Lords Sitting of 14 June 1989

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

NHS Policy Board: Composition
Baroness Cox Baroness Cox asked Her Majesty's Government:
Whether they will reconsider the omission of the chief nursing officer from the National Health Service Policy Board.
Lord Henley: My Lords, the composition of the NHS policy board reflects the desire of my right honourable friend the Secretary of State for Health for independent advice about the determination of policies for the NHS. Members were chosen not to represent any particular groups of NHS staff but to bring wider management perspectives to bear on the setting of strategy for the NHS.
Baroness Cox: My Lords, I thank my noble friend for that Answer, which I am afraid I do not find very encouraging. Is he aware that nurses comprise nearly half the workforce of the National Health Service? Is it not inept at best, and, I am afraid, insulting at worst, to exclude from membership of such a key policy-making body anyone with direct experience of nursing, particularly as a shortage of nurses will be one of the most acute problems facing the National Health Service over the next few years?
Lord Henley: My Lords, I am aware of the fact that nurses comprise around half the employees of the National Health Service. However, the composition of the policy board is intended not to be representative of health service interests but to bring together a group of people who can provide a range of specific contributions to the board's role of determining strategy for the National Health Service. An essential nursing contribution to the management of the NHS will be made through the management executive.
Lord Hunter of Newington: My Lords, one reads in the newspapers that the chief medical officer is in attendance at the policy board by personal invitation. Will the Minister tell us whether he represents the interests of the nurses or the medical staff? Or would the policy board prefer not to have him there at all?
Lord Henley: My Lords, the chief medical officer is appointed to the policy board not as chief medical officer but for his personal attributes. He was appointed because of his wide and valuable experience in the spheres of epidemiology and public health, and not ex officio as chief medical officer.
Lord Molloy: My Lords, is the noble Lord aware that all the great professional organisations of our
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National Health Service want the chief nursing officer on the policy board? Why are the Government resisting the views of these top-flight specialists? Can we have some valid reasons and not the lame excuses that he has given up to now?
Lord Henley: My Lords, I have given a perfectly good explanation. The policy board is not there to represent sectional interests. The role of the chief nursing officer, Miss Poole, is in no way diminished. My right honourable friend was surprised at suggestions that her position and authority were diminished by not being appointed to the policy board.
Lord Campbell of Alloway: My Lords, is my noble friend aware that there is genuine concern about the wisdom of the policy of total segregation of the administrative arm? Is there any valid objection in principle to having the chief nursing officer to assist in the administration? Surely one ought to be flexible about something regarded by people of all political persuasions as so important.
Lord Henley: My Lords, there is not total separation between the two. The policy board will agree with the chief executive of the management executive on the annual statement of key aims and objectives of the National Health Service. The executive will then report back to the policy board. The chief nursing officer will not be on the policy board; nor will anyone be on it ex officio other than my right honourable friend and his colleagues, the Permanent Secretary and the executive of the management executive. The deputy to the chief nursing officer will be on the management executive.
Baroness Seear: My Lords, does the noble Lord agree that there is all the difference in the world between being asked as an executive to comment on and explain how one will implement a policy which has already been formulated and being in on the formulation of the policy? It is perfectly arguable that one should not have people in a representative capacity, but one needs the knowledge in policy formation that only a professional nurse can bring.
Lord Henley: My Lords, the policy board is there to advise my right honourable friend the Secretary of State. He will also receive advice from the management executive. On the management executive we will have a representative of the chief nursing officer.
Lord Dean of Beswick: My Lords, is the noble Lord aware that his answers clearly indicate that the nurses will have no input into this area? Is it not strange that the advice of three prominent industrialists seems to be more eagerly sought than the views of the nurses who are a tremendously vital component of the health service? Will the noble Lord take this back to the Government and ask them to reconsider the matter in the interests of the patients and all concerned?
Lord Henley: My Lords, my right honourable friend will certainly read what the noble Lord has

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said. He implies that this is a kick in the teeth for the nurses. It is not. No one could value the nurses or the nursing profession more than my right honourable friend, and no one could value more the advice which the chief nursing officer gives to my right honourable friend. He will continue to take her advice into account.
Lord Ennals: My Lords, if that is the case and the Secretary of State takes her seriously, why is she not on the board? Can there be any logic in deciding to have the chief medical officer but saying that he does not represent the medical profession? One could ask—I shall not do so—in respect of all 18 members of the board, "who do they represent?" and "why were they chosen?"
From the exchanges on the Floor of the House this afternoon does the noble Lord not recognise that there is deep concern on all sides about this matter? Rather than simply asking his right honourable friend to note what has been said, will he put to him the views of the House? Although the noble Lord says that this was not intended as a slight to the nurses, can I assure him, as the noble Baroness has done, that all nurses take it in that light? Is it not a bad thing for the National Health Service that people who work for it and give it their dedication, commitment and skills should feel that they have been kicked in the teeth? That is how they feel.
Lord Henley: My Lords, I have said that nurses are not being kicked in the teeth. I hope that the nursing profession will take note of that. I think the noble Lord possibly misunderstands the role of the chief nursing officer and that of the chief medical officer. Neither is there to represent professions; they are there to give a lead to the medical and nursing advice used by the department. The noble Lord knows that perfectly well.
As I said, the chief medical officer has not been appointed in that capacity; he has been appointed for the personal contribution he can make. The noble Lord will understand that I cannot comment upon the personal reasons for which the chief nursing officer in her own right, and not in her capacity as chief nursing officer, was not appointed. It would obviously not be proper for me to do so.
Baroness Elliot of Harwood: My Lords, I find the Minister's reply most unsatisfactory. Who appointed the members of the National Health Service Policy Board without including the chief nursing officer when nursing is the most important—or, possibly the second most important—aspect in the National Health Service? It seems absolutely crazy.
Lord Henley: My Lords, my right honourable friend appointed the members of the policy board. He chose to appoint the chief medical officer but, as I have already stated, not in his capacity as chief medical officer.
Lord McCarthy: My Lords, the Minister is making the situation worse for himself. He says that the personal attributes of the chief medical officer get
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him on the board and that the personal attributes of all industrialists also get them on the board. However, he then says that the personal attributes of the chief nursing officer actually keep her off the board. Does he really mean that?
Lord Henley: My Lords, it is possible that I expressed myself rather badly. However, I am sure that noble Lords would not expect me to discuss the merits of individual candidates for the policy board in this way. As I said, the Secretary of State has expressed every confidence in the chief nursing officer. That is all that it is proper for me to say on the matter.
Baroness McFarlane of Llandaff: My Lords, would not the Minister agree that nurses have a contribution to make to the policy of the National Health Service which is far broader than their narrower sectional interest? Indeed, they have an intimate acquaintance with the National Health Service and the needs of patients. It is a contribution which is complementary but distinctive from medicine. In view of that contribution to policy, would the Minister agree that there is a lamentable lack of expert opinion on the policy board?
Lord Henley: My Lords, I do not accept that there is a lamentable lack of expertise on the policy board. I stated that there was a representative of the chief nursing officer on the management executive and that that executive will feed advice through to the policy board.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord clarify one point? What part of the United Kingdom will the new policy board cover? Will it apply to England only, or will it apply to Scotland, England and Wales? Further, in the event that it covers only England, why then are Welsh and Scottish members on the board?
Lord Henley: My Lords, so far as I am aware the board covers the whole of the National Health Service. I am not, however, aware whether there are any Welsh or Scottish members on the board. But, as I said, the board is not there to represent individual interests.

ILEA: Disposal of Playing Fields
2.46 p.m.
Lord Orr-Ewing Lord Orr-Ewing asked Her Majesty's Government:
What steps they have taken and intend to take to prevent ILEA selling off playing fields, including 20 acres of Raynes Park, for building developments.
Viscount Davidson: My Lords, each local education authority is responsible for providing playing fields for its schools and colleges and for decisions about surplus facilities. In the special circumstances of ILEA, the authority is required to obtain my right honourable friend's consent to

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disposal of property. This ensures the retention of sites required for educational purposes by an inner London borough. If, as was the case with Raynes Park, no borough needs the site, the ILEA is responsible for its disposal, and its future use is a planning matter for the local borough council.
Lord Orr-Ewing: My Lords, is my noble friend aware that there is very wide interest in this playing field and others which are near our big cities, especially those near London? Further, as questions have been asked in both Houses from all quarters in support of some manner in which this open space could be held for recreation and for sports, would it not be wise to take up the suggestion made by the London Playing Fields Society in a letter to the Department of the Environment that ILEA playing fields, if not others, might be listed immediately under the auspices of the Government while the matter is sorted out? Is my noble friend further aware that it would be a shame if we did not reserve these spaces in highly built up areas or on the fringe of London for future generations? In that way we could get our young people off the streets and on to playing fields undertaking organised sports.
Viscount Davidson: My Lords, we still expect that the playing fields will not go out of use as a result of the abolition of ILEA. However, the authority has declared a number of playing fields, nearly all located outside inner London, surplus to educational requirements. In the case of Raynes Park, all the inner London boroughs have agreed with the assessment.
Lord Boyd-Carpenter: My Lords, can my noble friend explain why it is that the forthcoming dissolution of ILEA should suddenly make these playing fields surplus to requirements when they have been needed over the past few years?
Viscount Davidson: My Lords, it is because such fields will now come under the control of borough councils and those councils will have different plans. That means that playing fields in the future will probably be nearer to those who use them.
Lord Renton: My Lords, bearing in mind that we have a green belt policy which surrounds London with open fields—or at least to a great extent—are we really to abandon the open spaces in London itself as easily as this?
Viscount Davidson: My Lords, we expect that playing fields will not go out of use. On the basis of borough bids for sports facilities, including those declared surplus by ILEA, it seems likely that more property will be brought into sports use as a result of its abolition.
Lord Pesten: My Lords, following yesterday's disaster on the playing fields of Headingley, will the Government take seriously the need to keep playing fields in existence as playing fields? Am I not right that, given the new Education Reform Act, the Secretary of State cannot prevent the London boroughs getting rid of playing fields? Following
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that, and in the hope that the noble Viscount has some good news, can he tell us whether the water sports facilities at Raven's Ait, which is an example of what I have in mind, will be preserved?
Viscount Davidson: My Lords, I am not sure whether that comes under the heading of "cricket" or "rowing". The water sports centre at Raven's Ait to which I think the noble Lord is referring will no longer be used by ILEA and it applied to my right honourable friend for consent to dispose of it. It was given consent and has sold it to the Royal Borough of Kingston, which I understand is committed to retaining the site for educational and recreational use.
Baroness David: My Lords, is not the reason for ILEA having some surplus playing fields that the number of children in London has substantially declined? Is it not also because it has only £11 million for the maintenance of buildings, and it desperately needs the cash, of which the Secretary of State has kept it so short?
Viscount Davidson: My Lords, I believe that we are making a generality out of an individual case. I do not see many other playing fields going the same way as Raynes Park. ILEA owns some half-a-dozen large sports centres outside inner Landon. It has taken a number of them out of use because of the time taken to ferry pupils to them and has provided alternative facilities closer to the schools. ILEA has sought to find ways to keep such centres in recreational use and is in discussion with the outer London boroughs and sports bodies to that end. I hope therefore that few fields will need to be sold on the open market.
Lord Orr-Ewing: My Lords, will my noble friend consider listing Raynes Park, as we seem to have got into a muddle and are legislatively inhibited from taking action? Why not put a single-clause Bill through Parliament? He would have the support of all sides of both Houses. It would not take long and it would not slow up the Government's machine. It would be a simple answer. Future generations might benefit a great deal and thank us for so doing.
Viscount Davidson: My Lords, that is an interesting suggestion which I shall of course pass on to my right honourable friend.

The Bank of England and Privatisation
2.52 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
Whether, and if so when, they propose to privatise the Bank of England.
Lord Strathclyde: My Lords, the Government have no plans to privatise the Bank of England.
Lord Ezra: My Lords, I am obliged to the noble Lord for making it clear that the Government do not at present propose to privatise the Bank of England and that there are limits to their

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privatisation programme. Does he, however, agree that the time is now ripe to re-examine the Bank of England's role, particularly with regard to its relative independence, especially in the light of the new conditions which will arise in Europe with the creation of the single market? While I accept that the Bank must inevitably act as the Government's agent in many respects, is it not desirable that it should have greater independence in other respects along the lines of the Federal Reserve Board and the Bundesbank?
Lord Strathclyde: My Lords, that is an interesting proposal which I shall put to my right honourable friend the Chancellor of the Exchequer. The differences between the Bundesbank and the Bank of England are perhaps not as great as they appear. I wonder whether the noble Lord would welcome the removal of ministerial accountability for the Bank of England were his proposals to be put into effect.
Lord Bruce of Donington: My Lords, I welcome the Government's acquiescence in the validity of the Bank of England Act 1946, which gives them powers of general direction over its activities. Will the noble Lord clarify the position, particularly in view of the fact that the governor has the right of private audience with the Prime Minister? Will he tell the House what would happen if the Prime Minister were to give one set of directions to the governor and the Chancellor of the Exchequer were to give a different set?
Lord Strathclyde: My Lords, that is, as the noble Lord suspects, a completely hypothetical situation and one that is unlikely to arise in the near future.
Lord Barnett: My Lords, could we take it that the reason why the Government do not propose to privatise the Bank of England is that they see no good reason to do so? If that is the case, does it represent a major change in government policy, given that they have never before needed good reason for privatising anything?
Lord Strathclyde: My Lords, I disagree with the noble Lord. The Bank of England works well with its existing system. We believe that the Government have a clear resoponsibility to maintain the currency and avoid inflation through their monetary policies.
Lord Jenkins of Hillhead: My Lords, is it, however, on the whole the Government's view that the Bank of England should belong to the more independent group of central banks, including the two mentioned by my noble friend Lord Ezra and the Swiss Federal Bank, or that it should incline to the group of more supine central banks of which the Bank of France is the outstanding example?
Lord Strathclyde: My Lords, as I said in reply to an earlier question, we have no plans to change the existing situation; but, as before, I shall put those suggestions to my right honourable friend the Chancellor of the Exchequer.
Lord Morris: My Lords, is my noble friend aware that his original Answer will be welcomed by many people, not least when one considers the important role that the Bank of England plays as the nation's banker?
Lord Strathclyde: My Lords, I am glad that my noble friend welcomes my reply.
Lord Hatch of Lusby: My Lords, in answer to my noble friend Lord Barnett the Minister said that the Government believe that the Bank of England's present situation is necessary to counter inflation. When will it do so? Is it helped or hindered by government policy? As the inflation rate is now rising, does that mean that the Government will again use the Bank of England to raise the prime interest rate?
Lord Strathclyde: My Lords, the noble Lord is going far off the Question. I said that the existing situation of control of the Bank of England works well and that the Government have a clear responsibility to maintain the currency and to avoid inflation.
Lord Cledwyn of Penrhos: My Lords, is the Minister aware that we on this side of the House welcome the Government's acceptance that in matters of the first importance public ownership is best.

NHS Research Needs
2.58 p.m.
Lord Nelson of Stafford Lord Nelson of Stafford asked Her Majesty's Government:
How the research needs of the National Health Service will be met by the new management executive, given the membership which was announced on 22nd May.
Lord Henley: My Lords, the Government will shortly give a full and positive response to the Select Committee's Report on Priorities in Medical Research, which dealt with the research needs of the NHS. The response will explain how the management executive will ensure that the needs for research of NHS management will be properly assessed and reflected in the Department of Health's arrangements.
Lord Nelson of Stafford: My Lords, I thank my noble friend for that reply, which I must say I found rather disappointing. Are the Government aware that there is deep concern that research interests are not directly represented on the new National Health Service Management Executive? Is he also aware that the Medical Research Council supports such an appointment? In view of those facts, will the Secretary of State consider the early appointment of such a member to the National Health Service Management Executive?
Lord Henley: My Lords, I am aware of the concern. The management executive recently appointed by

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my right honourable friend is considering how best the functions which my noble friend would assign to a director of research could best be performed within the executive and for that matter at all levels within the National Health Service. My right honourable friend understands the case for those functions being performed. One of the current directors might be given responsibility for research.
Lord Ennals: My Lords, has the Minister studied the evidence given to the Government by the Medical Research Council? It included the statement that,
"The proposals in the White Paper could lead to a fragmentation of the NHS, making it more difficult… to mount"
the necessary research studies. Does he recognise the extent of the concern and the fears expressed by his noble friend? Will he take steps to give a reassurance about this?
Lord Henley: My Lords, the noble Lord will know that I gave him a reassurance on about 19th April regarding the commitment of Her Majesty's Government to research, as set out in the White Paper. I reiterate that commitment, as expressed in paragraph 4.30, that we are fully committed to maintaining the quality of medical research. We shall provide the powers necessary for all parts of the National Health Service to continue to be involved with research and central funding for the service cost of that research.
Lord Ennals: My Lords, is it not quite extraordinary after such an assurance that no person involved in research has been appointed to the management board which we were discussing earlier? Would not that have been the logical way to give some indication of government support?
Lord Henley: My Lords, I understand the noble Lord's worries. However, as I said, the management executive, as recently appointed, will consider the matter and see how it can best be resolved.
Lord Hunter of Newington: My Lords, is the Minister aware that, following the report of the Croham Committee and the setting up of the Universities Funding Council, it was realised that the important area in the clinical medical schools was that grey area with the knock-for-knock principle operated between two departments of government? That was nearly two years ago. Can he confirm what we understand from the newspapers, that there has been no report from the senior civil servants about how the matter is to be resolved between the two departments of government? It is a matter of the greatest importance to clinical research in the National Health Service.
Lord Henley: My Lords, I cannot confirm that but I shall certainly bring it to the attention of both my right honourable friends.
Baroness Lockwood: My Lords, in view of the publicly stated opinion of the Secretary of State that it is better to introduce management changes into the National Health Service without pilot experiments,
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and that it show signs of weakness if what we are doing is rushing off to get academics to advise us, do Her Majesty's Government think that research into the health services has any place at all in the National Health Service?
Lord Henley: Yes, my Lords, of course I do. I have stated quite clearly that Her Majesty's Government remain committed to research within the National Health Service.
Lord Peston: My Lords, may I ask the noble Lord, when he considers questions of research generally, whether he will convey to the Secretary of State the enormous importance which some of us attach to research in psychiatry? Will he convey to his right honourable friend how disappointed we are to hear that the general practice research unit at the Institute of Psychiatry at the Maudsley Hospital is no longer to be supported by his department, despite the enormous importance of its work?
Lord Henley: My Lords, I am afraid that I shall not be able to respond to the individual case which the noble Lord mentioned. However, I shall write to him and bring the other matters to the attention of my right honourable friend.
Lord Rea: My Lords, is the noble Lord aware that your Lordships' Select Committee which examined the research needs of the health service received convincing evidence that, if expenditure on health service research, currently running at 0.1 per cent. of NHS expenditure, were to be increased to 0.3 per cent., improvements in efficiency and effectiveness could be achieved which would vastly outweigh the cost of that research? Does he realise—I am sure that he does—that many industrial concerns think that 5 to 10 per cent. of turnover is a reasonable amount to spend on research and development? Does that not back up the suggestion of the noble Lord, Lord Nelson, that an eminent and widely respected scientist should be appointed to the management executive of the NHS?
Lord Henley: My Lords, obviously the Government will deal with the suggestions of the Select Committee in their published response. With regard to the adequacy of research funding, the Medical Research Council, the main body that receives government grants for medical research, has seen its budget rise from £150 million in 1988–89 to £176 million in 1989–90. That is an increase of 12 per cent. The health department's own research budget has gone up from £28·5 million to over £35 million, an increase of 25 per cent.
Baroness Robson of Kiddington: My Lords, does the noble Lord agree with me that aJl of us in this House are worried that there is no member with practical research experience in the top management tier and that many of us feel worried that the Government are relying purely on voluntary research contributions? At the moment voluntary research money far exceeds the Government's contribution to the MRC.
Lord Henley: My Lords, I shall convey to my right honourable friend the worries of the noble Baroness and of other Members of the House. I can only reiterate the commitment of Her Majesty's Government to research. I should also in passing say that we are very grateful for all the voluntary funds that go to research.
Lord Denham: My Lords, perhaps the noble Countess will forgive me intervening for one moment. We have spent 29 minutes on four Questions and perhaps the House might feel that after she has asked her question and my noble friend has replied, we might go on to the next business.
The Countess of Mar: My Lords, may I ask the noble Lord whether the Government have not learnt a lesson from the last National Health Service reorganisation after the Griffiths Report? In that reorganisation managers and chairmen of regional and district health authorities were imported from industry. They had no conception of what it was like to work within the National Health Service. Is it not time that the Government realised that the health service needs the experience both of the researchers and—to go back to the Question of the noble Baroness, Lady Cox—the nurses rather than of people who have been in Sainsbury's, Marks and Spencer's or whatever?
Lord Henley: My Lords, I am not quite sure which question I am supposed to be answering. As regards the policy board, which was the first question, we have brought in the people whom the noble Countess mentioned for their business expertise and their strategic vision for the National Health Service.

Committee for Privileges
3.6 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, that the Lord Wilberforce be appointed chairman of the committee for the consideration of the petitions in respect of the Barony of Grey of Codnor.—(The Chairman of Committees.)
On Question, Motion agreed to.

Brewing Industry: MMC Recommendations
3.7 p.m.
Lord Kimball Lord Kimball rose to call attention to the recommendations of the Monopolies and Mergers Commission in respect of the brewing industry and to the problems which arise in connection with these recommendations; and to move for Papers.
The noble Lord said: My Lords, I am the grandson of a brewer but I have no knowledge of the industry beyond that which I suspect most of your Lordships have—namely, that we all know what makes up the best communities in Great Britain. I do not wish to argue my case on rural communities alone. I think
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also of groups within towns which hold together and live as proper communities.
What makes those communities work? It is the presence of the parson, the pharmacist, the physician, the policeman, the postmistress, the priest, the primary schoolteacher and the publican. The list is alphabetical; we all have our own priorities. Today I wish to look in particular at the fate of the publican. After all, pubs are popular. British pubs are popular and unique to Great Britain, I might almost say to England, because there is something special about the English pub. Pubs provide the opportunity for our population to enjoy their most popular form of relaxation after watching television.
The whole question of the public house has been of some concern ever since my noble friend announced that he was minded to accept Recommendation 12.129 of the Monopolies and Mergers Commission report. It suggested that no major brewer should be allowed to retain more than 2,000 on-licensed outlets. I wish today to follow this recommendation to its logical conclusion, and in so doing pay a special tribute to my noble friend the Secretary of State for Trade and Industry, who himself has been very keen to hold the debate. With the co-operation of noble Lords opposite we have succeeded in arranging a debate before my noble friend has made up his mind on the extent of the recommendations of the Monopolies and Mergers Commission which he will ask the House to implement. I am very grateful for his assurance that he has come here today to listen before making up his mind. I am quite certain that imprinted on the heart of my noble friend is "1992"—rather like "Calais" in the case of someone else. That major factor has not been considered by the Monopolies and Mergers Commission.
We really must face up to the fact today that in 1992 we shall release the forces of competition throughout Europe. Only the fittest will survive. There will be emphasis on economies of scale within the European Community. We need strong brewing companies to survive in that atmosphere. To dismantle them at this stage makes no sense whatever.
We have won the argument in Europe on the harmonisation of excise duties. Some people may consider that unfortunate. However, the fact remains that Great Britain will remain the country with the highest rates of excise duty. Our neighbours in Belgium and France have a very low rate of duty and Italy has none. The single market requires the removal of all fiscal frontiers. If tax control at the border goes, what will prevent drink purchased at low rates of duty flooding into this country? This is no time to weaken the brewing industry. That point was omitted by the Monopolies and Mergers Commission.
If my noble friend is minded to implement the recommendation on the 2,000 pub limit, let us consider what will happen. The industry has only two choices. It can keep its pubs and sell its breweries, or it can put 22,000 pubs on the market at a stroke. American, Japanese and Australian brewers are waiting in the wings to buy up this country's brewing capacity. They understand about

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monopolies. In Australia one brewer has 98 per cent. of the home market. I do not believe that noble Lords are opposed to foreign ownership as such, if brought about by natural market forces. However, what I find quite unacceptable is that a Conservative Government should propose the dissolution of the brewers' estates and bring it about by regulation and interference.
A very charming letter has been delivered to all your Lordships. It was sent to the Clerk of the Parliaments who forwarded it to me. Mr. Burbridge-James, who lives on the South coast, states that, having fought for his country in the last war he invested £100 in each of the three major brewers which distributed beer in his area and whose beer he could enjoy. Mr. Burbridge-James states that, as a pensioner, the income from the holdings, which have grown in strength, is essential in maintaining his standard of living.
However, the important point in the letter occurs when Mr. Burbridge-James asks:
"What kind of society is it that will forcefully take what is legitimately mine and hand it over to others to pursue the same trade"?
We are not only here in Parliament to represent consumers' interests; we also have a duty to investors and savers in the industry. We seem inclined to forget that. In addition to the investors and the savers in the industry, we also have a duty to the people employed in the industry. Between Watford and Warrington, right across the centre of the Midlands, there are 27,000 brewery employees. I believe the noble Baroness, Lady Fisher of Rednal, has some more up-to-date figures from the Transport and General Workers' Union. What will happen to the British hop industry if our breweries are taken over by foreign companies?
The other alternative to the brewers retaining their estates but selling their breweries is that 22,000 pubs will be put on the market at a stroke. That will be a major loss to many communities in terms of losing a social centre. Many pubs are economically non-viable; they are just social centres. It is no good thinking they will remain pubs. The property developers will descend on them like vultures. Attractive corner sites in city centres will not remain as licensed premises; they are far more valuable for property development. We shall lose a very large number of Britain's public houses if the second alternative occurs.
It is interesting that although these drastic proposals are made in the report, no one has found any real abuse of power. The report states that 75 per cent. of public houses are owned by 6 per cent. of brewers. However, that is hardly a monopoly when the biggest brewer of all only owns 22 per cent. of all pubs. There is no monopolistic situation. Despite what I am afraid I can only describe as a rather crude attempt last week by the department to try to split the united front that has been retained by the six major brewers, the 52 regional brewers and the 150 micro-brewers, they are all absolutely convinced that the alternative of selling off the 22,000 pubs and enforcing the 2,000 public house limit is unacceptable and unworkable.
If we are to look at what might be done—we must try to find a solution to the problem—there is some
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merit in what the Consumers' Association stated in its evidence to the Monopolies and Mergers Commission concerning the maximum level of local concentration of public houses in the ownership of any one brewer. The association suggested that no brewer should own more than one-third of all full on-licences in any licensing district. Licensing districts are roughly equivalent to English constituencies. There are virtually 600 English constituencies; there are 630 licensing districts.
If my noble friend is thinking along these lines, he should recognise that it would be an extraordinary step to ask a major public company to divest itself of its assets. If that were done voluntarily, I hope my noble friend realises that it would be a major concession on the part of the national brewers. It must be seen as such, and it must be the end of the saga. There is no question of coming back in two or three years' time and saying that not enough has been done.
I know that my noble friend Lord Orr-Ewing will deal with the problem of the tie and how it affects all the clubs in this country. I can only say that if I could borrow money at 3 per cent. today and also have a choice of borrowers at that rate, I would appreciate that the tie is no disadvantage to any commercial operation. Many of us are very pleased to see how so many clubs in this country have been modernised and made habitable as a result of the brewers' tie.
In conclusion, I must refer to the dissenting report from Mr. Mills. It is rather typical that this is not mentioned in the summary of the commission's report, nor is it listed on the contents page. I think we should look at that report. It seems to suggest the sensible way through this problem. Mr. Mills states that we must look at the limited independence of some tenants and at the imposition of ties when properties are sold. He feels that those elements have worked to the detriment of the public interest. To alter that primary legislation it will be required to amend the Landlord and Tenant Act 1954.
I think all of us in the House would support the recommendation that in every public house there should be one guest beer. I mean a genuine guest beer and not an imported foreign lager. I believe we would all like to see a firm recommendation that every brewery should allow into all its public houses at least one local British brewed ale, and not just a lager which carries with it all the expenses of extra advertising. I think we would all agree that those are sensible recommendations that should be implemented.
The report of the Monopolies and Mergers Commission is massive. It has 470 pages; it is as big as the London telephone directory. However, at no point does the commission state that excess profits are being made. It does not even say that the industry is inefficient; in fact it says that it is reasonably efficient.
If we go ahead with the recommendations contained in the report and they are implemented in full the result will be fewer public houses, the disappearance of pub tenancies, serious financial difficulties for our sports clubs, declining amenity

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standards, fewer United Kingdom owned breweries brewing English beer and less choice of beer at higher prices.
I agree with the final paragraph of the Monopolies and Mergers Commission minority report:
"Warts and all, imperfections and all… the consumer [has] reasonable value for money and reasonable choice. The … industry should be left to change and develop as it is already doing".
My Lords, I beg to move for Papers.
3.20 p.m.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, I thank my noble friend for raising this subject today. I welcome the opportunity to hear further views on the Monopolies and Mergers Commission report.
My noble friend said that I had 1992 in my heart. The former Queen of England who claimed that they would find Calais written on her heart after she died lost Calais. We have no intention of losing the battle for 1992.
The Monopolies and Mergers Commission made its report to me in February of this year. It was the result of an extensive investigation lasting two and a half years. The report was published on 21 st March. I said then that I accepted its conclusions. I stand firm on that. I have not so far heard anything to persuade me that there are not substantial public interest detriments which need to be remedied.
As to the recommendations, although I said when the report was published that I was minded to accept them, I indicated that I was ready to listen to views from any interested party about precisely how the recommendations should be put into effect. I was open to representations, both public and private before reaching a final view. We have now had the best part of three months' consultation since the report was published. This is bound to be an unsettling period for the brewing industry and for publicans. From their point of view the sooner firm decisions are reached the better. But it is also important that our decisions, when they are made, should be the right ones.
The representations made have taken many forms. Your Lordships will have seen advertisements in the campaign sponsored by the Brewer's Society. These have suggested that the effect of the Monopolies and Mergers Commission recommendations would be the closure of many pubs and a reduction in consumer choice.
However, we have also seen the subject debated by pub-goers themselves. My department has received a number of letters from them. In the last analysis they are the most important of all because the issue we are debating is how best the consumer should be served.
Last week the Haig Whisky company published the results of a survey of pub-goers conducted by MORI. According to the press release announcing the results of this survey:
"Most regular pub-goers want the monopoly of the big brewers broken… The majority are in favour of the Government implementing the Monopolies Commission Report. Only a third
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of adults surveyed opposed the idea that the major brewers should be required to sell off some of their pubs.
"84% said that the landlords should have more freedom to introduce more beers. The majority of consumers thought that the recommendations would be good for the traditional British pub. 66% said that the choice of beers would increase, and 60% that the quality of pubs would increase."
These results confirm what the Consumers' Association found in its own survey, which was conducted in May 1987. The conclusions of that survey were given in evidence to the Monopolies and Mergers Commission. Two-thirds of respondents agreed at the time that all pubs should be allowed to sell draught bitter from more than one brewer. Only 7 per cent. disagreed with that proposition. Furthermore, there was overall agreement that pub prices were too high compared with supermarkets and off-licences. 61 per cent. agreed and only 11 per cent. disagreed.
I am sure that your Lordships will also have seen references to the article on prices of soft drinks in the June edition of Which. The Consumers' Association reported a restricted choice of soft drinks in many pubs and prices which could be higher than those for alcoholic drinks, on which, of course, duty is paid. The Consumers' Association agreed with the Monopolies and Mergers Commission that these are detriments which result from the operation of the tie. The public are often obliged to buy such products from the brewers rather than being able to shop around for the best range and prices.
Publicans themselves, when questioned in opinion surveys, show substantial support for many of the MMC recommendations. On 27th May the newspaper The Publican gave the results of its own survey of publicans:
"Around 90 per cent. of publicans want greater security of tenure under the Landlord and Tenant Act, want to see an end to the non-beer tie, and want a choice of guest draught beer".
Over the last few weeks my honourable friend the Parliamentary Under-Secretary of State for Corporate Affairs and I have listened carefully to the views of a great many people who have come to see us to discuss the report. We have had a number of meetings with the Brewers' Society. We have also met representatives of individual brewers, either at their own request or through the offices of their Members of Parliament. We have heard from the National Licensed Victuallers' Association, which represents many licensees, the Consumers' Association, the Campaign for Real Ale, and others.
As a result of those extensive consultations I believe that a number of matters are now clear. I believe that the Monopolies and Mergers Commission was clearly right that there is a need to increase competition in this industry. It was also clearly right in recognising the important part that regional and local brewers have to play in maintaining diversity and choice in the supply of beer.
We have already made plain in a Written Answer in another place last week the importance the Government attach to the role of the regional and local brewers. We said then that our intention was that certain measures should apply to the national brewers but not to other brewers. We had in mind

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particularly the requirement to allow tenants to choose a cask-conditioned guest beer; the abolition of the tie on low-alcohol and non-alcoholic beers, ciders, wines and spirits and soft drinks; and any measures to reduce local monopoly.
I agree with the Monopolies and Mergers Commission's conclusion that the position of publicans needs to be strengthened so that they can more effectively meet consumer preferences. There are two main ways in which that role of publicans can be enhanced.
First, I am glad to say that there seems to be consensus among the main parties that tenants' security of tenure should be increased by bringing them within the scope of the Landlord and Tenant Act 1954 as the MMC recommended.
However, there also seems to be agreement that certain further steps recommended by the MMC would not be appropriate. The MMC recommended that the parties to a tenancy should not be allowed to contract out of the provisions of the Act, as is the case with other business tenancies. It also recommended that brewers should be required to incorporate certain standard provisions into tenancy agreements. These would cover such matters as assignability of tenancies and restrictions on the brewer's ability to take back premises at the end of a tenancy for its own use or for redevelopment.
It is generally agreed that these further provisions might in the long run make tenancies unattractive and should not be pursued. The National Licensed Victuallers' Association itself has indicated to us that it accepts this.
Secondly, tenants have a role in improving choice. One of the ways they may do this is through the guest beer proposal. Fears have been expressed, and were expressed by my noble friend this afternoon, that this proposal could result in a flood of heavily promoted, mass produced brands, which would not contribute to a genuinely greater choice. We are clear that we should specify that the guest beer should be cask-conditioned; that is to say, a real beer of individual character. That accords with the views of most publicans on what they would wish to offer, and we believe that it will be welcomed by regional and local brewers.
In relation to the national brewers, I am still considering the position. Here I do have concerns about the extent to which a few dominate the market. The six national brewers account between them for 74 per cent. of brewer-owned tied houses, 75 per cent. of beer production and 86 per cent. of loan ties.
I should like first briefly to consider the issues in relation to the national dominance of the major brewers and to put before your Lordships' House some of the ideas which have been canvassed to address that national dominance. First, let me raise one dimension of the problem which particularly concerns me. That is the question of local concentration and local choice. In a number of licensing districts, one or other of the national brewers owns over a quarter of all the pubs, in some districts over a third of all the pubs, and in a few districts over half.
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It is hard to see that that situation can encourage vigorous competition. Choice at a local level is important to the individual consumer. I am inclined to think that no major brewer should be allowed to tie more than a limited proportion of the pubs in any local authority area. Any excess pubs should be sold to owners who are not already dominant in that area. I would welcome your Lordships' views on that important aspect of the position held by the national brewers.
Secondly, let me turn to how increasing competition and choice might be addressed at the national level. The Monopolies and Mergers Commission recommended that no company with brewing interests should be permitted to own more than 2,000 on-licensed premises. The MMC believed that an approach of that kind was necessary if the detrimental effect of the vertical tie were to be remedied, and the market freed.
The MMC also recommended that there should be a ban on all future loan tying, whereby the brewer provides financing on favourable terms in return for a commitment by the publican to purchase drinks. The MMC correctly identified that loan tying can be used to reinforce a dominant market position akin to ownership of the pub. But I am reflecting further on that proposal because it seems to me that there are circumstances in which loan tying may be acceptable. I have in mind, as an example, the position of members' registered clubs, where I see an argument that they should be free to enter into loan ties if that is the collective wish of the members on a free vote. In those circumstances, I should however want to ensure that loan agreements do not unreasonably lock borrowers in to a particular supplier. They should be free to change the loan and supplier easily if another offers better terms.
I see many attractions in the overall approach recommended by the MMC and I have received many representations in its favour. Many who know the industry well believe that direct action of that kind is necessary to ensure that vertical integration is broken down and the market opened effectively.
However, I have also received representations on a variety of alternative approaches designed to achieve the same basic objectives by different means. One interesting suggestion that has come from a number of sources is that competition and choice would be greatly increased if the national brewers were required to operate their property portfolios above a threshold on an independent arm's length basis. In other words, each of the national brewers would be able to retain its property investment but would lease on an arm's length basis to independent tenants, groups of tenants or separate companies the management of its pubs over and above the threshhold. Those independent managers would be free to negotiate their finance and their supplies of drinks—including beer—from wherever they chose, from the most competitive source.
That idea was first canvassed by CAMRA, but has also been proposed by the Wolverhampton and Dudley Brewery, which has set out its ideas in a document now placed in the Library of your Lordships' House. The idea has been canvassed in outline only. Philosophically, I find it attractive. It

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may offer an opportunity to remedy the detriments resulting from vertical integration which the MMC have identified, without forcing property disposals. If a way could be found of opening the market to much greater competition, through the creation of many more free houses and the breaking of the grip of the national brewers without forcing property disposals, I should welcome it.
The meetings that have been held with the Brewers' Society over the past few weeks have been very valuable, and I am grateful to the society for its help in conducting the first round of exchanges. We announced by Written Answer in another place the conclusions that we have reached in the light of those meetings. However, I fear that I cannot now continue discussions with the Brewers' Society when we turn to the highly market-sensitive question of the MMC's divestment proposal. I am sure that there is no one in this House who will not recollect that I have the responsibility for the working of the market and that these are matters which affect not only the responsibilities of the major brewers but the entire working of market-sensitive situations.
I have therefore decided that the next stage is for me to discuss the MMC's divestment proposal—and the alternatives to it—with the national brewers. I shall be meeting them shortly for private discussions on those market-sensitive issues. I wish to assure all noble Lords that I shall be ready to hear constructive proposals from them which address the central issue of the extent of the vertical tie. But I should say at this stage that it is for them to persuade me that the arm's length proposal or any other option can offer a remedy as effective as the MMC's own recommendations.
We are holding this debate today and it is a welcome opportunity, for I should welcome your Lordships' views on this or any other alternative remedies provided that they meet the basic criteria; namely, that they address the dominance of the national brewers and the grip on the market that they have secured by vertical integration.
3.37 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord, Lord Kimball, for raising the matter and to the Secretary of State for being so frank in his open-mindedness about the possible solutions that noble Lords may wish to recommend to him.
I have read part of the Monopolies and Mergers Commission report. I cannot say that I have read the whole thing. I hope that there are many noble Lords in the House at the moment who have read the whole thing and will therefore be superior to me in knowledge. But from what I have read this is an extremely distinguished report from the commission. As noble Lords will know, it was my noble friend Lord Wilson of Rievaulx who set up the Monopolies and Mergers Commission when he was President of the Board of Trade. He will agree that the report is one of the most distinguished that the commission has produced in its 40 years, if my arithmetic is correct.
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As the Secretary of State has said, there is no doubt that the MMC is right in saying that there is a complex monopoly. That is nothing new. In 1977 the Price Commission identified exactly the same problem. In 1969 the MMC identified the same problem. However, we must note that, although the problem was identified 20 years ago, nothing has happened up to now. I should therefore say to the Secretary of State that we on these Benches intend to hold him to his word that he will now do something about it. The Government simply cannot shelve the whole thing and do nothing.
The noble Lord started off by saying that when the report was published he was minded to accept its conclusions. I am not sure whether or not he was minded to accept the recommendations. There may have been a semantic problem. He then got a blast from the Brewers' Society and I thought somewhat changed his tune and said that he preferred to ask the Brewers' Society: "If the MMC recommendations are wrong, have you got anything better?" That is rather like asking turkeys how they like to be roasted for Christmas. The noble Lord, Lord Kimball, replied that the turkeys would rather not be roasted at all and would like the situation to continue as it was before. However, I must say to him that, so far as we are concerned and from what the Secretary of State has said so far as he is concerned, that is not an option.
Beer and related products sold through the beer trade, if I may use that generic expression, are not simply commodities sold on the basis of price. I think that the noble Lord and I agree on the problem of defining the differences between services, amenities and the product. As the noble Lord, Lord Kimball, said, there is no doubt that the pub offers not just a commodity at a certain price but also an amenity to go with it. So to try to consider the whole area on the basis of price is in my view not correct.
No doubt there are some noble Lords who will say that market forces and prices must rule, but I disagree. I find it difficult to understand how anybody can come to a conclusion that a certain price is unjustified. To me that is a very odd type of argument, given that in what we are dealing with there is a strong service element.
This is a very complex industry and therefore the report was complex. The recommendations were summarised by the noble Lord, Lord Kimball, the most important point being the 2,000 on-licence outlet limit of ownership. Those recommendations were complemented by other recommendations referred to by the Secretary of State; namely, the loan tie, the product tie in terms of the guest beer, the terms and conditions of tenancies and, although he did not mention it, the wholesale price list publication, which I shall come to in a moment.
Apart from the noble Lord's initial reaction, the Government have responded in rather a curious way in a Written Answer given in another place to what was obviously a planted Question. The Government have now said that regional and local brewers need the full exclusive tie. We agree with that and believe that it is an important step forward. They have agreed that the Landlord and Tenant Act should be extended to cover tenancies in pubs. We agree with

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that. They have agreed that the guest beer, in so far as it applies now to the big six, should be a real ale and not a lager—and so we avoid the Fosterisation of Britain—and we agree with that.
They have agreed that there should be abolition of the tie on non-beer products. We agree with that, while noting that the block exemption—the EC regulations 1984/83—which allows the beer vertical tie excludes other ties. It has been in full operation since 1st January this year and, if the tenants have greater security of tenure, they will by virtue of that regulation be able to break what I believe has been a tie imposed by the brewers to date. But I agree that that is a matter of opinion; it is a question of whether the tenant has sufficient initiative to understand the scope of his rights. But security of tenure is definitely needed in order that that provision can take its full effect.
What is now left? For the big six—because we are talking about the big six only—wholesale price lists are to be published with discounts and discounts should be related to volume—justifiable quantity discounts, or whatever they may be. It seems to me that at this point we are entering rather difficult territory; namely, that of the Robinson Patman Act of the United States which, as the noble Lord will know, was part of the 1930s scene and requires that discounts should only be related to quantities or to some justifiable or provable reason for the discount. It has caused enormous trouble in the United States.
I am uncertain—I put it no higher than that—as to whether this is the right moment to embark on a major piece of competition legislation such as the Robinson Patman Act in the United States. Legislation would be required not just for the beer trade but right across the board and I am sure that the food manufacturers would have their say should the noble Lord try to draft any Bill along the Robinson Patman lines. It is not that I am opposed to it. I simply believe that this is not the right place to start along that road.
So far as concerns tenant security, as I said, we agree that the Landlord and Tenant Act should be extended. We also agree with the Monopolies and Mergers Commission that the tenants should be given a reasonable opportunity to acquire premises if the brewer who owns the premises sells. Obviously there has to be market value. One cannot have any preferential right for the tenant other than that he might have first refusal if the brewer decides to sell. We also agree that there should be some restriction on repossession of tenanted houses, in particular where the licence is lost. I think that those are elements where a code of practice, statutory or otherwise, or an order would be welcome.
I am afraid that we part company with the Monopolies and Mergers Commission on the loan tie. I think that the Secretary of State is also moving in our direction on this point. After all, membership clubs survive by low interest rate, high quality, high volume loans from the brewers. Speaking as a banker, if I may do so for a moment, I cannot conceive that any bank in its right senses would lend the same amount of money to a membership club at the same rate as a brewer would do it. Of course, the member of the club would be paying the interest rate
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directly through the product price. Nevertheless, it is undoubtedly true that there are many membership clubs that would go out of business if they were required to go to the banks and if the brewers were not allowed to lend them money. So we would certainly keep that provision unless the Government can come up with some magic scheme which would allow cheap finance to be offered to membership clubs as a substitute for the cheap finance that they are receiving from the brewers.
The next argument concerns the tie on the brewer-owned on-licence outlets. This is the argument to which the noble Lord, Lord Kimball, addressed himself primarily. To my mind there are several difficulties with what the Monopolies and Mergers Commission recommends. Under certain circumstances if major brewers in the big six (and two have threatened already to do it) instead of divesting themselves of their retail outlets divested themselves of their production, it would create a situation in which there were strong retailers who had command of their own brands and who would be able to say to the producers, "We will specify the quality of beer and what specific gravity we need. You will deliver it here, there and everywhere". They would have enormous power. It would seem like Tesco, Sainsbury's and Marks and Spencer rolled into one so far as the countervailing power of the retailer is concerned. So we are doubtful about that and, if that is the noble Lord's intention, we think that he certainly must extend his order—and he has powers under Section 56 and Schedule 8 of the Fair Trading Act to do so—to cover not just those who have brewing interests but anybody who might own more than 2,000 on-licence outlets.
I do not know how the noble Lord will be able to draft such an order. Having looked very carefully at the section and schedule that I mentioned, it seems to me that to draft something along the lines of the text of the Monopolies and Mergers Commission and at the same time to say, "But nobody else can do it", is a task which would stretch the imagination of the most fertile mind of parliamentary counsel.
I therefore come back to a remark made by the noble Lord, Lord Kimball. There may well be difficulty and confusion between ownership and the tie. I welcome very much what the noble Lord the Secretary of State said about the possible alternatives. There are a number of alternatives that I believe he should pursue. I should like to see no limit on the ownership of licensed outlets; but no company, brewing or other, may tie exclusively more than 2,000 outlets either by virtue of ownership—that is, through management or tenancy—or by loan tying or by selling to another owner with a product tie. I should exclude from those 2,000 outlets the membership clubs which I have just described and which I believe need a loan tie. Outlets above that ceiling, as the noble Lord has said, could be run as a property portfolio. There would be a restriction upon the ability of the owner to impede other brewers and other parties, whoever they may be, from selling their products into that outlet if they can match quality and price.
A number of people have worried about the enforcement problem. I simply say this. Each major

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brewery of the big six would have to nominate with the Office of Fair Trading those outlets which it wished to tie exclusively. That list would be open and available for all to see. Outlets which were not on that nominated list—and it could be regulated by local conditions and monopolies, as the noble Lord said—would be open to anybody. Although there is no legal mechanism to bring such a proposal under the 1956 Act, under a Section 56 order I believe that he could achieve this. It would be, in effect, a restrictive practice to stop any other organisation selling to outlets not on the nominated list. Anybody can come in and, if it can match price and quality, open up the normal nominated list to what is effectively a free trade. If that is adopted, there is no need for a guest beer. The guest beer is already allowed to enter. However, if the noble Lord wishes in the 2,000 nominated outlets to have a guest real ale, I certainly would not dispute that as a possibility.
On disposal of outlets, we do not have the problem which the noble Lord has outlined. It would be very difficult for markets to cope with thousands of premises being dumped on the market, rural pubs being shut down, or whatever it might be.
All that I have suggested would be a major revolution in the brewing industry. If the Government were to adopt this solution, we would ask them to declare a moratorium for, say, three years on mergers, acquisitions and re-arrangements in the industry. As a result of the order that the Secretary of State would make to implement this solution and to deal with the complex monopoly conditions revealed in the MMC report, nobody would know quite what the financial effects on any given company would be. It would be in those circumstances wrong to have any radical change in the structure of the industry. If this solution were adopted, it seems to us to be a good basis for the industry up to 1997, when the block exemption on the vertical tie—the exemption from Article 85—comes up for review. If we go along the lines that I have suggested, I believe that in 1997—if Sir Leon Brittan in his great wisdom were to decide that the vertical tie is no longer in the interests of the Community and that a block exemption should not be continued—the brewing industry would be in a much better condition to face that problem as and when it occurs. Therefore the industry must be prepared for that.
I conclude by saying that the Government are absolutely right to reject a solution to the problem based on pure theology of market forces. Market forces would demand that we scrap the licensing system. I do not think that the Government, ourselves or anybody else will scrap the licensing* system. We reject market forces. Some noble Lords who will speak today will recommend the pure market force argument. I hope very much that, with the conversion of the noble Lord to industrial policy and clear industrial planning, he will reject those arguments. I am also glad that the noble Lord, having been converted to industrial policy, does not live anywhere near Downing Street because I am afraid that he might receive unwelcome attention from the
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current Rasputin and a handbagging from certain people who believe that market forces ought to overrule all sensible ideas that he might put forward for this industry.
It is welcome that we can have this dialogue at least in the same language. Up to now the noble Lord and I have had dialogues but we seem to be entering into dialogues from a wholly different theological position. I am very glad—it is a matter of the profoundest relief—that he is willing to talk our language. If there are flaws in the suggestions that I put forward I should be grateful if he would point them out and speak to them in the language that he has used this afternoon. If not, I hope that he will take them as a basis for a good way forward. However, if he simply rejects them without good reasons purely because they come from the Labour Party, CAMRA or somebody else, I am bound to tell him that he will be turning this into a partisan issue, and it should not be a partisan issue. That is something that all noble Lords will wish to avoid since to do so would be damaging both to one of our great industries and to the consumer.
3.57 p.m.
The Viscount of Falkland: My Lords, we are all grateful to the noble Lord, Lord Kimball, for giving us this opportunity to talk about these proposed radical changes to the arrangements for the brewing industry in this country. I listened to his speech most carefully. I found it most persuasive. However, I should be interested to hear—perhaps the noble Lord and I can talk outside this Chamber—about the problems that he would foresee if these recommendations were to be implemented in the drive against alcohol abuse. Although I may have on occasions criticised the industry for not contributing more in certain areas, one has to commend their initiatives to enhance social responsibility with regard to drinking alcoholic beverages in this country. It is the lack of social responsibility which causes so much abuse today regarding drinking in particular in public places. I mention the commitment of the industry to publicise the new strength requirements to improve awareness of drinkers of the alcoholic strength of different drinks. It has been an area of confusion. More people are becoming aware of which drinks are strong or weak. That is helpful.
The Scottish Whisky Association funded a conference on Young People and Alcohol in February 1989 which involved a major survey of attitudes—a very important issue—and the behaviour of young people. The Brewers' Society's Wheelwatch Campaign with regard to drink driving and the attempt to promote the availability and sale of drinks which were safe for those who have to drive was important. This year £25 million is to be spent on the development and marketing of low and non-alcoholic beers. That again is encouraging. The trade has co-operated very strongly in tackling alcohol-related disorders, violence and so forth, in pubs through better management of premises. Does the noble Lord, Lord Kimball, consider that management would suffer in the light of these new recommendations? There has been a great sense of

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responsibility in making sure that young people do not have access to drinks in pubs although the subject of identity cards for that purpose causes some heated debate.
These are very positive developments. I should like to commend the Government's involvement in next week's National Drinkwise Day on Saturday. It is to be launched by the Government. Several companies have come together on this day to produce posters relating to alcoholic strengths and the promotion of low alcoholic brands. I am very happy to say that the major companies in this country which sell alcoholic drinks through supermarket chains have very responsibly produced sensible leaflets for the guidance of customers about their products. It all helps to create the new social responsibility that I have mentioned.
All these matters are very positive. However, whatever the changes in the future, or whether we maintain the status quo, I should like to feel that this energy towards combating alcohol abuse and allowing people to drink with enjoyment and responsibility continues. I should like to be assured that should we see radical changes this will be kept up. The urgency was highlighted by the Government when they commissioned the survey on drinking in England and Wales in 1987 which revealed that some 5 million men and 2 million women were drinking over a level considered to be safe. Between 1·25 and 2 million men and the corresponding 0·25 million women were drinking amounts each week which would certainly damage their health. When I talk about health being damaged, I mean that for a man that figure is 50 units per week which, if someone is drinking lager, is an incredible amount of liquid with a very high content of alcohol.
It means that the bulk of alcohol-related harm—violence, accidents, illness, absenteeism and a chain of other harmful results and also drink driving, one of the most important—is not confined just to a minority of chronic abusers of alcohol but extends quite widely through the drinking population. The young people are especially vulnerable and have become more so over the last 10 years. Recent reports have shown that about four in every 10 young men under 24 drink over what is considered to be a sensible level which would not be damaging to their health over a long period, and one in every 10 young men drink very dangerous levels indeed—well over 50 units.
In addition, I hope that the industry, whatever way it goes and whatever decisions the Secretary of State takes, will be reconvening the National Alcohol Forum, a joint initiative which unfortunately foundered through disagreement over chairmanship and polarisation of attitudes over licensing laws which we discussed in your Lordships' House through the Licensing Bill. The re-establishment of that body would be complementary to the excellent work of the Wakeham Committee and could put forward recommendations to that committee.
The Government and the drinks industry will obviously commission further research on drink driving, particularly aimed at the hard core of older drivers. It seems nowadays that there is a
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concentration on young drivers perhaps because their offences are more colourful and horrifying. But there is a hard core of older drinkers who in almost every case are people who repeatedly offend as drink drivers. They have a drink problem and need treatment. That must have careful consideration by the Government and I am sure that will be taken on board by the Wakeham Committee.
Perhaps the Government and the brewing industry should also commission and encourage more local and regional activities providing advice and counselling for problem drinkers. By and large to date the whole picture of the drinks industry has been encouraging. I begin to think that much of my criticism and comments in the past have been somewhat carping, but we must keep up the pressure. If the National Alcohol Forum is reintroduced, we shall be able to establish more accurately what are the factors which will make it possible for us to identify the relationship between alcohol and a variety of illnesses and deaths. It is that which is most alarming.
Like my colleagues on these Benches, I am a committed European and upon our entry into the single European market in the 1990s we do not feel that our culture will suffer in any meaningful way, any more than we feel that the use of pubs and part of our culture will change, either. I hope that people will begin to drink with more responsibility all through the age and social groups with more enjoyment and responsibility. Even if we do not become a country of cafes like France and Italy, I hope that at least we shall begin to drink with responsibility, care and enjoyment as people do in those countries in those cafes.
4.5 p.m.
The Lord Bishop of Truro: My Lords, my interest in the supply of beer was at its height when I married a brewer's daughter. It was a profitable deal. When exchanging visits with my in-laws, empty crates in my poor curate's abode were invariably replaced by full ones.
Earlier when studying theology at the university my concerns had been a little more catholic. At that time a sum of money had come the way of the junior common room. A termly meeting had to decide how to invest it for the common good. There is a record in the minute book in that common room to the effect that Mr. Mumford threw in the whole weight of the Church on the side of port.
It would be an exaggeration to claim support on quite such a scale for the Motion of the noble Lord, Lord Kimball, but I know that at least three bishops would have liked to take part in this debate. Among several areas of concern, what stirs me most is the effect of the recommendations on community life in the rural areas, particularly in thirsty Cornwall. It is in the country more than anywhere that public houses surplus to the proposed figure of 2,000 per brewery will be under threat. How are they to keep going?
I listened with very great interest to the proposals of the noble Lord, Lord Williams of Elvel. I shall want to study them with special care. Also, I shall

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listen eagerly to any response from the Secretary of State to those rather detailed and fascinating proposals. For the moment I find myself still wanting to say that few tenants will be able to buy the pubs that become available. Other commercial interests may develop the properties for rather different purposes. Private individuals will probably acquire them for houses, including housing for resale, I dare say. Certainly, because of the size of the properties concerned, they will be sold at prices beyond the capability of most local people.
Those pubs which remain may be taken over by international brewing chains which would alter the arrangements for supply and might even serve to create more monopolies. We have to assume therefore that many local pubs will disappear. I find myself comparing this phenomenon to the dissolution of the monasteries. I dare say I ought to avoid special pleading, but one is tempted to wonder where the bellringers will repair after their strenuous exercise and how hard-pressed vicars and recalcitrant church wardens will resolve their differences. Your Lordships may care to exchange the adjectives.
There has been a fruitful partnership between church and pub for many centuries, though I suppose that little bit of social history did not weigh heavily with the Monopolies and Mergers Commission in its report. I am sure it cannot be at all controversial that your Lordships will want to take careful note of the threats to local community life. The pub is a peculiarly English institution, and not even the Cornish would deny that. It is a centre of village life which has served the social needs as nothing else has, including the Church itself. I doubt whether the MMC's great motivation is to fill the churches; nor would any right reverend Prelate on these Benches want that at the expense of the pubs.
I have to hand a press statement which was issued yesterday by the National Association of Local Councils. With its permission I shall quote from it:
"Whereas in the 1950s it was an unusual village which did not have its own school, church, post office, village shops, garage and regular local bus service, the changes in the manner of life and the economic and social pressures of the last three decades have meant that most small villages are now finding themselves without a school or garage, sharing a minister with three or four neighbouring parishes so that the church is in use only one Sunday in three or four, with at best a part-time post office and, if no post office of any kind, then probably no village shop".
That is a most powerful statement from the association.
Nowadays people move about from village to village according to taste and need. Therefore it is all the more important that the few remaining facilities should continue to be available and be stable at that. Furthermore, by the provision of many pubs drink driving is kept to a minimum because of the shorter distances involved. Many pubs in the country are run at a loss. However, it has been the policy of the larger brewers to maintain them as a public service. That is not to say that purveyors of beer are in the charity business. No doubt the millions of visitors to the countryside take their custom to the more profitable town pubs during the rest of the year. I
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dare say that many country pubs are kept going by the "townies".
Whether profit-making and viable or not, pubs are a vital part of rural life. If they go, village communities will be impoverished even further and the whole nation will suffer. I do not believe that the case is made for the arbitrary reduction of the power for good exercised by the large brewers of this country. Six of them own 75 per cent. of the pubs and that is not excessive when brewing is compared with other sectors. Certainly they provide more freedom of choice than is so in other nations where the monopoly base is smaller. The future of 20,000 public houses is at risk. Is it really a wise risk to take?
4.13 p.m.
Lord Orr-Ewing: My Lords, I would not be out of place in thanking the right reverend Prelate for his contribution to the debate. One normally compliments a noble Lord on his maiden speech. His looks belie the fact that he may be reaching retirement and coming towards the end of his time to speak in this House. When that happens we shall be most sad. We hope that before he finally retires he will make many more sensible, down to earth and humane speeches.
The Church, the pub and the other institutions that the right reverend Prelate mentioned are essential to village life. The club is as important in built-up areas. He spoke about the villages in his dioceses, but the same is true of tower-block areas. There people badly need a community centre where they can exchange views, enjoy themselves and relax. Pubs have come to fill the gap left by the church halls.
I should also like to thank the noble Lord, Lord Williams of Elvel. He made a most constructive speech which I should like to study more closely. I am not sure that the threshold should be 2,000 pubs, as was also mentioned in the admirable speech of my noble friend. It is not an inflexible threshold and, as was stated in the leader in Monday's Financial Times, 5 per cent. of the outlets is extraordinarily low. It may well be that the number should be flexible and higher in certain areas, and I hope that it will not be written in tablets of stone.
I compliment the Secretary of State on approving the investigation. The 30 people who undertook it carried out a long and loaded task. It is a formidable undertaking merely to produce a 500-page report. I only wish that there had been more people on the committee with knowledge and longer experience of consumer and service markets, but there is never a perfect mix.
It is not generally appreciated that this is the fifth investigation involving the brewery industry in recent years. The first MMC investigation was reported in 1969. It also proposed a threshold and a number of untied pubs above that, but that was rejected. I am not sure what has changed to make the proposal more acceptable, but it should be reconsidered. In 1969 there was an investigation by the Prices and Incomes Board of which the noble Lord, Lord Williams, was later chairman. In 1977

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the board made a second investigation into beer prices. The report was published on 29th July and I note that the noble Lord took up his appointment on 1st August—
Lord Williams of Elvel: My Lords, I thank the noble Lord for giving way. At that time the chairman of the Prices and Incomes Board was the noble Lord, Lord Cockfield, whom I am glad to see in his place.
Lord Orr-Ewing: My Lords, I am sorry that I did not refer to the noble Lord, but I did not see him take his seat. I was exonerating the noble Lord, Lord Williams, because he moved into office two days after the report was tabled.
The EC has considered tied loans and whether, in the case of the main breweries, there was a restrictive practice, thereby reducing competition. After lengthy consideration it reported that at least for the next 15 years, ending in 1997, there was nothing to discourage tied loans. On the whole the practice was to be approved of. I hope that my noble friend will take that into account.
Clearly after five investigations action is called for but not to the extent that has been recommended. Some of the major recommendations appear to be dangerous and will destroy an aspect of life in this country without replacing it with anything constructive.
I have always understood that the definition of a monopoly is 25 per cent. of the market. Not one of our brewers has 25 per cent. of the market; the biggest is Bass, with 22 per cent. Ipso facto, there was no case for an examination under that general ruling. I cannot help feeling that, after five investigations, when we come to a decision we should leave the issue alone for a while and tackle some other monopolies. For instance, the BT monopoly arranged by the Government had 97 per cent. of the telephone lines, while they allowed Mercury—now Cable and Wireless—to compete to the extent of 3 per cent. Five years have passed since that agreement was reached so perhaps that case should be examined. Even the BBC has been secured—and I thoroughly approve because it is a public service—and it has 50 per cent. of the market with the approval of the Government. Therefore, the size of a company's hold on the market has not a dominant effect on governments. I understand that the next examination will be into petrol companies, and we shall await the outcome.
It is worth remembering that, although six brewers in this country hold 75 per cent. of the market, that is a much lower figure than for any of the EC markets. After 1992, if nothing is done, that 75 per cent. will be subject to futher reduction by competition, particularly from the big competitors in Germany, where they make some very good beer, and Denmark. Therefore, if nothing is done, that 75 per cent. is likely to be reduced.
I see that in Chapter 1.27 it is recommended that no new tied loans be allowed. My noble friend and others have already dealt with the public house side of the matter. I hope that, if that recommendation is reconsidered, it will be considered sympathetically
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so that not too much is not torn apart and dismantled.
I want to deal with the clubs, and I believe that I have the support of the noble Lord, Lord Williams, on this. There are 34,000 clubs, of which about half have tied loans at this moment. The working men's clubs close to the Labour Party and the Conservative constitutional clubs are two large elements with tied loans. There are 3,600 working men's clubs in all, almost all of which have tied loans, and there are 1,500 of our clubs, the majority of which have tied loans.
I remember very well that when I was adopted for North Hendon we had a constitutional club. I do not believe that it was entirely on my side despite its name. However, we would have been absolutely lost if we had not had a tied loan from a local brewery.
Lord Young of Graffham: My Lords, I have said earlier this afternoon that I can see an argument why members' clubs should be free to enter into tied loans if that is the collective wish of the members on a free vote. That is a point which is accepted.
Lord Orr-Ewing: I am delighted to receive that reassurance. I felt that if that was endorsed from this side of the House as well as from the other, it would be written in tablets of stone and my noble friend would not in any way draw back from it.
There are also British Legion clubs and service clubs, most of which have tied loans. Then there are the sports clubs. There are 24,000 of those. The nice thing about these tied loans is that they are extremely flexible. They are given at a very low percentage—I believe it is 3 per cent. To obtain such a loan from the bank the rate is 15 per cent. However, if you do not receive the service that you want, you can change your brewery, or if a windfall allows you to pay off the loan you can do so or if there is a better loan at the bank you can switch to the bank and pay off the loan. However, it is interesting to note how much these loans have helped the sporting clubs. That covers golf, tennis, squash, local rugby football and soccer clubs. Those loans are of inestimable value and much of what has happened in sports clubs is a result of tied loans. Therefore, I hope that that will never be at risk.
The construction of floodlighting, which is an advantage for outside sporting clubs and which obviously extends the hours for drinking, can be financed through a loan. Cricket nets can be erected. I only wish that they had had their effect on the English cricket team because we might have done rather better. It is not a condition of the loan that it shall be spent on the clubhouse or on internal facilities.
Of course there are valid points and my noble friend is right to take them into account. We shall eventually debate them in the House when the Bill comes forward. However, I hope that the criticism about the threshold which has arisen and which is likely to arise as a result of this debate and about the tied loans—I was glad to receive the assurance of the Secretary of State—will be taken into account.

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I believe that we owe a debt of gratitude to my noble friend Lord Kimball for initiating this debate. It is, as the Secrtary of State said, absolutely essential that we should kick this ball around and discuss it before any action is taken which would make fundamental differences to the pubs, clubs, restaurants and other such facilities in our community that make life worth living in this country.
4.24 p.m.
Viscount De L'Isle: My Lords, like my noble friend Lord Kimball and the right reverend Prelate, my prime concern in considering this report is the future of the British pub. Of course I do not ignore what my noble friend Lord Orr-Ewing said about clubs, but, as the right reverened Prelate said, in the country and also in the town the pub is a social institution of prime importance. What worries me is that the MMC does not seem to have addressed itself to the social importance of the pub; nor does it connect, as did the right reverend Prelate, the practice of breweries of maintaining marginally profitable or even unprofitable public houses in some areas as being a valuable social contribution.
If I understand it, the object of the commission's report is to create effective competition and, if necessary, narrow the margins of the brewers. Brewers are not benevolent institutions per se. They consider their own interests. If their margins are narrowed apart from the selling off of the nationals' 22,000 pubs, they will close those pubs which are least profitable. The academics, if it is academics who wrote the report, have rather purloined the word "detriment" as being a pure economic term. But what about the detriment to those villages or to those side streets in a neighbourhood where the pub is so important? Is there not a detriment in that case? Whatever the consumers may have told my noble friend Lord Young of Graffham about their preferences for change, I have no doubt that when their pub is closed they will know who closed it; it will be the Government. Therefore, I ask him to be extremely careful that he does not introduce a series of measures which deprive people of their community centre, which more often than not lies, in the pub.
As has been pointed out, competition in other places such as the United States and Australia has led to concentration in a very few breweries and I believe that that is the overall trend. It is because the present system of vertical integration has preserved our pubs that I believe it should be handled with very great care.
I cannot believe that it would be a wise course of action to force on to the market within a limited period 22,000 public houses. I agree that a great many of them would be likely to fall into the hands of property dealers who would change their use. As we know, as the noble Lord, Lord Williams, pointed out, there is already a limited number of outlets. I do not see that limit being raised very easily since that depends on the attitude of the licensing justices all over the country and they have been very careful
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about issuing more licences. Therefore, unless we are very cautious we shall see an overall and serious net reduction in the number of pubs available to the people, and with that I see a lack of choice not only as to place but also as to the number of beers available because there exists real competition for that.
As has already been mentioned, 1992 is close upon us. I am sure that if we were to fragment the industry, as might happen if all the proposals and recommendations were accepted, there would be plenty of European brewers and others who would very much like to pick up the fragments—and this at a time when the brewing industry must summon up the blood to meet European competition.
Of course if some of the nationals are deprived of and have to sell so many of their public houses, they may, as suggested by the noble Lord, Lord Williams, go over to the retail trade entirely or they may keep some of their houses and devote some of the resources garnered from their sales to promoting more and more national beers. I do not think that the recommendation, although I do not dispute it, of one cask matured guest beer will blunt the force of insistent promotion which is now so prevalent, particularly in America, and which will be available soon through sattellite and other means all over Europe.
Therefore, I do not discount the competition that will come. I fear that against that competition our pubs will suffer in numbers again. Therefore, I ask the Secretary of State once more to pay attention to this point. The deprivation not only of rural communities but urban communities and neighbourhoods of their public houses through the onslaught of competition will be ill-received, and properly ill-received, if countervailing care is not paid to ensuring that as far as possible these outlets are preserved for the use of the people.
4.31 p.m.
Baroness Fisher of Rednal: My Lords—
Lord Pender: My Lords, we are all grateful to my noble friend Lord Kimball for initiating this debate. Beer always has a good run, and rightly so. I believe that there have been 13 reviews of the industry in the past 20 years.
It has been encouraging to read during the past few days of certain reassurances to protect the regional and local brewers. We await with interest what my noble friend the Secretary of State has to say at the end of the debate. Of one thing there can be no doubt: the Monopolies and Mergers Commission has ensured lasting recognition of its report through the words, "2,000 pubs". The pub is an integral part of life. People do not go to pubs just for the beer. Pubs are a meeting place for adults second only to private dwellings. They provide a social centre and a line of communication. Their demise could lead to a number of social problems. I strongly believe that the English pub—in particular, the village pub—is very much part of our heritage and a major tourist attraction. To put this in jeopardy when people are enjoying more leisure time and when

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tourism is one of the best growth areas of our economy would seem ludicrous.
The main proposal that brewers be restricted from owning more than 2,000 pubs would constitute the most fundamental change ever proposed to the British pub. The ramifications of implementing the restrictions would be destructive to the industry. The issue has inevitably proved the favoured liqueur for today's debate. I confine my remarks to the proposals concerning public house tenants. These are serious in that they threaten to destroy the tenanted system which has served the British public so well for so many years. On the surface, the proposals purport to improve the lot of the tenant. In reality, they would tip the present delicate balance between tenant and brewery landlord so far away from the brewery's interest that no brewery would in future offer its pubs for tenancy. The economic balance would be weighted heavily towards breweries managing their own pubs rather than offering them to a tenant.
What brewery would readily lease a pub to a tenant in the knowledge that the brewery could thereafter never again select a tenant for that pub? Their rents could never be increased, except by application to a court. Over one-quarter of the beer trade would be lost to the brewery as the tenant could buy in a "guest" beer from any other supplier. The brewery would no longer be assured of a market for its low alcohol beers—the fastest growing sector of the beer market. My noble friend the Secretary of State dealt with that point. No wonder so many of the tenants who have thought through the implications of these proposals have rejected what would, at first sight, appear to be of great advantage to them. If these proposals are implemented there will no longer be any tenants left to reap the benefit.
Then again, the MMC had intended that these proposals would benefit regional and local brewers. The large majority of brewers have looked closely at the implications and profoundly disagree. Their view is that these proposals represent the greatest threat that the regional brewers have had to face since the war. The proposed undermining of the tenancy system will hit the regional brewers harder than the majors as the majors will in any case be left with virtually no tenancies if they are forced to sell 22,000 pubs.
If we are to have a distinction between national, regional and local brewers then that distinction has to be identified by the number of houses or annual output. It will be interesting to have a government comment on that. Possibly the number of houses is a better identification, particularly if at a later date there are further negotiations with Brussels as to a brewer's ability to tie whether through a loan or ownership of the outlet concerned. It seems to me that it is quite possible that the total number of tied outlets that might be allowed by the Commission could be in the region of 500 to protect the smaller German and Belgian brewers who are faced with a similar situation as ourselves if the tie is abolished.
4.38 p.m.
Baroness Fisher of Rednal: My Lords, I apologise to the noble Lord, Lord Pender, for jumping up at
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the same time as he did. Perhaps I may say to noble Lords, as the only woman to speak in this debate, that I use pubs but I do not drink beer; so, if anyone is calling, it will be a gin and tonic!
I wish to emphasise the aspect about which I perhaps know a little more than noble Lords who have spoken—the urban areas, and particularly the rural areas. I do not think anyone has yet mentioned the fact that in rural areas that have tourist attractions the pub is part and parcel of the attraction for tourists. If a pub is just outside the area it is a place that is visited by them. I believe the Secretary of State is keen on extending tourism and the service trade, so that can be linked with the friendship and peculiar village atmosphere of some pubs.
In comparing the general standard of pubs today with those of 20 years ago one sees that the change is significant. Normally, today's pubs have extremely good decor. They come in various period styles, such as Victorian, Tudor or moderniistic. All have carpeted floors and comfortable seating. We should also accept that it was perhaps the brewers, through their pubs, who broke down social barriers. I can remember when the bar was where the lower classes went—many of them Labour supporters. There was also the smoke-room, which was a bit upper class. The brewers not only got rid of that; they also got rid of sexism. They abolished the gents-only parts of pubs. Perhaps the brewers were a little in advance of some other organisations in breaking down social barriers.
We have seen a change in beer drinking over the past 25 years. My knowledge comes from the Birmingham-Wolverhampton-West Midlands areas where 25 years ago dark mild ale was popular. Public taste then moved to lighter beers. Another change took place when bitter beers became popular. We now see yet another change in consumer taste. Lager is now a popular drink in pubs. There is also this new drink called LA. When I first heard somebody call for it I thought, "I don't know what this kind of beer is. It must be some quite fantastic thing that is coming from the States". However, I recognise that that is low alcohol beer, which of course is to avoid perhaps a tough driving penalty for driving under the influence of drink.
We see not only a change for male drinkers. Women's tastes have changed quite considerably in pubs over the past 25 years. The biddy in the corner drinking her glass of Guinness has gone, and we see the younger element choosing spirits or perhaps from the great variety of wines that are available. I know that the noble Lord made some points about the loan tie, and the noble Lord, Lord Orr-Ewing, went into detail about that. I hope that the noble Lord the Secretary of State will make quite sure that he gives serious consideration to the loan tie and free trade outlets.
Over the past 18 months I have been chairman of Motability in the Midlands. Our task is to raise charitable moneys for adaptations to be made to cars for people who have the motability allowance. I am amazed at the high standards in the clubs today. I go to many of them to receive cheques that have been raised for charity, and I see the discipline that

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is exerted in what were called working men's clubs and are now called in the main social clubs.
It is important for the Secretary of State to understand that there is keen competition between all the brewers to get this trade. I have firm information that every time the subject of the renewal of a contract comes up it has a high profile on the committee agenda of all clubs, because they are going to make quite sure that they get the best deal from the brewers competing for them. That point is perhaps covered by a kind of free vote of the people.
The thriving clubs that we now have are providing not only for male drinkers but are providing all kinds of facilities, sports facilities, and particularly places for families, which is much better than having children stand outside public houses. They are now with their parents, and the clubs are providing these kinds of facilities. We have talked about 1992. All European countries allow free trade loans, so there is no reason why Britain should be different in that respect.
The report goes into prices in the big brewers' houses. But are prices too high for the drink consumer? The beer drinker would obviously answer that he thinks that the tax on it is too high. In fact, it is the highest in Europe. The noble Lord the Secretary of State always gives us percentages, but this does not mean a solitary thing to me. I remember that I was on a committee of one woman and three men. They had to fill in a form on how many women comprised the committee and they said 25 per cent. I became the 25 per cent. woman after that. Percentages really do not mean very much.
The brewers would argue that, despite the punitive taxation, we in this country have beer prices that are among the lowest in Europe. The Monopolies and Mergers Commission report conveys the fact that prices will come down if its proposals are put into operation. There is no reasoning in the report to show that prices will come down. I was very gratified that the noble Lord, Lord Orr-Ewing, gave the example of British Telecom because I had that down as well. We have gas, electricity, and water. It is no good these people telling us that prices will come down because we know full well that they do not, and the consumer is now used to that.
Lord Young of Graffham: My Lords, if the noble Baroness will forgive me, I think I can do no more than to comment on the paper submitted by the Wolverhampton and Dudley Breweries, which is a brewery prominent in the area that the noble Baroness was discussing. They say on the second page that competition indeed is responsible for low prices, that it is only in the Midlands where committed regional brewers have been able to use that weapon competitively, and that it is no accident that prices in those areas are below the national average. I assure the noble Baroness that that was something which the report actually showed. I commend that paper to the noble Baroness. Indeed, it contained many of the proposals that the noble Lord, Lord Williams, advanced in his speech.
Baroness Fisher of Rednal: My Lords, I commend to the noble Lord the Secretary of State the note of dissent, paragraph 42:
"It is interesting to note the valid point made in the report that in some regions of the country—such as the North-West and the West Midlands"—
that is the part that I know best—
"the practice of regional brewers in maintaining their wholesale and retail beer prices at significantly lower levels than the national brewers has been effective in keeping the prices"
down.
"in other words, the existing competition works".
That is the dissenting report. I think we are level pegging now.
Will the changes lead to more consumer choice? Most public houses have at the moment a wide choice of bottled beers, including those of all the various brewers. The issue really comes down to the availability of different draft beers. Perhaps I may say something about guest beer. "Guest beer" is a wonderful phrase. It is really your competitors' beer. It is like asking Marks and Spencer to take in things from Littlewoods or British Home Stores and put them on one side and say, "Let us see what we can do". That is what a guest beer really is. It is putting your competitors in the same position that you are in.
There is a saying that you can lead a horse to water but you cannot make it drink. People who use pubs and drink beer choose the pubs that serve the beer they like to drink. They choose. It is a choice that they have. They go around. I know that it is much more difficult with village pubs, but in places like London, Birmingham, Manchester and other cities people can choose where they want to go, and they choose according to their taste.
If the noble Lord the Secretary of State wants to take on the brewers he ought to recognise that the consumer has to have a free choice, and that free choice must be the pub that he wants to use and the beer that he wants to drink. It should not be a government edict. This is the Government who talk about freedom of choice. What the Minister is saying this afternoon is, "I just want to curtail that freedom". It does not go down very well coming from a freedom-loving government.
Perhaps I may now give my Birmingham plug. Everybody in the House knows that I never make a speach without relating it to the West Midlands or Birmingham. I make no apology for that. We have seen the demise of two large Birmingham breweries—Ansells, which was in the constituency that I represented in another place, and Davenports. We are left with one brewery, which is partly in Birmingham and partly in Sandwell, an adjoining borough. The closure of the brewery at Cape Hill which belongs to Mitchells and Butlers would be catastrophic. The brewery has undergone a major modernisation programme costing £11.5 million. Only last year it was given a major award by Business and Industry for the thoughtful development of the site and employee considerations.
If the brewery had to close many of its tied houses and was allowed to retain only 2,000, there would be serious repercussions. It has been in Birmingham

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for more than 100 years. It is part of Birmingham life and is one of the large employers along with Cadbury, Kendrick and Guest, Keen and Nettlefolds. Mitchells, which joined with Butlers, became one of these family businesses. It does exactly what the Secretary of State likes people to do. It is business in the community. Mitchells and Butlers has become part of the Birmingham scene. It plays a full role in all kinds of sponsorship—sport, the City of Birmingham orchestra and charities—and other projects which the city promotes. One would hesitate to see destroyed a great tradition started by a Birmingham family.
The Secretary of State said that people are being consulted. The duty of the Monopolies and Mergers Commission was clear. It was based upon responsibility for the public interest. However, the Secretary of State has another serious responsibility—to maintain employment. I have had a long report from two of the largest trade unions involved with the industry. It says that nearly three-quarters of the labour force in the Midlands—this refers not only to Mitchells and Butlers but to all the other brewers in the area, including those in Burton-on-Trent—could lose their jobs. This applies not only to the breweries but to the outlets that would have to close down.
The report says that wages and conditions of service in the brewing industry, particularly pension rights, are considered to be good. If the Transfer of Engagement Act had to be put into operation many of those benefits would be lost. The West Midlands is moving out of recession. We make a special plea to the Secretary of State not to aggravate the position by bringing about the closure of breweries in the West Midlands.
The note of dissent makes the point that the recommendations of the commission are more drastic than necessary. To some extent the report arrives at conclusions that can only be described as blinkered. I echo what other noble Lords have said. No other country has an institution comparable to the British public house. It must be preserved.
4.55 p.m.
The Earl of Liverpool: My Lords, I should like to join other noble Lords in thanking my noble friend Lord Kimball for initiating this debate and thereby giving us an opportunity to consider the report by the Monopolies and Mergers Commission which took about two and a half years to produce and which some of us have been having difficulty digesting since its publication in March. I should like to say how interesting I found the speech of the noble Baroness, Lady Fisher of Rednal, and how closely in tune I felt with everything she had to say.
I should declare an interest as a director of J. W. Cameron & Company, a regional brewer in Hartlepool and a subsidiary of the Brent Walker Group. I also own one public house. I can therefore perhaps be said to be firmly in the camp of the regional and perhaps even of the local or micro. I hope this afternoon to address the wider implications of the MMC report as it affects the whole industry.
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Brewing and our pubs are a unique and much loved part of our national heritage. Indeed, the relative competitiveness and production efficiencies which flow from the tied house system are both envied and admired by our competitors abroad. I hope to touch on the overseas competition aspect later. There is nothing new about the present system. Indeed this is acknowleged by members of the MMC who state in chapter 2 of their report that a measure of vertical integration has existed in the industry since the 18th century.
There must be good reason for such integration to have existed for more than 200 years. Primarily it is the fact that if one is producing a product with a short cellar or shelf life, in order to minimise wastage, increase efficiency and keep one's price competitive one must know with a reasonable degree of accuracy what one's volume sales are likely to be and where those outlets are located. That is as true today as it was in the 18th century. I am concerned that the proposal put forward today by the noble Lord, Lord Williams of Elvel, who advocates in effect a new tier of public house—a real free trade of some 22,000 pubs—will make production planning virtually impossible.
In tenanted pubs an entrepreneurial licensee can, for the outlay of a modest sum, start his own profitable business in premises where the rent is subsidised and where he can benefit from the marketing expertise and brand advertising which is freely provided by his brewer. He also gets a home for his family thrown in. No wonder the Brewers' Society quite rightly called this tenant-brewer relationship a partnership. I believe that this system has been a positive force in keeping retail costs down. In paragraph 2.203 of the report we are told that:
"Since beer consumption peaked in 1979 the real price of a pint of bitter in public bars has risen by 15 per cent.".
The reports adds:
"Over the same period real personal disposable income rose by 14·6 per cent.".
Those figures suggest to me that in real money terms the price of a typical pint of beer has increased by a mere 0·4 per cent. over 10 years, which is not a bad effort.
Lord Young of Grafifham: My Lords, it is 15 per cent. in real terms—over the rate of inflation. The report showed the increase in the price of a pint of beer between 1979 and 1987.
The Earl of Liverpool: My Lords, I am grateful to my noble friend for correcting me. When one considers that more than 35 per cent. of the retail cost of a pint sold goes to the Government—that is 30p on every pint, producing an annual income to the Exchequer of £3.2 billion or 6 per cent. of GDP—we have not done badly. It is also worth noting that well over half a billion pounds is invested annually by Brewers in improvement to their pubs.
I believe that the police do not wish to see any changes in the present structure of the tied house system. There are unfortunately the less desirable elements of our society which from time to time rear their ugly heads. And pubs must deal with them. I

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am talking about drugs and various other problems. If members of the police are concerned in any way about a tied house, they have the benefit of knowing that they can go to the brewery company where they will receive immediate support. The company will immediately institute the most stringent inquiry so as to ensure that matters are put right.
I should like to turn briefly to consumer choice. With over 200 breweries in the United Kingdom—that figure includes micro-brewers—the product range is enormous. In any given area there is a tremendous choice of pubs available to the public. Members of the public are free to choose which pub door they go through. Indeed, that point has already been made by other noble Lords.
In the North-East—I have with me the figures provided by the North-East Brewers' Association—there are 3,183 pubs, 1,116 of which are free houses. The remaining 2,017 are divided between 11 breweries. That does not seem to me unduly monopolistic or in any way acting against the public interest.
There is a great variety of reasons why people choose to go to a particular pub. It may be the atmosphere and decoration, the clientele, the pub's games facilities, the food, the music, their liking for the licensee and his staff, its particular location—and, yes, beer. However, on that last point, it is very often the care which a licensee takes in looking after his beers which is more important than the range.
One of the statistics used by the MMC and upon which it bases much justification for its recommendations is the fact that the so-called "Big Six" own 75 per cent. of all brewery-owned on-licences. I suggest that that ignores the fact that there are over 37,000 free trade on-licences. With those included no one brewer can be said to own even 10 per cent. of the market. As my noble friend Lord Orr-Ewing said, that is hardly a monopoly. The point I am trying to make is that while there are undoubtedly some big fish about, the sea is big enough and the ecosystem is not too much out of balance.
The draconian recommendations contained in the report would have far-reaching consequences detrimental to consumer prices and to the small businessman, let alone to the brewing industry as a whole and, I believe, to the public. The brewers have gone about their lawful business in our capitalist democracy for many years seeking to develop profitable companies. I should like to join with other noble Lords in expressing concern at the possibility that they may be called upon to divest themselves of substantial assets.
When one reads the report one cannot help being fascinated by the chapter headed "Note of Dissent". I should like to express agreement with my noble friend Lord Kimball who drew attention to it as perhaps the lone voice of sanity. The sad part about all this is that whatever is done by the Government as a result of the report, the alarm bells have been set jangling. The result is that available tenancies will continue to decline in number, thus denying
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many aspiring licensees with limited capital resources a route into the trade.
The likely passing of the village pub was a point excellently made by the right reverend Prelate the Bishop of Truro. It has already been said that 1992 is just around the corner. A number of overseas competitors would just love to see us shoot ourselves in the foot and thereby provide them with a bridgehead in our industry. That simply must not be allowed to happen. I hope that my noble friend the Secretary of State can assure the House that he is mindful of that fact.
There is one final point which I do not think has so far been touched upon. It concerns the MMC's recommendation that the whole question of the supply of gaming machines—that is, amusement machines offering prizes—in pubs should be referred to the Director General of Fair Trading under the Fair Trading Act 1973 or that it should be the subject of an investigation under the Competition Act 1980.
Brewers are currently able to apply a measure of control by maintaining a list of reputable suppliers with which their tenants may deal. I am not sure what the MMC has in mind, but I must say that any dilution of the brewers' right of control will have the most disastrous consequences. The system works well at present and prevents the less reputable and, if I may say so, more colourful operators from gaining a foothold in this aspect of the trade.
I know that my noble friend the Minister has listened carefully to all the arguments that have been put forward both this afternoon and in recent weeks. I hope that he can at least reassure me that if any changes to the industry are to be implemented, he will acquire for himself a fine pair of kid gloves and handle the matter with the greatest care lest a Pandora's Box be opened which the whole country may live to regret.
5.6 p.m.
Lord Thomas of Gwydir: My Lords, my noble friend Lord Orr-Ewing paid tribute to the commissioners who produced the report for the hard work which they put into it. I agree with him. I have no doubt that they are all men who are able, industrious and intelligent. Their two-and-a-half year inquiry was indeed comprehensive, as the 501-page report bears witness. What amazes me is that, despite all their effort, with the exception of the dissenting commissioner, Mr. Mills, they have apparently failed to understand the way in which competition works in the brewery industry. They appear to have failed to recognise the long-tested efficiency advantages of vertical integration and the role of contracts in allocating risk between brewer and licensee and the benefit of that structure for the consumer. They seem to have discounted the clear evidence of heavy competition at all stages in the supply of beer and ignored the commendable and unique performance of the UK industry, in particular when compared to that of other countries.
Mr. Mills, the dissenting commissioner, expressed the view that most of the recommendations proposed by his colleagues, if implemented, would be an unnecessary leap into the dark, could be counter

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productive and damaging to the structure of the industry and could consequently be against the public interest. In my view, that can be considered to be a polite statement. The truth is that, almost without exception, the recommendations proposed are misconceived, illogical and disproportionate. Moreover, the major ones quite clearly should be rejected.
Having somewhat firmly expressed by opposition to the report, perhaps I should tell the House that I have no financial interest in, or any connection whatever with, the brewing industry. My interest, apart from being an appreciative consumer, is political and legal. My political view is similar to that expressed by my noble friend Lord Kimball in that I believe that the brewing industry is a highly competitive, successful, responsible, popular and unique British institution. It is unthinkable that a British Government who believe in a free market and deregulation should lend their support to some of the drastic recommendations proposed. That is my political view.
My legal view is that I disagree with the commission's reasoning that a monopoly situation under Section 6 of the Fair Trading Act 1973 exists. My noble friend Lord Orr-Ewing referred to what he believed to be a monopoly situation; but under the 1973 Act a monopoly situation would exist if at least one-quarter of the supply of beer was from a single company or an interconnected group of companies; that is known as the scale monopoly. It is clear that such a monopoly does not exist in the United Kingdom brewing industry.
To get round that difficulty the commission seized hungrily on Section 6(1)(c) and Section 6(2) of the 1973 Act which prove that a monopoly situation exists if two or more non-interconnected persons supply one-quarter of goods in the United Kingdom by conducting their respective affairs so as to prevent, restrict or distort competition in connection with the production or supply of that description of goods. That incidentally is known as a complex monopoly.
The commission decided that a combination of 70 brewers—six national, 11 regional, 43 local and 10 small brewers, all independent of one another and in active competition with one another—were together supplying over one-quarter of the United Kingdom beer. In fact they were supplying 90 per cent. of it. It therefore found that that amounted to a complex monopoly situation.
The commission's reasoning behind that somewhat surprising finding was that each brewer owned retail outlets to which it supplied by restrictive agreements with tenants or orders to managers most of all the beer sold and that each made preferential loans with restrictive agreements for the supply of its own beer to free houses and clubs.
The commission said that that meant that those brewers were conducting their respective affairs in order to prevent, restrict or distort competition. I believe that to be an unfair interpretation. It is a narrow interpretation of what that section of the Fair Trading Act meant by competition. No one
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suggests that vertical arrangements and ownership diminish in any way the intense competition in the beer market as a whole, and it is in the United Kingdom market as a whole, of which it is alleged that at least one-quarter has been monopolised, that competition must be considered. To approach the matter from the effect of an individual contract between a brewer and tenant or operator is in my opinion legally wrong and economically unreal.
Lord Peston: My Lords, perhaps I may intervene to ask the noble Lord to clarify what he is saying. I listened earlier to the noble Lord, Lord Orr-Ewing, making a similar point. Is he saying that the Monopolies and Mergers Commission has failed to understand the Act under which it has been set up to operate and which it has interpreted, having considered everyone of the arguments that the noble Lord has put—because they are put in the report and rebutted? Is he saying that the Monopolies and Mergers Commission does not understand its own legislation?
Lord Thomas of Gwydir: My Lords, what I am saying is precisely what I have just said; namely, that the commission's interpretation of what was required under that part of Section 6 of the 1973 Act was wrong and unreal. The reason that I gave was that it should measure competition in relation to United Kingdom competition and not in relation to what may be a contract between the brewer and licensee or borrower. I hope that the noble Lord will have the opportunity to consider what I have said. I may be wrong. These are matters of argument. But nevertheless it is a view which I wish to put forward.
I shall go further. The United Kingdom brewers' vertical arrangements and agreements are all approved of and authorised by European Commission Regulation 8–1984/83, to which the noble Lord, Lord Williams of Elvel, referred, as a block exemption. It remains valid until 1997. Indeed, five out of the seven recommendations made by the commission in the report are in direct conflict with that regulation. The commissioners considered that point, and if the noble Lord would like to look at paragraph 12.119 he will see that they appear to consider that, if my noble friend the Secretary of State consults the commission on its recommendation, the problem is solved. I fear that it is by no means as simple as that.
The recommendation seeks, through prohibiting agreements and conduct expressly permitted by the block exemption, and in other ways, to impose a restrictive competition regime in the United Kingdom only; in other words, it is seeking the distortion of competition in the Common Market. I submit to my noble friend the Secretary of State that it would be unwise of us to lend our support to that recommendation.
Lord Young of Graffham: My Lords, I hesitate to intervene once again, but we have a difficult and complex position as it is. We should take care not to make it more difficult. Even the dissenting view accepted the fact that a complex monopoly situation exists. Paragraph 1.11 of the report shows that the

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six national brewers account for 75 per cent. of United Kingdom beer production. I have had the opportunity to take other advice. In our view there is a complex monopoly situation. I am listening carefully to the debate. We should be looking for remedies so as to rectify the position. It would not take the debate further to go into the foundation of the report and the advice that I have had from the director general since.
Lord Thomas of Gwydir: My Lords, my noble friend may wish to lend his support to the report. I do not. The difficulty that he says we are in is not my difficulty but his. It is whether he is going to carry out, through the legal process, some of the recommendations contained in the report. I suggest that he would be unwise so to do. That is why I criticise the report. The commissioners have produced an unsatisfactory report. Most of their recommendations do not deserve support.
I have been speaking for some time now and I shall not continue much longer. I should have liked to have referred to some of the recommendations to which other noble Lords have referred, in particular the major recommendations referred to by my noble friend Lord Kimball and the right reverend Prelate the Bishop of Truro, as well as my noble friend Lord Pender, concerning the limit of 2,000. That recommendation cannot in the analysis be supported at all. I hope that my noble friend will come out straight away and say that it will be discounted and not supported. The whole proposal will inevitably cause disastrous problems in the industry.
The other recommendation concerned the tied loans which were referred to by my noble friend Lord Orr-Ewing. I welcome what my noble friend the Secretary of State said about supporting members' clubs, provided that all the members want it, to negotiate a loan with the brewer. However, what about the free houses? Why can they not negotiate a loan with the brewer? That is something which, as the noble Baroness, Lady Fisher, said, is widespread throughout Europe.
The major recommendations to limit the number of public houses owned by brewers and abolish the loan tie are adequately referred to in the note of dissent by Mr. Mills in paragraph 14. He says that they are:
"neither desirable nor necessary: indeed their implementation—far from making the market more competitive—could make it less competitive, reduce consumer choice, cause considerable uncertainty and create public interest detriments."
I ask my noble friend to pay attention to that kind of view which was expressed by one of the commissioners.
Of course one would agree that it may well be that some changes in the UK brewing industry are desirable. Many have been mentioned, but these are minor changes. The noble Baroness, Lady Fisher, referred to changes which have taken place over the last 25 years. They are led by both the brewers and the consumers and these changes are constantly taking place. The brewers are responsible people. If changes are needed they may well be achieved by
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voluntary persuasion. My noble friend the Secretary of State says that he is in communication with the brewers. I hope that he will realise that negotiation is infinitely preferable to recourse to the legal powers provided by the 1973 Act. Negotiation and persuasion are the course which I urge him to follow.
5.24 p.m.
Viscount Massereene and Ferrard: My Lords, I apologise to my noble friend Lord Kimball for being delayed, since the train which I went to catch never turned up. Amazing! I was delayed by an hour, but for once it was not my fault.
The only connection that I or rather my family have ever had with brewing is that in the 18th century my family gave the first Guinness a charter to start a brewery. When a book was written on the history of the firm I gave the author access to the papers of the time. That of course has given me no experience regarding breweries. But I wish to say that I am fortunate enough to reside for a fairly large part of the year in the most beautiful part of Kent, with the most beautiful pubs I have ever seen in England, with their gardens, creepers and charming pubkeepers.
Other noble Lords have referred to the idea in the report that it should be demanded that the breweries should get rid of 2,000 houses. Some people might think that that would be favourable to the small companies, and that is possibly right. However, I doubt it. I believe that if that happens the breweries might decide to sell far more and it could become a forced sale. That would be disastrous. To start with, I imagine that if they sold all their houses it would come to about £6 billion and the smaller companies would not be able to pay the amounts necessary in order to buy some of the houses back.
What would probably happen is that some great industrialists from Australia, Canada, America or wherever would buy them. I am all for money coming in through people investing in Britain, within certain limits, but it would be disastrous if the brewery business became completely controlled by foreign hands. That is just my opinion.
It would be rather interesting for somebody to write a book—it would have to be very long—on how pubs in different parts of the British Isles vary. I have been to quite a lot of pubs in all parts of the shires. I remember once being taken by a friend to a pub in Ireland. There were 16 or 17 pubs in the village and only nine inhabited houses. It was surprising. I asked, "How do you explain this?" "Oh, well", was the answer, "I think some other activities might go on in the other houses". So I dropped the subject. A great deal of what I have written down has already been mentioned so I shall not repeat it.
I wish to say a word about the idea in the report that tenants of breweries' pubs could appoint, or lease to, tenants of their choice. That might be all right if they made the right choice, but would they have the experience to do so. I do not think that would be very satisfactory and some undesirables might be chosen by the sitting tenant. We must remember the problem of drugs. I am quite sure that, if that problem arose, some of the people quite

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innocently chosen might deal in drugs. So I do not agree with that proposal. I must not repeat what has been said before. It is always difficult if one speaks towards the end of a debate not to do so.
As regards the price of beer, the report seems to think that the retail price of beer will go down, but I am sure that that will not happen. There are many reasons for that, some of which have already been mentioned.
I have spoken for six minutes. I think that the report is very well prepared but I should like to make one criticism. To a great extent it has been prepared by academics. I am all for academics, but in their right place. I have had experience of small businesses. It has been my experience that one must have managed a business or businesses oneself to find out the problems. I shall not continue, but I wish to thank my noble friend on the Front Bench for his very good explanation of the matter. I must apologise that I did not hear all of his speech as I arrived so late. I heard quite a lot of it, but I hope to hear more from my noble friend towards the end of the debate.
5.30 p.m.
Lord Harris of High Cross: My Lords, after listening to the spirited warning by the right reverend Prelate against what he called the dissolution of the pubs, the least we can hope is that the local brewer of the right reverend Prelate will name one of its better hostelries "The Bishop of Truro", so that we can all visit it to enjoy the local brew.
The Minister had better watch his flanks. He may gain the eloquent support of the noble Lord, Lord Williams of Elvel, but rouse up a holy alliance of the Bishops' Bench, what used to be called in this House the "beerage"—I caught a whiff of beerage on the breath of some speakers—and that 25 per cent. woman, the noble Baroness, Lady Fisher of Rednal, to say nothing of such friends on the Cross-Benches as myself.
I personally welcome the MMC report mainly—indeed only—for the dissenting note by Mr. Leif Mills, who describes himself, in the best tradition of trade union leaders, as a:
"frequent consumer of real ale".
If we read the note of dissent written by Mr. Mills, we shall discover that he displays indignation, scorn and anxiety, but his warnings are sober and there are no signs of the report having been written, as they used to say, under the affluence of incohol. Not the least of the services that Mr. Mills has rendered is to challenge the idea that on complex issues of economic policy, committees should always seek a unanimous verdict.
In an IEA Hobart paper written 25 years ago, entitled Anything but Action, A. P. Herbert half seriously suggested that on these occasions we should appoint two panels, each charged with presenting the strongest case respectively in favour of and against a particular proposition. That candidly acknowledged the fact that good men can disagree and such a system would leave the reader, and in the last resort the Government, to judge the merits of the contending arguments.
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I congratulate the brewers in this situation for the generally high quality of the special pleadings which they have prepared to inform our judgment and to redress the balance of advocacy. Having pondered the opposing arguments of the MMC report and its critics, I strongly incline to the commonsense view expressed by Mr. Leif Mills that the distinctive quality and traditional popularity at home and abroad of the British pub is not unrelated to the tied estate. He acknowledges that competition does not and cannot work with textbook simplicity as economist members of the MMC frequently appear to assume. His most telling quip, which academics might dignify as a "rejoinder" to the majority, is to propose an examination question for their students. He proposes the following question:
"The brewing industry may well work in practice, but does it work in theory?"
I should add that Mr. Mills has himself studied economics, even if it was that rather dangerous amalgam of PPE at Oxford which has a great deal to answer for in enthusing many members of the Labour Party with socialism from which they have only recently begun fully to recover.
I seriously believe that this industry works well on the whole. It is at the forefront of the growing international leisure and service sector which, as the noble and gallant Viscount, Lord De L'Isle, said, will face intensified competition from Europe and further afield. Despite the charges of the MMC report, concentration of production is lower than in other comparable countries, choice is wider and prices in pubs are a much smaller multiple of the prices in competing off-licences and supermarkets.
Regional variations in prices offended the MMC, but they proved to reflect wide differences in property costs. Wholesale margins were singled out as looking high and rising, but turned out to be lower and stable because of discounts forced on brewers. What forced those discounts on brewers? It was competition in the local retailing situation. Lager looked relatively expensive to the geniuses of the MMC, but proved to have higher marketing and capital costs. The total misjudgment of the report was in asserting that brewers made their profits mainly from brewing and wholesaling. Yet Whitbread has said that, faced with forcible dissection, it would not be the only one to stick to its pubs rather than to its breweries.
The most devastating critique of the MMC comes from one of the foremost economic experts in competition theory, Dr. George Yarrow from Oxford. His conclusion is that:
"The MMC's analysis of the effects of vertical agreements dissolves into virtually total incoherence".
Even among economists, that is a fairly unfriendly observation. The major objection of Dr. Yarrow is that the report constantly refers to "the monopoly situation" on the formal reference criterion that at least 25 per cent. of beer sold on licensed premises was made by companies which controlled outlets, and/or made preferential loans to free outlets. Dr. Yarrow says there was no effort by the commission to demonstrate whether and in what respects market dominance existed or was exercised to the detriment

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of consumers. Dr. Yarrow points out that competition is a multidimensional process going beyond prices and profits to the costs of production, marketing, research, innovation, to say nothing of consumer choice, convenience and amenity, on which other noble Lords have spoken so eloquently.
Leaving aside the gross invasion of property rights in making brewers sell off most of their pubs, Dr. Yarrow predicts that the results will have anti-competitive effects to the detriment of small retailers and brewers, and still more in the long run on their customers. None of us can have missed over recent years the improved quality and range of services in British pubs, with a welcome emphasis on food and family facilities. Our expert witness Dr. Yarrow points out that an apparent restriction in one dimension may increase competition in other ways, not least when more supermarkets, off-licences and clubs sell more drinks for home consumption within the range of television and beyond the reach of muggers and breathalysers. In short, pubs have to compete vigorously to keep their customers. The economic efficiency gained by the tying of outlets is shared by lower prices to the customer.
If we leave aside ideological rhetoric, no economist really believes that in complex, diverse and differentiated markets the textbook assumptions of atomistic competition provide a serviceable model, whether for beer, water or anything else. The outcome of trying to push the real world in that direction would be more likely to produce instability, higher costs and less choice through homogenised output, and lack of progress through inability to finance long-term investment.
Save in rare identical products and in some financial markets, imperfect competition is the best competition we can have. Where we should always be vigilant is in purging avoidable restrictions upon production and distribution, above all to keep open entry to new competitors. In brewing, the key restriction which brings the tied house into question is the power of licensing justices to veto new entrants on some assessment of "need".
In its otherwise disappointing evidence, the Consumers' Association points out that licensing,
"makes it very difficult to open new pubs and gives a clear value to the licences owned by existing ones".
My proposal to rescue the Government from the MMC's ambush draws on the 1972 Erroll Committee on liquor licensing. It is that justices should henceforth be confined to their historical function (since 1552) of ensuring that the individual to whom a licence is granted is "a fit and proper person" and that his premises are suitable for their purpose. But let the justices be relieved of the intolerable burden and the impertinence of deciding local need, which is a business judgment for the market to regulate.
Once this artificial restriction on new outlets is swept away, the theoretical objection to ownership or control of outlets by brewers must be reduced if not substantially removed. In that event the academic critics could return to brood in their ivory towers and the majority of us, who I gather visit pubs at least once a month, can continue to enjoy
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the many and varied charms of that unique British institution.
5.40 p.m.
Lord Ingrow: My Lords, I too should like to thank my noble friend Lord Kimball for giving us the opportunity to consider the report. I must first declare an interest. I am a small brewer. I have worked out roughly where we stand: we affect the total supply of beer by somewhere around the fourth decimal point. Therefore I do not believe that I can be said to be a monopoly in myself. But I have spent a great deal of time in the brewing industry. I was appalled to realise that it was 50 years. So I have had over 50 years' practical experience of the industry.
I have listened to the many speeches this afternoon and I think that there are Members who think that they have a fair idea of what goes on in breweries. I do not think that; I am confident that I have practical experience of the industry, as has my noble friend Lord Liverpool.
In a small brewery one has to fight hard to keep going but one does not have to surrender. We have more free trade than we have tied trade. As noble Lords will be aware, there has been committee after committee on the subject. I had the pleasure of giving evidence for the Magistrates' Association to the commission of the noble Lord, Lord Erroll of Hale. He is still here, and very happy about the matter.
I understand that the most recent investigation was instigated by the Office of Fair Trading alone. There was no outcry and no demand from the public. The MMC appointed a committee of six members to investigate and report. Originally it was due to report within two years but took two and a half years of expensive hard work. When the committee produced its questionnaire it sent me the same one as the large brewers. It is all very well for the large brewers; they have plenty of people to complete such questionnaires. Noble Lords can guess who had to complete it in my brewery.
As a small brewer one has to look at everything that is going on and find out why things are happening. I had to consider the consequences to my brewery of each proposal.
I told my colleagues in the industry that, since the matter had been sent to the MMC, the commission would come back with the report, whether that was justified or not. That is what I have found from studying the report and that view seems to be borne out by what the noble Lord, Lord Thomas, said rather better than I could.
Four of the six members of the committee had never been in practical business of any kind. It is dangerous for this or any other industry to be subjected to destruction by well-meaning people who do not know their subject. Indeed, they were the kind of people to whom no sensible industrialist would offer gainful employment.
If one looks at the report one finds that it is all about figures: they know the price of everything and the value of nothing. I should like to give a few examples. The report said that too much profit was made. That is the kind of easy remark made by those

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whose salary comes not from business but from the public sector, and is fairly common. The report said that there was not enough competition; however, it has been said that if one wants competition one may be frustrated by the licensing justices who say that there are enough pubs and there is no need for any more.
There was apparently surprise among the members of the commission that the price of goods of all kinds varied up and down the country. It is extraordinary to read something like that. I wonder what right they have to judge anybody when they do not know the simplest facts of life. I find it disgraceful. Of course prices vary up and down the country. National variations do occur. Fish is cheaper on the docks than in the shops; beer is dearer in London—most things are dearer in London.
There is one point which I believe should be nailed, namely the brewers' tie. That is presented in the same way as nurses used to present children with the threat of Bonaparte if they did not go to bed quietly. The brewers' tie—what is it? If one owns a shop and sells very good shoes in it, that is one's right in accordance with the law. Someone may then come along and say, "I cannot sell my shoes as well as you. I want you to sell my shoes in your shop". If that happened with any product but beer most people would think it extraordinary. It is a most extraordinary state of affairs. If one wants to buy the goods of Marks and Spencer you buy what the board of Marks and Spencer says you can buy. If you want to go to the estimable noble Lord, Lord Sainsbury, you buy what the board of Sainsbury's says you can buy. You will not find its goods in Marks and Spencer and vice versa. Nobody grumbles.
I have only tenants in my pubs. I like to see people have an opportunity to succeed for themselves. They can do that in a small firm. But I do not think that I should want to continue in that way if the proposals in the report were to cramp our style completely.
If the proposals concerning loans were adopted we should be left with managers. I should stress that many clubs come to brewers because brewers will lend them money when banks will not. (I wish that banks were as careful in lending money in other areas). As it is, there will be a great reduction in the number of sporting clubs, and Clubs of all kinds, if we are not allowed to extend loans.
When the state enters business—and this is a proposal to nationalise elements of the private brewer—the results are not good. Perhaps we can cast our minds back to the nationalisation of various breweries before the First World War. The last—the Carlisle state breweries—I think was returned to private ownership 18 years ago. One brewery had to be shut immediately, the owners tell me, because it was liable to blow up, and the standards of decoration and the regulations which were applied in other pubs under that system were a total disaster. It does not fit naturally with the production of beer to run the business on Civil Service lines.
There was a mention of a consumer elite, and the report of the Consumer Council is before us. With respect, those people are the elite of any organisation.
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One can find just as many people who will say that they would rather have music in a pub as will say that they would rather not have music. The responses tended to come from the council, which is not the same thing as the ordinary British people.
It is hard going in a small industry. I know. I suggest that those who do not know or who think that it is very easy should try it, with their own money, and see whether they are competitive. We shall be round there in Carey Street when they file their papers.
It seems extraordinary that in the whole of the report the MMC does not appear to have thought what the consequences would be if all its recommendations were followed. Clearly the report needs to be amended before it can be considered.
But there is one danger that we should consider. If I had been presented with a proposal to confiscate substantial property I should have got rid of it as quickly as one would get rid of a primed grenade. That, bluntly, is my advice to the Secretary of State. He has the poisoned chalice there in his hands and he should get rid of it as quickly as possible. I can only say that there must be no question of the report having the same consequences on the government side as did the abolition of resale price maintenance in 1964.
5.50 p.m.
Lord Mancroft: My Lords, we must thank my noble friend Lord Kimball for instigating this useful debate. Furthermore, perhaps I may suggest that, when a noble Lord as loyal to the Government's cause as my noble friend draws attention to problems arising from a report such as this, the Government would do well to heed that warning.
I cannot lay claim to any great knowledge of the brewing industry; indeed, I do not now drink any alcohol, so I suppose that I could claim a certain disinterest. But I have one area of knowledge, in that I am closely involved in the treatment and long-term rehabilitation of alcholics.
Some people would suggest that those who sell alcohol are responsible for the problems of alcoholism and alcohol abuse. That is not a view that I hold. However, all manufacturers and retailers have a responsibility to make sure that no harm befalls the customer as a result of purchasing their products. The large brewers in the United Kingdom have responded well to the call for low-alcohol and non-alcolohic beers and have continued to promote them strongly through expensive advertising campaigns. They have also artificially suppressed the price to make them competitive with ordinary beers, which are much cheaper to brew. They have responded to that challenge in a way that leaves the tobacco and drug companies looking very foolish.
On the subject of so-called lager louts, the police have always told me that it is far easier to police tied or tenanted pubs than free houses because, if there is a problem, the breweries are both quick and keen to take police advice in getting it sorted out. Of course they have the money to implement rapid change which is not available to landlords of free houses.

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Problems of repeated rowdiness and violence in pubs can often be dealt with by changing the appearance and atmosphere of the pub. The introduction of restaurant facilities and the provision of a room where children can go is enormously helpful in discouraging troublemakers. Only the larger breweries can provide the capital necessary to make those changes.
Again, only the larger breweries have the money to run those incredibly expensive advertising campaigns that we need to alter public attitudes to drinking. To divest them of their pubs to any degree would deprive them of the inclination and money to continue to make those vital changes to an area of severe social problems.
In part, I suppose that I am addressing some of the problems raised by the noble Viscount, Lord Falkland. What worried him was, if the big six breweries are forced to sell off 22,000-odd pubs, how will the landlords of those pubs find the money to maintain standards as they should be maintained. That is a very real worry.
I should not dare to criticise so mighty a tome as the Monopolies and Mergers Commission report; indeed, I should hardly dare to lift it! On the face of it, much of what it concludes as recommendations seems sensible. The sale of guest beers, the lifting of restrictions on soft drinks and other freedoms would undoubtedly be good for the consumer, but on that one point of ownership of outlets by the brewers I am concerned.
If one stands back and looks at it, brewing is a very healthy industry. There is a large diversity of businesses, including international conglomerates, large public companies, small private companies and family firms, as well as many one-man outlets. There is a large turnover, good profit margins and a vast, stable and increasing asset base. Take away that asset base, as the report recommends, and the industry may be severely damaged.
In that matter, as in all others, it is only opinion. I cannot claim to have studied the industry as closely as the MMC has done. But on one thing I am clear: British pubs are a much loved institution and the brewing industry is successful and highly thought of abroad. In short, the system works, and if something works we should not mess about with it.
5.54 p.m.
The Earl of Shrewsbury: My Lords, I too should like to add my thanks to those of other noble Lords to my noble friend Lord Kimball for instigating the debate. I must offer the House my apologies for being unable to be present at the start of the debate. I had to attend an industrial function in the West Midlands.
It is a source of consternation to me that I am forced to oppose my Front Bench on this occasion. I should declare an interest as a great consumer of beer, although not in vast quantities. To my mind, there is no beer on earth that comes even remotely close to British beer, especially Burton-brewed beer, and I shall defend it to the very last drop.
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What the commission is demanding puts the British brewing industry under threat and undermines its very existence. In my view, what the commission is proposing is both heavy-handed and fatuous. Such interference would not be tolerated in other markets, for the allegations of a serious abuse of market power are flimsy, to say the least.
If my noble friend really believes that a monopoly situation exists in the brewing industry—and I am not so certain that I agree with him—it is a monopoly that has worked extremely well for many years to the benefit of the consumer. There is considerable freedom of choice in what the consumer purchases. I know that, if I visit a pub that does not stock my favourite tipple, I go elsewhere because the chances of being able to buy that brand nearby are very high indeed.
As the Financial Times in a leader on 12th June put it:
"Consumer choice is not restricted, just because individual outlets offer a restricted range of products… In some areas individual brewers may own too many pubs, but in general, product choice can be exercised by moving between different outlets".
But what a state we have reached, with 1992 only four years away, when we are asked to be parties to the undermining and dissipating of our great beer-making traditions. Why should our great brewing industries be forced to shed parts of their business by arguments, which are anything but overwhelming and which would also leave them less able to meet head on the force of foreign competition?
As we have heard from other noble Lords this afternoon, there are currently 200 independent producers in the United Kingdom, with six companies accounting for 75 per cent. of the market. That is hardly excessive by any standards and is positively benign when compared with monopoly power in overseas brewing industries.
Like many other noble Lords, I am not prepared to stand on the sidelines and watch our great brewing industries in this great country being torn apart. Those who suggest it are way out of line with reality and should be made to sit down with the heads of our great brewing concerns and be told—and should listen to—the facts of life.
Where I live in Staffordshire is within 15 miles of Burton-on-Trent, which is the hub and centre of Britain's great brewing traditions. The brewer that I know best in my area is Bass, Mitchells and Butlers. In the Midlands alone, that brewery has over 2,200 public houses and four distribution depots; it currently employs in excess of 13,000 people. It is a major supplier to the free trade and a major employer.
Implementation of the report would bring dire consequences for the industry. Hundreds of public houses would be under great threat, prices would rocket, there would be less choice of brands and hundreds, if not thousands, of jobs would be put at risk.
Bass alone would have to divest itself of some 5,300 outlets nationwide. It would be barred from entering into any more free trade loan agreements.

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That in turn would drastically affect working men's clubs, many of which would be unable to survive. The resulting social upheavals are obvious. There would also be a danger of invasion by companies outside the European Community. The effect on the Midlands economy alone could be disastrous. Already Birmingham breweries have had very hard times. Ansells closed in 1981 and there is now a proposal to close Davenports with its site going for redevelopment. Even Cape Hill, one of the Midlands' brewing success stories, which has undergone a recent £11.5 million modernisation programme, would be under threat.
Furthermore, the recommendations pay no consideration whatsoever to the role played by brewers in the communities that they serve. Bass has invested £ 100 million over the last two years within the Midlands. Its contributions to the arts, sports, charities and community projects maintain all that is best in the British way of life. None of that should be allowed to perish on the whim of the ill-informed.
Can my noble friend the Secretary of State honestly be serious—at a time when the Midlands is really moving forward in its quest for full employment—in wishing to implement badly thought out proposals that stand every chance of dragging the area back to the ghastly days of the late 1970s and early 1980s? Can he honestly say that such drastic measures will improve the structure of the industry? I think not. Can he honestly say that to take away property rights (which is what the enforced divestment of public houses means) is something that we as a property owning democracy should sit back and allow to happen?
Does he think that there is a sufficient market on which to float all those superfluous properties? Especially at the present time, with high mortgage rates which are already a killer, can he see people who previously were tenants borrowing without any financial assistance at all from the industry to run their own businesses? I do not know one banker who would support them. I do not know one person who supports the recommendations of this report.
6 p.m.
Lord Peston: My Lords, I take part in this debate as an Opposition spokesman on industry. My noble friend Lord Williams of Elvel did the same, and, as I understand it, the noble Lord, Lord Young, is still the Secretary of State for Industry.
As I listened to the debate it seemed to me that what was needed here was either the Secretary of State for Social Services and our spokesman for that on this side, since it appears that the brewers are undertaking to carry out social services and are not selling beer. Alternatively, our arts spokesman should be present as this debate raises concerns which are part of our national heritage; or we should have our employment spokesman because employment seems to be a fundamental issue in our discussions. There may also be a place for our agriculture spokesman because of the need to preserve our rural areas; or, if I understood correctly the right reverend Prelate the Bishop of Truro and there is some inextricable connection between the
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Church of England and the brewing industry, perhaps we need our religious affairs spokesman to be present.
In that case we are most fortunate on these Benches because our main spokesman on industry is also our religious affairs spokesman. To the right reverend Prelate the Bishop of Truro I must say that my old friend the noble Lord, Lord Annan, who listened to what he referred to as a splendid speech but who, regrettably, could not take part in the debate himself, asked me to remind noble Lords of the election song of the Liberals in 1880. They used to sing "The Churchman and the Brewer":
"We will drive them from the land For the non-Conformist children are marching hand in hand ".
I must say that many of the contributions to the debate have somewhat distressed me. As an academic myself, I do not mind any attack on academics. As noble Lords are aware, I can take care of myself in that regard—and noble Lords may discover that for themselves in a moment or two. However, I have to say that the group of members of the Monopolies and Mergers Commission who produced this report were not a group of academics. So far as I can see, except for one obvious exception they are a group of businessmen. They have some experience of running industry but certainly I do not recognise most of them as academics.
I do not think that it will do to attack the Monopolies and Mergers Commission itself simply because one does not like what it has done. That is my first point. My second point refers back to the comments of the noble Lords, Lord Orr-Ewing and Lord Thomas of Gwydir. I remind the House that the Brewers' Society said that it did not think that this industry was a complex monopoly. However, I think one owes it to your Lordships to remind the society that these matters were looked into in very great detail by the Monopolies and Mergers Commission itself, and it has simply said that the Brewers' Society is mistaken. The noble Lord, Lord Thomas, is perfectly capable of saying that he does not agree. But it must not be misunderstood: the Monopolies and Mergers Commission is a major body and it has certainly taken a view which cannot be dismissed out of hand. I was most happy to hear the Secretary of State say that the advice from his department was exactly the same. This is a proper inquiry which falls well within the terms of the legislation.
I was equally distressed to hear the noble Earl, Lord Shrewsbury, say that the committee was ill informed. I cannot believe that he has read the report. For example, the least of the information contained in the report is all the information that the Brewers' Society produced, and, to give it credit, that information is summarised in every detail. If the group were ill informed, it is not obvious to me just how it could have been ill informed. What was the Brewers' Society doing in respect of the enormous chapter which summarises its evidence in the report if it was not correctly informing the MMC? If the noble Earl will reflect for a moment, he may consider that his use of those words was not entirely appropriate. In my view the group were not even

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remotely ill informed and that is not the way in which to approach this report.
Let me add that I do not believe that if we find ourselves with a report of this kind, any Member of your Lordships' House can do anything but consider it carefully; or rather, noble Lords would be failing in their duty if they did not scrutinise the contents of the report. That is the purpose of this debate.
I must say that I have generally heard very little which gives any suggestion of this report being a definitive report. An enormous range of evidence has been considered. It is a report that, in particular, states very clearly the views of the Brewers' Society and then goes to a great deal of trouble to rebut those views. It is fundamental to our deliberations that the relevant issues should have been considered. They have certainly been considered by a group of people who have no axe to grind. They are people who stand independently and act, as they are obliged to do, in the public interest.
One may disagree with them. I am not for one moment suggesting that when a report comes forward anyone is forced to say that he agrees with it. To suggest that this report is anything other than a first-class definitive analysis produced in a bona fide manner and using the best available evidence does less than justice to the report itself or your Lordships' House.
At the risk of tedium, I shall quote from the report itself. The opening paragraph reads:
"We have unanimously concluded that a monopoly exists in favour of those brewers who own tied houses".
There is no shilly-shallying there. They say that they have unanimously come to that conclusion. Again, at paragraph 1.18:
"Eloquently though the industry's case has been put, we are not persuaded that all is well. We have confirmed our provisional finding that a complex monopoly situation exists in favour of the brewers with tied estates and loan ties".
Paragraph 1.22 refers to the,
"detriments which we see as arising from this lack of competition",
and in summary it lists the main detriments:
"the price of…beer …has risen too fast…the high price of lager is not justified by the cost of producing it"
etc.
Noble Lords can read this report as well as I can. All that is contained in the report. It is not a superficial report or one that has not considered the matter fundamentally and in my view considerately.
A particular point that I should like to draw to the attention of the House was also raised by the noble Earl, Lord Liverpool, although I think that the Secretary of State dealt with it quite admirably in his intervention. The report shows quite clearly that the real price of beer has risen over this period. Indeed, the noble Earl, Lord Liverpool, put the main point that it has risen in real terms at the same rate as real incomes have risen. Given that it is argued—as I think it was argued by the noble Lord, Lord Kimball, to whom we are thankful for introducing this debate—that there are economies of scale, in this industry to argue economies of scale plus a rise in the real price of the product at the
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same rate as the rate of rise in real incomes is all the evidence that is needed to show that this is a monopoly industry exerting a monopoly power. One could look for no harder evidence.
Lord Harris of High Cross: My Lords, I rise to intervene because the noble Lord, Lord Williams of Elvel, said particularly that this was partly a manufacturing business and partly a service sector. Over the past decade or so there has been a transformation of the facilities and amenities and everything related to the industry. One cannot say that it is demonstrable as the noble Lord says. Still it remains arguable.
Lord Peston: My Lords, I was about to return on other grounds to the remarks of my old friend, the noble Lord, Lord Harris, and I shall do so in a moment. However, I think that the evidence is overwhelming. We are not discussing a minor rise in the real price of beer—bitter in this case. I see that the noble Earl wants to intervene. Perhaps I may just finish this sentence. We are discussing a major price rise which could not possibly be accounted for by what has allegedly happened on amenities.
The Earl of Liverpool: My Lords, I am grateful to the noble Lord for allowing me to intervene again or at least to reply to him. I was referring to the 10-year period 1979–89 when prices rose by 15 per cent. in real terms. If one applies an average percentage increase, that comes to a little over 1 per cent. per annum. Given the enormous increase in that same period in the contribution to the Exchequer that has been made from the price of a pint through duty and VAT, I do not think that that is in any way unreasonable.
Lord Peston: My Lords, obviously the noble Earl is perfectly within his rights to say what he regards as unreasonable. Perhaps I may remind him that we should be looking at the same table. The table to which I refer is the one that takes out the VAT element. There may be a further element for VAT. However, this table is net of the VAT element. In my old Treasury days, the Exchequer was most obliged to the industry for generating a degree of revenue. Of that there is no doubt. I do not think that the ending of a monopoly here would diminish that revenue.
I was astonished and most disappointed by the speech of the noble Lord, Lord Harris of High Cross. It is a sad day for the Institute of Economic Affairs, of which he has been such an admirable leader—I recommend its pamphlets to my students—when its leading figure speaks in your Lordships' House in favour of one of the major restrictive practices—namely, the tie—that one can find in this country. I say that to him in terms so that he knows where I stand. He argues that the competitive model, which is the baseline for all serious analysis of economic welfare, no longer applies. If that is the case, the difficulty for him is that a very large number of the most interesting pamphlets ever to come from the IEA are now disowned by him. I found that a most

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unhappy intervention. Adam Smith would most certainly be turning in his grave on this matter.
Perhaps I may refer to Mr. Mills's minority report. There is a difference between a minority and a majority. We can agree at the very least that we are entitled to regard the majority group as bona fide people who have considered these matters. However, I was intrigued by Mr. Mills's point on competition. It was in the famous paragraph 42 to which my noble friend Lady Fisher referred. Mr. Mills states that the existing competition works. The point that many of us wish to make is that more competition will work even better and more in the interests of consumers.
I well understand why noble Lords on the other side have argued about the effect of either the recommendations of the MMC or those of my noble friend Lord Williams of Elvel. I was delighted to hear the sympathetic way in which the Secretary of State said that he was open to consider that line of advance. There is an enormous argument for going in that direction. However, it will weaken the big brewer. There is no doubt about that. But the whole point of trying to do something about monopoly power is that it weakens those who are exercising such power. That is the nature of the problem.
In praising the intervention of the Secretary of State, perhaps I may say that noble Lords will recognise how difficult that is for me on an occasion such as this. However, it is equally difficult for him to be praised by me when hardly a word has been spoken in his favour by anyone sitting behind him. His intervention that we must look carefully at the non-beer tie is also correct. We would very much agree with him. We are also well aware that the local monopoly problem will not necessarily be solved by the MMC recommendations. The problem of local monopoly is very difficult to solve. The Secretary of State and his department are looking at the local monopoly problems. He will be strongly encouraged by my noble friends and myself on that matter.
En passant, two aspects of the debate left me quite bewildered. I agree that pubs are better than they were. However, this mythology that pubs are so good seems to be rather exaggerated. Not all pubs, but too many, are still dirty, uncomfortable, noisy beyond belief and of course polluted by cigarette smoke. We know that they overcharge for soft drinks, and the public resent that. There is enormous evidence on that.
I do not wish to go back over the ground that my noble friend Lord Mason of Barnsley covered a few weeks ago. But we know that this admirable industry, envisaging itself as a social service, is still unable to provide a uniform standard measure of wine and is still unable to tell its customers what wine they are buying in the glass. I accept the premise of caveat emptor. I would not dream of ordering a glass of wine in a pub. Nevertheless, for those people who do, I should have thought that this marvellous social service industry, constantly concerned only with the public interest and not its profits, would move slightly more rapidly in the direction of letting the public know what they are getting when buying a glass of wine.
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The right reverend Prelate the Bishop of Truro and other noble Lords have raised the question of the rural pub. It is difficult to read the whole report through while listening to the debate. I have rapidly looked through the report a second time to see whether any definitive evidence was provided that rural pubs were threatened. If the subject is that important I am surprised that it was not a major part of the evidence of the Brewers' Society.
The issue seems to have arisen much more recently. When it realised that it was going to lose the argument on economic grounds, the society thought that it would go into rural preservation, heritage and such matters. I accept the view of the noble Viscount that one must not listen to academics because they have no experience of the world and do not know of these matters. However, as an economist, I am unable to see any evidence that the rural pub is threatened overwhelmingly, and I cannot think of any reason a priori why it would be. In particular, the brewers have not claimed that they are using monopoly profits in urban areas to subsidise the rural areas. They may not make the same profits in those cases, but I have not read that they are suggesting—they may now have changed their ground—that the rural pub is in some sense uneconomic and will go under in intense competition.
I have rather more belief in the market than most noble Lords opposite, though not the Secretary of State. In so far as the rural pub is desirable and desired, the market will provide appropriate rural pubs. I am not one of those who believes in competition in the market except where it concerns my own interests. I believe in competition in the market where it is relevant; and that is another matter altogether.
In conclusion, I believe that this subject has been thoroughly explored. I believe that the brewers have lost the argument. I believe that they now seek to reverse policy using a massive public relations campaign, financed no doubt by the monopoly profits that they earn. I believe that this is a critical moment for competition policy in this country. It is fundamental that the Secretary of State acts on this report and that he acts sooner rather than later.
6.17 p.m.
Lord Young of Graffham: My Lords, again I say how grateful I am to my noble friend Lord Kimball for initiating the debate and for giving all in your Lordships' House the opportunity to debate this matter thoroughly. I have been sitting in your Lordships' House for close on five years now. It is said—I believe it fully—that one judges a man by his friends. I have had a certain amount of culture shock this afternoon as I begin to wonder where I am sitting.
In summing up, I find myself under a very real difficulty. Much that I could say would, I fear, be market sensitive. So there is very little indeed that I can add to the statement that I made earlier in the debate. There are however one or two small items that I wish to mention. I ask all in your Lordships' House to read my words very carefully. They were

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not chosen lightly. I ask noble Lords to ponder on them and what they mean—just as I shall read carefully all the contributions made this afternoon—in order to see the way ahead in what is a very difficult situation.
I correct one or two inaccuracies. The noble Lord, Lord Williams of Elvel, outlined what seemed at first sight to be in large part the proposals of the Wolverhampton and Dudley Breweries and CAMRA. In case he should be thinking that I have changed my position, I assure him that it is he who has changed. I said that I was attracted philosophically by the proposals of the Wolverhampton and Dudley Breweries to release the tie above the threshold because that would let the market work. One would have more consumer choice rather than the other way round. I am sure that the noble Lord will be reassured to find that what he finds attractive is the working place of the market.
I say this to the noble Viscount, Lord Falkland. We should be careful when referring to 1992 and considering the situation in terms of alcohol abuse. There is not necessarily a better world when we cross the Channel. It is some time since I saw the current figures. But it seems to me that the consumption of alcohol, for example in France, is considerably above that of the United Kingdom. That is not necessarily something which we should want to follow. These are areas in which we must be very careful.
The right reverend Prelate the Bishop of Truro expressed concern, which many in your Lordships' House have echoed, for the future of the village pubs. Perhaps I have led a peculiarly sheltered life—the noble Lord, Lord Williams of Elvel, seems to know that I have led a sheltered life—but many village pubs seem to me to be free houses. I am not sure how many pubs are tied and how many are free. The issue has only recently emerged and the figures are not available in the report. For many village pubs other services become attractive. I am not sure what effect that will have. It is something which we must take into account in our further deliberations.
I must tell my noble friends Lord Orr-Ewing and Lord Thomas of Gwydir that 25 per cent. is not the test. We are talking about the ease of market entry. Many speakers have referred to other matters. But the great difference between this industry, the on-house licence, and any other, is that the number of public houses in the country is limited. The number is 18,000. It has increased by only 7 per cent. over the past 20 years. It is that, coupled with a vertical tie, that persuaded, I believe, the Monopolies and Mergers Commission to say that a complex monopoly exists. Of course what we are looking at is a way to remedy that difficulty.
I should tell my noble friend Lord Pender that there is consensus among the parties, which includes the National Licensed Victuallers' Association, that security of tenure should be increased by bringing it within the Landlord and Tenant Act 1954. To the noble Baroness, Lady Fisher of Rednal, I must say that one cannot always choose one's beer merely by going to the local pub. In some local authority areas, though not many, over 50 per cent. of the pubs sell
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only one particular make of beer. In other areas it is a third. But there is evidence of local concentration. That may be a fruitful area to consider.
I assure my noble friend Lord Liverpool that I will exercise care over the next few weeks. I have heard enough in the House this afternoon to be fully aware that this matter is not taken lightly. I assure all in your Lordships' House that I shall not take it lightly. Indeed, when I enter into the final series of meetings with the brewers I shall be concerned to ensure that all noble Lords' views are taken into account.
The contribution that puzzled me the greatest was that of the noted Cross-Bencher, the noble Lord, Lord Harris of High Cross. I have known and respected the noble Lord for a long time. I wondered whether he was changing his whole approach to the workings of the market until the penny dropped at the very end of his speech. The noble Lord said that we should bring into being the recommendations of the Erroll Committee back in 1973 on granting licences. Of course the easiest way to cure the problem is to abolish the licensing system. Do that, and we have no problems! The market will expand and customers will choose. But there are very good reasons why that is not possible. I doubt whether there would be many in your Lordships' House, if any at all, who would seek that kind of solution. It is because we are in that difficulty that we find ourselves in a difficult complex monopoly situation, as the report shows.
We have had an interesting debate. If I go further I shall begin to say things which those who look at markets may misinterpret. I am grateful for what many have said in the debate and I shall read all the contributions with considerable care.
6.24 p.m.
Lord Kimball: My Lords, I believe that the noble Lord, Lord Peston, forgot that criticism of the report came from behind him, to his left, to his right as well as in front of him. It is fair to say that this has been a unique debate. In fact, 17 noble Lords have spoken and 15 from all sides of your Lordships' House have found little in favour of the Monopolies and Mergers Commission's report.
I have worked out that the noble Baroness, Lady Fisher, in fact represented 6½ per cent. of our debate. The reduction in her percentage from 25 per cent. in no way reduces the importance of her contribution and her reflection of the problems in the Midlands.
We are all grateful to the right reverend Prelate the Bishop of Truro for his contribution. It may be his last week of duty as our prayer Bishop, but it is certainly not his last chance to contribute to our deliberations.
All of us on both sides feel that much of what the noble Lord, Lord Williams, said is worthy of further and deeper consideration. My noble friend asked us to give him an answer—I have his speech here which he was kind enough to send up to me—and study what he put forward about a threshold over and above which the national brewers would have to lease their houses to independent tenants at arm's length. That is little better than saying that they should be allowed to own only 2,000 houses. I am

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sorry, but I have to tell him after consultation that that is a totally impracticable proposition.
Lord Young of Graffham: My Lords, I hope my noble friend will forgive me and I am sure my noble friend consulted extensively with the whole industry, but the industry must reflect on what I have said and look at it carefully. Let us not come to any premature judgments.
Lord Kimball: My Lords, I accept that point, but I am giving an initial reaction to what my noble friend asked. My noble friend Lord Thomas showed us the extent of the legal tangle into which we may get. It is the Government's job to sort that out. It is not our job to do so. But we may find ourselves in a very difficult and serious situation.
I am grateful to my noble friend Lord Orr-Ewing because by his speech he succeeded in getting an undertaking from the Government which lays to rest the problem that we have all feared about the tie and its effect on clubs. It is a much more complicated issue than any of us thought before we started the debate. I really wonder what the hurry is. I hope we shall not rush into bringing forward the orders or even the primary legislation that is needed. After the debate we should go away as my noble friend has suggested and consult and reflect, because one of the reflections that must be faced is that the debate has shown that there is certainly no majority for any of these proposals. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Control of Pollution (Amendment) Bill
6.27 p.m.
Lord Gregson: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Gregson.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of Listowel in the Chair.]
Clauses 1 and 2 agreed to.
Clauses 3 [Restrictions on power under section 2]:
Lord Gregson Lord Gregson moved the amendment:
Page 3, line 35, at end insert ("or
(c) in the opinion of the authority, it is undesirable for the applicant to be authorised to transport controlled waste because the applicant has not provided sufficient evidence of technical competence and financial soundness for that purpose.").
The noble Lord said: I ask the Committee to bear with me while I present this amendment, simply because it is an extremely complex matter with a long history in your Lordships' House. It is intended to give the Secretary of State powers to help eliminate the cowboys from the waste disposal industry by requiring carriers of controlled waste to show that they are technically competent and financially sound before they can be registered under the Bill.
Control of the waste disposal industry is provided for by the Control of Pollution Act 1974. It relies on the waste disposal authorities within local government to control the disposal of waste of all kinds. So that they shall be fully effective, we must give them the powers that they need.
In their Green Paper published earlier this year the Government have proposed to strengthen waste disposal control by three methods: first, to introduce a duty of care on all the producers; secondly, the registration of carriers; thirdly, a requirement for technical competence and financial soundness of operators of waste disposal sites. That is the cradle-to-grave control recommended by your Lordships' Select Committee in 1981.
The weak link in the Government's proposals is the registration of carriers. The Bill which we are now discussing is in line with their proposals. It allows waste disposal authorities to refuse registration in only two cases: if the application is on the wrong form or if the applicant has been convicted of a relevant offence. In my opinion that begs the question. What good is a registration if waste disposal authorities are obliged to register as carriers anyone, however suspect, until he has been convicted of an offence?
My amendment will have the effect of providing a more effective register, with evidence of the competence and financial soundness of the carriers. An effective register is in the interests of the public, the producers of waste and the carriers. I stress that the public want the standard of waste disposal improved across the board.
If the Government's Bill comes before Parliament next year, producers will be subject to the duty of care. They will wish to know that the registered carriers are competent and therefore by employing them they are prime facie complying with the duty of care. Good carriers will not want unfair competition from bad carriers who cheat the system. The amendment proposes that carriers should have the same requirement of technical competence and financial soundness which the Government propose for site operators.
In another place Mrs. Bottomley replied on behalf of the Government at Third Reading of the Bill:
"We need a register of carriers of waste so that those who have a legitimate wish to continue their business feel secure that the people to whom they have entrusted their waste will satisfactorily meet the necessary standards".—[Official Report, Commons, 28/4/89; col. 1242.]
Furthermore, two House of Lords Science and Technology Committee reports (published in 1981 and 1989) called for the effective registration of carriers. The 1981 report stated:
"Licensing of sites, while being essential, is rather like shutting the stable door after the horse has bolted if it is not coupled with licensing of the earlier stages of operation—those engaged in collection, transport, storage and disposal. Here accidents can occur, wastes can disappear or profits can be raised by skimping on control procedures; and the ease with which anyone with a lorry can set himself up as a disposal contractor is alarming".
The 1989 report commented:
"Registration should be dependent on evidence of technical competence and financial soundness, equivalent to that which is proposed by the Government for site operators. Such a requirement would help to eliminate the "cowboy" carriers and

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would be welcomed by producers as an assurance that they were dealing with responsible carriers and were thus complying with the duty of care. The Secretary of State for the Environment wanted to place the responsibility for vetting carriers on producers and objected to the introduction of a closed shop by means of registration. Even if registration had that effect, the Committee would prefer a closed shop of competent carriers to a free for all among incompetent carriers".
I am aware that the Road Traffic Acts require licensing of transport vehicles, but they exclude any vehicle below 3½ tonnes. That exclusion means that a great many vehicles used for fly-tipping and dumping hazardous waste fall straight through the net.
I am also fully aware that strengthening the register in this manner will have to be carefully co-ordinated with the words of the Transport of Dangerous Substances Acts 1981 and 1986. But I am sure that giving the Secretary of State these additional powers will make the task easier for the producers of waste to meet their obligations under the duty of care which the Government intend to introduce.
The duty of care is onerous, particularly if the waste is hazardous or special as defined by the Control of Pollution Act. The transport of special waste is closely defined by the 1981 and 1986 Acts. The requirements are that: the vehicle is fit for the purpose and tanks are regularly examined and tested; precautions are taken against fire and explosion; the vehicle operator and driver have information available to make them aware of the risks created by that substance and such information is available in writing in the cab; and the driver has received adequate instruction and training to enable him to understand the dangers and what to do in an emergency. The Act also makes requirements for the competence of the carrier and financial resources. Those provisions are already on the statute book. I am concerned to get them read across on to the list of carriers.
My concern is that industry, and especially small companies, will require the maximum help in meeting the duty of care. In the spirit of the comments made by Mrs. Bottomley in another place, I ask the Minister whether he is prepared to allow local authorities to include on the list of carriers those who offer the special service in order to assist industry to comply with the duty of care. The qualified carriers would welcome that, as would the producers and the local authorities. The public would feel much more assured and the cowboys would be frozen out. I look forward with interest to hearing the Government's comments.
Baroness White: I support the amendment tabled by my noble friend. I was a member of your Lordships' Select Committee on Science and Technology which recently considered the matter. I was not a member of the committee which sat in 1981 but a long time has passed since then. A recent report was placed before your Lordships' House to which I should like to draw attention.
In the Second Reading of the Bill great stress was placed on the difficulties in obtaining any kind of conviction of the fly-tippers, particularly in London. Although the problem is more serious in London,
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especially in respect of builders' waste, there are also problems in the country. I used to own a cotttage in mid-Wales and half a mile away was a disused quarry. One had to experience to believe the trouble which we had with fly-tipping in that remote and delectable rural area. Every kind of disagreeable waste, not especially special or hazardous, could be tipped in there late in the evening or early in the morning. The local police to whom we complained from time to time said that they had no chance of identifying or catching those responsible.
The question of fly-tipping is widespread. As a member of the Select Committee I strongly support its recommendations. They specifically include the proposals in the amendment moved by my noble friend Lord Gregson. We are strongly in favour of registration but we want to have effective registration. It cannot be based almost exclusively upon the conviction of someone for a proscribed offence. Obviously that must be a relevant consideration but there are situations where it is extraordinarily difficult to convict and yet one may have a very strong supposition that the persons concerned are not proper or adequate people to carry out that particular function. The only way in which one can estimate that objectively is, as is suggested by the amendment before the Committee, that evidence should be produced to the registration authority of technical competence and financial soundness for the purpose.
In considering this we must take into account the opinions of the Secretary of State for the Environment, because he personally gave evidence to the committee. I have here the transcript of that evidence. He took a very detached view indeed of registration and in replying to Question 172 he said:
"Registration will simply provide a list of those carriers who have not been convicted of a serious pollution offence"—
in other words, a completely negative criterion and no suggestion that we should make any attempt to bring suitability for the operation into account. Mr. Ridley was quite clear that his main concern was to avoid anything which might be considered a closed shop. However, as my noble friend said, the committee dismissed that argument put forward by him and made it quite clear that it thought that the social problems and the health dangers of fly-tipping were even greater dangers than a closed shop.
When the noble Lord, Lord Nelson of Stafford, a member of the Select Committee, asked the Secretary of State at Question 175 whether he really thought that that negative criterion for registration—that is, simply not having been convicted of a serious pollution offence—would give adequate protection against the opportunities which present themselves to cowboys to get into this business, the Secretary of State replied:
"I never know whether cowboys is a term of endearment or censure".
There was a certain flippancy in his whole approach to this question. I feel that my noble friend Lord Gregson is absolutely justified in putting before the Committee the proposed amendment to the Bill which would strengthen it in a way which the Select Committee considered very carefully and which we felt was an essential part of the proposed legislation.
Lord McIntosh of Haringey: I should like to add my support to my noble friend's amendment. This Bill is in itself an attempt to strengthen the law. That is what it is about. It has been brought forward because the existing law is not adequate to the purpose.
There are two ways of strengthening legislation of this kind. The first is to increase penalties, and there is some move towards that in the Bill although it is not the main thrust of the Bill. The second is to remove opportunities to commit an offence and I applaud the thrust of this amendment to remove opportunities for the commission of the very nasty and anti-social offence of fly-tipping.
I remind the Committee that this is a very modest amendment. It does not say that local authorities shall have a free hand to refuse applications. It certainly does not give rise to the fears expressed in some quarters that it might lead to a closed shop of contractors who alone would have the privilege of disposing of waste. It says only that the local authorities may refuse applications because there is insufficient evidence of technical competence and financial soundness for that purpose.
If contractors can show that they are financially sound and technically competent, it is no help for the local authority to know that it has nearly caught them on a number of occasions in fly-tipping offences but has not been able to make the offence stick by achieving a conviction in the courts. The dependence of Clause 3(l)(b) on the fact that an applicant has been convicted of a prescribed offence, as my noble friend Lady White makes clear, is simply not adequate. The whole point of the Bill is that people are not being convicted of offences because the law is not adequate to secure convictions. Therefore, to rely on past convictions under the existing legislation before the introduction of this Bill is not an adequate protection. It does not give the local authorities an opportunity to use the register with due discretion and due concern for the rights of contractors in a rather more effective way than is provided for in the Bill as drafted.
I very much hope that this amendment, which is a modest and not in any way a dramatic change to the Bill, will achieve the support of the Government, the Committee and indeed another place when it goes back there.
6.45 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh): I thank the noble Lord, Lord Gregson, for his concern about the problems of waste disposal which have led him to table this amendment. I know he has a long record of interest in waste management and I am most pleased that he has agreed to chair the Waste Management Industry Training and Advisory Board to continue his involvement.
I fully understand the reasons why the noble Lord has tabled this amendment but I hope to convince him that it is unnecessary in the first place and that, if it were to be introduced, it would place a very large burden on both local authorities and legitimate industry which could not be justified by the benefits to be gained.
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The registration system contained in the Bill did not seek to judge competence. It sought to be a simple list of carriers whom a waste producer could approach in the knowledge that anyone on that list had not been convicted of fly-tipping. This would be the first step but not the only one towards the producer's fulfilment of his duty of care. The register will work by removing from the register those carriers who are guilty of waste-related offences and by making waste producers very careful not to employ anyone who is not on that register, otherwise they, as well as the carrier, will be liable to prosecution. That is the intention of the register.
Reference has been made to the remarks made about the competence of registered carriers by the Secretary of State to the Science and Technology Committee. What the Secretary of State was describing was the duty of care by which a producer will be required to take all reasonable steps to ensure the legal disposal of his waste. The first step towards fulfilling that duty will be to use a carrier who is registered with the waste disposal authority. The register will act as a "white list" of carriers who have not been convicted of waste-related offences.
Beyond the first step of using a registered carrier, the producer will be required to take certain other steps. These will be contained in a code of practice which is now being prepared, but the additional steps are likely to include the producer providing adequate information on the waste sufficient to allow the carrier to handle it correctly, receiving a transfer note from the carrier and being satisfied to the best of his knowledge that the vehicle is suitable to carry the waste. As long as the producer has satisfied his duty of care he will not be open to prosecution. Questions of the competence of the carrier will not be addressed through the register but through other enquiries that a producer might make to satisfy himself that the carrier is a responsible person.
The noble Lord seeks to introduce a new power for waste disposal authorities to satisfy themselves of the competence and financial soundness of a carrier. These are no simple matters, and moreover they are matters which would be totally new to local authorities. A whole new system would need to be devised for local authorities whereby they could judge competence and financial soundness. Moreover for most carriers this would duplicate existing controls of the Department of Transport.
The Department of Transport already controls both vehicle operators and the carriage of dangerous goods. Through operator licensing, the vehicle licensing authorities require evidence of good repute, professional competence and financial soundness.
These authorities are able to refuse or revoke a licence to anyone who does not satisfy their requirements, and as far as professional competence is concerned the applicant must pass a written examination. Operator licences apply only to those who operate vehicles of over 3·5 tonnes gross weight. I know that this is a matter which greatly concerns the noble Lord and I shall return to that issue in a moment, but first I should like to outline the other controls that the Department of Transport puts on the carriage of dangerous substances.

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These dangerous substances include all our special waste, and, indeed, we shall be issuing a consultation paper on special wastes very soon which will propose a much wider definition so that even more waste substances will fall under the dangerous substances regulations. These regulations require that operators should obtain full details of the substance to be carried and ensure that the driver has these details and knows what to do in an emergency. The operators must use vehicles which are fit for the purpose and which have been regularly examined and tested. Drivers must have received training in relation to their own duties under the regulations to enable them to understand the dangers of the substance being carried and, equally important, what to do in an emergency. All dangerous substances are to be properly contained, packaged and labelled. These regulations apply to the carriage of dangerous substances in all sizes of vehicle.
The Government therefore believe that these requirements meet the needs for detailed operational control over the carriers of waste for the majority of owners. We accept that the licensing controls do not cover the use of vehicles of less than 3·5 tonnes gross weight, though the regulations cover the use of such vehicles for the carriage of special waste.
If there is a gap in control from the Department of Transport, it lies in the carriage of non-special waste in light goods vehicles. I do not believe that this gap presents a serious risk. The amount of waste that can be carried in light goods vehicles is relatively small and non-special waste does not present a danger to life. Therefore, any individual carrier using a light goods vehicle for the carriage of non-special waste would not present a significant hazard to the public or to the environment by the carriage of that waste.
However, let us consider what the proposed powers for local authorities would add to the provisions of the Bill. An applicant might demonstrate both competence and financial backing. This might be of extra use to producers in using the register but does not mean that the carrier will not contravene waste disposal law. The cowboy carrier might find it relatively easy to demonstrate these qualities to the satisfaction of the authority, but it is his criminal intent that will lead to the fly-tipping.
The real remedy as with all crime is to catch the fly-tipper, prosecute him and remove him from the register so that he cannot legitimately be employed to carry waste again. The answer does not lie in setting up a new licensing system which would enter new areas of competence for local authorities and duplicate a system already in existence for the larger vehicles. There surely cannot be a justification for requiring a HGV operator to satisfy two authorities of the same information. To extend the requirements for technical competence and financial soundness to light goods vehicles might bring in the operators of as many as 2 million extra vehicles under control.
The noble Lord, Lord Gregson, said that he seeks to provide a power for the Government to introduce tests of competency and financial soundness if at some future date they wish to do so. The
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Government do not believe the extra burdens that this amendment would place on both local authorities and legitimate businesses could be justified by the benefit to the producer of having additional information on the competence of the carrier on the register. The Government do not feel the need for any reserve power in the Bill. In reality, the fact that the noble Lord proposed this measure as a reserve power would be quickly forgotten and the Government would be pressed very hard to include it in the regulations.
I therefore believe that this amendment, though worthy in its motives, is unnecessary for the purposes of the Bill and would significantly change the character of the register that the Bill will introduce. Therefore, I hope that the Committee will be able to resist it.
Lord Gregson: I confine myself to two points. First, the Minister replied explicitly, but this is only an enabling amendment. It does not cause the Government to do anything if they do not want to do so. Secondly, I can see no reason, if someone is qualified under the transport Acts to carry special substances, why that endorsement cannot be entered on the list of carriers. I can see no reason unless the Department of the Environment and the Department of Transport actually exist in two different countries with very poor communication! In my opinion there is no reason whatever why that endorsement cannot be transferred across to the carriers list to give those small companies that have to deal with the burden of the duty of care—which I fully endorse—some very good information with which to find a carrier with confidence, because that is what the law requires. Therefore, I must press my amendment.
6.56 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 41; Not-Contents, 45.

DIVISION NO. 1

CONTENTS

Addington, L.

Listowel, E.

Ailesbury, M.

McIntosh of Haringey, L.

Airedale, L.

McNair, L.

Amherst, E.

Mason of Barnsley, L.

Birdwood, L.

Mayhew, L.

Blyth, L.

Nelson of Stafford, L.

Bottomley, L.

Nicol, B.

Carter, L.

Northfield, L.

Cledwyn of Penrhos, L.

Peston, L.

Clitheroe, L.

Ponsonby of Shulbrede, L.

Cocks of Hartcliffe, L.

Raglan, L.

David, B.

Rugby, L.

Davies of Penrhys, L.

Seear, B.

Dean of Beswick, L.

Taylor of Mansfield, L.

Dormand of Easington, L.

Tordoff, L.

Ennals, L.

UnderhiU, L.

Galpern, L.

Whaddon, L.

Gregson, L. [Teller.]

White, B. [Teller.]

Hatch of Lusby, L.

Williams of Elvel, L.

Jenkins of Hillhead, L.

Young of Dartington, L.

Kirkhill, L.

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NOT-CONTENTS

Auckland, L.

Jenkin of Roding, L.

Bauer, L.

Kimball, L.

Belstead, L.

Lauderdale, E.

Boardman, L.

Long, V.

Boyd-Carpenter, L.

Mancroft, L.

Caithness, E.

Mersey, V.

Carnegy of Lour, B.

Mottistone, L.

Carnock, L.

Nelson, E.

Carr of Hadley, L.

Norrie, L.

Colwyn, L.

Orkney, E.

Davidson, V. [Teller.]

Pender, L.

De L'Isle, V.

Reay, L.

Denham, L. [Teller.]

Redesdale, L.

Dundee, E.

Rees, L.

Elliot of Harwood, B.

Rodney, L.

Ferrers, E.

Stockton, E.

Fortescue, E.

Strathclyde, L.

Gray of Contin, L.

Sudeley, L.

Hacking, L.

Swinfen, L.

Harmar-Nicholls, L.

Thomas of Gwydir, L.

Hemphill, L.

Trenchard, V.

Henley, L.

Vinson, L.

Hesketh, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 3 agreed to.
Remaining clauses agreed to.
House resumed: Bill reported without amendment.

Spectacles and Sight Testing
7.5 p.m.
Lord Northfield Lord Northfield rose to ask Her Majesty's Government what has been the effect on prices of changes in the law governing selling of spectacles and sight tests; and what further action they propose to improve competition and choice.
The noble Lord said: My Lords, I ask this Question tonight so that we can assess progress in breaking down the opticians' monopoly. Those of us who have repeatedly over the last 10 years raised this issue are and always have been, asserting two main principles. We are saying first that competition is still badly needed in the commercial activity of selling spectacles. Even when National Health Service frames existed, what we might call fashion frames—the private frames—were always 70 per cent. of the market. So there has always been need for competition in this purely commercial activity.
Part of our case on competition has been that the cloak of professional prescribing and the sort of sanctity provided by a consulting room atmosphere have been used, sometimes quite brazenly, to cover overcharging for spectacles. The patient, as he is called, has been trapped in the consulting room, hardly able to go elsewhere. We assert that sight tests are in the main simple and mechancical and that spectacles are quite cheap applicances, as I shall show by particular examples. Our first assertion therefore is the need for competition.
The second has always been the issue of personal freedom. The Office of Fair Trading report in 1982 on opticians and competition talked of,
"personal freedom to choose a lower level of service for a lower price."
We say that it is for the individual to choose rather than being ordered in a paternalistic way to pay more by the state.
Progress in asserting these two principles in the 1980s has been entirely due to your Lordships' House. We have never had help of any note from the other place. It is noble Lords here in this Chamber who, on this minor matter—yet one of considerable importance to many people and particularly the elderly—have made the running in the last 10 years. Let us see what that progress has been.
I began raising this issue in 1979 after periods of raising it in the other place. In the early 1980s we had as the background the Price Commission reports and the reports on one particular company which dominates the market, Dollond and Aitchison. The first step forward was to persuade the: Government to exert pressure on the General Optical Council to allow the display of prices in the shops. That could still be better. Some displays in opticians, windows still do not show prices clearly enough. People are still being enticed inside without knowing the price of the goods they are going to buy. We must press on with that.
The second stage was when the Government, embarrassed by charges that prices were too high, set up the inquiry by the Office of Fair Trading. Its report came out in 1982. I shall not discuss the findings at any length. But the report said that there was room for something like a 28 per cent. price reduction if a smaller number of opticians carried out more tests instead of charging high prices to remain in business doing a few tests. The report was quite firm in saying that competition had some way to go in that respect.
The Government chose the soft option. The report said that if the Government wanted to make at least some progress they could agree that the selling of spectacles should be allowed by non-opticians provided people produced a recent prescription. It was the soft option. Instead of freeing the market openly, they would allow non-opticians in to do the selling provided people brought along a prescription. They encouraged people to shop around. Interestingly, the Government took the powers away from the General Optical Council to make rules in this area. They gave up the General Optical Council deciding that there was no hope there of liberalisation. The Government had to take powers to make the changes by direct orders in council. So it has remained.
The third breakthrough occurred when this House by a free vote agreed to recommend the selling of over-the-counter reading glasses—ready glazed spectacles. That had not been easy. We had had to push the Government through two previous stages. We had to persuade them that there was no harm to sight in wearing the wrong spectacles. I remember that for years spokesmen from the Government Front Bench spoke about the harm to people's eyes if they wore the wrong spectacles. We had to get rid of that idea in the early 1980s. The Government made a complete volte face and finally agreed that they did not do any harm although they might give people headaches and it was perhaps stupid to wear

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the wrong ones. Secondly, we had to convince the Government that presbyopia, the kind of problem from which I suffer and which arises as one grows older, is not a disease. It means that one needs spectacles to magnify. That took a good deal of work, particularly by my noble friend Lord Rugby who has been a hero throughout the whole dispute with the opticians and with the Government during the 1980s. At last the Government conceded on that point too. Yes, presbyopia is no longer a disease; it is a wearing out of the muscles that focus. It happens to most people over the age of 40.
We also hoped that reading spectacles would help in another way—by showing cheap spectacles on sale in the shops, ready glazed. This would make the others look expensive, as they are in so many cases. The very cheapness ought to be showing up the exaggerated prices of spectacles made up to prescription. We hoped that that would be an added benefit of putting reading spectacles on sale.
Those are three stages through which we pushed the Government. We approached a fourth stage. I refer to the business on which we have had some news in the past week. The Government, full of confidence now and pushing the frontiers further, so we thought, announced that we would have two-tier eye tests. In other words, one could pay a simple fee or perhaps nothing at all for a simple refraction test, or one could pay the full fee and have the so-called medical test as well. It was an issue of personal freedom, a matter dear to the heart of myself and those who campaigned with me. However, in the past week, the Government unhappily have fallen on their face. The resistance in the Back Bench committee of the Conservative Party in another place to the proposal of two-tier testing has made the Minister run away, defeated, tail between his legs and unable to push it through Parliament. I am sad that he has shied at this fourth fence which we hoped he would mount, full of enthusiasm after the progress we had made in the 1980s.
We are now up against something else, which will tie in with the two-tier eye test, about which I shall say a word later. Now, in the optical world, high technology computerised machinery—the autorefractor and the autotester that goes with it—does the testing of eyes automatically without the need for the so-called professional testing. This is pushing the frontiers of technology a good deal further. It will force the pace anyway, and it will mean that we shall have to go to two-tier eye tests because progress of this kind cannot be resisted for long.
In the middle of all this progress—I shall come to examples of what is happening now—the Government stopped free sight tests. That was a mistake. It was absolutely premature, as the figures now show. The number of sight tests taken has fallen by 30 per cent. generally and by 40 per cent. in many areas. People are staying away from the optician. This is sad because, although those of us who believe in being able to buy reading spectacles in this way will continue to press for freedoms, we also believe passionately that everyone should have a regular sight test because it is sensible for them to do so.
How could it ever have been expected, as the Minister hoped, that the industry would begin to provide free sight tests? Free sight tests with that degree of imperfect competition? This was the chance for another fee which opticians had always been able to get in this industry by a degree of overcharging, as has been highlighted in various reports. Secondly, could we really have expected it, given good will? Would any optician give a free sight test and provide a prescription to somebody so that he could shop around, as the Minister wanted, only to find that that person had taken the prescription to another shop to have it made up? The idea was doomed from the start. It was not able to stand on its own feet as something that was likely to succeed once it was linked with shopping around and once the prescription was in the person's hand. I deplore the ending of free sight tests. The Government were hoping for a degree of competition that was not about to take place. The industry is not yet competitive enough. We have not pushed it into a new period of real competition.
For the rest of my remarks I want to talk not about the progress we have made in this Chamber, in Parliament and in the law, but about what is happening in the high street. I have done my own research and shopping around for reading spectacles. I have been to four or five main stores—Boots, Debenhams, Selfridges, Dollond and Aitchison and one of the new shops that specialises in making up spectacles. I should like to tell noble Lords what I found.
I went into Debenhams, which is part of the Burton group. I went to the optical department and saw no reading spectacles. I said to the girl, "Where are your reading spectacles?" She replied, "Oh, we just have a few but we don't put them on show". I said, "Why not?" She replied, "We haven't enough space". I said, "But these racks are half empty. You have plenty of space in this shop". She replied, "Well, I don't know, you will have to ask the manager. Anyway, I will go and find them for you. We don't put them on show. We keep them in a box in the storeroom". The girl went away and came back with a tin box from the storeroom. She opened it up and produced six, eight or perhaps 10—no more than that—sample frames. Many of them were alike so there was no real choice. I asked the price, She said, "Those are £14.95 and these are £16.95". I can tell the House that the cost to the retailer of the spectacles I saw is about £2 or £4. It is a complete racket.
I went on to Selfridges. I found a tiny display on the counter in the optical department. I asked, "How much are they?" The price was £15—very little. The whole point is to shore up the price as high as possible in order not to show how expensive are the others on display for private making up. Dollond and Aitchison had a poor selection, also in a tin box. It was clearly disparaged by the young lady trying to serve me. It was implied that they were no good. That was not exactly said but it was clearly hinted at, the purpose being to interest me in something much more expensive and elaborate.
Reading spectacles are not on proper display—I can say that from touring these shops—and their

1489
prices are too high. I have now told your Lordships—I hope it will be known outside—that the true cost to the retailer of reading spectacles of nearly all the kinds that I know now is somewhere between £2 and £4. Their price in the shops should not be more than £8 or £10. Ridiculous prices of £14·95 and £16·95 are totally unjustified.
I was sorry to see that one of the shops which, following the liberalisation in the middle of the 1980s, opened to do the making up without an optician present had joined in the racket. It had found, I suppose, that profits were easy to make and so had joined the act. The Glass Shop, which I praised in an earlier speech in the House, had only one or two frames on display and one or two in a drawer. Most of the shop was given over to fancy fashion frames costing £50, £70 or £80. Money is too easily made and the competition is imperfect. As far as I could see, the company had joined in the act.
One of the reasons for the fact that the concept of reading spectacles has not yet taken off is that the Government have issued no publicity. There has been no public education; indeed, you cannot find any indication on the walls of the doctor's surgery telling you that if you need a spare pair of spectacles you can get them as reading spectacles. People are not encouraged to know their prescription; but people should know what their prescription is. I know what mine is, as I know the size of my shoes. It is 125 dioptres for distance and 325 for reading. It is not difficult. People have been mesmerised into thinking that spectacle prescription is a highly complicated scientific business. However, for the vast majority of people—I do not say for all—that just is not so.
The big hope which we have is the emergence of companies such as the one called Crown Eye Glass, in which I have no commercial interest whatever. The company is selling spectacles called "Readyspecs". An interesting thing happended in that connection. The Daily Mail published a feature about the high cost of spectacles on 24th April. As a result the company sent the writer of the article a pair of "Readyspecs". She then wrote another article stating how marvellous they were. The spectacles start at £2·99 and the top price for the most elaborate fashion model is £9·99. She said that she was writing the column wearing a £4·99 pair which fitted perfectly, which were more comfortable, which gave her better vision and which looked just as expensive as the specs that she had bought two weeks previously which had cost £84. That, of course, was from another shop.
The result is this: I have with me the first 120 letters written to the company by people who read that column. Most of them say, "Where can I buy these spectacles? I did not know that we could buy them so cheaply. I am a pensioner and I have been conned into paying £80 for a pair of spectacles. Please, where can I buy Readyspecs? What can you do for me?"
The Government must do something about publicity. It should be pointed out that this is legal; people should know that they can buy spare or
1490
replacement pairs of spectacles. People should continue to have eye tests when they need them, but they should know that the freeom to buy exists. It was clear from many of the letters to which I referred that most people did not know that this freedom existed. The correct price range is that offered by Crown Eye Glass. It is the sort of range of which I approve; namely, £2·99 to £9·99.
The company now tells me that it has a thousand stockists; there are 90 Crown Optical Centres, as they call them; and the way they are working is not with the 300 or 400 per cent. mark-up which has been common in the optical trade, but with a 100 per cent. mark-up. In my view that is legitimate. It is competition beginning to work.
However, such companies then have to suffer from the dirty tricks trade. For example, people go into an optician to receive their prescription and the optician says to them. "Where will you have your spectacles made up?" The person say, "Oh a new cheap place just across the road." The optician then says, "What, are you going to those cowboys over there? You should not trust them." Therefore this company—and I suppose others like it which will come into the business—is fighting a great deal of the dirty tricks in order to get cheapness open to the public.
I am conscious of time so I come: finally to the price of spectacles made up to prescription. The average price of 1987 was given by the Federation of Ophthalmic and Dispensing Opticians as £58·14. I suppose that the figure must by now be well over £60. My own experience, again from shopping in the shops which I mentioned earlier—some of which were quite disgraceful—is that spectacles are still on display at ridiculous prices of £60, £80, and even £130 for the frame alone. Let me give your Lordships the true prices for them, as I did in respect of the ready-made spectacles. A plain lens, a non-complicated one of up to four dioptres costs somewhere between £2 and £4 a pair for the lens made by reputable firms such as Pilkingtons. A bifocal lens costs between £6 to £8.
Perhaps I may give your Lordships another example. I have with me a pair of bifocal spectacles. I broke one lens. I have taken it to various opticians during the past few weeks asking them for a quotation for replacing that one lens. The lowest quotation I have received is £24. The more general quotation I have received has been £30. Moreover, on top of that, I was told that as my prescription had run out I needed to pay £10 to have another eye test. Therefore, to replace a £4 lens in my spectacles the price would be about £40. That sort of racketeering must be stopped. We must force the pace of competition much further.
If you want to add on to the cost of the lens the cost of the frame, I can tell your Lordships that the most popular type of frame today costs the retailer somewhere in the region of £5 to £15. The most popular price is about £11 to £12. If you add the cost of the lens—which is £2 to £4, or perhaps a little more for bifocals—and the cost of the frame together and give a 100 per cent. mark up, which I think is fair, then the cost of a pair of spectacles made up to prescription today ought to be between £20 and £35. It should not be the £60, £80, £100 or

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even more about which people have written to the Daily Mail and to others. That is in line with what the Office of Fair Trading found in its report in 1982. It said that there was room for about a 30 per cent. reduction in the average price. We must get that reduction.
What about the future? I think that the future lies partly in the computerised machine called the autorefractor. I ask the Minister to send his officials to Sweden to see the machine operating. There, non-qualified people—that is non-opticians—are able to use it and sell spectacles. It prints automatically by computerised high technology. It prints out your prescription for you as you look into the machine when it is manipulated by the operator, who will have taken only an hour and a half to learn how to use it. It is foolproof and the president of the opticians, or one of the groups opticians, has confirmed that the machine is foolproof and says that no one should have any doubts about it.
The future has to be with that kind of system. We must return to two-tier testing in some form, allowing people to have a cheap test if they so wish. Then we must allow non-opticians to carry out that cheaper test, using the autorefractor and not needing the optician to do it. It is done in a matter of minutes and the computerisation of the system is a guarantee of the way that it operates in giving you a simple refraction print-out of your prescription.
I propose to place one of these machines on exhibition in your Lordships' House during the next few months so that noble Lords will be able to see just what these machines are and how they operate. This is the future and we cannot stop the march of scientific progress in this way. Moreover, we cannot stop the increase in competition which ought to take place. I still regard the prices of spectacles in our country as being nothing less than a scandal. We must continue to press quietly but determinedly to get those prices down.
7.27 p.m.
Lord Mottistone: My Lords, that was a typically fierce speech given by the noble Lord, Lord Northfield. Is it not funny that he has this real bee in his bonnet, as has the noble Lord, Lord Rugby, about spectacles? Spectacles are things which we do not have to buy every week, as we do bottles of wine or food. In the ordinary course of events, even when you reach my great age, and perhaps even the noble Lord's great age, you do not have to buy spectacles more than every two years. I have had my present spectacles for about three years and they are doing me no harm. Therefore it is much more equivalent to buying, say, a motor car; it is not like buying food. There is no need to see the matter as being a scandal where people are being put in a state of penury as a result of having to spend £50 once a week in order to buy a pair of spectacles. It is not like that.
The noble Lord talked about the opticians' monopoly. That issue goes back to the early 1980s when it was pointed out how dreadful the system was. However, opticians have always been in competition. They are professionals in their
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business. He wants them to have to compete with someone else. I shall return to my motor car analogy. Motor cars can only be produced by professionals because, apart from anything else, in no other way can they comply with all the government regulations. The noble Lord is saying that we should be prepared to buy our motor cars from someone who makes them in a back yard.
Lord Northfield: No.
Lord Mottistone: It is that type of thing. It is not unreasonable for certain types of goods to be produced by professionals who are in competition the one with the other. Opticians have been doing that all along.
The noble Lord then went on to boast—I thought rather excessively—with his great skill and experience, about how he managed in the House to get these things done by the Government.
Lord Northfield: No.
Lord Mottistone: That is how it came out. The noble Lord should read what he said. Having boasted as much as he could, he then castigated the Government for not going further—but everyone does that particularly when they are in opposition. I remember it well.
The noble Lord made one or two other points. Let us come to his Question, because what he said did not bear on the Question that he asked. He said that the Government should give more publicity to the latest regulations. The Government are not in the business of publicity. If one has freed the market—I agree that it has been freed—it is up to the marketeers to publicise themselves. I am advised that widespread advertising and publicity have dispelled some of the false notions that it costs £80 to buy a pair of spectacles. If people do not read the right advertisements, that is their fault. When I read a newspaper I almost invariably skip over the advertisement pages because it is much the safer way to get on in life—not permanently to be dragged in this or that direction and persuaded to buy something. Not that I can afford to buy much. I believe that the noble Lord over-exaggerated the lack of publicity.
The noble Lord then told us some stories about retailers selling the new over-the-counter spectacles. He quoted two retailers who were not in the business previously. They have taken up the business but not as seriously as he would like them to. They are ordinary retailers selling a product in the market. If they can sell it at a price at which he says they should be able to and make a 100 per cent. mark-up, why are they not doing that? Why does it matter if they are not? Why does the noble Lord want to insist that retailers should be forced to present their products in a way that he thinks proper rather than in the way that they as professional salesmen know is necessary when they are trying to sell the product? He is exaggerating the need to do anything else at the moment.
The noble Lord did not mention NHS vouchers for people on low incomes because that did not suit

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his argument. They have made a great difference to such people. His argument will not affect them one way or the other. They will still obtain their spectacles cheaply. There are several million such people. Many of them require proper spectacles because they are elderly or going blind. I do not believe that he would argue with that. One million people a year are referred by optometrists to their doctors. If the noble Lord carries his story to its logical conclusion, they will not be encouraged to have tests and obtain the proper spectacles. Those people could be at risk.
What the noble Lord has done so far has made more people not want to buy proper spectacles because he persuaded the Government that the eyesight test should be charged for.
Lord Northfield: No.
Lord Mottistone: It was his campaign which produced that result. Charging for eyesight tests puts people off having one. They cost £ 10 or so, which adds to the cost of the spectacles.
Lord Northfield: My Lords—
Lord Mottistone: If the noble Lord wishes to respond to me he might like to stand.
Lord Northfield: The noble Lord is mistaken. I opposed charging for sight tests. I voted for them to remain free.
Lord Mottistone: I am afraid that I did not hear the noble Lord.
Lord Airedale: The noble Lord said that he opposed the charge.
Lord Mottistone: He might personally, but the campaign conducted by him and his colleagues led to that result. If they had never mounted their campaign, it would never have happened. That must be so. All that splendid boasting about how in the early 1980s the noble Lord went on and on and on badgering the Government and they did something is all part of it. He may not want it, but it is there.
I shall not spend as long as the noble Lord did, which was a long time for a debate of this sort, because I suspect that your Lordships would prefer that I did not. The autorefractor as an alternative to proper eye tests is a bogus argument. I shall not say much about it because I hope that my noble friend the Minister will have a few words to say about it, and I do not want to steal his thunder.
It is important to know what the machine does not do. It does not perform accurately on people, such as young children, with active focusing powers; it does not work well on people whose eyes are not entirely clear, for example, the elderly and people suffering from cataracts or other diseases which obscure the media of the eye; and, finally, it does not give a binocular result which is balanced between the two eyes and only treats each eye independently. The last point is of great importance for the comfort of the prescription and the proper functioning of the
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two eyes to avoid eye strain and perhaps double vision. All those factors are what one might call comfort factors.
The machine also does nothing to show whether disease is present. That is a matter which should not be neglected. We are not all subject to such problems, but that does not mean that the 1 million people who are reported every year to their doctors should not be helped in some way.
There is no evidence to answer the noble Lord's question as to what effect changes in the laws governing the selling of spectacles have had on prices. The full effect has yet to be seen. It is possible to obtain spectacles at the budget end of the market at prices comparable with those which the noble Lord believed to be reasonable. If he has not found them, I have. It is a question of whether one shops around and whether one is trying to prove one's point when one does so.
It is too early to say how the situation with regard to sight tests will settle down. It is sad if the noble Lord is right and people are frightened to have their eyes tested. They should not be because it will only cost them between £10 and £15—whether or not they obtain new spectacles, and sometimes they may not need to—every two or three years, however old they are, except for the exceptional cases. That is not a large sum of money. It is like buying one-and-a-half bottles of whisky every three years. I am sure that those who like drinking whisky would not find that nearly enough.
On the whole, it is sad that we have to have payment for tests. It will be interesting to see. I believe that the Minister's reply will be that the Government will not go for the two-tier testing system, and that suggests that he will persuade the General Optical Council to report in two years' time on the situation.
I conclude by saying that we must wait for the report. There is no point in plugging away at bees in one's bonnet on this subject at the moment. Let us wait and see what is reported in a year's time. If the report favours the noble Lord, Lord Northfield—which I hope it will not—he can be perfectly happy and pipe down. On the other hand, if he does not like the report—which I hope he will not as a matter of principle—he can renew his attack and I shall be happy to resist him.
7.40 p.m.
Lord Rugby: My Lords, I suppose that if I were to nominate a personal subject, in the unlikely event that I were ever asked to go on "Mastermind", it would have to be "The Opticians Acts 1958 to 1988".
When I first became interested in the spectacle rackets of the post-war era, I was unaware that the noble Lord, Lord Northfield, was already giving a spirited defence of the cause of the public against a caucus of what I suppose one might call "parliamentary gerrymanderers" engaged in sequestering for themselves and their accomplices a monopoly control of the spectacle market, together with its enormous profits. At the same time they were depriving the public of their absolute right to

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self-determination in all matters concerning their eyesight. Without the stand which he and a few other stalwarts took in the face of the abuse which was liberally heaped upon them at that time, the cause might have been lost once and for all.
There have been various committees instigated by governments, both before and during my lifetime, in order to bring order out of a chaotic situation. There was one in 1906, one in 1922, then again one in 1927 under Neville Chamberlain, and a further one in 1949 under Nye Bevan. All these investigations were as relevant then as they are now. Not one of them can be construed as having brought about a successful conclusion to the chaos.
The 1927 committee failed because at that time the relatively high fees charged by a limited number of qualified specialist ophthalmologists could not cope with the requirements for eye examinations demanded by insurance companies and friendly societies. Indeed, the ophthalmologists could not take on the demand which was being put upon them and the friendly societies were unable to pay their fees.
The opticians therefore were asked to fill in the gap. But they had insufficient medical training, they could not offer a medical diagnosis because their trade was one of refraction only and because they carried out that particular job, they demanded commensurate fees. Refraction is not a medical discipline and it cannot be.
Running alongside that at the time were the itinerant spectacle vendors, the market stall sellers and the Woolworth emporia, all selling reading glasses to a middle-aged and elderly community. The community comprised at least half the population, for whom reading, the library, the Bible and their prayer books comprised a large part of their world for religious worship, self-education and their livelihoods. They were paying 6 pence a time for their glasses. The ones I am wearing at the moment are now £2·99 and I may say I am wearing them as a result of an autorefractor test.
As a result of the Opticians Act 1958, the opticians were able to do away with all that competition and to recoup what they regarded as their rightful financial status, and a lot more besides, by exercising exclusive control over the market, combined with compulsory eye testing against prescriptions. These prescriptions then became their own printed currency, underwritten and honoured by the Department of Health and Social Security, but without any obligation to diagnose diseases of the eye and without the training or the disciplines of medicine. In these circumstances, the British public became, optically speaking, the most disfranchised, the most deprived, the most exploited in the whole world, not to mention the most overcharged.
Perhaps I may just quote one example, which is myself. I became a victim when I needed my first pair of national health glasses. I needed them for my livelihood as a farmer and I was able to obtain the issue of one prescription. The glasses were flimsy affairs, they lasted a fortnight before one lens dropped out. I had to wait three weeks before I could
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obtain a replacement, although the need was vital. I was told that extra pairs would be available, but only at extortionate costs, both to myself and to the taxpayer, of further eye tests. But those glasses were unsuitable for industrial wear and tear, quite unlike the wonderful motor cars to which the noble Lord has just referred. In the end, I got my friends and my family to keep me topped up from America. I pointed out, in a similar Unstarred Question about eight years ago, that at that time it was quicker and cheaper for me to fly with Freddie Laker on his Skytrain and pick up a couple of reading spectacles off the shelf in New York than to deal with a British optician.
Anybody would think that with the population in this deprived state, with only one pair of glasses each, there would have been a good market for people repairing them. In this desperate situation there were people who tried, but what happened? They were instantly prosecuted by the General Optical Council under criminal law. They were fined and their stock in trade confiscated.
Several millions of people today are dependent on their spectacles. Had it not been such a profitable line for the opticians, I believe that those people would have been advised at an earlier stage not to have those glasses. Many millions only wish to use spectacles after middle age for reading, like myself. But for years they have been denied the right to choose and have been conned into continuous costly eye testing with extortionate price-fixing accompanying the process. There are many thousands of children whose parents have been wrongly advised to educate the eyesight of their children into permanent spectacle servitude, rather than using the orthoptics technology which trains the developing child's eye to do without glasses.
I can only summarise by saying that the verdicts of the previous committees have, in the light of experience, been proven correct. The warnings which they gave have not been heeded by the Government. It is imperative that they should be accepted and accepted soon. At least we have got back our reading spectacles after 30 years—a right of choice which should never have been removed. I thank the noble Lord, Lord Northfield, for sticking to his guns and for now bringing forward a new technology.
I shall give my reasons why that technology should not be given a restricted use warning such as we have had in regard to reading glasses in the past. An autorefractor gives an instant computer readout of the refraction of the eye. It does so with super accuracy and the operator does not have to be skilled. I understand that a sight test now costs £15 at an opticians but I have recently seen that engine drivers for British Rail will receive a full medical check-up for £10, which I may say probably also includes an autorefractor eye test.
It is highly important the customer requiring this computer information should have it available. It enables him to check his prescription; it enables him to know that he is not being cheated; it enables him to know that he no longer has to undergo an appointment system and a cross-examination and all that mumbo jumbo. The technology does not presume to offer any medical diagnosis, it informs

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the inquirer or customer of the physical state of his eyes. He is as much entitled to know his index of refraction—which is what the technology provides—as to know the thermal heat of his body by applying a thermometer to his mouth.
I hope that the noble Lord will not introduce any health arguments to counter the introduction of this new technology. We do not and never have gone to opticians for health checks. That has been amply demonstrated by previous reports which the Minister has it in his power to read.
7.50 p.m.
Lord Ennals: My Lords, I wonder whether it is proper for me to intervene in this marvellous debate between these two great campaigners, the noble Lords, Lord Mottistone and Lord Northfield, one of whom has for over 30 years been campaigning for whatever it is he is campaigning for. The other joined in late but has shown no less vigour. I pay my tribute to them as campaigners. The noble Lord, Lord Mottistone, is a rugged and testy battler for the other side, whichever the side is. I feel that I am in the wrong place, and I hope that the Minister will help me out.
My noble friend Lord Northfield will understand that I do not share some of his feelings of excitement with this historic campaign for freedom of choice; this two-man campaign which has set out to change the world. Now apparently the two campaigners find their efforts have been thwarted by the brazen behaviour of opticians and their professional colleagues. However, I think my noble friend is quite right to draw attention to some examples of gross overcharging which the Government should inquire into. Some of the examples my noble friend gave should be examined very carefully.
However, I sometimes think that the two campaigners are more concerned with choice and competition than with eye health. I am concerned with the health of the nation. I realise that lots of other people are also concerned with that. I am not trying to boast. I was delighted to hear my noble friend mention his own attitude towards what I believe is the Government's iniquitous decision to impose charges for eye tests. My noble friend naturally opposed that. I did not hear the speech he made on an earlier occasion concerning that proposal, but he voted against it. I am as strongly opposed as my noble friend, and perhaps slightly more, to the decision the Government took at that time. I thought it was an appalling decision, and I do not know why the Minister embarked on that route. As I recall, no one gave him any support at the time. Everyone was unanimous in their criticism of the Minister when he proposed the two-tier system which has been referred to by my noble friend.
It took a little time before the Secretary of State recognised the lack of wisdom of his ways. Recently he has repealed that decision. The first decision by the Government, which was to impose charges for eye tests, had the consequences that some of us predicted. It has already provided a deterrent to people as regards undergoing sight tests. It is very disturbing that there has been a fall of between 30 and 40 per cent. in the number of sight tests. The
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noble Lord, Lord Mottistone, said that £10 or £15 was not a high charge. Nevertheless, he and I thought at the time that the charge would be a deterrent for those on very modest incomes.
If the Government remove free sight tests, one must suppose that they do not attach very much importance to sight tests as a part of the National Health Service. The very fact that they decided that they would not include sight tests as a part of the National Health Service was an indication to many people that they did not place great value on the tests. I, however, do place great value on them. That decision of the Government was a great mistake, and has now proved to be a mistake. The Secretary of State proposed another device, which was the two-tier system. That, too, has been discredited. One million people a year are referred for medical attention following eye examinations because of the presence of eye disease, or indeed other systemic diseases such as high blood pressure. The main argument we presented at the time when the decision was taken to impose charges was that we wished to do nothing to discourage, and everything to encourage, patients to undergo regular eye tests, and not just when they felt there was a need.
Eye diseases are painless, symptomless and advance to a stage where treatment is extremely difficult or impossible before the patient is sufficiently aware of them to seek referral. We argued that it is only routine eye examinations which allow the early detection of disease. We argued that it is early detection which is so important to the eventual outcome of treatment. That view is widely held by ophthalmologists and it is widely held by Members of your Lordships' House. We can already begin to see the consequences of the lack of wisdom of the Government's policies. I hope that the Minister will confirm that the proposal put forward by his right honourable friend as regards a two-tier system gained no support from any sections of the profession, nor yet from any community consumer groups which are concerned with people's health.
I hope that the Government will not come up with any more bright ideas to disrupt the professions working in the field. It is not as if many measures have not already been taken in this field. I sympathise with optometrists when they say that they have had five years of competition changes, and that perhaps it is time to let things stay as they are for a while. In 1984 the deregulation of the dispensing of spectacles took place. Optometrists were permitted to advertise, and the Government withdrew the National Health Service range of spectacles. In the next few years optometrists were subject to regulations which required them to hand each patient a copy of his prescription. Personally, I warmly welcomed that provision and I think it is good professional practice.
In the past few years optometrists have, while maintaining their professionalism, risen to the challenge of the new situation by producing a wide range of information for patients and consumers at large in order to inform them of the services which they can obtain from optometry, and to give them general information on the importance of looking after their eyes. No one can say that optometrists

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have not risen to meet the new situation which the Government have imposed upon them. That situation was further disrupted at the end of last year by the imposition of the privatisation of the eye test for 60 per cent. of the population. As a result of the Government's decision to withdraw the two-tier sight test, the General Optical Council is co-operating with the association of optometrists and other optical bodies in order to undertake a review over the next 12 months of the eye examination service in this country. I warmly welcome that decision.
My noble friend referred to the autorefractor, as did the noble Lord, Lord Rugby. I think that it is accepted as being an extremely useful tool for an optometrist or an eye doctor in the initial screening of a patient. However, it cannot be denied that it gives no information whatsoever about the health of the eyes. It contributes useful but inadequate information about the optical powers of the eyes, but further professional interpretation and tests must be carried out before an acceptable prescription can be provided for each patient.
The noble Lord, Lord Mottistone, said that as people get older their eyes become less clear. This piece of machinery is less effective both for the elderly and for the young. So anyone who assumes that this is a bright new piece of technology which will remove the need for eye testing is mistaken. Nevertheless, I hope there will be development of this particular piece of machinery.
I hope the Government will not embark upon new proposals like the proposals of the Secretary of State on the two-tier system. As with the rest of the health service, optometrists should be allowed to get on with their own jobs. There has been excessive interference in this field by the Government. They interfered with the system of sight tests and then proposed two-tier sight test charges. I think it is time the professions were allowed to get on with their work. I certainly agree with my noble friend that the Government should look at any examples of gross overcharging in the interests of patients. However, I think we have had enough of new proposals which, although they may have been designed to improve the health service, have proved to have exactly the opposite effect. I look forward with interest to the Minister's reply.
8 p.m.
Lord Henley: My Lords, I think we can say that we have had a rather interesting debate this evening, with diametrically opposed views coming from different sides of the House. I am not sure that it will be possible for me to satisfy all noble Lords. I do not see how I could satisfy both the noble Lords, Lord Northfield and Lord Rugby, and my noble friend Lord Mottistone.
Nevertheless, I am grateful to the noble Lord, Lord Northfield, for bringing this matter to the attention of the House. The debate gives us the opportunity to reflect upon the success of recent legislation affecting our optical services and to acknowledge that even though the ophthalmic profession has faced
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a number of important changes in recent years we still see—I am confident that we shall continue to see—the same high standard of care and professionalism that we have come to expect.
Perhaps it may be helpful if I first recap and remind noble Lords of the progress and notable achievements this Government have made in reforming the optical services in recent years. In December 1984 the opticians' sole right to sell spectacles ended and the market was opened up for the first time to allow unregistered suppliers the right to supply prescription spectacles. In July 1986 the NHS spectacle scheme was replaced by the NHS voucher scheme, the new scheme providing a more effective way of targeting financial help for spectacles to those in need. On 1st April 1989 legislation was introduced to allow the sale of ready-made reading glasses without prescription to those over the age of 16. Noble Lords will recall that, as the noble Lord, Lord Northfield, mentioned, we agreed to abide by the principle of a vote in this House last summer when noble Lords concluded that it was right that reading glasses should be available without prescription to those over the age of 16.
The noble Lord asked about the effect the changes in legislation have had on prices. The change in spectacle provision has resulted in a wide range of competitively priced spectacle frames becoming available on the market. I understand that some companies are even offering free frames. But people must take advantage of the changes by shopping around to obtain the widest choice at the best prices. It may well be that competition arising from the sale of ready-made reading glasses will cause prices to reduce still further. It is of course early days yet and I am sure that noble Lords would agree that it would be unwise for me at this stage to make any firm predictions on the future direction the market may or may not take.
This leads me on to sight tests. We considered it right that those who can afford to pay for sight tests should do so, and on 1st April this year regulations were introduced restricting the NHS sight test to certain groups. Some 40 per cent. of people still get free tests under the NHS.
Again, however, it is early days and it would be unwise at this stage to make any firm judgments, but we do not accept that people will be deterred from having sight tests as a result of the introduction of charges. The noble Lord, Lord Ennals, mentioned a fall of 30 per cent. since 1st April. As I said, it is only two-and-a-half months and I believe that there was a large influx before 1st April. Speaking from my own experience, I went to an optician in March. I did not have a sight test but he advised me to rush in and have one before 1st April. That might explain some of the fall.
Similarly, I should not like to predict with any accuracy the effect that market forces are likely to have on sight test charges. I should hope that competition will mean that charges will be lower in 12 months' time. Certainly it would be unwise to make any assessments at a time when the market has undergone such major changes and needs time to settle. However, I understand from early indications that sight test charges vary enormously from about

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£7 to £15, with two of the larger companies settling on a fee on or marginally above the current NHS sight test fee of £10·40. In passing, I should mention to the House that in Holland, where sight test charges were also introduced, one of the large multiple optical companies broke ranks and offered free sight tests and now most of the market has followed suit. It may be that given time we may well see something similar occurring in this country.
At present we have no further plans to introduce legislation that will affect the optical services. Noble Lords are no doubt aware that following consultation the Government recently decided that it was not appropriate to lay regulations for a two-tier sight test—that is, allowing consumers in the private market the right to opt for a refraction-only sight test, one which would determine only their optical prescription and not provide any examination of the eye.
I am sorry that the noble Lord, Lord Northfield, seemed to think that we had fallen on our face; and I am sorry that the noble Lord, Lord Ennals, talked of my right honourable friend's lack of wisdom. However, I stress that we are a listening Government. The noble Lord laughs, but that is the case. We do not listen, only as the noble Lord suggested, to our honourable friends in another place.
We concluded that it was right that all sight tests should include an eye examination and any other test appropriate for the needs of the individual patient. We recognise that we must preserve the role of optometrists and ophthalmic medical practitioners in primary health care. The eye examination which can detect symptomless eye conditions, as the noble Lord, Lord Ennals, suggested, such as glaucoma as well as other medical conditions is a vital part of that role.
However, in reaching that decision it was also announced in another place that the General Optical Council, which is responsible for the professional conduct and education of opticians, has offered to undertake a programme of investigation into the optical services. Terms of reference have yet to be agreed but I expect the review to be wide-ranging and it will be carried out over the next 12 months. We shall obviously want to look closely at current regulations in the light of the council's findings.
We have heard much about the use of autorefractors this afternoon. There are two schools of thought—that of the noble Lords, Lord Northfield and Lord Rugby, and that of my noble friend Lord Mottistone. I took note of what the noble Lord said about Sweden, and I shall pass on his suggestion that we examine the experiment there. I shall be most interested, when he brings the machine here, to examine it.
My understanding is that while these instruments provide a good baseline measurement it is questionable whether they constitute an accurate refraction even when combined with auto optitesters. We have concluded, as I said earlier, that all sight tests should include an examination. Therefore we do not plan to change legislation to allow the use of automatic instruments to conduct
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"quickie" sight tests by unqualified people or for such instruments to be used as a screening device which will give people an indication of whether or not they need spectacles.
As I have already said, we shall of course honour our commitments to monitor the new arrangements arising from the changes in legislation. However, I must say that I expect it will be some time before the market settles down. Many people will have brought their sight tests forward as I suggested earlier, in order to avoid the charges from 1st April and therefore may well not have another sight test for at least two or three years. However, I think that we can look forward over the next five years or so to seeing competition develop in the optical field and to the consumer. I have no doubt that the profession will make full use of new technology and embrace it enthusiastically as part of the everyday equipment it needs to give a full and valuable service to the patient.
At this point it may be appropriate if I deal with one or two points raised by noble; Lords in the debate. I apologise in advance if I do not cover everything. The noble Lord, Lord Northfield, complained that we had not publicised the availability of reading glasses as widely as he would have liked. I take the same line as my noble friend Lord Mottistone. I do not accept that it is the Government's responsibility to publicise the availability of reading glasses in any massive advertising campaign. However, in leaflet G11 which is published by the Department of Health, reference is made to the availability of those glasses and people are advised that they can use National Health Service spectacle vouchers to purchase them.
The noble Lord, Lord Northfield, also complained that the cost of reading glasses was too high. Reading glasses are on sale in many outlets, as the noble Lord pointed out. My understanding is that it is possible to purchase reading glasses from as little as £2·99. That proves that competition is developing, and we hope that it will continue to do so. The noble Lord complained about reading glasses not being on display. They are on display in a number of outlets including, according to my information, some department stores. Obviously, we cannot force companies to display them.
I welcome the remarks of my noble friend Lord Mottistone about the voucher scheme, which is of great use on low incomes. I should say in passing that our evidence is that some 36 per cent. of people who choose to buy spectacles on the voucher scheme manage to buy spectacles within the voucher value. However, on the subject of overpricing—to which the noble Lord, Lord Ennals, and other noble Lords referred—if noble Lords wish to write to me on those points I shall look into the matter further.
The noble Lord, Lord Rugby, seemed to be of the view that opticians are not competent to carry out sight tests. I do not accept that line of argument. The training that opticians receive gives them the competence to be able to refer patients to their doctors where the sight test reveals an ocular or medical condition that requires diagnosis or treatment. We recognise that it is important for

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opticians to continue to develop their skills after they qualify. This year the Government have allocated £100,000 for that purpose. The British College of Optometrists has produced two videos which will be issued to all optometrists.
So far as concerns further changes in spectacle price and sight test arrangements charges, we propose to allow market forces to take effect and for the market to find its own level. We look forward to seeing both cheaper sight tests and cheaper spectacles without in any way seeing a reduction in professional standards and service available to the consumer. As I have aleady said, we do not believe that charges will have any deterrent effect on the number of people attending their optician and having their sight tested. I believe that we, as a country, can still claim to have one of the best optical professions in the world and one that offers high and caring professional standards to all its patients.
House adjourned at twelve minutes past eight o'clock.