Lords Sitting of 10 December 1992

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

Kosovo
Lord Renfrew of Kaimsthorn Lord Renfrew of Kaimsthorn asked Her Majesty's Government:
Whether they will consider supporting the claims of the majority for the independence of Kosovo in the light of the possibility that Serbian forces might initiate a policy of "ethnic cleansing".
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we fully support the efforts of the special group on Kosovo established at the international conference on the former Yugoslavia to broker a political settlement in Kosovo based on genuine autonomy.
Lord Renfrew of Kaimsthorn: My Lords, I thank the Minister for that very positive and encouraging Answer. Does she agree that if this unpleasant practice of ethnic cleansing is applied in Kosovo, it is likely that other nations, such as Turkey, will be drawn into the conflict? They will be reluctant to see fellow Moslems or indeed fellow human beings subjected to such vicious and obscene persecution. Do Her Majesty's Government have clear proposals to discourage such an eventuality?
Baroness Chalker of Wallasey: My Lords, all ethnic cleansing, wherever it occurs, is totally against the wishes of everyone. I believe that the Security Council resolution, establishing a commission to analyse the war crimes, will be able to take the perpetrators of ethnic cleansing and hold them individually responsible for their actions. I fully accept what my noble friend said about the danger of spreading the matter. We are taking all possible action to try to prevent that.
Baroness Blackstone: My Lords, can the Minister tell the House whether the CSCE delegation which has recently been in Kosovo has reported its findings? Can she also inform the House of when the CSCE next intends to discuss the issue?
Baroness Chalker of Wallasey: My Lords, to my knowledge it has not yet reported its findings. I believe that there is to be a further meeting next week.
The Earl of Lauderdale: My Lords, does my noble friend agree that the premature recognition of Bosnia contributed substantially to the deterioration of the situation? May I hope that we shall be very cautious in this regard?
Baroness Chalker of Wallasey: My Lords, if there is one thing we have all learned since this tragedy began in the former Yugoslavia it is that recognition of one part after another of the former Yugoslavia seems to have been an engine to break down the whole
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situation. It is right, I believe, that we keep the London Conference machinery working for peace and the prevention of tragedy in all parts of the former Yugoslavia.
Lord Finsberg: My Lords, does my noble friend agree that what has happened so far in Kosovo with the beginning of cleansing and what has happened in the rest of the former Yugoslavia show how very sad it is that the CSCE has been utterly powerless? Does she believe that the world will be able to drive the Serbs out of the territory that they have illegally and so brutally obtained?
Baroness Chalker of Wallasey: My Lords, my noble friend is a little over-critical of CSCE. In Kosovo it has established a long-term resident monitoring presence with the aim of promoting a dialogue between the authorities concerned and the representatives of the local populations. It will also collect information on human rights violations and promote solutions. However, I understand the frustration felt by many Members. We need to work very carefully through every possible aspect of the London Conference to prevent the conflict spreading.
Earl Jellicoe: My Lords, having twice in recent months visited Albania and discussed these matters with Albanian Ministers and that country's able President, may I voice my very real fear that the present situation in Kosovo contains within it the seeds not only of another civil war, perhaps imminent, but also of another major Balkan conflagration which could well spread outside the Balkans? Given those circumstances, can my noble friend say first what progress has been made in stationing European Community monitors around the frontiers of Kosovo, including the Albanian frontier? Secondly, bearing in mind her reply to the Question of my noble friend Lord Renfrew, what representations, if any, have Her Majesty's Government recently made to Belgrade about the restoration in Kosovo of real autonomy, an autonomy that obtained under Tito?
Baroness Chalker of Wallasey: My Lords, my noble friend has asked a number of complicated interlinked questions. The EC monitoring mission operations are being extended. We are currently in negotiation for an extension to Albania and, indeed, along the borders that he mentioned. It is of great regret that the Kosovars are not participating in the elections to be held later this month. Sadly they have forfeited the right to field Kosovar candidates. We understand why but they could still vote in the federal elections. I believe that Kosovo has to have representation, even if its long-term aim may be to have genuine autonomy with full human rights. That is what we are pressing the Serbian authorities to grant to the Kosovars. I hope that in the meantime they may be persuaded to accept something short of full independence.
Lord Ennals: My Lords, may I bring the Minister back to the question put by my noble friend Lady Blackstone; namely, the role of the CSCE? In view of the fact that it has now made the very important appointment of a commissioner for national

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minorities, Max Van der Stoel, a former Netherlands Foreign Minister, might it not be the case that that appointment and the CSCE may be more appropriate to deal with some of these problems than the European Community which, in my view, is not equipped for such a role?
Baroness Chalker of Wallasey: My Lords, I understand the noble Lord's wish to see the CSCE further involved. I believe that with the long-term resident monitoring presence there is a chance to do more in that regard. It may in some ways be better equipped but not in all.
Lord Campbell of Alloway: My Lords, does my noble friend the Minister agree that such a terrible thing as ethnic cleansing, for example, is not a war crime as such but a crime against humanity? Does she further agree that investigation is one thing: it is another to set up an international court under the aegis of the United Nations with jurisdiction to try? What has been done towards setting up such a court? If it were set up, how would the persons to be tried be arrested and transported for trial and how would the penalties be enforced? It is a problem which one can talk about. But what can one do about it?
Baroness Chalker of Wallasey: My Lords, Security Council Resolution 780 established an impartial commission to analyse the information on war crimes. Although there is no intention of preparing cases for prosecution, it is intended to assist the UN Secretary General. We have for a long time pressed with our European partners for the International Law Commission to be given a mandate to draft a statute for an international criminal court. I believe that that is the route we should take. I cannot answer all the detailed questions which my noble friend put because many of them depend upon the way in which the mandate is drafted.
Lord Plumb: My Lords, what action is the Security Council taking in respect of the siege of Sarajevo?
Baroness Chalker of Wallasey: My Lords, the Security Council met yesterday and issued a statement which I shall place in the Library of the House. The Security Council strongly condemned the attacks on Sarajevo and the other attacks in Bosnia. It demanded an immediate cessation of the attacks and of all actions aimed at impeding the distribution of humanitarian assistance and forcing the inhabitants to leave the city. The Security Council further stated that if such attacks and actions continue it will consider as soon as possible further measures against those who commit or support them in order to ensure the security of UNPROFOR and of the international relief workers, the ability of UNPROFOR to fulfil its mandate and compliance with the council's relevant resolutions.
Lord Mackie of Benshie: My Lords, what grounds does the Minister have for believing that the Serbians will pay any more attention to the signals sent by the United Nations, Europe and the CSCE than they have hitherto?
Baroness Chalker of Wallasey: My Lords, we continue to work with those Serbs who appear to understand that what is happening in Bosnia is wrong. We shall do so while that is necessary.

Summer Time
3.12 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
Whether, in view of the launch of the single European market at the beginning of 1993 and the opening of the Channel Tunnel towards the end of that year, they will expedite their review of the desirability of adopting Central European time.
The Minister of State, Home Office (Earl Ferrers): My Lords, the European Commission is reviewing its position on Summer Time. We shall bring forward our proposals when the approach of the Commission is clear.
Lord Ezra: My Lords, does the Minister recall that his noble friend Lord Astor gave almost the same indication in a debate on 14th July; namely, that the Commission was conducting an early review of the matter? Has there been a further delay? If so are the Government prepared to use their Presidency of the Community to speed up the inquiry? In view of the developments referred to in my Question there is an obvious relevance in our linking up with Central European Time. Therefore, will the Government give a declaration of intent subject to suitable proposals being made?
Earl Ferrers: My Lords, I am glad that my noble friend Lord Astor gave a similar reply. It shows that there is at least consistency in government. I do not believe that the review has been delayed. Negotiations with the European Commission on a directive for the dates of Summer Time from 1995 are expected to begin in the middle of next year. The noble Lord asked whether the Government would use their Presidency of the Commission to expedite matters. I fancy that there are pressing issues of a more substantial nature with which the Commission must deal than the altering of summer time arrangements. As regards our intention, I believe that we should wait for the review of the Commission.
Lord Hailsham of Saint Marylebone: My Lords, does my noble friend agree that the actual motions of time depend more on the degrees of longitude and the sun than on the particular convenience of persons who live at different degrees of longitude?
Earl Ferrers: My Lords, the whole subject is one of beastly and foul complexity to which one must address one's mind from time to time. One of the points involved is that made by my noble and learned friend. I am sure that he is right but I would rather not pursue it.
Lord Strabolgi: My Lords, in contrast to what the noble and learned Lord said, are the Government aware that in this country an extra hour in the evening would result in additional participation in leisure

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activities, much more employment and greatly increased revenues for the tourist and leisure industries?
Earl Ferrers: My Lords, that is one of the arguments for one side of the equation and it must be taken into account.
Lord Winstanley: My Lords, does the Minister recall our experiment with British Standard Time, which was introduced by my noble friend Lord Jenkins of Hillhead when he was Home Secretary? That illustrated the advantages of a greatly increased amount of communication time between businesses in Britain and Europe. Would that not be added to by the single market? Is it not also a fact that the previous experiment was halted as the result of a conspiracy between the Daily Express and the BBC, which hourly reported children being mown down in the streets by traffic while ignoring the fact that more children are taken to school in the morning than are collected in the afternoon and that just as many are injured in accidents in the afternoon as in the morning?
Earl Ferrers: My Lords, I find it difficult to disagree with the noble Lord, Lord Winstanley, or to agree with him. He made a number of points all of which were pertinent. However, I do not believe that the Daily Express and the BBC, powerful though they are, altered the dates and times at which we change Summer Time.
Lord Monson: My Lords, does the Minister agree that Britain is by no means alone in this respect because more than one-third of the countries in the Community do not adhere to Central European Time? They are the United Kingdom, the Republic of Ireland, Portugal, Greece and the Canary Islands, which are part of Spain. Does the Minister also agree that the United States, Canada and Australia each have up to five time zones which they link successfully in their single markets?
Earl Ferrers: My Lords, I am sure that the latter part of the noble Lord's question is correct. However, as regards the number of countries within the European Community which have different time scales, that is one of the problems which the Commission is addressing in order to ascertain what commonality there may be. It may bump up with the very problem which the noble Lord puts forward.
Lord Bruce of Donington: My Lords, will the Minister give prime regard to the convenience of the United Kingdom in these matters? Is he aware that, as regards the statement in the Question about the launch of the Single European Market on 1st January, 75 per cent. of the single market has been in operation for 20 years and opinions are still divided as to the benefits which have been derived from that?
Earl Ferrers: My Lords, the noble Lord asked whether we shall take into account the fact that the United Kingdom's convenience is the most important. That may well be so but the difficulty is in knowing
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what the United Kingdom wishes. Everyone has different views, as your Lordships have demonstrated today.
Lord Elton: My Lords, before we decide whether we want Central European Time should we not decide where the centre of Europe is, and do we know?
Earl Ferrers: My Lords, the answers must be yes and no. Your Lordships can choose which questions they refer to.
Lord Vinson: My Lords, does my noble friend agree that the present arrangements sorely disadvantage many elderly people, who are frightened to go out after dark and who are in effect curfewed at sundown? The extra hour which the proposed changes would bring would greatly emancipate and improve their lives.
Earl Ferrers: My Lords, that may be one of the advantages of such a change.

Wave Power
3.20 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
When the inquiry into the potential for producing energy for the United Kingdom from wave power at sea is expected to be completed.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, the Government's review of wave energy into the potential for producing energy from wave power is in preparation, and we expect it to be published by the end of the year.
Lord Campbell of Croy: My Lords, I am grateful for that reply from my noble friend. Is it correct that, because of the passage of time, the inquiry is now being conducted by only one person? If support is needed by that person, will my noble friend make sure that it is forthcoming because waves offer a promising future without the need for disturbance or nuisance on land?
Baroness Denton of Wakefield: My Lords, I am pleased to repeat to my noble friend Lord Campbell of Croy that the report is shortly to be published. He rightly points out that the review of wave energy has been conducted largely by Tom Thorpe of the Energy Technology Support Unit, but in recent months Mr. Thorpe has been assisted by independent consultants. Most of the delay has been caused by the complexities of the problems and the desire to ensure that every potential is examined.
Lord Donoughue: My Lords, given the great potential benefits of wave power —it is clean and does not involve the hazards of waste disposal or decommissioning and does not involve the burning of a primary fuel—and bearing in mind that the coasts of Scotland and Cornwall alone could provide half the energy demand of this country, will the Minister accept that on this side of the House we shall scrutinize

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that report very carefully? We trust that it heralds the end of the apparent hostility of the Minister's department to expenditure on research in that area.
Baroness Denton of Wakefield: My Lords, I should not expect other than that noble Lords opposite would scrutinise carefully any reports that we publish. There is no bias against wave power. That is a myth on the part of noble Lords opposite. The Government have spent money, and wave power will be taken fully into account when considering our renewable strategy.
Lord Mackie of Benshie: My Lords, originally the noble Baroness said that the report would be published before the end of the year and then she said that it would be published shortly. In my experience the word "shortly" in Government replies can often mean years. Will the noble Baroness clarify her reply?
Baroness Denton of Wakefield: My Lords, on this occasion I am pleased to say that the report will be published before the end of the year.
Lord Campbell of Croy: My Lords, can my noble friend give the House any news of the inquiry into renewables in general, which was initiated by the Department of Energy before it was absorbed into the DTI?
Baroness Denton of Wakefield: My Lords, the report of the renewable energy advisable group, which is now chaired by Dr. Martin Holdgate, is expected to be published shortly.
Lord Williams of Elvel: My Lords, will the noble Baroness confirm to the House that before privatisation the Central Electricity Generating Board carried out an extensive survey and research into wave power and off shore energy? Will she confirm also that at that time the CEGB said that, although the economics were not right, nevertheless there was a potential for providing 100 per cent. of the United Kingdom's energy requirement? That figure is produced in the report by a committee of your Lordships' House. Will the noble Baroness say what extra evidence is available to this inquiry which was not available to the CEGB at the time?
Baroness Denton of Wakefield: My Lords, the answer to the noble Lord, Lord Williams, is the question: when? The amount of work to be done and the report due to be published before the end of the year will establish clearly that every project in that area is in its development stage. When those projects have moved beyond the development stage we shall be able to form a better view of what they will contribute.

Gibraltar Airport
3.25 p.m.
Lord Merrivale Lord Merrivale asked Her Majesty's Government:
To what extent Gibraltar is affected by Council Regulation No. 2408/92 (the third air liberalization package) and to what extent this regulation diminishes the effect of the 1987 airport agreement.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, Council Regulation 2408/92 provides that Community air carriers shall be entitled to operate services between virtually all Community airports. As with the two preceding Community market access regulations, Gibraltar Airport is suspended from the provisions of this regulation pending implementation of the 1987 airport agreement. International air services to Gibraltar will, therefore, continue to rest on bilateral agreements rather than EC legislation.
The 1987 airport agreement is essentially concerned with practical arrangements for the management of the airport. The EC regulation does not affect this.
Lord Merrivale: My Lords, I thank the Minister for that Answer. Is it not a fact that both the 1987 joint agreement and this council regulation refer to greater co-operation over the use of Gibraltar Airport, while Spain, in effect, wants joint control, believes the agreement to be a temporary arrangement and argues that the airport is on occupied territory? Does not the agreement appear to be somewhat unworkable on the basis of co-operation, bearing in mind also that certain European Community measures surpass it?
The Earl of Caithness: My Lords, the difference between my noble friend and the Government on this matter is the interpretation of the 1987 Gibraltar Airport agreement. My noble friend said that the purpose of the agreement is to give joint control over the airport, which is on disputed territory. I contest that interpretation of the agreement. I believe that it provides for consultation with the Spaniards, which is very different.
Lord Clinton-Davis: My Lords, perhaps I may support the Minister on that point as one who participated in the debates in the Council of Ministers on the issue. Is it not a fact that, had it not been for compromise on all sides, the benefits of the 1987 agreement and that which has persisted through to this very day in relation to air services could not have been procured?
The Earl of Caithness: My Lords, it is rare to have the support of the noble Lord and I welcome it on this occasion. He is right that without this we should not have been able to make the progress that we have in Europe as regards air services and liberalisation. I hope that accord will be reached soon on the 1987 airport agreement.
Lord Boyd-Carpenter: My Lords, will my noble friend indicate what action Her Majesty's Government are taking to clear up this situation inasmuch as the functioning of that very interesting airport is being handicapped by the attitudes of Spain in particular?
The Earl of Caithness: My Lords, the United Kingdom Government are not taking action. The Gibraltar Government are taking action in some respects on EC legislation through the European Court of Justice which I believe my noble friend

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knows about. We hope that Gibraltar will implement the airport agreement because we believe that that will be to the benefit of Gibraltar.
Lord Merrivale: My Lords, in view of the Gibraltar Government's attitude—and I believe it to be the right attitude—regarding the 1987 agreement, will the Government consider a revision of the agreement on the basis of Community requirements, treating Gibraltar Airport as a Community airport?
The Earl of Caithness: My Lords, that is an interesting idea. Of course one needs at least two sides to participate in an agreement. Although we might look upon my noble friend's idea with favour, we should have to consult the Spanish Government to reach an agreement. However, I shall certainly put that matter to my right honourable friend.

Business of the House
3.28 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 38 (Arrangement of the Order Paper) be dispensed with on Monday next to allow the Motion in the name of the Lord Moran to be taken after the Motion in the name of the Baroness Blatch.—(Lord Wakeham.)
On Question, Motion agreed to.

Crown Proceedings (Armed Forces) Bill [H.L.]
Report received.

Criminal Justice Bill [H.L.]
3.30 p.m.
Read a third time.
Clause 18 [Offences in connection with laundering money from drug trafficking]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 1:
Page 16, line 34, leave out ("suspects") and insert ("believes").
The noble Lord said: My Lords, the amendments to which I am speaking relate to Clauses 18, 26 and 28, and the point is a single one. It is that a person should not be liable to be found guilty of a crime punishable by five years' imprisonment or unlimited fine merely upon the basis of a failure to report a suspicion of unlawful behaviour by others. That proposition is elementary. If the clause is enacted without amendment, we shall be close to totalitarianism.
The amendment is intended to be helpful. It is modest. It is offered in the spirit that the Bill would be improved if amended as we suggest. If one looks at similar legislation such as the Theft Act 1968 one sees that it is an offence to handle stolen goods knowing or believing those goods to have been stolen. Every day, in every Crown Court throughout this country, juries
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are directed by judges that knowledge or belief of the stolen quality of the goods is required and that suspicion will not do.
If the clauses are unamended, the crime enacted will derive solely from a failure to disclose mere suspicion. In ancient Japan, it used to be an offence to be in possession of dangerous thoughts. If the amendment is not accepted, we shall have made it an offence to be in possession of undisclosed suspicion. That is of no practical utility in the administration of the criminal law. It will not assist to achieve the end which we all desire; namely, to stamp out drug trafficking. It is another example of ill-considered legislation which will be of no practical benefit but which will have significant disadvantages.
As Clause 18 presently stands, the verb "suspects" is not even qualified by the word "reasonably". The result will be that if a prospective defendant has a bare suspicion that illegal behaviour has gone on, in the sense of laundering money from drug trafficking, it will be a criminal offence —I repeat—punishable by five years' imprisonment or an unlimited fine, if that person does not disclose that bare, mere suspicion to a constable as soon as reasonably practicable. That is the point of the amendment. I repeat, if I may, that it is moved in a spirit of wanting to improve the Bill. The new offence created, if the amendment is not carried, is not needed, justified or of any practical utility. I beg to move.
Lord Wigoder: My Lords, I support Amendments Nos. 1 and 2 which raise, in a sense, a point similar to those contained in Amendments Nos. 3 and 4, but there are special considerations with regard to Amendments Nos. 1 or 2 which require our careful attention. It is not, at common law in this country, an offence to fail to disclose information about other people's criminal activities. It may be criticisable morally, but it is not a criminal offence to fail to disclose such activities.
There are a few statutes in which an exception to that rule is made, because, no doubt, it is felt in the public interest that the criminal activities involved are so serious that it should be made a criminal offence for people to fail to disclose their knowledge of them. There may be other statutes that deal with the point. I do not know. I am aware of two. I raise the point because it has not been adequately answered by the Minister. The two statutes are, first, this Bill which deals not with drug trafficking but with the laundering of money obtained from drug trafficking, which is a stage removed. The other statute that deals with the matter is the Prevention of Terrorism (Temporary Provisions) Act 1989 which deals with the obligation placed upon people to disclose information about terrorist activities.
No one, I suppose, could for one minute dispute that terrorist activities may be of such vast importance to the community that it is important in the public interest that there should be an obligation upon every citizen to disclose any information obtained, and that he should be criminally liable if he fails to disclose that information. That is hardly on a par with obtaining

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information about the laundering of money obtained from drug trafficking, and yet that is the statute that we are now considering.
The Bill requires a standard of proof, where the information is merely about the laundering of drug trafficking money, of "believes" or "suspects". The far more serious case of citizens who have information, or think that they have information, about terrorist offences is dealt with in the words:
"A person is guilty of an offence if he has information which he knows or believes might be of material assistance … and fails without reasonable excuse to disclose that information".
The standard of proof is far more rigorous where terrorist information is concerned than where information about the laundering of money obtained from drug trafficking is concerned. That appears to be totally illogical. The public of this country are entitled to look at our statute law and compare the one with another and say, "Yes, this appears to make sense. This is consistent", or, alternatively, "This is totally ridiculous". It is totally ridiculous to say of people who may have information about terrorist activities that they can be convicted on the higher standard of proof only—that they should have known or believed —whereas, if it happens to be something of much less consequence, however important it might be, such as the laundering of drug trafficking money, it suffices to say that that person should have suspected that information and failed to disclose it. The two statutes are clearly inconsistent. I venture to suggest that the prevention of terrorism legislation retains the right standard and that this Bill should be amended to come into line with it.
Lord Hailsham of Saint Marylebone: My Lords, I happen to take exactly the opposite point of view from the noble Lords, Lord Williams and Lord Wigoder. All thoroughly bad political reasoning depends either upon a false analogy or a false premise. This amendment is an example of both defects. The first defect is that there is some analogy between the handling of stolen goods and the offence proposed in the Bill as it stands. There is no such analogy. Clearly, it is right, and always has been right, that the offence of handling stolen goods is dependent upon belief or knowledge or the closing of one's eyes deliberately to the danger that the goods are stolen.
The other fault—the false premise—is that the offence consists of failing to disclose a bare suspicion. That is just a false premise. The offence consists in failing to disclose information or other matter on which a suspicion is based; in other words, not a bare suspicion. The question which the House has to ask itself is quite a different one; whether a responsible citizen of any kind who in the course of his business acquires the suspicion on some information or other matter fails to disclose the information or other matter on which the suspicion is based. That seems to be a self-answering question. It is the duty of a responsible citizen to disclose that to the proper quarters. I would like to see the Bill stay as it stands.
Lord Campbell of Alloway: My Lords, I accept wholly the spirit in which this amendment is put
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forward. I also accept that it raises a difficult question on which there are countervailing arguments. But I come down on the side of retaining the Bill as it stands without feeling uncomfortable about supporting some form of totalitarian regime. I take the point of the noble Lord, Lord Wigoder, on his analogy, but I would seek to deal with that shortly at a later stage.
The form of the amendment is important in this context. It is two-pronged. It leaves out "suspects" and inserts "belief". It is accepted that "belief' imports the mental element of conviction which is absent in "suspicion". Other than in an exceptional case, mental state—what the accused knew, believed, suspected or intended—is a matter of inference to be drawn from the facts of the case. The test is not objective, such as what the reasonable man would have known, believed, suspected or intended. It is true that it is a heavy burden for the Crown to establish beyond all reasonable doubt on criminal standards that the accused knew; a lesser burden to prove that he suspected.
Turning to the first limb of the amendment, if the accused believed, surely he reaches a state of conviction not materially different from knowledge. Without indulging in metaphysics or a study of case law, suffice it to say that for all practical intents and purposes in the circumstances of any particular case it is difficult for a judge when directing a jury to distinguish between knowledge on the one hand and belief on the other.
Perhaps I may now turn to the second limb of the amendment, which is perhaps the main question: whether "suspects" should be deleted, a matter on which my noble and learned friend Lord Hailsham has made, your Lordships may think, some telling observations.
It is important to observe that no amendment has been tabled to delete "suspect" and insert "believe" in Section 26C, it being an adequate situation apparently that the accused should establish on the balance of probabilities (the civil burden) that he did not know or suspect. Why then should it be otherwise for the Crown under Section 26B where it has to establish knowledge or suspicion beyond all reasonable doubt, the criminal burden of proof?
One has to put the amendment in the context of the Bill as a whole and in particular of Sections 26B and 26C. Amendments Nos. 1, 2 and 3 are concerned with failure to disclose knowledge or suspicion of drug money laundering under Section 26B, whereas Amendment No. 4 is concerned with concealing or transferring proceeds of criminal conduct generally (it is a general application) and not limited to drug-related criminal conduct.
In all those cases it has to be conceded that the burden of proof rests on the Crown to establish its case beyond reasonable doubt. Even as regards Section 26B it still remains on the Crown to show that the accused had no reasonable excuse for nondisclosure under subsection (3).
Coming to the analogy points of the noble Lord, Lord Wigoder, is it really right to draw on these analogies? Surely suspicion of money laundering from drug trafficking which is not disclosed for no

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reasonable excuse should be a criminal offence. I made these notes long before I had the advantage of hearing what my noble and learned friend Lord Hailsham had to say. I wholly agree with him. It should be a criminal offence in the situation which exists in the United Kingdom today and which is likely to persist and some even think to intensify. For these reasons, on balance, I would hope that my noble friend the Minister will not accept the amendment, although I accept that it is well intentioned and there are two sides to the argument.
3.45 p.m.
Lord Monson: My Lords, as a layman I gladly support the first four amendments. Although the arguments for Amendment No. 4 are slightly different and stronger than those for the first three, I shall speak to them all now as shortly I have to catch a train to Edinburgh and I may not be around by the time the House reaches Amendment No. 4.
Here we have new crimes where people can be sent to prison not for sins of commission, if sins they be, but for sins of omission. No evidence of criminal intent is required by the Bill as it stands. People can be sent to prison for between five and 14 years, depending on the section in question, merely for being careless, absent-minded, too trusting, naive or for being the kind of person who is too embarrassed to kick up a fuss over what might be an extremely slight suspicion. These amendments would make it a little less likely that people would be sent to prison unjustly in the moral sense even if not in the legal sense.
Lord Bridge of Harwich: My Lords, I shall be brief. Surely the very essence of the offence created by the new Section 26B which Clause 18 introduces is a failure to disclose information which does give rise in the mind of the defendant to a suspicion of drug money laundering. As my noble and learned friend Lord Hailsham has pointed out, it is a matter which is about 100 miles away from the offence of receiving stolen goods.
The offence is subject to three very important safeguards as a complete protection from prosecution for a failure to disclose any information which is covered by legal professional privilege. It is a full defence if one has a reasonable excuse for failing to disclose the relevant information. Most important of all, if a suspicion is aroused in the mind of an employee, all he is required to do is to report the matter up the chain to one of his superiors. That is subsection (5) of the new Section 26B.
In those circumstances, the typical case calling for a prosecution under this clause will be that of a relatively junior official in a bank or some other financial institution who handles a financial transaction which reeks of drug money laundering and does nothing about it. Can your Lordships not picture the cross-examination of the defendant when he is giving evidence? He may be asked, "Did you not suspect that the transaction was tainted with drug money laundering?" He may answer, "Yes, of course, I suspected that it might be." "What did you do about it?" "I did nothing about it. It was not for me to
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investigate the matter." "Surely, you must have believed that this was a drug money laundering transaction?" "No, I certainly did not believe it—suspect, yes; believe, no."
If this amendment were to be carried and I was the trial judge summing up in such a case, after reminding the jury of this passage in the cross-examination of the defendant I would say, "Members of the jury, if you think that it may be true that the defendant was telling the truth in those answers, then you must acquit him. It is only if you are satisfied so as to be sure that he is lying that you may convict him. You must be satisfied beyond reasonable doubt before you can convict him that his state of mind amounted not merely to "suspicion", but to 'belief.'" In the face of that direction, in 999 cases out of 1,000 the jury would be loyal to the judge's direction and would acquit. That is why I propose to vote against the amendment.
Lord Ackner: My Lords, I entirely agree with and support all that my noble and learned friend Lord Bridge of Harwich said. I wish to make only two points. First, having regard to the strength of language used by the noble Lord, Lord Williams of Mostyn, in proposing the amendment, one would have thought that the word "suspect" was not in any way used in legislation—or certainly not in this sort of legislation. The very word "suspect" is to be found in Section 24 of the Drug Trafficking Offences Act 1986 which deals with assisting another to retain the benefit of drug trafficking. It is used again in Section 14 of the Criminal Justice (International Co-operation) Act 1990, which deals with concealing or transferring the proceeds of drug trafficking. It would therefore be surprising to find that the lesser obligation on the defendant was to be found in this Bill, which is designed to make the life of the drug money launderer more difficult than at present.
Secondly, the noble Lord, Lord Williams, made the point that there is no reference to "reasonable". If the words were "had reasonable grounds to suspect", the burden would be less for the prosecution to discharge. The test then would be an entirely objective one—not what he, the defendant, suspected, but what a reasonable man would suspect. So, far from there being a complaint on that basis, this is very much in favour of the defence.
Earl Ferrers: My Lords, I am bound to say that after the speeches of the noble and learned Lord, Lord Bridge, and the noble and learned Lord, Lord Ackner, I feel that there is little that I can reasonably add. I shall not, however, take the advantage of sitting down immediately because it might be a good idea if I might put the Government's point of view.
The noble Lord, Lord Williams of Mostyn, said that this was a helpful, modest little amendment. It is also a particularly persistent one because it has appeared twice before and, rather like the rotten penny, it rolls up again on Third Reading.
The noble and learned Lord, Lord Ackner, was absolutely right when he said that the whole purpose of the Bill is to try to make life more difficult for the drug money launderer and those who traffick in this

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kind of thing. As both he and the noble and learned Lord, Lord Bridge said, there are perfectly adequate and full safeguards for any defendant.
Perhaps I may give just one example of the kind of situation with which we are dealing. A bank employee might suspect that the next-door cashier was involved in money laundering. As the Bill is drafted, if that employee suspects that another person is involved in drug money laundering, he must report his suspicions to his line manager. If the amendment were to be accepted, it would mean that only if that employee knows or believes that the other person is involved in drug trafficking must he report it to his line manager. If he just suspects, he need not do so.
The reason for the new offence created by Clause 18 of failing to report knowledge or suspicions of money laundering is to ensure that the police are given every possible opportunity to collect information about money laundering and to investigate suspicious transactions. If suspicions are not reported, the ability of the police to tackle money launderers and therefore to tackle drug traffickers effectively will be severely hampered. I find it hard to believe that the noble Lords who tabled these amendments really intend that it should be a defence for a bank employee, who is charged with an offence under this clause, to say that he only suspected the cashier next to him was engaged in money laundering. The fact that the clerk could not say that he believed that he was money laundering although he jolly well suspected that he was would get him off. Worse than that, the police would have been denied the opportunity of investigating something suspicious—and, after all, that is what the police are always doing. That is what they are skilled at and that is what they are professional at. It is much better for the police to investigate something suspicious than to rely on employees to check out their suspicions first and then determine whether they are tantamount to belief.
Perhaps I may remind your Lordships that employees have a very straightforward way of acting on a suspicion. It is specifically recognised in this clause. It enables them to protect themselves from any risk of prosecution, and at the same time ensure that any facts which might indicate money laundering reach the enforcement authorities whose job it is to investigate them. Employees may report up the line to their supervisor, in accordance with subsection (5). That is what we hope they will do.
Our defences against money laundering and drug trafficking —which depend on a steady flow of information—will be seriously weakened if the incentive to report suspicions is reduced, as it would be if your Lordships were to approve these amendments. The employees of financial institutions already make disclosures to the enforcement authorities on the basis of suspicions in order to protect themselves and their employers from liability to prosecution under Section 24 of the Drug Trafficking Offences Act 1986. Clause 18 simply builds on that existing incentive to report suspicions, albeit with greater force.
I find it hard to agree with the noble Lord, Lord
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Wigoder, who said at Report stage that Section 24 of the Drug Trafficking Offences Act was a less relevant precedent than certain provisions in anti-terrorist legislation. Section 24 of the 1986 Drug Trafficking Offences Act is, in effect, the parent of Clause 18. We are introducing Clause 18 as a supplement to it, especially to ensure that our legislation exactly conforms to the terms of the European Community directive. That is one of the purposes of the Bill.
Perhaps I may quote from Article 7 of the European directive. It states that member states shall ensure that credit and financial institutions refrain from carrying out transactions which they know or suspect to be related to money laundering. If we are to comply with the terms of the directive I venture to suggest to your Lordships that we really must use the test of "knowledge or suspicion" which appears in Article 7. If we fail to do that, it will mean that we shall be unable to meet our obligations under the directive, apart from the fact that it will weaken our defences against laundering. I therefore hope that, even if the noble Lord, Lord Williams of Mostyn, finds it difficult to accept the other arguments of which I have tried to persuade him on about three occasions, he will accept this one. If we do not use those words, we are not complying in full with the directive.
The noble Lord, Lord Wigoder, referred to the position on terrorism. He said that it is totally ridiculous that terrorism should be dealt with on the higher standards of knowledge or belief but money laundering on the lower standard of suspicion. I respectfully suggest to the noble Lord that there is a world of difference between that section about terrorism and the clause under discussion. Section 18 of the Prevention of Terrorism Act applies to everyone, but Clause 18 of the Bill concerns only those who come across suspicion in the course of trade, employment and so forth.
When the Prevention of Terrorism Act was drawn up it was decided that it would be unreasonable to expect everyone, particularly those who are living in Northern Ireland where terrorist activity is unfortunately rife, to report every activity of their friends, their family or their neighbours which they felt might be suspicious but which nevertheless fell short of a belief that they had been involved in a matter of terrorism. Suspicions about money laundering which are covered in Clause 18 are different because they only apply to those in the work context. That is reasonable and fair. Suspicion was agreed to be the right test when the anti-money laundering legislation was first introduced in 1986. I suggest to your Lordships that it is still the right test.
4 p.m.
Lord Williams of Mostyn: My Lords, the noble and learned Lord, Lord Hailsham of Saint Marylebone, accused me of incorrect analysis. He was supported in that suggestion on the basis that handling stolen goods was 100 miles away from the question presently being discussed. There is no incorrect analysis. The mere physical handling of stolen goods is no crime. It depends on the specific mental element—knowledge or belief that the goods were stolen. Similarly, a failure

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to disclose information of itself is not the offence. It is information which is known or suspected to be of relevance.
The amendment for which we contend is simply that there should be knowledge or belief before the sanction of the criminal law falls. The noble Earl, Lord Ferrers, spoke of the bank clerk and the teller at the adjacent desk. The words are wider than that:
"information, or … knowledge or suspicion",
which comes to a prospective defendant,
"in the course of his trade, profession, business or employment".
Those are wide words.
The noble Earl spoke of a disincentive to report suspicions. There is no disincentive in a well-run organisation. There is no disincentive to the moral obligation. What we simply suggest, with great respect, is that one should not base criminal liability with penal sanctions on the basis of a bare suspicion that information is in the mind which ought to be disclosed as being relevant to drug money laundering. That is why the analysis, though faulty, is faulty elsewhere and not with us. In the circumstances we are of the view that we should test the opinion of the House.
4.4 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 66; Not-Contents, 149.

Division No. 1

CONTENTS

Addington, L.

Listowel, E.

Airedale, L.

Llewelyn-Davies of Hastoe, B

Ardwick, L.

McIntosh of Haringey, L.

Aylestone, L.

Mackie of Benshie, L.

Beaumont of Whitley, L.

McNair, L.

Blackstone, B.

Mallalieu, B.

Bonham-Carter, L.

Merlyn-Rees, L.

Broadbridge, L.

Milner of Leeds, L.

Bruce of Donington, L.

Molloy, L.

Callaghan of Cardiff, L.

Monson, L.

Carter, L.

Morris of Castle Morris, L.

Clinton-Davis, L.

Morris of Kenwood, L.

Cocks of Hartcliffe, L.

Mulley, L.

David, B.

Nicol, B.

Dean of Beswick, L.

Perry of Walton, L.

Donaldson of Kingsbridge, L.

Portland, E.

Ennals, L.

Prys-Davies, L.

Falkland, V.

Rea, L.

Fisher of Rednal, B.

Redesdale, L.

Gallacher, L. [Teller.]

Richard, L.

Geraint, L.

Ritchie of Dundee, L.

Gladwyn, L.

Seear, B.

Glenamara, L.

Serota, B.

Graham of Edmonton, L. [Teller.]

Strabolgi, L.

Thomson of Monifieth, L.

Hampton, L.

Tordoff, L.

Harris of Greenwich, L.

Turner of Camden, B.

Hilton of Eggardon, B.

Underhill, L.

Holme of Cheltenham, L.

Varley, L.

Jeger, B.

White, B.

Jenkins of Hillhead, L.

Wigoder, L.

Jenkins of Putney, L.

Williams of Elvel, L.

John-Mackie, L.

Williams of Mostyn, L.

Kilbracken, L.

NOT-CONTENTS

Ackner, L.

Alexander of Tunis, E.

Addison, V.

Alport, L.

Ailsa, M.

Annan, L.

Aldington, L.

Astor, V.

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Banbury of Southam, L.

Long, V.

Belhaven and Stenton, L.

MacAndrew, L.

Bessborough, E.

Mackay of Clashfern, L.

Birdwood, L.

Macleod of Borve, B.

Boardman, L.

Manchester, D.

Bolton, L.

Mancroft, L.

Borthwick, L.

Marlesford, L.

Boyd-Carpenter, L.

Merrivale, L.

Brabazon of Tara, L.

Mersey, V.

Braine of Wheatley, L.

Monk Bretton, L.

Bridge of Harwich, L.

Montagu of Beaulieu, L.

Brightman, L.

Morris, L.

Butterworth, L.

Mottistone, L.

Cadman, L.

Mountevans, L.

Caithness, E.

Munster, E.

Campbell of Alloway, L.

Murton of Lindisfarne, L.

Campbell of Croy, L.

Nathan, L.

Carnegy of Lour, B.

Nelson, E.

Carnock, L.

Norfolk, D.

Chelmsford, V.

Norrie, L.

Clark of Kempston, L

O'Cathain, B.

Cockfield, L.

Orr-Ewing, L.

Coleraine, L.

Oxfuird, V.

Colnbrook, L.

Park of Monmouth, B.

Constantine of Stanmore, L.

Parkinson, L.

Cox, B.

Pender, L.

Cranborne, V.

Platt of Writtle, B.

Crickhowell, L.

Plumb, L.

Cross, V.

Plummer of St. Marylebone, L.

Cullen of Ashbourne, L.

Porritt, L.

Dacre of Glanton, L.

Rankeillour, L.

Denham, L.

Rayleigh, L.

Downshire, M.

Reay, L.

Eccles of Moulton, B.

Renton, L.

Effingham, E.

Renwick, L.

Ellenborough, L.

Rodger of Earlsferry, L.

Elles, B.

Rugby, L.

Elliot of Harwood, B.

St. Davids, V.

Elliott of Morpeth, L.

Saint Oswald, L.

Elphinstone, L.

Sandys, L.

Elton, L.

Savile, L.

Faithfull, B.

Selborne, E.

Ferrers, E.

Shaughnessy, L.

Finsberg, L.

Shrewsbury, E.

Fraser of Kilmorack, L.

Simon of Glaisdale, L.

Gainford, L.

Soulsby of Swaffham Prior, L.

Gisborough, L.

Spens, L.

Glenarthur, L.

Stanley of Alderley, L.

Goschen, V.

Stewartby, L.

Hailsham of Saint Marylebone, L.

Strathcarron, L.

Strathclyde, L.

Halsbury, E.

Strathcona and Mount Royal, L.

Hankey, L.

Hanworth, V.

Strathmore and Kinghorne, E. [Teller.]

Harrowby, E.

Harvington, L.

Sudeley, L.

Hayter, L.

Swansea, L.

Hemphill, L.

Swinfen, L.

Henley, L.

Terrington, L.

Hesketh, L. [Teller.]

Teviot, L.

Hooper, B.

Thomas of Gwydir, L.

Hothfield, L.

Thurlow, L.

Howe, E.

Trumpington, B.

Hylton-Foster, B.

Ullswater, V.

Ilchester, E.

Vaux of Harrowden, L.

Ingrow, L.

Vivian, L.

Ironside, L.

Wade of Chorlton, L.

Jenkin of Roding, L.

Wakeham, L.

Joseph, L.

Waterford, M.

Kimberley, E.

Westwood, L.

Kinnaird, L.

Wilson of Langside, L.

Lauderdale, E.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.12 p.m.
[Amendment No. 2 not moved.]
Clause 26 [Assisting another to retain the benefit of criminal conduct]:
[Amendment No. 3 not moved.]
Clause 28 [Concealing or transferring proceeds of criminal conduct]:
[Amendment No. 4 not moved.]
Clause 33 [Meaning of "inside information"]:
Lord Spens Lord Spens moved Amendment No. 5:
Page 34, line 36, leave out ("significant").
The noble Lord said: My Lords, Amendment No. 5 deals with Clause 33(d). Essentially it is a clause based on a false premise, to borrow a phrase from the noble and learned Lord, Lord Hailsham. I have never understood why the premise is allowed to exist. The false premise is that there is some mysterious linkage between information, or the lack of it, and the price of a security in the market place. It is a premise which has dogged me for the past five years and it needs to be examined.
Any merchant banker will explain that there have been days when he has been summoned by chairmen of client companies to explain why it is that after the publication of good results his share price has gone down. It is something that few company chairmen understand if they are not in the market place. But the Stock Exchange does not work on the basis of today's time; it works on the basis of future time. In other words, it deals in expectation. If the expectation is not satisfied then it is perfectly possible for the share price to go down. That explanation seems to be understood by few people outside the stock market.
As a banker who has been involved in writing prospectuses, offer documents, rights issue documents and all sorts of issue documents—over the past 30 years I have probably written more than 300—it is a relatively simple point of view to take regarding price sensitive information, which is the easier way of defining it. Price sensitive information is information which ordinarily would have been disclosed in a prospectus, had a prospectus been about to be written. That is probably as good a definition as any that exists.
I suspect that by using that definition there has been a dramatic shift in the burden of proof. I know from my experience how that dramatic shift in the burden of proof can have a serious effect. It is not generally known but the allegations against the defendants in the Guinness trials were based on market support allegations. The implication was that the price had been moved, or at least had not gone down. In the last four weeks of that bid the price went up by some 20 per cent. and that was used to demonstrate that the huge alleged market support operation had had some significant effect.
In practice that is not exactly what happened. On 14th March 1986 the noble Lord, Lord Lawson, introduced his Budget, which contained two material facts. One was a cut in the rate of income tax by 1 per cent. and the other was no increase in excise duty on alcohol. The effect of that budget was to move the share price of all the brewery stocks upwards by similar amounts. Whitbreads, Bass Charringtons, and Allied Breweries all moved in that direction over the same period of time.
That led to an argument over what exactly a false
328
market was. There is a Stock Exchange definition of a false market, which I shall read because it is important in the context of what I am about to say. The Stock Exchange definition is contained within the rule book for all members and reads:
"A 'false market' is defined as a market in which a movement of the price of a share is brought about or sought to be brought about by contrived factors, whether by the operation of buyers and sellers acting in collaboration with each other or otherwise, calculated to create a movement of price which is not justified by assets, earnings or prospects".
In order to make the charges stick, that specific problem had to be dealt with. It was dealt with by Mr. Justice Henry in the following way. On day 91 of the first Guinness trial he said,
"If it stopped after the third line, it would seem [to] me to be quite a good definition. The whole seven lines seem to me to be a rather bad definition … it seems to me to be, as a definition of a false market, a nonsense. If it ended after the third line, I could understand it".
He finalises his conclusions by saying,
"But the law has its own definition of the false market and it is not this definition".
Therefore, for many years the Stock Exchange has been operating on a definition of a false market that simply is not recognised by the law. For that mistake four people went to prison and were fined in excess of £11 million; so the phrase that we are discussing has an important effect.
The reason the difficulties arise is because of the word "significant". "Significant" is a qualifying adjective—one of the bugbears of the law. Again, I can illustrate the problem by what happened to me. There were some 300 days of court appearances in the Guinness trial; approximately 10 per cent. of those were taken up in discussions on various qualifying adjectives. The biggest problem that arose was in relation to the adjectives in Sections 151 and 153 dealing with "purpose". Section 153 contains the remarkable sequence of phrases, "for the purpose", "principal purpose" and "larger purpose" all in the same sentence. That is really quite an achievement.
The Lord Chancellor has just published his consultative paper on long criminal trials which is essentially about the Guinness trials. He talks about delay and costs in that paper and I do not know where he gets his figures from. All I can say is that of the 30 days involved in discussing qualifying adjectives of various kinds, 15 days were spent dealing with specific qualifying adjectives. Those 15 days were at a cost to me of £5,000 a day and a cost to everyone involved of £750,000. That is the price we pay for inserting a word which has no meaning.
The equivalent word in the Guinness trials, and one very often used, was "material"—the disclosure of a material fact. It was the second leg which was the principal target of the allegations. Perhaps I may tell the House what Mr. Justice Henry said about the word "material", because it is interesting in relation to the word "significant."
"The word 'material' is not defined in the Act".
That is the in the Prevention of Fraud (Investments) Act 1958.
"It is an ordinary English word. I would define it simply as a fact of such significance as might reasonably affect a shareholder's decision whether to assent the Guinness offer."

329
Setting out that test with the help of the ordinary dictionary definition, I believe myself to be saying substantially the same as Section 146 of the Financial Services Act 1986 when dealing with a comparable problem. The section states that,
"all such information as investors and their professional advisers would reasonably require, and reasonably expect to find there, for the purpose of making an informed assessment of [it]".
That definition is probably as near as one will get to the price sensitive definition that I have just given about prospectuses.
As to the word "significant", the noble Earl, Lord Caithness, said last week:
"The question then turned to what constitutes a significant effect on the price of securities. That will depend on the facts". [Official Report, 3/12/92; col. 1501.]
If it is to depend on the facts, may we have a statement from the Government that that is the case? I can tell the House exactly what happens. The moment we say that, the prosecution will simply say, "This is a significant movement, a significant effect on the price." The defence is then left to disprove it. The judge will rule—because he has to rule, otherwise he does not have a trial—on whether or not the facts are capable of being interpreted by a jury as significant. So we are left with the dictionary definitions on which Mr. Justice Henry fell back. The Concise Oxford Dictionary definition reads:
"significant: having a meaning; expressive; suggestive; with pregnant or secret sense; inviting attention; noteworthy; of considerable amount or effect or importance; not insignificant or negligible".
The Shorter Oxford Dictionary, which is in two volumes, states in volume II:
"significant: full of meaning or import; important; notable; signifying something; expressive or indicative of something; something which conveys or expresses a meaning [like] a sign, symbol, indication".
That is very little help, I suspect, to any jury, even if those dictionaries were available.
What does it all mean? We do not need the word "significant". It is perfectly clear what price-sensitive information is. If we take the word out, it will do something to restore the balance in the clause. If the word remains in the Bill, any defence would be quite capable of demonstrating that there never had been any significant effect, whatever "significant" may mean. A great deal of time will be wasted and very little achieved. I beg to move that the word be omitted.
Lord Clark of Kempston: My Lords, I wish to ask my noble friend to resist the amendment because the word "sigificant" attached to insider dealing is only proved when the value of the security increases. Whoever is the insider, a director or whoever, he has inside knowledge. If the word "significant" is omitted, many directors of companies will have information about the cash flow, about prospects and what the sales forecasts are. That in itself cannot be considered to be "significant". The word "significant" only becomes important when a share price increases and people who have inside knowledge make a profit from it.
I wonder whether the noble Lord, Lord Spens, realises that if his amendment were accepted, the provision would not read well. The wording of the
330
amendment should have been to leave out "a significant" and insert the word "an", because one cannot have "a effect".
Lord Simon of Glaisdale: My Lords, I doubt very much that it makes any difference whether or not the word "significant" is in the Bill. There is a fundamental axiom of the law which is practically always expressed in Latin but which means that the law takes no account of insignificant matters. I am generally against putting unnecessary words in a Bill, but this is just one word and it would save argument. Therefore, I hope that the noble Earl will resist the amendment. It seems on balance that it is better that the word "significant" should remain in the Bill.
The Earl of Caithness: My Lords, this amendment, moved by the noble Lord, Lord Spens, is not, in the words of my noble friend Lord Ferrers when he dealt with the first amendment, a "rotten penny". This one has not come back. It comes to your Lordships for the first time at a Third Reading debate.
The prohibitions in Part IV apply to someone who possesses information which is likely to have a significant effect on the price of securities. The requirement, which has a counterpart in our existing legislation, serves to ensure that the prohibitions on insider dealing apply to major matters such as impending takeover bids, forthcoming profits and dividend announcements which are out of line with expectations. These are the stuff of insider dealing as it is commonly understood. These are the stuff to which the prohibitions should apply.
The amendment seeks to cast the net wider. It would, in the words of the noble Lord, Lord Spens, delete the qualifying adjective. It would bring within the ambit of the legislation dealing where someone possessed information that was likely to have any effect on the price of securities.
One possible consequence of adopting such an approach would be that there were many technical breaches of the law because of dealings by people who possessed information likely to have only a trivial effect on the price of securities. That would not be satisfactory; it would either lead to a host of prosecutions where there is no real mischief or the law would fall into disrepute.
A second and in many ways more serious possible consequence of the amendment could follow. It is likely to inhibit important and legitimate communication between a company and investment analysts and fund managers. It is generally agreed that these contacts can play a useful role in enabling analysts and fund managers to obtain a better understanding of the company and its management. It is also accepted that significantly price sensitive information should not be disclosed at such meetings and indeed the effect of the Bill as it stands is to prohibit this. It would, however, be very difficult for such meetings to take place if the insider dealing prohibitions were extended to apply to information which was likely to have any effect on the price of securities as the amendment proposes: the risk of disclosing "inside information" would he too great. It is likely therefore that broadening the law in the way

331
proposed by the amendment would effectively stop the dialogue between companies and investors and analysts.
I put it to the House that the effect of this amendment would be not to increase the number of real villains caught within the ambit of the legislation but it would put at risk important and legitimate activities. I shall read with care what the noble Lord, Lord Spens, had to say on this matter because much of what he said was detailed and needs examination. However, I felt we were right to advise the House that this amendment ought to be resisted and I received support on that from my noble friend Lord Clark and the noble and learned Lord, Lord Simon of Glaisdale.
4.30 p.m.
Lord Spens: My Lords, I am grateful to the noble Earl, Lord Caithness, for that reply. However, he referred to something that I am not at all sure is at present covered by the law of the land; that is, a price movement outside expectations. I have just demon-strated that that has been overruled by the courts, so there is no such thing as an expectation in that regard.
As regards the noble Earl's second point, on inside information and the problems that people who deal in shares may have, I have this to say. For many years we have all been conscious of this problem. Way back at the very start of my career it was made clear to me that in a corporate finance department, where there is always inside information, any dealings in stocks and shares would lay one open to accusation. The burden of proof had already shifted to people having to prove that they did not know, for example, that ICI was about to make a bid, even though that knowledge was available in the department. There are many people who do not own shares and who do not deal in shares but who are open to such allegations. I imagine the same provision would apply to fund managers and analysts, although I do not think that is the case. There can be no harm in a situation where all inside information and all price sensitive information renders it possible that any dealing in shares can be exposed as criminal. The simple answer is not to deal. However, having listened to what the noble Earl said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
An amendment (privilege) made.
Earl Ferrers: My Lords, I beg to move that the Bill do now pass.
We have come to the end of an important Bill. I am grateful to all noble Lords who have contributed to our debates, in particular to those noble Lords who have extended our vocabulary and imagination by the use of exotic new words, such as "flabbergastee", or new questions such as "tippee or not tippee"? We are grateful to the noble Lord, Lord Wigoder, for that, as it were, extra-curricular intellectual stimulation. I suspect—although I dare say the noble Lord, Lord Williams of Mostyn, and the noble Baroness, Lady Mallalieu, would prefer me to know or believe—that your Lordships are glad that one of the main results of your Lordships' characteristically meticulous scrutiny
332
is that we have decided that "tippee is not tippee". The noble Lord, Lord Airedale's man in the street will at least rejoice in that, even if he finds, on the balance of probabilities, that the standard of proof applicable to civil proceedings remains to him, the man in the street, incomprehensible, and even if to lawyers it is as clear as daylight.
I am particularly grateful to the noble Lords, Lord Airedale, Lord Wigoder and Lord Harris of Greenwich, and to the noble Baroness, Lady Mallalieu, all of whom left their distinctive mark on Part I by persuading the Government—and their apparently intransigent Minister, as the noble Baroness, Lady Mallalieu, will recall—to consider, and to accept, proposals which they put forward. These changes have smoothed away some of the problem areas and have made the Bill somewhat easier to understand. The man in the street will be grateful for that, too.
I was also grateful to your Lordships for the support given to the general thrust of Parts II and III of the Bill, which deal with confiscation of the proceeds of drugs and other crime, and with money laundering. I am glad that your Lordships decided, after some fairly detailed discussions on a number of occasions, not to dilute the pretty tough regime which is proposed in the Bill.
Part II of the Bill is aimed at those people who make vast profits from supplying drugs to others, and am grateful to your Lordships for the support given to the principle of being tough on drug traffickers and of curtailing their financial incentive.
Although Ministers rarely admit it, I was glad for the amendments to Parts II and III which were tabled by some of your Lordships. They enabled me to explain more fully the need for Part II and III and the Government's intentions. Part IV of the Bill brings law on insider dealing into agreement with the European Community directive on the subject, and I am most grateful to my noble friend Lord Caithness for having taken the heat of the debates on that very technical part of the Bill. It was here that the word "tippee" was finally tipped out of the Bill. I am also grateful to many other noble Lords who have contributed to these often technical discussions.
The provisions in this Bill, when they are implemented, will significantly increase the powers which are available to deal with those who take part in so-called white collar crime, and with those who participate in the world-wide traffic in drugs, spreading misery and profiting from human dependency. With your Lordships' help, this Bill, I think, strikes a proper balance between the demands of justice and fairness, and the need to provide our law enforcement authorities with adequate powers to tackle the threats to society which are posed by drug traffickers, money launderers, insider dealers and fraudsters.
Moved, That the Bill do now pass.—(Earl Ferrers.)
Baroness Mallalieu: My Lords, from these Benches I thank the noble Earl for being somewhat less intransigent than, at stages in this Bill, I have accused him of being. I also thank other noble Lords who have

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contributed to the Bill, in particular the noble Lord, Lord Williams of Mostyn. They have contributed to some significant improvements in the Bill.
On Second Reading I was concerned that Part I of the Bill was incomprehensible to anyone but a lawyer, and even then contained a number of possible interpretations. I should like to think that the noble Earl has agreed to amendments which have made things rather better in that respect. I am bound to say that there are some areas which may need to be examined closely in another place, in particular the provisions in the final part of the Bill in relation to insider dealing. In his heart of hearts the noble Earl will appreciate that those provisions may need further clarification. However, I am most grateful to him for the courtesy with which he has responded to the amendments raised from this side of the House.
Lord Wigoder: My Lords, as regards Parts I, II and III of the Bill, those of us in all parts of the House who have any kind of legal qualifications have en-deavoured to assist by making various contributions. We have been very much aided by noble Lords who do not have legal experience and whose contributions are perhaps all the more important for that reason.
I am sure that all of us will join in saying how grateful we are to the noble Earl, Lord Ferrers, for the patient and careful way he has listened to amendments being proposed, for the detailed consideration he has given to them and for the sympathetic way in which he has responded. I wish that I could say the same about the noble Earl, Lord Caithness. I cannot, because, for practical purposes, he has had almost no amendments to respond to and practically no contributions to deal with.
I exempt at once from that observation the noble Lord, Lord Mottistone, who has enabled us to learn of the CBI's views on various aspects of the Bill, but I have an uneasy feeling that the House may not have done itself justice in its consideration of Part IV—the insider trading part—of this important Bill. It is a highly technical subject on which the legislation in the past few years has repeatedly caused difficulties through its wording. It is crucial that the net that is cast by the clauses in that part of the Bill should be neither so wide as to sweep up people who should never be included at all, nor so narrow as to enable people who should be included to escape its provisions.
It is very much a matter for the expertise of Members of your Lordships' House who have vast experience in the worlds of financial services, insurance, banking and, indeed, commerce and industry generally. I am sad to see that, from the end of the Second Reading stage until today, not one contribution was made, as I understand it, by any of your Lordships with that skill and ability. Had that been so, we might perhaps have produced a rather better Part IV of the Bill than now exists.
Curiously, too, there has been a singular shortage of written contributions from bodies outside the House. I received a short submission from a firm of City solicitors just as the Bill began its Second Reading. There was then a deathly silence until an hour or two before Report stage when it was far too
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late to do anything. I received a detailed submission from the Group of 100, which, as your Lordships will know, is a rather informal gathering of the finance directors of the top British companies, expressing collectively their serious reservations about not only the wording but some of the substance of the provisions in Part IV of the Bill. I had no alternative but to suggest to them that they might care to take their points to another place and have the matter debated there. I should not want the absence of discussion of Part IV of the Bill to lead the Government to think that Part IV is therefore absolutely word-perfect and will not be challenged in any way when the Bill reaches another place.
I reiterate my gratitude to the noble Earl for the way in which he has handled this matter. I and my colleagues look forward to following the progress of the Bill in another place in due course.
Lord Mottistone: My Lords, I sympathise greatly with the comments of the noble Lord, Lord Wigoder, but I should particularly like to thank my noble friend Lord Caithness for the great care that he took in dealing with the relatively few amendments that were produced for us to consider. I thought that he did an excellent job in trying to clarify the situation and I hope that the meetings that I know will take place between his department and those people who are involved will develop matters speedily enough for them to be included in the Bill before it leaves Parliament altogether.
The problem that has to be overcome—and people like the noble Lord, Lord Spens, can perhaps help us give the matter greater prominence—is that those in the City do not understand that your Lordships have such an important contribution to make in sorting out legislation. They need to understand how and when to go about making representations. It is only the really experienced bodies of trade associations and the like that get going fast enough to tell us what they want. The City is particularly ill-informed in this matter. I repeatedly invited the CBI to obtain more information, but one did not have much time. It is rather a pity that, as the noble Lord, Lord Wigoder, said, this House, with its great expertise in all these fields, could not have been used to greater effect. However, that does not mean to say that my noble friend Lord Caithness did not do a jolly good job.
On Question, Bill passed, and sent to the Commons.

Agriculture Bill [H.L.]
4.45 p.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Earl Howe.)
On Question, Motion agreed to.
House in Committee accordingly.
[LORD STRABOLGI in the Chair.]
Clause 22 [Application of sections 23 to 43]:
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 25B:
Page 12, line 41, at beginning insert:
("Subject to subsection (2A) below").
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 26.
Lord Carter: Does the noble Lord not mean Amendment No. 26A?
Lord Stanley of Alderley: I am sorry, yes. Before I start perhaps I should declare an interest in that I have been a potato producer for a little over 38 years.
The purpose of the amendment is to ask the Government whether they will insist on the six conditions numbered (a) to (f) in Amendment No. 26A before they agree to any EC regulation on potatoes. Unless my noble friend can give the Committee some idea as to how the Government will deal with the EC regulation on potatoes, made public, I think, last week, I suggest that we are wasting our time dealing with this part of the Bill. Not for the first time I feel that Parliament is a Brussels poodle. The six conditions mentioned in the amendment have been put forward by COPA/COGECA. I heard yesterday that they are supported by the Netherlands, Germany and Belgium and I understand that France, Spain and Italy are likely to take a similar view.
The regulation is to go before the Council of Ministers next week, so there is considerable urgency for the British Government to take a view. I hope that the Committee is as anxious as I am that the Government take a firm line on this useless bit of Brussels bureaucracy.
The draft Brussels regulation would, first, prevent any flexibility. Subsidiarity is ruled out. That will prevent individual states being able to deal with their particular problems. Britain has a totally different marketing problem and climate from, say, Spain or Greece. I do not think that I need spell that out in more detail. Secondly, the regulation will lead to chaotic and fluctuating markets. Thirdly, the scheme will need funding. If subsidiarity was allowed and Great Britain was permitted its own potato marketing scheme, there would be no demand on the taxpayer. Fourthly, the scheme is inconsistent with the CAP reforms which, for better or worse, simply propose quotas and restrictions. The scheme will therefore cause chaos, not just for potato growers, but for other interacting crops, which include cereal crops.
I doubt whether I need to persuade any Member of the Committee that the CAP has become bad for farmers and for consumers. I therefore hope that the Committee will be prepared to strengthen the Government's hand in resisting this latest nonsense emanating from Brussels and will support the principle, if not the detail, of the amendment. I beg to move.
Lord Carter: I am pleased to add my name to the amendment. I strongly support it from this side of the House on two grounds; first, the uncertainty in the industry; and, secondly, subsidiarity. The Bill is causing uncertainty in the milk industry and will continue to do so until the various schemes are worked out. There is great uncertainty in the animal sector.
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There is a new regime to be dealt with, including the matter of set-aside, and there are also the problems of the GATT settlement.
The European Community is determined to control production in all agricultural areas except potatoes, which is the most cyclical crop outside the market garden sector. There is great uncertainty at the moment which will be increased by the broad catch-all provisions that are proposed by the Government in Clause 22, where it is stated that the scheme can be wound up at the whim of a Minister.
The present system works reasonably well as far as potatoes are concerned. It does not work perfectly but it works as well as can be expected in relation to a crop with the cyclical characteristics of potatoes. The attempt to introduce the new regime is a classic example of the endemic disease of the bureaucrats: "Do not sit there, do something". The Bill introduces a fortuitous uncertainty into a desperately uncertain situation in farming, the most uncertain that we have faced in our farming lifetimes, in relation to a crop that is notoriously subject to substantial swings in price, unless there is some attempt to manage the market.
The Government must be pinned down as to when they are going to do something about subsidiarity rather than talking about it. A good working definition of subsidiarity would be: if it works, leave it alone. The Potato Marketing Board circulated a very useful document to all growers entitled The Potato Marketing Scheme and the Proposed EC Regime. The document points out:
"'Our Farming Future' states that a lightweight EC regime for potatoes would have no place for acreage quota controls or support buying functions as at present operated by the Potato Marketing board. The PMB believes that whilst these will not form part of a draft regime for application throughout the EC, nevertheless they can be retained within Great Britain if this is negotiated by the Government under the principle of subsidiarity. Informal discussions with Commission officials suggest that they do not see abolition of the British system as central to their objectives, provided it does not conflict with the principles of the Single European Act".
That is a good working definition of subsidiarity: if it works, leave it alone. If the Government must interfere, they should introduce measures that improve existing structures and not wantonly destroy them, as will happen under the proposed regime. There should not be any worsening of national structures. The matters set out in paragraphs (a) to (f) are essential functions and they should form part of any proposals for a future scheme.
The scheme has been unanimously rejected by COPA/COGECA. The rush to get the Bill through is extraordinary. The draft proposal was produced on 24th November and all responses to the document had to reach the department by 7th December. That demonstrates an extraordinary rush to introduce a regime that will have the most marked effect on a major crop. A period of 14 days was allowed to industry to formulate a response. We know that other member states are very worried about the situation and they expect severe disruption of the market if the regime is introduced.

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The present scheme works well. There is a substantial attempt being made to manage the market through CAP reform for all of the combinable crops and many livestock products, so why can that not be the position with regard to potatoes? I urge the Minister to think again. We would welcome a firm assurance that the Government will not rush into a decision before December 31st in order to pay obeisance to the single market. We know that the Government are desperate to produce something as the outcome of their presidency of the European Community but I hope that the potato grower will not be sacrificed in this rush to judgment. If the Government use their presidency of the Council of Ministers to do so and thereby produce a collapse in growers' confidence, they will have much to answer for.
Lord Mackie of Benshie: I support the amendment. The Minister should tell us what he thinks about the proposed regime. He knows that we do not think much of it but it is necessary that he should give us a full explanation of the Government's thinking because it is relevant to this amendment and other amendments. If the Minister assures us that he thinks little of it, then it would give us a certain amount of confidence.
The present scheme has worked. This year we have experienced an extraordinarily good crop. There have been very bad prices but, taken as a whole, there has been a stability in the market here that has not been evident on the Continent. I look forward to hearing the Minister before I say anything else.
Lord Plumb: I have some sympathy with the amendment. For more than 20 years we have been members of the European Community. There is a regime for the majority of agricultural commodities within the Community but there has never been a regime for potatoes. For that reason it is strange that we should be trying to rush a scheme through in indecent haste in a matter of weeks before there has been consultation at all levels with the producers and the consumers.
We are attempting to move away from the Agriculture Act 1947. I had the privilege, which was sometimes doubtful, of trying to maximise the function of the Agriculture Act 1947 for more than 10 years while I was President of the National Farmers Union. Part of that Act relates to the statutory powers of various marketing boards. The instruments that they have been operating have maintained some stability throughout their lives, although from time to time they have had to deal with volatile situations. Potatoes either suffer or gain from the vagaries of the weather, which affect quality and yield. That is a matter that does not have to be spelt out to potato growers this year. The buying programme that has been operated by the board has not always been perfect, but both producer and consumer have benefited from the more stable market that has been created.
We must try to maintain stability in the market place. We continue to contribute to the generic promotion of the crop and to fund research and
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development. If there is to be a successor scheme to the Potato Marketing Board, then we must ensure that the statistical needs of the industry are met.
Clauses 48 and 49 would have the effect of terminating price support guarantees for potatoes and wool. Can the Minister assure us that the services that are required by the industry will be maintained by a successor to the Potato Marketing Board? Can he also assure us that the proposals will be compatible with whatever may emerge from the European Community?
The question of subsidiarity is extremely important in this context. The clearest definition I thought I had heard was given some little time ago by the Foreign Secretary when he said that subsidiarity meant less interference from Brussels. If that is the definition, let us take time to prepare a scheme that is meaningful. It has already been said by my noble friend Lord Stanley and by the noble Lord, Lord Carter, that organisations in Europe are opposed to the so-called proposals. I can assure the Committee that I and others who work in the European Parliament will also oppose the proposals. Frankly, they do not add up to what I consider to be a sensible regime.
I support the amendment on the basis that we look for a successor and one that will not only provide stability but can restore a little bit of confidence. That may be lost if we go bull-headed into a scheme which at the moment is ill-conceived, ill-timed and inappropriate to deal with a major crop such as potatoes.
5 p.m.
Lord Monk Bretton: I am an agriculturalist though I do not grow potatoes. Therefore I am slightly, but not altogether, disinterested. I should like to say a few words in support of the amendment moved by my noble friend Lord Stanley of Alderley. Let us not have an EC regime which will be too weak and lead to fluctuations in the market even worse than all those who grow potatoes have already experienced.
I fear that this may prove to be an unmitigated disaster for United Kingdom growers and, more than likely, a number of Continental growers. We could find that the public here are slowly weaned off fresh potatoes onto powdered potato products which would have to be reconstituted. No doubt they would be buying those products through supermarkets; they would more than likely be imported products to boot. All of that could also be to the detriment of our balance of payments.
Lord Geraint: There is concern among potato growers especially in the west part of Wales where Pembrokeshire growers are well known for their early crop. Noble Lords on both sides are keen to have an assurance from the Minister today that this well developed industry in many parts of Britain will be cared for.
I have been told that this year potato growers in Pembrokeshire have had their worst year for a decade or so because they have had to compete with third country imports. Those who are concerned with the production of early potatoes for the home market

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every year find that now and again the market collapses suddenly when third country imports come into Britain. I wonder what assurances the Minister can give to the West Wales early potato growers. If he is to do away with the present scheme, will it be better or worse for those growers? We are all aware that other sectors of industry are being clobbered at the present time, and it is a great pity that the potato growers of Pembrokeshire and other parts of Britain will be clobbered as well.
Baroness Carnegy of Lour: As I said at Second Reading, until recently I had a financial interest in the growing of seed potatoes in Angus in Scotland. I do not know whether the amendment is the right one to put into the Bill but I am sure that the discussion that has just taken place is the right discussion at this moment.
The scheme suggested for Europe proposes an enormous change in the structure of the market in Europe. It sweeps away the current regimes in a number of member states and leaves the whole system to market forces, without anything else being put in their place. I hope that the Minister will convey to his right honourable friend Mr. Gummer the importance of making sure that in Edinburgh during the coming weekend nothing hasty is done about the scheme until it has been thoroughly examined by all member states, because the change would be a very important one and of doubtful merit.
Lord Elphinstone: I am an ex-potato grower. I have no particular axe to grind in this matter but I should like to take up the question of uncertainty in the industry. The potato industry is one that requires very substantial working capital. It is vital that potato growers are able to take a long-term view; otherwise the provision of such working capital becomes impossible. I urge the Minister to bear in mind that any uncertainty created by these and other proposals will inevitably damage the industry in the long term.
Earl Howe: This amendment would lay down conditions to be met before the Government could revoke the potato marketing scheme. The conditions relate to the content of the EC's proposals on the regulation of the market in potatoes. Only one of the conditions—that relating to third country imports—is included in the current proposals.
The effect of the amendment would be that unless we were able to achieve a whole raft of changes to the Commission's proposals we should not be able to revoke the potato marketing scheme under the terms of the Bill. There are some—many of whom are here this afternoon—who would welcome that outcome, or so they might think. However, if the regime came into force as drafted the potato marketing scheme would still have to be revoked but we would have to use the provisions of Section 2(2) of the European Communities Act to do so. That course of action would not allow for the transfer of the board's assets to a successor body or bodies. The effect would be that the board's valuable work in R&D and market promotion would have to come to an end.
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Although not provided for in the proposed regime, those functions should not be difficult to continue on a national basis if our experience in other sectors such as horticulture is anything to go by. That is the reason why, as my noble friend will know, the Bill provides for the setting up of a successor body or bodies to the board which could perform many of the valuable functions to which he has referred.
The day after the Second Reading debate (24th November) the European Commission printed its proposals for a Council regulation on the common organisation of the market in potatoes. It may be helpful to summarise what the proposals comprise. First, there is provision for the encouragement of producer groups, marketing all the produce of their members and co-operating in production and marketing, and of associations of such groups. These would be recognised by member states, which would make them eligible for regressive grants not to exceed 5 per cent. initially of their production value over the first five years after recognition. Those grants would qualify for reimbursement from FEOGA at a rate to be determined by the Commission. Existing groups would qualify only in respect of the expense involved in merging with other groups. Aid would be paid either under this regulation or under the terms of the existing regulation on producer groups (No. 1360/78).
Secondly, there are provisions for third country trade, including a facility for import licensing and the ability to take "appropriate measures" in the face of market disruption. No details are given of the way in which any of those measures are to be applied. That is to be decided in management committee.
The Commission stated that under the regime there could be no national measures such as quotas or intervention. Those are two main aspects of our potato marketing scheme. However, the proposals provide for transitional arrangements if the introduction of the new system would give rise to substantial difficulties.
The proposals are to be discussed at the Agriculture Council next week. Noble Lords have asked what the Government's negotiating position will be. Our aim will be to ensure four things: first, a level playing field across Europe for potato production; secondly, that the UK industry can meet all the needs of the market; thirdly, that the UK industry can contribute to the export drive; and fourthly, that decisions are based clearly on the best scientific and technical knowledge available. I am, of course, unable to foresee the outcome of these discussions.
In the meantime, a wide range of organisations in the industry and consumer groups are being consulted on the proposals. If the regime is not proceeded with we shall still keep the potato marketing scheme under review in the normal programme of reviews of non-departmental public bodies. I repeat that our aim is for the UK industry to meet all the needs of the market and to contribute to the export drive.
This amendment would not prevent the revocation of the potato marketing scheme if the EC proposals were to go through as drafted or in any way short of the provisions suggested by my noble friend. It would merely serve to ensure that much of the valuable work

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done by the potato marketing board could not continue. Therefore, I hope my noble friend will agree that we ought to discard the amendment on those grounds, but that what I have said is helpful.
Baroness Carnegy of Lour: My noble friend says that the Government intend to insist on a level playing field across Europe for potato marketing—which is doubtless a very laudable ambition—but does that include allowance for climatic differences in Europe? The difference between, for example, the north of the United Kingdom and the south of the United Kingdom for growing seed potatoes is very considerable. The difference between the north of the United Kingdom and the Mediterranean is even greater. Would climatic conditions be included in the consideration of a level playing field?
Earl Howe: All factors would be taken into account. It depends what my noble friend is driving at and what she would like to see come out of that consideration. I am sure that that is one of the factors that will play a part. My noble friend referred to the Scottish seed potato market. It is interesting that the market for Scottish seed potatoes in Great Britain is diminishing on two counts: first, because of the importation of potatoes in processed form; and secondly, because of Dutch penetration of the market. Seed imports have gone up from 9,000 tonnes in 1981 to over 30,000 tonnes in 1990. Seed exports from the United Kingdom have fallen from 114,000 tonnes to just above 60,000 tonnes in the same period. Those facts do not support the contention that the present arrangements are the most suitable for a thriving domestic seed potato industry.
Lord Mackie of Benshie: I thank the Minister for painting as gloomy a picture as I have heard for some time. As I understand it, the basis of the scheme is to give grants to producer groups, and very little else. I understand also that the basis on which the Minister is going in to bat for us is that of a level playing field. It is easy to get a level playing field when everyone is equally disadvantaged. That appears to be the case, in that there will be no provision for the control of the market in this very volatile crop and no provision for the control of the acreage. Therefore, the playing field may be level, but it will be a bad playing field for the British grower to play on.
He also said, that we can supply the market. There has never been any difficulty in supplying the market. The difficulty has been in getting a profit out of growing potatoes in that sort of market. Export and scientific research are the other two conditions. It is not a great programme for the support of British farming and the British potato grower. I think it makes this amendment and the conditions in it all the more necessary.
The potato industry is a very volatile one. The noble Lord, Lord Plumb, who is more experienced both in the practical area and in the politics of farming than anyone else, laid down very clearly that the present scheme has snags. It is not always perfect. It cannot cope, and give everyone profit, with an enormously successful year for quantity and for
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quality; but it has provided a reasonable background. The consumer in this country has never gone short of a potato for his lunch or his dinner, at quite reasonable prices from the farm, however high they may have gone in the supermarket, so I do not see that the Minister has given any real assurance that this amendment is unnecessary. The amendment appears to me to be very necessary in view of what he said.
5.15 p.m.
Earl Howe: The noble Lord regretted my reference to the level playing field. The noble Lord, Lord Carter, referred in his speech to subsidiarity. He suggested that if it works, leave it alone. A situation in which a potato grower here has to pay £850 a hectare to grow potatoes if he has not been allocated a quota is one which puts him at an obvious disadvantage with his continental competitor, who can grow potatoes without any penalty whatsoever.
Let us look at the UK as a potato producing country. The noble Lord, Lord Mackie, was quite right to say that we consume a great many potatoes. In fact, the UK consumption of potatoes is the highest in Europe. But processed potatoes, which is the single largest growth sector of the market, are being supplied increasingly by imports. In 1980, 114,000 tonnes were imported. In 1990, 524,000 tonnes were imported. That represents a potential of 14,200 hectares of farmland lost to potato production in this country. That is why this country is losing out under the present scheme. There are those who suggest that the present scheme creates stability of price in the UK. The fact is that UK prices fluctuate as much as prices in other Community countries, especially Holland; so that suggestion does not stand up either. Altogether, I do not believe that the noble Lord, or indeed other noble Lords, have demonstrated that their faith in the present system is justified.
Lord Mackie of Benshie: The noble Lord might well have said that the grower in this country only has to pay £850 per hectare if he wants to grow more than his quota. He does not have to pay that on every single acre he grows.
Earl Howe: The point I was trying to make was that there is plenty of scope for us to grow more of our own requirements. The penalty for doing so is £850 per hectare because the potato growers are not able to exceed their quota and the Dutch are stealing a march on us.
Lord Carter: There are a number of interesting points in the Minister's reply which I am sure the noble Lord, Lord Stanley, will wish to take into account when he decides what to do with the amendment. The point about the quota is a dangerous one: making a comparison between countries. After all, if we started on milk quota and dealt with the differences in the treatment of price, value and taxation throughout the Community, we would find no such thing as a level playing field. In Italy it does not even exist. So the point made by the noble Lord about the difference between this country and Holland

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in the case of the potato quota (which in effect is a contribution by growers to a market equalisation fund) is a dangerous one.
The Minister's rejection of the amendment was disappointing. It was based largely on technical grounds relating to the scheme. The Minister knows that the amendment had to be drafted in response to the EC regime. We wish to probe the Government's reaction to the regime, which we found disappointing. I had hoped that the Minister would have better grounds for rejecting the amendment.
He mentioned the wide consultation which the Government propose. However, he did not deal with my point that the document was published on 24th November and responses were required by the department by 7th December.
Earl Howe: I apologise for not covering that point. The timetable which the noble Lord gave was correct. We asked for replies by 7th December but in practice we are considering late applications. The point is that we were aware that the issue would be raised in the Agriculture Council and we needed to have replies at an early date.
Lord Carter: That is extraordinary. There have been 14 days for consultation about a regime which, if there is no objection from other member states, the Government are prepared to rush through before the end of December. I believe that everyone in the Committee will be amazed by that answer. What is the timetable? We have no chance to return to the Bill until the Report stage towards the end of January. Is the Minister really telling us that when his right honourable friend, who is president of the Council of Ministers, meets with other members of the Council next week he will be prepared to push through the scheme if there is sufficient agreement?
Earl Howe: I cannot say how the discussions will go next week. There is no question of our pushing anything through. Unanimity is required, as the noble Lord knows, for a measure of this kind to be adopted. It remains to be seen how enthusiastically the proposals will be received by other member states, and that we do not know as yet.
Lord Mackie of Benshie: The Minister said that there was a great opportunity for us to reduce imports and to grow the extra potatoes for processing in this country. I can tell him exactly what the new scheme will do. It will halve the price of potatoes. We in this country will be producing more for the market and the continent will be producing the same amount. Without some restriction of acreage the price will be dropped even further. However, it will not drop one penny to the consumer of a packet of crisps.
Earl Howe: I do not believe that one point follows from the other. The noble Lord will have to do better than that in his argument. My noble friend Lady Carnegy spoke of the differences in climate. In terms of climate and freedom from disease the UK has a comparative advantage for the growing of potatoes, in particular in Scotland which has ideal climatic
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conditions. UK growers can therefore expect to benefit from a level playing field provided they are not held back by quotas as their competitors are not.
Baroness Carnegy of Lour: I am sure that my noble friend knows that while there is an advantage in being at a northern latitude as regards problems of disease in potatoes there is also the problem that the great difference in climate causes production to go up and down like a yo-yo from year to year. We in the United Kingdom have to contend with that element which does not exist in other countries in the Community.
Amendment No. 26A suggests in paragraph (a) that one condition for abolishing our marketing scheme is that member states should be able to make such arrangements as may be considered appropriate to manage areas devoted to potato production. Is it likely that the European Community will agree that member states can manage their potato marketing internally so as to manage it against one another?
Earl Howe: I stand to be corrected by my noble friend Lord Stanley as to what he intended by the provision. I understood him to refer to quota areas. I do not see much likelihood of that. It would be an extremely difficult, uphill struggle to persuade the other 11 member states to accept measures of the kind which we presently adopt.
The Earl of Perth: I must again declare an interest as a potato grower. It appears that the noble Lord, Lord Stanley, other Members of the Committee and the Government have the same purpose. We are told by the noble Earl, Lord Howe, that the amendments as drafted will not work and will cause difficulty. Will the Minister help us by saying that he will take into account the worries that have been expressed today so that on Report we can reach a common end? I believe that we all have the same aim in mind; that is, to protect the potato growers in so far as it is appropriate. We are told that the amendment does not work. Will the Minister go further and say that by the Report stage he will have considered our worries in order to ascertain whether he can incorporate them in any action that he may take?
Earl Howe: I am grateful to the noble Earl, who makes an important point. I should have said that all the comments made in the debate will be taken into account in our negotiations in Brussels. We have had extensive discussions with the Potato Marketing Board and those are continuing. I am grateful to the noble Earl. I am sure that by the time we reach Report we shall be on more certain ground as regards the approach adopted by other member states in the EC. Doubtless I shall be able to report on the outcome of the forthcoming Agriculture Council.
Lord Stanley of Alderley: I shall leave the question of the future role of the Potato Marketing Board to my next amendment. I thank my noble friend for spelling out the four conditions which the Government intend to press in securing a potato scheme. As I see it, however, those four conditions are not compatible with the European Community regime that has been put forward. I hope that he will confirm

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that the Government are to resist the scheme. If he is prepared to do so I might answer his question about the meaning of paragraph (a) in my Amendment No. 26A.
My noble friend has got the wrong end of the stick as regards quotas. As a grower I have always considered the payment of a quota an insurance benefit and an aid for research. The board has done that most successfully. Of course it makes mistakes but my noble friend must admit that sometimes he too makes mistakes. I am sure that I should be the first to criticise the board.
I thank all Members of the Committee for their contribution to the debate. I was struck most by the question of the rush, which was raised by almost all Members. The scheme has been produced in the most almighty hurry. It is totally wrong; it is rubbish. Every Member has said that it will not achieve its aims. It will make the present situation worse, particularly in the bad years. I hope that my noble friend will tell my right honourable friend to resist the measure most strongly. I was particularly pleased to hear that my noble friend Lord Plumb does not like the scheme and that the other place in which he works does not like it either. That gives me a certain amount of confidence.
At present, I shall leave the matter. It goes without saying that I speak for myself. Although I am much in favour of a united Europe and a common market, I am totally disillusioned by the quantity of bureaucrat-ic rubbish which is churned out—and on this occasion rushed out—by Brussels. It makes all members of the European common market look complete fools. One begins to say that one does not want that common market at all. I am sure that my noble friend would not wish me to take that view.
I wish this European regulation all the evil that I possibly can. I hope that it gets no further than the paper on which it is written. As regards the amendment, I admit that it was drafted in a hurry yesterday morning following a series of telephone calls. Therefore, I fully accept that it is defective. I agree with my noble friend that it would not achieve what I want to achieve; that is, that this European Commission regulation should not rule our lives in Great Britain. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.30 p.m.
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 26:
Page 12, line 45, at end insert:
("(2) In deciding whether it is necessary or expedient that the Potato Marketing Scheme should be brought to an end, in the light of any EC regulations on the common organisation of the market in potatoes or otherwise as the case may be, the Minister and the Secretaries of State shall have regard to the need for arrangements which match marketing conditions in Great Britain.").
The noble Lord said: I may repeat a few questions which my noble friend has answered. If I do that, it is not because I was not listening but because I may not have understood him.
The purpose of the amendment is to try to discover what the Government intend to do to ensure a healthy and profitable potato industry. When I use the words "potato industry", I mean growers as well as processors. As has been mentioned by the noble Lord, Lord Carter, growers have had a terrifying year. I have been a grower for 38 years and this has been one of the worst that I have experienced. To have the marketing side thrown into confusion by this scheme is pouring salt into the wounds.
I wish to ask two specific questions to which I hope I shall receive specific answers. If the European Commission does not instigate a scheme for potatoes, will the Government allow the Potato Marketing Board to continue in its present form with its present powers? I do not believe that that question has been answered.
Secondly, can my noble friend tell me whether the recently proposed scheme put forward by the Commission for a common potato regime means that the United Kingdom cannot continue with its present scheme? I understood the Minister to say that we cannot, but perhaps he will confirm that.
Thirdly, if the European Commission puts forward a common potato scheme, will the Government ensure that the United Kingdom can have its own complementary scheme? I know that that has been partly covered but I should like specific answers to those specific questions. If I do not receive an answer "yes" to my last question, I must follow up the matter on Report. It is very much loaded with the horrible problem of subsidiarity. I beg to move.
Lord Carter: Again, we are pleased to support the amendment, which is essential. I shall not repeat all the arguments used on the previous amendment as regards the EC regime. However, the drafting of Clause 22 is a piece of government sleight of hand. The general theme running throughout our discussions was that there might be an EC regime which would mean that the Government would have to wind up the Potato Marketing Board. The amendment ties the changes in the marketing scheme to the introduction of an EC regime. Clause 22 merely states that this part of the Act will apply if Ministers feel that,
"it is necessary or expedient".
The amendment of the noble Lord, Lord Stanley, has picked up the words "necessary or expedient".
It would be extremely helpful if the Minister could tell us for what it is necessary and to whom it is expedient. That catch-all phrase runs throughout this enabling Bill and the Government must be much clearer about what they mean by "necessary or expedient". At least the amendment attempts to tie down the end of the marketing scheme in the light of EC regulations and also in the light of marketing conditions in this country. If the scheme must come to an end, the inclusion of this amendment will be an improvement on the clause as drafted.
We believe that, if the scheme must come to an end, the matter must be restricted to EC legislation, if that ever sees the light of day. Clearly, from what has been said on the last amendment, we all hope that it will not. Only then can the marketing conditions in this country be taken fully into account.
Lord Mackie of Benshie: I shall not detain the Committee except to say that the principle of the amendment ties in with the Government's condition of a level playing field for any new marketing scheme.
Lord Renton: I have a great deal of sympathy for the merits of the amendment but one needs to bear in mind that the Government appear to have contem-plated that the Potato Marketing Scheme, as we have had it for a long time, could be brought to an end irrespective of what happens in the European Community. If that is so, it should be made abundantly plain.
It is perhaps not unreasonable for the Government to wish to have the best of both worlds; that is, have the opportunity—indeed, it would then become a necessity—to bring the present scheme to an end if something in the common agricultural policy is agreed to which would clearly replace the present scheme.
Therefore, I have a great deal of sympathy for this amendment. I should like to hear something specific from the Government as to the exact effect of Clause 22 as it stands alone, even when read with subsequent clauses.
I make one comment about the drafting of Amendment No. 26. I do not believe that it fulfils sufficiently strongly the intention of my noble friend Lord Stanley of Alderley. The crux of the matter is whether the word "match" achieves what he wants it to achieve. I invite attention to the last lines of the amendment, which state:
"the Minister and the Secretaries of State shall have regard to the need for arrangements which match marketing conditions in Great Britain".
I believe that the word "match" is too flexible and broad. I hope that my noble friend wishes to tie down the Government. I do not claim to be a master of English—I am only a rusty old lawyer—but I suggest that we want arrangements which are consistent with marketing conditions which have prevailed in Britain. The provision could be made clearer and stronger. It would be better to replace the word "match", which is rather ambiguous, with the word "reflect" so that the amendment would read:
"arrangements which reflect marketing conditions in Great Britain".
The amendment raises a very interesting and important matter. I shall try to keep an open mind on it until I have heard what my noble friend Lord Howe has to say.
Earl Howe: The first thing I would say to my noble friend is that should Ministers decide to revoke the potato marketing scheme, other than in the light of an EC regime, they would of course consider the marketing conditions in Great Britain before certifying that the scheme should be brought to an end and would wish to ensure that the decision to bring it to an end was in the best interests of the industry as a whole. I hardly think that my noble friend needs such a reassurance, but for the record I am happy to give it.
Where I find difficulty with the amendment, as worded, is that it could present Ministers with conflicting obligations. Some of the potato industry might well wish for the retention of a body resembling the PMB to manage the market as now. But an EC
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regime might very well preclude such arrangements. Indeed, the EC proposals as we now have them are incompatible with the UK quota system, and there is certainly no guarantee that an EC regime will conform to the sort of arrangements that producers favour. Should the current EC proposals be adopted, I am sure that my noble friend knows that they would take precedence over national arrangements. It would not therefore be appropriate to impose upon Ministers a requirement to have regard to marketing conditions in Great Britain if the shape of the regime is not within their discretion.
My noble friend Lord Stanley asked three questions. He asked me to confirm that under the proposed EC scheme the UK cannot run a national scheme in addition. I believe that I have already answered that question. He also asked me whether, if the EC does not instigate a scheme, the Government will allow the PMB, or a successor body, to run one. I answered that in part when we discussed the previous amendment. We shall keep under review the worth and effectiveness of the PMB, in the light of the considerations that I have enumerated. In that consideration we shall wish to ensure that the board is still serving the best interests of the industry as a whole. That is something we do as a matter of course, and shall continue to do. That should come as no surprise.
The noble Lord, Lord Carter, asked me about the words "necessary or expedient". That term is well tried in legislation. It does not mean that Ministers can act on a whim. They would wish to consider the interests of registered producers, potato processors and retailers and of the UK as a whole, of which competition law is a part. The general public interest is just one of the considerations that they would take into account. I note that an amendment to that effect follows this one.
To decide whether it was expedient to revoke a scheme would involve considering whether the scheme continued to serve the purposes for which it was originally intended and whether the interests of the potato industry, in the broadest sense, were still served by it. Equally, Ministers might decide that it was necessary—that is to say, legally necessary—to revoke the scheme. In that context, they would have to take into account any obligations under an EC regime.
I hope that what I have said is helpful and that my noble friend will be reassured by the first part of my reply. He may wish to reflect upon the second part.
Lord Geraint: I am sure that the Minister realises by now that a great deal of anxiety is felt on all sides of the Committee about the future role of the PMB. At this late stage, is he willing for the PMB to hold a referendum or poll to see whether its members are in favour of doing away with the present system? I am talking about the PMB and its statutory powers.
Earl Howe: Producers who are members of the PMB already have the power under the Agricultural Marketing Act 1958 to call for a poll if they so choose. It is entirely up to them to do so.
5.45 p.m.
Lord Renton: Before my noble friend Lord Stanley replies, will my noble friend the Minister be so kind as to make clear the Government's decision on a point that I raised. Clause 22 as it stands would enable the potato marketing scheme to be got rid of, even though there is no question of our entering into a scheme within the CAP. It would seem from the wording of Clause 22 that the Government envisage that possibility. Will my noble friend confirm that they do? If it be the fact that only a scheme within the CAP would cause the PMB to be brought to an end, then the Bill should make that clear. My noble friend Lord Stanley of Alderley mentioned subsidiarity. We are going to enter into a phase in the development of the European Community in which every major new policy will have to be considered in the light of the principle of no subsidiarity. Have the Government considered whether a new potato marketing scheme within the CAP will be considered in the light of subsidiarity and rejected if it were found to be less favourable to our own potato growers than is the present scheme?
Earl Howe: My noble friend asks—if I paraphrase him correctly—whether the Government envisage circumstances in which they would wish to bring the potato marketing scheme to an end, other than in the context of an EC regime. As I have repeatedly said, we have taken no decision to bring the potato marketing scheme to an end. There are various considerations which will weigh heavily upon us in the weeks and months ahead. I enumerated some of those in answer to the noble Lord, Lord Mackie, on the previous amendment. It is by no means evident to us that the present scheme has all the virtues and advantages that some Members of the Committee think.
However, we take account of the consultation with interested parties that we continue to hold, particularly with the PMB. I can say only that it is a matter that we are keeping under review. No decisions have been taken. The point of having the provision in the Bill is that the Bill was a convenient opportunity to insert enabling powers in legislation. It is not every week that we have an Agriculture Bill. It was a convenient place in which to insert the provision in view of the likelihood of the EC being about to come forward with proposals. I am sure that my noble friend will understand that now that it has come forward with proposals, it is doubly important that the powers exist.
Lord Renton: I am sorry to press this point, but it is important. It could turn out to be of major importance in practice. Will the new scheme put forward by the EC, which my noble friend has mentioned, be considered by the Government in the light of the principle that there be no subsidiarity?
Earl Howe: The word "subsidiarity" could mislead us in the context of the CAP. It has little place in a single market. Definitions of the word vary. Where we live within a common regime, as all 12 member states do under the CAP, there is little room for subsidiarity other than in minor matters.
Lord Mackie of Benshie: If, as we hope, the present proposals of the Commission are sunk without trace, will the Minister be happy to continue with the Potato Marketing Board as it operates at present?
Earl Howe: The noble Lord and several others are determined to lead me up a path. I have said that no decisions have been taken. We still have an open mind. We are reviewing the situation and shall continue to do so. If Ministers decide that the time has come when the potato marketing scheme no longer serves the interests of the industry, then doubtless they will wish to look at the provisions of Clause 22. I stress that no decision has been taken at the present time.
Lord Carter: If the Government are determined to consult as widely as they can before they decide whether the winding up of the scheme is necessary or expedient, can the Minister say why there is not a consultation clause to go with Clause 22? There is very good consultation as regards Clause 25 which is about the transfer scheme for the successor body. There is nothing about any consultation in helping the Minister to decide what is necessary or expedient when deciding whether to wind up the scheme.
Earl Howe: We are consulting very widely at the moment. We have regular contact with the potato industry. We take it that the Potato Marketing Board, as a democratic body, is in touch with its members and that what we get in the way of response and feedback from the board represents the views of producers.
Lord Carter: I admit that even as a farmer the potato industry is wider than the producers. Is the Minister saying that he will not object if we return at Report stage with a consultation clause to strengthen Clause 22?
Earl Howe: We can doubtless discuss the merits of a consultation clause on Report. If at that time the EC regime is on the table, I am afraid that consultation will count for little. I am willing to discuss the matter at Report stage.
Lord Boyd-Carpenter: Will my noble friend clear up something which he said a moment ago and which disturbed me? Did he say that in agricultural matters, right across the spectrum, the views of the Commission must always prevail notwithstanding the greater importance that has been given in recent months to the doctrine of subsidiarity and the discussions that are going on in Edinburgh at this moment?
Earl Howe: I remind my noble friend that the common agricultural policy has been with us for many years—
Lord Boyd-Carpenter: It is a disaster.
Earl Howe: My noble friend says that it is a disaster. We live with it and in many ways we benefit from it. It is a common marketing regime for agricultural and horticultural produce throughout the EC. There is little room for subsidiarity in that policy. I can think of one example; namely, the regime concerning set aside. It is up to member states to

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decide the conditions to attach to the set aside regime that are appropriate to their own country. That is where subsidiarity certainly has a place. But in a single market there is very little room for it.
Lord Stanley of Alderley: I admire my noble friend's honesty. I do not believe that I have heard any Minister explain so clearly what subsidiarity does or does not mean. I am not being sarcastic when I say to my noble friend that I am enormously grateful to him. While on the subject of subsidiarity, perhaps I may point out that I asked a parliamentary Question a few weeks' ago about changing the counting of our ewes from 14-day periods to 42-day periods, which would be much easier. The answer was that we are not allowed to do so under the Treaty of Rome. If one cannot do that, what can one do? I am grateful to my noble friend for spelling out the matter.
I hope that arising from what Members of the Committee, and in particular, the noble Lord, Lord Geraint, have said, my noble friend will be seized of the state of uncertainty in the industry. It is terrifying —the worst thing that we could have. We badly need certainty. I was delighted to hear my noble friend Lord Renton say that my amendment was too wishy-washy. The Bill is extraordinary. My noble friend Lord Mottistone is not advocating a free market, and now my noble friend is saying that I am being too wishy-washy. He normally complains that I am too hard going. I agree with him. The Bill does not give us a good guide. I would like to put in a much harder tone in order to know where we are going. I ask my noble friend to try to return at Report stage with very firm ideas as to where we are going as regards the Potato Marketing Board.
I am most grateful for my noble friend's remarks. He did not answer my questions exactly as I put them. I believe that he could not, and that that is the truth of the matter, because he is tied down by subsidiarity. I shall certainly read Hansard. I have nice long train journeys during which I can think about what he said. I shall consider what to do at Report stage in order to see whether we can produce some amendment which gives growers and the farming industry—I am not worried about the Government—a guide as to where we are going. Meanwhile, I hope that at Christmas my noble friend receives a book on subsidiarity so that he is even more explicit afterwards. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 26A not moved.]
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 27:
Leave out Clause 22 and insert the following new clause:
("Application of sections 23 to 43
.—(1) If the Minister of Agriculture, Fisheries and Food, the Secretary of State for Scotland and the Secretary of State for Wales are of the opinion that it is in the public interest that the Potato Marketing Scheme should be brought to an end they may acting jointly by order provide that the following provisions of this Part of this Act shall apply.
(2) No order shall be made under this section unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.").
The noble Baroness said: This amendment is grouped with Amendment No. 35, tabled by my noble friend Lord Stanley, which is almost identical to the second part of my amendment. The amendments which we have just discussed have been about what kind of European potato scheme might emerge from current discussions and how any scheme might affect this Bill. From my point of view this is also a probing amendment. It has been tabled after discussion with the Potato Marketing Board. I am glad that the noble Lords, Lord Carter and Lord Gallacher, have added their names to the amendment. It goes wider than the clause which it seeks to replace.
The amendment is concerned with all the circumstances that the Government should be required to take into account before deciding to bring to an end the present potato marketing scheme. Most importantly, the amendment also insists that the proposed change should be properly discussed by Members of both Houses of Parliament before it is or is not accepted.
Clause 22 as it stands simply states that Ministers can make an order to abolish the present Potato Marketing Board if it appears to them that it is necessary or expedient to do so. It is understandable why the Government have worded the clause briefly and simply. The Agriculture Marketing Act 1958, which, under Clause 40 of the Bill, will no longer apply to potatoes, sets out in considerable detail the conditions which must prevail if a marketing scheme is to be revoked. Those conditions have become out of date and most are not really relevant at this moment.
Is the new clause an adequate replacement? My noble friend has explained what he means by necessary or expedient. I believe that Members of the Committee all know from experience that governments can find things which are necessary or expedient in all kinds of strange circumstances. They could find it necessary or expedient to abolish the potato marketing scheme just because they do not like the way the board is behaving or because the European Community scheme appears over the horizon, as at present, although it is still a long way from securing agreement among member states.
It seems to me that what is important is that, European scheme or no European scheme, all the circumstances affecting the public should be taken into account before any change is made: the effect of the change on the variety of potatoes in the shops, their quality and availability at home and for export and the effect on our extremely important seed potato industry, not to mention the effect on the farming industry generally.
My amendment replaces necessity and expediency as the criteria for Ministers deciding to wind up the present potato marketing scheme with the need to make that decision "in the public interest". That more all-embracing phrase is taken from the 1985 legislation. It seems better to define the breadth of consideration that is required. Even more importantly, my amendment insists that, once Ministers have decided to end the potato marketing scheme, the order should be properly discussed and the decision finally made by both Houses of Parliament. As I understand

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it, the affirmative resolution procedure is permissible under Clause 53, and I have chosen to call for that procedure in this new clause.
I was unsuccessful the other day in trying to persuade my noble friend Lord Howe that full parliamentary discussion was appropriate—indeed, that any parliamentary discussion was appropriate —for the proposals for a new voluntary milk marketing co-operative under Part I of the Bill. I submit that the situation that we are dealing with now in Clause 22 is very different. This order will be for a simple decision—whether to revoke the potato marketing scheme or not—but because potatoes are a basic food on almost everybody's shopping list, the effect of the change will be widespread. Such a decision might or might not appear "necessary or expedient". However, it would certainly be a matter of public interest and it seems to me that it should and could be properly discussed by Parliament.
I shall listen carefully to what my noble friend the Minister says about the amendment. If he feels able to accept it, I shall of course be delighted, but if not, I hope that he will take on board the arguments and perhaps consider tabling his own amendment to Clause 22 at a later stage. In doing so he may feel, particularly after the summit in Edinburgh, that he could incorporate elements of the amendments that we have already discussed this afternoon.
In my view, the public interest is crucial in this matter—and so is parliamentary discussion before acceptance. Neither should be omitted from the Bill as they are now. I beg to move.
6 p.m.
Lord Gallacher: We strongly support the amendment which the noble Baroness, Lady Carnegy of Lour, has moved very ably, as is her custom. I listened to the discussion on the preceding amendments with great interest. As we were told on Second Reading, this is an enabling Bill—and nowhere is it more enabling than in the manner in which it proposes to get rid of the Potato Marketing Board. I am firmly convinced in my own mind that the possibility of a Community regime is convenient for the Government and will probably be the reason given for the abolition of the board.
However, I am equally convinced that even if no regime were in prospect the days of the Potato Marketing Board are numbered. I ask myself: what is the justification for that? I can come up with only one justification—that Ministers in the Ministry of Agriculture, Fisheries and Food have to find a scapegoat for the adverse balance of payments which Britain is running in food and drink with the other member states of the European Community and that the Potato Marketing Board is within their grasp, ready willing and able, and is certainly about to suffer an early death.
That being so, I think that in all humility the Minister can hardly refuse Parliament the opportunity which is asked for in subsection (2) of the amendment —namely, for an affirmative resolution to be passed by Parliament before the board disappears. I sincerely
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hope that the Minister will not find it in his heart to refuse such a plea in the light of the fate which awaits the Potato Marketing Board.
Lord Elphinstone: I, too, support the amendment. When discussing the potato production industry we must bear in mind that it is a very much bigger and more important part of our nation's primary production than is often realised. The net retail value of potatoes and potato products amounts to almost £3 billion annually. It is very far from being the dog-and-stick industry that it is sometimes considered. Indeed, many jobs are dependent upon it.
The present structure of the industry and the massive investment that it requires are based upon the existence of the Potato Marketing Board with its area quotas. The Bill as it stands enables that structure to be changed by, effectively, the stroke of three ministerial pens. That may well be at some future time when circumstances are fairly different from those of today. It is therefore important for the actual abolition of the potato marketing scheme to be subject to the comment of both Houses, as has been suggested. Therefore, I support the amendment and urge my noble friend Lord Howe to give it consideration.
The Earl of Perth: I, too, support the amendment and especially subsection (2). Earlier today the Minister twice said that the Government wish to work in the best interests of the industry as a whole. I think that I have quoted him correctly. I am perfectly ready to accept that—I think that we all are—but if that is the case, I can see no reason why he is not prepared (or perhaps he is prepared; I very much hope so) to accept the affirmative resolution, which is proposed not only in this amendment but in Amendment No. 35 also. I beg the Minister to give us that assurance even if he finds for one reason or another that the first subsection of the amendment would be better otherwise phrased.
Lord Simon of Glaisdale: I beg to follow my noble friend Lord Perth and all the other speakers in so far as these amendments raise the question of an affirmative resolution in preference to a negative one. One can rehearse quite briefly why the affirmative resolution procedure is the more effective by way of parliamentary control. The Minister introduces the regulations under the affirmative resolution and does not merely reply at the end of a rather ragged debate, having the last word.
Moreover, there is another very important advantage. Although it is frequently made use of in your Lordships' House, the negative resolution is often obviated in the other place because time runs out before it can be debated. In that sense, the negative resolution procedure is really only a one-Chamber procedure—a procedure of your Lordships' House.
The distinctions between the two—the criteria—have been perfectly well laid down by the Joint Select Committee on Delegated Legislation of 1971–72, of which the late Lord Brooke of Cumnor was the chairman. He was a very experienced chairman and it was a very powerful committee. The committee said:

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"It should be the affirmative resolution procedure if the regulation is going to make a substantial difference to the law".
It must be obvious, going no further, from the speeches the Committee has already heard, that any such regulation as is in question here is going to have a substantial effect on the law. The committee went on to say:
"No doubt 'substantial' might be a matter for argument".
The committee said that what it meant by "substantial" was what was not trivial, what was not tidying up or what was not consequential. The noble Earl has to answer whether the regulations which are in question here can be stigmatised as trivial, tidying up or consequential. It must be quite obvious from what the Committee has already heard from experienced speakers that that cannot be done.
I desire to add only two points. These stipulations as to parliamentary control cannot really be considered in isolation in this Bill. One of the matters that has to be considered is the extraordinary provision in the Statutory Sick Pay Act as it was introduced. That had a Henry VIII clause; one which actually allowed the Minister by regulation to alter the charge on the employer and thereby to alter the charge on public funds. When the Bill was introduced that was subject only to the negative resolution procedure. The Government very quickly conceded in the other place that it should be subject to the affirmative resolution procedure but they nevertheless tried to stand by the Henry VIII clause. Your Lordships would have none of it and on a Division the Government were defeated.
That is the further background, but there is an immediate circumstance in this Session. This is the third Bill with a blanket negative resolution procedure applying throughout. The first was the Judicial Pensions and Retirement Bill. In it there were two Henry VIII clauses—it is true that they were not very important ones—that were going to be governed by the blanket negative resolution procedure.
The other was the Criminal Justice Bill, which was before your Lordships earlier today. There again a blanket negative resolution procedure was laid down in the regulation-making clause which was almost identical except that it was differently ordered to the one in this Bill. That was really serious because there was a Henry VIII clause—your Lordships will scarcely credit this—which allowed the Minister in effect to add a new criminal offence to the calendar and also gave him power to remove a criminal offence. The provision was subject only to the negative resolution procedure.
That was naturally objected to at Second Reading and the noble Earl, Lord Ferrers, in charge of the Bill very quickly conceded at the outset of the Committee stage that that should be the affirmative resolution procedure, as of course it ought to have been seen from the outset that it should be. What we are seeing is in effect a formulaic clause dealing with regulations, each provision of which comes up on the computer in the parliamentary draftsman's office and which prescribes blanket negative resolution procedures. It is
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most inappropriate in this Bill, particularly as regards Clause 22. I very much hope that the noble Earl in charge of the Bill will accept the amendment.
6.15 p.m.
Lord Renton: The speech which the noble and learned Lord has just made enables me to be quite brief. I wish to add a few words on the importance of the potato marketing scheme and reinforce the argument that if we are to get rid of it it must be done by the affirmative resolution procedure and not by the negative procedure as is at present provided by the Bill.
The growing of potatoes in three different parts of the kingdom which I shall mention is of fundamental importance to farming in those parts. Potatoes that probably play a more important part, and year after year a more consistent part, in the farming calendar than any other crop. The three areas I have in mind are, first, south-west England, and perhaps in this connection I may mention the Channel Islands, for early potatoes. For main crop potatoes I think particularly of the growers in the Fens, in my old constituency of Huntingdonshire. Another part of the country where potato growing is of fundamental importance is in those parts of the Highlands where seed potatoes are grown.
It would be a great shock to the potato growers in those parts of the country if this matter were simply to be slipped through on the negative resolution procedure. It is vital and an expression of democracy that the affirmative resolution procedure should apply. We should be grateful to the noble and learned Lord for raising the matter with the thoroughness that he did.
Lord Monk Bretton: I agree that the affirmative procedure is the right one here and is well justified. I rise to say this particularly because when we were dealing with milk I argued the other way. I still feel that I was justified in doing that, even though after what the noble and learned Lord, Lord Simon of Glaisdale, has just said I am beginning to wonder whether that was quite right. There is a big difference in this case because the matter of milk has been discussed for a long time—there have been soundings among producers and so forth for two or three years —whereas this matter of potatoes seems suddenly to have come up with very much less discussion.
Lord Mackie of Benshie: I rise quickly to support my noble neighbour because if I did not I would be in severe trouble. This is a very good and essential amendment. I trust that the Minister will be able to refute the severe allegations made by the noble Lord, Lord Gallacher.
Earl Howe: My noble friend Lady Carnegy seeks with Amendment No. 27 to do two things: to redefine the grounds on which Ministers could take a decision to end the potato marketing scheme and to subject that decision to scrutiny by both Houses of Parliament under the affirmative resolution procedure.
Should Ministers decide to end the potato marketing scheme that decision would not be taken

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lightly. The Bill empowers Ministers to certify that the scheme should be brought to an end if it appears to them necessary or expedient to do so. I do not believe that my noble friend took on board the assurances I gave in the last amendment. Those words do not mean that Ministers can act without firm reasons. I repeat, Ministers will wish to consider the interests of registered producers, of potato processors, of retailers and of the UK industry as a whole. The key consideration would be whether the scheme continued to serve the purposes for which it was originally intended. The general public interest is only one of the considerations that they would take into account.
As I explained, the word "necessary" has a largely legal force. The legal obligations of an EC regime would be an example in that context. Therefore in most circumstances it would not do merely to require Ministers to consider the public interest when coming to their decision.
Turning to the appropriate parliamentary procedure for ending the scheme, I find myself in some difficulty as I must disagree with the noble and learned Lord, Lord Simon, to whom this Chamber always listens with great attention. He said that the order-making provisions in the Bill were subject to a blanket negative resolution procedure. He is not correct in regard to the order-making powers in Clause 22. That is an order without parliamentary procedure; the order is simply placed in the Library of the House and is not subject to either negative or affirmative resolution.
Lord Carter: Perhaps I may interrupt to ask the noble Earl whether he finds the fact that the order is to be placed in the Library an improvement.
Earl Howe: I ask the noble Lord to bear with me and I shall explain.
I wonder whether my noble friend has not gone a little overboard in seeking to correct what she sees as a deficiency in the Bill. As we have said, there is a strong chance that the introduction of an EC potato regime will create an obligation to abolish the UK scheme. I said at Second Reading, and I feel this equally in the light of arguments presented today, that some form of parliamentary scrutiny should be allowed for in respect of any order made under Section 22.
Lord Simon of Glaisdale: Will the noble Earl say what he means by "some form"? Does he mean merely the negative resolution procedure? Every noble Lord who has spoken has said that that is insufficient.
Earl Howe: I am coming to that.I believe that the negative resolution procedure is appropriate as it should provide a sufficient opportunity to debate the order over and above the debates on the Bill. Accordingly, unless I am prevented from doing so, I propose to table an amendment at a later stage to meet the undertaking that I gave at Second Reading.
The negative resolution procedure would not only be consistent with the procedure adopted for many measures taken under the terms of Section 2(2) of the European Communities Act; despite the general observations of the noble and learned Lord, Lord
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Simon, to whom we listen with great respect, it would also be no impediment whatever to a debate in either House should Ministers decide to revoke the potato marketing scheme for reasons other than an EC obligation.
After an order is made, should there be one, the board has plenty of time in which to consider whether to put forward proposals for a transfer scheme. Equally, Parliament has plenty of time in which to accept the ministerial line or decide upon a debate. For the life of me I cannot see what extra advantage the affirmative resolution procedure gives us in that context.
The noble and learned Lord, Lord Simon, prayed in aid a number of examples. He specifically referred to instances where there was a substantial difference in the law. He defined "substantial" as not trivial, tidying up or consequential. He is perfectly correct. But he failed to make clear that those substantial differences are typically ones which embrace measures whose principles have not been the subject of prior parliamentary debate in any shape or form. In the light of our discussions this afternoon I hardly think that that applies. He also correctly referred to cases where increases in taxation may be in prospect. With great respect, I suggest to him that that is not relevant to this clause in the Bill.
The Government will continue to keep the potato marketing scheme under review, as we have undertaken to do in Our Farming Future. However, I must emphasise that the potato marketing scheme was designed to meet the needs of the 1930s. We need to be sure that our arrangements can now meet the needs of the 1990s to enable our industry to compete in Europe and to provide the quality, variety and value that will encourage our processors and supermarkets to source their supplies from home-grown potatoes.
I appreciate the anxieties expressed by my noble friend and other noble Lords that the House should have the opportunity to discuss the ending of the potato marketing scheme should that prove necessary at a later date. Negative resolution procedure would provide that opportunity and I ask the Committee to reject the amendment on the basis of my assurance. Equally, in the light of what I have said, and in particular my undertaking to table an amendment to provide for a negative resolution, I hope that my noble friend will be content to withdraw the amendment.
Lord Renton: Before my noble friend sits down I wonder whether he has borne in mind that over the past 40 years there has been a different attitude towards the negative and affirmative procedures, especially in another place. Unfortunately, in your Lordships' House we do not give great prominence to debates on either affirmative or negative resolutions —not as much as they do in another place on affirmative resolutions.
Those who, like myself, served for many years in another place remember well that one had to table a Prayer on a negative resolution in order to initiate a debate at all. Such Prayers were nearly always taken at the end of a day's business before the half-hour adjournment debate which finally concluded the day. If the Government were obliged to table an order for

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affirmative resolution on an important point, it could often become the main business of the day, or at any rate be taken quite early in the day. Therefore the Minister's assurance that the negative resolution procedure would be enough, with deep respect to him, is simply not a reflection of parliamentary practice.
Lord Mackie of Benshie: I notice that the noble Earl did not refute the suggestion made by the noble Lord, Lord Gallacher. He has given the show away. What the Government want is to grow another half a million tonnes of potatoes in this country in the vain hope that it will replace the imports, instead of which it will drive the price down and ruin a great many people.
The Earl of Perth: We heard from the noble Lords, Lord Elphinstone and Lord Renton, of the enormous importance of the potato industry. It helps employment, it helps the farmer and in every way it justifies the affirmative rather than the negative procedure. I hope that the noble Earl will reconsider his undertaking merely to give us a negative resolution and table an amendment which allows an affirmative one. I say that quite apart from the legal angle on which we have heard so eloquently from the noble and learned Lord, Lord Simon. It is to be found not only in the amendment of the noble Baroness, Lady Carnegy, but also in Amendment No. 35, which shows that there is a general wish in the Committee that we should not have a negative but an affirmative resolution.
Baroness Carnegy of Lour: I thank all noble Lords who joined in this important discussion. I was interested that the Minister defines the public interest in a rather narrow way. I am less experienced than many Members of the Committee, though perhaps as experienced on the matter as the Minister himself. But it seems to me that, if it does not already have it, "public interest" should have a wider sense.
The important point in the discussion is that we should be quite sure that Clause 22 contains a wide enough definition of what has to be taken into account. I hope that my noble friend will consider this matter and discuss it with his right honourable friend to see whether he is satisfied that the clause is wide enough.
The discussion on negative or affirmative resolution has been heard many times in the House. I am grateful to the noble and learned Lord, Lord Simon of Glaisdale, for taking the trouble to come along and join the discussion and to my noble friend Lord Renton who is also experienced in these matters.
The Government should think carefully about the point. I do not wish to divide the Committee on the matter now because I want the Government to reflect on the first part of the amendment. If anyone wishes to divide, I suggest that my noble friend Lord Stanley should move his amendment and the Committee could divide on it. I believe it would be much better for the Minister to go away and consider what two experienced Members of the Committee have said on the point. The Minister should discuss it with his right honourable friend and perhaps reconsider it, once the
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roar and dust of Edinburgh have died down. For my part, I thank the Committee and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22 agreed to.
Clauses 23 to 25 agreed to.
6.30 p.m.
Schedule 3 [Qualifying transfer scheme]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 28:
Page 39, line 35, at end insert:
("(c) a society formed for the purpose of giving effect to the scheme and registered under the Industrial and Provident Societies Act 1965;
(d) a company registered under the Companies Act 1985 which has not carried on business and whose Memorandum of Association empowers it to carry on (inter alia) the activities assigned to it by the Scheme; and
(e) a company registered under that Act which was a subsidiary of the Board immediately before the day on which subsection (1) of section 23 of this Act comes into force.").
The noble Baroness said: This again is a probing amendment. I recognise that it addresses complicated issues and that the solution I propose to the problem may not be correct. I have also discussed Amendment No. 28 with the Potato Marketing Board. I find that the board fears that the functions which could be carried out by what is termed in the Bill as a qualifying "successor body" are too narrow in scope. The board is concerned particularly that functions such as control and maintenance of standards could be an important activity in the future.
The board also tells me that it would not wish to put at risk the link between its research station at Sutton Bridge and the packing station there. The latter is run on highly commercial lines and enables experimental work on matters such as the handling and storage of potatoes to be carried out under real rather than laboratory conditions. I do not need to tell Members of the Committee who are experienced in these matters that the storage and handling of potatoes is very important indeed. The trading surplus from the packing station's operation goes to defray the cost of research and development work carried out there.
The board, I understand, has been advised that it cannot be guaranteed that a development council, under the 1947 Act, would have the power to carry out that commercial activity. If that were so, many of the practical benefits and all the financial benefits of the close links between the research activities and the packing station would be lost.
The board has persuaded me that the options for the form of a successor body should be widened along the lines of those proposed for the milk marketing arrangements. That is what the amendment does. I point out that the requirement for any transfer scheme to be approved by Ministers would remain unchanged, so that the Ministers would still retain ultimate control over any future decision.
I believe this to be an important amendment. I shall again listen carefully to what other Members of the Committee, particularly the Minister, have to say. I beg to move.
Lord Carter: I was pleased to add my name to the amendment and I support it. I do not intend to repeat any of the arguments made by the noble Baroness, but this gives me the opportunity to raise a point on which it would be helpful for the Minister to reply.
The amendment adds a clause on page 39, after paragraph 7(2) (b), which will become new paragraph 7(2) (c). When the Minister replies, will he deal with the point on sub-paragraph (2)? At the moment all the Government see in the Bill as successor bodies is a development council. We all understand what that can do. Paragraph 7(2) (b) states:
"any other body corporate formed solely for the purpose of carrying out functions of a kind which could be assigned to such a council".
One can understand the functions which could be carried out by a body corporate which would be similar to those of a development council. But presumably one could not have a body corporate which would have the levy-making powers which one would have for the development councils under the 1947 Act. Perhaps the Minister could clarify the point, either now or in writing to me. It seems odd, and I wonder what action the Government are considering there. Why do we want a body to carry out the functions of a council, presumably without the levy-making powers of the council?
Earl Howe: As my noble friend explained, the amendment would allow the undertaking of the PMB to be transferred to a commercially trading successor body. I have to say that that is not our intention. We do not wish to find ourselves with a potato equivalent of a milk marketing co-operative, possibly holding a dominant market position. I am sure that my noble friend will understand that.
I understand the PMB's anxieties about the status of its Sutton Bridge research station, which is one of the main points at issue here. But the amendment does not meet those anxieties because it is too wide and could open the board to unforeseen tax liabilities. We shall meet the PMB to explore its anxieties and if there prove to be any difficulties on the research station, as the provision stands, we shall consider what, if any, amendment is desirable. Should there be a problem we shall, if necessary, come back to the House at a later stage.
The noble Lord, Lord Carter, asked a specific question about a similar body, the body corporate, set up to carry out functions similar to those which might be assigned to a development council. That body would be voluntary, but I agree with the noble Lord that no statutory levy would be possible with such a body.
My noble friend Lady Carnegy has highlighted a potential difficulty which has come to light only relatively recently. I trust that she will be content at this stage to withdraw the amendment in the light of what I have said.
Baroness Carnegy of Lour: I thank my noble friend for his reply. It is good news that he will discuss the point with the marketing board. It is important and we must not put the research station and the other operations at risk. I take his point that the Government do not wish to widen the scope of the successor body so much that it can take on many other operations. That is not the purpose of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 agreed to.
Clauses 26 to 32 agreed to.
Schedule 4 agreed to.
Clauses 33 to 35 agreed to.
Clause 36 [Power to poll registered producers]:
Lord Carter Lord Carter moved Amendment No. 29:
Page 18, line 37, leave out ("may") and insert ("shall").
The noble Lord said: In moving Amendment No. 29, I wish to speak also to Amendments Nos. 30 and 31. It may surprise the Committee when I say I believe we shall have a fairly short discussion on this group of amendments. We had a good discussion about the pros and the cons of producer polls on Tuesday and I certainly do not wish to repeat all those arguments this evening. It is obvious that the Government believe that, by including Clause 36 in the Bill, there should be a poll of producers and they should be asked their opinion in the case of the transfer scheme to succeed the Potato Marketing Board. One could ask: if potatoes, why not milk? But the purpose of the amendments is to ask why the permissive power for a poll should be introduced. Clause 36(1) states:
"The Board may carry out a poll".
To strengthen that provision, subsection (2) gives the power to ignore the poll anyway. We do not think that that conveys the stiffening of resolution that the Government should adopt in this area. It would be interesting to find out the Government's thinking on this matter and why they have included this provision in the way they have. Amendment No. 30 suggests removing subsection (2) completely. Subsection (2) states in effect that, having carried out a poll, one may then completely ignore it. That provision seems a little odd. We are certainly prepared to go along with Amendment No. 31, standing in the name of the noble Lord, Lord Stanley, and others, which uses the words,
"have regard to the result of the poll".
Perhaps the Committee recalls that I used those words on Tuesday. I explained then that the phrase "have regard to" offers a good precedent. It means that one cannot ignore a measure completely but one need not slavishly follow it, rather in the same way the Government treat their election promises. However, unlike in the case of the milk boards, the Government have introduced a provision for a poll of potato growers but, it seems to us, have rather damned the provision by faint-hearted drafting. These amendments are intended to stiffen the Government's resolution. If the Minister cannot accept the amendments as drafted, I urge him at least to indicate that the Government are prepared to strengthen the commitment to a producer poll in the Bill. I beg to move.
Lord Renton: I wish to support what the noble Lord, Lord Carter, has said on this. The potato marketing scheme, although of course in the general public interest, is in the particular interests of the growers of potatoes. That a poll should be taken in order to ascertain what their interests are—because that is what the result of a poll will show—and then can be completely ignored, as it could be under the Bill, is to me unthinkable. The amendments, taken together, are quite frankly very moderate. Amendment No. 31 is the one which is truly operative and that merely states that the board shall,
"have regard to the result of the poll".
I cannot imagine the Government opposing such a sensible suggestion.
6.45 p.m.
Earl Howe: I have listened carefully to the noble Lord, Lord Carter, and other noble Lords. I feel I can say at the outset that their wish for producers to be in a position to call for a poll if they choose to as regards the ending of the potato marketing scheme is something I have absolutely no quarrel with. However, they can already do so under the terms of the Agricultural Marketing Act 1958. They do not need this Bill to do it. The point about Clause 36 is that it gives the power to the board itself to hold a poll if it wishes to do so, and not just a poll about the ending of the scheme but a poll about what is to succeed it. The provision for an orderly succession is not available under the Agricultural Marketing Act, or indeed the European Communities Act. This Bill provides for it.
The noble Lord, Lord Carter, suggested that not only should the board be obliged to poll producers, but that it should also be bound by the results of the poll. On the first point, I must put it to the noble Lord that the idea of an obligatory poll has a severe practical objection; namely, that it could put the Potato Marketing Board to considerable, and I would say unwarranted, expense. It would be required to poll producers as to whether they wished the board to consider making an application for a transfer scheme and, if they decided to proceed, they would have to poll again on the principles of the proposed scheme. If they then decided to withdraw that scheme, they would be required to poll again before submitting a different transfer scheme. That really would be a nonsense.
I fully understand the concern behind the amendment but I think it is much better for us to leave it to the Potato Marketing Board to decide how and when to consult its producers. Clause 25(1) requires the Board to satisfy the Ministers that it has,
"taken reasonable steps to bring the principles or—
a transfer scheme—
"to the attention of registered producers".
That surely meets the central point of concern. There is no question of producers not knowing what is going on. A poll of course, is one means of bringing the scheme to their attention, but there are less cumbersome and equally effective ways in which the board might advise growers of its intentions, such as by means of letters, media announcements or producer meetings.
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I remind the noble Lord that all but three of the board members are elected by producers and they keep very closely in touch with them. I think there is a limit to the extent to which Parliament should prescribe to a democratically run body how it should order its business.
I now turn to the suggestion that the board should be bound by the result of any poll, as proposed by Amendment No. 30. Were this amendment to be accepted, the Committee would be telling the members of the Potato Marketing Board that it does not trust them to represent the interests of the registered producers who elect those members. I cannot really believe that the noble Lord, Lord Carter, wishes to convey that kind of message to the PMB. It is inconceivable that producers' views will be ignored. Indeed, as I have said, Clause 25(1) (a) and (3) (b) place an obligation on Ministers to ensure that potato producers know about any proposals and that their interests have been taken account of.
If a poll of producers has been taken, as the Bill allows for, the board would need good reasons to override the conclusion of that poll. But, that such an element of discretion should be provided for ought not to be in doubt, not only because the number of respondents in the poll might in the board's view be too small to be representative of producers generally —I believe that matter should be left to its discretion —but also to allow for the imposition of an EC potato regime. A negative vote from producers in the face of an EC regime would not preserve the board but would cause it to be wound up with no successor to take its place. That cannot be what this Committee wants. I hope the noble Lord, Lord Carter, will think again about these amendments and withdraw them.
I wish to speak briefly to the amendment tabled by my noble friend Lord Stanley and the noble Lord, Lord Geraint. If the amendment were accepted, it would not make any material difference to the effect of Clause 36(2) because as drafted the clause states that the PMB should not be constrained by the result of any poll when deciding on whether to take action under Clause 24. If it chooses to have a poll, it can safely be assumed that it will have regard to the result in forming its decision, even if it does not decide to follow it. With great respect to my noble friend, I do not think that his amendment carries any material force as regards the Bill.
Lord Renton: We shall have to consider what my noble friend has said. He has put before us quite a complicated argument which is worthy of consideration before we finally take any decisions on this matter. However, I hope that he will bear in mind that the powers given under the agricultural marketing Acts with regard to the holding of inquiries and polls relate to the past and the present, but we are legislating for the future. I respectfully suggest that anything in the agricultural marketing Acts which may have a bearing on the future of the potato marketing scheme might have to be amended by the Bill. I do not think that there is any amendment at the moment.
Furthermore, the Minister says that the Potato Marketing Board is a democratically run body. That is what we want it to be when this vital decision is

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made as to the future of potato growing in this country. In order for it to be a democratically run body when the present scheme is brought to an end and a new scheme deeply affecting the future of potato growers is introduced, we must make sure that democracy is given a chance and that the board is required to consult the growers and must have regard to the interests of the growers as expressed in the poll. However, for the whole matter to be made optional on the part of the board and for it to be able to disregard the result of the poll—that is really what the provision comes to—far from making it a democratically run affair, makes it completely undemocratic. I therefore hope that my noble friend and his colleagues in the department will bear in mind that important point also.
Lord Carter: I was a little puzzled by the reference in the Minister's reply to the 1958 Act. As I understand it, that poll will be concerned with the future of the potato marketing scheme itself whereas the poll that we are discussing now concerns only the transfer scheme. The Government have already made it clear that, if they exercise their powers, they will revoke the potato marketing scheme. This simply concerns the successor body that will follow it.
Earl Howe: The poll, should the board choose to have one, could be on both matters.
Lord Carter: Unless I have misread it, the Bill refers to Clause 24. The poll concerns the level of support as regards the making of any application under Clause 24 which refers to the transfer scheme. Am I wrong there? Section 23 revokes the potato marketing scheme and this poll concerns only the successor body and the transfer of its property, rights and liabilities. However, we shall leave that point.
The disadvantages of a poll listed so very powerfully by the Minister make me wonder why the Government have included the Clause in the Bill. On the question of the level of support, Clause 36(1) speaks of a poll carried out in such manner as the board thinks fit, so, when it laid down the rules of the poll, it could indicate that it would not be bound by a poll of less than a certain percentage of producers.
I am not convinced by the Minister's arguments about ignoring "have regard to" and preferring "shall not constrain". I believe that everyone in the Committee will agree that "have regard to" would be a considerable improvement. Perhaps the Minister wishes to deal with the point that I made earlier.
Earl Howe: My voices tell me that I was correct in what I said; namely, that there could be first, a poll on whether the board should be wound up and, secondly, on whether there should be a scheme.
Lord Carter: I shall have to read the Bill with care, but, as I read it, the poll applies only to Clause 24 —the transfer scheme. We shall have to read Hansard and perhaps discuss the matter further. I think that the wording "have regard to" would be much better than "shall not constrain". I believe that other Committee
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Members agree, but, in the light of the discussion that we obviously need about the meaning of the poll. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 30 and 31 not moved.]
Clause 36 agreed to.
Clause 37 to 43 agreed to.
Clause 44 [Grants]:
Lord Mancroft Lord Mancroft moved Amendment No. 32:
Page 20, line 40. at end insert:
("(aa) wild game meat,").
The noble Lord said: I ask the Committee to put hot potatoes aside for a moment and turn its mind to the problems of the wild game meat industry. Although the Chamber is not exactly bursting at the seams and Members are not fighting each other in the aisles to take part in the debate, I ask the Committee to think carefully about the matter because it is an increasing and important part of the rural economy.
If I may remind the Committee, Clause 44 empowers Ministers to make a scheme for the payment of grants for the marketing of agricultural produce or other produce specified by them in an order. Previously, applications to MAFF for grant aid to establish a game marketing scheme have not been accepted because game is not considered to he agricultural produce. Under the Bill, Ministers will by order be able to specify game as produce eligible to receive grant aid for its marketing.
This is therefore a very gentle probing amendment using a very blunt probe. Its purpose is to see whether Ministers are prepared to consider paying grants for the marketing of game. If they are, the amendment is, strictly speaking, unnecessary as they may specify game meat by order. However, if they are not, we may need the amendment to make sure that that can happen.
As noble Lords will know, the amendment refers to wild game meat. In this context, we mean meat from game birds such as pheasant, grouse, woodcock and partridge, hares and rabbits, and, although venison is not strictly game, the amendment also includes deer. The amendment does not include farmed game.
As the Committee probably knows, wild game meat is par excellence a "green" product. It is in the truest sense of the word free-range and it is produced in an environmentally friendly manner. All game meat is very lean, so it is a health food. As the Committee will know, it is delicious to eat, providing a tasty and welcome alternative to the normal fare of chicken, beef, pork and lamb. Also, very importantly, it is relatively cheap.
At present, government policy lays great emphasis on diversification and on encouraging alternative uses of farm land. Many of those uses are far from environmentally friendly—industrial use of buildings, "equiculture", barn conversions and even golf courses. By contrast, the growth of shooting has both provided farmers with alternative income, apart from recreation, and made a huge contribution to the conservation of the British countryside. In 1978 a Countryside Commission study indicated that farmers with an acknowledged interest in game shooting spent

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on average 25 per cent. more on landscape improvement than those with no sporting involvement.
Well over half a million people shoot game. In other words, they are the slaughterers of the industry. The volume of game shot virtually doubled in the seven years between 1983 and 1990. The total value of the bag in 1990 was £35.2 million. On average, nearly half of the produce was sold. The wholesale value of actual sales was £16.7 million. The largest wild game meat product is pheasants. A high proportion—60 per cent.—are sold, with a total wholesale valuation in 1990 of £10.2 million. On the fair assumption that 90 per cent. of pheasants sold in the United Kingdom are exported, the wholesale value of game bird exports is estimated to be in the region of £9 million.
In other words, there has been some success in the marketing of game and the Committee will be delighted to know that several supermarket chains now sell oven-ready fresh or frozen grouse, partridge, woodcock and pheasant as well as venison, which is good news for all of us. Safeway and Sainsbury now produce a free pamphlet on how to cook those delicious delicacies, although I am unable to tell your Lordships whether or not this evening is late closing.
Game is no longer regarded as the food of the privileged few, and food retailers are showing an increasing interest in it. There is an abundant supply of British pheasants during the shooting season, but for some reason imports of game have risen, partly due to the inadequate marketing and distribution by the UK industry. There is a need to develop an orderly and profitable marketing strategy to benefit all parties in the supply chain from the game farmer to the consumer, possibly by creating a game marketing board.
The shooting sports organisations have taken the lead, with support from all sectors of the industry, in commissioning a feasibility study by professional marketing consultants into game meat marketing. That initiative has been welcomed by Food From Britain. However, the Ministry of Agriculture is unable to grant aid to the study on the ground that game is reared primarily for sport, even though most of it goes for food use afterwards. Existing legislation would not permit it.
In the same way, my noble friend Baroness Trumpington confirmed in a letter to the chairman of the Game Conservancy in March of this year that the Ministry of Agriculture's farm diversification grant scheme could not support the cost of developing a marketing strategy for shot game. To extend the scheme would require new statutory instruments in order to present it to Parliament. Grants for marketing and processing agricultural produce under European Community regulations have also been restricted to farmed game and venison.
In summary, I can say that improved marketing of game would produce benefits for consumers, producers, farmers and the balance of payments. Shooting provides an important alternative source of income to farmers and makes a major contribution to conservation of the countryside. There is a strong case
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for the Government to provide financial support for a marketing scheme for game, surely the most British of foods.
Lord Carter: We look forward with interest to the Minister's response to the idea of a game marketing board. I do not hunt, shoot or fish, but I happily consume the products of those who do. This seems to be a sensible amendment, if the Minister can confirm that the grants can be extended.
I would be sceptical if the grants were used to subsidise the wages of latter-day Mellors—referring of course to the Mellors of D.H. Lawrence and not to the Member for Putney. If the grants were restricted to improve marketing, the amendment would be a sensible addition to the Bill.
Earl Howe: My noble friend has explained, while I was salivating, that the amendment would add wild game meat to the range of produce that is specifically identified in Clause 44 as being eligible to be considered for inclusion in any scheme which Ministers may decide to make under the powers of that clause. He will be pleased to know that the amendment is unnecessary.
The clause makes provision for any scheme to be made in relation to the produce of agriculture, horticulture, fish farming and anything derived from such produce. It contains in subsection (2) (c) provision for Ministers, by order, to extend that range of produce to other activities which are not agricultural or horticultural in nature, or where there is doubt as to whether they would be regarded as such under existing legislation.
If at some future date Ministers decide to make a scheme under the powers in Clause 44, and they decide that such a scheme should apply to wild game meat, they would then invoke the powers in subsection 2(c) to make such an order.
Excluding wild game meat from the face of the Bill does not in the least imply that it is inherently ineligible for inclusion in a group marketing grant scheme or that there is any bias against considering it for a scheme. If we were to accept the amendment then we should no doubt be inundated with requests for other produce to be included on the face of the Bill. Therefore, this is one of those instances where secondary legislation is the appropriate vehicle for extending the range of eligible produce, as set out on the face of the Bill. I hope that my noble friend will be content with those assurances.
Lord Mancroft: I thank the noble Lord, Lord Carter, for his support. I suspect that it would not need any encouragement from him to ensure that any noble Lords who employ gamekeepers make sure that they are not called Mellors.
I appreciate that others may wish other products to appear on the face of the Bill. I note the Minister's comments about the powers held by his right honourable friend in Clause 2(c). I hope that means his right honourable friend will be prepared to look favourably upon such requests at some stage in the future. I will read with care and attention what the Minister said. I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.
Clause 44 agreed to.
Clauses 45 to 47 agreed to.
Clause 48 [Wool guarantee]:
Lord Gallacher Lord Gallacher moved Amendment No. 33:
Page 23, line 15, leave out ("1993") and insert ("1995").
The noble Lord said: We move from potatoes and game meat to wool. In moving Amendment No. 33 I shall speak to Amendment No. 34, with which it is grouped.
The amendment standing in my name and that of my noble friends Lord Carter and Lord Geraint seeks to retain the wool guarantee for two more years until 1995. We regard that extension of time as being necessary because of the collapse in world prices for wool since 1990. Under the proposals in the Bill, which are somewhat severe, we are advised that the price would halve from next May.
The British Wool Marketing Board, whose other responsibilities are to continue under the Bill, needs time to adjust to new financial conditions, especially if it is to continue its present work for farmers and the wool market in general. The board has to accept fleeces of varying quality and amounts and has to find markets for those fleeces, which is a difficult job when surpluses worldwide make the market more competitive.
In addition, there is the existence of the multi-fibre arrangement for which the Department of Trade and Industry is responsible. That arrangement impacts on the market for wool and, therefore, makes conditions more difficult for wool to be used as a commodity in the manufacture of textiles.
We are advised that even a slight increase in current market prices would significantly reduce the Government's commitment. Conversely, the absence of any guarantee in over supply conditions is likely to further depress market prices.
We accept the statement in the guide to the subject matter and content of the Bill that the present arrangement is very costly and in 1991–92 amounted to nearly £40 million. I was advised recently that trade press reports have indicated that there is a strong possibility, in the review of hill livestock compensatory allowances, of a cut of £20 million, which is equal to 20 per cent. of the present allowances. Part 4, paragraph 29, of that guide, having given the cost of withdrawing the current guarantee, states that sheep farmers will continue to receive very substantial Government support through ewe premium and hill livestock compensatory allowances. If the press reports of the impending cut are correct, then hill livestock farmers are certainly facing a very bleak prospect. If one adds to that the possibility of a reduction in the guaranteed price for wool, their difficulties are significantly increased.
In the light of that situation the Minister should look sympathetically at the modest extension of two years that the amendment proposes. If it is still argued that it is a cost beyond reason and one which must in present circumstances be reduced or even done away with—which is the point of the Bill—many of us, looking at European Community expenditure on
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commodity regimes like tobacco (to which the United Kingdom Government contribute a significant amount as their share of the total cost) will be asking ourselves why those costs are obligatory whereas this very necessary and desirable guarantee to the Wool Marketing Board has to be reduced in such a dramatic and serious way. In all the circumstances I hope that the Minister will consider this sympathetically. I beg to move.
Lord Borthwick: I gather that the Wool Marketing Board is being abolished and that the main grading centres will go too. That is much more important. I do not know whether any Members of the Committee remember what happened in the old days. All sorts of wool was put into a sack and the local boys came along and trampled upon it. When tradesmen, manufacturers and so on came along, they had to buy 10 big sacks, pull out of them the particular skins they wanted, chuck the rest back and send it to auction. It was a waste of time and a terrific waste of money and good hides. By that time they were all mixed up. That was all stopped and grading started. After grading began in Britain it started in Australia and New Zealand. It is now almost worldwide. If the board is done away with, we will have no control centre here for grading. I should like to know what is going to happen. Will we be left with some control for the grading of wool in order that it can be sold?
7.15 p.m.
Lord Geraint: Once again I declare an interest. I happen to be a hill farmer producing a little wool on the slopes of Plynlimon. I had the great honour and privilege of representing Wales on the British Wool Marketing Board for 21 years from 1966 to 1987. I was vice-chairman of that board for 11 years from 1972 to 1983. We had the duty to look after the interests of approximately 100,000 wool producers in Britain. I enjoyed my stay at the board and the responsibility given to me and others to look after the interests of the sheepmen of this country. But here I am today very disappointed indeed that the Government will do away with the guaranteed price system for wool.
We have also been discussing the future of two other boards, the Milk Marketing Board and the Potato Marketing Board. It seems to me that the Government of the day are hell bent on taking away the statutory powers of those two boards, but for some unknown reason they are leaving the statutory powers of the British Wool Marketing Board as they are. Perhaps the Minister will explain. During the past 10 or 15 years we have been told so many times that the British Wool Marketing Board, with its statutory powers, is safe and here to stay—for the very simple reason that nobody within the Community has been interested in dismantling it, since wool has been classified as an industrial raw material and not an agricultural product. I would say that that is the main reason why the board has held on to its statutory powers.
It was the Government—nothing to do with the EC —who made the unilateral decision to do away with

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the guaranteed price. If I remember correctly, the Minister made the announcement in 1988–89. The whole of that sector of the agricultural industry which produced wool and lamb was disappointed. The effect will be disastrous. It will save the Government of the day approximately £26 million or £30 million in a period of 12 months. But what effect will it have on the industry, especially young people? I say with respect to noble Lords on both sides of the House that very little has been said about the future of the young men farming our land, especially those farming hill land.
Before I make a plea on behalf of the young farmers of this country let me say that today I read an article which is very interesting for those who live in England —not Wales or even Scotland. The information, sent to me by the Farmers' Union of Wales, states:
"A recent survey in rural areas of England had shown that 39 per cent. of parishes had no permanent shop; 40 per cent. had no post office; 51 per cent. had no school; 29 per cent. had no village hall; and 73 per cent. had no daily bus service".
That does not augur very well for the young farmers of this country who are very keen to follow in the footsteps of their fathers. How do the Government of the day, in particular the Minister, believe that these young people are to enter the industry if their income is to be slashed year in year out because of government policy? I wonder whether the Ministers concerned have contacted young farmers to discuss future trends in the agricultural industry and policy-making to make sure that their aspirations are fulfilled. Without them the countryside will be much poorer and many more people will leave the hills. I say to the Minister and to the Government of the day that empty farmhouses will be the tombstones of this Government's policy in the nineties unless they change course. That is indeed a sad state of affairs as we look forward to the next century. I urge the Minister to give serious consideration to the amendment. Two years' grace for the wool board and a guaranteed price system will be a step in the right direction. I hope that there will be a review after that period.
The noble Lord, Lord Gallacher, referred to rumours about the hill land compensatory allowance. I go a little further and read from yesterday's Farming News. It is up to the Minister to say whether the rumour referred to by Mr. Richard Saunders in that publication is genuine:
"Leaked correspondence between Minister John Gummer and the Chief Secretary at the Treasury Michael Portillo reveals that in order to achieve the £20 million cut in spending demanded by the Treasury for 1993–94, the Minister has proposed a cut in HLCAs for hardy sheep in severely disadvantaged areas from £8.75 to £6.60 (a 26 per cent. drop) and for other sheep in SDAs a cut from £4.90 to £3.60, (a 11.2 per cent. drop). For sheep in disadvantaged areas the payment would actually increase from £2.45 to £2.67 because otherwise it would be below the lowest level permitted by the EC".
Perhaps the Minister will confirm whether or not that is true. If it is, the income of those hill farmers in the sheep sector of the industry will be cut by £40 to £50 million next year. That is not a very good policy to pursue.
Noble Lords are very keen that the environment should be preserved in hill areas of Britain. I am afraid that that is not to be. I have said on many occasions that, although one may blame the Milk Marketing
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Board, the Potato Marketing Board and the wool board, for the past 50 years the standard of living has been reasonable in the hills, in the lowlands and within the farming fraternity; but not I am afraid in the free market of the 1990s, especially in the hill areas of Britain, unless the Minister will concede the request of many Members of the Committee that another two years' grace should be given to the guaranteed price system for all. I hope that the Minister will respond favourably to our request.
Lord Stanley of Alderley: I support the amendment but I should declare an interest in so far as I keep sheep. I believe that the noble Lord, Lord Carter, will confirm—he runs a costing business—that the sheep industry is possibly showing the worst returns of all, not excepting beef. Therefore I am particularly concerned about the point made by the noble Lord, Lord Gallacher, that those who claim hill livestock compensation payments will be 26 per cent. down this year. I hope that the Minister will comment.
There is one particular point which I ask my noble friend to bear in mind; namely, the price now of shearing ewes. It will hardly be worth shearing them. Quite soon we shall be in the position of not shearing them. That raises a point about cruelty, in line with what has been happening in Australia where the profitability of sheep has been so low that they have been left to die and one has not even been able to afford to shoot them. I hope that we do not reach that stage here. I support the amendment.
Lord Plumb: I support the amendment on the extension of the wool guarantee for a further two years. The Minister may be tempted to ask whether, if the world wool price looked like increasing over the next two years, we would be saying the same thing. I believe that we might be saying something slightly different. Frankly, in the light of what has been said, and given the knowledge that we have at the moment of the virtual collapse of the wool price worldwide, the removal during this year of the wool guarantee could be disastrous for the whole of the sheep industry and for flock masters in particular over the next two years.
The sheep industry is going through a difficult period. The variable has been very much dependent on the export of sheep, particularly to France. We exported something like 394,000 sheep this year, which is something of a record. But that in itself is perhaps not of a long-term nature. Wool is seen, and always has been seen, as an industrial product. Nevertheless, the guarantee is absolutely essential as we see the various changes take place. I hope that the Minister will look favourably at the substance of the amendment to make sure that the flock masters and the sheep industry are preserved and protected over the next two years as we phase out or phase in, as the case may be, a change of regulation.
Lord Borthwick: I had news this morning that much wool remains undelivered because it is not worth delivering. Many sheep this year have not even been clipped. I have never heard of that happening before

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but I guarantee it happens today. We got it straight from headquarters. I think that we are in a very serious position indeed on the sheep farms.
Earl Howe: The noble Lord, Lord Gallacher, asks me to be sympathetic to the amendment. I like to be sympathetic whenever I can. I listened very carefully to what was said.
I explained at Second Reading that while the wool guarantee had served the industry well over the past 40 years, the Government feel that it has now outlived its usefulness. It is out of place in the conditions of the 1990s. It has, in particular, become redundant in the face of EC support measures for the sheep sector under the common agricultural policy. The wool industry is ready to accept financial responsibility for its own affairs and it should do so as quickly as possible.
It would not therefore be right to accept the amendment, which would postpone the date for termination of the wool guarantee by two years—from 30th April 1993 to 30th April 1995.
I understand the concern that this action will take place at a time when the market for wool is particularly depressed. It is true that the guarantee element currently accounts for approximately 65 per cent. of the producer's return from wool. However, it is important to emphasise that his total return from wool amounts to only about 5 per cent. of his total return from sheep production. Substantial producer support by means of the sheep annual premium and hill livestock compensatory allowances will continue to be paid. UK sheep producers currently benefit from over £400 million a year in direct subsidies from these sources.
The noble Lord, Lord Geraint, I am sure, does not need reminding, because he is so experienced, that although the guarantee has in practice operated as a means of support over the past three years, it was intended as a means of price stabilisation for producers, not as continuous market support. So I am not quite sure what he thinks is the underlying justification for the UK taxpayer supporting the sheep sector over and above the very substantial support provided under Community measures.
A number of Members have asked me to comment on the reports of the hill livestock compensatory allowances for next year. My right honourable friend the Minister has this afternoon announced the outcome of the autumn review of the hills and uplands, including the fact that we will be cutting HLCAs on sheep in the severely disadvantaged area.
HLCAs are designed to compensate hill farmers for the disadvantages of farming in the hills. The rates are decided only after the autumn review of economic conditions in the hills. In previous years rates have increased when incomes have fallen. This year evidence shows very substantial increases in hill farmers' income, suggesting that HLCAs were higher than necessary.
Even after the reduction, hill farm incomes will still be very substantially higher—at least £20 million higher than last year. The devaluation of the green
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pound will provide a strong additional boost to their 1992 ewe premium payments as well as those in 1993 and thereafter.
My noble friend Lord Borthwick understood that the wool board was being abolished. The wool board is not being abolished; it is the guarantee that is being abolished. Termination of the guarantee will not affect the marketing arrangements for wool, which will continue to be organised by the British wool marketing board. This decision reflects the Government's view that the board has been successful in recent years in promoting improvements in the quality and marketing of British wool in the interests of wool producers and consumers. The scheme is popular with producers. The existing system of collecting, grading and selling wool enables UK wool, which represents about 2.5 per cent. of world production, to compete effectively against larger producers. It also ensures that all wool is collected, including that from small and remote producers, as well as providing significant economies of scale to the benefit of producers. The ending of the guarantee will not affect these arrangements.
The industry has been given a number of years to prepare for the withdrawal of the guarantee. It is now ready to respond more directly to the needs of the market, and I believe that it should not be prevented from so doing.
I turn briefly to Amendment No. 34. Clause 48 of the Bill would not only terminate the wool guarantee from 30th April next year, but would provide that wool already collected by the British wool marketing board in the 1992 clip year—that is to say, 1st May 1992 to 30th April 1993—and previous clip years should continue to qualify for the guarantee, provided it is sold by the board before 1st May 1995. That will assure for the board a sensible and appropriate timetable for the sale of the wool without disruption to its traditional marketing patterns. It will also provide a clear and precise end date for Exchequer liability. The amendment proposes that the timetable should be extended by two years. It is therefore closely related to, if not directly consequential upon, Amendment No. 33.
I do not believe that it is appropriate or necessary to contemplate going back on what is a well-flagged decision by the Government. I hope that the noble Lord will be content to withdraw the amendment.
7.30 p.m.
Lord Gallacher: I am disappointed with the Minister's reply because, in spite of the somewhat rosy picture that he painted of the financial position of sheep farmers, the speech of the noble Lord, Lord Geraint, was at variance with that. The decision to leave price stabilisation to the board is somewhat arbitrary. The crux of the problem lies in world market conditions. Anyone who reads about the position of sheep farmers in Australasia cannot help but be depressed about the state of their wool market. The fact that such a state exists must mean that the problem for the British Wool Marketing Board on the

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world scene is significant. In those circumstances our proposition is not unreasonable; namely, an extension of two years.
The Minister said that farmers have had time enough to get ready for what lies before them. If that preparation time had been in conditions of market stability I should have agreed with him. However, the time has been one of market instability—and chronic instability at that. Furthermore, it shows no sign of diminishing.
The Minister has acknowledged that the board has done a useful job and we agree with him. He spoke of the improvement in the overall financial position and mentioned the figure of £20 million as the basis of comparison. What is the basis on which that comparison is made? Is it this year with last year, or has some other basis been taken? Perhaps the Minister will answer that question before I decide what to do about Amendment No. 33.
Earl Howe: The calculations that we made on the incomes of hill farmers are based on a number of factors including the hill livestock compensatory allowances and ewe premiums. The figure of £20 million which I mentioned calculated that even after reductions in the HLCAs, which we announced for the coming year, hill farm incomes will still be substantially higher than they were in the previous year.
Lord Geraint: I am disappointed with the Minister's reply. We have all tried our best to persuade him. But if he has not had sufficient evidence of the situation on the hills I invite him to come to the village of Ponterwyd where I have lived all my life. When I was a boy in the local school there were 33 farms. There are still 33 farms in our village. When I was in school all the farmers were full-time but today only three are full-time. That says it all. I beg the Minister to look once again at the amendment which was so ably argued by many Members of the Committee.
Lord Borthwick: I wish to put forward another point and apologise that my queries were not all put at the same time. The Minister mentioned two years. That period was proposed because vast amounts of wool are still held in Europe. We hoped to get rid of that wool during that time. Given a little more time some of that wool may be got away and the trade improve. We want a little extra time to help us to clear the stocks.
Lord Gallacher: I am grateful to the Minister for the information about the basis on which the comparison with better times was made. However, at the beginning of his speech he confirmed as a fact of life what I knew only as a rumour. It is an unpleasant fact of life for those people who will be affected by it. I propose to let the farming community reflect on what the Government have done in that regard. In the light of those reflections we may return to this issue on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 34 not moved.]
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Clause 48 agreed to.
Clauses 49 to 52 agreed to.
Clause 53 [Orders and regulations]:
[Amendments Nos. 35 to 38 not moved.]
Clause 53 agreed to.
Clauses 54 and 55 agreed to.
Schedule 5 [Repeals and revocation]:
Lord Carter Lord Carter moved Amendment No. 39:
Page 41, leave out line 11.
The noble Lord said: On Second Reading I referred to the watershed in our post war agricultural history and the Government's proposals for removing the appropriate section of the 1947 Act. That is a watershed because the Government are in effect removing themselves from the responsibility of ensuring fair incomes for farm workers and farmers and the promotion and maintenance of a suitable and efficient agricultural industry. We are all well aware that our farming fortunes are now decided in Brussels. Of course, the annual review of prices now takes place in Brussels. An annual report on UK agriculture deals with farming income and expenditure and gives many other valuable statistics. I suggest that we have one of the best measured farming industries in Europe.
I understand the Government's wish to remove the requirement for the annual review. In a Written Answer given to Mrs. Dunwoody in another place the Minister for Agriculture, Fisheries and Food made a statement about the future of his Ministry's document, Agriculture in the UK. The reply was:
"It will continue to be published".—[Official Report, Commons, 2/7/92; col. 705.]
That is a firm commitment. Is the Minister prepared to bring forward an amendment to put that commitment on the face of the Bill? We know that the current 1991 edition of Agriculture in the UK states:
"The document provides an accessible form of information on the economic conditions and prospects of the United Kingdom agriculture industry. The Government will draw on this when considering policy issues, including proposals by the European Commission for agricultural support in 1992–93".
It is a very valuable document. The Government have said that it will continue to be published. This is a probing amendment to raise the point. I hope that the Government will accept the purpose behind the amendment and will agree that the statistics should continue to be published in the annual document Agriculture in the UK and that they will be prepared to write that commitment on the face of the Bill.
Earl Howe: I can well understand the nostalgia which the revocation of Part I of the Agriculture Act 1947 must engender in many who have had a long and close association with British agriculture. It does indeed draw a line under a chapter in our past, one which commenced shortly after the Second World War and represented a substantial new deal for farmers. Nevertheless we must accept that times have moved on. Decisions on levels of support for the agricultural industry are now taken largely on a European Community basis under the common agricultural policy, which represents a no less effective —and certainly more expensive—safety net for farmers.

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The purpose of the annual review was to assist Ministers in the setting of national price support levels. The last of the national price supports—the potato and wool guarantees—will be brought to an end by the Bill.
The annual reviews, which Members of the Committee will recall used to be published as Command Papers, have already been replaced as a meaningful exercise by the Community's annual price fixing, and the Command Papers have been superseded by Agriculture in the United Kingdom, which is published annually by agriculture departments. Publication of Agriculture in the United Kingdom will continue after the ending of the requirement to hold an annual review, so there need be no fears that repeal of the requirement will reduce the flow of publicly available information. I see no need to place that requirement on the face of the Bill.
Consultation with the agricultural industry also now takes place at times when major decisions for agricultural support and other policy issues are made, not only during the annual CAP price-fixing exercise, but also when other important CAP proposals come forward from the Commission. I can assure the Committee that the Government's consultations with the agricultural industry will not be diminished by enactment of the Bill.
I hope that, in view of these assurances, the noble Lord will be content to withdraw the amendment.
Lord Carter: I shall withdraw the amendment but I am disappointed. The Minister said that we should have no fear but I am sure that if we look back in Hansard over the years we can see that we have been told by successive Ministers of different departments to have no fears about something, only to find that it has disappeared. To have this provision written on the face of the Bill would have strengthened the commitment. I know that the Government recognise the value of that annual publication and I do not see why they are not prepared to accept the amendment. However, in the light of what the Minister said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 5 agreed to.
Clause 56 agreed to.
House resumed: Bill reported without amendment.

Oversea Companies and Credit and Financial Institutions (Branch Disclosure) Regulations 1992 Companies Act 1985 (Disclosure of Branches and Bank Accounts) Regulations 1992 Companies (Fees) (Amendment) Regulations 1992
7.44 p.m.
Viscount St. Davids Viscount St. Davids rose to move, That the regulations laid before the House on 26th November [13th Report from the Joint Committee]; and the regulations laid before the House on 17th and 19th November be approved [12th Report from the Joint Committee.]
The noble Viscount said: My Lords, the purpose of these regulations is to implement two EC directives: the Eleventh Company Law Directive and the Bank Branches Directive. They were both adopted in 1989.
The eleventh directive deals with the filing of company documents, including annual accounts, by branches of limited companies that are incorporated outside the member state in which the branch is operating. The Bank Branches Directive sets requirements for the disclosure of the accounting documents of credit or financial institutions. Both directives thus deal almost entirely with registration and accounting requirements for non-British companies which work through branches in this country.
We are debating here today three sets of regulations that implement these directives. To help your Lordships, the forms and guidance notes which will be used in operating the regulations have been placed in the Library. The Oversea Company and Credit and Financial Institutions (Branch Disclosure) Regulations 1992 are addressed to non-British companies. I shall refer to those as the main regulations. The Companies Act 1985 (Disclosure of Branch and Bank Accounts) Regulations 1992 are addressed to British companies. The Companies Act (Fees) (Amendment) Regulations 1992 set out the fees that will be charged in operating the main regulations.
Although we are considering the implementation of these directives in Great Britain, I want to take the opportunity to say a few words about the implications of the directives for British companies operating through branches in other member states. The directives are of considerable help to British companies because they prevent other member states imposing excessive demands for information from branches; in other words, one of the hidden barriers to the completion of the single market. They are to be welcomed in that light.
The regulations implementing the directives are technically complex because Britain already has a registration regime for foreign companies. This "place

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of business regime" is contained in the Companies Act 1985. It requires a foreign company to register if it sets up any form of permanent presence here. For the time being this existing registration regime must continue for operations that conduct functions that are solely ancillary or incidental to the parent company, such as a warehouse or internal data processing facilities. Companies incorporated in Northern Ireland or Gibraltar will also continue to be registered under this regime.
The regulations introduce branch registration for the rest. Companies will be required to register a branch if the presence here is sufficient for people to be able to transact business as they would with the parent company. That is a branch within the meaning of the directives. It is not a branch in the sense we usually know it—for example, the branch of a bank where we cash cheques or a local office. "Branch" is used for the purposes of registration rather more in the sense of a subsidiary of a foreign company; but one that is not separately incorporated. It is important that companies understand this distinction, as the directives, and therefore the regulations, require the separate registration of each branch. It is in no one's interest for companies to register each of their individual offices if those are joined within a common management structure and can be regarded as being a single operational entity or, in other words, a branch within the meaning of the directives.
I have spent some time explaining the definition of branch and the two registration regimes because they are crucial to understanding the main regulations. We issued a consultative document on implementation of the directives to over 700 organisations and individuals as well as making it available in the Library. The definition of branch and the problems of the dual regime were the points that concerned most respondents. Many pointed out that deciding between registration regimes is potentially confusing or expensive. The Department of Trade and Industry recognises that an up-to-date system of company law helps to reduce the burden of regulation on business and generally promotes the competitiveness of industry. Those are both high priorities for the department and it continues to look at ways of improving selected areas of the Companies Act 1985.
Your Lordships may wonder, therefore, why the Government are bringing in this dual regime. We have a Community obligation to implement the directives by the beginning of next year. We cannot lecture others about not meeting their obligations if we ourselves fail to do so because we are unable, at the moment, to find the legislative time to resolve the problems of our existing regime. There are benefits too not only for British companies but also for foreign companies operating here. But I can assure your Lordships that these regulations have been designed to make the operation of the dual regime as easy as possible for companies. For a start, those already registered will not need to file again details of their directors and secretary or their constitutional details and will not have to pay to re-register in the transitional period. Secondly, there is a clear set of
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guidance notes—which have been made available to your Lordships—to help companies understand what is required of them. I should like to take this opportunity to thank the many organisations who provided help to the department in preparing those notes. The comments received about what should be explained were, I understand, very useful and the guidance notes were amended to take account of those comments. It is an excellent example of the Government and industry working together to ease the impact of a regulatory change and reduce the costs of compliance.
The most important benefit for companies registered under the branch regime is that from next year most of them will no longer have to prepare a different set of accounts for this market—known as Section 700 accounts in honour of the relevant provision of the Companies Act 1985. Section 700 accounts are the sort of accounts that a British company would have had to prepare in the 1960s. In future, foreign companies will be able to file instead the accounts that are prepared, audited and disclosed according to their home state law. That should not only be less burdensome for companies but in most cases the information filed should be more helpful to inquirers than the Section 700 accounts. But, as a protection, if accounts are not required to be disclosed in the home state Section 700 accounts will still be required. The arrangements for banks are slightly different but the effect is to allow them to disclose here their home state accounts.
As the department's consultative document made clear, it is concerned that some companies might try to take advantage of that change by deliberately incorporating in territories with minimal public disclosure requirements and then working through branches here. From the comments the department received, it was clear that that point concerned others too. I wish to tell your Lordships that Companies House will monitor the numbers of registrations under the branch regime to see whether there is any sign of an increase in companies operating from such territories. If there are signs of abuse we shall not hesitate to take action. The directives provide one solution to this: requiring such companies to produce branch accounts. If that does not work, then the Government will have no hesitation in going back to the Commission and demanding a different solution.
Your Lordships will have noticed that the regulations we are debating are different from those first laid. The Joint Committee on Statutory Instruments pointed out that in its view the regulations exceeded the legal powers of the European Communities Act 1972 in setting the level of penalties for failure to comply with them. There is more than one school of thought on the extent of the legal powers in that respect, but to avoid delaying the implementation of the directives, the regulations were amended in the way sought by the Joint Committee. The regulations we have before us clearly show the changes.
I shall turn now to the second set of regulations we are debating today—the Companies Act 1985 (Disclosure of Branches and Bank Accounts)

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Regulations 1992. As I explained, these are addressed to British companies. The Eleventh Directive requires all companies to disclose in the directors' report,
"the existence of branches of the company".
That provision was inserted into the directive at the request of the European Parliament so that those dealing with a company would be aware of the extent to which it operates through branches; subsidiaries already have to be disclosed. The department consulted on the basis that that would mean disclosing the addresses of branches. Those responding argued that that was too onerous an interpretation. That concern has been recognised and the regulations have been changed so that they now repeat the words used in the directive. The regulations also make some technical changes arising from the implementation of the bank accounts directive and to reflect changes to the definition of credit institutions introduced by the main regulations.
The third set of regulations that we are debating is the Companies (Fees) (Amendment) Regulations 1992. Those provide for the fee levels which Companies House will charge companies for registration of branches and inquirers for inspecting the data held. Those fees are in line with those charged to domestic companies and will be subject to the same controls.
We are not debating the forms regulations here today or the guidance notes but they have been made available so that your Lordships can see how the whole package will work. The regulations are complex. They serve the dual purpose of keeping the burdens on companies to a minimum while at the same time providing adequate disclosure of information for those dealing with the companies. I beg to move.
Moved, That the draft regulations laid before the House on 26th November [13th Report from the Joint Committee], and the draft regulations laid before the House on 17th and 19th November be approved [12th Report from the Joint Committee]. —(Viscount St. Davids.)
Lord Clinton-Davis: My Lords, I thank the Minister for having introduced these complicated matters in the way that he has, but I have a number of questions. I agree with him that, overall, the directives upon which the regulations are based are likely to he of considerable help to British and, indeed, other companies, but the fact remains that they are extremely complicated, as the Minister conceded in the last part of his remarks. So I immediately wonder to what extent, if they are so complicated, they are issues which will be tackled successfully by the companies affected.
The Minister says that the department has provided guidance notes, and the rest of it, but, even so, the matter remains complex. I therefore ask him, first, to what extent he is satisfied, from the discussions that the department has had that British and other companies can deal with the matters satisfactorily. One of the issues raised was not just their complexity but the expense involved. Although some steps have been taken to mitigate that expense, can the Minister cast further light on that and say whether, from
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discussion he has had with the CBI, chambers of commerce and other such bodies, companies still find that the regime will be expensive.
One of the points raised by the Minister was that the directives and regulations require separate registration of every branch. He went on to say something to the effect that companies would be able to register each of the individual offices if they are joined with a common management structure and can be regarded as a single branch. I was not able to take down every word that he said. Is that situation well understood?
Secondly, the Minister said that deciding between registration regimes was potentially confusing. While it was helpful to say, as the Minister did, that the Government are looking at ways and means of improving various areas of the Companies Act 1985, that does not offer much assistance in unravelling the regulations. So, again, I ask the Minister to reveal to the House the result of the discussions his colleagues in the Department of Trade and Industry have had on that point with the various representatives of industry.
The next point I wish to take up with the noble Viscount is that it appears that we were under an obligation to transpose the directive into our law by 1st January next year. Why have the Government left it for so long to take that action? After all, we have only a few parliamentary days left before the Recess and therefore before the date for transposition expires. Were the Government not leaving a little to chance?
Incidentally, as regards that point, the Government often say that they do so much more than other member states to undertake obligations to transpose directives into our law. There has been some criticism of that stance of late. It appears that we have taken steps to transpose and adopt about 70 per cent. of the necessary internal market directives, whereas others appear to have been doing rather better. What progress has been made as regards these directives by other member states?
The next question concerns the filing of accounts. As I understand it, foreign companies have an option to file the accounts which are prepared, audited and disclosed according to their home state law or they can file accounts which have been prepared for them in this country. Let us assume that they file their accounts which have been prepared, audited and disclosed according to their home state law. Does that mean that the accounts can be filed in exactly that form? It may be that some would require a measure of translation. Are the company authorities here able, ready and willing to undertake those necessary tasks? Would it involve additional expense? That matter needs to be clarified.
I noted that the noble Viscount said that a specific provision was inserted into the directive at the request of the European Parliament. The provision in question seemed to be valuable, thereby vindicating the role of the European Parliament in going into some of those matters in considerable detail and having a real role to play. I wish that it had a greater role to play. It might he of some small assistance to those who feel that the European Parliament is often unfairly denigrated.

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Having said all that and posed those questions, I hope that the noble Viscount will be able to respond. I still believe that overall the regulations will prove to be helpful, but it may be that some further steps need to be taken to explain them rather better to those businesses which remain a little concerned about their over-complexity.
Viscount St. Davids: My Lords, it is essential to understand the way in which we are now using the word "branch". It indicates a major structure with a management control and not a great number of small, individual operational offices. I know that my right honourable friend the President of the Board of Trade is keeping company law under constant review and will seek the earliest opportunity which the legislative programme accords in order that some of those problems can be removed, for it is obviously not desirable to run the two regimes together.
The noble Lord, Lord Clinton-Davis, raised the question of expense. It is unlikely to exceed £5,000 to comply with the regulations. That is an amount which many companies have to find in the normal course of meeting legal requirements. He also asked, why so long? As noble Lords will see from the regulations, they are enormously complex. A great number of consultations have had to be undertaken, various documents produced and guidelines brought in. That explains why we have had to deal with the matter at quite a late date. I can tell the noble Lord that a number of European countries have already implemented the regulations.
In drawing up accounts foreign companies delivering their home state accounts will have to provide English translations for use in this country.
Lord Clinton-Davis: My Lords, I am very much obliged to the noble Viscount for giving way. Can he specifically indicate to me where that requirement appears in the regulations? I could not find it and it may be because the regulations are so complicated. If he has difficulty on that perhaps he will write to me.
Viscount St. Davids: My Lords, I do have difficulty on that. I shall write to the noble Lord.
He has drawn attention to the complexity of the regulations. As I said, we have consulted a wide range
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of legal and accountancy firms which have offered their advice. That includes organisations such as the CBI; and we spoke about one-off costs. The consultative document has been drawn up to meet its requirements as far as we can. The member states of France, Germany, Belgium, Denmark, Spain and Greece have already implemented the eleventh directive. France, Germany, Greece and Luxembourg have also implemented the bank branches directive. I hope that that is useful.
Lord Clinton-Davis: My Lords, before the noble Viscount sits down, can he give an undertaking that the Government will not leave matters of this importance to the last minute in the transposition of directives into our law? It is most unsatisfactory. It may well be that the Government can be accused of having still brought about an overly complicated system, but they cannot now amend it because we have to undertake our obligation to transpose by 1st January. If the noble Viscount cannot give an undertaking now, will he undertake to consider the point with his right honourable friend the President of the Board of Trade because it is an extremely unsatisfactory state of affairs?
Baroness Seear: My Lords, I support what the noble Lord has said. As noble Lords will see, we are somewhat denuded on these Benches. I have colleagues who might well have wished to make a contribution if these regulations had come forward at a more convenient time and with a little more notice.
Viscount St. David: My Lords, I shall draw these matters to the notice of my right honourable friend. It would be unrealistic to give an assurance that such matters will not arise late because, as I have said, they are extremely complex. We have to make them work on an existing structure of complex company law. I shall endeavour to ensure that such legislation is brought forward at the earliest possible opportunity.
On Question, Motion agreed to.

Sea Fish (Conservation) Bill
Returned from the Commons with the amendments agreed to.
House adjourned at nine minutes past eight o'clock.