to see the first A.300 prototype.
I regret that due to other commitments I was not able to accompany my noble friend Lord King in taking delivery of the A.320 a fortnight ago. I know that that aircraft will be highly successful. I am sure that we shall be getting 130 per cent. return on the A.320 and that we shall get it earlier on 250 aircraft. I have looked at the matter carefully. On 600 aircraft (which I think is a very possible figure and which refers to firm orders) there should be a 170 per cent. return. As your Lordships know, and as my noble friend has said. Airbus Industrie is committed to repaying the Government.
When we look at the A.330 and the A.340, the outlook seems even brighter, with the prospect of some 1,000 aircraft being sold. Moreover, I am glad to learn that British Aerospace should be cutting costs by 30 to 35 per cent. As I think is accurately reported in the press today, that is to be achieved by the twin-engined A.330 and the four-engined long range A.340 having the same wings, thus cutting millions on production costs and making large reductions on fuel bills. As I understand it, 11 airlines, including North-West Orient, will be ordering those aircraft, which I hope will have not only British wings but also, later on, Rolls-Royce RB.211 engines. Despite the problems at the outset which my noble friend has mentioned, that has proved to be a most effective engine.
I have here an interesting document concerning federal funding of Boeing and indeed of McDonnell Douglas. I could go into that in some detail. However, the hour is late. I visit Washington quite regularly—at least once a year—and I have spoken on the telephone with Washington this afternoon. I cannot believe that the kind of modest funding which the Airbus receives can be criticised. It is very modest, in terms of United States federal funding. After all, the Airbus is the only competition in the world for the two American aircraft manufacturers that I have mentioned. I know from my visits to Washington and
1668
to Seattle how impressive that government support, given either directly or indirectly through the Department of Defense or NASA, is. In my view, Americans have no grounds for criticising support for Airbus by European governments.
I was interested to read an excellent leading article in Flight International of 16th April about the committee of four wise men, which my noble friend has mentioned and which was commissioned by the main partner governments. Perhaps I may tell my noble friend that that report is available in the Library. It may have come there from another place. However, the Librarian was able to produce a copy.
The wise men were charged with reporting on ways in which the organisation of Airbus Industrie and its accountability might or should be altered and how control over costs could be improved. I have been looking at that report, which is dated April 1988. It is a report whose recommendations I would certainly endorse. I spoke yesterday to Sir Jeffrey Sterling who is the British wise man and, as your Lordships know, chairman of P & O. I also spoke to the secretary of the wise men's committee on this matter.
As I understand it, the trouble is that Airbus Industrie is not an industrial company with the accounting responsibilities that apply to most companies in the world. As your Lordships may know, it is what is called a groupement d'interêt économique, which is little more than a headquarters organisation designed to take care of the interests of the partners. It was originally formed to share the risks involved. Now it seems to me there should be a body or company responsible for working out and agreeing on how to share profits. I agree that the best theoretical solution would be to float the organisation on the market as a pan-European limited company, something like a plc or société anonyme.
I hope that a company or a multi-national corporation of that kind or, as the wise men suggest, at least a holding company with national subsidiaries may be formed not later than 1992 when the Single European Act concerning the single internal market in the European Community comes into effect.
In parenthesis, I should like to say that I was most interested to attend a meeting at Lancaster House with Members not only of your Lordships' House and of another place but also Members of the European Parliament.
It seems to me that no time should be wasted in getting legal advisers and financial directors from the four countries together to set up the kind of corporation or holding company that I have mentioned. I hope that some progress in this direction may be made at the meeting in Hanover towards the end of next month. Perhaps my noble friend Lord Beaverbrook will be able to comment on the prospects.
I think that the new Airbuses have a future. I think that they have been and will be perhaps the greatest international aerospace success story outside the United States and that they will prove to be the only competitors of the various Boeing aircraft. I certainly wish my friends in British Aerospace, Aerospatiale, Messerschmitt, Bolkow and Blohm, and indeed my

1669
Spanish friends in CASA, the best of luck with these highly promising aircraft. Speaking personally, I would assure them that these Airbuses are a safe investment of taxpayers' money.
6.45 p.m.
The Earl of Kinnoull: My Lords, I apologise for the discourtesy in not putting my name down for this debate. As my noble friend the Whip in front of me has told me, it is very discourteous. But I am not sure whether it is more discourteous to put one's name down and not turn up than to turn up not having put one's name down. Perhaps the best courtesy is to speak for a short time, and that is what I intend to do.
I am also grateful to my noble friend for raising this very important Question this evening. Like my noble friend Lord Bessborough I take a different stance. Whereas my noble friend seems to be more concerned about the position in which British Aerospace may find itself in the future, I take the view that it is more important in this debate that we look at government support for this truly European project. British Aerospace makes its commercial judgment in the fullness of its knowledge, and I do not wish to comment on the judgment it makes.
The House has many aerospace enthusiasts. I think perhaps the most experienced is my noble friend Lord Bessborough. It was very encouraging to hear from him of his research as to the up-to-date position vis-à-vis Airbus Industrie, and indeed of his continued support which now goes back many years. I add my name to the list of aerospace enthusiasts in this House. It is such a splendid industry for Britain. It has had wonderful achievements in the past. It has a tremendous export record. I think that it is still the third largest industry in the world and certainly the largest in Europe, even if the industries of Germany, France and Spain are taken together.
As we know, the industry is a very large consumer of research and development. The investment it makes takes a tremendously long time to show a return and a profit. We have read a great deal about the imperfections of Airbus Industrie and we know of the four wise men's report. Like other Members, I should be interested if my noble friend can update us on the point which the governments have reached and how soon they will be able to announce a constitutional revamping of Airbus Industrie.
I hope that my noble friend will be able to confirm that the British policy is to continue to regard Airbus Industrie as a long-term and vital European investment. First, it is a truly European project company. Secondly, one must not forget that Airbus Industrie already has a fine record of sales and performance for the airline operators. I think that it is an achievement, particularly in American terms, to find that it is the only real competitive threat to Boeing at the present time in medium and widebodied aircraft. I think that is a tremendous achievement.
I think that it is also an achievement that the US airlines themselves buy the aircraft. I think that it is disappointing that British Airways has only what are in effect the orders to which British Caledonian
1670
was already committed before being taken over by British Airways. To be honest, it has not been very supportive.
I pay tribute to the Government for their support of the most recent project in the form of launch aid given to Rolls-Royce and British Aerospace. However, I am sure that my noble friend will recall that there is very deep concern among equipment companies as to how competitive they will be in the bids for the project. I am sure that my noble friend is well aware that the equipment companies' contribution to a modern airliner represents 40 per cent. of the total cost of the aircraft. Therefore they are very important. British equipment companies rely not only on the companies themselves, but also on subcontractors and thousands of skilled people.
The climate of competition for the projects within Europe is becoming unhealthy. It is known that the German and French governments are supporting their equipment industries to the point that bids are so subsidised that British companies will suffer. I hope that my noble friend will be able to indicate that the Government are both aware of the situation and sympathetic to special consideration for equipment companies in order to give them a chance and offer some support for the heavy research and development costs that are often involved in being able to compete in that way. I look forward to hearing my noble friend's reply.
6.50 p.m.
Baroness Seear: My Lords, I too must apologise for not having put down my name before the start of this debate and also for having compounded my offence by coming in a few moments after the noble Lord, Lord Bruce-Gardyne, had risen to his feet. I must say that your Lordships have got through today's programme with almost unprecedented speed. I was extremely surprised to find that we had arrived at this part of today's business quite so soon. I have no claim whatever to be knowledgeable on the subject of the aircraft industry in general or Airbus in particular. I once worked for the ministry for aircraft production but not in a technical capacity, needless to say, and it was a very long time ago.
The noble Lord, Lord Bruce-Gardyne, obviously feels that this is not—to use a rather overworked phrase—value for money so far as concerns the British taxpayer. He also believes it likely that there is a danger of it becoming increasingly poor value for money. Like the noble Earl, Lord Bessborough, I have studied the report of the four wise men, which is conveniently in the Library, and it confirms a number of the criticisms that have been made by the noble Lord, Lord Bruce-Gardyne. Their description of the structure of the organisation—and indeed it is rather difficult to call it a structure because it seems to be a collection of parts which has scarcely been welded into a structure so far—confirms that it is not of an order that is likely to lead to a successful business enterprise. They point out that there is great need for a restructuring of the organisation in far better and more efficient organisational terms and, as the noble Lord said, a need for a strong financial executive, that is to say, a financial director who will pull together the whole financial side.

1671
Unlike the noble Lord, Lord Bruce-Gardyne, despite those pretty trenchant criticisms, the four wise men are optimistic about the future, provided that certain steps which they recommend are taken along the lines of the rectification of the criticisms to which I have referred. They comment on the technological progress and innovation of Airbus and speak favourably about the fact that it is a genuinely European enterprise.
On reading the report of the four wise men it seemed to me that the real criticism of Airbus was that it was not yet sufficiently a truly European enterprise. They believe that the future of Airbus lies in it becoming very much more a genuinely European enterprise. At the present time it is a system of collaboration between a number of basically national companies which in many cases put national interests ahead of the interest of the development of Airbus.
They make the point, which seems to me to be self-evident if one is attempting to develop a really European enterprise, that appointments should not be made on a nationality quota basis but on the basis of finding the best man to do the job. How on earth can any enterprise be successful unless that is the basic principle on which appointments are made? Similarly, as regards the supply of equipment, they note that the efficiency of the equipment that is being introduced should be the primary consideration rather than thinking all the time of national interests in regard to its provision.
I fully realise that such arguments run counter to the thinking of a number of people in this country, and indeed in your Lordships' House, and to the beliefs of some people who nonetheless call themselves Europeans. However, in many ways the present situation and the report of the four wise men are interesting precisely because Airbus seems to be a prototype of the European enterprise of the future. As everyone knows—or does everybody know?—we shall soon be coming up to 1992 and the single European market. If we are to make a success of the single market and reap its benefits, we must hope and expect to develop enterprises of a kind which are genuinely European.
I venture to intervene in the debate this evening despite my lack of technical expertise in this field because from a political point of view I think it important to point out how vital are such genuinely European enterprises. It is enormously important to be able to obtain the benefits of drawing on the skills and knowledge of Europeans as a whole and operating on the basis of Europe as the major market. That is something towards which we must work.
It is very worth while to invest in a concern of this kind despite the present difficulties if it is to be a way in which we can develop one, and then in other spheres two more, of those enterprises which have all the advantages of being genuinely European. It is for that reason above all others that we very much hope that the Government will not take too much notice of the sensible warnings of the noble Lord, Lord Bruce-Gardyne, and of the adverse comments that were made by the four wise men, but will look a little further ahead and see the value of having enterprises on a European scale which are genuinely European.
6.57 p.m.
Lord Underhill: My Lords, I fully appreciate the desire of the noble Earl, Lord Kinnoull, to raise this matter in view of certain criticisms that have been made. It is far better that it should be brought out into the open through parliamentary procedure rather than that criticisms should be made and not receive any effective answer.
Your Lordships may recall the Question that was asked by the noble Earl in this House on 11th April. I was pleased to note that in reply to my supplementary question the Minister who will respond to today's debate said:
"I can confirm that government support for the Airbus programme is not in question".—[Official Report, 11/4/88; col. 914.]
He went on to say that the report to which reference has been made was being reviewed. That was only 10 days ago but I think it would be helpful if the House could be given some indication of how that review is progressing and the Government's views.
My understanding is that the board of Airbus Industrie is quite prepared to consider any revision of structure that may be considered practical and desirable. The House may remember when I asked my supplementary question on 11th April that I also stated that in view of the criticism by the chairman of British Aerospace, the Government must be involved in any discussions that British Aerospace, as one of the partners, might wish to have with Airbus Industrie.
Like other speakers, I was fully in support of the Airbus project right from the start for various reasons on behalf of my own party. We support it, first, because it is a European venture, which I believe is to be encouraged. Secondly, it presents the only possibility of breaking the monopoly of Boeing and McDonnell Douglas, who I understand produce some 84 per cent. of the the world's aeroplanes. Therefore Europe and other countries—and ours in particular—should be involved in that venture.
I am not an expert on company legal matters but my understanding is that Airbus Industrie is not an enterprise in the ordinary way. It is more of an arrangement between four individuals who are partners. Therefore if it can be formed somewhat differently and the partners consider it desirable, so be it.
Reference has been made to the question of launch aid. I do not want to become involved in the arguments and allegations of Boeing on the subject of subsidy and government financing. My understanding from the outset has been that it was absolutely clear that launch aid for the A.320 was neither a grant nor a subsidy. It was a loan which would be repaid in the ordinary commercial way by British Aerospace on certain terms. Today I am given to understand that no fewer than 486 orders and firm options have already been received for the A.320. I gather that this is an almost unparalleled situation with a production of this kind.
Like the noble Baroness, I am not an expert in some of these matters. We accept advice that we receive from people whom we contact to obtain the information. I am given to understand that if no further orders beyond those 486 are obtained, the

1673
Government will receive a return of at least 126 per cent. based on those orders alone. If further orders for the A.320 are received, the Government's return will be so much greater.
As is known British Aerospace requested £750 million launch aid for the A.330 and A.340. The Government agreed to give £450 million launch aid. I recall that when the Statement was repeated in your Lordships' House, I asked whether British Aerospace was satisfied that it could do the launch with £450 million aid, and not the £750 million that it originally requested. I was assured that that was the position held by British Aerospace.
From the outset it was made absolutely clear that Airbus Industrie wished to have a complete family of large aeroplanes, and that to do otherwise would not give it the proper type of programme. I am assured that 11 airlines have already placed orders for 145 planes in the A.330 and A.340 programmes. If that is so, it would appear that that will be as successful as the production of the A.320. I am assured that already there are 1,100 orders for all the Airbus programmes with 400 Airbus planes flying in service at the present moment. We should all be very pleased with that development.
The question of employment is very important. Various figures have been mentioned. I gather that when we take into account the expectation of Rolls-Royce engines being used on these two new machines, employment in this country will increase to 50,000 people. That is a very high figure and we therefore have to take it also into consideration.
With the present board, every decision taken must be taken by at least an 81 per cent. majority. In view of the 20 per cent. interest which British Aerospace has, it means that it has a considerable voice in what is decided by the board of Airbus Industrie. We were also assured at the time that the launch aid was considered that over and above the 20 per cent. interest the percentage of workshare falling upon British Aerospace would be 28 per cent. Therefore I believe that we have a successful undertaking here. It is one in which we can all take some pride. I look forward to the Minister answering the criticisms that the noble Lord, Lord Bruce-Gardyne, has properly raised, and to being satisfied that if there are any difficulties with British Aerospace it should come to the Government to discuss the matter, or it should discuss the matter with the board of Airbus Industrie.
7.5 p.m.
Lord Beaverbrook: My Lords, we have had an interesting debate this evening and I am grateful to my noble friend Lord Bruce-Gardyne for providing this opportunity to discuss whether the UK's involvement in the Airbus programmes has been worth while, and whether the provision of launch aid to British Aerospace for its share of the development programmes is a safe investment of taxpayers' money.
The Government agreed in 1984 to provide up to £250 million in launch aid toward British Aerospace's costs for developing the Airbus A.320. This fine aircraft already has 483 orders, options and
1674
commitments from 20 airlines, which is more than any other new airliner had received before the date of entry into service. British Airways and Air France have recently taken delivery of their first A.320s, and the aircraft will soon be entering service. The development of the aircraft was carried out on time and within budget and is a great credit to all the partner companies.
The provision of launch aid for the A.320 was the first time that the UK Government have provided financial assistance to British Aerospace for its involvement in Airbus programmes. British Aerospace had previously not received any money from the Government for its involvement in the A.300, the A.310, the A.300–600 and the A.310 improved version. Cumulatively, however, by 1984, when the British Aerospace board needed to take decisions on whether to participate in the A.320, the company's commitment to Airbus programmes was such as to require it to ask the Government to share some of the risk. The Government agreed to do this because civil airliner programmes often stretch over a period of 20 years, at the beginning of which there is a four or five year period when major investment in design and development is occurring before any revenue is received from sale of the aircraft concerned. In addition, British Aerospace had decided to proceed entirely at its own expense with two major new civil airliner programmes, the BAe 146 and the Advance Turbo Prop. Indeed, the agreement reached between the Government and British Aerospace on launch aid for the A.320 required the latter to proceed with development of the ATP at its own expense.
Last May, the Government agreed to provide British Aerospace with up to £450 million in launch aid for the new A.330 and A.340 programmes. The A.330 is a twin-engined medium to long-haul aircraft and the A.340 is a very long-range aircraft.
My noble friend Lord Bessborough is correct when he says that the A.330 and A.340 indeed have a common wing. The press report that he read is accurate on that point. Together these two aircraft will complete the Airbus family of aircraft so that it can compete across the range with Boeing and McDonnell Douglas in all markets except those served by the larger-sized Boeing 747. Total commitments from airlines for these two aircraft already total 145 from 12 customers. These new airliners, which are due to enter service in 1992–93, will help to rationalise existing world air services, enabling airlines to operate with greater efficiency while easing airport congestion. As before, British Aerospace will design and develop the wings required for these new aircraft, building further on the expertise in this area which has enabled them to win a Queen's Award for Technology in the recently announced 1988 awards for their achievement on the A.320.
Some of you will no doubt be be aware that British Aerospace, Airbus Industrie, and their three partner companies in France, Germany and Spain are engaged in detailed discussion with McDonnell Douglas of the United States to see if there is scope for them to collaborate on wide-bodied airliners such as the A.330 and A.340 and the MD.11, and narrow

1675
bodied airliners such as the A.320 and MD.90 series. The governments of the Airbus partner countries again affirmed (at their meeting in Madrid on 12th April) their support in principle for such collaborative talks and have wished them a successful outcome. The UK Government welcome this initiative and hope that it will result in proposals for a collaboration on a commercially viable basis. However, this is a matter for the companies, and governments should not seek to impose artificial deadlines on them.
I should mention the current dispute between the United States Government and the governments of the Airbus partner countries supported by the EC Commission. This dispute mainly concerns the interpretation of the rules of the GATT aircraft agreement on government supports for the aircraft industry. The UK Government and their partners are satisfied that the provision of launch aid for Airbus programmes does not breach these rules.
However, we have been willing to discuss with the US Government a possible tightening of the rules in future. For our part, there has been concern about indirect support given by the US to its aircraft manufacturers through agencies such as NASA and the Department of Defense. Some progress towards agreeing new rules on these matters was made at a meeting of Airbus Ministers and Commissioner de Clercq with the US Trade Representative, Mr. Clayton Yeutter, at a meeting at Konstanz in Germany last month. A further meeting of the same participants will be taking place in Paris in mid-May. The UK Government, along with its partners, genuinely desires to bring this dispute to a conclusion and to avoid the dangers both to the European Community and to the United States if it were allowed to escalate into a trade war.
Turning to the precise question posed by my noble friend Lord Bruce-Gardyne, I would not describe launch aid as a safe investment, but it is a necessary and worthwhile use of taxpayers' money. The development of large civil airliner programmes is undoubtedly risky. As I mentioned earlier, large sums of risk capital are needed at the design and development stage, and revenues from sales are not received until several years after a programme is launched. The pay-back period can then extend for 10, 15 or even 20 years. The world market is highly competitive and until recently has been dominated by US companies, notably Boeing.
In all, the risks have been too great for one European company to take on its own, and this is why Airbus Industrie was created. Even so, European companies have all needed support from their governments, the others to a greater extent than BAe. BAe themselves, although they tried both in the case of the A.320 and the A.330/A.340, were not able to find banks or other financial institutions in the private sector willing to share in their risk without a requirement for guarantees from the company itself or from the Government that loans made would be serviced and repaid. This, and the fact that BAe would be financing the production stage on its own, was one of the main justifications for launch aid.
I can confirm that the noble Lord, Lord Underhill, is correct when he says that launch aid itself is fully
1676
repayable and the arrangements are designed to provide the Government with a real rate of return on their investment, both in the case of the A.320 and the A.330/A.340. In the case of the A.320, £50 million of the launch aid is repayable in fixed instalments beginning on 1st January 1990.
I would say to my noble friend that it is not the case that the Government have agreed to forgo the repayment of any element of Airbus launch aid. Launch aid is an entirely separate and unlinked issue and has no connection with the arrangements for BAe's purchase of the Rover Group. The rest of launch aid is repayable by means of levies on sales of aircraft. In the case of A.330/A.340, all the launch aid is repayable by levies on sales of aircraft. Recovery of the Government's investment is therefore dependent on the number of aircraft sold. The level of the Government's rate of return and other details about the levy arrangements have to remain commercially confidential.
Detailed studies were carried out by BAe before it submitted its application for launch aid for the A.320 and the A.330/A.340 to satisfy itself that the programmes were viable if government assistance were received. Thereafter, the Government, before deciding to give launch aid, carried out in each case a thorough appraisal of the market forecasts, the technical feasibility, financial viability and the wider economic benefits of the programmes. The subsequent progress of the programmes is also carefully monitored. Having said that, there is no guarantee of success, and much depends on what actually happens in the marketplace.
My noble friend Lord Kinnoull asked me about launch aid for equipment manufacturers. Perhaps I can refer him to the answers from which the noble Lord, Lord Underhill, quoted, when I responded to a Question on this subject in your Lordships' House on April 11th.
Many of your Lordships will be aware that the fall in the value of the US dollar which occurred last year, and which has persisted this year, has created major problems for Airbus Industrie and its partner companies, as the prices of Airbus aircraft, as in the case of other airliners, are denominated in US dollars. British Aerospace recently announced a net loss after tax of £110 million for 1987, following a £320 million provision for losses on civil aircraft sales attributable to the falling dollar. About half of this special provision was due to losses on its Airbus business. If the value of the dollar remains at present levels, these problems will continue. Senior British Aerospace representatives have discussed with my department the effects on the company's Airbus business of the decline in the dollar, and talks are expected to continue. However, there is no easy solution to the company's problems.
One of British Aerospace's main concerns is that Airbus should become more competitive and profitable. That is also the Government's goal. That is why Airbus Ministers and Airbus Industrie and its partner-companies have welcomed the report of the so-called wise men on Airbus organisation which addresses these concerns.

1677
The wise men were asked by Ministers of the four Airbus countries last November to report to them on possible improvements to the management system of Airbus. The UK member of the group was Sir Jeffrey Sterling, Chairman of P&O and special adviser to my noble friend the Secretary of State for Trade and Industry. The report was submitted just before Easter, and the Chancellor of the Duchy of Lancaster attended a meeting of Airbus Ministers in Madrid on 12th April, at which the Ministers approved the principles underlying the report as a basis for future discussion and invited Airbus Industrie and the partner companies to put forward proposals and a precise schedule in order to put the new organisation in place before the end of 1988.
My noble friend Lord Bruce-Gardyne mentioned a press report about the German industry seeking to nominate someone for a new post of finance director of Airbus Industrie. The wise men said that posts should not be awarded to particular nationalities. The new structure for Airbus Industrie and the question of who should fill any top post is a matter for consideration by the presidents of the partner companies in the Airbus consortium. British Aerospace will have a full say in this. I would agree with the noble Baroness, Lady Seear, that it is of paramount importance that the best man is found for the job in question, at whatever level and whatever post in the Airbus organisation.
I would also say to my noble friend Lord Bessborough that at the meeting in Hanover on 5th May Ministers expect to receive proposals from the partner companies on the implementation of the
1678
report. The wise men have said that consideration of turning Airbus into a plc should be an option from 1992 onwards.
As my noble friend was able to tell us, copies of the report have been placed in the Library and are available for your Lordships. In the conclusions of the report, the wise men remarked that we should not allow present problems, whether inherent in Airbus or external, to detract from the impact of one of Europe's most important joint ventures, or cast doubts over its future. Deliveries of Airbus aircraft would triple or quadruple over the next few years. Having already won a significant place in the market (15–30 per cent.) and having as a result less need than formerly to achieve sales at the same rate as before, it should be possible to achieve a break-even point over the next five years, particularly for the A.320, provided that the new management structure for Airbus is rapidly implemented, leading to increased competitiveness, substantial reductions in programme costs and increased efficiency. The wise men's final comment, which strikes the note on which I should like to end my speech, is that through Airbus, Europe is now soundly established in commercial aerospace.

Dartford-Thurrock Crossing Bill
Reported from the Select Committee with amendments; Bill recommitted to a Committee of the Whole House.
House adjourned at twenty minutes past seven o'clock