Lords Sitting of 27 June 1991

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

Productivity
Lord McCarthy Lord McCarthy asked Her Majesty's Government:
Whether they expect a significant rise in output per person employed during the second half of 1991.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, it is not the practice to publish forecasts for output per person employed. However, the Government expect some productivity growth in line with the recovery in activity forecast for the second half of the year.
Lord McCarthy: My Lords, I thank the Minister for his Answer. Does he accept that it is important that the Government should anticipate some increase in output per person employed because it always predates any improvement in the level of unemployment? The last time we had this level of fall, it took 12 months before unemployment stagnated, and four years before it began to fall. Is that what the Government expect this time?
Lord Brabazon of Tara: My Lords, I can only quote from the Financial Statement and Budget Report concerning productivity. It states that unit labour cost growth in manufacturing is likely to slow sharply through 1991 and beyond, principally as productivity growth rebounds with the recovery in activity. I hope that is reasonably encouraging.
Viscount Caldecote: My Lords, does my noble friend agree that during the period of the Labour Government between 1974 and 1979, labour productivity in manufacturing industry was virtually static? However, during the period of this Government labour productivity increased by 50 per cent.
Lord Brabazon of Tara: My Lords, in the 10 years between 1970 and 1980 we were bottom of the table for G7 in manufacturing productivity growth. In the years between 1980 and 1990 we have been top.
Lord Peston: My Lords, I could have sworn that there was a Conservative Government during part of the period from 1970 to 1980. Noble Lords seem to wish to forget about that. However, it is up to them. The noble Lord referred to a recovery of activity in the second half of 1991. Is he aware that the second half of 1991 starts on Monday? Is it the current view of the Government that the recovery of economic activity will start at about that time? I know of no other economic forecaster who remotely believes that.
Lord Brabazon of Tara: My Lords, that quote came from the latest government prediction which was
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made in the Financial Statement and Budget Report. It looked for a recovery in the second half of the year. Whether that starts on 1st July, I should not like to say.
Lord Peston: My Lords, there can be doubt that it starts on 1st July. I wish to make sure that I understood the Answer. The statement that the noble Lord gave us was the one made at the time of the Budget. Is he now telling us that as a result of the Government's experience since the Budget, they have not reformulated their view as to what is likely to happen in 1991?
Lord Brabazon of Tara: My Lords, I think that we still expect a recovery in the second half of the year.
Lord Barnett: My Lords, given that there is a large balance of payments deficit during the current recession, what does the Minister think will be the source of the rise in output during the second half of the year? Why does he think that it will not result in an even bigger deficit and a return to the recession rather quickly?
Lord Brabazon of Tara: My Lords, as I said in my original Answer, the Question refers to output per person. We expect to see that as activity grows it is fairly normal for unit labour cost growth to come down.
Lord Stoddart of Swindon: My Lords, does the noble Lord agree that the recession has been longer and deeper than the Government's forecast? Does he further agree that it will be even longer and deeper still unless the Government immediately cut interest rates and cut them sharply?
Lord Brabazon of Tara: My Lords, that is a different Question from the one on the Order Paper. It is a subject for a different Question.
Lord Dean of Beswick: My Lords, the Minister must be aware of the recent report that shows that the average working week of 48 hours in this country is considerably in excess of that for similar groups of people in Europe. I speak as one who used to work in engineering, producing goods. Is the Minister aware that history has clearly shown that the longer the working week, the poorer the production per hour? When can we expect our people to have the same privileges and working conditions as their colleagues in Europe?
Lord Brabazon of Tara: My Lords, that is a matter for negotiation between employers and employees. It is not for the Government to interfere.
Lord Dean of Beswick: My Lords, the Minister must be aware that the Secretary of State in another place has already rejected it.
Lord McCarthy: My Lords, does the noble Lord agree that since he mentioned the 1970s, the rise in productivity growth began in 1976 when we had a Labour Government? More to the point, after what he said to us today about productivity growth and unemployment, is it not about time that the Government announced their policy for job creation?
Lord Brabazon of Tara: My Lords, there are more jobs now than ever before. The best way to produce more jobs is to have better productivity and lower inflation.

Kurdish Refugees
3.6 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
What progress is being made towards the return to their homes of the large number of Kurds from Iraq now refugees in Iran.
The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness): My Lords, good progress has been made. Latest figures suggest that about half of the original 1,200,000 Iraqi refugees who fled to Iran have now returned to Iraq.
Lord Hylton: My Lords, I thank the noble Earl for his encouraging reply. Can he explain why no safe haven was provided for the Kurdish refugees who went to Iran and whether there are any plans to remedy that state of affairs?
The Earl of Caithness: My Lords, as the House will be aware, considerable progress has been made on the humanitarian side for all the Kurds. UN security guards are looking after the whole of the northern area, including the Kurds who went into Turkey or up to the Turkish border, as well as those who went into Iran. The situation is being monitored by the UN security guards. The UN Secretary-General will take account of that in future policy.
Lord Cledwyn of Penrhos: My Lords, does the noble Earl agree that there is still considerable uncertainty about the safety of the Kurds in Iraq itself? Is there any truth in the reports that we have read that a rapid deployment force under the aegis of the United Nations is to be created on the Turkish border with Iraq? If that is the case, I am sure that the whole House would welcome it. Can the Minister say whether there is any prospect of the 1 million Kurds now in Iran returning to their own country?
The Earl of Caithness: My Lords, on the noble Lord's second point, we seek to encourage the return of all the Kurds to their homes. That is the whole purpose of the humanitarian exercise put forward by my right honourable friend the Prime Minister, now followed up by the United Nations.
With regard to security in the area, there are four points: first, the effective UN presence on the ground; secondly, the clear warnings to Iraq that any renewed repression will be met with the severest response; thirdly, a continuing deterrent military presence in the region to back up those warnings; and fourthly, the maintenance of sanctions. We are considering all four points.
Lord Cledwyn of Penrhos: My Lords, as I asked before, is there any truth in the report on BBC radio this morning that it has been agreed that a new rapid deployment force will be established on the Turkish border with Iraq?
The Earl of Caithness: My Lords, I replied to the previous question of the noble Lord in the terms I did because I understand that consultations are still continuing.
Lord Tordoff: My Lords, is there any news of the situation further south where there is no safe haven for the Shi'ite Moslems? Is there any news of the several hundred thousand people who are apparently in the marshes around Basra and who are under threat from Saddam Hussein?
The Earl of Caithness: My Lords, I understand the noble Lord's interest. It is however a different question to the one on the Order Paper.
Lord Mellish: My Lords, how much will it cost to look after the Kurds? Some of us believe that Saddam Hussein should bear that cost. However, I understand there is a central fund. What contribution is Belgium making to that central fund?
The Earl of Caithness: My Lords, the Security Council resolutions contain provisions for compensation to be paid by Iraq. As regards donations in cash and kind for the displaced people of Iraq that have been made since April 1991, to the best of my knowledge Belgium has not contributed.
Lord Molloy: My Lords, is the Minister aware that the Kurdish people have been greatly encouraged by the announcement made by the British Prime Minister that no British soldier will be withdrawn from Iraq until peace for the Kurdish people is assured? Does the Minister agree that in this emergency situation there is an urgent need to build decent homes and public buildings in the areas where the Kurds will be living to enable them to construct a nation of their own? Will the United Nations support the British Prime Minister's announcement by not withdrawing any UN soldiers while Britain does not withdraw any of its forces?
The Earl of Caithness: My Lords, I refer the noble Lord to the reply I gave to the noble Lord the Leader of the Opposition when I mentioned the four conditions that we wished to take into consideration. Without the fulfilment of those four conditions, we shall not remove our troops.
Lord Kilbracken: My Lords, do the Government recognise that the great majority of the Kurds still in Iran are city dwellers? They come mainly from the Kurdish cities of Arbil and Sulaimaniya where Saddam Hussein keeps increasing his security forces. I understand that he has as many as 58,000 of those forces in Sulaimaniya. Is it not therefore obvious that the Kurds who do not wish to go to the safe haven or to the area controlled by the Kurdistan Front will not return to their cities until Saddam's security forces return to Baghdad?
The Earl of Caithness: My Lords, the UN security guards are in place precisely to monitor situations such as the one the noble Lord describes. The UN security guards will monitor the security situation and report to the Secretary-General any violations of Security Council Resolution 688.
Lord Kennet: My Lords, what is the latest news of the build-up of the UN security guards? What is the target figure that it is hoped they will reach? How many security guards are now in place?
The Earl of Caithness: My Lords, I do not know the exact figure at the present time, but in the near future the UN will have about 500 security guards in place.
Baroness Ewart-Biggs: My Lords, there has been worrying news as regards the condition of Kurdish child refugees. Has the Minister any information about the welfare of those children and whether the organisations who seek to support them are receiving sufficient funds?
The Earl of Caithness: My Lords, as a House we should all compliment the non-governmental organisations on the work they are doing with families and children. I am happy to report that Britain is the largest single donor to the Gulf appeal of the International Committee of the Red Cross.
Lord Hylton: My Lords, on the Iraqi side of the frontier will the Government do something to support and back the efforts of the Swiss Red Cross which I understand has a distribution point at a place named Shaqlawa?
The Earl of Caithness: My Lords, as I said, we are the largest contributor to the appeal of the ICRC. We are the second largest donor in cash and kind to displayed people in Iraq after America. We are in front of Japan, Germany, Canada, Denmark, Finland, Australia and France. That is a record to be proud of.

Treaty of Rome and Single European Act
3.15 p.m.
Lord Bruce of Donington Lord Bruce of Donington asked Her Majesty's Government:
Whether they will confirm that the text of the Treaty of Rome, as amended by the Single European Act, as set out in Cm 455 of 1988 has been approved as authentic by the European Commission; and, if not, whether they will make available to members of the House the two official volumes of the Commission's version.
The Lord Privy Seal (Lord Waddington): My Lords, the original authentic text of the Treaty of Rome was published in the Official Journal in 1957. Her Majesty's Stationery Office has published a series of abridged editions of it with subsequent amendments. The two volumes referred to by the noble Lord were published in 1987 by the Office for Official Publications of the European Communities and contain the amended text of the treaty incorporating the Single European Act. Much related material is also included. I am pleased to inform the noble Lord that there is now a copy of this version in the Library. HMSO reproduced this text, minus the supplementary material, in 1988 as Cm 455. It required no separate authentication by the European Commission.
Lord Bruce of Donington: My Lords, I thank the noble Lord for his most courteous and prompt
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responses to my verbal approaches. Why is it that the amended Treaty of Rome, as amended by the Single European Act of 1986, was published in the Official Journal only in French? Why was no official version available at that time in the English language, as is customary? Does the Minister agree that so far—apart from the two volume official version of the Commission's Treaty of Rome of 1979 which has just been placed in the Library—this House and another place have not been provided with an authenticated copy of the original Treaty of Rome which the intergovernmental conference that is now taking place seeks to amend? Does not the Minister agree that it is most desirable that the confusion that has hitherto existed about the authenticated text be cleared up as quickly as possible so that the British people may know exactly where they stand in regard to the proposed amendments to the Treaty of Rome?
Lord Waddington: My Lords, I have an apology to make to the noble Lord. I am afraid that my letter was not fully authentic when it referred to the publication of the Treaty of Rome in 1957 in French alone. It was published in the then four official languages of French, Dutch, German and Italian. As regards the noble Lord's second point, Cm 455 is a copy of the two volume edition to which the noble Lord refers. Two volumes are required as they contain many related documents, including all the documents supporting the applications for accession to the Treaty of Rome by the various countries which joined the EC at a later date.
Lord Cledwyn of Penrhos: My Lords, will the Minister explain to the House why the two volume text is not available in the Printed Paper Office? What is the reason for the discrepancy between the EC text and Cm 455? Who decides the level of expense that may be incurred in making official government publications available in the Printed Paper Office?
Lord Waddington: My Lords, the two volume edition costs £80. Decisions on whether any paper is too expensive to be stocked by the Printed Paper Office are taken in the normal course of events by the senior clerk of the Printed Paper Office who operates within guidelines set by the Administration Committee. In contentious cases the decision is referred to the Clerk of the Parliaments. I am not aware of any discrepancy between the two volume edition and Cm 455. However, the two volume edition contains a lot of material related to the treaty, but far more than the text of the treaty.
Lord Molloy: My Lords, does not the Minister agree that the extremely important points made by my noble friend Lord Bruce of Donington are of great interest not only to this House but also to the general public? The points my noble friend has raised could have a great effect upon the future of this country. Therefore, should not this matter be examined extremely seriously?
Lord Waddington: I am sorry, my Lords, but I missed the last sentence of the noble Lord's question.
Lord Molloy: My Lords, I asked whether the noble Lord agrees that the points raised by my noble friend Lord Bruce of Donington are worthy of thorough examination in the interests not merely of this House but of the entire British people.
Lord Waddington: My Lords, I do not disagree with the noble Lord. The points raised by the noble Lord, Lord Bruce of Donington, are very important indeed. However, I hope that I have reassured the House in pointing out that the two-volume edition costs £80 but that there is available the HMSO edition which costs only £13.30. The latter is a copy of the relevant parts of the two-volume edition.
Lord Cockfield: My Lords, in view of the high level of interest shown by your Lordships in European affairs, would it not be desirable that copies of the consolidated edition should be freely available to Members of this House? I should have thought that one copy only shared among possibly 500 or more Members might be thought to be a rather thin supply. Does my noble friend also agree that the second volume contains important protocols, some of which relate to dependencies of the British Crown?
Lord Waddington: My Lords, I have already made clear that ultimately decisions on these matters are for the Clerk of the Parliaments. However, one has to bear cost in mind and one has to bear in mind that Cm 455 was produced for the specific purpose of being of assistance to Members of both Houses of Parliament. If I am correct in saying that it reproduces accurately the texts as they appear in the two-volume edition, there is a fairly strong argument for bearing in mind that Cm 455 costs £13.30 and the two-volume edition costs £80.
Lord Peston: My Lords, I have got myself a little lost in listening to all of this, but I am not a detailed reader of the Act and therefore it is all rather academic. However, I believe that noble Lords would like an assurance. When we deal with Acts of Parliament we are expected to deal with the authentic document. Sometimes when someone gets it wrong he is told that he has not used the right wording. Is the noble Lord the Leader of the House telling us that regarding European Acts there is no shadow of doubt in his mind that the shorter versions are perfectly satisfactory when it comes to dealing with all the statutory matters before us? That is the Question which my noble friend has raised and we should like an assurance that there is no problem whatever.
Lord Waddington: My Lords, I have no reason whatever to believe that they are not wholly satisfactory.
I did not answer a question which was posed by a noble Lord a short time ago and I shall do so now. There is no reason why the Commission should go through some procedure in order to mark Cm 455 as authentic. I am not sure what mechanism could be used to bring that about. We are at liberty, for our own convenience, to reproduce documents produced
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by the Commission. That is what we have done in this particular case for the convenience of Members of both Houses of Parliament.
Lord Bruce of Donington: My Lords, I thank the noble Lord for correcting the contents of the letter which he was kind enough to address to me on 25th June. Can he give an assurance, particularly in the light of the remarks that have fallen from the lips of the noble Lord, Lord Cockfield, that Cm 455 contains the entire text in the English language of both volumes of the authenticated treaty? If that is not the case, will the noble Lord explain why, in his letter of 25th June, he indicated that Cm 455 was among the abridged versions of the original treaty? Will the noble Lord agree that the consideration of these vital matters, which are of great constitutional importance to the United Kingdom, is probably worth the expenditure of £80 for those of our legislators who are required to consider these important matters in the national interest?
Lord Waddington: My Lords, I am sure that I can reassure the noble Lord on the matters which he has raised. Cm 445 contains all the treaties and the protocols. There is also an abridged version of the two-volume text which does not include most of the annexes, protocols and other associated texts which appear in the two-volume edition. I say again that the two-volume edition contains a great deal more than the EC treaty and the Single European Act. The first volume contains all the Community treaties and protocols, and numerous resolutions and declarations in addition. The second volume contains the documents concerning the accession to the Community of Denmark, Ireland, the United Kingdom, Greece, Spain and Portugal.

Lloyd's: Trading Liability
3.25 p.m.
Lord Williams of Elvel Lord Williams of Elvel asked Her Majesty's Government:
Whether they propose to introduce limited liability for members of Lloyd's.
The Lord Advocate (Lord Fraser of Carmyllie): My Lords, Lloyd's is a society of sole traders regulated by the Council of Lloyd's under the Lloyd's Act 1982, and any question of limited liability would be a matter for Lloyd's itself in the first instance.
Lord Williams of Elvel: My Lords, I am grateful to the noble and learned Lord the Lord Advocate for that Answer and delighted to welcome him answering DTI questions. I had no idea that a Scottish law officer of the Crown was such an expert on these matters. Is that perhaps because he is the only Minister of the Crown who is not a member of Lloyd's? I ask that question as a seeker after truth because the Government have refused to answer a Written Question of mine specifying which Ministers of the Crown in this House are members of Lloyd's.
Leaving that aside—and I am sure that the noble and learned Lord is a great expert on these matters

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—does he not agree that something has gone rather badly wrong with the Lloyd's market? Does he accept that many people who are otherwise wholly innocent and have no involvement in the management of Lloyd's find themselves suffering due to the incompetence not only of underwriters but also of regulation? Is it not time that the Government had a close look at the Lloyd's insurance market, which is very valuable to this country, made sure that it introduces limited liability, and comes under the Financial Services Act?
Lord Fraser of Carmyllie: My Lords, it may be some small consolation to those of my colleagues who are members of Lloyd's that they do not have to answer a Question on this matter and that it is left to me—I am not a member of Lloyd's—to do so.
As I am sure the noble Lord appreciates, Lloyd's itself has established a task-force, set up by its council, to examine the capital base of the Lloyd's market. That exercise was begun in January and it is my understanding that it is anticipated that it will take until the end of the year to conclude that examination. In those circumstances it would be wholly premature to intervene in any way while Lloyd's is undertaking that careful consideration of the capital base of the market.
It will be appreciated that as recently as 1986 a committee of inquiry was established under the chairmanship of Sir Patrick Neill. Given that investigation, it seems to me that no further inquiry is required.
Earl Alexander of Tunis: My Lords, in declaring myself a Lloyd's name, perhaps I may ask my noble and learned friend whether he agrees that, as the noble Lord, Lord Williams of Elvel, said, Lloyd's has historically made substantial foreign earnings for the balance of payments. Does he agree that we should take every opportunity to restore confidence to the insurance market, even if that means further consultations with the Inland Revenue and other interested parties?
Lord Fraser of Carmyllie: My Lords, of course the Government fully recognise the contribution which has been made by Lloyd's and by the rest of our insurance industry to the United Kingdom's invisible earnings. Lloyd's is both a unique and an important institution. I am, of course, aware that suggestions have been put forward by Lloyd's that arrangements for new tax reliefs might be brought forward on its behalf. However, as the Financial Secretary explained in another place, the Government saw serious difficulties in the proposals and were not persuaded that they would solve Lloyd's longer term problems.
Lord Ezra: My Lords, as the noble and learned Lord said, it is clear that it is for Lloyd's itself to put its own house in order. Nonetheless, will he not accept, as was implied by the Question of the noble Lord, Lord Williams of Elvel, that the insurance sector is a very important part of the British economy? It was initiated over two centuries ago and Lloyd's has been right at the centre of that? Is this not therefore a
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matter of national importance and should the Government not give very close consideration to the future of that important institution?
Lord Fraser of Carmyllie: My Lords, I can only reiterate that Lloyd's itself has decided to set up a task force to look at its accountable base. Of course, the value of the Lloyd's market is appreciated and that has been demonstrated, as the noble Lord knows. In supporting the United Kingdom insurance industry, we have sought to press for further liberalisation of insurance markets throughout Europe. It is well recognised how important it is, but the Government believe that Lloyd's should be left to see how it can best reorganise its affairs, if it so desires.
Viscount Mountgarret: My Lords, does my noble and learned friend agree that some of the devaluation of the confidence in and reputation of Lloyd's, to which the noble Lord, Lord Williams, referred, has been generated by a considerable amount of hype and media coverage and perhaps by the views and opinions of some noble Lords opposite and their party? Does my noble and learned friend agree that Lloyd's is best able to get its own house in order when mistakes have been made so that lessons can be learnt and it can once again render a great contribution to our invisible exports, as it has done in the past?
Lord Fraser of Carmyllie: My Lords, I certainly recognise that point. If my noble friend knows what the Opposition's policy on Lloyd's is, I should be grateful if he would inform me. If he cares to read Commons Hansard for last week and the week before, he will find that two wholly conflicting views are expressed.

Procedure of the House: Select Committee Report
3.31 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
I should like to draw special attention to the first item in the report on time-limited debates. Difficulties have arisen of particular concern to Opposition spokesmen winding up before the Minister replies to the debate. Sometimes they find themselves with less time than the limit set and sometimes with time to spare. When they have less time, it means that previous speakers have exceeded their limit. The Committee wishes to underline the point that is frequently made by the Chief Whip in announcing the time limit. When, for example, a 10-minute guideline is set, the time is up as soon as the figure "10" appears on the clock. I think that many of your Lordships believe that the figure is a warning that they should draw to a conclusion and they perhaps run on until the figure "II" turns up, but, if that happens, they have exceeded their time by one minute.
As regards Opposition spokesmen who find that they have more than the allotted time and can still leave the Government spokesman with his 20 or 25

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minutes to wind up, the Committee recommends some flexibility. However, it stresses that the spirit of time-limited debates should always be respected and, in any case, the 15-minute guideline for all debates that is given in the Companion should never be exceeded.
Perhaps I may briefly mention two other points in the report which are of some importance. First, the Committee gave careful consideration to the matter of instructions to extend the scope of a Bill which the Companion suggests are no longer in use. The Committee confirmed that view. It considered that they were undesirable and could be used to undermine the rules on the relevance of amendments. Secondly, with reference to the advice given in its first report—that noble Lords should take care to avoid giving the impression that they represent outside interests in the Chamber—that should in no way restrain your Lordships from declaring any relevant interests. I beg to move.
Moved, That the Second Report from the Select Committee be agreed to.—(The Chairman of Committees.)
Following is the Report:
ORDERED TO REPORT:—
TIME-LIMITED DEBATES
Winding-up Speeches
1. The Companion (p.86) stipulates the time allocated to the mover of a motion in a time-limited debate and the time when the Minister replying should rise. It explains that the remaining time is divided equally among the other Lords on the speakers' list. A Government whip announces a guideline for the length of these speeches, and explains that any Lord who breaches the guideline does so at the expense of subsequent speakers. Such arrangements apply equally to Short Debates and to motions to which a time limit has been applied.
2. On occasions, speakers exceed the guideline to the extent that those due to speak immediately before the Minister, the opposition front bench spokesmen, find themselves with almost no time left. The House, including whips of all parties, should make clear to a speaker exceeding the guideline that he should conclude swiftly.
3. On other occasions, speakers do not use up all of the time allocated. There has been confusion whether the opposition front bench spokesmen can extend their speeches into any spare time which has accumulated before the Minister rises, or whether the limit should be strictly applied in all cases. The limit remains a guideline which relies on the discretion of peers for its application. Opposition spokesmen speaking towards the end of a debate may sometimes find there is time for longer speeches before the Minister rises. Such speeches are not out of order, but it is desirable that the spirit of time-limited debates should be observed by all speakers. All speakers apart from the mover and the Minister in a time-limited debate are subject to the 15 minute maximum guideline for speeches given in the Companion (p.39).
Standing Order 35
4. Time-limited debates, with the limit set by motion in the House, are now an established feature of the House's proceedings. But at present, Standing Order 35 and the rules for the conduct of Short Debates have to be applied by business motion. The Committee proposes that Standing Order 35 should be amended to embrace all time-limited debates as follows:
"(1) If a Short Debate or a time-limited debate is continuing at the end of the time allotted to it, the Clerk at the Table shall rise and thereupon the Lord Speaker shall ask the mover whether or not he wishes to withdraw his Motion. If the mover does not ask leave to withdraw, or if leave to withdraw is refused, the Lord Speaker shall, notwithstanding the provisions of Standing Order No. 16, put the Question forthwith.
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(2) If an amendment is moved to a Motion which is the subject of a Short Debate or a time-limited debate, paragraph (1) shall have effect in relation to the amendment in like manner as it has in relation to the original Motion."
The Committee also considers that when the Companion is next revised, the rules for the conduct of Short Debates (pp 223–224) should be re-drafted to apply to all time-limited debates. The Companion should also make clear that the length of time available to the mover of the motion and the Minister in a 2 hour or 3 hour debate is the same as in a 21 hour debate; and that such limits in 4 hour debates are the same as for 5 hour debates.
INSTRUCTIONS TO EXTEND THE SCOPE OF BILLS
5. Instructions to Committees can be either mandatory or permissive. Mandatory instructions are now regularly tabled to require Committees of the whole House to consider bills in a certain order. Permissive instructions are most commonly used in private legislation, when Select Committees are instructed to give special consideration to particular issues. Such instructions usually occur two or three times a session. It is considered undesirable to give mandatory instructions to Select Committees, since that would pre-empt their consideration of the issue. In the case of public legislation, permissive instructions confer on a Committee authority to do something which, without the instruction, they would have no power to do; for example, to divide a bill into two bills, to consolidate two bills into one, or to extend the scope of a bill.
6. The last occasion when a permissive instruction to extend the scope of a public bill was passed in the House of Lords was in 1899. In 1906 such an instruction was moved, but the motion was withdraw. No similar instruction was tabled in the House until April 1991. A motion to extend the scope of the War Crimes Bill was tabled, but it was not moved because the bill was refused a second reading. The Companion suggests that the procedure has fallen into desuetude, but the precedents continue to be listed in Erskine May.
7. The Committee has examined the history of permissive instructions in the House of Lords, and the arguments for and against their continuing use. The purpose of an instruction to extend the scope of a bill is to allow the House to consider amendments to a particular bill which would, without the instruction, not to be relevant to the bill. Amendments to public bills are inadmissible if they are not relevant to the subject matter of a bill (Companion, p.98). The reason for restricting amendments in this way is that Parliament has an interest and a duty to legislate in a coherent manner and also to preserve orderly debate. It would not be in the interest of the House if amendments which were not relevant to a bill were tabled and discussed. Such amendments would take valuable time and, if passed, might create a situation where the Statute Book became increasingly illogical. A bill which is introduced into Parliament to achieve a particular purpose should remain for that purpose, and not be used as a vehicle for some other purpose. The Committee considers that instructions to extend the scope of bills are an undesirable challenge to the requirement that amendments must be relevant. Such an instruction could be seized upon as a means to circumvent advice that an amendment was not relevant. The Committee concludes that instructions to extend the scope of bills are undesirable.
WEARING OF ROBES BY BISHOPS IN DIVISION LOBBY
8. The Committee has considered the question of whether bishops should be obliged to wear robes in the division lobby as well as in the Chamber. It will report further when it has had the benefit of advice from the bishops.
PRIVATE NOTICE QUESTIONS
9. The Committee's First Report (Session 1990–91) confirmed that "proceedings on Private Notice Questions should follow the rules for Starred Questions". One difficulty with such a practice is that in certain circumstances, this may restrict proceedings more than the House would wish. The Committee therefore suggests that once a Private Notice Question has been accepted as of sufficient urgency to require an answer, the Leader of the House should consider whether the Government should make a statement to the House, rather than answer a Private Notice Question. Circumstances when a statement would be more appropriate include when a long answer was required, when the

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Lord answering was the responsible Minister, or when the House of Commons was not sitting.
SPEECHES ON BEHALF OF OUTSIDE INTERESTS
10. The Committee's First Report (Session 1990–91) reiterated the Companion guidance that Lords speak only on behalf of themselves:
"When speaking in the House, Lords may indicate that an outside body agrees with the substance of the views that they are expressing; but they speak for themselves and not on behalf of outside interests."
The Committee concluded that "Lords should therefore take care to avoid the impression that they are representing outside interests in the Chamber." It wishes to make clear that this guidance should in no way prejudice the requirement that Lords declare their interests. Whilst Lords should make it clear that they are speaking on their own behalf, this should not restrain Lords from declaring any relevant interests to the House.
INDUCTION COURSE FOR PEERS
11. The Committee recommends an induction course to help new peers to learn about the House and its procedures. The first course should be an experiment, and should take place in the autumn.
COMMITTEE OF SELECTION
12. The terms of reference of the Committee of Selection under Standing Order 61 limit its powers to the choice of members of Select Committees and the panel of Deputy Chairmen. The Committee recommends that these terms of reference should be extended to allow the Committee to choose Lords for bodies other than Select Committees. It accordingly recommends the following addition to Standing Order 61:
"(5A) The Committee of Selection shall also have power to select and propose to the House the names of the Lords to form any other body, not being a Select Committee, referred to it by the Chairman of Committees."
On Question, Motion agreed to.

Welfare of Animals at Slaughter Bill
3.34 p.m.
Read a third time.
Lord Houghton of Sowerby: My Lords, I beg to move that the Bill do now pass. I hope to be permitted to make one or two brief observations. Unfortunately, the noble Lord, Lord Soulsby of Swaffham Prior, cannot be here and wishes to express his regret.
The Bill obtained its Second Reading on 2nd May last and has not occupied any of the time of your Lordships' House since that date. The reason why no amendments were put down was not lack of interest or a lack of ideas as to ways in which the Bill might be improved or extended but solely because the noble Baroness, Lady Trumpington, beseeched us, in advising us what the Bill contained, that we should if possible allow it to go forward without delay and not go back to the House of Commons as it is already long overdue. That is what happened, so the Bill can now go straight from your Lordships' House for Royal Assent.
The Bill becomes operative in two months' time. It has been on its way here for years. It left the Farm Animal Welfare Council as long ago as 1988 and the recommendations that it contains have gone unreformed ever since. It is high time that the new conditions regarding the training, employment and supervision of the staff of slaughterhouses were
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brought into operation. Those noble Lords who read the Second Reading speech of the noble Lord, Lord Dunleath, will have been shocked to read of some of the malpractices that have crept into methods at slaughterhouses. They are abhorrent and should be stopped. The noble Lord gave us the example of the metal discs in the ears of cattle which are often ripped out of the ear before the animal goes forward for execution. That puts the animal in serious discomfort and pain on its way to slaughter and should be stopped.
In addition, we are probably less well-informed than we should be as to the kind of people who are employed in slaughterhouses. It is not a prestige occupation and we probably do not pay enough attention to it. We are all responsible for it and to a large extent we probably are concerned with what they do. The conditions that are now to be imposed are therefore long overdue. The Bill relates to the training and supervision of slaughtermen, to codes of practice, and so on, so I hope that we shall send forward the Bill promptly.
Some of my cynical friends ask, "Where does the welfare of animals at slaughter come in? What kind of welfare do you wish to provide for an animal on its way to slaughter?". I reply by giving a human parallel, saying that we all like to think of our welfare at the point of death. The principle is exactly the same. We would not like to be ill-treated however near to death we were. It would only add to the misery of the final tragedy. Our humane instincts extend that consideration to animals.
Noble Lords will welcome the Bill. The supervision under the Bill may not be adequate because so much can happen at great speed in slaughterhouses today. Tens of thousands of sheep go through slaughterhouses in a day. It is a mechanised operation and things can happen which many people deplore. The Bill is just a thought for the welfare of animals for slaughter and in passing it we shall probably improve the final moments, if no more, of the existence of animals which have to undergo the final solution in the interests of mankind.
Before I sit down, perhaps I may add that I wonder whether this situation will go on for ever. Will humankind slaughter animals by the million every day in order to feed man? Is there no alternative in sight? Will it extend and increase with the population? If so, the world will have as one of its biggest industries the

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slaughter of animals for human consumption. The nobility of the human race deserves better. I beg to move.
Moved, That the Bill do now pass.—(Lord Houghton of Sowerby.)
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, perhaps I may simply say that animal welfare is a matter that we take very seriously indeed. I submit that our record is a creditable one. I am most grateful to the noble Lord, Lord Soulsby, for bringing this short Bill before the House. I am equally grateful to the noble Lord, Lord Houghton, for gallantly picking up the threads of this last round. I look forward to introducing further provisions for the welfare of animals when time permits.
On Question, Bill passed.

British Technology Group Bill
3.41 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay): 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 Reay.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Vesting of property etc. of NRDC and NEB in a successor company]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 1:
Page 1, line 15, at end insert:
("(1A) No order under subsection (1) above shall be made until the Secretary of State has—

(a) by order nominated the successor company; and

(b) made an order under subsection (1B) below.

(1B) The Secretary of State may by order sell or transfer all or any of the securities of the successor company that he or the Treasury may hold to third parties provided that he has laid before Parliament a statement announcing—

(a) the identities of the third parties concerned, and

(b) the consideration for the sale or transfer,

before such an order is made.").
The noble Lord said: First, I must thank the Minister and say how grateful we are that he has succeeded in the attempt that he promised at Second Reading in producing the articles of association of the successor company. We shall have more to say about that as our debates go forward in Committee. I believe that the noble Lord has honoured not an undertaking but nevertheless a promise to do his very best. He has done his very best and I am sure that the Committee will be extremely grateful to him for having achieved it.
Amendment No. 1 is designed to ensure that the British Technology Group as it stands at present does not go into the hands of what I would call undesirable owners without Parliament being informed. Perhaps I may take the Committee through the provisions of the amendment.
The order under subsection (1), mentioned in the first line of the amendment, is the vesting order which the Secretary of State may make to vest the property of NRDC and NEB in a successor company. The provision under paragraph (a) of the amendment is a condition precedent to that order being made, as is paragraph (b). Paragraph (a) should not cause any great difficulty for the Government. It says that we should know the successor company into which the property of BTG—if I may so refer to it, and I shall continue to refer to it as such throughout the Committee stage—is to be vested.
The important point comes under subsection (1B) of the amendment which states:
"The Secretary of State may by order sell or transfer all or any of the securities of the successor company that he or the Treasury may hold to third parties provided"—
at this point I introduce two more conditions precedent—that we know to whom the company will be sold, how much will be paid for it and on what conditions the transfer of securities will be made. Until those matters are known and laid before Parliament, the Secretary of State, according to my amendment, would not be able to make the order to sell and therefore would not be able to make the order to vest.
We suggest in Amendment No. 1 that, before the Secretary of State makes the vesting order, Parliament should be told who will buy the property and whether it is a consortium of people, institutions, banks, or whatever it might be, together with the consideration price and other conditions.
I do not have to tell Members of the Committee—we had a lengthy discussion of this matter at Second Reading—that BTG is quite different from other companies that have been privatised. Its assets are intellectual property and people —approximately 190 people of great skill. It is not a company which will be floated in the way that British Gas, British Steel or other privatised companies were floated. It will be sold to a consortium on a private basis. In those circumstances, I believe that Parliament ought to know before the vesting order is made who are those people, what the price is and what will be the effect of the sale. I beg to move.
Lord Reay: It may be for the convenience of the Committee if I take an early opportunity to explain what action the Government have taken since the Second Reading on 3rd June. During the earlier stages of the Bill the Government made clear that they would listen carefully to all the views and representations expressed in this Chamber, in another place and outside Parliament.
During our debate at Second Reading, as the noble Lord reminded us, I undertook to try if possible to ensure that the draft articles of association were made available to this Chamber while the Bill was before it. I am therefore pleased to be able to report that draft articles of association for the successor company to the British Technology Group were placed in the Libraries of both Houses on Friday 21st June. Additional copies are available in the Printed Paper Office and the Vote Office. I am grateful to the noble Lord for his words of appreciation of the fact that these articles have now been laid before the Chamber.

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The principal feature of the draft articles is a provision for a government special share which will protect certain provisions in the articles. The two key provisions protected by the special share are in Article 42—a 15 per cent. limit on control by any one shareholder of voting rights in the privatised company (for practical purposes, a 15 per cent. limit on individual shareholdings)—and in Article 12 a restriction on substantial disposals of assets without the consent of the special shareholder. Those provisions are in keeping with precedent in previous privatisations.
The special share would last for up to five years. In the Government's view that would be sufficient to enable BTG to adjust to life in the private sector. It is also in line with precedent. In addition, Article 79 contains a third provision for one director of the company to be appointed by the Committee of Vice-Chancellors and Principals of the universities of the United Kingdom in consultation with the Committee of Directors and Principals of the polytechnics. That right will not be protected by the special share, for reasons which I shall outline in a moment. The safeguards are together designed to preserve BTG's independence and integrity in dealing with all its customers and to help the continuation of BTG's traditional technology transfer activities.
The 15 per cent. limit on individual shareholdings in Article 42 clearly means that no one buyer will be able to purchase BTG outright or achieve a controlling interest. It signals that the Government will not be interested in receiving bids from that type of investor. It means that BTG will therefore be sold to a number of investors with, in effect, a balance of power between their various interests. That provision in the articles should allay the concerns that have been expressed about BTG being purchased by a single industrial or commercial company with an interest in the success or failure of particular technologies.
The prohibition on substantial disposals of assets without the special shareholder's consent in Article 12 goes hand in hand with our aim to see BTG's technology transfer activities continue. Clearly, a sale to a consortium which takes a long-term view of BTG is the most practical step that we can take to help the continuation of the business. In addition, Article 12 provides for any disposal of the whole or a material part of the assets of the privatised company to be subject to the consent of the special shareholder. A material part of the assets is defined in Article 12. It means either assets which represent 25 per cent. or more of the company's net asset value or assets to which 25 per cent. of average income is attributable.
The Government have included Article 79 giving the CVCP the right to appoint a director in recognition of the important part that the academic sector has played in BTG's business and will surely play in its future. The academic sector accounts for around a half of BTG's new business and is thus its largest inventive source. We believe that any new buyers will want to continue to work closely with such an important source of business. There is no reason why there could not be more than one director if the new owners so decide.
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The 15 per cent. limit on individual shareholdings follow the precedents of other privatisations. But in the circumstances of this privatisation it is not necessarily intended to be absolutely rigid. With only a small number of shareholders it may be possible for the make-up of individual shareholdings to include one or more somewhat above 15 per cent., yet without control of the company passing to any one shareholder. Thus, while 15 per cent. will be our bench-mark, we will be prepared to consider possible ownership structures involving higher shareholdings. Each will be considered on its merits, taking into account the preservation of BTG's independence, the determination to continue BTG's activities and of course the price offered.
The flexibility to allow shareholdings above 15 per cent. is provided by the power to change the articles, a power which has been available in previous privatisations. The limit on a shareholding can be amended through a special resolution of the company but only with the agreement of the special shareholder.
The provision of the universities appointed director is not protected by the special share. Let me explain why. First, noble Lords will know that we must always be mindful of our position on barriers to takeovers within the European Community. We wish to see such barriers removed wherever possible. Unequal voting rights, of which special shares are an example, are regarded as constituting one such barrier. In the context of the European Community 5th Directive on company law, where there is a proposal to prohibit unequal voting rights, a derogation is being proposed from this principle which would allow public sector businesses to make the transition to the private sector.
We therefore believe that we can justify a special share which is time-limited and restricts overall control and disposals of assets under such a derogation. We do not believe, important though it is to represent the universities, that we can justify using a special share to entrench particular interests on the board of a privatised company.
In conclusion, we believe that the special share provisions we have proposed genuinely meet the concerns that have been expressed inside and outside Parliament. The special share achieves a fair balance. It will help attain the objective we have always had of providing a good prospect for the continuation of BTG's technology transfer activitites. But at the same time we do not want to fetter and constrain any new owners in a way which makes it impossible for them to take commercial decisions by having to look over their shoulders for Government approval. We do not want to deter purchasers from coming forward by imposing unrealistic constraints on the ownership of the new business.
The Government firmly believe that the British Technology Group belongs in the private sector. BTG's own chairman, board and management agree and support privatisation as the best route for future expansion and success. BTG has sent information to all its customers—research organisations, universities and industries in the United Kingdom and overseas

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—informing them of the privatisation. The overwhelming majority of replies expressed support for the principle of privatisation. We all want to see BTG continue to develop and exploit the results of academic research as a successful commercial organisation in the private sector. We believe that BTG is on course for that target.
Perhaps I may turn to the first amendment in the name of the noble Lord, Lord Williams.
Lord Williams of Elvel: I am sorry to intervene. If the noble Lord agrees, before he replies, would it be wise at this point to hear the noble Lord, Lord Meston, who wishes to speak on the amendment?
Lord Reay: I am in the hands of the Committee. It is a sensible proposal.
Lord Meston: I am conscious of the fact that to a large extent the Minister has taken the wind out of my sails. The difficulty with the Bill hitherto has been that we have had just bare bones. As drafted, it does little more than is necessary to transfer the business of BTG to an unknown company on an unknown date. Until last week, the Government have added little except the rhetoric of privatisation. We are grateful for what the Minister indicated today. I hope that what he indicated is not cast in concrete because refinements may be necessary at the Report stage. Indeed I hope that the Government—they have been at some pains to stress their open mind throughout the passage of the Bill—will retain an open mind when we consider the detail of the draft proposed articles. I do not wish to add anything further at this stage.
Lord Morris: I am sure that we are all grateful to the Minister for enlightening us. I cannot complain that he has taken the wind from my sails; there was none in my sails to start with. He has put wind into my sails. I am worried by what he said. He informed the House that Her Majesty's Government were seeking to give comfort to us with the Government's special share in BTG. He stated that we should derive great comfort from the fact that any substantial disposal of assets could not possibly come about without the approval of the special shareholder.
As the noble Lord, Lord Williams, made absolutely clear, the company will have assets which are not fixed or currency assets of a disposable quality. The real net worth of a company is in the people who work for it. I do not believe that the Minister's words give comfort. If the real net wealth of a company lies in the skill, experience and knowledge of those who work for it and that company moves elsewhere, it will wither on the vine. If one considers the position carefully, I do not believe that the statement is as much comfort as my noble friend suggests.
Lord Peyton of Yeovil: I have done my best, as I always do, to generate some enthusiasm for the measure, but I must tell my noble friend that so far I have failed. Nor have I encountered a great deal of enthusiasm in others.
I wish to ask the Minister one question at this stage which arises from his remarks. He referred to a
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balance of power between their various interests—that is, between the interests of the new owners. I cannot help feeling that it is easier to talk of such a balance of power than to achieve or maintain it. I hope that before we pass from the subject, my noble friend will find it possible to make a few more remarks to enlighten us.
Lord Williams of Elvel: Perhaps I may intervene to thank the noble Lord, Lord Peyton, for what he said. I wish to come back to the terms of my amendment. The Minister made a general statement about his approach. My amendment specifically addresses the point for which the noble Lord, Lord Peyton, seeks an answer. How does one achieve a balance of power? If there is such a thing, is it not proper that Parliament should be told what that balance of power is, before the Secretary of State makes an order? That is the point of the amendment.
4 p.m.
The Earl of Halsbury: I congratulate the Minister on fulfilling the promise that he made on Second Reading to bend over backwards in order to provide us with the memorandum and articles of association in time for our debate today. It is pleasant to see that he has kept his word which, I am sure, was the result of a great deal of hard work.
I am dubious about one aspect of the golden share provision. In this Chamber only last week the Government excused themselves from applying their rights under a golden share provision on the ground that there was an undertaking not to exercise their rights in a managerial context. Therefore, to some extent, I have doubts about the full provisions of the golden share idea.
I have two drafting points to make. They arise out of legal doctrines about which I am not an expert but about which I have heard sufficient to beware. The first relates to the exclusio alterius rule whereby, if one appends illustrations of a general term—for instance, any intellectual property—and then proceeds to list a number of such illustrations, one cannot thereafter argue that an item not on the list was covered by the generality. That is treacherous countryside which I do not pretend fully to understand. The remedy is usually to include in context some provision such as, "without prejudice to the generality of". That device is used at page 5 of the memorandum and articles of association where paragraph (T) states:
"To enter into any guarantee"—
that makes the provision general—
"contract of indemnity or suretyship and in particular (without prejudice to the generality of the foregoing)".
There is the avoidance of the exclusio alterius rule used at one point in the memorandum and articles of association. I should like the Minister to undertake to look at its applicability to the earlier illustration I gave. It is purely a drafting point. That is all I wish to say at this stage in giving general support to the noble Lord, Lord Williams of Elvel.
Viscount Caldecote: Can my noble friend make clear to the Committee whether the memorandum and

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articles of association are to be finalised before the Bill is passed so that we may know precisely the form of that document, or will it still be in draft form?
Lord Williams of Elvel: Perhaps I may intervene again; I apologise to the Committee if I do so too often. I wish to direct the Committee's attention to my amendment. I understand that the Minister has made a general statement about the Bill. When dealing with subsequent amendments we shall have plenty of opportunity to discuss the status of the special share and the articles of association and whether they will be final by the time the Bill leaves this Chamber. However, the Committee is currently addressing itself to Amendment No. 1 which, in the words of the noble Lord, Lord Peyton, seeks to establish the balance of power. If the Minister says that there is to be a balance of power, Parliament should be told what the shareholding and the price is to be and how the whole deal is to take shape before the vesting order is made. That is the point of my amendment, and I should be grateful if the Committee would address itself to that point.
Lord Reay: The noble Lord has taken three opportunities to plug his amendment. He is right in saying that Members of the Committee have made general remarks in reply to my opening statement. That is understandable in view of the nature of that statement. They have also raised questions with which we can deal during the course of our debate.
Perhaps I may continue on the specific topic of the amendment. The amendment is technically flawed. However, I recognise that the noble Lord's intention is that the Government should disclose to Parliament the identities of the parties concerned and the sale consideration before shares in a successor company are sold. However, that would be unprecedented and in our view an impractical way to proceed. It would be unprecedented because none of the previous far larger privatisations that have occurred has required parliamentary approval of the purchasers in this way. This is an enabling Bill which seeks Parliament's approval for the framework in which the sale will take place.
The proposal is impractical because it would seriously hamper the sale process. We should not be negotiating in good faith and in confidence if, once we had concluded the deal, we were then to ask the prospective new owners to wait in the wings until we had sought further parliamentary approval. Prospective purchasers might well be deterred by the uncertainty involved in such an unusual process of seeking parliamentary approval. There could also be no guarantee that other interested parties might seek to reopen or challenge the sale process once details of the proposed sale come into the public domain.
It may be that the intention of the amendment is to ensure transparency in the sale process. Members of the Committee are concerned about the principles that will govern the privatisation and the kind of new owners that will emerge. The Government are clear what principles they will follow in this privatisation. First, we do not intend to sell BTG to a single industrial or commercial company. Secondly, we fully
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intend to sell BTG to buyers who will take a long-term view and will want to continue its technology transfer activities. We shall look most carefully at the identities and intentions of the prospective purchasers to ensure this. Thirdly, there is a provision in the articles which prevents substantial disposals of assets without the shareholders' consent. Given that we have made our intentions clear, we believe that the amendment is unnecessary and for the reasons that I have set out it would be unprecedented and would make a sale extremely difficult. The Government must be free to negotiate and carry through the sale in a way that will not jeopardise the whole privatisation process. For that reason I ask the noble Lord not to press his amendment.
Lord Williams of Elvel: I shall press the Minister further because I do not believe that any of his arguments stand up—not the first, second, third or fourth. The amendment may be technically flawed but it is not the job of the Opposition to draft amendments as parliamentary counsel would draft them. Any argument from the Government Benches that the Opposition's amendments are technically flawed in some manner falls on very deaf ears. If the Government would like to provide us with 150 parliamentary counsel we shall get our amendments properly technically drafted. Until then I hope that we shall adopt the principle that has always obtained in this Chamber; that the Opposition draft amendments making their intention perfectly clear and if the Government accepts them they draft them correctly. That is the answer to that argument, and I hope that we shall hear no more of this technically flawed stuff as we go through Committee.
Secondly, as regards previous privatisations, the Minister has given the game away. The Government have simply taken pigeon-hole privatisation, drawn out what happened in respect of British Steel, British Gas, electricity and so forth, and said, "We will do the same again". But the privatisation of BTG is quite different from those privatisations. It will not be a public flotation nor a trade sale; it is a special deal. There are no physical assets worth the name; the company is totally concerned with people and intellectual property. Therefore, in order to achieve the balance of power among the shareholding, as mentioned by the noble Lord, Lord Peyton, the Government must give up the idea that it is exactly the same as previous privatisations. It is wholly different.
Thirdly, the Minister said that my suggestion was impractical. It is not in the least impractical. The Government can negotiate in perfectly good faith. They can crash their way round the City of London talking to institutions, banks and trusts. They can then fix a deal and will have a condition precedent to the contract which is the announcement to Parliament. There are plenty of conditions precedent to contracts for sale all over the place. That is absolutely no reason for rejecting the amendment.
Fourthly, the requirement of further parliamentary approval in order to make sure that Parliament understands that the Government have done their best to achieve the balance of power referred to by the noble Lord, Lord Peyton, and to obtain the best price

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for the taxpayer while preserving the integrity and continuation of the business, which is based on intellectual property, does not seem to me onerous. I hope that the Minister can come up with some rather better argument.
Lord Meston: I wonder whether the Government have read too much into the amendment in the name of the noble Lord, Lord Williams of Elvel. My understanding is that at this stage he does not seek to invoke the affirmative resolution procedure. He merely requires that a statement is laid before Parliament; nothing more and nothing less. I join with him in failing to understand the argument that the negotiation would somehow lack good faith. It could not possibly lack good faith if both sides know the ground rules; and one of those ground rules will be, if this amendment or something like it is accepted, that there are those preconditions.
The Earl of Halsbury: On Second Reading I remarked that a friendly divorce had been agreed on and that we were now facing the problem of remarriage which, as Dr. Johnson said, represents the triumph of hope over experience.
I support this amendment and in particular subsection (1B). It is vitally important to have the right shareholding and the right people with the right ideas. One can see from the current BTG reports that the group admits that the pyrethroid insecticides have come to the end of their earning ability and that something else must be found. Those insecticides swam over the horizon at the very end of my term as managing director and have lasted for 30 years as the principal revenue earner. What will they be succeeded by? They are liable to be succeeded by another device which started at about mid-term of my managing directorship; namely, the Torotrak gear. It was initially known as the Perbury gear because it was invented by a Mr. Perry and a Mr. Bury. Their names were put together and the product was called the Perbury gear. However, it has now changed its name.
It is no longer a single development by BTG but is a joint project by BTG and Leyland. In the brochure one is invited to go to see it fitted to a Rover car. It is on the road. It has taken 35 years of patience and expenditure to see that through. That would not happen with shareholders impatient for short termism and profits tomorrow. Therefore, the future backers of the enterprise must be right minded. I believe it right that Parliament should be in a position to confirm that in its opinion the backers are right minded.
Why is that gear so important? It is a continuous variable gear from speed zero to speed maximum. Any gear ratio in the whole range is applicable. The result is that the computer control of engine performance is facilitated with fantastic results from the green point of view and as regards the composition of the exhaust gases. Unburnt hydrocarbon is down 33 per cent.; carbon monoxide is down 57 per cent.; carbon dioxide is down 80 per cent. and there is a beneficial effect as
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regards fuel consumption, in miles per gallon, of 11.5 per cent. with a small deterioration in NOx. The brochure ends with the words:
"Come and talk to us. Test drive the new Torotrak CVT and prove to your own satisfaction that the Torotrak CVT really is the transmission of the future".
It has taken 35 years of possibly heartbreaking failures to reach that point. That is why the board must have the right composition and that is why I support the amendment, particularly subsection (1B), of the noble Lord, Lord Williams of Elvel.
I have not tabled any amendments. I wished to simplify our proceedings and I thought it better to support amendments in the name of the noble Lord, Lord Williams, rather than to have a shot myself.
4.15 p.m.
Lord Peyton of Yeovil: Before my noble friend replies I should like to take the opportunity to correct the noble Lord, Lord Williams, in one respect. The reference to the need to produce a balance of power between the interests of the different shareholders came from my noble friend and not myself. I asked my noble friend to say how he proposed in the first instance to achieve that balance of power and how the Government intended to ensure its continuation.
I hope that my noble friend is able to say rather more than merely putting another suit of clothes on the words. In my view that is what he did. He said that the Government intended to look carefully at the identities of buyers and their interests. I understand that. However, I am not yet satisfied as to how the Government will achieve the permanent enshrinement of a balance of power between the different shareholders.
Lord Reay: I take up the point made by my noble friend. A provision of the articles of association will be a 15 per cent. limit on individual shareholding. That will ensure that no one organisation can acquire a controlling interest in the company. To that extent there will have to be a balance of power in the ownership of the privatised company.
Lord Williams of Elvel: How will there be a balance of power just because nobody can own more than 15 per cent.?
Lord Reay: That is self-evident. If there is no controlling interest, by definition there must be a balance between the shareholdings, none of which will be above 15 per cent. As I said, that is our benchmark. Therefore, there must be a form of consortium which, by its nature, will provide a balance of power and interest.
I cannot pass over some of the remarks which the noble Lord made without commenting on them. He made heavy weather of the fact that I referred to a technical flaw in the amendment. I did not base a great argument on that. In fact, I brushed past it as soon as I decently could in order to meet him on his own ground as regards the principle behind the amendment. However, I should be failing in my duty to the Committee if I do not point out technical flaws where they have been detected.

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I ask Members of the Committee who may be tempted by the noble Lord, Lord Williams, to reconsider whether this amendment is sensible. The Government are being asked to conclude a sale with some entity and then come back to this Chamber, state what the entity is, state what is to be the price of the sale and then seek the approval of the House.
I believe that to bring a deal into the public domain before it has been finalised and then ask for parliamentary approval is impracticable. It would invite all sorts of disturbances to the process of the sale. It would also act as a discouragement to potential purchasers to enter into the process of making a bid to buy the company. I said that it was unprecedented, but that does not surprise me. It seems to be a thoroughly bad idea.
Lord Williams of Elvel: It is unprecedented because this is an unprecedented privatisation. I must repeat that and I shall continue to repeat it all the while it does not get through the heads of Members of the Committee opposite. It is unprecedented and therefore we must look at unprecedented possibilities. There is no reason why this Chamber should not invent precedents. That has been done before and I hope that it will be done again.
Let us concentrate on practicability. It seems to me to be possible to do a deal with a consortium with what the noble Lord refers to as a balance of power, whatever that may mean. The noble Lord, Lord Peyton, corrected me for trying to put words into his mouth because they were the Minister's words. A deal is done. The condition precedent is that there is a statement to Parliament saying that the deal is done and a price is given.
That does not give an opportunity for anybody else to come in. The contract is initialled; contracts are exchanged; there is only one condition precedent and once that is fulfilled the contract is completed. Nobody else can come in once the deal is struck. It is only if Parliament, in its wisdom, decides that the Government have not achieved a balance of power or have sold to quite the wrong people, that we may experience trouble. Then we would have to pray against the order. Noble Lords know that praying against an order is an extremely difficult exercise.
It is a condition precedent purely for a contract of sale. I have been in the business of buying and selling companies for 20 years. I know that there are plenty of conditions precedent around when one has a contract of sale for a company. They do not allow anybody else to march in and make new bids. Exclusivity is granted to the buyer at the point at which contracts are exchanged and initialled. The noble Lord does not have a leg to stand on in the matter.
At this stage I do not wish to divide the Committee; that would be wrong. I shall certainly read what the Minister said and see whether I can glean any words of wisdom from it, although I am rather pessimistic about that possibility. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 2:
Page 1, line 21, at end insert:
("( ) The Articles of Association of the successor company shall contain inter alia the provisions set out in Schedule (Articles of Association of the British Technology Group Plc) while the company is wholly owned by the Crown, and thereafter until altered by the affirmative resolution of both Houses of Parliament.").
The noble Lord said: In moving Amendment No. 2, for the convenience of the Committee I shall speak also to Amendment No. 6, which is consequential upon Amendment No. 2. In our previous debate we discussed the special share. These amendments specifically address the problems of the special share.
I shall take, first, Amendment No. 2. The problem with the articles of association at the moment is that the special share may disappear at any time and will, if the Minister's prediction is right, disappear after five years. At that time there is no guarantee that the articles of association will not be changed by any future shareholding body; in other words, Parliament will have no say whatever in the future articles of association of the successor company once the special share has been redeemed.
We regard that situation as unsatisfactory. In order to preserve the integrity of the business we believe that the articles of association of the successor company should be contained in a schedule to the Bill. Clearly there must be mechanisms for changing the articles of association should the shareholders decide, in their wisdom, that they want to do so. I am sure the Minister will say that Amendment No. 2 is technically flawed, but I shall pass over that for the moment. It incorporates a method of changing the articles by simple order in both Houses of Parliament to enable Parliament to decide, after this unique privatisation, whether or not the articles of association should be changed.
If the articles of association are not written in on the face of the Bill as a schedule, they would contain no serious guarantee once the special share is redeemed. It could be redeemed tomorrow—not in the calendar sense but the day after the company is sold—and the articles of association could then be changed at will by the new shareholders.
I have not tried to include in my proposed new schedule—Amendment No. 6—the entirety of the articles of association that the Minister was kind enough to produce. I focused on one specific issue; that is, the special share. The articles of association state, as the Minister said, that there will be a special share which will be held by one of Her Majesty's Secretaries of State, a Minister of the Crown or any other person acting on behalf of the Crown. Members of the Committee will notice a difference between my amendment and the existing articles of association. The present articles allow for a redemption of that special share either at the discretion of the Secretary of State after consultation with the company or at the end of five years, whichever is the earlier. We do not believe that that gives the company a proper guarantee for the future.
I note what the Minister says in regard to the Fifth Directive. I believe that the amendment is consistent with the philosophy of that directive. If it is not, then I do not understand why the Government are

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privatising the company in the first place. Leaving that aside, it is possible for a special share to be "non-time limited"—if I may use that expression. At the same time, if that is challenged by the Commission, or anybody else in the European Court, and the United Kingdom lose, a mechanism exists under Amendment No. 2 for the articles of association to be changed to conform with that judgment, if that is the judgment that is handed down.
I want to start with a golden share unlimited in time. I will go further than the present articles, which draw attention to the rights of the special shareholder in the event of voluntary winding up, presentation or disposal of the whole company; I will go on to disposal of the whole or a material part of the assets of the group. Again I must remind Members of the Committee that we are dealing with intellectual property. I should like to feel that a material part will be confined to 10 per cent. of the assets rather than the higher figure contained in the present articles.
I accept that the amendments are not correctly drafted and need all kinds of adjustment to put them in proper technical form. But their effect is to make sure that the articles of association of the successor company—that is to say, privatised BTG—are a matter for Parliament and can be changed in specific circumstances only with the assent of Parliament. If that does not happen, there is no guarantee of permanency of the integrity and independence of BTG. That is the point behind the amendments. I beg to move.
Lord Meston: Between now and the Report stage we shall have to look carefully at the draft proposed articles most helpfully produced by the Government, and the proposals tabled by the noble Lord, Lord Williams of Elvel. I readily echo what he says, that at this stage it is not a case of arguing over the detail of drafting but of looking at the general principles. The general principles that he raises are of fundamental importance in this case. Generally speaking, articles of association are not unalterable. I wonder whether the Government intend that there should be any provisions in the articles which are not to be altered; if not, they are capable of alteration under the provisions of the Companies Act.
The Minister indicated his thinking behind the five-year period. However, the uncertainty which has troubled those who are most concerned by the Bill, is preserved by the provision to which the noble Lord, Lord Williams, referred; that is, allowing for redemption at any time. The concern as regards the Bill is not just asset stripping but asset preservation and the preservation of the long-term projects, such as those to which the noble Earl, Lord Halsbury, has referred, and which are part of the unique business of the British Technology Group. I perceive from the Minister's remarks, both now and at Second Reading, that perhaps the Government now appreciate that BTG has unique qualities best known to those who are most concerned about its future. It is for that reason that we have to look very carefully at the details of the articles of association and ensure that there is not too much provision for future change when these matters
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are out of the hands of both the Government and Parliament. To that extent I support what the noble Lord, Lord Williams, has said.
4.30 p.m.
The Earl of Halsbury: I support the amendment in principle. The matter is of such complexity that I would like further time to study it when I have read in Hansard the Minister's reply to the noble Lord, Lord Williams of Elvel. I received only yesterday the Government's memorandum and articles of association and I have not had time to do my homework. Therefore, I wish to reserve my position on the matter until the Report stage while giving a general blessing to the intention of the noble Lord, Lord Williams of Elvel, in the hope that we can find a formula to which everyone can agree. The most important factor is the acceptability of future shareholders to BTG itself. That is very important. Doubtless it has a part to play in selecting its future shareholders one of these days. For the time being I give the noble Lord, Lord Williams, my moral support, but I shall not follow him into the Division Lobby at this stage if he cares to divide the Committee.
Viscount Caldecote: I do not believe that there is any disagreement between Members of the Committee that transfer technology is of great importance to the prosperity of our manufacturing industry. I do not believe that there is any disagreement that BTG has done a first-class job and that it will do a better one in the private sector. I believe that we are all trying to find the best way forward to enable the company to continue doing the good job that it has done in the past. I have some sympathy with the proposal put forward by the noble Lord, Lord Williams.
My noble friend the Minister spoke a great deal about the balance of power. But is not the balance of experience just as important? To some extent we shall come to that matter in future amendments. For instance, it would be possible for insurance companies or financial institutions of various kinds to buy 60 per cent. of the shares of the company and have control of it. However, that might not always be desirable. We shall come to that point to some extent in the amendments to be moved by the noble Lord, Lord Flowers. Can my noble friend the Minister say something about that matter? The important thing is to have people in charge of the company who we are confident will carry on the good work that the company does now.
Lord Reay: Amendments Nos. 2 and 6 would have the effect of writing special share provisions into a schedule of the Bill itself. That would be entirely unprecedented even in the case of far larger privatisations such as British Telecom. It would be entirely unprecedented to write special share articles into the enabling legislation, which is what the amendment proposes. The Government have always retained the right and flexibility to retain the precise special share provisions appropriate at the time of privatisation. In the case of BTG, entrenching the special share in the Bill in this way would remove the flexibility which, in our view, is essential if we are to

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achieve a sale and maximise the proceeds to the taxpayer. One reason is that we want to retain the flexibility to allow, if necessary, shareholdings above 15 per cent. We do not necessarily want to rule out a good consortium, some of whose members might have more than a 15 per cent. holding.
For example, would noble Lords rule out a 30 per cent. stake being taken, for example, by the CVCP? Members opposite might say that in that case one can seek parliamentary approval. The delay and uncertainty involved could well jeopardise the interest of the prospective consortia and therefore the privatisation itself I must insist that the Secretary of State needs flexibility, as he has always done on previous occasions.
Amendment No. 6 sets out special share provisions which go further than what the Government have proposed in two ways. At present the threshold set out in the draft articles which we have prepared is assets which represent either 25 per cent. of net asset value or assets which generate 25 per cent. of average income. One of the two main effects of this amendment is to reduce the present threshold for restriction on disposals of assets from 25 per cent. to 10 per cent.
We believe that 25 per cent. is the right limit. It is intended to prevent a sale of the whole, or a substantial part, of the business of BTG, without the consent of the special shareholder. BTG's council and management have been consulted on the articles and strongly supported the Government's proposal to have a 25 per cent. limit on disposals of assets. They are as concerned as anyone about the future of BTG's business. But they clearly accept that the asset disposals threshold must be set at a practical level to allow the business to continue to operate on a commercial basis.
A 25 per cent. limit would catch substantial disposals of assets without involving the Government in vetting every disposal above £3 million, which is what the limit would be in absolute terms if the percentage proposed by the noble Lord were accepted. It would be quite wrong for the Government to be involved in the business affairs of the privatised company in that way. Indeed, we are privatising exactly in order to remove this sort of petty constraint on the company. A limit on disposals which was pitched at an unrealistically low level like that to catch individual asset disposals would unreasonably involve the Secretary of State as special shareholder in making commercial decisions. The amendment proposes that the time limit of up to five years on the special share should be removed.
There is a recognised precedent that, in order to allow a business that is being privatised time to adjust to the private sector, the Government may decide to take a time-limited special share. This is precedented in many previous cases; for example, in the privatisation of Jaguar, British Steel, the water companies and the regional electricity companies. In all those cases the special share was time-limited. It is time-limited in such cases because it is only needed during the relatively short transitional period while the new business adapts to its new commercial environment. It is no part of the Government's
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business to continue to intervene indefinitely in the affairs of such private sector companies. Our aim is to give them time to establish themselves and prove their track record. Once the new company has established its credentials, there is no reason why it should not be subject like any other company, or any of its competitors, to the full disciplines of the market.
Viscount Caldecote: I wonder whether my noble friend can help me on one point. If BTG in its new form is very successful and continues to increase its profitability and the usefulness of its technological transfer, would not the company be in even better shape in five years' time, just at the time when the protection of the special share is removed? Can my noble friend the Minister say whether the company would then be open to being taken over by a predator who might well take a short-term view of the situation and not enable BTG to continue to do the excellent work that it is now doing and which we hope it will continue to do indefinitely?
Lord Reay: I have explained why the time-limited share has to be as it is and why it has always been so. There is another reason which I touched on in my original statement as to why it is wrong to have an unlimited time share. It concerns the European initiative on the removal of barriers to takeover and the proposed European Commission Fifth Directive. It is quite likely that the directive may only allow derogation from the principle of equal voting rights in the case of privatised companies where it is time-limited. In the past unlimited special shares may have been used but the developments in Europe, and United Kingdom support for the removal of the barriers to takeover initiatives, together with the kind of business which BTG is, make an unlimited time for the special share inappropriate today.
Lord Williams of Elvel: Try as I might I cannot perceive any serious argument coming from the Minister, either responding to my points or, specifically, to the point made by the noble Viscount, Lord Caldecote. First, he says everything is unprecedented. What I have been trying to say—and I shall say it again and again until I am understood—is that this is an unprecedented privatisation. It is not like the regional electricity boards, British Gas, or anything like that. This is a technology transfer operation which employs 190 highly skilled people, whose assets are almost entirely in intellectual property and who perform a very valuable service. This is not another British Gas. Therefore, to claim that because it was right for British Gas, National Power, PowerGen, and all the other privatisations is absolutely no argument whatever for saying that it is right for BTG.
At the end of his reply the Minister referred to the proposed directive. This is a proposed directive which has a long way to go before it is finalised. There is nothing in existing legislation in the United Kingdom or anywhere else which would stop us having the special share permanent until somebody tells us we cannot do it. Nobody is telling us that at the moment. The point made by the noble Viscount, Lord

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Caldecote, is absolutely right. If this company is as successful as we all hope it will be in either the private or the public sector—and if in the private sector we hope it will be successful—the time at which it will be most vulnerable to a takeover will be when the special share is pulled out. That will be the problem; so the whole thing will collapse on some predator coming in to take a short-term view of the value of the intellectual property involved. That is precisely what we are trying to avoid, but the Government do not seem to pay any attention.
We then get down to the question which is a fundamental dilemma of the Bill: do the Government want to see BTG in proper hands? By "proper hands"
I mean a sensible long-term solid body of shareholders who will stay there for the long term—and it is a very long term—knowing that the sort of developments that the noble Earl, Lord Halsbury, referred to will be taken through. Or, to use the noble Lord's phrase, do the Government wish to maximise the proceeds for the taxpayer? I understand, intellectually, either possibility. The noble Lord is representative of the taxpayer. He can easily say, "Well, we shall flog the whole thing off for the highest price we can get. That's no problem". Indeed it is no problem for the Treasury. I suspect the Treasury is rather worried about the attention of the Public Accounts Committee in another place. Nevertheless, this is not the sort of company to fool about with. We have to get this into a shape where it has a proper shareholding, where the shareholding is long-term and constant and, in my view, where the special share continues without time limit. That is the only way we are going to secure the future of what is, as the noble Viscount, Lord Caldecote, said, an extremely valuable company from the point of view of the British economy.
I do not want to bang on too hard about this. I hope my message is gradually getting through to the Minister. I must say that I find his arguments wholly unpersuasive. He has not answered any of the points made by any Member of this Committee. He has simply relied on precedent and maximising proceeds to the taxpayer. The Committee has not got off to a very good start. I recognise, as the noble Lord, Lord Meston, said and as the Minister will no doubt say, that in its present form the amendment is technically flawed. I know that the Minister has not said that, but I admit that it is. However, I am trying to get at the point of principle, and it is the point of principle that I believe noble Lords have debated.
I hope the Government will take this matter away and consider it. The argument is being put forward not only by those on the Opposition and the Liberal Democrat Benches. There are important voices on all sides of the Chamber arguing for a sensible solution for this company. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.45 p.m.
Lord Flowers Lord Flowers moved Amendment No. 3:
Page 1, line 21, at end insert:
("( ) The Secretary of State shall not nominate a company for the purposes of this section unless he is satisfied that the memorandum and articles of association of the company make adequate provision for—

(a) imposing on the company a duty to safeguard and exploit intellectual property of all kinds; and

(b) enabling universities and research councils to participate in the direction of the company.").

The noble Lord said: In speaking to Amendment No. 3 I shall, with the leave of the Committee, speak also to Amendment No. 4. Both amendments refer to the way that the Bill should reflect the proper interests of the research community in the constitution of the successor company. May I first apologise to your Lordships. Due to unavoidable absence abroad I was unable to take part in the Second Reading debate on this Bill. I shall resist the temptation to make a long and discursive speech now, partly because it is against the custom of the House to do so and also because were I to do so I should find it difficult to better the excellent speech already made by the noble Baroness, Lady Hollis of Heigham, at Second Reading. I am grateful that she joined me and other noble Lords in presenting these amendments because it is now clear that they have wide support in all parts of the Chamber.
I also take this opportunity to thank the noble Lord, Lord Reay, for having made the draft memorandum and articles of association available to your Lordships in time for the Committee stage. The Select Committee on Science and Technology, of which I have the honour to be the present chairman, has never taken a considered view about the future of BTG, important a matter though that is. However, it is an organisation well known to the members of that committee and at their meeting last week they made clear their concern that BTG should retain its essential independence of judgment when operating within the private sector. Accordingly, they encouraged me to write to the Minister about these documents believing them to contain the essence of the matter.
The memorandum and articles are encouraging but by themselves they do not suffice; they are permissive rather than prescriptive. The purpose of Amendment No. 3, particularly paragraph (a), is to ensure that the successor company has a duty to continue to undertake the kind of work presently done by BTG; namely, the development and exploitation of the intellectual property entrusted to it by institutions of higher education, especially the universities, and others active in research. It would ensure that the new company dealt with all intellectual property, not limiting itself to somebody's flavour of the month or to those items which happen to suit its more immediate commercial interests; for the business is by its nature essentially long term in character.
As the noble Earl, Lord Halsbury, illustrated so vividly, it is the willingness of BTG to look seriously at projects which are out of the main stream and that have so often underpinned BTG's success, earning it the respect of the research community. The Minister

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said that that is understood by the Government; but it does not appear on the face of the Bill and that is what matters.
It has been said in another place and at Second Reading here that research councils, universities and, in the case of medicine, their teaching hospitals, provide some 70 per cent. of the intellectual property which BTG develops and transfers as appropriate to the commercial sector. Work at BTG is extremely important to them, returning some £8 million annually to inventors and their institutions. I have with me copies of many letters from vice-chancellors, and of course from the Committee of Vice-Chancellors and Principals, representing all the universities which make that very clear indeed.
This amendment will put on the face of the Bill the requirement that the memorandum and articles continue after privatisation to make adequate provision for this very important sector to participate in and influence the direction of the company. Without those safeguards there is nothing in the Bill to indicate what the company should be doing, or to differentiate it from many other companies; indeed, to reflect the unique requirements placed upon it. The memorandum and articles do not suffice by themselves because, as everyone knows, they can be changed by a vote of the shareholders at any time, and especially when government interest has waned as it inevitably will in due course.
Therefore, even though the draft memorandum and articles of association have been made available, for which we are indeed grateful, and even though the documents recognise the role of universities by making welcome provision for the appointment by the CVCP of a director of the company, the link with the universities and the research councils is so vital that it should find expression on the face of the Bill. Lest it be thought from anything I have said that I find these documents satisfactory in all respects, I should add, speaking as a former chairman of the Committee of Vice-Chancellors and Principals, that the CVCP is now seeking a professional opinion about them which should be available before we reach the Report stage. When I have seen that advice, I may feel inclined to press matters further.
Much the same considerations apply to Amendment No. 4 and so I shall not repeat myself. The amendment requires that there should be provision on the face of the Bill regarding the experience and capacity of the directors of the successor company. The special characteristics of BTG are by now well known to noble Lords and have been further rehearsed today. In order to preserve its essential features it is important that the directors of a successor company should understand and have extensive experience of the business of research and that this requirement should continue indefinitely. The proposed new clause would ensure that at least a third of the directors, in the opinion of the Secretary of State, met the requirement. This is no more than an extension of the present composition of the BTG council, which has eight members in addition to its chairman and chief executive, three of whom are
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drawn from universities and research councils. Their first-hand experience of research is much valued by the BTG management. I beg to move.
The Earl of Halsbury: I support these two amendments in general terms. A little history may interest the Committee. When I became the first managing director I realised what a rich source of inventive supply the world of academia would be. I set out to gain its confidence. I had a rather unusual power of selection of future board members, due to circumstances which I described at Second Reading. I thought that the individual who was to become the late Lord Blackett would be my passport to the universities. He was pure academic. He was a Nobel Prize winner. He had everyone's confidence and became a member of the board in due course.
The next stage in gaining the confidence of the universities was to assure them that we were not trying to set up a monopoly of any kind in receiving the output of the universities. I toured every university in the country to explain that if the university wanted to do something itself it should go ahead and do it. If it found itself in difficulties it should ask for help; but if it wanted us to do something it had only to say so and we would do our best to respond correctly and give the appropriate advice. As a result, a tremendous amount of good will built up between the NRDC, as it then was, and the universities.
After my time it seemed appropriate to the Treasury that inventions made in universities with funds from the research councils should be directed to the NRDC. The Treasury made a pronunciamento to that effect as a result of which the universities were required to hand things over to the NRDC. The NRDC immediately forfeited the confidence of the universities. This became a matter of so much ill will that the Treasury ukase was put into reverse and immediately BTG regained the confidence of the universities. Therefore, to have on the council a membership which would enable the universities and research councils to participate in the direction of the company would merely be reverting to first principles. I support it entirely.
Amendment No. 4 is a slightly more elaborate version of the recital contained in the original Development of Inventions Act 1948. I have not had time to investigate fully but I do not think it involves any new point of principle. I support it. However, like the noble Lord, Lord Flowers, I want to make a study of what transpires in Committee. Therefore, I do not wish to see the amendment pushed to a Division at this stage. Nevertheless, it has my full support.
Baroness Park of Monmouth: I am not a scientist but I was involved while at Oxford with the whole question of our policy on intellectual property. I wish to endorse most strongly what the noble Lord, Lord Flowers, said. Indeed, I share the concerns expressed by the noble Lord, Lord Peyton, the noble Viscount, Lord Caldecote, and the noble Earl, Lord Halsbury.
In May 1985 the Green Paper on the development of higher education into the 1990s urged the importance of higher education seeking to derive more of its total income from sources other than the

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taxpayer and the ratepayer. The British Technology Group offered, as a public institution, a very effective and acceptable way for many university scientists and engineers to exploit their inventions through its facilities for technology transfer. That intellectual property represents well over 50 per cent. of BTG's value. It seems only reasonable and right that BTG's successor company should be required to continue to serve in every way as well as before its most important source of supply.
Cast-iron guarantees are needed that such areas of support as, first, a degree of long-term strategic investment in developing new ideas and, secondly, energetic measures to protect patents, to litigate to recover royalties and to pursue infringement cases, should be as strong as before. The BTG has always emphasised the prime importance of being able to protect intellectual property effectively. This often requires a major investment of resources and expertise, as we have been told. Equally, the universities, the prime users, are rightly concerned about a privatised body proving reluctant on short-term commercial grounds to produce the sometimes speculative investment needed over many years to take an innovation from the experimental stage to the point where its commercial potential can be properly assessed.
The BTG has been willing to take a consistently long-term view, in keeping with its origins. Would a private company do that? The answer is almost certainly, no, unless specific provision is made in the legislation that the existing approach to the funding of innovation should continue as before. Such major technologies as magnetic resonance imaging, which is still being funded, and cephalosporin, an established success, owe their development to BTG funding. I am confident that the Government will see the force of the argument that these special aspects of BTG's work must be preserved.
The point which needs particularly to be recognised is that we cannot have it both ways; on the one hand, requiring universities to make research pay and to make it available for exploitation for the nation's good, and, on the other hand, in principle, proposing to transfer BTG's powers to a private company whose object is described in the articles of association as acting "for the purposes of the company". Hence our concern that there should be proper safeguards.
I had expected to speak separately to the other amendment. However, following the excellent example of the noble Lord, Lord Flowers, I shall not take the time of the Committee beyond making the point, which I think is important, that scientists themselves have always been happy to provide their intellectual property for the public good but they would possibly have very real problems if they were to doubt the conditions in which that intellectual property would be handled by a successor company.
5 p.m.
Lord Peyton of Yeovil: When my noble friend replies to what is to my mind an eminently reasonable amendment, I hope that he will at least reflect some
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concern or a belief that universities have a contribution to make and that inventors have some rights. So far as I can see from a First Reading of the Bill, neither of those important features are to be found in it. It cannot be assumed that investors will want to go to universities to seek their advice and be guided by it; nor can it be assumed that investors whose interests are, often enough, quite short term are the same as those of inventors whose interests are essentially long-term.
I return to the point which was first raised by my noble friend. I refer to the question of a conflict of interests. The Bill appears to be unconcerned with the issue. I appreciate my noble friend's difficulty in answering a quite simple question, for the very good reason that I do not believe a satisfactory answer exists. However, I hope that my noble friend will address the point in his reply that there is great unease about the Bill. So far as I am aware, there is no great enthusiasm for it. I am not at all sure who will gain from it. I should be most grateful if my noble friend could give us some idea on that aspect of the matter.
In such circumstances, I believe that it is up to the Government not just to talk—as they have frequently done—about the need for integrity, impartiality and independence; they must say very clearly how they will achieve those very desirable objectives.
Lord Kirkwood: Like the noble Lord, Lord Flowers, and the noble Baroness, Lady Park of Monmouth, the little I have to say in support of this amendment also applies to Amendment No. 4. Both amendments refer to the independence of BTG.
There can be little doubt about the success of BTG under its present chief executive, Ian Harvey. That can be gauged by the fact that the royalties earned last year exceeded the total earned by the entire US universities system and government research system combined. One can appreciate the argument for privatisation; namely, that further growth and success on the international scene could be inhibited by association with a UK government (of whatever hue), particularly in view of the great opportunities for business in Europe opening up in 1992.
However, a crucial part of the success of the enterprise is the perception by researchers in universities, polytechnics and government research stations, that BTG is an independent organisation anxious to secure the best deal for its customers in the market. Should the group lose that—by being taken over by a commercial enterprise interested only in short-term profits, in asset stripping or in obtaining favourable licensing terms for itself to the exclusion of competitors—then the goose will certainly fly from the BTG nest and may refuse to lay any golden eggs anywhere.
It is to ensure that the independence of BTG be written on the face of the Bill—and that is what BTG itself wants—that these amendments have been laid before this Chamber. I urge Members of the Committee to support them.
Viscount Caldecote: I support the general thrust of these amendments because I think that it contributes to the objective which I mentioned a short time ago;

733
namely, the continued prosperity and success of BTG. However, the significance of the amendments depends to some extent on the answer to the question which I raised earlier as to whether the memorandum and articles of association will be firm before the Bill is enacted or whether they will remain in draft form. I hope that my noble friend will be able to enlighten us in that respect.
Lord Williams of Elvel: I very much regret that my noble friend Lady Hollis is unable to be present in the Chamber today. However, if she had been here, as she has attached her name to the amendments, she would certainly have spoken in favour of both of them. I shall do the same.
In supporting the amendments, I slightly echo the remarks made by the noble Viscount, Lord Caldecote. Even though these amendments may mark an important step in preserving the integrity of the business as it stands, in my view they do not go quite far enough. I should prefer to have—this is why those of us on this Front Bench did not put our names to the amendments—a sort of arrangement where the articles of association (including the very desirable points enshrined by the amendments) are in some sense fixed in stone before the company is privatised.
However, I regard Amendments Nos. 3 and 4 as being important. They are important as expressions of principle because without such provisions in the Bill—and what is proposed I regard to be a minimal position—I simply do not believe that the integrity of the business will be protected over time.
Lord Reay: In replying to Amendment No. 3 tabled in the names of the noble Lords, Lord Flowers and Lord Kirkwood, the noble Baroness, Lady Hollis of Heigham, and my noble friend Lady Park of Monmouth, I should like, first, to point out that we have already taken into account the interests of the academic sector in the direction of the privatised BTG in Article 79 of the draft articles of association. I make this point especially to my noble friend Lord Peyton of Yeovil. The article provides for a director appointed by the university. To be precise, he will be appointed by the CVCP after consultation with the Committee of Directors of Polytechnics. That carries into concrete form part of the requirement of Amendment No. 3.
My noble friend Lord Caldecote asked me about the status of the draft memorandum. He was quite right to ask the question again. I apologise for not having answered it before. It is in draft form at this stage and we expect to stick to the principles which are set out therein. However, we must retain the ability to change the details if necessary.
I should point out that the draft memorandum placed before the Committee already sets out in some detail the activities of the successor company. Those activities cover technology transfer in far more detail than is the case in the proposed amendment. For example, perhaps I may draw the attention of the Committee to paragraph 4(A) (iii) on page 1 of the memorandum which sets out what the activities of the company will be. It says:
"To apply for, or join in applying for, purchase or by other means acquire and protect, prolong and renew, whether in the United Kingdom or otherwise any intellectual property rights
734
including patents, patent rights, brevets d'invention, licences, copyrights, secret processes, trade marks, registered designs, protections, concessions and the like, and to use and turn to account and to manufacture under or grant licences or privileges in respect of the same, and to expend money in experimenting and testing and making researches, and in improving or seeking to improve any patents, inventions or rights which the Company may acquire or propose to acquire".
The privatised BTG will have the power to carry out its traditional technology transfer activities.
Lord Williams of Elvel: Perhaps I may interrupt the Minister for just a moment. I must point out that that does not impose any duty on the company whatever.
Lord Reay: I was, in fact, going to deal with that point.
As I was saying, that will give BTG the power to carry out its traditional technology transfer activities. The power will be utilised by new owners who wish to continue those activities. It is our intention to sell BTG to such new owners. But imposing a duty of this kind, which is what the noble Lord would like to do, would be meaningless unless it matched the intentions of the new owners. How could such a duty be enforced? To place a duty on the new owners in the articles of association to safeguard and exploit intellectual property of all kinds would take away from the company the ability to exercise the power in the memorandum as it thinks best in the long term commercial interests of the company. The articles of association constitute a contract between the company and each member. Therefore, it is those members who would have to enforce the duty in the articles imposed upon the company and they could not be required to do so. They would also be able to amend the relevant article by a special resolution.
The memorandum of the new company provides for such technology transfer activities to be part of the privatised BTG's business. But the crucial factor would be the identity of the new owners and their intentions. We intend to sell the company to owners who will continue the traditional business.
As far as Amendment No. 4 is concerned (I hope that the noble Lord, Lord Williams, is not listening) I must say that it is technically flawed if the intention is to effect the composition of the first directors of the privatised BTG. This is because we shall need to set up the successor company for BTG as a shell company before we vest the assets, property and liabilities of the NEB and the NRDC in its. The first directors of the BTG's successor company will therefore be purely nominal appointments to the shell company, probably civil servants from the DTI. They will not be the same people as those appointed by the new shareholders of the privatised company.
However, I accept that that is not the intention of the amendment and I shall therefore address the principle behind the amendment.
The Government fully accept the important role played by the academic sector in BTG's past development and the role which it can—and I have no doubt will—play in the future. We have therefore consulted the CVCP and listened to its representations. There have been two results of this process. First, as I mentioned, we have included a provision in

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the articles for one director to be actually appointed by the CVCP in consultation with the polytechnics. Secondly, we believe that the CVCP is considering a proposal, which it is discussing with the universities and its financial advisers, to take a financial stake in the privatised company.
Those practical proposals, taken together, would go further than the proposed amendment in two respects. First, we are giving the power of appointment to the board to the academic sector; and, secondly, we are allowing for the possibility of a CVCP-held stake, which would result in the academic sector having further close involvement with, and a say in, the business of the privatised BTG.
If a CVCP stake in the privatised BTG materialises there may well be additional directors from the academic sector with relevant experience of research and its exploitation. I must emphasise that there is no reason why further such directors with relevant experience should not be appointed. Indeed, the articles we have presented are drafted to help keep open that possibility to the new shareholders. Article 80 specifically says that directors of the company do not require a share qualification. It will therefore be open to the shareholders to appoint further such independent directors as and when they wish.
We believe that such practical arrangements for the continuing participation of the academic sector in BTG's business should be welcome to the Committee. However, we do not believe that the Secretary of State should in some way dictate the composition and experience of the board. I accept that there will be a need for relevant experience on the board of technology, of intellectual property rights, and of public as well as private sector research. There will also be a need for commercial and financial skills. But it will be for the new owners to decide how to achieve the right balance. They will clearly bear all those factors in mind in making their appointments. We do not believe it is right for the Secretary of State to intervene in the composition of the board to the extent required by this amendment.
For those reasons I hope that noble Lords will not press the amendments.
Lord Peyton of Yeovil: Before my noble friend sits down perhaps he will consider what he said. I understood him to say that it is useless to impose duties on the new owners without knowing their intentions. That is what worries me most. I hope that my noble friend will understand that while it is interesting to have in front of us articles which reveal what is presently in the Government's mind, they are in no way the same as enshrining a principle in a Bill which we can amend. We cannot amend articles. I have the strongest objection to articles of association being used as anything other than an indication of the Government's present thinking. When the Government move from that and treat articles of association as if they were some alternative to legislation I feel very uneasy indeed.
5.15 p.m.
Lord Williams of Elvel: If I may supplement what the noble Lord, Lord Peyton, said, there is absolutely no reason in law why the objects of the company should not be rephrased in the way that the noble Lords, Lord Peyton and Lord Flowers, require, and that should be enshrined in legislation. I am sure that the noble Lord, Lord Meston, would be delighted to offer his services, for a certain consideration, in order to draft the objects. If the Government lawyers cannot do it properly, we can do it for them. It is vitally important that a duty be imposed on the company. Otherwise—I will tell the noble Lord this absolutely straight—not only will the company not perform its duty but it will not be worth very much. That is the point.
Lord Reay: Perhaps I may reiterate what I said. By their nature the articles of association constitute a contract between the company and each member. It is therefore those members who would have to enforce the duty in the articles which would be imposed upon the company. There is nothing that could require them to do so. That is what I meant when I said that a duty such as would be required by this amendment could be enforced only if it matched the intentions of the new owners.
Lord Meston: To follow on from what the noble Lord said, he is quite right in saying that the objects in the memorandum do not bind the company. Like the noble Lord, Lord Peyton, I noted the Minister's remarks about matching the intentions of the new owner. The trouble is that we do know what the intentions of the new owner may be. Although the Minister drew our attention to paragraph 4A(iii) of the proposed draft memorandum, we could equally look at paragraph 4(Q) and see that the new owners can sell or dispose of any real or personal property or the undertaking of the company for whatever considerations they may approve. In other words, they can sell off the whole lot. It is not enough just to look at the memorandum and articles and say they give us assurances for the future. There has to be some statutory provision. The various amendments which we have heard today are directed at that.
Lord Flowers: I am grateful for the support that noble Lords all round the Committee have shown for these amendments, which are intended to preserve some of the essential features and independence of the BTG. I apologise if Amendment No. 4 is indeed flawed, but I think its intention is clear enough. I shall certainly take it back and look at it again before the next stage should it be necessary to reintroduce it in some form.
In response to the Minister, I readily acknowledge that there is some comfort for the research community in the articles of association. However, they do not stand part of the Bill. As I understand it, they can be changed by the company at will or at any rate by a vote of the shareholders. On the contrary, we seek something more permanent on the face of the Bill to guarantee the continuation of the essence of BTG.

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From what the Minister said, it seems that the Government seek maximum flexibility in order to maximise immediate profits to the taxpayer—a worthy objective. However, they wish to do so at the expense of longer term benefits (through innovation in industry) to the economy and therefore to the taxpayer. The question is: where does the balance of advantage lie—in the short term, or in the long term? It is in the hope that the Government will reflect further on this important matter before the Report stage that I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 1 shall stand part of the Bill?
Lord Meston: Perhaps I may raise a matter that I mentioned at Second Reading. It concerns the thinking behind Clause 1(5) which provides for the revocation or variation of orders to name a day or to name a successor company. Rather than speculate on why the provision may be necessary, I ask directly why it appears in the Bill. I supplement that question by asking whether it is envisaged that there will be a time gap between the making of the order and the appointed day. It may be that this has just been inserted from an abundance of caution or there may be some specific purpose. I wonder whether the Minister can enlighten us.
Lord Reay: I shall have to look into that. I apologise for the fact that the noble Lord asked the question previously and did not receive a reply. I shall look into it and let him know.
Clause 1 agreed to.
[Amendment No. 4 not moved.]
Clause 2 agreed to.
Clauses 3 to 5 agreed to.
Clause 6 [Target investment limit for Government shareholding]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 5:
Page 4, leave out lines 26 to 28 and insert ("as to ensure that the beneficial ownership of more than ten per cent. of the successor company shall not be owned by a company which is not situated in the United Kingdom and which is itself not controlled beneficially or otherwise by persons other than United Kingdom citizens.").
The noble Lord said: This is in the nature of a probing amendment to determine the Government's attitude towards foreign ownership or foreign participation in the successor company. Some concern has been expressed in various quarters that the intellectual property which forms the assets of BTG could be valuable to foreign companies. Foreign companies may, as it were, club together. I realise that no one is allowed to own more than 15 per cent., but if, for example, four foreign companies clubbed together in one form or another through various vehicles, either inside or outside the United Kingdom, it would be possible for them to gain advantage of the intellectual property which resides within BTG.
I do not know whether the Government have considered the point. If so, what is their view? I should be grateful if the Minister would pay attention to it and let me know the Government's view. I beg to move.
Lord Reay: Our reply is quite simple. On the question of foreign ownership, as no doubt many Members of the Committee will be aware, we are constrained by our treaty obligations with our European Community partners. We cannot exclude European Community nationals from share ownership or discriminate against them in any way. That would be contrary to our obligations under Articles 7 and 221 of the Treaty of Rome. We therefore cannot rule out potential buyers solely on grounds of nationality.
I wish to point out that in any case the special share provision that we envisage taking would prevent any one buyer—whatever its nationality—taking control of BTG. Article 42 of the draft articles placed before the House achieves that because it limits any individual shareholding from the United Kingdom or from overseas to 15 per cent. We are therefore only talking about a situation where there would be foreign investment in BTG, not overall foreign control of BTG by one organisation. Foreign investment in BTG is something that spokesmen of the party opposite were prepared to support in Committee in another place at the higher limit of 20 per cent.
We should not give the impression that we are in any way antagonistic towards foreign investment in British companies and in the British economy. An element of foreign investment in the privatised BTG could help it to raise capital and expand into overseas markets, continuing its development as a world technology transfer organisation. This development could in turn be of benefit to the longer term continuity and stability of the privatised BTG.
Perhaps I may again make the point to the Committee that BTG is already a world technology transfer organisation. Over 70 per cent. of its licence income comes from overseas. That is because technology is not parochial or limited by national frontiers; it is international. If BTG helps to develop United Kingdom inventions and license them abroad, that would be to the benefit of the United Kingdom because United Kingdom inventors then enjoy licence revenue-sharing agreements with BTG. I hope that that goes some way towards answering the question which the noble Lord raised.
Lord Williams of Elvel: I am grateful to the Minister. He went slightly off on the wrong tack. I am not in the least opposed to moderate foreign investment in BTG. That is obviously acceptable. I understand our Community obligations. However, let us take the case which may be hypothetical, but it could happen: seven Japanese companies club together and each takes one-seventh of the company. They offer a price which the Treasury cannot resist, 50 per cent. higher than any other bid that the Treasury received. Having respect for the Public Accounts Committee in another place, the Treasury has to accept it. Is that a situation with which the Government are comfortable?
Lord Reay: The noble Lord asks an extremely hypothetical question. He invites me to consider a situation in which no United Kingdom investors come forward, but we certainly expect United Kingdom

739
investors to come forward at the appropriate time and to offer to take stakes in the privatised company. Of course, any such offers from United Kingdom bodies will be considered on an equal basis with all others. We do not intend to discriminate, nor can we on grounds of nationality.
I wish to make another point. As the noble Lord knows, whether they are foreign or United Kingdom investors, they will not be able to acquire more than a 15 per cent. shareholding in the privatised company. That will prevent effective control going to a single foreign company, as I said. However, any grouping of companies acting together would likewise be caught by the special share provision.
Lord Williams of Elvel: I am not sure that the Minister has answered my question. To prove that Japanese companies and banks are acting in concert is an extremely difficult operation, as I know from my past career. Nevertheless, I hope that the noble Lord will pay some attention to this point. When we come to Report, perhaps he will have a slightly more satisfactory reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clauses 7 to 17 agreed to.
[Amendment No. 6 not moved.]
5.30 p.m.
Schedule 1 [Provisions Supplementary to s.1.]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 7:
Page 10, line 48, at end insert:("and
(c) the NRDC Group Pension Fund including any accrued surpluses shall remain solely for the benefit of the members of the fund and their dependants and shall not be used by the successor company for any other purposes.").
The noble Lord said: In moving Amendment No. 7 I shall speak also to Amendments Nos. 8 and 9. These amendments collectively address the problem of the NRDC group pension fund. The Committee will be aware that the pension fund is governed by a trust deed. There are seven trustees of whom three are appointed by the employer. BTG has had a good record in appointing employees rather than non-employees as trustees. The election of trustees was introduced by the NRDC. The unions are particularly anxious that this practice should continue. We would like to see the practice safeguarded in the legislation.
Similarly, the present arrangements for pensions allow an inflation-linked principle which is common throughout the Civil Service. However, that does not necessarily flow into the private sector when a company is privatised. I should be glad to hear the Government's views on that. I recognise that Amendment No. 7 may be going a little too far in trying to ensure that surpluses in the fund accrue for the benefit not only of members of the scheme but also for past members; that is, pensioners. There may in future—I stress the words "in future"—be occasions when it may be appropriate for an employer to take a holiday from pensions contributions. I emphasise that that only applies to the future because at the moment public funds—that is, indirectly, taxpayers' money
740
—have entered the NRDC fund. It would be a mistake to allow the fund to be stripped in any way by a future privately owned company for the benefit of private shareholders.
Amendment No. 8 concerns the trust deed of the scheme. I understand that at the moment it is under revision. The trust deed states that all employees of BTG who are over 21 may join the scheme but, upon reaching the age of 30, all employees must join and the trustees must accept the employer's word as regards who is or is not an employee. It seems appropriate to give the trustees discretion as regards who to accept as a member, as that would help to protect the fund against the possibility of a future employer flooding the scheme with members who were not strictly employees.
Amendment No. 9 is designed to ensure that if unsuitable members are nominated for the scheme, they will not be allowed to join it. These are probing amendments. I am trying to ascertain the Government's view on the future of the NRDC pension fund. I beg to move.
The Earl of Halsbury: I declared an interest in this matter on Second Reading. If the Committee accepts the amendments, I am sure that I and my fellow pensioners will be duly grateful.
Lord Reay: I understand entirely the sentiments underlying the three amendments which the noble Lord has tabled. I share his concern to see that the rights of past and present members of the pension scheme are protected after privatisation and that surpluses which have accrued over the years are not dissipated to the detriment of the underlying financial viability of the fund. At the same time we should bear in mind when considering these amendments the importance of striking a fair balance between the rights of employees and those of employers.
Amendment No.7 provides for any accrued surplus to be used solely for the benefit of the members and not to be used by the successor company for any other purposes. It is designed to ensure that both the present surplus and any possible future surplus has to be used to improve benefits. It will effectively prevent the employer taking a contributions holiday or taking a refund of a surplus while the scheme is ongoing, or a refund or a surplus should the scheme be wound up. In the Government's view the amendment is undesirable and would fall foul of statutory requirements, particularly the Income and Corporation Taxes Act of 1988, and the NRDC trust deed.
Paragraph 2 of Schedule 1 already provides a comprehensive provision which ensures that the only effect of vesting on existing agreements is to substitute the successor company for the corporation and the board. Thus if a pension arrangement or a contract of employment applies before vesting, it will apply after vesting. The successor company is simply substituted for the corporation and the board. Paragraph 4(1) (b) goes on to state specifically for the avoidance of doubt that Clause 1 of the Bill,

741
"is effective to vest the rights and liabilities of the Corporation or Board under any agreement or arrangement for the payment of pensions, allowances or gratuities in the successor company".
It is not for the Government to dictate how accrued surpluses should be treated, much less to direct that they should, in BTG's case, be used solely for the benefit of the members of the fund and their dependants to the exclusion of the successor company. The Inland Revenue lays down limits on the amount of pension an individual may receive and the amount of assets the fund may hold and still receive tax exemptions. The surplus could not be used to increase benefits beyond Inland Revenue limits without jeopardising the tax exempt status of the scheme.
If the surplus assets in the fund exceed 105 per cent. of the scheme liabilities, there would be a statutory surplus within the meaning of the Income and Corporation Taxes Act 1988 and the excess funds would cease to attract favourable tax treatment. In order to avoid any tax charge, the scheme assets may be reduced by the following methods: making payments to the employer; suspending or reducing contributions of the employer or the employees; and increasing benefits under the scheme.
It would be wrong to deprive a successor company of the full range of options for dealing with a surplus when these options are themselves laid down by statute. Such matters are inevitably a matter for discussion between an employer and the trustees of the pension scheme and with the wider membership, particularly through trade union representation. Precedents from court cases have shown that it is extremely difficult for an employer to take unilateral decisions in relation to the pension scheme to the detriment of members, particularly as regards the use of surplus funds.
In addition the amendment would preclude the refund of any surplus to the employer in the event of a winding up. This would be contrary to Inland Revenue rules which require any surplus on winding up to be refundable to the employer. The NRDC group pension fund rules also provide for a surplus on winding up to be refunded to the employer. If this amendment were approved, the pension fund rules would be incompatible and would need to be changed. If such a situation were to arise, there is a danger that the scheme would lose the approval of the superannuation funds office and would have to be wound up. I am sure that no one in this Committee would wish to see that happen.
It is a matter for the trustees of the pension fund who are independent of BTG management and the Department of Trade and Industry to deal with any surplus. The scheme is already adequately protected in that the actuary is appointed and selected by the trustees and is therefore outside the control of the corporation. In practice it is likely that any accrued surpluses will in future continue to be dealt with on actuarial advice in the same way as before; namely, by improved benefits to members and by a contribution holiday for the corporation.
Amendment No. 8 gives the trustees a discretion on whether a new member should be admitted or not. The purpose of the amendment is to prevent an employer
742
requiring the trustees to admit members who are inappropriate, for example because either singly or together they would be a financial burden on the fund.
The reality is that the trustees already have significant control over the introduction of new members in that they have a discretion to refuse to accept a transfer of past service benefits if, for example, they are not adequately funded.
Therefore, although the employer may determine who is eligible to join the scheme for future service, it is the trustees who have a discretion to admit members in respect of past service through their control and the acceptance of transfer payments from other schemes. That is equally true of individual and bulk transfers into the fund. The trustees can therefore ensure that the scheme receives adequate funds in respect of the past service of such new members. Further, as the trustees effectively control the contribution rate (by appointing the actuary) they can also effectively ensure that future service is also adequately funded.
We must also take account of employment law considerations. The provision of a pension scheme is a part of the terms and conditions of employment and is a benefit provided by the employer for its employees. It would be untenable to have a position where the provision of pension benefits is denied to an employee by the trustees of the scheme as that could possibly place the employer in breach of contract. The role of the trustees is to administer the operation of the fund and oversee the payment of benefits and not to decide who receives benefits—that is the role of the employer. For those reasons that amendment is unnecessary and undesirable.
I turn now to the last of the three amendments, Amendment No. 9. The effect of that amendment would be to remove the employer's present right to veto the nomination of any elected trustee and to lessen the control which the employer has over the constitution of the trustees, thus ceding more control to the employees.
The amendment is unnecessary in view of the fact that under the present scheme the employer does not have an unfettered right to veto a nomination for an elected trustee. The procedure for the election of elected trustees is laid down in the rules of the scheme. The starting point is that any three members of the scheme may nominate any other member who is an employee for at least one calendar year to be an elected trustee. The corporation has a right to veto any such nomination, but that right can only be exercised after there has been full consultation with the recognised trade union and if in the opinion of the corporation the person nominated is unsuitable to be a trustee.
So far as concerns the suitability of trustees there is a perfectly sensible procedure under the present scheme to ensure that suitable members are put forward for election. The consultation process ensures that the right of veto can be challenged and is not a blanket veto. Being a trustee of a pension scheme involves onerous obligations and is not a position which should be taken up lightly.
The independence of the trustees is further protected by the appointment of an additional trustee

743
as chairman. He has a casting vote when there is an equality of votes and has traditionally been chosen for his independence. His appointment must be approved by the other six trustees. Further, the trustees are required under trust law to act in the best interests of the members or risk personal liability. The use of a trust in itself acts to ensure that decisions are made with the interests of the members being properly taken into account.
I hope that in the light of that explanation the noble Lord will be reassured that adequate protection already exists under the present scheme and that he will see fit not to move the amendment.
Lord Williams of Elvel: I am most grateful to the Minister for his lengthy explanation of the rather complex position regarding the fund. I shall have to read through what he has said very carefully with my advisers before deciding what to do at the next stage.
There is only one point of principle I wish to make. While the company has been in public ownership, it has been public funds—indirectly taxpayers' money—which has gone into the fund. It would be a great mistake if the taxpayers' money were allowed to be stripped out by a future private owner for the benefit of private shareholders.
In the light of what the Minister has said—and I shall have to read Hansard very carefully when it comes out—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 8 and 9 not moved.]
Schedule 1 agreed to.
Remaining schedules agreed to.
House resumed: Bill reported without amendment.

Royal Assent
5.45 p.m.
The Deputy Speaker (Lord Aylestone): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Motor Vehicles (Safety Equipment for Children) Act,

Local Government Finance (Publicity for Auditors' Reports) Act,

Oversea Superannuation Act,

Maintenance Enforcement Act,

Crofter Forestry (Scotland) Act,

Football (Offences) Act,

Registered Homes (Amendment) Act,

Disability Living Allowance and Disability Working Allowance Act,

New Roads and Street Works Act,

Children and Young Persons (Protection from Tobacco) Act,

Northern Ireland (Emergency Provisions) Act,

Criminal Procedure (Insanity and Unfitness to Plead) Act,

Road Traffic (Temporary Restrictions) Act,

Radioactive Material (Road Transport) Act,

Natural Heritage (Scotland) Act,

Property Misdescriptions Act,

744

Welfare of Animals at Slaughter Act,

Killingholme Generating Stations (Ancillary Powers) Act,

Heathrow Express Railway (No. 2) Act,

London Underground (Victoria) Act,

Llanelli Borough Council (Dafen Estuary) Act.

Vienna Document (Privileges and Immunities) Order 1991
5.47 p.m.
Lord Cavendish of Furness Lord Cavendish of Furness rose to move, That the draft order laid before the House on 23rd May be approved [21st Report from the Joint Committee]
The noble Lord said: My Lords, the purpose of this order is to confer privileges and immunities on observers, inspectors, evaluators and auxiliary personnel, in accordance with the provisions of the 1990 Vienna document of the negotiations on confidence and security-building measures.
The order is necessary for the United Kingdom to give effect in domestic law to those provisions on privileges and immunities. The order is being made under Section 1(2) of the Arms Control and Disarmament (Privileges and Immunities) Act 1988. The privileges and immunities it confers follow the pattern of Section 1(1) of the 1988 Act under which observers and inspectors visiting the UK under the Stockholm document were granted the privileges and immunities of diplomatic agents and auxiliary personnel were granted the privileges and immunities of the administrative and technical staff or the service staff of a mission.
Those privileges and immunities will in practice be enjoyed only rarely by visitors to the UK. The Vienna document sets limits on what each participating state is obliged to accept. For the United Kingdom this amounts to three inspections and one evaluation visit per year. Observations are linked to the size of military exercises. The United Kingdom has been obliged to host only one since the adoption of the 1986 Stockholm document. I beg to move.
Moved, That the draft order laid before the House on 23rd May be approved [21st Report from the Joint Committee].—(Lord Cavendish of Furness.)
Lord Graham of Edmonton: My Lords, my noble friend Lord Richard has asked me to apologise for his absence and to say that he wishes the order well.
On Question, Motion agreed to.

Building Societies Act 1986 (Continuance of Section 41) Order 1991
5.50 p.m.
The Earl of Strathmore and Kinghorne The Earl of Strathmore and Kinghorne rose to move, That the draft order laid before the House on 3rd June be approved [21st Report from the Joint Committee].
The noble Earl said: My Lords, the purpose of the order is to continue for a further five years the power of the Building Societies Commission to require a building society to apply for renewal of its

745
authorisation. That power, provided by Section 41 of the Building Societies Act 1986, was originally intended as part of the transitional arrangements relating to the new prudential regime introduced by that Act; hence its initial limitation to a five-year period after the passage of the Act. However, it has proved to be a useful and flexible power with an application beyond the transitional period and is well worth maintaining as part of the commission's regulatory armoury.
Building societies are unable to raise money from members or to accept deposits unless authorised to do so by the Building Societies Commission under Section 9 of the Act. At the time the Act came into force, existing building societies were given deemed authorisation as it was not considered worthwhile to require all societies to apply for authorisation. However, the Section 41 power provides an important safeguard. If the commission has reason to believe that a building society's business is or may be conducted in a way that may not adequately protect the investments of shareholders and depositors, the commission can direct the society to apply to it for renewal of authorisation.
The type of situation in which the Section 41 power is useful and necessary is where, over a period of time, the commission has a number of grounds for doubts about the adequacy of the way in which the building society conducts its business and where the society does not respond sufficiently to the normal persuasion process of supervision. The state of a society may not be such as to justify the imposition of conditions on the society's authorisation by the commission, but the commission may still have underlying misgivings about the way in which the society is run. This is an effective but nevertheless entirely non-contentious piece of legislation. I beg to move.
Moved, That the draft order laid before the House on 3rd June be approved [21st Report from the Joint Committee].—(The Earl of Strathmore and Kinghorne).
Lord Graham of Edmonton: My Lords, we on this side of the House approved the original legislation and the reason for bringing it forward, so we certainly raise no objection to its extension. However, perhaps the Minister will take the opportunity to acquaint the House with the extent to which the powers in the Bill have been called into use. He said that adequate protection was provided, and he referred to the requirement for and the value of this piece of legislation in regard to dealing with those building societies which do not take the action necessary to allay the commission's underlying doubts. He must have some statistics regarding the extent to which the power in the Bill has been used. There must be a body of evidence collected over the past five years which shows that it is needed, that it has been effective and that, as a consequence, an extension is required. I understand that the Minister may not be able to provide that information; but I should be surprised if he cannot do so as it is an obvious question and he must be well briefed on it.
The Earl of Strathmore and Kinghorne: My Lords, I thank the noble Lord for his comments. The power may be used only once within a period of five years for any particular building society. The society has up to six months to put its house in order, if that is necessary, before it seeks to satisfy the commission that it is fit to continue to be authorised. The procedure allows the commission to reach a decision on the basis of a more fundamental and wider review of the prudential position of the society than is possible in the normal course of supervision.
The Section 41 power has so far been used only once, but it is of greater value than that would suggest. As with other prudential powers, the society would often prefer to do what is necessary without having formal legal procedures invoked. In conclusion, the Section 41 power is a useful part of the commission's range of prudential controls and one which merits continuance for a further five years.
Lord Graham of Edmonton: My Lords, I am grateful for the Minister having come armed with the answer. I agree that the fact that the power has been used only once is a good indication of its deterrent effect and that it encourages building societies to take the necessary steps to avoid its use.
On Question, Motion agreed to.

Badgers Bill
5.54 p.m.
Report received.
Clause 3 [Extension of general exceptions]:
Lord Mancroft Lord Mancroft moved Amendment No. 1:
Page 2, line 16, after ("or") insert ("after midday of the day preceding the day of the hunt, or").
The noble Lord said: My Lords, this is a straightforward amendment which, sadly, was overlooked in Committee. Its purpose is to permit the stopping of badger setts with straw, hay or loose soil, as outlined in the Bill, before midnight. Under the Bill as presently drafted, no stopping is permitted except on the day of the hunt. That is quite acceptable for stopping with bundles of sticks or paper bags because it would not be appropriate to stop badger setts the evening before a hunting day in that way as badgers can either be stopped in or out of their setts for some time, being unable to remove the stop. However, in the case of loose materials, a badger can easily dig his way in or out as he wants to.
Where a large number of holes have to be stopped, it has been pointed out that a single-handed earth-stopper could well find it hard to get round if he was confined to stopping on the morning of the hunting day. He may well want to stop on the afternoon or evening beforehand. The amendment would permit that, but only if he uses loose materials, not a bundle of sticks or paper bags which are not covered by the amendment and could only be used on the morning of the hunt. If the earth stopper returns in the morning, he may well find that the badger has dug his way out of one of the holes. He can then restop

747
the hole. It may well be of help to him to have it confirmed that the set is active so as to ensure that it is treated properly in the future.
It might be claimed that stopping the night before would disturb badgers just when they wish to come out for foraging and feeding. However, in the winter the stopping will mostly be done before it is dark. Disturbance to the badger is therefore absolutely minimal. It would be much worse for the badger if many holes had to be left unstopped because the earth stopper could not get round in the morning. If foxes then run to ground, there is risk of much more disturbance if they must be got out. If the sett showed signs of current use or was protected, the fox could not be removed. That would not be satisfactory to the farmer or keeper concerned who may well resort to another legal form of control such as night shooting or snaring which would leave the badger far worse off, as has happened in Northern Ireland. For those reasons a practical earther-stopping code is necessary. The amendment would clear up the small remaining problem with Clause 3.
It is late to bring forward the amendment, but I showed it to the coalition—the proposers of the Bill—on Tuesday and they have had time to look at it. If I may put the opposition's case, as it were, the reasons against the amendment were, first, that the proposers of the Bill felt that they had already conceded too much and, secondly, that they felt that it would cause extra disturbance to the badger. There is no extra concession in this issue because the principle of earth stopping has been willingly agreed. It is already within the Bill. There would be no extension. Furthermore, that practice has been going on in hunting counties since time immemorial. It is just a continuation of an existing practice. A voluntary code would become a statute governed by law. It must be remembered that the largest concentration of badgers in Britain is in those very heavily hunted countries which are stopped most so, if it disturbed the badger, how come that is the place in which they thrive most?
I cannot force through the amendment at this late stage, but I hope that the noble Lord, Lord Houghton, will appreciate that those of us involved in country sports and farming have gone a long way down the route—further than we have ever gone before—to get the legislation on the statute book and we are keen that it should be put on the statute book.
So far the Bill has proceeded with good will on all sides and much hard work has been done. I ask the noble Lord to extend that goodwill just one iota further. I think it would behove him to do so. It would gain the support of noble Lords and would put a nice seal on the atmosphere in which this Bill has been debated. It would show those who have come a little further this time that the noble Lord appreciates it and that the proposers of the Bill appreciate it. I too would appreciate it very much if he were to accept this amendment at this late stage. I beg to move.
6 p.m.
Baroness Phillips: My Lords, perhaps I may speak before the noble Lord replies. I listened carefully to the explanation but I am still not quite clear why he needs this amendment. The noble Lord went into some detail, but did not make that clear. He did not say whether it is to help those people who hunt badgers —naturally we are not enthusiastic about that—or whether it is to help the badgers. Before we go any further, perhaps he would explain in simple terms for those of us who are not hunters or do not live in the countryside and roam about with large dogs—people such as myself who believe that sport is a different activity, like playing football or tennis—the reason for covering the badger's house. After all, I presume that we are dealing with that. It is all very well to ask for goodwill, but on whose behalf is it requested? Is it on behalf of the badgers?
Lord Mancroft: My Lords, with the leave of the House perhaps I may answer the noble Baroness. First and foremost, what she regards as sport I would regard as a game. But that is neither here nor there.
The answer to her question is that it has been the custom and the practice for many years—indeed, long before I was around—on the day before a hunt or on the morning of a hunt to go around and stop up the holes (the badger holes, the fox holes or the rabbit holes) so that the fox does not go to ground and must then be dug out. It affects the badger because the fox often does not distinguish between one hole and another. The fox may go down the badger sett. Obviously, if he does that the hounds will "mark", as it is called, around the hole. That will disturb the badger, although it is permitted within the legislation as it stands at the moment. If the badger sett is ineffectually stopped, there is a great likelihood that the fox will go into it. The fox and the hounds marking the sett will disturb the badger if it is there.
This amendment will allow to continue a practice that has gone on for years. Some noble Lords do not like hunting—I cannot think why—and may not approve of it. But the practice to which I referred has gone on for a very long time. It has gone on without injury to the badger. Indeed, fox hunters are very keen that the badger and his sett should be protected. That would be very much more difficult to do without this very simple amendment.
Lord Houghton of Sowerby: My Lords, I am in a difficulty. I might as well be frank about it now. It is a matter of communication and consultation. This further amendment was tabled this morning. I do not know why we have this situation and feel that it must be owing to the very nature of the problem with which we are dealing. Previously I complained about an amendment that had been tabled on the morning of a debate. I am not complaining now; I simply say that we have this situation.
I was consulted about the amendment this morning and after lunch. After discussing it with the noble Lord, Lord Mancroft, I consented to it. It was again discussed later in the day and I again expressed my feeling that, much as it might be disliked, I had

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throughout been willing to go to any reasonable length to obtain agreement and good will. I am now in some difficulty. When I consulted my adviser, Mr. Bryant, who has been the co-ordinator of the so-called coalition, he felt that this was quite a serious matter and that I might be in danger of not being able to carry the coalition with it. It might upset leisure groups all over the country and lead to a considerable amount of internal difficulty.
It may be that I take either a more lenient or a more ignorant view of what is done to badgers in the countryside. I did not feel that the situation was as bad as it is now said to be in my advice. I might add that the whole process of stopping-up is repugnant to a great many people. They feel that it is absolutely unsporting and interferes with the lifestyle of another species, and so on. I do not wish to argue that point. But many people are deeply against it because it conflicts with their sense of what should be humane treatment of animals. After all, the process is a step taken to maximise the sport of the hunters. They want to prevent escapes into badger holes, which would rob them of their quarry and send them back to the covert to get another fox; so the day's sport would be spoilt.
As the noble Lord, Lord Mancroft, just said, I was assured that it is the practice at the present time, but I am not fully informed of its extent. I am a trusting chap and when the noble Lord told me that with all the skill of a car salesman (not a second-hand car salesman) I fell for it. Now I am in danger of finding myself in difficulty. If this amendment is sent to the Commons and there is a revolt there, goodness knows what might happen. It is not what we wish. Certainly it would not do me any good if I were reported as having consented to it and fallen in with the wish of the noble Lord only to be repudiated at the other end. Noble Lords can see that I am not fit to be the commander of this enterprise. However, I must try to rescue the situation.
It is unfortunate that this matter was not considered by the coalition when at the Home Office dealing with the other matters upon which agreement was reached. I believe that it was mentioned by the noble Lord, Lord Mancroft, to members of the discussion party on the pavement after they left the meeting. But the matter was not formally considered by the group and it has not been possible for the group to discuss it. So I probably exceeded my authority and took a risk which I ought not to have taken. The noble Lord, Lord Mancroft, in a way failed to keep his back clear from being hit from behind because he was with the coalition and took a leading part in the discussions at the Home Office. We ought to have had this matter out that morning.
I have no experience of what happens because my badgers are not on land which is used for hunting or shooting. But we have to deal with a charge that if badger setts are stopped up in the afternoon before the hunt the badgers will be obstructed from coming out of their setts that evening. They might be kept under ground if the stopping-up is effective. Cubs might be in need of food but the parent badger would not be able to get out. I stand to be corrected on that matter. Alternatively, if the badger is out, it will not be able to
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get back in. We have to clear up this question of whether the disturbance that may be caused is more than is reasonably acceptable.
Finally, we may not make progress on the amendment before I have to appeal to the noble Lord to withdraw it and suggest that we consider it again before Third Reading, sad as that may be. It is no good my putting noble Lords or myself into an impossible position. We have done well so far. We have had goodwill and understanding. Many congratulations are due to all concerned.
However, I must reserve my position. Without going back on what I said, I am not free to promise that what I agree to will be confirmed by those who have responsibility for the public verdict on the Bill. I leave that problem for the moment before your Lordships. I may have to ask leave to make another statement later. It is an unfortunate development. It is a good thing that it occurred at the beginning and not at the end of the debate. If we can overcome this difficulty we shall have overcome all the humps in the Bill. I do not want the basis of our agreement and the goodwill that has been established to be scattered by a feeling that we have been let down in the end.
Lord Boardman: My Lords, perhaps I may help the noble Lord on certain points that he raised. He referred to the problems that the provision might cause to badgers getting in or out of a sett after the stopping-up and until it is unstopped on the subsequent day. On moving the amendment, my noble friend Lord Mancroft made it clear that the amendment applies only to the first part of Clause 3. That does not mean that badgers cannot get in or out. The Bill provides for stopping-up by,
"untainted straw or hay, or leaf-litter, or bracken or loose soil placed in the entrances on the day of the hunt",
or the afternoon of the previous day. That method of stopping-up would not prevent the badger from digging itself out and returning to the sett if it wanted. It would isolate the unstopped hole to the one from which the badger had come. The badger would not in any way be prejudiced.
Perhaps I can help the noble Lord, Lord Houghton, on other points. I believe that the amendment makes Clause 3 more effective. He has agreed and accepted that provision. It helps the control of foxes and in no way prejudices the badger. Clause 3 has been accepted. I believe that the amendment makes the clause a little more effective. It is right that the amendment should be added. Clause 3 having been accepted, it would be a pity if it were only partially effective because the right to stop up a sett on the afternoon of the previous day had been omitted.
I believe that the badger will in no way be prejudiced by acceptance of the amendment. I understand the noble Lord's difficulty. However, I hope that he will be able to agree to my noble friend's amendment, which I support.
6.15 p.m.
Lord Renton: My Lords, I have not previously spoken on the Bill and had not intended to do so. However, the noble Lord, Lord Houghton of Sowerby, is such an old friend that I should like to do my best to put his mind at rest.
He is against stopping-up. The amendment limits stopping up and therefore I very much hope that he will see the advantage of it. That advantage is not diminished by the fact that the amendment appeared on the Marshalled List only today as a starred amendment.
Lord Addington: My Lords, the noble Lord, Lord Mancroft, seems to justify the amendment by saying that it might be inconvenient to do the work. That seemed a large part of his argument. Perhaps there could be a compromise by stating that what is necessary for the hunt or for the protection of the badger is far more important. Perhaps we can discuss the issue at another stage. The convenience of those who wish to hunt seems to take precedence over the protection of badgers. That appears to be the argument presented. I hope that we shall have an opportunity at least to clear the air and ensure that the protection of the badger is given priority.
Viscount Massereene and Ferrard: My Lords, I used to hunt quite a lot. No one likes digging foxes out, but one has to do so because one hunts with the objective of killing foxes. I agree that there are many ways of killing foxes, some of which are extremely unpleasant—for instance, poisoning, snaring and shooting with a shotgun. Many foxes are peppered by shot from people using shotguns. I have never shot a fox with a shotgun. I have shot foxes in Germany with a rifle, but that is quite different.
I have badgers in my park. They are most delightful animals and fascinating to watch if there is a full moon. However, we are discussing a difficult problem. One of the objectives of a hunt is to keep down the number of foxes. From my experience no one who hunts likes the digging out process. It is not done for sport. The fox usually gets away during the chase anyway. But how does one control foxes apart from snaring or poisoning? One can shoot foxes at night with a high velocity rifle with a silencer. The fox is attracted by a lamp—keepers use that method a great deal.
Perhaps I may branch off somewhat on the subject of badgers. For quite a few years government have been the real villains—I refer to government as a whole and not to the different parties which have been in power—because over 20,000 badgers have been killed by government since scientists believed that badgers gave tuberculosis to cattle. That was done to a great extent in the west country. I believe that the number was over 20,000; but that is immaterial. On three or four farms around us the cattle did not pass the test for tuberculosis. I was surrounded by farms at which the cattle had to be burnt. However, my Jersey herd never suffered from tuberculosis. I no longer have cattle; I used to have a great many.
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I am glad that the scientists have stopped killing badgers. The scientists, as if often the case, were in the wrong. My experience of hunting is not as great as that of some people, but I have hardly ever seen a badger killed. Obviously, we do not hunt badgers. On the whole hunting people are fond of badgers and do not like disturbing or killing them. However, when hunting foxes it is often difficult not to disturb badgers.
Lord Gridley: My Lords, during Second Reading I confined my speech to the importance of reaching agreement on the various issues in the Bill and co-operating to the best of our ability. It is most important to accept the amendment in that vein. I realise the difficulties of reaching total agreement in the light of all the issues before us. In Committee, on Second Reading and during the passage of the Bill in another place a great deal that is valuable has been achieved. Members in another place will again consider the Bill. We must relay the issues that have been foremost in our debates so that they understand that your Lordships are anxious that the Bill reaches the statute book. We should understand the difficulties and realise that we cannot have a perfect Bill. However, we should support this amendment in the general interests of the Bill.
Lord Burton: My Lords, the amendment emphasises the complications that can arise when we try to legislate on country affairs, and in particular on long-standing traditions. The noble Lord, Lord Houghton, clearly, and not surprisingly, was concerned about stopping out the setts. However, Clause 3 already provides that one may not pack the hole hard: one must use soft materials. That will make it easy for the badger to work his way out. There is no risk of the badger being shut in. Of course, badgers come out after dark. My noble friend Lord Mancroft is most experienced in this matter but even he had not considered the problem. It is one that an expert has drawn to his attention.
I realise that we are rather rushing through the Bill. I hope that the noble Lord, Lord Houghton, will not consider that he is being pressured. I also hope that he realises that far from weakening the Bill the amendment will greatly improve it.
Lord Mancroft: My Lords, as always we have had an interesting debate. The noble Lord, Lord Addington, raised an important point. I may have over-emphasised the convenience of stopping. It is only convenient if it is done effectively; ineffective stopping will do no good to the badger. The object of the exercise is to prevent foxes going to ground in badger setts and therefore hounds going near them. Stopping is convenient only for that purpose.
As we discussed at an earlier stage, the principle of stopping badger setts is necessary not for the sport or the catching of the fox—we are not concerned with that in the Bill—but for the protection of the badger and his sett. We have gone to great lengths to ensure that the voluntary code of practice which has been in operation for some years becomes enshrined in law in the Bill. We have thought carefully about the Bill; we

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have gone through it word by word to ensure that it will work. We have introduced a register so that people cannot stop unless their name is listed. No one can use it as an excuse for being near a badger sett when they should not be.
The amendment is not new. I did not introduce it at the meeting which my noble friend Lord Astor kindly chaired at the Home Office on Tuesday. That meeting was strictly reserved for another area of the Bill—licensing. I introduced it at length two days ago when the coalition was able to see a copy. That was a day before the main licensing amendment was published.
The amendment is simple and straightforward. A suggestion has been made that the words on the Marshalled List:
"after midday of the day preceding the day of the hunt"
should be changed to "before dusk". That could be breakfast time, lunch time or any time. The phrase is not sufficiently exact and I would not wish so loose a phrase to appear in the Bill.
In reality the provision applies only to large areas of ground where there may be 20, 30 or even 100 badger setts. It could be a field, or even two fields, where badgers get into the banks. Stopping would not happen often; in general, only in winter when badgers are hibernating. In those circumstances, whether their front or back door is open is wholly irrelevant; they are sleeping inside. Badgers wishing to come out of the sett but finding it stopped are capable of pushing out easily. As I said in Committee, it is my experience that if one planted a Chieftain tank above a sett the badger would be able to get out in about two minutes. We are not planning on doing that; we are planning on using loose soil and straw. The badger would not notice that and would go through it as it goes through undergrowth. We have tabled the amendment purely for the badgers' added protection from any disturbance that might be caused by hunting.
If I were to withdraw my amendment it would be necessary to table a Third Reading amendment. That would be a pity because it would delay the Bill further and I have no wish to do that. Neither do I wish to divide the House. We have succeeded in reaching this stage of the Bill without a Division. I have no doubt that if I were to divide the House I should win but I am loath to do so. I wonder whether the noble Lord, Lord Houghton, can accept the amendment now and avoid all the problems for the future. It would be a pity to take the matter to a Third Reading debate but if the noble Lord insists, that is what we must do.
I see no movement from the noble Lord; therefore, I must test the opinion of the House. It is a pity to do so because I should have preferred the noble Lord to accept the amendment. It has support from all sides of the House. The noble Lord gives me no option but to ask for the opinion of the House.
On Question, amendment agreed to.
6.30 p.m.
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 2:
Page 3, line 13, at end insert:
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("(k) for the purpose of controlling foxes in order to protect livestock, game or wild life, to interfere with a badger sett within an area specified in the licence by any means so specified.").
The noble Lord said: I beg to move.
Lord Mancroft: My Lords, this amendment in the name of the noble Lord, Lord Houghton of Sowerby, and myself is as a result of the negotiations which we had earlier this week following an amendment brought forward in Committee by my noble friend Lord Swinton and the noble Lord, Lord Tryon.
The area in which we had the biggest problem as regards the Bill is that of licensing. That is a very important part of the Bill. My noble friend Lord Swinton and the noble Lord, Lord Tryon, brought forward an amendment in Committee which very much put the obligation on the Ministry to grant licences, possibly more than would have been desirable.
Therefore, the badger coalition of which the noble Lord, Lord Houghton—the sponsor of this Bill—is the front man, was opposed to that. However, in Committee the noble Lord, Lord Houghton, gave a reassurance that he would accept the principle of the amendment but he wanted time to go into further detail. At that stage my noble friend Lord Swinton withdrew his amendment and we entered into negotiations. The result is the amendment brought forward today in the name of the noble Lord, Lord Houghton, and myself.
Like most amendments it is not perfect. It probably does not go as far as my noble friend Lord Swinton would wish but probably goes further than the noble Lord, Lord Houghton, and his supporters desire. However, it is a good compromise amendment. It allows the control of foxes by sheep farmers in Wales, the West Country and the Fell District and the control of foxes to protect game birds and other wild nesting birds. It allows those who have a concern in those areas to apply for a licence with a fairly good chance of obtaining one.
The anxiety of the Committee was that people would apply for licences but would not obtain them. We have not sought to put an obligation on the Ministry or on the Nature Conservancy Council but we have endeavoured to tighten up the area. Therefore, the amendment includes the words:
"A licence under this section shall not be unreasonably withheld or revoked".
That is a very important sentence. I believe that my noble friend Lord Astor will confirm that that almost imposes an obligation on the licensing body to grant licences provided that it is assured—and this is very important—that the right sort of people obtain the licences.
Whereas my noble friend Lord Swinton and the noble Lord, Lord Tryon, were keen to make sure that the right people are able to obtain licences, equally it is important that the wrong people do not obtain them. That is why we have tabled the amendment. It is obvious that those people convicted under wildlife legislation of cruelty to animals or, indeed, under the Badgers Act 1973, should not be able to obtain licences and we must ensure that they do not do so. I believe that this amendment will achieve that objective

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and at the same time ensure that those who should have licences will be able to obtain them. I hope that it will relieve the anxieties of the Moorland Gamekeepers' Association, the National Farmers' Union and the Country Landowners' Association all of whom have approached us with anxieties as regards this area of the Bill. We have sought to address those anxieties. I hope that the House will accept the amendment in preference to that in the name of my noble friend Lord Swinton.
The Earl of Swinton: My Lords, I thank the noble Lord, Lord Houghton, for moving the amendment. I shall not pull his leg about the fact that it was tabled only this morning. I thank also my noble friend Lord Mancroft for speaking to it and for his hard work. I thank my noble friend on the Front Bench for what he has done because I know how hard he has worked.
The amendment goes a long way towards covering the points which I wish to see covered and I shall not repeat what I said in Committee. However, I have one or two important questions which I should like to ask my noble friend on the Front Bench. As my noble friend Lord Mancroft said, anxieties have been expressed by a number of organisations including the Moorland Gamekeepers' Association, the National Farmers' Union and the Country Landowners' Association. Will it be certain that applicants can obtain licences well in advance of the period for which they may be needed since there may be occasions when there is not time to apply for and obtain a licence? I cited such occasions in my speech in Committee.
Will the licences be valid for a long period? I believe that they should be valid for at least a year so that proper fox control can take place. Also, will they be granted at any time of the year? I hope—this is very important—that even though they will be granted in advance, I trust that licences will be granted swiftly so that there will be no long delay.
If my noble friend on the Front Bench can give me satisfactory answers to those points I shall support the amendment and in due course not move my amendment.
Earl Peel: My Lords, as this is the first time that I have spoken during the course of the Bill I should like to congratulate my noble friend Lord Mancroft and the noble Lord, Lord Houghton of Sowerby, on having got the two sides together. I hope that an amicable compromise has been reached and that the Bill will have a successful passage. It is also appropriate to say how grateful we are to my noble friend Lord Astor for the way in which he has brought both sides together and tackled the problems in such a masterly fashion.
With these two amendments we have reached a stage where it is obvious that we must work together in trying to solve the problem of fox control because, as my noble friend Lord Swinton said in Committee, foxes undoubtedly occupy badger setts from time to time. Obviously a sensible licensing system would appear to be the most appropriate solution for solving the problem. At the same time, that will ensure that the Bill reaches the statute book.
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I believe that the need to control foxes is sometimes underestimated. It is obvious to many of us who have occasion on moorland areas to distinguish between a keepered and non-keepered area that there is a marked difference not only in quantity but also as regards variety of species. It may be interesting to note also that the Game Conservancy national game census has shown a five-fold increase in foxes in the uplands since 1960. Therefore, it is no wonder that the Moorland Gamekeepers' Association is keen to see the introduction of a licensing system. Incidentally, it may interest your Lordships to know that in eastern England there has been a three-fold increase and in south-east England a six-fold increase. I am delighted to say that the numbers of badgers are also increasing. In the uplands it is not unusual to find a badger sett of 1,600 or 1,700 feet. Those badgers live in setts, thus increasing the problems caused by foxes using them.
It is vital that the system should not be cumbersome. As my noble friend Lord Swinton said, the licences must be valid for a reasonable duration of time. They must be easy to obtain and must be for bona fide people so that we do not undermine the principles of the Bill.
As I see it, the amendment in the name of my noble friend Lord Swinton is the more stringent of the two. It states that a licensing authority "shall" grant licences to any authorised person. I imagine that the word "shall" is the word to which the noble Lord, Lord Houghton, objects. On the other hand, my noble friend Lord Swinton's amendment has the advantage in that it says that a licensed person shall not damage a badger or a sett. However, it does not differentiate between livestock and game birds. As I understand it, there is a legislative distinction between the two in that MAFF has the authority to issue licences for livestock but not for game birds. That comes under the jurisdiction of the Department of the Environment, and in most cases the application is referred to English Nature or its parent bodies in Wales and Scotland.
A problem may exist. I spoke to the chief executive of English Nature who assured me that he does not see this as a conservation problem; it is a problem of resources and manpower. I can see that if English Nature were inundated with licence applications, that could cause a problem. I believe in most cases it will not. I suspect that the individual applying for the licence will include livestock and game. However, there will undoubtedly be times when the licence will only cover game and there could be a problem for the various nature conservation authorities.
Perhaps my noble friend on the Front Bench could help me on one point. I imagine that MAFF is not able to take on the licensing responsibility. It would be more effective if it could. If it cannot, perhaps the Department of the Environment can do it without passing on the responsibility to English Nature and the other two authorities in Scotland and Wales.
I believe that the key to the licensing system is the guidance likely to be issued by the Home Office. If it is well constructed and well thought out, I am sure that it will be effective and the amendment in the names of my noble friend Lord Mancroft and the noble Lord, Lord Houghton, will be workable and

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sensible. I am advised also that there will be a reasonable consultation period. That is imperative if the legislation is to be effective.
Like my noble friend, Lord Swinton, I should like to pose a number of questions to my noble friend Lord Astor. First, it is important that reputable people other than farmers—gamekeepers, hunt officials and members of fox destruction societies—are granted licences. Secondly, will such people be able to obtain licences without excessive argument as to whether fox control or interference with a set is necessary? Thirdly—I believe my noble friend Lord Swinton mentioned this—I hope that licences will not be constrained simply to the springtime. That would be totally impractical. Fourthly, will licences run for a suitable duration of time? For example, will they run from year to year? Will they be obtainable and renewable without bureaucratic delay?
I am sorry to burden my noble friend with a further array of questions, but they are of enormous importance if the licensing system is to be effective.
6.45 p.m.
Lord Tryon: My Lords, I too am grateful that these consultations have taken place and various noble Lords have come up with these alternatives to the amendments tabled by the noble Earl, Lord Swinton, and myself. Noble Lords will not be surprised to hear that I still prefer our amendment but throughout this has been a matter of compromise. A good job has been done and covers at least some of the points raised at Committee stage.
The question of licences has now been fully covered and thy points I intended to make have already been made by the noble Earls, Lord Swinton and Lord Peel. Therefore I shall leave that aside. The only matter on which I should like to ask for guidance is that, as I read the amendment, rabbits seem to have dropped out of the question. They were covered in our amendment and I spoke in that regard at Committee stage.
Will it be possible to obtain licences if there are a number of rabbits in the vicinity of a badger sett? That is an important point. I shall not go through all the arguments about rabbits again and the difficulties that arise when they are close to a badger sett. But it is something on which I should like guidance.
Viscount Astor: My Lords, this is a Private Member's Bill on which the Government are neutral. We seem however to have reached the point where the main difficulty on the Bill is concerned with licensing. That is an area which involves the Government, since the Government are responsible for the arrangements concerning the issue of licences. As I understand it the problem is to ensure that existing legitimate activities of fox control to protect sheep, other livestock, poultry, game and wild birds, can continue.
We have before us today two amendments both of which are designed to achieve that. I believe that we would be able to operate a satisfactory licensing system which meets your Lordships' anxieties under the amendment tabled by the noble Lord, Lord Houghton, and my noble friend Lord Mancroft. I do
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not feel the same confidence about the amendment tabled by the noble Lord, Lord Tryon, and my noble friend Lord Swinton. I should say, however, that I am grateful to the noble Lords for bringing this important point to the attention of the House. 1 hope that what I have to say on the question of licensing will be of some reassurance.
Since Committee stage, we have held meetings with both sides and the Government offered help in the drafting of a suitable amendment. I believe that a licensing system set up under the proposed Section 9(1)(k) of the Badgers Act would meet the anxieties expressed regarding the issue of licences, and satisfy the spirit of the amendment of my noble friend Lord Swinton and the noble Lord, Lord Tryon. Perhaps I may explain how such a licensing system might work.
First there is the question of to whom the licences will be granted. The legislation does not specify who may or may not receive a licence. Clearly we shall not be in the business of issuing licences to badger diggers. We need to be confident that anyone authorised to interfere with a badger sett for the purpose of fox control is suitable and responsible. That would include gamekeepers, farmers, hunts, fox destruction organisations or any other suitable person. I hope that satisfies the point raised by my noble friend Lord Peel.
Then there are the circumstances in which licences will be issued. The amendment tabled by my noble friend Lord Mancroft and the noble Lord, Lord Houghton, introduces the concept that licences shall not be unreasonably withheld or revoked. It goes without saying that licensing authorities should act in a reasonable manner. But I hope the amendment provides reassurance to those who have expressed doubts over this. We envisage that licences would be issued, in advance and for a prolonged period, where regular fox control for protection may risk occasional interference with a badger sett. I believe that was an anxiety expressed by my noble friend Lord Swinton. We would of course retain the right to revoke such a licence if a problem arose. We also envisage assessing in advance of lambing the position of sheep farmers whose flocks are at danger from foxes living in badger setts, so that licences may be issued speedily when the need arises. Licences will not necessarily be restricted to a single sett, although they will relate to a specified area, and that area could include a number of farms.
I have been asked in what circumstances a licence would not be issued. That is not an easy area in which to generalise. I am sure that noble Lords will appreciate that cases may arise which I could not possibly foresee at this moment. But two examples of situations when a licence might be refused are, on land where a scientific study of badgers is being undertaken or where disturbance might be caused to the nest of a breeding bird protected under Schedule 1 of the Wildlife and Countryside Act.
Licences granted under that provision would not be for the taking or killing of badgers. That is an important point as we are discussing the control of foxes, not licences to take or kill badgers. That is an area already covered by the present Act. I would, however, expect a condition of the licence to be that the person authorised should take reasonable care to

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avoid causing harm to a badger. The licence might also specify just what may, or may not, be done to a badger sett; for example, the sett should not be destroyed and any accidental damage to a sett should be rectified as soon as possible.
Under the present Act there are different licensing authorities for different situations; in some cases they are the agriculture departments; in others, the now separate components of the Nature Conservancy Council. The same principle would apply under the amendment we are now considering. But that does not mean that different standards would apply. It is the intention of the licensing authorities to work together to set up common guidelines for issuing licences. That was a point raised by a number of noble Lords this evening. Our aim is to develop a system which is simple, straightforward and just. In doing that we will consult interested organisations. We will consider which licensing authority will be responsible for the different areas of licensing. In principle the agriculture departments will issue licences relating to livestock and the Nature Conservancy Council will issue licences with regard to wildlife. There may be some situations where these areas overlap. During the consultation period we will work with interested organisations to define exactly in which circumstances the licensing authority would issue licences.
It is important to all concerned that the administrative arrangements should be properly worked out. For that reason I am pleased to see it is proposed that three rather than two months should be allowed after Royal Assent before the Bill comes into force to put these guidelines in place.
I now turn to some of the points raised during the debate. My noble friend Lord Swinton asked when licences would be issued. There is no reason why licences should not be granted at any time of the year. As I have said, we intend to establish administrative procedures which will enable licences to be granted speedily. My noble friend Lord Peel asked about guidance. It will not be issued by the Home Office, but it will be developed by agricultural departments, English Nature and the Scottish and Welsh equivalents. We expect the vast majority of the licence applications to be to the agricultural departments and not to English Nature or the Scottish or Welsh counterparts. The amendment does not in fact specify which licensing authority shall issue which licences. Where licences are issued by agricultural departments I do not expect English Nature to be consulted on every application, but on the general procedures. Once the amendments became known, we have consulted at the earliest possible stage with English Nature and the Scottish and Welsh equivalents.
Earl Peel: My Lords, it is not the actual consultation between MAFF and English Nature that concerns me; it is whether English Nature is to be responsible for issuing the licences. If there were a number, that would obviously have a very serious effect on its budget and manpower.
Viscount Astor: My Lords, as I have said, we believe that English Nature will be concerned only
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with issuing licences when they concern wildlife. We feel that that will be a very small amount compared with the number of licences issued by the agricultural departments. English Nature has a licensing function at the moment under the Badgers Act. One must remember that the Bill creates a new offence and a new licensing system for the control of foxes. That will involve extra work for both MAFF and the agencies. But if the Bill becomes law they will have a statutory duty to do that work.
I now turn to the question asked by the noble Lord, Lord Tryon, regarding rabbits. Licensing provisions will allow licences to be granted in relation to rabbit control if that work needs to be done. I hope that that answers the point which the noble Lord raised.
On Question, amendment agreed to.
Lord Mancroft Lord Mancroft moved Amendment No. 3:
Page 3, line 17, leave out ("and").
On Question, amendment agreed to.
Lord Mancroft Lord Mancroft moved Amendment No. 4:
Page 3, line 17, at end insert:
("ff) after subsection (2) (b) there shall be inserted—"
(c) in the case of a licence under paragraph (k) of that subsection—

(i) in England, the Minister of Agriculture, Fisheries and Food or the Nature Conservancy Council for England;

(ii) in Wales, the Secretary of State or the Countryside Council for Wales; and

(iii) in Scotland, the Secretary of State or the Nature Conservancy Council for Scotland."").

On Question amendment agreed to.
Lord Mancroft Lord Mancroft moved Amendment No. 5:
Page 3, line 24, at end insert ("; and
(h) at the end of that section there shall be inserted—
"(6) A licence under this section shall not be unreasonably withheld or revoked".").
On Question, amendment agreed to.
[Amendment No. 6 not moved.]
Clause 6 [Citation and commencement]:
Lord Mancroft Lord Mancroft moved Amendment No. 7:
Page 3, line 30, leave out ("two") and insert ("three").
The noble Lord said: My Lords, in moving the amendment, I do not wish to speak to it as such, except to say that this is probably the last time on which I shall address your Lordships on the Bill, as I suspect that we shall now require only a formal Third Reading. I do not think that I shall speak on Amendment No. 8 to be moved by my noble friend Lord Burton. I am sure that he will cover that quite adequately.
I hope that this important piece of legislation, which we shall probably complete tonight, will remove badgers from the political arena for some time to come. I believe that they will then be the most protected animal in Europe, if not the world. That is quite right because they are subject in some areas and at times to a type of cruelty which is not directed at any other animal. So it is right that we should have given them this extra protection.
In giving them extra protection life has been made more difficult for farmers, for the Ministry, as my noble friend Lord Astor has said, and for the NCC

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and sportsmen. However, all those organisations and people are prepared to accept those difficulties in order to help the badger and to allow it to live without the fear (which it cannot know) of this particular type of cruelty; namely, baiting, which I hope we have made that much more difficult to do tonight.
The Bill was sent to us to revise. It was sent in what can be described as a loose form. When it completed its Third Reading in the other place honourable Members said that it should be sent to their Lordships' House to be tidied up. We have tidied it up. We have worked extremely hard. We had a full Second Reading and a long and careful Committee stage. Both sides of the House, the sporting and farming communities—the Moorland Gamekeepers' Association came forward at a slightly later stage—and the National Farmers' Union all discussed at length with the badger coalition how best to tighten up the Bill, make it more effective, and at the same time allow those who have to live, work and play in the countryside to do so without falling foul of the law.
The fact that the Bill has got this far—and I hope will now find its way onto the statute book—is a great triumph for the noble Lord, Lord Houghton. We should not deny him that triumph. It has not been an easy route. He has been absolutely tremendous in the way in which he has led your Lordships' House down this difficult path. I am sure that there will now be such a valuable conclusion that we should have to look suspiciously on any further legislation, should it come to us n the future, and wonder whether it was not more politically motivated than it should be. We are convinced and have always been convinced that the motives of the noble Lord, Lord Houghton, are as pure a s anybody's motives could be. He is to be congratulated on that. He has championed these causes for many years both in your Lordships' House and in another place. Noble Lords and Members of another place appreciate that fact enormously. In turn, I hope that he and the supporters and sponsors of the Bill will appreciate that for the first time the protectionist lobby and the sporting lobby have come together. Let us hope that it is not the last time; let us hope that it can continue.
The Bill has gone through another place and is now going through this House in a tremendous spirit of good will. Let us hope that that, too, can be repeated. For a very small amendment my "few words" have been rather long-winded. I hope that the House will accept them in the spirit in which I have delivered them. I beg to move.
7 p.m.
Viscount Astor: My Lords, as this is the final amendment in the names of my noble friend Lord Mancroft and of the noble Lord, Lord Houghton of Sowerby, perhaps I may take this opportunity to congratulate them on the way they have brought together all the interested parties and achieved agreement on their amendments. The Government are neutral on Private Members' Bills; but I have to say that I cannot be anything but impressed by the way the two noble Lords have achieved their agreement. I thank my noble friend Lord Swinton for bringing to
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the attention of the House the issue of licences for the control of foxes. That is an extremely important issue and it was totally missed in another place.
As I said in Committee, I offered the noble Lord, Lord Houghton, the Government's help in drafting amendments. He duly accepted that offer. On behalf of all noble Lords, I thank not only the parliamentary draftsman but the officials of the Home Office, the Ministry of Agriculture, Fisheries and Food and the Department of the Environment. They have worked very hard to produce acceptable amendments for the noble Lord, Lord Houghton, and for other noble Lords. I thank my noble friends Lord Jeffreys and Lord St. John of Bletso for moving amendments on behalf of English Heritage. Indeed, I thank all noble Lords who took part in the various stages of the Bill. We even had the noble Lord, Lord McIntosh, speaking on a subject on which he does not normally speak. I am sure that the Third Reading will be a formality. I am also sure that another place will give the Bill careful consideration.
On Question, amendment agreed to.
Lord Burton Lord Burton moved Amendment No. 8:
Page 3, line 31, at end insert:
("(3) This Act shall not extend to Scotland.").
The noble Lord said: My Lords, I congratulate those involved on the way the Bill has been gathered together and consolidated. It has been improved enormously in your Lordships' House. I shall not repeat the names of those involved as they have already been mentioned; but I congratulate them all.
I am worried about how little consideration has been given to Scotland. Neither the Scottish Landowners Federation nor the Scottish National Farmers Union knew anything about the Bill until I drew it to their attention, after which they were somewhat apprehensive, to say the least. They felt, as I did, that it would not be satisfactory for Scotland unless there was an amendment on licensing which at last we managed to secure today. I hope that that will satisfy the Scottish Landowners Federation and the Scottish National Farmers Union.
I was also surprised to be telephoned yesterday by the chief inspector of the Scottish Society for the Prevention of Cruelty to Animals. He did not know about the Bill either. I am surprised that the Royal Society for the Prevention of Cruelty to Animals did not take the trouble to consult its Scottish wing. I discussed the matter with the chief inspector and I assured him that, provided we secured an amendment on licensing, things would be all right.
I am also anxious about the rapid increase in the badger population in Scotland. It is increasing at a tremendous rate. Whether it is because we do not have the motorways and vast roads that one sees in England, which appear to be the main destroyer of badgers, I do not know; but there appears to be little natural control. The only real control is when badgers run out of food and die of starvation.
Since we met in Committee (which was only six days ago) I have had two problems placed on my plate. When I got home one of my tenants telephoned me saying, "What am I to do? I understand badgers

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are protected but they have eaten all my hens". I was concerned whether this was serious damage. If it was serious damage, the culprits can be dealt with. It is a question of that little word "serious". Furthermore, I received a message not long after that from someone on the West coast. He said, "What are we to do? We are losing lambs, and a badger is killing them". I asked how many he had lost, because it is again a question of the seriousness of the problem. We should at some stage address ourselves to the question of how serious is serious.
I fear that before long badgers will suffer a major disaster. We may see something similar to what happened in Sweden where foxes became very numerous indeed. They eventually contracted mange and now they are very rare in Sweden. They died a horrible, painful death. Badgers are probably too clean to contract mange. However, I have a horrible suspicion that something will happen—whether it will be tuberculosis or something similar I do not know. I cannot believe that badgers will not suffer a natural
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disaster. They have no natural predator. Now that we have licensing I agree that the provisions of the Bill should apply to Scotland. Therefore, I shall withdraw the amendment unless any noble Lord has something to say.
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, perhaps I had better put the Question first and then ask the noble Lord to withdraw the amendment. Amendment proposed, page 3, line 31, at end insert
("(3) This Act shall not extend to Scotland.").
Lord Burton: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Aire and Calder Navigation Bill
Brought from the Commons; read a first time, and referred to the Examiners.
House adjourned at eight minutes past seven o'clock.