Sitting of 5 July 1971

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  TRADE AND INDUSTRY

    Overseas Trade Fairs (Expenditure)
    Mrs. Renée Shortasked the Secretary of State for Trade and Industry how much is being spent during this year by his Department to aid British firms wishing to exhibit at trade fairs abroad; and how much of this goes to firms exhibiting in West and East European countries, respectively.
    The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): Expenditure on aid to firms participating in trade fairs abroad is estimated at £4·8 million in 1971–72. Of this, some £2·3 million is expected to be spent on events in West European countries and £700,000 in East European countries.
    Mrs. Short: I am grateful for that information but surprised to hear how little is being spent on stimulating trade with Eastern Europe, since the population of Eastern Europe is about 350 million—far more than the population of the Common Market—and our export trade is just under £300 million a year. Does not the hon. Gentleman think that it would be worth while to put more effort into this, as it is an expanding market and will be for many years to come?
    Mr. Grant: I very much hope the hon. Lady is right, and that it will be an expanding market, but expenditure is to some extent conditioned by the number and frequency of trade fairs, and in this respect the figures are approximate to those in previous years.
    Mr. Blaker: Does not our balance of trade with the Soviet Union remain heavily adverse, in spite of Soviet protestations to do better, and will my hon. Friend press the Soviet Union on this matter?
    Mr. Grant: My hon. Friend is quite right in what he says. I assure him that we have made known to the Soviet Union on more than one occasion the points he has in mind.

  RB211
  Mr. Walter Johnsonasked the Secretary of State for Trade and Industry if he is now in a position to make a further statement on the Rolls-Royce RB211 engine.
  Mr. Dalyellasked the Secretary of State for Trade and Industry if he will make a statement on the latest position regarding the RB211 engine.
  The Minister for Aerospace (Mr. Frederick Corfield): I informed the House on 10th May of the position reached in negotiations on the RB211 engine. We now await a decision from the United States Government whether they will provide the necessary support to enable Lockheed to complete the TriStar project for which the RB211 is intended.—[Vol. 817, c. 32–8.]
  Mr. Johnson: It now appears that the American Congress is unlikely to support the bank loan for Lockheed. Bearing in mind that the proposed legislation which the American Government are trying to put through Congress may not be concluded—
  Hon. Members: Speech.
  Mr. Speaker: Order. The hon. Gentleman must ask a question.
  Mr. Johnson:—by the time Congress rises for the Summer Recess, will the Minister give an undertaking that work one the RB211 engine will go on? It is suggested that the main objection to the bank loan is lack of firm orders. Will the Minister ask B.E.A., as a matter of urgency, to make a decision on the purchase of the TriStar, because I believe that that could clinch the deal?
  Mr. Corfield: On the continuation of the RB211 beyond 8th August, I have

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  nothing to add to what my right hon. Friend said on 14th June. With regard to B.E.A.'s order, this is a matter for B.E.A.'s commercial judgment, bearing in mind that there are other aircraft available with British contributions.
  Mr. Dalyell: What advice does the Minister have for Rolls-Royce sub-contractors?
  Mr. Corfield: I have nothing further to add to my previous statement on that subject.
  Mr. Rost: Will my hon. Friend say whether his Department is investigating the prospect of using the RB211 engine in the VC10?
  Mr. Corfield: This and other matters are subject to consideration. They are only peripheral and do not in themselves, as I see it, justify the production of this engine.

  South Lancashire
  Mr. H. Boardmanasked the Secretary of State for Trade and Industry if, in view of the decline in employment in the textile and coal industries, and the threatened closure of Irlam Steel Works, he will now provide incentives for new industry in the south Lancashire area.
  Mr. Anthony Grant: An extension of assisted area status to South Lancashire could not be justified at present.
  Mr. Boardman: Whilst I appreciate that there is not much foot-loose industry at the present time, if the eventual closure of this steel works is confirmed, will the Minister act quickly to encourage alternative industry to go in?
  Mr. Grant: We have said that we shall keep assisted areas under constant review, and this will obviously be a factor which we shall take into consideration.
  Mr. Gardner: Will my hon. Friend keep a vigilant eye on the North-West of Lancashire and do what he can to encourage new industries to any part where present industries are in danger of failing or dying, especially bearing in mind the needs of areas such as Kirkham where the recent closure of a mill has caused serious unemployment?
  Mr. Grant: The answer to my hon. and learned Friend is "Yes, Sir", subject, of
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  course, to the overriding needs of areas worse affected.

  Machine Tool Industry
  Mr. Edelmanasked the Secretary of State for Trade and Industry what further support he proposes to give the machine tool industry in substitution for the assistance given to it by the Industrial Reorganisation Corporation.
  The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): Private financial institutions exist to provide expert advice to concerns requiring it as well as to organise the provision of finance in suitable cases.
  Mr. Edelman: Is the right hon. Gentleman aware that orders for machine tools are now at a record low figure, and that redundancies are continuing to rise? Does he agree that what is necessary for the machine tool industry is a general inflation of the economy in order to encourage investment and re-equipment of industry generally so that the machine tool industry may benefit from it?
  Mr. Davies: I am very conscious of the fact that the machine tool industry is particularly responsive to the climate of investment at any time. This is clearly a matter that I am keeping very much in mind.
  Mr. Dell: The Secretary of State has for some months had the report of the committee of inquiry into the machine tool industry. Can he say when he will announce the conclusions he draws from that report?
  Mr. Davies: I am indeed looking at the whole of the problems of the machine tool industry, and I have to see in due course whether these considerations give rise to any conclusions that I can usefully communicate.

  European Economic Community
  Mr. Laneasked the Secretary of State for Trade and Industry if he will list the industries which he expects to benefit from British membership of an enlarged European Economic Community.
  Mr. John Davies: Probably all United Kingdom industries are potentially

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  capable of benefiting from what would eventually be a greatly enlarged home market. Much would depend on the enterprise shown by individual firms.
  Mr. Lane: Is it not clear that most of British industry is eagerly looking forward, as my right hon. Friend has confirmed, to the opportunities presented by an enlarged Community, and is this not another reason why the whole nation should approach the prospect with confidence rather than with apprehension?
  Mr. Davies: My clear belief is that the balanced judgment of British industry generally is very much in favour of membership and believes that it will derive very great advantages from it.
  Mr. Benn: Will the Secretary of State give the House a categorical assurance that the White Paper, when published, will contain all the documents that may bear on industries other than steel and coal, which were recently commented on as the result of the negotiations that were conducted with the Six?
  Mr. Davies: I believe that the White Paper will give a very wide field for discussion of all the issues involved. To produce all the documents would, as the right hon. Gentleman knows, be quite impossible.
  Mr. Arthur Lewisasked the Secretary of State for Trade and Industry what will be the position after entry of joint trading and business arrangements concluded prior to British entry into the European Economic Community between countries and companies within the Six and the United Kingdom affecting both Government and private enterprise, giving details of individual agreements.
  Mr. John Davies: Bilateral trade arrangements between the United Kingom and France, Germany and Benelux, which relate to only a small part of our trade with those countries, would cease to apply in the transition period. Intergovernmental agreements and arrangements on technological projects will continue. It would not be possible to provide the details without a disproportionate expenditure of time and money. Agreements between United Kingdom and E.E.C. companies would have to accord with the rules of the Community.
  Mr. Lewis: That is a complicated answer. Can the Minister give an assurance that the White Paper will fully deal with this aspect? As I understand it, it will mean that we shall once again be on the losing end. The right hon. Member does not seem to be able to give us any facts or figures without spending an undue proportion of time and money. Is not he aware that the House and the country want to know what is happening? Instead of spending thousands of pounds issuing propaganda, let us have the facts and figures, and do not say that it costs money to get them.
  Mr. Davies: The hon. Member should be reassured to know that the changes in these arrangements will give rise to an expansion in trade rather than the contraction that he feared.

  "Southern Cross" and "Northern Star" (Missing Persons)
  Mr. John Hannamasked the Secretary of State for Trade and Industry how many missing persons have been reported from the liners "Southern Cross" and "Northern Star" during the period January, 1970 to June, 1971.
  Mr. Anthony Grant: During the period January, 1970, to June, 1971, three persons were reported missing from the "Southern Cross" and one from the "Northern Star".
  Mr. Hannam: I thank my hon. Friend very much for that reply, and also for the attention he has given to the case of a constituent. Does not my hon. Friend consider this to be a rather alarming number of cases to arise from two sister cruise ships? Does he consider that the present system of inquiry into deaths at sea is working satisfactorily? Will he not consider reopening the inquiry into this instance?
  Mr. Grant: I do not think that there is power to reopen inquiries. As to any coincidence between these two ships, it would be wrong to draw any conclusions. These were, as I understand it, different types of accident occurring in different circumstances at different times. The system by which we investigate these accidents can be improved, and this will be done when regulations are laid before the House as a result of the recent Merchant Shipping Act.

  Paper Bags (Charge to Customers)
  Mr. Kaufmanasked the Secretary of State for Trade and Industry whether he will seek powers to prevent shopkeepers from making a separate charge for paper bags without informing customers that this is their practice.
  The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley): No, Sir. I have no doubt that other shoppers are as alert as the hon. Member in ensuring that they are not overcharged, whether deliberately or by mistake, for goods they purchase, and that they react accordingly.
  Mr. Kaufman: But in a time of rising prices such as this why will not the Minister take action to protect shoppers from conning devices like this indulged in by an unscrupulous minority of traders? Why will he not take action to help housewives by drawing up a code of fair shopping practice?
  Mr. Ridley: We have had no complaint, other than that from the hon. Member, about this matter at all. I think that we should leave it open to the shopper to take or not to take a paper bag, and I do not believe that competition is not the best answer to this problem.

  Shirt, Collar and Tie Manufacturers' Federation
  Mr. Normantonasked the Secretary of State for Trade and Industry what correspondence he has had recently with the Shirt, Collar and Tie Manufacturers' Federation; what was the substance of their representations; and what action he proposes to take to maintain and promote he best interests of this section of manufacturing industry.
  Mr. Ridley: The Federation recently proposed a new origin marking order for men's shirts and pyjamas but has been informed that we do not consider that the arguments so far advanced justify such an order.
  Mr. Normanton: I thank my hon. Friend for his reply, but is he aware that there is still very considerable concern in this important and responsible section of British industry over his decision? With respect, my hon. Friend has not
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  replied to the final sentence in my Question, which asks him
  "… what action he proposes to take to maintain and promote the bests interests of this section of manufacturing industry."
  Mr. Ridley: I do not accept that the absence of an origin marking order will harm British industry. It is open to British industry, if it so wishes, to mark its goods "Made in Britain", if it believes that it will be to its advantage. I am certain that that is the right course for British industry to follow.
  Mr. Lipton: Is not the hon. Gentleman aware that the necktie often costs more than the shirt? Will he find out from this organisation why that is so?
  Mr. Ridley: I suggest that the hon. Gentleman takes the advice of his hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), and tries to do some better shopping.

  Steel Industry (E.E.C. Membership)
  Mr. Jayasked the Secretary of State for Trade and Industry whether he can give an assurance that the expansion of the British steel industry will not be limited by the European Steel and Coal Community in the event of the United Kingdom becoming a member.
  Mr. John Davies: Yes, Sir.
  Mr. Jay: In that case, will the Secretary of State now publish, so that hon. Members can have it, the memorandum on the subject from the European Coal and Steel Community which was presented to the Government on 4th May?
  Mr. Davies: No, Sir. If all the documents which are part of the negotiations were published, it would make negotiation exceedingly difficult—[HON MEMBERS: "Oh."] I realise that something that must be very approximate to the document has recently appeared.
  Mr. Michael Foot: Following the right hon. Gentleman's last reply, will he absolutely confirm to the House that the document originally published in The Guardian and republished today in the Financial Times is the authentic document? Second, will he confirm that the British negotiators made no objection to the document, and raised no point in

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  opposition to it? Third, will he confirm that it was the original intention of the Government not to disclose these discussions to the House or the country even in the White Paper, which is why the White Paper in this respect is now being rewritten?
  Mr. Davies: The hon. Gentleman would do very well to wait for the White Paper, when the matter can be fully discussed. The Guardian article was a commentary and did not pretend to be an exact reproduction of the document itself. But, as I say, the whole matter can better await the publication of the White Paper.
  Mr. Lane: Is not this another example of an anti-Market hare which is not going to run?
  Mr. Davies: Yes, Sir. I do not think that it has very far to run, I am bound to say.
  Mr. Foot: But since on New Zealand and on Commonwealth sugar the Government were perfectly prepared to claim that they had made objections to the original demands of the Community, even though eventually they conceded them in general, or in the main part, why does the right hon. Gentleman refuse to tell the House, and the people who work in the steel industry or the coal industry, what the response of Her Majesty's Government was when this document was lodged with them? If such information could be given on the other matters, why is it being withheld in this case?
  Mr. Davies: It is the Government's belief that the negotiators, at the time of the negotiation, handled the essential issues which surround these problems. As I say, the matter will be very much clearer when the White Paper is issued, and I suggest that it can better be discussed then.

  Industrial Development Certificates (Birmingham)
  Mr. Chapmanasked the Secretary of State for Trade and Industry how many industrial development certificates have been applied for within the city of Birmingham since 1st July, 1970; how many were granted; and what were the appropriate figures for the previous 12 months.
  Mr. Anthony Grant: In the period 1st July, 1970 to 31st May, 1971, 80 industrial
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  development certificates were issued in the Birmingham Group of Employment Exchange Areas and 10 were refused. The figures for the period 1st July, 1969 to 30th June, 1970 were 160 and 23 respectively.
  Mr. Chapman: While appreciating that the purpose of industrial development certificates is to encourage expansion of industry in the development areas, and my hon. Friend's greater flexibility to wards this matter, as instanced by the raising of the exemption level for expansion of industry from 3,000 to 5,000 sq. ft., may I ask whether he would be pre pared to go further and state categorically that, in looking at individual applications, if a firm can show that it cannot expand in a development area it will be allowed to expand in a non-development area, bearing in mind the recent example in the West Midlands where a firm has lost £100,000 by the refusal of an I.D.C. because it was not able to open up or expand—
  Mr. Speaker: Order. Supplementaries must be brief.
  Mr. Grant: As my hon. Friend said, one reason for the change in the figures was the I.D.C. exemption limit being raised from 3,000 to 5,000 sq. ft. It will not be practicable to change the policy generally in the way suggested by my hon. Friend. We operate a flexible policy. In Birmingham, modest expansion by firms which have strong ties with the area—expansion designed to improve efficiency—will be allowed subject to giving priority to development and intermediate areas.
  Mr. William Price: Is the hon. Gentleman aware that West Midlands Tory Members of Parliament have been arguing for years that all that the Midlands needed if they wanted industry was to get rid of the Labour Government? Is he aware that he has just about demolished the whole lot?
  Mr. Grant: I do not accept that. I am saying that with the limited supply of mobile industry it is important to give priority to the assisted areas.

  Rolls-Royce Ltd.
  Mr. Rostasked the Secretary of State for Trade and Industry when he expects to be in a position to make a

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  further statement on the price to be paid for the acquisition of Rolls-Royce Limited assets by Rolls-Royce (1971) Limited, and the basis upon which such a price has been calculated.
  Mr. Corfield: The determination of this price is a matter of considerable complexity, and is bound to take a substantial time. I cannot at the moment forecast when it will be possible to say anything further, but the parties concerned, of course, recognise the need for an early settlement.
  Mr. Rost: Does the Minister agree that the most valuable asset of Rolls-Royce is its goodwill, which includes the vast expenditure on research and development which absorbed the bulk of the capital which the company lost over the years, but without which the new company cannot make the profits which it appears to be making now? Will he confirm that this will be taken into account when the price is finally fixed?
  Mr. Corfield: An element of goodwill comes into this, but it is essential that we get the profit forecast accurate. By the time we have multiplied it by the number of years purchase, errors can turn out to be considerable sums.
  Mr. Whitehead: We have the word of the receiver that the purchase price for Rolls-Royce assets will very much depend on the final settlement of the RB 211 deal. Will the right hon. Gentleman tell the House what representations have been received from the United States Government about the continuation of British guarantees of support after 8th August? If he cannot do so, will he tell the House whether we shall have some statement on this matter before the recess?
  Mr. Corfield: I am not aware that the receiver has made the valuation in any way dependent on the continuation of the RB 211, for fairly obvious valuation reasons. I shall ensure that before the recess the House is kept up to date with the situation as it then stands.

  Miners (Redundancy Agreement)
  Mr. Skinnerasked the Secretary of State for Trade and Industry whether he is now in a position to consider a review of the miners' over-55 redundancy agreement to take account of inflation.
  Mr. Ridley: Yes, Sir. Preliminary work on the review is in hand and I hope shortly to be in a position to have discussions with the National Coal Board and the National Union of Mineworkers.
  Mr. Skinner: I am pleased that the Minister is getting on with the job which he promised on Third Reading of the Coal Industry Bill a few months ago. When he discusses the matter with the National Coal Board and, more particularly, with the N.U.M., will he take into account that he might take a line through, say, Lord Robens' recent award of about £2,500 after ten years' service? Bearing in mind that some of the miners get as low as 30 per cent. of take-home pay, taking into account real money values at the present time, will he see that the 90 per cent. is carried through on a proper basis?
  Mr. Ridley: We clearly appreciate the effects of inflation upon the scheme and, indeed, on other Government pension schemes, and we shall consider them all in that light.
  Mr. Varley: Is the hon. Gentleman aware that during the proceedings on the Coal Industry Bill the matter raised by my hon. Friend was fully discussed and a pretty firm undertaking was given by the Government that the erosion of the redundancy scheme would be taken fully into account in the discussions to which he has referred? If it is not taken into account, we on this side will regard it as a broken pledge.
  Mr. Ridley: The hon. Gentleman has no reason to regard it as a broken pledge. I said to his hon. Friend that we were continuing to take this into account and that we shall continue to do so in the discussions which will follow.

  Upper Clyde Shipbuilders Limited
  Mr. Millanasked the Secretary of State for Trade and Industry if he will now make a further statement about Upper Clyde Shipbuilders Limited.
  Mr. John Davies: No, Sir. The many questions answered in the House on this subject have explained the Government's position. As soon as I am in a position to make a further statement I shall do so.
  Mr. Millan: In view of the appalling unemployment figures on Clydeside, will

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  the right hon. Gentleman take it from me that no reconstruction of Upper Clyde will be acceptable unless it preserves all existing jobs? Will he impress that upon the four advisers whom he has appointed?
  Mr. Davies: I take note of what the hon. Gentleman said, but I feel sure that he will agree that, in the interests of the people employed there, the important thing is to have long-term viable and prosperous shipbuilding on Upper Clyde.
  Mr. Benn: As the liquidator has money to pay wages until 5th August, will the right hon. Gentleman assure the House that there will be no redundancies declared in Upper Clyde during the long recess?
  Mr. Davies: I shall have to look at the matter as soon as I have the advice of the team of experts which I have assembled to give advice on the subject and had an opportunity of talking further to the liquidator. At this stage I cannot go further than I have already gone.
  Mr. Lawsonasked the Secretary of State for Trade and Industry why he suspended credit guarantees in respect of ships being built by Upper Clyde Ship builders Limited.
  Mr. Ridley: I refer the hon. Member to my replies to the hon. Member for Glasgow, Craigton (Mr. Millan) and other hon. Members on 28th June.
  Mr. Lawson: Will the hon. Gentleman say how it is that his right hon. Friend can say that he had only 48 hours' notice of the difficulties of this concern, when it is quite clear from the answers we have had that his Department have been in touch with either the director or the company since mid-October of last year?
  Mr. Ridley: As I explained in answer to the last Question, we had doubts about the viability of U.C.S. in the autumn of last year. These doubts were resolved by the capital reconstruction and the injection of funds from ship owners which enabled the Government to grant credits again to U.C.S. The Government would certainly not have granted credits if they had not been confident about the viability of U.C.S. at that time.
  Mr. Buchanasked the Secretary of State for Trade and Industry if he will
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  publish in the OFFICIAL REPORT a copy of the letter dated 3rd May, 1971 written to his Department by Upper Clyde Shipbuilders Limited.
  Mr. John Davies: A letter sent by the company on 3rd May was published in the OFFICIAL REPORT on 28th June.—[Vol. 820, c. 9.]
  Mr. Buchan: I am aware of that, but will the Secretary of State make sure that his right hon. Friend the Prime Minister is aware of it, because he did not seem to realise the facts given in it last week. Is not this letter yet another example of the squalid conspiracy initiated by his hon. Friend the Under-Secretary to butcher Upper Clyde? Did not the letter make it perfectly clear that while the company was in a favourable trading position, the cash position was acutely difficult, which the right hon. Gentleman said that he did not know until 48 hours previously?
  Mr. Davies: I take it that the hon. Gentleman has either not read what I said or has not read the letter. The letter quite clearly accompanied a delayed statement on the state of the company at the end of March, which should have been in earlier. It was a delayed statement. The company declared in February its confidence in its own future. The Government accepted that, and renewed, as my hon. Friend has said, the provision of guarantees. The company only then, on 7th May, realised that it was not in possession of adequate knowledge about its financial future and commissioned a study of it. That study emerged on 7th June, when, for the first time, the company apparently realised that it was trading in deficit. It informed me of that matter 48 hours later, and 48 hours before it proposed to appoint a provisional liquidator. Those are the facts.
  Mr. John Robertsonasked the Secretary of State for Trade and Industry how much additional public money he has now committed to keep work going at Upper Clyde Shipbuilders Limited and to provide assistance for a reconstruction of the company.
  Mr. John Davies: As I said in the Answer I gave the hon. Member and others on 28th June, the best estimate of the Provisional Liquidator's total requirement from the Government until

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  6th August is £3 million.—[Vol. 820, c. 12.]
  Mr. Robertson: Does the Secretary of State agree that the proposed reconstruction might have been carried out at less cost to the taxpayer and with less disruption to the industry if there had been an outright acquisition by the Government?
  Mr. Davies: No, I do not think so. In fact, it was not even practicable because of the inadequate notice which the Government had of the liquidation. I doubt even so that it would have been a sensible solution. The right solution is the solution that the Government are pursuing, to try to bring about a viable, effective reconstruction on the Clyde. I greatly hope that this will be the outcome of these affairs.
  Mr. Benn: Will the Secretary of State now give the House his estimate of the total cost falling on public funds from the redundancies expected due to the reconstruction?
  Mr. Davies: No. I have said earlier that at present it is impossible to say what the employment outcome will be on the Upper Clyde, so clearly the right hon. Gentleman's question cannot be answered. However, as the right hon. Gentleman seems singularly unable to see the difference between the two, it is worth while my mentioning that to put in £3 million to procure a healthy construction is much better than putting in successions of £6 million to bolster up.
  Mr. Rankinasked the Secretary of State for Trade and Industry what is the number of ships presently under construction at Upper Clyde Shipbuilders Limited; those ready for launching; and the total number on the order book.
  Mr. Ridley: Work is proceeding on 14 ships, of which six have been launched and are fitting out. Two more of these ships are expected to be launched by the end of July. The total order book is 31 ships.
  Mr. Rankin: Does the hon. Member agree that ships under construction, ships ready for launching and ships on the order book all represent potential wealth? Will he promise that money will always be forthcoming to make that potential
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  wealth a real thing in the community life of Scotland—and of England, too?
  Mr. Ridley: Whether it is in the interests of all concerned to complete a specific contract is a matter which the liquidator is by law bound to consider, and it would be wrong for me to seek to interfere with him.
  Mr. Rankin: On a point of order. Here is an issue of almost life and death—[Interruption.] Of course it is. Instead of the Minister's giving an answer that includes his responsibility he seeks to shove it on to the liquidator, over whom we have no control.
  Mr. Speaker: The hon. Member knows that that is not a point of order.

  New Towns, Scotland (Special Development Area Status)
  Mr. Eadieasked the Secretary of State for Trade and Industry if Her Majesty's Government has reached a decision on future special development area status for new towns in Scotland that are at present excluded.
  Mr. Anthony Grant: No, Sir. But the Government hope to be in a position to announce a decision shortly.
  Mr. Eadie: Is the hon. Gentleman aware that there is great concern in, for example, the new town of Livingstone at the Government's delay in announcing a decision? Is he aware that a favourable decision would mean a considerable boost to morale in Livingstone?
  Mr. Grant: I appreciate that very much. The hon. Gentleman has repeatedly urged it upon me. We have to weigh the consequences of a further extension of S.D.A. status. We can justify it only if these towns can make a substantial contribution to solving the problems of the new S.D.As. We have completed our discussions with the Development Corporation. The Government are considering the matter and I hope that we shall be able to make an announcement fairly soon.

  Exports to Australia
  Mr. Redmondasked the Secretary of State for Trade and Industry what was the value of British exports to Australia in 1968, 1969 and 1970, respectively; and what proportion of this is

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  represented by the products of the shipbuilding industry.
  Mr. Anthony Grant: £321 million, £323 million and £346 million respectively, of which ships and boats represented between 1 and 1½ per cent.
  Mr. Redmond: Does my hon. Friend agree that these figures do not show that Australia has been particularly anxious to give assistance to British industries in need of support? Have any representations recently been made to Australia on that subject?
  Mr. Grant: I do not entirely accept everything said by my hon. Friend. I am not aware of any representations having been made in that respect.

  Shipbuilding Industry Board (Credits)
  Mr. Douglasasked the Secretary of State for Trade and Industry if he will give details of the total value of credits sanctioned by the Shipbuilding Industry Board for shipowners in the period October 1970 to March, 1971.
  Mr. Ridley: In the period 1st October, 1970, to 31st March, 1971, the Shipbuilding Industry Board recommended applications for guarantees involving a potential liability of £89 million.
  Mr. Douglas: I thank the hon. Gentleman for that answer. Will he explain why the guarantees for shipowners with orders with U.C.S. were held up apparently solely on the basis of an informal discussion between officials in his Department and the Government's director without any documentary evidence whatsoever?
  Mr. Ridley: The Shipbuilding Industry Board's director who is there to watch the interests of the Board, which has invested or loaned Government money, quite rightly drew the attention of the Government to the condition of U.C.S. finances. Therefore, the Government were bound, under the legislation, to take notice whether they should continue to issue guarantees for a company whose financial viability was in question.

  Glasgow (Official Visit)
  Mr. William Hannanasked the Secretary of State for Trade and Industry if he will pay an official visit to Glasgow.
  Mr. Lambieasked the Secretary of State for Trade and Industry if he will visit Glasgow and address the employees of Upper Clyde Shipbuilders Limited.
  Mr. Tom McMillanasked the Secretary of State for Trade and Industry if he will pay an official visit to Clydebank.
  Mr. John Davies: I visited Glasgow on 14th May. I will bear the possibility of a further visit in mind.
  Mr. Hannan: Will the right hon. Gentleman go a little further and give a firm date, because thousands of trade unionists want to convey to him, in firm inelegant language, what they think of the Government's policy? In view of the accumulated evidence from some of the replies which he himself has given, and in view of the conflicting statements of the events leading up to the introduction of the liquidation, does not the right hon. Gentleman consider that the Government have been far too precipitate in this decision? Will he go to Glasgow and re-examine all the facts on the spot?
  Mr. Davies: I have the advantage of the guidance of a group of experts and of the liquidator. This will provide me with a great deal of information which will be of great help. However, the truth is that the precipitate action of the Government, to which the hon. Gentleman refers, was brought about by the extraordinarily precipitate action of the company, which suddenly realised that it was in deficit without the least warning to anybody.
  Mr. Rankin: When the right hon. Gentleman went to Glasgow, did he find out how many ships were being built in the shipyards in Glasgow? Is he saying that those ships which were being built, and are now being built, have no backing from the Government?
  Mr. Davies: On the contrary, were it not for the Government's timely aid, the 14 ships currently being built in the yards of Upper Clyde Shipbuilders would not now be being built. The whole of the work force would have been dissipated and the work would not now be going on. The hon. Gentleman should certainly not reproach the Government for failure to act in this matter.

  Mercury Cell Batteries
  Mr. Pavittasked the Secretary of State for Trade and Industry if he will now refer the manufacture of mercury cell batteries used in post-aural hearing aids to the Monopolies Commission because of increases in their price over the last 12 months.
  Mr. Ridley: I would refer the hon. Member to the reply which I gave him on 1st March.—[Vol. 812, c. 301–2.]
  Mr. Pavitt: I am very grateful for that reply, which shows me that we are, for the first time, having some imports from Germany, which is the only competitor to the British manufacturer. As these batteries are used heavily by deaf people and by the hospital services, would the Minister have another look at this matter with a view to doing something so that they are not only in those two hands?
  Mr. Ridley: I have told the hon. Gentleman in the House on several occasions that we are watching the position very closely. If evidence is produced which suggests that a reference would be appropriate, I would not hesitate to make it.

  Banking (Competition and Credit Control)
  Dr. Gilbertasked the Secretary of State for Trade and Industry when he hopes to be able to announce further proposals for dealing with the bank cartel.
  Mr. Ridley: I would refer the hon. Member to my right hon. Friend's reply to his Question on 14th June.—[Vol. 819, c. 7.]
  Dr. Gilbert: Does the hon. Gentleman realise that now that the Treasury has come forward with this proposal for breaking up the cartel regarding interest rates, there is no excuse left whatsoever for not dealing with other aspects of the cartel's collusive practices in relation to services, charges and so on? Can we hope for some action from the hon. Gentleman's Department on this matter?
  Mr. Ridley: The hon. Gentleman must await the outcome of the talks between the banks and my right hon. Friend the Chancellor of the Exchequer on the future relationship between the Government and
  916
  the banks, and then we shall see what developments take place.
  Mr. Orme: Is not the Minister aware that there is public concern at the dramatic lowering of standards by British banks, especially following many of the mergers that have taken place? Something has to be done about this, and the Government have a duty to look into the matter.
  Mr. Ridley: The hon. Gentleman's Administration slept on this problem for six and a half years, but my right hon. Friend has already announced plans for reforming the whole system under which banking will operate in this country.

  Generating Plant (Manufacturing and Installation Faults)
  Mr. David Stoddartasked the Secretary of State for Trade and Industry if he will seek powers to compensate the Central Electricity Generating Board for the additional cost of out-of-merit running of generating plant due to the late commissioning and below capacity running of 500 megawatt turbo-alternators due to manufacturing and installation faults.
  Mr. Ridley: No, Sir. Consequential costs arising from the non-availability of plant are the responsibility of the C.E.G.B.
  Mr. Stoddart: That answer was not unexpected, but is the hon. Gentleman aware that the C.E.G.B. has lost tens of millions of £s as a result of slow commissioning of this plant and that many of the 500 megawatt sets are still not running at full capacity? Is this not the opportunity for the Government to do something about cutting a very significant price at a stroke?
  Mr. Ridley: If the C.E.G.B. has such difficulties, it is up to the Board to avoid them in the future. It would be wrong to expect others to subsidise the C.E.G.B. for purposes which are within its control.
  Mr. Palmer: Are there not penalty clauses in all these contracts? Could the hon. Gentleman explain why the C.E.G.B. seems almost reluctant to invoke penalty clauses against manufacturers?
  Mr. Ridley: The C.E.G.B. behaves completely commercially and properly in

  917
  this matter. I know of many occasions upon which it has invoked penalty clauses.

  New Firms (Scotland)
  Mr. William Hamiltonasked the Secretary of State for Trade and Industry how many new firms have been established in Scotland in the last nine months; how many have been closed; and what has been or will be the net gain in jobs provided.
  Mr. Anthony Grant: I regret that the precise information is not available. But in the period 1st September, 1970, to 31st May, 1971, 131 industrial development certificates were issued in Scotland which are estimated to give rise to nearly 9,200 jobs when the projects are fully manned. In the same period 110 closures of manufacturing establishments involving 8,300 redundancies were notified to the Department of Employment.
  Mr. Hamilton: Can the hon. Gentleman give comparable figures for the last five or six years so that we may know the trend? Is he aware that there is enormous despondency in Scotland because of the callous policies of the Government, and that there is no sign of recovery in Scotland? On the contrary, all the signs are that things will get worse before they get better—if they get better.
  Mr. Grant: On the first point, I cannot give the hon. Gentleman such lengthy figures without notice. If he puts down a Question, I shall be glad to do so. Nor do I accept the extravagant and depressing language he used. It might be worth his while to bear in mind that there has been a marked improvement in I.D.C. approvals for the area and for projects over 10,000 square feet, in project numbers, floor space and estimated additional employment for the period March-May, which are all higher than the corresponding period last year.

  Committee on Marine Technology
  Mr. John Hallasked the Secretary of State for Trade and Industry when the Committee on Marine Technology was first established; how much it has cost to maintain during its existence; and what have been the results achieved to date.
  Mr. Corfield: The Committee on Marine Technology was established in April, 1968. Its costs amount only to an appropriate share of the salaries of the members and incidental expenses. It has no executive functions, but a number of useful studies have been completed or are in hand, some of which have already resulted in industrial project.
  Mr. Hall: I do not quite follow my right hon. Friend's reply to my Question about costs. Does he think that the amount of money that has been spent on this Committee so far has resulted in value for money? Does he expect that the Committee will be able to make a useful contribution to marine technology which will justify the amount that will be spent on it in the future?
  Mr. Corfield: The approximate apportionment of the cost of the salaries to which I referred comes to £8,000. Many of the projects that have been studied and which have developed into industrial projects with, we hope, commercial potential, provide a good return. Nevertheless, these are matters which are being considered in relation to the whole field of Government research.
  Mr. Dalyell: What has become of the Labour Government's White Paper on marine technology?
  Mr. Corfield: I think that it is probably in the wastepaper basket.

  Concorde
  Mr. Sheldonasked the Secretary of State for Trade and Industry if he will make a further statement on Concorde.
  Mr. Corfield: I have nothing to add to the reply my right hon. Friend gave to the hon. Member on 14th June.—[Vol. 819, c. 20–21.]
  Mr. Sheldon: What is the right hon. Gentleman's latest estimate of development costs for this aircraft? What is the position now about a decision on full-scale production? Is the right hon. Gentleman aware that he has promised us such a decision? What is causing the greatest anxiety is that this matter goes on and on, more money is being spent, and the decision is likely to be taken when the aircraft are on the runway waiting for a buyer?
  Mr. Corfield: I cannot accept the latter part of the hon. Gentleman's remarks. As I have explained to the House over and over again, the whole problem is that no final decision to give the full go-ahead on the production programme can be given until the market is clearer. I have nothing to add on the subject of total estimated development costs to what I said on the last occasion when I addressed the House on this subject when I gave a figure of £885 million.
  Mr. Adley: Is my right hon. Friend aware that United Airlines has just renewed its options on Concorde and that K.L.M. has, for the first time since the cancellation of the United States S.S.T., expressed a serious interest in the plane? Will he ensure that this interest is encouraged over the next few months which are likely to be the most difficult period before the world airlines start to place orders for the plane?
  Mr. Corfield: The next few months are likely to be crucial. I entirely accept what my hon. Friend said about the airlines which are showing an interest.
  Mr. Benn: When does the right hon. Gentleman expect orders? Do the Government take seriously the Press reports which came from France of an interest from China in the purchase of Concorde?
  Mr. Corfield: In so far as there is any interest on the part of China it is at a very early stage and I should not like to commit myself in any way. I do not think that we can expect firm orders at any rate in the next three months.
  Mr. Onslowasked the Secretary of State for Trade and Industry what is his latest estimate of the total workforce employed on the Concorde programme in the United Kingdom.
  Mr. Corfield: About 25,000.
  Mr. Onslow: As my right hon. Friend will have noticed again this afternoon the anxiety of the hon. Member for Ashton-under-Lyne (Mr. Sheldon) and his hon. Friends that this project should be cancelled and all those engaged on it thrown out of work, will he repeat that figure still more loudly, for their benefit?
  Mr. Corfield: Yes. Twenty-five thousand currently, rising after full production is reached to 35,000.
  Mr. Leslie Huckfield: Can the Minister give me any idea of the workforce employed on the Concorde project in Coventry today?
  Mr. Corfield: No. I have no breakdown from area to area, but about two-thirds are employed in the Bristol area.

  Unemployment (Lanarkshire)
  Mr. James Hamiltonasked the Secretary of State for Trade and Industry what representations he has had from the Lanarkshire Development Council for a meeting to discuss unemployment in the county; what reply he has sent; and if he will make a statement.
  Mr. Anthony Grant: The Lanarkshire Development Corporation has asked me to receive a deputation. Arrangements are being made for a deputation to be received in the near future.
  Mr. Hamilton: I thank the hon. Gentleman for that reply. Is he aware that the reply that he sent to the Lanarkshire Development Council was not greeted with a great deal of enthusiasm? As in the county of Lanark 7·9 per cent. of the insurable population is unemployed, which figure does not include school leavers who have not been taken care of, will the hon. Gentleman now assure us that he will meet the premier Development Council as quickly as possible to try to give the Council an insight into what the Government's policy is for solving this very serious problem?
  Mr. Grant: I am looking forward to meeting the Council and to judging its degree of enthusiasm or otherwise. I will try to arrange a meeting as soon as possible. No doubt all these matters can be discussed. At the same time we can reflect that there has been a marked improvement in I.D.C. approvals and a substantial increase in applications for local employment assistance and other financial assistance recently.
  Dame Irene Ward: As I was in very early consultation with my right hon. Friend the Chancellor of the Exchequer on this very important matter, may I have an assurance that Members of Parliament of both parties will be on the deputation so that we can have a balanced consideration of this issue?
  Mr. Grant: I shall always be delighted to see my hon. Friend at any time mutually convenient to us, but this meeting relates to Lanarkshire.

  Lockheed Aviation
  Mr. Whiteheadasked the Secretary of State for Trade and Industry what plans he has to seek to give evidence before the Banking Committee of the United States House of Representatives currently investigating the proposed guarantee to Lockheed Aviation.
  Mr. Corfield: The Chairman of the Banking and Currency Committee of the United States House of Representatives has asked the British Government to give evidence on this subject. He has been told in reply that we do not propose to put forward witnesses but are prepared to make a further written statement, if that would be helpful to the Committee.
  Mr. Whitehead: I appreciate that we should be under no illusions as to the motives of those who may wish the Government to testify before this Committee, but is the Minister aware that the situation has changed significantly since similar requests came from the Senate Committee, first because there is now no prospect of the necessary legislation going through the two Houses of Congress before 8th August and, second, because the British Government's guarantee of further financial support for this engine and for this great project will itself run out in four weeks' time? Is the Minister therefore aware that, if he wishes to continue to have bipartisan support in the House for his efforts to rescue this engine, there must be an unequivocal statement that further support for the RB211 is forthcoming?
  Mr. Corfield: The hon. Gentleman does not help his constituents or anybody else by pressing for a statement of that sort at present.
  Mr. Fletcher-Cooke: Is there any precedent for the British Government giving any evidence before a Committee of either House of the American Congress?
  Mr. Corfield: I believe that there are precedents where they have given evidence on purely technical matters but not on matters affecting policy.
  Mr. Sheldon: Is the Minister aware that his answer to my hon. Friend the Member for Derby, North (Mr. Whitehead) was inadequate? The House has a right to ask him what he intends to do in the event of Congress not agreeing to go ahead with the loans to Lockheed. What is the Government's intention? Do they intend to carry on producing the engine, awaiting the final outcome in the United States?
  Mr. Corfield: My right hon. Friend made it perfectly clear the other day that, in the event of no decision being reached on 8th August, we, together with the other parties involved—that is, the two companies and the United States Government—would get together and decide what to do collectively. That is the only sensible way of behaving.

  Furs and Skins (Imports)
  Mr. James Johnsonasked the Secretary of State for Trade and Industry if he will make a statement regarding the extent of imports into the United Kingdom of furs and skins of the jaguar, leopard, cheetah and ocelot; and whether he will now introduce a Bill banning their import, on the lines of the Endangered Species Bill of the United States of America, a copy of which has been sent to him.
  Mr. Anthony Grant: The official statistics do not show separately imports of furs and skins of the particular species mentioned. As my right hon. Friend informed the hon. Member for Islington, North (Mr. O'Halloran) on 14th June, he will consider the practicability of controlling imports of furs and skins of certain rare animals as soon as he has the necessary technical information. Powers to restrict or ban imports are available under existing legislation.—[Vol. 819, c. 3–4.]
  Mr. Johnson: Is the Minister aware that the extensive and vicious commercial poaching that is going on in East Africa, South America and Asia—poaching that is encouraged by the wealthy ladies of leisure in London, who wear these skins on their backs—is connived at by Her Majesty's Government, who will not pass legislation? Will not he attempt to get

  923
  us in line with the Americans, who are doing something in this field?
  Mr. Grant: The hon. Member is a little unfair to Her Majesty's Government. I banned the import of vicuna, which I think was a wise decision. We are wholly sympathetic to the needs to conserve species which are in danger of dying out. We have had meetings and have considered the representations of the British Fur Trade Association. We are sympathetic to what it does, and at the moment we are awaiting further technical information from it.

  Nuclear Design and Construction Grouping
  Mr. Palmerasked the Secretary of State for Trade and Industry if, in view of the continued failure of the British nuclear industry to export reactors and the inability of the generating authorities to provide enough work for two nuclear manufacturing groupings, he will take steps to revise the recommendations of the former Industrial Reorganisation Corporation and apply the recommendation of the Select Committee on Science and Technology in the last Parliament for the creation of one British nuclear design and construction grouping.
  Mr. Corfield: This question is primarily one for the industrial interests involved. In any case it would be appropriate for my right hon. Friend to take account of the results of the current review of reactor programmes before forming a view on the hon. Member's suggestion.
  Mr. Palmer: Does not the right hon. Member agree that the position of the nuclear reactor industry at the moment is very serious, and that, in retrospect, the Select Committee has been shown to have had considerable insight into the future? Secondly, can the Minister tell us what the Vinter Committee is, and when is proposes to report?
  Mr. Corfield: I agree that the situation in this industry is very difficult at the moment, but I am sure that the hon. Member will agree that whatever foresight the Select Committee showed, it ultimately agreed that it was sensible to go for two companies instead of one. The
  924
  Vinter Committee is carrying out a purely Departmental study of reactor problems, together with the C.E.G.B. We hope that it will report in about October.
  Mr. Eadie: Does not the Minister agree that the implication of this Question is that Government representatives should apologise at the Dispatch Box for making miners unemployed and for closing pits, on the false premise that nuclear power would be cheaper than coal? Will not he reconsider this question, with a view to trying to institute a real nuclear power programme, rather than continuing to fuss about as he is at present?
  Mr. Corfield: It is precisely because there was so much fussing about in the past that we are having a jolly good review of the situation.
  Sir H. Legge-Bourke: I do not underestimate the difficulties of coming to a decision in this matter, but will my right hon. Friend give careful consideration to the recommendation of the Select Committee on the export aspects of this problem, in respect of which it had some constructive suggestions to make?
  Mr. Corfield: I accept that, but it is right to point out that in the light of the situation then ruling the Select Committee agreed with the proposals of the previous Government that two companies were most suitable in those circumstances. I agree that the matter now needs reviewing, and that is what I am doing.

  Charter Flights
  Mr. Leslie Huckfieldasked the Secretary of State for Trade and Industry whether he will make a statement about his recent change of policy on charter flights from the United Kingdom in larger aircraft by fifth freedom carriers.
  Mr. Anthony Grant: I refer the hon. Member to the reply given by my right hon. Friend the Minister for Trade to my hon. Friend the Member for Woking (Mr. Onslow) on 17th June.
  Mr. Huckfield: As I am sure the hon. Member is aware, that reply was not very informative. Is he aware that it represents nothing but a few sniping shots in what is becoming a charter bilateral war with the United States? Would not he do far better by offering a more comprehensive review of charter rates and by

  925
  supporting B.O.A.C. in its endeavour to reduce fares in Montreal this week?
  Mr. Grant: We are reviewing the complex position of charters. What the hon. Member says will be borne in mind, but I am not able to announce a change of policy at this moment.
  Dr. Gilbert: Will the Minister take note of the extraordinary reduction of fares reported in newspaper articles? They are so far out of line with the fares on the scheduled routes that even the more respectful citizens will be tempted by them. Is the Minister aware that that is not a healthy state of affairs and that something needs doing urgently?
  Mr. Grant: I accept that. We are aware of it and are reviewing the position carefully. But it is largely an international problem.
  Mr. Kenneth Lewis: Can my hon. Friend say when he is likely to reach a decision that no changes are required in this matter? The situation now is becoming somewhat chaotic on both the schedule and the charter side and something should be done.
  Mr. Grant: I am not in a position to say when this will be completed, but my right hon. Friend and I will take note of the urgency expressed by hon. Members on both sides of the House.

  Aircraft Industry (Australian Purchases)
  Mr. Scott-Hopkinsasked the Secretary of State for Trade and Industry what was the value of Australian purchases of the products of the British aircraft industry in 1968, 1969 and 1970, respectively.
  Mr. Corfield: £11 million, £8 million and £5 million, respectively.
  Mr. Scott-Hopkins: Does not my right hon. Friend agree that those figures show a considerable drop in the last three years, and underline yet again the fact that the Australian economy in this sector is looking elsewhere than to Britain—particularly towards America—for its exports and imports?
  Mr. Corfield: Yes. I believe that in this field about 80 per cent. of Australian imports come from North America and only 6 per cent. from the United Kingdom.
  Mr. Russell Kerr: Is the Minister aware that many Australians' enthusiasm for British exports began to expire with the first of our series of attempts to enter the Common Market?
  Mr. Corfield: There was a certain sign of their expiring at the time of the TSR2 decision.

  Companies Act (Review)
  Mr. Costainasked the Secretary of State for Trade and Industry what progress is being made with his review of company law.
  Mr. Carterasked the Secretary of State for Trade and Industry what progress he has made towards proposals for a revised Companies Act.
  Mr. Ridley: The work is still in its early stages, but we are pressing on as fast as possible.
  Mr. Costain: Is not my hon. Friend able to give us an approximate estimate in months of when it is likely to be completed?
  Mr. Ridley: It is a major task, and there is a great deal of consultation and discussion to take place in the course of the review. I cannot yet give my hon. Friend any indication when we may come to a conclusion.
  Mr. Arthur Lewis: Rather than review the company law, why does not the Minister ensure that his Department carries out the existing law, which it continually refuses to do? Although about 20 companies now have been milking the public, not one of the Ministers at the Department will take any action to enforce the law which is laid upon them by Statute.
  Mr. Ridley: That is not the impression which a good many company directors have of my Department. I put it to the hon. Gentleman that the review of comany law to which I have referred gives him a way by which he can help constructively to improve the arrangements for the future.
  Mr. Normanton: Will my hon. Friend give an assurance that in this review of company legislation he will pay particular attention to the long-standing and continuing problem caused by the way in

  927
  which the interests of minority holders of equities are prejudiced? This is a long-overdue reform, and I earnestly hope that my hon. Friend will pay close attention to it.
  Mr. Ridley: I assure my hon. Friend that this is one of the matters which we are considering and which arises out of the Jenkins Committee's recommendations.

RAILWAY ACCIDENTS (WAVERTON AND SURBITON)
Sir J. Foster (by Private Notice)Sir J. Foster (by Private Notice) asked the Secretary of State for the Environment whether he will make a statement on the railway accident which occurred at Waverton, Cheshire, on 2nd July.
The Minister for Transport Industries (Mr. John Peyton): At 6.20 p.m. on Friday, 2nd July, 1971, the last two coaches of the 10-coach 5.19 p.m. school excursion train from Rhyl to Smethwick were derailed while travelling at a speed of about 55 m.p.h. approaching Tattenhall Junction, near Waverton. Both coaches struck a bridge and were extensively damaged; the last coach broke away and turned over on its side.
The train was carrying many school children. I much regret to inform the House that two of them were killed. Twenty-nine persons were taken to hospital, nine of whom, including six children, were detained.
I am sure that all right hon. and hon. Members will wish to join me in extending sympathy to the relatives of the two children who were killed and to all those injured.
One of the Department's inspecting officers of railways visited the site and found that the accident's immediate cause was a considerable buckle in the track, which was of traditional jointed construction, not continuously welded.
A public inquiry into the accident has been ordered and will take place as soon as possible.
Mr. Walden: The schoolchildren involved in the accident were from Benson Road school in my constituency. I thank the right hon. Gentleman, as I know my constituents will thank him, for his expressions of sympathy, with which I asso
928
ciate myself. Also, on behalf of my constituents, I thank the police and the various hospital staffs, particularly in Chester, who have done so much in this tragedy.
May I put one question to the Minister, without in any way wishing to prejudge the inquiry? If it should transpire that there is a structural fault involved here which could cause a similar occurrence somewhere else, will he ensure that urgent steps are taken to see that something is done?
Mr. Peyton: Yes, Sir. I thank the hon. Gentleman for his generous remarks. If the inquiry throws up any cause or need for action, action will, of course, be taken.
Mr. Temple: Is my right hon. Friend aware that, because there was an excellent emergency plan in operation, all the various authorities, including the voluntary authorities, were able to swing into action quickly, otherwise the casualties would have been much greater?
Mr. Peyton: Yes, Sir. I am sure that my hon. Friend's remarks will give great satisfaction to those who had an opportunity to help.
Mr. Bradley: I associate all my right hon. and hon. Friends with the right hon. Gentleman's expressions of sympathy to the bereaved and to all who were injured in this tragic accident. I am sure that it would be wise to await the outcome of the inquiry which the right hon. Gentleman has announced, but could he at this stage say whether modern coaches were involved in this incident? Second, having in mind, also, the mercifully less serious accident at Surbiton yesterday, does the right hon. Gentleman accept that there is some public concern now about the safety standards set by British Rail? Will he take this opportunity to confirm that everything possible is being done to maintain our railways' hitherto good record in this respect, in accordance with the Chief Inspecting Officer's Report and recommendations for 1969?
Mr. Peyton: I am obliged to the hon. Gentleman for what he says. The answer to his question about rolling stock is that they were modern coaches. The hon. Gentleman has rightly drawn attention to public concern. There will always be concern when accidents of this kind take place, with tragic consequences, but

929
I am sure that he will be the first to agree that it would be wrong to let these things get out of proportion, since British Rail has a very creditable safety record.
Mr. Fisher: My right hon. Friend has decided to hold a public inquiry into the distressing accident at Waverton. Does he intend to hold a public inquiry into the Surbiton accident yesterday, which, although mercifully without fatal consequences, totally disrupted the whole railway service in that area?
Mr. Peyton: My hon. Friend is absolutely right; this was, potentially, a very serious accident. It caused great interruption to traffic and could have had far worse consequences than it did. There will be a public inquiry.
Mr. Rankin: Will the right hon. Gentleman keep in mind also that, in a short time, we shall be running trains between London and Glasgow at 100 m.p.h? Will he bear in mind the need for the coaches to embody the greatest possible safety measures? Second, could he say whether the rails at the point of the Waverton accident were of the modern type which will carry the new fast expresses?
Mr. Peyton: I was careful to say in my original answer—indeed, I am almost grateful to the hon. Gentleman for making me say it again—that it was not continuous welded rail involved in this accident. As regards the London-Glasgow trains. I am absolutely certain that the railways will have very much in mind the need to maintain safety standards. It would be wrong to suggest that they ever fall short in the desired standard of care, and I am absolutely satisfied that no effort is spared to ensure that the public have the highest safety standards provided for them.

WAYS AND MEANS

  Purchase Tax
  3.38 p.m.
  The Minister of State, Treasury (Mr. Terence Higgins): I beg to move,
  That it is expedient to provide that the functions conferred on the Commissioners of Customs and Excise by section 6 of the Purchase Tax Act 1963 (registration, &c, of wholesalers, manufacturers and others) shall be exercisable, and, together with the corresponding functions conferred on the Commissioners by the enactments repealed by that Act, treated as having always been exercisable, by any officer of customs and excise.
  I suggest, Mr. Speaker, that it would be for the convenience of the House to discuss at the same time new Clause No. 7 to the Finance Bill, "Purchase tax—exercise of functions of Commissioners with respect to registration, etc." Is that agreeable?
  Mr. Speaker: If that be the wish of the House, I willingly agree.
  Mr. Higgins: The effect of the Ways and Means Resolution and the new Clause to the Finance Bill associated with it is to delegate to officers of Customs and Excise the functions of the Commissioners in relation to the registration of purchase tax traders and to remove doubts as to the validity of the past exercise of those functions.
  In two recent law cases, there has come to light a loophole in the machinery which, although it can be regarded as a mere legal technicality of no real substance or merit, is nevertheless a weakness in the legal basis of the tax which fundamentally affects its operation and which, I am sure the House will agree, cannot be allowed to continue.
  The law cases in question concerned the prosecution by the Department of certain registered traders for failure to make returns of the tax for which they were accountable as required by Regulation 7 of the Purchase Tax Regulations, 1965. It was argued by the defence in the first case that it was necessary for the prosecution to show that the registration of the trader, which had been effected some years ago, had been carried out by an official authorised to do so.
  The point here is that under the law, which is now Section 6 of the Purchase

  931
  Tax Act, 1963, the duty of registering traders is laid upon the Commissioners. They have delegated the work of registration to the Customs and Excise officers responsible for the purchase tax control of traders, and the officers' authority under that delegation is supported by Section 4(1) of the Customs and Excise Act, 1952, the relevant part of which says:
  "Any act or thing required or authorised by or under any enactment to be done by the Commissioners or any one of them may be done—
  (c) by any other person authorised generally or specially in that behalf in writing by the Commissioners."
  The question of authorisation of officers under that provision had previously been considered by the courts in a different context in 1962 and again in 1967. In those two cases a written authority under Section 4(1) had not been given, but there was no difficulty in regularising the position ad hoc. However, the opportunity was taken to consider the question of authorisation generally, and as a result a document was drawn up and signed by the then Deputy Chairman of the Board of Customs and Excise in December, 1969, which formally authorised, both generally and specially, the various grades of officer to whom have been delegated functions which in law are laid upon the Commissioners.
  Unfortunately, the point at issue in the prosecution in the cases to which I have referred concerns the authority of the officer at the time when the registrations were effected, several years before the authorisation of December, 1969. The court decided in the first case that as no authority covering the officer's action had been produced, there was no evidence of registration, and the summonses were accordingly dismissed.
  In the interval between that decision and the decision in the second case, a document was drawn up and signed by the Commissioner concerned which sought to ratify registrations effected before the general authority of December, 1969. But when that document was produced in the second case, the court ruled that it could not be accepted as applying in criminal cases.
  Clearly, we need to resolve the situation. The great majority of the 73,000
  932
  purchase tax traders were registered before the general authority of December, 1969, and it is on the validity of that registration that most of the purchase tax revenue depends. The House will agree that the common sense of the situation is that the officers who effected the registrations were properly appointed members of the Department who had been instructed to undertake the work of registration and had been issued with a set of printed instructions. All that is missing is a document formally delegating to them the registration work which in law is laid on the Commissioners. The purpose of the Motion is to close this technical loophole in the law.
  Mr. Robert Sheldon: I am in some difficulty, because the annotated copy of the 1963 Act is missing from the Library. As a result, any investigation into what the Minister has explained has not been carried out in the way in which many hon. Members wishing to consult the references would wish.
  Is any prosecution now being undertaken, and will any such prosecutions be affected by the Motion?
  3.45 p.m.
  Mr. Charles Fletcher-Cooke: It sounds very simple to say that the delegation concerned should be allowed, and that it should be allowed retrospectively. But the question whether he is registered or not can mean a great deal to a businessman. Some who are not registered think that they should be, and some who are registered think that they should not be.
  Is there any statutory appeal against refusal to register or against a registration. The Commissioners are persons of some distinction, whose judgment in the matter might reasonably be taken as final, although I am always in favour of an appeal being provided if possible. But when discretion is delegated to a great number of officers, and if at the same time an appeal is not provided for, rather different considerations arise. My hon. Friend may well reply that I should have taken that objection, if it be an objection, in 1969, when the general Order was laid, and that all we are doing now is to regularise the 1969 position by making the power to delegate retrospective. That is a very small and narrow

  933
  point, and it is not the point that I am on. That I readily concede, but if there is no provision for an appeal, does not my hon. Friend think that there should be, since delegation has taken place, and presumably will take place, pretty widely, and the discretion in future will not remain with those very distinguished and highly respected officers, the Commissioners of Customs and Excise?
  Mr. Joel Barnett (Heywood and Roy-ton): Apart from the very small ones, all the manufacturers are registered, but wholesalers in particular have frequently had difficulty, in some cases where they wanted to register and were not allowed to and in others where they did not want to register but it was insisted that they should. Does the Motion indicate a change of policy? I understand that in the past the general policy was that the authorities tried to register as few wholesalers as possible. But now, in view of the impending value-added tax and the registration of large numbers, is it the intention that in the interim period before the introduction of the value-added tax—is that eventually happens—wholesalers shall be allowed to register where perhaps they might not otherwise have been able to do so?
  Mr. Higgins: I understand that there are no cases of the kind which the hon. Member for Ashton-under-Lyne (Mr. Sheldon) suggested would be affected by the change. I am sorry about the difficulty which the hon. Gentleman had in the Library. I did not have notice of his
  934
  question, but to the best of my knowledge no cases will be affected, and I understand that the two cases to which I referred will not be affected by the change either.
  I stress in answer to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) that the purpose of the Motion is simply to maintain what had always been thought until recently to be the position. Therefore, it is not what happened in 1969 which is relevant to the question of appeal but what exists in the relevant legislation, and the Clauses to which I referred are particularly concerned with registration. I understand that there is no provision for appeal as such, but an action can be brought in the courts if someone is dissatisfied with the situation.
  We are receiving representations from all interested parties on the question of the value-added tax in the light of the Green Paper. I cannot give the hon. Member for Heywood and Royton (Mr. Barnett) an off-the-cuff answer to the specific point he raised, but I will look into it.
  Question put and agreed to.
  Resolved,
  That it is expedient to provide that the functions conferred on the Commissioners of Customs and Excise by section 6 of the Purchase Tax Act 1963 (registration, &c., of wholesalers, manufacturers and others) shall be exercisable, and, together with the corresponding functions conferred on the Commissioners by the enactments repealed by that Act, treated as having always been exercisable, by any officer of customs and excise.

ORDERS OF THE DAY

  FINANCE BILL
  Not amended (in the Committee) and as amended (in the Standing Committee), considered.
  3.50 p.m.
  The Chief Secretary to the Treasury (Mr. Maurice Macmillan): I beg to move,
  That on Consideration of the Finance Bill any amendments relating to the Clauses and

New Clause 35

  CLAIMS FOR DEFERMENT OF PART OF SURTAX FOR 1972–73
  (1) A person chargeable to surtax for the year 1972–73 may claim to be allowed to defer payment of two-thirds of that surtax or, if his income includes income which has borne tax by deduction, two-thirds of so much of that surtax as is attributable to his other income.

  5

  (2) One half of any amount deferred under this section (that is to say one-third of the surtax) shall be payable on 1st January 1975 instead of on 1st January 1974 and the other half on 1st January 1976.

  (3) For the purposes of this section—

  10

  (a) income which has borne tax by deduction is income from which tax at the standard rate has been deducted (otherwise than in pursuance of section 204 of the Taxes Act (pay as you earn)) or is treated as having been deducted; and

  (b) the amount of surtax attributable to a person's other income is the surtax to which he would be chargeable if his other income, reduced by any deductions under section 28 of the Taxes Act, were his only income; and

  15

  (c) any reductions of his total income attributable to any provision other than section 28 of the Taxes Act shall be treated as first reducing income which has borne tax by deduction; and

  20

  (d) where, in the case of a husband and wife, an application under section 38(2) of the Taxes Act (separate assessment to surtax) or an election under section 20 of this Act has effect, the amounts that may be deferred by them respectively shall be ascertained, in accordance with the preceding provisions of this section, by reference to the surtax to which each of them is chargeable and to the income in respect of which that surtax is chargeable.

  25

  (4) A claim under this section shall be made to the Board but shall not be allowed by the Board unless it appears to them that the amount to be deferred is £100 or more and is not in dispute—[Mr. Barber.]

  Brought up, and read the First time
  The Chancellor of the Exchequer (Mr. Anthony Barber): I beg to move, that the Clause be read a Second time.
  Mr. Speaker: I understand that it would be convenient to discuss at the same time sub-Amendment (a), in line 25, leave out 'and is not in dispute', standing in the name of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and Government Amendment No. 15.
  Mr. Barber: If you please, Mr. Speaker.
  Schedules be considered in the following order of Clauses and Schedules, namely, Clauses 1 to 8; Schedule 1; Clauses 9 to 17; Schedule 2; Clauses 18 and 19; Schedule 3; Clause 20; Schedule 4; Clauses 21 to 28; Schedule 5; Clauses 29 to 36; Schedules 6 and 7; Clauses 37 to 47; Schedule 8; Clauses 48 to 52; Schedule 9; Clause 53; Schedule 10; Clause 54; Schedule 11; Clauses 55 and 56; Schedule 12; Clauses 57 to 63; Schedule 13; Clauses 64 and 65; Schedule 14.
  I hope that this proposed ordering of the new Clauses and Schedules, Mr. Speaker, is satisfactory to the House. It follows previous practice.
  Question put and agreed to.
  New Clause 35 seeks to replace Clause 21 and deals with the problem of overlapping tax, which is inherent in any proposal for unification of income tax and surtax. Clause 21 as it stands allows a surtax payer to defer for one year payment of half the 1972–73 surtax which is attributable to his earned income and interest is to be charged on any surtax so deferred from the normal due date, 1st January, 1974. I think it is recognised on both sides of the House that in many cases Clause 21 as it stands will provide no particular difficulty and

  937
  that in many cases also the taxpayer in any event would not wish to defer the payment of this surtax. [Laughter.] Well, he might wish it. We would all wish it. But I think that quite a number of taxpayers would, even under Clause 21 as it stands, find no particular difficulty. On the other hand, representations have been made to us which have convinced me that in some respects Clause 21 is too harsh. The result of these representations and of our considerations is new Clause 35.
  The grounds of criticism which were put to me fell under three heads. First, there was the complaint about the repercussions of the deferment on earned income. I think that this is a justifiable complaint. Certain investment income from, broadly speaking, rent and interest—for example, bank deposit interest—will result in overlapping tax payments when received by the surtax payers. The assessment made for 1973–74 in respect of such income payable on 1st January, 1974, will extend to the full scale of the unified rate, but the 1972–73 surtax will also be due on 1st January, 1974, on such income.
  The case for spreading the 1972–73 surtax attributable to Schedule A income has been particularly strongly pressed and the argument is that, for practical purposes, the recipients of rental income are as badly affected by overlapping tax problems as are income tax earners. The problem for the owners of agricultural estates, for example, is especially difficult, in that they are currently being urged to spend large sums on capital improvements, drainage works and so on, and these tax payments would denude them of capital. There is a great deal in that argument.
  The second ground of criticism concerns the period of the spread as it is set out in Clause 21. It is said that the period of the spread in Clause 21 is inadequate. It has been maintained that the liquidity problems posed for surtax payers by overlapping tax liabilities have been under-estimated and that a deferment for one year only would not go far enough to meet the difficulties. As I have said, I do not doubt that in the case of many taxpayers there would be no particular difficulties. On the other hand, I have been convinced by particular examples brought to my attention that
  938
  there would be considerable difficulties for some.
  The third ground of criticism concerns the charge to interest. The interest charged in the circumstances of these cases has been the subject of particular criticism. In the reply which my hon. Friend the Chief Secretary made when this matter was considered in Standing Committee, he gave a general undertaking to look again into these matters in the light of the arguments and to bring forward proposals on Report to meet any criticisms which, on further reflection, we considered justified. I therefore decided that, as there was considerable substance in these various criticisms, a new Clause should be put down to replace Clause 21, and this goes a considerable way to meet the criticisms.
  Under new Clause 35, part of the 1972–73 surtax referable to the whole of the taxpayer's income other than income subject to deductions of standard rate tax at source may be deferred. So Schedule A, among other things, will, for example, qualify for spreading. This should go a long way to meet those critics who have argued that spreading should not be confined solely to surtax on earned income.
  Secondly, surtax which qualifies for deferment will be payable in three equal instalments—on 1st January, 1974, 1st January, 1975, and 1st January, 1976–instead of in the two instalments proposed in Clause 21 as it stands.
  Thirdly, the interest charged will be dropped. Of course, interest will be payable under the ordinary rules from the new deferred due dates if payment is not then made within the prescribed period.
  It might be helpful if, at this point, I refer to sub-Amendment (a) because I think that there is some genuine misunderstanding about the meaning of the words
  "… and is not in dispute."
  which my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) seeks to delete. Section 29(2)(b) of the Taxes Management Act, 1970, allows the Board to make a surtax assessment to the best of its judgment when a taxpayer has failed to make a return or when the Board is dissatisfied with the return. The purpose of the sub-Amendment is to deny the privilege of

  939
  spreading when an estimated assessment has been made in such circumstances.
  The words which my right hon. Friend seeks to omit—and this is important—will not rule out deferment simply because a taxpayer has appealed against an assessment so that the tax is in dispute. The reason is that so long as the appeal is unsettled the tax charged under the assessment is not payable anyway. But once the appeal has been disposed of so that the tax is no longer in dispute, deferment can be claimed provided the other conditions of new Clause 35 are satisfied.
  It could happen that there is an appeal relating to some part of income included in an assessment although there is no dispute over the remainder. In these circumstances, the Special Commissioners may order that the tax not in dispute should be paid notwithstanding that appeal on the other matters is outstanding, and if the conditions for deferment are met, the appropriate proportion of such tax may be deferred. It may well be that my right hon. Friend has not appreciated that tax under appeal is not payable anyway until the appeal is settled, and, once it is settled, deferment will be available if the other conditions are satisfied.
  4.0 p.m.
  I add only one observation which seemed to me to be important when the full significance of these words was explained to me. When one talks in these terms of an assessment being under appeal, that means in many cases simply that a notice of appeal has been given. Those of my hon. Friends and hon. Members opposite who are concerned with these matters will know that in normal circumstances the Inland Revenue considers as a notice of appeal a letter from the taxpayer or his advisers challenging the assessment. In other words, that letter is taken as a notice of appeal, so that in those circumstances the assessment would be under appeal, and thus the words to which my right hon. Friend's Amendment refers would become operative in the way I have described.
  For all those reasons, it seems reasonable that these words should be included. I hope that my right hon. Friend will be satisfied with that explanation and
  940
  will not seek to press his Amendment to a Division.
  Mr. John Boyd-Carpenter: Those of us who criticised Clause 21 were naturally very glad to see Amendment No. 15 to remove it. It would be ungrateful not to say that my right hon. Friend's new Clause is a considerable improvement, from the taxpayers' point ow view, and ordinary fairness, on Clause 21.
  But I thought that my right hon. Friend was, for him, a little disingenuous when he said that some such Clause was inherent in any change to a single tax system. It is only inherent in the method which he himself has adopted for making that change. As I ventured to point out on Second Reading, it is my right hon. Friend's decision to retain a tax which, while assessed on the basis of 1972–73 income, is payable and collectable only in 1974, a year in which my right hon. Friend will also be collecting, through P.A.Y.E., the higher rate of income tax. It is his decision to make the transition in this way which has produced the difficulties which his own new Clause, as did Clause 21, seeks to mitigate.
  In thanking my right hon. Friend for mitigating some of the punishing effects on the taxpayer which he himself decided to inflict, I hope that I shall not be thought to believe that my right hon. Friend is going the right way about making the transition. The very fact that he has, first, put Clause 21 into the Bill and, secondly, in the light of criticisms, mitigated it, is surely an acceptance on his part that his method of making the transition is unfair and oppressive.
  It springs simply from what, with all respect to the Inland Revenue, is its professional delusion that surtax for 1972–73 is, from the point of view of the taxpayer, tax payable in that year, whereas, from the point of view of the taxpayer, surtax in respect of 1972–73 is 1974 tax, which is when the impact falls and the taxpayer has to pay it.
  I am sorry that my right hon. Friend has not so far gone the whole hog and taken the line that as he is collecting whatever higher rate of income tax he decides in 1974, the right thing would be to cancel out surtax for 1972–73, which would have the incidental advantage of

  941
  enabling him to get rid of the Surtax Office a year earlier, with the consequent administrative saving. My gratitude to my right hon. Friend for doing away with the oppressive interest provision of Clause 21 and the insertion of the three-year deferment provision is tempered by the fact that even the new Clause is only an attempt to make the best of what sems to be a fairly bad job.
  I come now to my Amendment. I was naturally interested in my right hon. Friend's explanation. I will admit that I had not appreciated that the words "and is not in dispute" meant that no problem could arise when an appeal had been entered. But I am less clear from my right hon. Friend's explanation about the position if an argument, which could not yet be construed as a formal appeal, or even the letter which he mentioned, were taking place between the taxpayer and the Inland Revenue.
  For example, if there is a genuine difference of view, which accountants ate trying to sort out, between the taxpayer and the Revenue, if these words stay in the Bill, will it be impossible for an application to spread—whatever the final sum may be—to be put in by the taxpayer? My right hon. Friend's assurance was perfectly clear when an appeal or anything that could be construed as an appeal had been entered no problem could arise, because until that appeal was disposed of, no tax was payable. But if there is simply a discussion or informal argument as to the precise quantum of surtax due, and, as my right hon. Friend knows, that is apt to happen with complicated estates, with these words in the Clause, is an application to spread prevented?
  Equally, what is the position when an appeal has been put in and, within the three-year spread period, it has been decided one way or the other, possibly after one and a half years? I take it that an application to spread could then be put in, but I should welcome such an assurance.
  Finally, I was very interested in my right hon. Friend's reason for this. He told us that it was his purpose to prevent an application to spread when the Revenue had imposed an estimated assessment because of its difficulties in getting a return. It therefore seems that the purpose of these words is to add to the
  942
  pressure on the taxpayer in such a case. The taxpayer is not only to be exposed to the risks of an estimated assessment, with all the inconvenience that that may cause, but to be denied a spread at any time in the course of his discussions with the Revenue.
  I wonder whether that is fair or necessary. I know that my right hon. Friend will say that an estimated assessment is imposed only when, from the Revenue's point of view, the taxpayer is at fault, but there may be occasions, for example, when an estate or trust is being valued slowly and with difficulty and when great confusion exists, when, with the best will in the world, it will not have been possible for those responsible to put in the proper tax returns. There are cases when estimated assessments may be imposed quite lawfully without there being at any rate any serious fault on the part of the taxpayer.
  I do not see why in such a case taxpayers should be denied any opportunity whatever of applying for the spread which my right hon. Friend has accepted as necessary to be open to other surtax payers in this situation in connection with a tax transition for which he is responsible. Therefore, while I was glad to have my right hon. Friend's assurance about cases in which an appeal was entered, I am still unhappy about why there should be an automatic denial of spread in all estimated assessment cases, meritorious or unmeritorious. I am a little uncertain about what happens when there is argument and discussion as to the amount of surtax due both in the period before a formal appeal is entered, or is deemed to be entered, and after such an appeal has been disposed of. I confess that at the moment I should be much happier if the words were not in the Bill, but I should like to hear a further explanation.
  Sir John Foster: I ask my right hon. Friend the Chancellor of the Exchequer to take out some of the negatives and to deal with the new Clause in a positive way.
  Subsection (4) provides that the Board shall not allow a claim to spread if the amount is in dispute. That sounds very odd. Is it possible to distinguish between a dispute which is an appeal and a dispute which is not? Can my right hon. Friend give an instance in which it is

  943
  fair that a claim to spread should not be allowed because the taxpayer is disputing in some way which is not an appeal? Looked at in a positive way, it is not justifiable, and certainly does not seem justifiable to a non-lawyer and a person of common sense, to say that a claim will not be allowed if it is in dispute but it will be allowed if it is not in dispute.
  Mr. Joel Barnett: I cannot help feeling that the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) is making rather heavy weather of the new Clause. It is reasonably clear that if a matter is under appeal the taxpayer is not suffering any more than he is if it is not under appeal. Admittedly he cannot spread, but he is in a better position: he does not pay at all. I should be prepared to accept the explanation of the Chancellor of the Exchequer.
  Mr. Boyd-Carpenter: The words used are, not "subject to appeal", but "in dispute". As my hon. and learned Friend the Member for Northwich (Sir J. Foster) said, this must mean that there can be cases in which there is no appeal but there is dispute.
  Mr. Barnett: When it comes to the legal interpretation of words, I defer to the right hon. Gentleman and to the hon. and learned Member for Northwich. (Sir J. Foster). But, from a purely tax point of view, I have had no difficulty about deciding with the Revenue when a matter is under appeal. A letter to the Revenue saying that one does not accept a particular part of a surtax assessment is good enough. But if the right hon. Gentleman is right in his legal interpretation and that the new Clause may not be interpreted in the way indicated by the Chancellor of the Exchequer, I agree that it will be necessary to amend the Clause. But if the Chancellor's interpretation is correct, the taxpayer will be at least as well off because he is not obliged to pay the surtax.
  Despite what the Chancellor of the Exchequer said, the general Revenue interpretation is that when an assessment, whether for income tax or surtax, is under appeal, the collectors of taxes do not say, "We will wait until it is all
  944
  settled." They are generally instructed, in no uncertain terms, to apply for a substantial amount on account. But most taxpayers do not appreciate that they are not obliged to pay, although the collector of taxes tends to be rather pressing, even when a case is under appeal.
  4.15 p.m.
  I refer to the main point made today by the right hon. Member for Kingston-upon-Thames which he made when the matter was last debated on the Floor of the House. He indicated that the method proposed by the Chancellor of the Exchequer was unfair. He said that it was a "professional delusion" because the tax arose in 1972–73 and did not become payable until 1974. He said that in those circumstances the whole of it should be relieved because in that year the unified tax would be paid. The implication behind his words was that it was unfair because the taxpayer paid the tax twice. That strictly is not true. The taxpayer pays twice in one year, which is very different. If the taxpayer were relieved of the tax, it would be a very substantial concession; it would not be a minor concession. It would be a relief of £300 million of surtax. The Bill, as I am sure my hon. Friends will agree, has been more than kind to people at that end of the tax paying scale. Therefore, it is not unfair in any sense of the word to insist that that tax shall not be totally relieved.
  In practice, with surtax being paid in arrears, there is at least one year's surtax owing at death. If the whole of that one year's surtax were relieved, not only would it be a major concession, but I suppose that one could argue that it would be a concession to beneficiaries of estates. Surtax which became payable at death would, in most cases, no longer be payable under the unified tax system. The implication behind the words of the right hon. Member for Kingston-upon-Thames was that it was unfair to relieve these people of the surtax. In my view, it is not unfair. On the contrary, it would be grossly unfair to other taxpayers if surtax payers were relieved of this amount of surtax—£300 million.
  I agree that my first impression of Clause 21 might have stemmed from the fact that I was personally involved in having to pay the tax and that it seemed very hard to have to pay two lots in

  945
  one year—and, incidentally, in a very interesting year, 1974. Surtax payers might feel that paying that extra amount in surtax would be a good reason for putting crosses in places other than on income tax forms. If the payment of the tax were cancelled altogether, while it might be very nice for me personally, it would be grossly unfair generally. I accept the new Clause, with its not unreasonable further concession to surtax payers.
  Mr. Barber: I am grateful to my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) for his kind words and for recognising that I have gone some way towards meeting those who believed that the provisions of Clause 21 were too stringent. I know full well the arguments which my right hon. Friend has adduced previously about the way in which one might deal with the problem of the overlapping of surtax which is inherent in any proposal for unification. My right hon. Friend is right if one takes the view that it would be reasonable to cancel altogether one year's payment of surtax.
  I have heard these arguments deployed before and, naturally, I have considered them, but I do not believe that I should be justified in adopting that remedy, which would certainly avoid the sort of problems which my right hon. Friend and others have had in mind. I therefore came to the conclusion that the best thing I could do was to put forward provisions which would alleviate the situation in a reasonable way. Although I may not have gone as far as some of my right hon. and hon. Friends would have wished me to go, I hope that they will agree that, in conjunction with my hon. Friends who served on the Committee upstairs, I have gone quite a long way to meet the objections raised under the three heads which I mentioned. I take the point which my hon. and learned Friend the Member for Northwich (Sir J. Foster) made about the wording. It is always difficult on Report to consider looking again at the wording. I shall, therefore, deal with the substance of what he and my right hon. Friend said about the words in the Amendment.
  The way in which deferment is operated is not dependent on there being a
  946
  formal appeal. If a taxpayer says to the inspector that he does not agree with the assessment, the matter is then treated by the Inland Revenue as an appeal. Once an assessment is under appeal the tax is not payable in any event. When an appeal has been decided, where a dispute has been resolved, then the spreading provisions apply. My right hon. Friend asked for an assurance on that particular point.
  I referred in my opening remarks to certain circumstances in which the Inland Revenue would consider it right to make an estimated assessment. Suppose a taxpayer has made no return of income, done absolutely nothing to co-operate with the Revenue, the Revenue has only one course open to it, and that is to make an estimated assessment.
  Even in these circumstances, on receipt of the estimated assessment, if the taxpayer then says, "I do not believe that this assessment is justified", that would be treated as an appeal, and because it is treated as an appeal the tax which might otherwise be payable would not be payable until the dispute had been settled.
  I looked at my right hon. Friend's Amendment with great care, because I wanted to make sure that it would not operate unfairly in any of the sorts of cases mentioned. I am satisfied that it will operate in a fair way, and I hope that he will accept what I have said and the assurances I have given.
  Sir J. Foster: Can the Chancellor give an instance of a dispute where no spreading is allowed other than on appeal where no spreading is required as no tax is payable?
  Mr. Barber: I regret that I cannot offhand give such an instance. But in those cases where there is a dispute between the Revenue and the taxpayer, that dispute will, in normal circumstances, be treated as an appeal and, therefore, once the dispute is resolved the spreading provision will apply. Whatever the answer is to that point, there are no circumstances in which this could operate to the taxpayer's disadvantage.
  Question put and agreed to.
  Question read a Second time, and added to the Bill.

New Clause 7

  PURCHASE TAX—EXERCISE OF FUNCTIONS OF COMMISSIONERS WITH RESPECT TO REGISTRATION, ETC.
  The functions conferred on the Commissioners of Customs and Excise by section 6 of the Purchase Tax Act 1963 (registration, etc., of wholesalers, manufacturers and others) shall be exercisable, and, together with the corresponding functions conferred on the Commissioners by the enactments repealed by that Act, treated as having always been exercisable, by any officer of customs and excise.—[Mr. Higgins.]
  Brought up, read the First and Second time, and added to the Bill.

New Clause 12

  DOUBLE TAXATION RELIEF FOR UNDERLYING TAX
  (1) Part XVIII of the Taxes Act (double taxation relief) shall be amended as follows.
  (2) For section 508 (extension of relief to United Kingdom and third country taxes) there shall be substituted the following section:—
  508.—(1) Where a company resident outside the United Kingdom (in this section referred to as 'the overseas company') pays a dividend to a company resident in the United Kingdom (in this section referred to as 'the United Kingdom company') and the overseas company is related to the United Kingdom company, then, for the purpose of allowing credit under any arrangement against corporation tax in respect of the dividend, there shall be taken into account, as if it were tax payable under the law of the territory in which the overseas company is resident,—

  (a) any United Kingdom income tax or corporation tax payable by the overseas company in respect of its profits; and

  (b) any tax which, under the law of any other territory, is payable by the overseas company in respect of its profits.

  (2) Where the overseas company has received a dividend from a third company and the third company is related to the overseas company, then, subject to subsection (4) below, there shall be treated for the purposes of subsection (1) above as tax paid by the overseas company in respect of its profits any underlying tax payable by the third company, to the extent that it would be taken into account under this Part of this Act if the dividend had been paid by a company resident outside the United Kingdom to a company resident in the United Kingdom and arrangements had provided for underlying tax to be taken into account.
  (3) Where the third company has received a dividend from a fourth company and the fourth company is related to the third com
  948
  pany, then, subject to subsection (4) below, tax payable by the fourth company shall similarly be treated for the purposes of subsection (2) above as tax paid by the third company; and so on for successive companies each of which is related to the one before.
  (4) Subsections (2) and (3) above are subject to the following limitations—

  (a) no tax shall be taken into account in respect of a dividend paid by a company resident in the United Kingdom except United Kingdom corporation tax and any tax for which that company is entitled to credit under this Part of this Act; and

  (b) no tax shall be taken into account in respect of a dividend paid by a company resident outside the United Kingdom to another such company unless it could have been taken into account under the other provisions of this Part of this Act had the other company been resident in the United Kingdom.

  (5) For the purposes of this section a company is related to another company if that other company—

  (a) controls directly or indirectly, or

  (b) is a subsidiary of a company which controls directly or indirectly,

  not less than 10 per cent. of the voting power in the first-mentioned company.
  (3) In section 498(4) for the words from 'not less than 25 per cent.' to 'of the Commonwealth territories' there shall be substituted the words 'not less than 10 per cent. of the voting power in the company paying the dividend'.
  (4) In section 507, in subsection (1), for the words '25 per cent.' there shall be substituted the words '10 per cent.' and subsections (2) and (3) shall be omitted.
  (5) This section has effect with respect to dividends paid (within the meaning of section 527(3) of the Taxes Act) on or after 1st April 1971.—[Mr. Patrick Jenkin.]
  Brought up, and read the First time.
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): I beg to move, That the Clause be read a Second time.
  It would be for the convenience of the House if I dealt with the matter fairly briefly as I do not anticipate that there will be any matters of contention arising. You have indicated, Mr. Speaker, that we can also take new Clause 31–
  Extension of unilateral relief from double taxation
  In subsection (4) of section 498 Income and Corporation Taxes Act 1970 (Unilateral relief for double taxation) after the first mention of the word 'territories' and before the word 'any' insert the words: 'or holds an investment in the equity of the first mentioned company, the cost or market value whereof

  949
  at any time during the second company's chargeable accounting period is at least £1 million'.
  If I may, I will catch your eye again at the end of the debate so that I may reply to any points made relating to that Clause.
  New Clause 12 refers to the entitlement of companies with investments overseas to relief for what is called underlying taxation, that is, the company tax paid by the foreign associate. Hitherto there have been a number of different provisions, depending on the country in which the overseas associate is operating and allowing different percentages of shareholding which entitle the United Kingdom company to claim relief for the underlying tax. This Clause implements the intention which the Government set out in the White Paper entitled "British Private Investment in Developing Countries", Cmnd. 4656 published in April of this year. There we said that we felt that with
  "… the growth of consortium investment and local participation in many developing countries, there is a case for extending the lower 10 per cent. limit more widely. The Government will be proposing an amendment to the Finance Bill accordingly."
  The Clause goes further than the White Paper. It first replaces the 25 per cent. test with the 10 per cent. test in all cases. There would be very few 25 per cent. cases left if we merely eliminated them from developing countries. Secondly, we are putting on the Statute Book in an extended form what has hitherto operated as an Inland Revenue concession designed to deal with cases where voting control was held through a chain of companies. This does not alter the practice but we are constantly under pressure from the Public Accounts Committee to put into statutory form those arrangements which have operated sometimes over many years as concessions. I think the House will applaud the fact that we have taken this opportunity to write this concession into the Statute Book. This forms the bulk of the Clause.
  I was intrigued to look up the record on the 10 per cent./25 per cent. point. I find that it is five years ago almost to the day when from the other Dispatch Box I suggested to the then Government that the time had come for the elimination of what I called the few isolated cases where the 25 per cent. is the rule.
  950
  Mr. Niall McDermot, one of my predecessors as Financial Secretary, replied:
  "I do not say that there will never come a day, when we have renegotiated these new agreements, when what is left of the unilateral system may not be adjusted to a level different from the prevailing one, but I do not think that this is the moment to seek to make such an adjustment."—[OFFICIAL REPORT, 21st June, 1966; Vol. 730, c. 521–2.]
  In the view of the Government the time has come to make this change.
  4.30 p.m.
  Mr. William Clark: I congratulate and thank my hon. Friend for introducing this new Clause. I would like to refer to the 10 per cent. holding because in many cases there can be a company which invests in an overseas company and has an initial 10 per cent. holding under which it qualifies for relief. Sometimes the overseas company may have a rights issue or a new share issue and the investment of the British company is diluted so that it is less than 10 per cent. Has the time not arrived for us to write into the Bill a figure of investment? In new Clause 31 I have suggested a figure of £1 million cost or market value. I am not wedded to the figure of £1 million. It could be less. It could be £250,000. I hope, however, that the point can be looked at because although a company may start with a 10 per cent. holding it might be that the 10 per cent. is diluted by an issue of shares in a company, where a British company has little say despite the fact of the 10 per cent. holding.
  Mr. Dick Douglas: I do not want to detain the House unduly on this new Clause, but there are one or two questions I should like to put. As the Minister has indicated, it extends certain provisions beyond the field of developing countries and I wanted to ask whether it in any way involves reciprocal arrangements particularly with European countries if existing members of the E.E.C. should develop with developing countries arrangements similar to the type of arrangements under the Clause.
  Secondly, how does the Minister see the investigating procedures to ascertain the reduction from the 25 per cent. voting control?
  Mr. Patrick Jenkin: Perhaps I may be allowed to deal first with questions of

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  the hon. Member for East Stirlingshire (Mr. Douglas). He is quite right when he implied that one of the factors which would determine the Government's view whether to accord the 10 per cent. test rather than the 25 per cent. would have been whether in the course of negotiations of double taxation conventions it would have been possible to ensure corresponding advantage to this country. The passage I read from Mr. MacDermot's speech indicated that while there were a great many of these agreements still to be negotiated the then Government did not feel it right to take this step. In many cases, we were able to negotiate 10 per cent. and get something for it in return. In others, we were not. We have taken the view that there would be scant prospect of getting anything further now, and, therefore, it would be right that we should make a rule universally rather than have very few cases left over where the 25 per cent. or, indeed, another test, might operate.
  I would insert in parenthesis that the Republic of Ireland is a special case where special rules apply. This is not affected by the new Clause.
  On the hon. Gentleman's second point about the investigating procedures, I do not think there would be anything new here. The Revenue will have to be satisfied that the necessary 10 per cent. voting control is exercised before giving the United Kingdom shareholding company relief for underlying tax. I do not anticipate any difficulty here.
  I come to the point raised by my hon. Friend the Member for Surrey, East (Mr. William Clark). This is one which, naturally, he will realise, if he has studied the record, Ministers would have considered most carefully, because when we were in Opposition we advanced, both in the House and in the Committee, a similar proposition on the grounds that if one were going to draw a distinction between what one might call trading investment and portfolio investment, it would perhaps, so the argument runs, be unreal to continue to a voting test. There must be cases where less than a 10 per cent. shareholding could nevertheless be described as a trade investment. It would be unfair that the investment should be denied relief for underlying tax.
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  The point my hon. Friend made is, what of the case which starts with more than 10 per cent. and perhaps by a rights issue the United Kingdom shareholding company share is reduced and is not able to take up a share below 10 per cent.? The argument always advanced against this by our predecessors, and one which does seem to me to have a good deal of force in it, is that if one were to take the test, whether it be £1 million, as my hon. Friend mentioned, or £250,000 as he has also mentioned, inevitably one is drawing a distinction between a big company to the disadvantage of a small company. If one is going to allow a big company with less than 10 per cent. holding relief for underlying tax, the small company might even have a bigger share of the equity than a large company, and would be denied it.
  Inevitably one would be creating new anomalies, anomalies, perhaps, different from the sort which exist already under the 10 per cent. rule, but, at the same time, it would be even more difficult to defend—for instance in the case which my hon. Friend mentioned of a rights issue which a United Kingdom shareholding company does not take up. It is not immediately obvious that it would be easier for a small company to take up a rights issue in an overseas company than it is for a big company. Indeed, many people might think that the opposite is the case. By putting in an absolute amount, £1 million or what have you, we would be emphasising the advantage which a big company would already have to the detriment of the small company. Therefore I have been convinced by the arguments that it would be wrong to depart from the usual test which I think is almost universally applied in double taxation conventions throughout the world, the distinction between direct and portfolio investment, namely, by reference to the voting control.
  As I indicated earlier, we are refining this and making statutory extra statutory concessions with the definition of voting control. We are now making the 10 per cent. rule universal, and I think this is right.
  These are matters which will fall to be considered in the light of Corporation tax reform. I should not like anyone to think that the changes foreshadowed in the

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  Green Paper are likely to lead to any significant changes in taxation of portfolio investment. It would be wrong to leave the House with any such impression.
  I hope that, in the circumstances, my hon. Friend will think it right not to press his Amendment.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

New Clause 21

  TEMPORARY RELIEF FROM IMPORT DUTY FOR CERTAIN COMMONWEALTH TEXTILES
  Schedule 3 to the Import Duties Act 1958 (which lists descriptions of goods in respect of which, subject to certain specified conditions, orders may be made providing for relief from import duty) shall be amended by adding the following paragraph after that added by section 1(4) of this Act—
  11. The following goods, that is to say, cotton yarn and manufactures of woven cotton, may be relieved from import duty if—

  (a) they are goods of the Commonwealth preference area, and

  (b) they are imported on or after 1st January 1972 under the authority of an import licence which restricts the quantity of goods which may be imported there-under, and

  (c) the Secretary of State certifies that he is satisfied that they were exported from their country of origin before the said 1st January, and

  (d) import duty would not have been chargeable on them if they had been imported on 31st December 1971.—[Mr. Noble.]

  Brought up, and read the First time.
  The Minister for Trade (Mr. Michael Noble): I beg to move, That the Clause be read a Second time.
  The new Clause amends the Import Duties Act, 1958, to provide a new limited power for import duty relief. The need for this new power arises from our intention to go ahead with the previous Government's decision to impose a tariff of 85 per cent. of the most favoured nation rate on imports of cotton yarn and woven cotton articles from the Commonwealth Preference Area arriving in this country on or after 1st January, 1972.
  The present import restrictions on the quantities of those goods exported from the developing countries will be discon
  954
  tinued at the end of this year. Because the quota restrictions are operated on the basis of the date of export, while the tariff must be related to the date of arrival, goods exported under quota from the Commonwealth Preference Area before the end of this year but arriving early next year would, unless the proposed power is enacted, be subject to both quantitative restraint and the tariff. To avoid this double penalty Commonwealth suppliers would have a strong incentive to ship all the quota entitlement to arrive before the end of this year, thus producing a lumping of imports which might dislocate the market. To prevent this risk of dislocation we propose to relieve such goods from import duty in the early part of 1972. The new Clause would give us the power to do so. The power will be needed only for the first few months of that year.
  The Clause is purely enabling. It adds a further paragraph to Schedule 3 to the Import Duties Act, 1958, which lists a series of cases where relief from import duty may be made available by order under Section 5 of the Act. The necessary order will be made in due course subject to negative resolution procedure in accordance with the existing provisions of Section 5. The power is only available for cotton yarn and manufactures of woven cotton. The relief is deliberately restricted by sub-paragraph (a) to goods of the Commonwealth Preference Area, by sub-paragraph (b) to goods imported under a licence restricting the quantity to be imported, and by sub-paragraph (d) to goods of a kind which would have been admitted duty-free had they been imported on 31st December, 1971. Only goods complying with all these conditions would, unless relief were given under the Clause, became temporarily subject to the new double restraint of quota control and import duty.
  In particular, sub-paragraph (b) excludes goods from Commonwealth countries which have not been subject to quota restriction, while sub-paragraph (d) excludes all goods, Commonwealth and non-Commonwealth alike, which are already subject to tariffs as well as quota restrictions.
  In addition, sub-paragraph (c) makes the key provision that the goods first have to be certified by the Secretary of State—in practice, the Department of Trade

  955
  and Industry—to the effect mat he is satisfied that they were exported before the end of this year. Relief is intended only for goods exported under the current quotas up to the end of this year, and this sub-paragraph precludes relief for goods exported thereafter. Certification will be based on evidence of the date of export which has to be submitted to the Department of Trade and Industry before it issues import licences under the current quota controls. H.M. Customs and Excise needs such certification so that it can be satisfied as to the eligibility of the goods for duty relief.
  A further effect of sub-paragraph (b) is that the power will effectively lapse when we cease to issue for the cotton textiles concerned individual import licences which embody quantitative restrictions, that is to say, as from 1st April, 1972, although such licences will in any case be issued freely for goods exported as from 1st January, 1972.
  Mr. Tam Dalyell: As the right hon. Gentleman knows, there is no cotton industry in Argyll and the Islands, or even in West Lothian. Therefore, in the presence of colleagues who represent cotton constituencies, I feel a little constrained about speaking on this subject. I do so simply to ask a question. I gather that the Indian Government are greatly dissatisfied at various developments which have taken place. What consultations has the Department had, through the Foreign Office, with the Indian Government, and what is the general philosophy of putting a certain constraints on imports of manufactured goods that can be produced by developing countries, which is perhaps a better way of giving finance to developing countries than outright aid? The House might be grateful for a short statement on the basic philosophy.
  Mr. Barnett: Unlike the constituency of my hon. Friend, my constituency has a considerable textile interest. I appreciate the need for arrangements for the transitional period between quotas and import duties. My hon. Friend referred to India, and we know that the Government are in dispute with the Indian Government about the new arrangements. I should be interested to know what the position is now. I appreciate the point
  956
  made by the right hon. Gentleman that export certification will be required to ensure that imports after 31st December will come in free of duty but there are many in my constituency and in Lancashire who would be concerned if they thought that there was the likelihood of any evasion which would dislocate even more the Lancashire textile industry. Is it possible that after certification the exports could be held up, so that substantial quantities of duty free textiles came in after 31st December 1971? For example, India, and other countries, too, may not have been able to fulfil the quota for a variety of reasons. Is the right hon. Gentleman satisfied that there is no way of getting round the provisions so that there could be a flood of duty-free textiles into the country?
  4.45 p.m.
  Mr. R. T. Paget: I understand that this is part of a general arrangement to protect our interests, even though it is at the expense of India's interests. I am all in favour of protecting our interests, but, if we were to go into the Common Market, I should equally be in favour of protecting our interests against those of Germany or Italy. Will the Minister confirm that nothing of this sort could be done?
  Mr. Noble: The hon. Members for West Lothian (Mr. Dalyell) and Hey-wood and Royton (Mr. Barnett) have spoken about India. The Clause is designed to help the Indian market, because about 90 per cent. of the imports affected come from India, Pakistan and Hong Kong—I have not got the exact breakdown. Both hon. Gentlemen are correct in saying—and I must not stray out of order—that we are in dispute with the Indians over the waiver in the textile agreement, and there will be opportunities—I suspect fairly soon—for debating that when the appropriate moment comes. The Clause has been designed specifically to help these countries so that they are not in any way burdened by being afflicted both with the quota and with the tariff.
  The hon. Member for Heywood and Royton asked whether difficulty might arise in Lancashire because of exports being held up after certification and so causing disruption. This is the exact point which the Clause is designed to

  957
  meet. This will not be so, because the key question will be: on what date were they shipped? Therefore, although there might be export certification, unless they were shipped by 31st December of this year there could be no question of their being allowed in as part of the quota and, therefore, free of duty.
  In reply to the point made by the hon. and learned Member for Northampton (Mr. Paget) about protecting our interests, the provisions of the Clause have in the past been discussed by the previous Government with our textile interests, and it was felt to be right. The consultations that we have had since have shown that the textile interests still feel that this is an acceptable method of dealing with the point. Nothing in the Clause will affect us in any way when we come into the E.E.C. I think the hon. Gentleman may be satisfied that this is a purely temporary Clause to correct what might be a disruptive effect over the last few months of this year and the first three months of next year, and as such—
  Mr. Paget: My point is that most temporary and necessary measures to prevent disruption of our trade will be available to us when we are in the Common Market.
  Mr. Noble: I am not certain that I fully understand the hon. and learned Gentleman's point.
  Mr. Barnett: Perhaps the right hon. Gentleman might explain to my hon. Friend that if we imported as few cotton textiles as the Common Market countries, my constituency in Lancashire would be highly delighted.
  Mr. Noble: I am grateful to the hon. Gentleman for helping me. I was about to say that the Common Market has very strict quota arrangements and, presumably, we should have to deal with that problem when and if we entered it.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.
  Mr. Deputy Speaker (Sir Robert Grant-Ferris): New Clause 2–
  Mr. Dalyell: On a point of order, Mr. Deputy Speaker. I do not, of course, complain about Mr. Speaker's selection: I only wish to say that the promoters of new Clause 1 are a little sad that it has not been selected.
  Mr. Deputy Speaker: That is not a point of order. Selection is the prerogative of Mr. Speaker, and there cannot be any points of order raised against it. I therefore cannot accept as a point of order what the hon. Gentleman says. However, he is now on the record, and I cannot prevent that. New Clause 2.

New Clause 2

  ANNUAL REPORT ON THE OPERATION OF CAPITAL ALLOWANCES
  The Board shall publish an annual report on the operation of the system of allowances and charges in respect of machinery and plant set out in sections 30 to 44 of this Act.—[Mr. Dell.]
  Brought up, and read the First time.
  Mr. Edmund Dell: I beg to move, That the Clause be read a Second time.
  Perhaps I may first point out that in the reprinted Finance Bill the relevant Sections mentioned in the Clause are now 37 to 47. I should also make it clear that the annual report for which the Clause asks is, of course, a report additional to that which in any case is published annually by the Commissioners of Inland Revenue.
  I want to put before the House a simple proposition which I hope will gain universal acceptance. It is that where in order to achieve certain objectives large sums of public money are spent, or allowed against taxation, there should be regular examination of and report on how far the objectives are being achieved, and on the administration and economy of the scheme.
  I say that I hope that such a simple proposition will gain general acceptance because when I had responsibility at the Board of Trade for administering the investment grant system a similar proposition was put to me from the then Opposition, and I accepted it. Not merely did I accept it, but I launched an inquiry, which I announced to the House on 4th February, 1969, into the operation of the

  959
  investment grant system. Therefore, this idea having come in the first place from the then Opposition and it having been accepted by the then Government, I hope for universal assent that similar considerations apply to the new scheme of investment incentive now introduced.
  After all, where Departments expend large sums of public money they in many cases report annually to the House; the Department of Defence does, and so does the Department of Education and Science. The Treasury must now face the fact that arising out of the change in the system of investment incentives it is once more a large spending Department in the area of aid to industry. These allowances are not intended simply to reduce the taxation paid by companies. They are defined, described and intended to be investment incentives, and it is as investment incentives that they should be judged.
  When the Department of Defence or of Education and Science puts up its estimates, no doubt these are thoroughly examined by the Treasury, but here we have the Treasury as a large spending Department, and we should enable the House to give careful consideration to the expenditure estimates of the Treasury and to the effectiveness of the expenditure in achieving the objects it has in mind, as we do in the case of these other Departments.
  I quite understand that there is a limit on the practicability of assessing the effectiveness of investment incentives. I will not go into great detail on this topic, because I explained the difficulties in full on 4th February, 1969, in a speech of which I am sure all hon. Members are aware, when I announced the intention of the then Government to launch an inquiry into the effectiveness of investment grants.
  In summary, the difficulties arise from the fact that there are many influences on investment, and it is very difficult to single out and assess the influence of investment incentives. Nevertheless, this should be done. I said that we were having that inquiry into investment grants. There were also annual reports and, presumably, during the continuation of the investment grant system, residually, there will continue to be annual reports on the operation of that system.
  960
  Those reports contain a great deal of information which, unfortunately, under the new system looks as though it will be lost. Those reports do not meet the specification, which I intend to outline to the House, for the reports for which I now call, but they might well have been improved and developed as a result of the inquiry that was launched by the Board of Trade into investment grants.
  In addition to the difficulties inherent in this problem of assessing the effectiveness of investment incentives there is another considerable difficulty, and that is that there has been as a result of the introduction of the new system a loss of information; a reduction in the information that will be available about the operation of investment incentives. Compared with the investment grant system, we will have less information, less current information and little regional information.
  This is a subject on which I have been in correspondence with the Financial Secretary, and I am grateful to him for the assistance which he has given. I now understand that the Minister of State, Treasury, is to reply to this debate, but no doubt in view of the new Clause he has carefully studied the letter of 24th May which his hon. Friend the Financial Secretary wrote to me. In that letter the hon. Gentleman stated what we had lost by way of information from the change of system, and as this may be regarded as an impartial account of what we have lost, I will read it:
  "With the cessation of investment grants we lose, of course, that statistical data derived from the administration of the system, some of the most important of which were the industrial and regional analyses of capital expenditure on plant and immobile machinery."
  That is what we have lost: what do we have instead? The Financial Secretary tells me that instead we have the existing information about capital formation, which is of little regional assistance, and we will have the new annual censuses of production, but as the first has been taken this year in respect of 1970 this information will be somewhat in arrears, and we have yet to see it. Turning to capital allowances, where information about capital allowances is up to date it is too highly aggregated, and where it is not too highly aggregated it is hopelessly out of date.
  Much of the latest information now available relates to 1968. The Financial

  961
  Secretary recommended to me certain tables in the 1971 Inland Revenue statistics, the latest year for which is 1967 when the investment grant system was just coming into operation. On this basis we will have to wait a considerable time before we have information about the capital allowances system which is in any way relevant to an assessment of its efficiency. There is no regional information about capital allowances.
  Therefore, it has to be accepted—as, I believe, the Financial Secretary did accept—that the information, at any rate in regional terms, is grossly deficient. What the hon. Gentleman said was that the figures in respect of capital formation and capital allowances
  "… provide most of what could reasonably be required, apart from a regional analysis."
  I must tell the Financial Secretary that I do not think that they do contain most of what could reasonably be required, and the qualifying clause, "apart from a regional analysis", is of some importance.
  Regional policy is one of the main objects of having investment incentives at all. If one does not have information on effectiveness in that area what is the use of the information that is available? We therefore need to improve the quality of the information which will be available about the operation of the scheme, and particularly do we need to improve it as regards regional information. Regional objectives are the main objectives of investment incentives, and we must see that they are being fulfilled. So we need a report. The report should state the available information. It should comment on the policy and administrative aspects of the operation of the capital allowances scheme. I suggest that the report should be regularly considered and reported upon to the House of Commons as to policy possibly by the Trade and Industry Sub-Committee of the Expenditure Committee and as to administration by the Public Accounts Committee.
  5.0 p.m.
  I will now outline some of the matters which I think should be dealt with in such a report. First, administration. There is a danger of thinking that tight administration of allowances is less important than tight administration of grants. I emphasise that these allowances
  962
  are as much public expenditure as the grants ever were and should be treated accordingly.
  There are certain possible sources of over-allowance against taxation within the scheme. The most obvious is the movement of plant and machinery out of development areas or, in development areas, between manufacturing industries, on the one hand, and service and distribution industries, on the other.
  Under the investment grant scheme there was a system of inspection to check on what was being done. This point was raised in Committee by my hon. and learned Friend the Member for Lincoln (Mr. Taverne). In response to the reply from the Chief Secretary he said that he was not convinced. He had good reason not to be convinced. The Chief Secretary said:
  "In the tax case, the issue would be of less overall significance—merely a bringing forward to an earlier year of the tax allowances on 40 per cent. or less depending on when the transfer took place."
  That is an interesting comment. It is about these important differentials which are alleged to inspire industrialists to invest in development areas. When dealing with administration apparently these differences are of little importance; nobody is likely to try to benefit from them. So, when the Government think that they have to persuade us that they have a significant regional policy, these differentials are important; but when dealing with the administrative aspect they say that they are not significant.
  The Chief Secretary, in an attempt to console the Opposition about his refusal to accept my hon. and learned Friend's comment about the need for tight administration, said:
  "Not least among the factors enabling the Revenue offices to detect such matters is their general familiarity with taxpayers' business activities. Their continuing contact enables them to identify those cases where there could be a special risk of diverting assets to premises outside a development area, and to make appropriate inquiries."—[OFFICIAL REPORT, 14th June, 1971, Standing Committee H; c. 607.]
  The one kind of information which the Inland Revenue certainly does not get in all cases is the regional distribution of a company's investment. The Financial Secretary, in his letter of 24th May, told me specifically that that was the reason that regional information could not be

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  provided. So, on the one hand, we are told that regional information cannot be provided because it is not necessarily included in the return, and on the other, that tax inspectors can check merely looking at a piece of paper representing the tax return of a company. I do not believe it. I think and fear that there is grave danger of slackness in administration in this sphere. The Public Accounts Committee will have to watch this as keenly as it watched similar aspects and problems with the investment grant system.
  In Committee the Opposition also raised the problem about ships and claims for free depreciation on ships operating in a way which might be a cost on the balance of payments. I do not propose to go into this in any detail, because the Chief Secretary in Committee, at c. 600, admitted that it was a severe problem, and made it clear that it was being watched. I know that it is a different problem from that which existed with the investment grant. I accept that, when in Government, we did not make free depreciation for ships conditional on a balance of payments test. In logic I think that we should have done. Nevertheless, I am not satisfied with the present position. I hope that the Government will watch it carefully. Meanwhile, I simply ask one question: will the Treasury or the Inland Revenue make a balance of payments test where there is a claim for free depreciation on a ship built outside the United Kingdom? If not, why not?
  The next set of problems I want to indicate as the subject matter for discussion in the report proposed in the new Clause involve certain policy matters relating to the effectiveness of the new capital allowance system. First, what is the real value, as an investment incentive, of a 60 per cent. tax allowance, particularly for distribution and services? The Government have introduced this 60 per cent. tax allowance for distribution and services. We discriminated against them. The initial effect of the introduction of this great benefit on distribution and services has been a fall in investment intention in that area. On 16th June the Department of Trade and Industry forecast a fall of 5 per cent. in investment intention in 1971 compared with 1970, but that 1972 would be the same as 1971. So the first effect of introducing an incentive,
  964
  which was not there before, is a fall in investment intention.
  What is the Government's view? This is the kind of matter on which I should like them to comment. Do they suggest that the fall would have been greater but for the introduction of this investment incentive? Incidentally, the Financial Times today, in its assessment of investment prospects, does not seem any more hopeful than the Department's assessment of 16th June. This again shows that perhaps the new system is not working as effectively as the Government hoped.
  The second area which might be discussed in the report proposed in the new Clause is the effect of the new system on important industries of low profitability, such as shipbuilding, for example. Will they become profitable, or will they become even less competitive through failure to invest? Similar considerations might apply to certain sections of the motor car industry, which is one of our most important exporting industries.
  What will happen under this system to important industries where there is a long period of gestation before profit arises? I instance large chemical works or deep mining. We had a discussion in the House a short time ago on mining problems concerning one particular company. I believe that the C.B.I., in making its representations against the investment grant system, at any rate seemed to believe that this was one area in which there should be a grant system. However, the Government have made no provision to meet the C.B.I, on that point. I recall the hon. Member for Bedford (Mr. Skeet) saying that he was against the investment grant system in nine cases out of 10, but that in this tenth case grants were needed. However, grants are not provided.
  Let us have some information from the Government and regular reports about the effect of the introduction of the capital allowance system on important import-saving activities of this kind.
  Above all, we want an assessment of the effect of the new system on development areas. We believe that the change has so far had a marked adverse effect on development areas. The kind of information which might be provided and discussed in the report which I am describing is what the actual differential has turned out to be. The Government have

  965
  said that the differential is unchanged following the introduction of the new system as compared with what it was on 26th October, 1970. I have said in the House many times that I believe that statement to be misleading, and indeed meaningless, but the Government obviously believe that it means something and, therefore, will be able to justify it in due course, I hope.
  Let the Government in due course provide the information which shows that the differential has been maintained. I fear that the Minister of State will say, "The Financial Secretary told you in his letter that we cannot do it". So they make claims to the effect that the differential is being maintained, sustained by the knowledge that there will be no test of the accuracy of their claims at any time in the future.
  It is not good enough. If the Government make claims of this sort, they must be able to justify them. What, again, is the actual flow of aid to development areas? What will it turn out to be? In Committee on the Floor of the House I quoted the remarks of the Prime Minister in 1965 to the effect that it was not simply the differential that was important but the actual flow of aid to the development areas. I am glad that the Minister of State is here so that I can remind him of those wise words of the Prime Minister in 1965, because the Minister of State has been telling the House for some time that the only thing that matters is the differential. This is a point on which he is in severe disagreement with what the Prime Minister said in 1965. I believe that the Prime Minister was right in what he said in 1965 and that on this point the Minister of State has been talking nonsense.
  However, what will be the actual flow of aid to the development areas? Again, I fear that the Minister of State will refer to the Financial Secretary's letter and say, "We cannot tell you". It is important that we should know. What do the Government intend to do about it, and how will they report to the House?
  What will be the effect on inward investment of the reduction in the level of assistance? This is another subject which could be the subject of information and comment in a report such as I am suggesting.
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  There is a competitive element as between countries and an increasing proportion of American investment has been going to E.E.C. countries. If we joined the E.E.C. this might continue to be the case unless there were adequate incentives to investment from abroad in Britain. Therefore, it is important that there should be a regular assessment of what is happening.
  Another area which should be commented on is the effect on investment in development areas of the failure to provide for the possibility of transitional arrangements if, for example, development areas are downgraded. As a result of a failure to provide for transitional arrangements there will be great, and I believe damaging, uncertainty regarding the reliability and duration of the new scheme. People who are proposing to invest will be uncertain to what extent and for how long they can rely on it, and their doubts on that score will be reinforced by the Government's failure to make any provision for transitional arrangements in respect of projects in process on 26th October and their decision to limit their transitional arrangements to contracts that had actually been signed.
  I have some experience of these matters, because again and again during my period at the Board of Trade potential investors came to see me and asked what guarantees could be given about the duration of the investment grant system. I could give no guarantees. I could only point out the fact that the then Opposition did not like the investment grant system. However, I said, and I think that I was entitled to say, that in the past there had been provision for transitional arrangements.
  Indeed, had I been talking to those potential investors in the period of the General Election I would have been able to point to the fact that the Conservative Party was suggesting that there would be transitional arrangements. In fact, there are no transitional arrangements. This will have an adverse effect on people's confidence in the existing scheme in development areas.
  In short, a report of this type would provide the opportunity for an annual review of development area policy. This year, to take an example, it would help

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  Parliament, the public, and particularly the Government, to understand why, after the large reductions in taxation upon which the Chancellor of the Exchequer prides himself and the introduction of free depreciation in development areas, there is nevertheless higher unemployment and a severely reduced number of inquiries by industrialists regarding investment in assisted areas.
  There is need for a report, because there is here a large body of public expenditure. It is necessary to test its efficacy. The United Kingdom has a special problem of slow growth. Our main hope of faster growth is to stimulate investment. Lacking faster growth we need special and effective aids to investment. There is a need to stimulate, and indeed to distort, the market forces to achieve a higher rate of investment. Therefore, there is a need to assess regularly the effectiveness of the aids that are provided. The evidence so far is against the new system. At any rate let us have a regular opportunity to assess it which might lead the Government to a realisation of the need to change it.
  5.15 p.m.
  Mr. Douglas: My right hon. Friend the Member for Birkenhead (Mr. Dell) made an excellent speech in proposing the Clause. The additional points I shall raise relate to information which we might seek to have embodied in this type of annual report relating to company balance sheets.
  I vividly recall reading the extract of a speech by the Secretary of State for Trade and Industry in Dusseldorf when he made some very poignant remarks about the adequacy of accountancy in contemporary circumstances of high inflation and where companies' asset structure and their balance sheet valuations did not reflect the cost of replacement either at current valuations or at possible future valuations.
  If we are to be troubled about the adequacy of the accountancy profession—this is particularly important in a regional context—and if companies are to be squeezed from the point of view of liquidity and are to hold up investment, we must carefully examine whether tax-based incentives are suitable to enhance investment opportunities in a period of
  968
  high inflationary pressure. It would be appropriate in the context of a report to ensure that in any consideration of investment opportunities questions such as the degree of inflation prevailing and the adequacy of investment incentives offered by the Government were taken into consideration.
  I agree wholeheartedly with my right hon. Friend that the Treasury has an equal—perhaps a greater—responsibility to examine the method of approach by companies in their use of the investment incentives now proposed by the Government. In the past the Department of Trade and Industry, or the Ministry of Technology as it then was, built up a considerable body of expertise to examine whether the assets for which capital allowances were given were deployed for the purposes and in the areas for which the allowances had been claimed. The Treasury should have transferred to it this body of expertise, either in terms of Civil Service personnel or the files and details of the companies which in the past have used capital allowances, including details of the regional impact of such allowances.
  My right hon. Friend has made a number of valid comments about the regional aspects of capital allowances.
  The Minister of State, Treasury (Mr. Terence Higgins): The hon. Gentleman keeps referring to "allowances". Does he mean grants or allowances?
  Mr. Douglas: I mean grants—the grants which the Labour Government deployed.
  We have gathered a great deal of information as to the regional impacts of these grants. The Select Committee on Scottish Affairs paid particular attention to the use to which these allowances were put in Scotland. Unfortunately, because of lack of detailed information then, no distinct conclusion could be reached visà-vis tax allowances in this situation. However, this information is decidedly appropriate in determining the effectiveness of regional policy. If we are to enter the European Economic Community, the effectiveness of our types of regional incentives must be weighed against others.
  To digress here, it is noteworthy that the Northern Ireland Government, in their proposals, will have some opportunity to give incentives in the form of grants. I assume that they will have some

  969
  measurement of the effectiveness of grants in Northern Ireland to ascertain their usefulness in creating employment opportunities there. Unless we have that type of measurement, we shall not have an opportunity to assess the effectiveness of our system of investment incentives in enhancing employment opportunities within our regions.
  If we were to argue about the effectiveness of the phasing out and ending of the regional employment premium in 1974, we should have to see how effective is the harmonisation of tax-based incentives in marrying up with the creation of the right type of employment opportunities in the regions. Right hon. and hon. Gentlemen opposite have always argued that grants created a capital-intensive structure in the regions. That may or may not be true. One of the criticisms which we might have made about grants was that we did not get the necessary spin-offs from them that we might otherwise have expected in terms of enhancing employment overall. If we remove the grants, as we are about to do, and introduce tax-based incentives, we shall be unable, in regional economic terms, to look at how these new incentives will relate to the build-up of either foreign-based industries or indigenous companies within the regions.
  In regional impact, it is essential to have some assessment of the effectiveness of the new policies. The Government may claim, "It is early days yet. We are only now getting the opportunity of increasing company liquidity and, therefore, we cannot see at present how tax-based incentives will operate." That may be an excuse which the Government could proffer, or it may be offered as a reason.
  I cannot find any company of any magnitude in Scotland that has confidence in the future in terms of the new investment incentives. I can find no company willing to say, "We are convinced that the new tax-based incentives are desirable in the regional context." I hope that the type of report for which my right hon. Friend has asked will be produced by the Government—not because we ask for it in narrow, partisan terms but because we want to see in concrete terms the effectiveness of regional policy on different dimensions and attitudes.
  Mr. John Horam: As my right hon. Friend the Member for Birkenhead (Mr. Dell) so rightly said,
  970
  investment allowances are a major element in any regional policy. We know the problems of regional policies; at least, we see the conditions which are produced by regional imbalance in this country. We who come from and represent development areas see these problems every time we visit our constituencies, and they colour our whole approach to politics and to issues of this kind.
  Equally, we know, in theoretical terms, the kind of solutions that we would want. We want solutions which would deploy public money effectively and which would be, in the fashionable phrase, cost-effective. But we also want solutions which are effective and which are seen to do what they are mant to do, which is to reduce the regional imbalance.
  Part of the link between the problems and the solutions is provided by information. We must have good information if we are to plan properly and sort out the most effective solutions. I accept that there can be debate on even a non-political basis about the kinds of solution that there may be to our regional problems. Yet it is generally agreed by probably all hon. Members that the regional statistics and information that we have at present are extremely inadequate. This was first revealed when we had the strategic document produced by the Planning Council set up by the previous Labour Government. One of the big criticisms of that Council, excellent though its analysis was, varying from region to region, was the self-evident paucity of statistics and information on which it relied. It relied mainly on employment statistics, which were produced widely and well, for obvious reasons. But there was little else of a critical kind to rely on to diagnose the fundamental problems, which the Council attempted to do.
  Equally, the Annual Abstract of Regional Statistics contains a great deal, but very little of it is related to some of the crucial equations which we have to look at, some of the fundamental factors we need to know far more about in the economic, social and industrial health of a region. Far too few of the statistics are related to the important things. If one looks at that Abstract, one sees that in the whole area of statistics on regional matters, only one page is about investment by private industry. That is a page summarising the effect of investment grants. That page will no longer be

  971
  present in future years. Presumably we shall have no information directly related to the regional consequences and effects of investment grants, allowances, or whatever system is used.
  Equally, comparing that with the sort of information available in other countries, under the French planning system the regional equation is built in at the beginning of the public expenditure and taxation operation. They know not only on what programmes the public expenditure is being made, but also exactly where the money is spent. They break it down regionally, that is to say, vertically as well as horizontally, so that they know not only what is being spent on schools throughout the country, but they can see even in a very small area what is being spent on schools, roads, grants to industry and so on. That is the kind of view which we need to have of our policies before we can make them effective. We need that kind of insight into the situation.
  5.30 p.m.
  Yet, given this paucity of information—as compared with the excellent information achieved by various methods in other countries—this Government will reduce the amount of information coming forward. Furthermore, they do not intend to try to make it better than what it is. They do not care very much about the situation. I want to quote the reply given to my right hon. Friend the Member for Birkenhead at an earlier stage, when he referred to the question of information resulting from the new system.
  The Chief Secretary said:
  "The right hon. Gentleman asked about the provision of information and statistics under the new system. The Revenue is not able to publish statistics about tax allowances given in the development areas because many firms operate in both development areas and elsewhere. In preparing their accounts for tax purposes they are not required to separate out the allowances which arise in different localities.
  "I suppose that we could consider forcing people to provide this information, but I am against adding to the administrative burdens on industry. However, statistics relating to tax allowances generally are published in the National Income Blue Book and Inland Revenue statistics."—[OFFICIAL REPORT, 18th May, 1971; Vol. 817, c. 1221.]
  There are certain inconsistences underlying the lordly idea that we must not
  972
  trouble industry, and that it is too much bother for industry to produce the information required. First, industry is getting a certain amount of money in respect of these allowances from the State and, ultimately, from the taxpayer. To that extent Parliament has a right to know where this money is going and how it may be spent, and it should be given the maximum information.
  Not only has Parliament the right to know; industry itself does a great deal of digging for information of just this kind for its own planning purposes. I happen to know something about this matter. Before I became a Member of Parliament I was an economic consultant, and I can tell hon. Members that a whole business is devoted to the task of research for the benefit of industry—searching for the information that industry needs, sometimes at inconvenience to ordinary members of the public.
  It is a curious argument that industry which is receiving money from the State should not be troubled by being asked to give further information because it will complicate the tax forms that have to be filled in. That same information is needed by industry for good planning. Industry is finding out as much as it can about the general problems in order to get its own planning right.
  Mr. Higgins: Can the hon. Member show us how the information that he has indicated would be of relevance to a firm's capital budgeting proposals?
  Mr. Horam: I do not quite follow the Minister's point. I thought that my right hon. Friend the Member for Birkenhead explained how further information on capital allowances would help our understanding of its effectiveness.
  Mr. Higgins: I understood the hon. Member to be relating it to the capital budgeting decision of individual firms.
  Mr. Horam: No—not at all. I was making the point that it is a little absurd to argue that we should not trouble industry for further information about its activities, or about money that the State gives it, when industry itself takes a lot of trouble to discover first such information from its customers and clients, and from ordinary members of the public.
  At one stage I worked for Rowntrees for six months, in London. I questioned

  973
  surburban housewives, trying to discover whether they wanted the covering of Kit-Kat bars to be thick or thin, and made of milk or plain chocolate; what they wanted the wrapper to look like, and whether they were satisfied with the price. The price, incidentally, is now very much higher than it was then.
  That is the sort of information that industry desperately requires and goes to a great deal of trouble and inconvenience to acquire. The Government, similarly, go through a great deal of trouble to acquire information for planning purposes. It is said that industry should not be bothered; that it has already too many forms to fill in. But this information is essential for planning purposes. We must have it if we are properly to plan the facilities and services that the State provides.
  I want to know what the Chief Secretary meant when he said that firms need not send in the information about the distinction between development areas and non-development areas. I should have thought that the whole point was that there are differential allowances for development areas and non-development areas. I find it difficult to believe that such information should not be sent in some way to tax inspectors, since there is a differential grant and a differential allowance. I accept the Minister's greater wisdom—I know that he reads his briefs well—but I am surprised that that should be the case. I should have thought that a firm would send in this information. It would certainly need it itself, and it would not be involved in much trouble if it had to pass it to the taxation authorities.
  We are concerned not only with the Government's reluctance to ask for the provision of information of this sort, on grounds that we must beneficently call laziness; we are also a little suspicious about the attitude underlying it. Since the Government are committed to reducing public expenditure—or, at least, reducing the rate of increase in public expenditure—and made pronouncements about regional policy even before the General Election which indicated that they believed in some form of regional policy, we find it difficult to know how they square the circle. We suspect that they do so by occasionally announcing little lump sums for ad hoc programmes
  974
  which, when analysed in the way that my right hon. Friend the Member for Birkenhead has analysed them, add up to a programme far less satisfying and less effective than the one operated by the last Government, or that we should be entitled to hope for at this point in our history.
  The proposals under the Local Employment Act were shown eventually to indicate a rate of increase lower than the rate of increase achieved by the last Government. Secondly, there was help to the special development areas, which, once the Prime Minister got his facts right—he over-estimated the position in the first place by 150 per cent., and even then it will be only £10 million in five years' time—are shown to amount to nothing very quickly. More recently there was a statement from the Secretary of State for the Environment on policy in the housing areas. That seemed to show a quaint mixture between regional policy and housing policy. We are all aware that housing is as bad in London as in any development area. Hon. Members who represent development areas would concede that. This is a strange mix-up in inter-departmental co-ordination. If that is what the Secretary of State's policy will lead to, he had better start on a different tack.
  Finally, there was the inspired leak—perhaps the word "inspired" is a little odd in this context—of a £100 million public works programme for the winter. The word "inspired" is a little too ambitious for something that the Labour Government have already done four times, in the winter, and which is no more than a topping up of a well-known programme. Not only that; it was used by the Labour Government for anti-seasonal purposes to counteract the seasonal drop in the work of the construction industry.
  This Government seem to be using it to cope with the whole problem of unemployment, and in that respect it is more unsatisfactory now than it was in the first place. This policy of announcing with great fanfares that lumps of money are going to be available in five years' time, to be put into regional economies, seems to require more careful inspection—the sort that would arise if we had an annual review linked to the capital allowances programme, as an essential part of regional planning. In

  975
  order to bring about more effective programmes, with good planning, we must have more information coming forward on regional matters which will allow people to make more effective judgments of the effect of our programmes. That would clear away the vast cloud of suspicion that hangs over the Government's efforts so far.
  Mr. Dalyell: It struck me, when some of my hon. Friends were speaking, that there was an uncharacteristically petulant reaction from the Minister of State at the Treasury when he intervened merely to ask why we wanted all these statistics anyway. I may have misinterpreted him, but that was the impression created in my mind.
  The first reason, of course, was given admirably by my right hon. Friend the Member for Birkenhead (Mr. Dell). How can we operate a regional policy without this kind of information? But there is, in my view, a second reason, namely, that there are a great many people who want to know where substantial sums of taxpayers' money have gone. Here is an example. With the recent closure of Plessey in Alexandria, there are a great many of our fellow-countrymen, as my hon. Friend the Member for East Stirlingshire (Mr. Douglas) knows, who simply want to know how it can happen that so much money goes into creating jobs and then—lo and behold—one Friday afternoon we are told that the whole operation is coming to an end. In a democracy, this sort of legitimate curiosity should be satisfied, and this is a good reason, apart from all the other points raised by my right hon. Friend, for having a report of the kind proposed.
  I realise that time is short, and I shall briefly state three separate issues. First, there is the question of the low-profit industry. It must be remembered that in development areas it is precisely the low-profit industries which provide many of the male jobs, if not of the female jobs. On this count alone, therefore, they are entitled to some help. But the low-profit industries now, unfortunately, include some of the key growth industries. I think, in particular, of electronics and machine tools. When one is told by Mr. De Barr of the Machine Tool Research
  976
  Association that orders are now running at under 40 per cent. of what they were 18 months ago, one sees the seriousness of the situation.
  How are the Government's new benefits, so called, helping the current low-profit industries such as machine tools or—dare I say—the electronics industry, which is in considerable crisis at the moment, not just in the West of Scotland, as evidenced by the Plessey problem, but far more generally? How does the Minister of State think that the new system will help the likes of the electronics industry in Scotland? Why should we not have a fairly full analysis in the kind of report which we have proposed of what the Government are doing in respect of these job-creating industries?
  The second issue is that of the long-gestation industry. I have shipbuilding particularly in mind here. The sub-contractors of the Upper Clyde, or, for that matter, in this case, of the Lower Clyde, are anxious people now. They are dependent on the shipbuilding industry far more than even the sub-contractors of Rolls-Royce are dependent on Rolls-Royce.
  Mr. Douglas: I hope that it was just a slip of the tongue. With respect, I should not have thought that the situation of Lower Clyde sub-contractors was in any way on a par with the situation on the Upper Clyde.
  Mr. Dalyell: I accept that at once. The point I am attempting to make is that shipbuilding sub-contractors as a whole are more dependent on shipbuilding than even the Rolls-Royce sub-contractors are on Rolls-Royce.
  Here again, among all the other causes of recent trouble, the effect of the Government's own measures should be looked at candidly. This is all the more reason for a serious and candid report such as is called for in the new Clause.
  The third issue relates to the multinational company. Whereas, by the time the scheme had reached some maturity—it was not altogether satisfactory at the beginning—it was comparatively easy to identify the effects of grants under the old system in relation to multi-national companies, I suspect that it is now, under a system of tax allowances, fairly easy for

  977
  the multi-national companies semi-legitimately to manoeuvre their profits and returns between factories in development areas and factories in non-development areas so that great confusion can be created.
  It is all the more important, therefore, as we become more dependent on multinational companies, to try to identify precisely what the effects are of granting taxpayers' money under the new system. I make no bones about my view that the system lends itself to abuse by certain multi-national companies, were they so minded, the like of which we did not have under the Labour Government's system.
  I realise that time is short, so, having made my three points, I leave the matter there.
  5.45 p.m.
  Mr. Higgins: The right hon. Gentleman the Member for Birkenhead (Mr. Dell) moved the new Clause in characteristically constructive frame of mind, and I shall do my best to reply to the various points which he and his hon. Friends have raised. As the right hon. Gentleman said, the number of Clauses has changed since the Committee stage, so that the reference now, I think, should be to Clauses 37 to 51.
  The right hon. Gentleman began by stressing that what he had in mind was an additional report, that is, as I understand it, a report in addition to that which is at present published by the Board of Inland Revenue, but it became clear during the debate that many of the analyses for which he is asking, and for which his hon. Friends the Members for East Stirlingshire (Mr. Douglas) and for Gateshead, West (Mr. Horam) are asking, are not of a kind which could reasonably be carried out by the Board of Inland Revenue, since they are, in effect, broad economic analyses either of the effect of grants as against allowances on individual firms or of the effect of allowances on the economy as a whole.
  Therefore, the terms of the new Clause do not seem to meet the argument which the right hon. Gentleman began to advance once he left his introductory remarks. The right hon. Gentleman compared the report required in the new Clause with the Department of Trade and Industry's reports on investment
  978
  grants. But these reports were self-contained in a separate part of the administration of the responsible Department. The report which the right hon. Gentleman is asking the Inland Revenue to produce on an annual basis is a report on the system of allowances and charges on plant and machinery only in so far as it has been altered in this Finance Bill.
  I do not suggest that one should necessarily read the Clause literally, but it would, as it stands, require a report on capital allowances for expenditure incurred on plant and machinery before 5th November, 1962, and after 26th October, 1970, but not for expenditure incurred between. Also, it would cover the new free depreciation allowances in respect of plant and machinery in development areas, but not in respect of mining works.
  Therefore, although I do not make much of the point, I take it that the right hon. Gentleman does not intend us to read his new Clause literally in that sense. However, even if we do not read it literally, the point remains that the new allowances in the Bill are only one part of the system of capital allowances covering the use in trading of a wide variety of depreciable assets, such as industrial and agricultural buildings, patents, know-how and the rest, and this system in turn is only one part of the system of rules for computing taxable profits. So the kind of report which the Clause seeks to introduce seems rather inconsistent with the idea that it is to be a broad survey of the entire regional development scene.
  The Inland Revenue already publishes an Annual Report which is presented to Parliament as a Command Paper and is supplemented by a volume of statistics. Of course the Board will put in the Report anything of special interest with regard to capital allowances which it considers relevant in that context. But it does not seem that the kind of instrument which the right hon. Gentleman proposes is one which would carry out the objectives he and his hon. Friends seem to have in mind.
  The right hon. Gentleman also made a number of points about the provision of information on capital allowances and so on. He said that he had been in correspondence with my hon. Friend the Financial Secretary on the subject. The House will not wish me to repeat in detail the

  979
  elaborate summary of all the data that happens to be available, but one point in particular should be taken up on the new census of production which will be produced annually, beginning this year with a survey covering 1970. This will be a source of information which I think will prove on a regional basis to be of relevance to the kind of problems the right hon. Gentleman mentioned.
  Mr. Douglas: May we have an assurance that the Report is comprehensive? My recollection is that it is a sample survey and will not necessarily give the information asked for.
  Mr. Higgins: It will give figures on a regional basis. I shall come to the relevance of figures from such surveys. The hon. Gentleman said that the figures are too aggregated or too out of date. That is a good debating point, but in making decisions on most such matters the question of how out of date they are is not the most crucial thing, provided they are not very out of date. We want figures on which we can appraise the policy concerned. In that context, it is important to distinguish between the effects of measures on the individual firm and their effects on general economic policy. That was why I intervened in the speech of the hon. Member for Gateshead, West. I certainly was not seeking, as the hon. Member for West Lothian (Mr. Dalyell) suggested, to intervene unfairly but was seeking to distinguish which of those two objectives he was talking about. The right hon. Gentleman and the hon. Member for Gateshead, West with with their experience in industry—and I have had some slight experience in industry on capital proposals—will agree that to try to appraise the impact of incentives on the individual firm on the basis of the kind of figures which the right hon. Gentleman talked about would be very difficult. As he himself rightly pointed out in a speech back in 1969, many different variables may affect the investment intentions of individual firms.
  I found it extraordinary that the hon. Member for West Lothian should suggest that the scope for abuse is rather greater under the system of allowances than under the system of grants. Opposition spokesmen on the subject—particu
  980
  larly the hon. and learned Member for Lincoln (Mr. Taverne) in Committee, as reported in column 608 of the OFFICIAL REPORT of the Committee proceedings—have not fully appreciated that it is a great deal more difficult for abuses to occur under a system of allowances than it was under a system of grants.
  The right hon. Member for Birkenhead, referring to the remarks of my hon. Friend the Chief Secretary in Committee, asked whether inspectors really could look at the proposals and decide whether abuses were taking place. As I and my hon. Friend have tried to show, the inspectors of taxes look very closely at the position of the individual firm. If, for example, the inspector knows that about 40 per cent. of a firm's trade is being done in a development area, and 100 per cent. allowances are being claimed, he might well look at the matter rather seriously. The inspectors are naturally more in touch with the individual firms.
  The situation with regard to investment grants was very different. The Board of Trade Report on investment grants for 1968–69 said:
  "Since this system of physical inspections of plant and machinery started in the autumn of 1967, 21,000 establishments have been visited and this has resulted in prosecutions of two cases of irregularity."
  That might suggest to the hon. Member for Gateshead, West, who stressed the importance of not putting too heavy a burden upon individual firms, that we can perhaps carry the proposals for tight administration to too great lengths. Our view is that the system of allowances which we have introduced is likely to be very carefully scrutinised by the individual tax inspectors who are responsible. We believe that we have a soundly-conceived system of incentives, and that the system of administering it through the 700 local tax offices will enable us to overcome the kind of difficulty which the hon. Gentleman raised.
  A number of remarks were made about the effectiveness of the change of system. This has been a major issue of political dispute between the two parties over the years. It is not our view that an annual report of the kind suggested by the right hon. Gentleman this evening would be either comprehensive, for the reasons I have given, or effective in enabling us to

  981
  appraise the basis of the allowances. While we shall certainly take into account what has been said, and the Inland Revenue will carefully consider what further information can be produced, we do not believe that the House should accept a proposal for an annual review of the kind suggested in the Clause. I therefore hope that the House will reject it.
  Mr. Dalyell: The issue was raised of the low-profit company which gives jobs in development areas, particularly male jobs. Can the hon. Gentleman say something about an analysis of the effect of the system on that form of company?
  Mr. Higgins: A number of points were raised, and I naturally listened to them with interest. Many of them are matters of controversy between the two parties. I cannot see how an annual report of the kind sought would necessarily give the data which would meet the problem the hon. Gentleman has raised. Clearly, we could not break down the allowances received by individual firms so that they could be identified.
  6.0 p.m.
  Mr. Dick Taverne: This is a serious Amendment which was carefully argued by my right hon. and hon. Friends. The Minister of State has not come within a mile of answering the case for more information. He said that the kind of information asked for could not be supplied by the Inland Revenue because it would require broader economic inquiries which the Inland Revenue would not be in the best position to undertake. There would be no objection from us if inquiries of this kind were carried out by the Treasury, which would be in the right position to do so. But since this is related to capital allowances, presumably it is a subject which the Board of Inland Revenue could publish. The hon. Gentleman said that the Board's Annual Report will mention any special features, but the burden of our case is that the kind of information now supplied is not sufficient to deal with this major question.
  It is true that the new census of production will help in some respects, but it will not show the capital allowances side and the influence which capital allowances have on the development of production and the relationship between
  982
  this and regional development. The system proposed in new Clause 2 would cover most of the questions which have been raised. It would also cover questions of the mining industry and others concerned with first-year allowances. The hon. Gentleman said that although some of the information which is supplied is out of date, that does not necessarily matter. What we will want and need to know is how the position has changed and how it is changing. We need this to be able to form a judgment on how it is working.
  This concerns expenditure involving hundreds of millions of pounds and, as has been pointed out, to talk as if any extra expenditure on doing elaborate surveys was a minor matter on which one should not waste civil servants' or company time, is totally to underrate the kind of issue at stake, because we are faced with enormously important questions affecting the expenditure of hundreds of millions of pounds.
  The fact that this is a form of tax allowance is neither here nor there. We have persistently argued in Committee and elsewhere that there is no difference in principle between positive expenditure and negative expenditure—the area which is regarded for some matters by Government spokesmen as primarily the jurisdiction of the Chancellor and not as Government policy as a whole. There is no basic difference between one form of Government investment incentive and another in desirability and effect. For example, there is no basic difference in principle between housing subsidies and tax reliefs on mortgages. So the fact that it is a form of tax allowance should not lessen the degree of information provided or the degree of scrutiny which the House exercises.
  We need to know the information which the Government have brushed aside in the past. It is clear that any change from the system of grants to the system of allowances which the Government undertake needs major research, and that the Government did not make inquiries into the effects there would be and the way they would be achieved. It is clear, from an answer by the Secretary of State for Trade and Industry, that the kind of information which should be obtained would be of enormous value. This was the detailed Written Answer

  983
  given by the Secretary of State to my right hon. Friend the Member for Birkenhead (Mr. Dell) on 14th December. The Secretary of State was asked
  "… if he will now publish the results of the survey of the effectiveness of investment incentives."
  Some details were given about the pilot survey which showed that
  "… it is difficult to establish how far companies' decisions may have been influenced by investment incentives …"
  rather than other factors. The right hon. Gentleman said:
  "Despite the size of sample and response rate, the survey produced much information of value on the factors entering into a company's investment decisions, and on the methods of investment appraisal used."
  Yet this is precisely the kind of area which we need to be covered in the Annual Report. The right hon. Gentleman stated, for example,
  "About 30 per cent. of the investment may not be appraised at all, perhaps a third of this because some firms do not use any formal methods of appraisal, and the remainder because many firms do not appraise small projects or replacements. Much of the remaining 70 per cent. of investment is appraised by more than one method of calculating returns on investment."
  Is this picture changing? Are more careful D.C.E. calculations being done? This is a matter of great importance in judging the effectiveness of these allowances. The right hon. Gentleman said:
  "A large part, perhaps three-quarters, of investment may be done by companies in which managerial factors constrain investment to some extent. Such factors include a lack of satisfactory proposals or of adequate staff to manage projects …"
  How are decisions arrived at? How far are the consequences of those decisions, which have a considerable impact on the negative expenditure of the Government, determined by rational considerations in the first place?
  Again, the right hon. Gentleman said:
  "So far as the evidence of the pilot survey goes, firms doing more than half of all investment may have increased their investment in the development areas as a result of the regional differential; the size of the increase cannot be
  estimated, but generally appears to have been small."—[OFFICIAL REPORT, 14th December, 1970; Vol. 808, c. 238–40.]
  So there is some evidence that the regional differentials are of importance but it is not yet known exactly how far they are of importance. But all this is absolutely vital because, if the Government get this kind of decision wrong, if the relationship between the two is wrong, disastrous consequences may follow.
  Again, one would wish to know how far there was an effect which was caused by the delayed impact of tax allowances as compared with investment grants, because the allowance would not be received until tax became payable, which is a delay of nine months after the end of the accountable period. There may be, therefore, up to 21 months' delay between expenditure and the effect on the company's finances compared with the delay of about six months in the case of grants. How far does this extra delay affect the change? How far is this the effect of the change? I am advised that, from a prudent accounting standpoint where the true rate of wear and tear is less than the tax rate, as would clearly be the case under the new system an adjustment will be necessary in the tax equalisation reserve account in order that part of the profit should be allocated to cover tax on the latent balancing charge which arises on the accelerated rate of write-down for tax purposes. If that happens, profits cannot be available for company development.
  There are a host of such questions which are vital in deciding whether the system is effective and how it is working out in practice. This is an important Amendment. I do not think that the information given is sufficient to judge the effective expenditure of hundreds of millions of pounds of Government money and, in the circumstances, I advise my right hon. and hon. Friends to vote for the Second Reading of new Clause 2.
  Question put, That the Clause be read a second time:—
  The House divided: Ayes 169, Noes 190.

  Division No. 406.]

  AYES

  [6.10 p.m.

  Abse, Leo

  Ashton, Joe

  Blenkinsop, Arthur

  Allaun, Frank (Salford, E.)

  Barnes, Michael

  Boardman, H. (Leigh)

  Allen, Scholefield

  Barnett, Joel

  Booth, Albert

  Archer, Peter (Rowley Regis)

  Bishop, E. S.

  Bradley, Tom

  Brown, Ronald (Shoreditch & F'bury)

  Howell, Denis (Small Heath)

  Pendry, Tom

  Buchan, Norman

  Hughes, Mark (Durham)

  Pentland, Norman

  Callaghan, Rt. Hn. James

  Hughes, Robert (Aberdeen, N.)

  Perry, Ernest G.

  Campbell, I. (Dunbartonshire, W.)

  Jay, Rt. Hn. Douglas

  Price, J. T. (Westhoughton)

  Carmichael, Neil

  Jenkins, Hugh (Putney)

  Price, William (Rugby)

  Castle, Rt. Hn. Barbara

  Jenkins, Rt. Hn. Roy (Stechford)

  Reed, D. (Sedgefield)

  Clark, David (Colne Valley)

  John, Brynmor

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Cocks, Michael (Bristol, S.)

  Johnson, Carol (Lewisham, S.)

  Robertson, John (Paisley)

  Concannon, J. D.

  Johnson, James (K'ston-on-Hull, W.)

  Roderick, Caerwyn E.(Br'c'n&R'dnor)

  Cox, Thomas (Wandsworth, C.)

  Johnson, Walter (Derby, S.)

  Rodgers, William (Stockton-on-Tees)

  Crosland, Rt. Hn. Anthony

  Jones, Barry (Flint, E.)

  Roper, John

  Cunningham, G. (Islington, S. W.)

  Jones, Dan (Burnley)

  Roes, Rt. Hn. William (Kilmarnock)

  Cunningham, Dr. J. A. (Whitehaven)

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  Shore, Rt. Hn. Peter (Stepney)

  Dalyell, Tam

  Jones, Gwynoro (Carmarthen)

  Short, Mrs. Renée (W'hampton, N. E.)

  Davies, Denzil (Llanelfy)

  Judd, Frank

  Sillars, James

  Davis, Terry (Bromsgrove)

  Kaufman, Gerald

  Silverman, Julius

  Deakins, Eric

  Kelley, Richard

  Skinner, Dennis

  Defargy, H. J.

  Kerr, Russell

  Small, William

  Dell, Rt. Hn. Edmund

  Lambie, David

  Smith, John (Lanarkshire, N.)

  Dempsey, James

  Latham, Arthur

  Spearing, Nigel

  Doig, Peter

  Lawson, George

  Spriggs, Leslie

  Dormand, J. D.

  Lee, Rt. Hn. Frederick

  Steel, David

  Douglas, Dick (Stirlingshire, E.)

  Lewis, Arthur (W. Ham N.)

  Stoddart, David (Swindon)

  Douglas-Mann, Bruce

  Lipton, Marcus

  Strang, Gavin

  Driberg, Tom

  Loughlin, Charles

  Summerskill, Hn. Dr. Shirley

  Dunn, James A.

  Lyon, Alexander W. (York)

  Swain, Thomas

  Eadie, Alex

  McBride, Neil

  Taverne, Dick

  Edwards, Robert (Bilston)

  Mackenzie, Gregor

  Thomas, Jeffrey (Abertillery)

  Ellis, Tom

  Mackie, John

  Thomson, Rt. Hn. G. (Dundee, E.)

  Evans, Fred

  Mallalieu, J. P. W. (Huddersfield, E.)

  Thorpe, Rt. Hn. Jeremy

  Fernyhough, Rt. Hn. E.

  Marks, Kenneth

  Tinn, James

  Fisher, Mrs. Doris (B'ham, Lady wood)

  Marquantd, David

  Tomney, Frank

  Fletcher, Ted (Darlington)

  Marshall, Dr. Edmund

  Torney, Tom

  Ford, Ben

  Mayhew, Christopher

  Tuck, Raphael

  Fraser, John (Norwood)

  Meacher, Michael

  Urwin, T. W.

  Freeson, Reginald

  Mellish, Rt. Hn. Robert

  Walker, Harold (Doncaster)

  Mendelson, John

  Galpern, Sir Myer

  Millan, Bruce

  Wallace, George

  Garrett, W. E.

  Miller, Dr. M. S.

  Watkins, David

  Gilbert, Dr. John

  Morris, Alfred (Wythenshawe)

  Weitzman, David

  Ginsburg, David

  Morris, Charles R. (Openshaw)

  Wellbeloved, James

  Golding, John

  Morris, Rt. Hn. John (Aberavon)

  Wells, William (Walsall, N.)

  Grant, George (Morpeth)

  Ogden, Eric

  White, James (Glasgow, Pollok)

  Grant, John D. (Islington, E.)

  O'Halloran, Michael

  Whitehead, Phillip

  Griffiths, Will (Exchange)

  O'Malley, Brian

  Whitlock, William

  Grimond, Rt. Hn. J.

  Orme, Stanley

  Willey, Rt. Hn. Frederick

  Hamilton, James (Bothwell)

  Oswald, Thomas

  Williams, Alan (Swansea, W.)

  Hamilton, William (Fife, W.)

  Paget, R. T.

  Williams, W. T. (Warrington)

  Harrison, Walter (Wakefield)

  Palmer, Arthur

  Wilson, Rt. Hn. Harold (Huyton)

  Hart, Rt. Hn. Judith

  Pannell, Rt. Hn. Charles

  Woof, Robert

  Hattersley, Roy

  Parker, John (Dagenham)

  Heffer, Eric S.

  Parry, Robert (Liverpool, Exchange)

  TELLERS FOR THE AYES:

  Hooson, Emlyn

  Pavitt, Laurie

  Mr. Ernest Armstrong and

  Horam, John

  Peart, Rt. Hn. Fred

  Mr. Donald Coleman.

  Houghton, Rt. Hn. Douglas

  NOES

  Adley, Robert

  Chichester-Clark, R.

  Fletcher-Cooke, Charles

  Alison, Michael (Barkston Ash)

  Churchill, W. S.

  Fookes, Miss Janet

  Allason, James (Hemel Hempstead)

  Clark, William (Surrey, E.)

  Foster, Sir John

  Barber, Rt. Hn. Anthony

  Clegg, Walter

  Fowler, Norman

  Batsford, Brian

  Cockeram, Eric

  Fraser, Rt. Hn. Hugh (St'fford & Stone)

  Bell, Ronald

  Cooke, Robert

  Gibson-Watt, David

  Benyon, W.

  Cooper, A. E.

  Goodhart, Philip

  Berry, Hn. Anthony

  Corfield, Rt. Hn. Frederick

  Goodhew, Victor

  Biggs-Davison, John

  Cormack, Patrick

  Gorst, John

  Blaker, Peter

  Critchley, Julian

  Cower, Raymond

  Boscawen, Robert

  Crouch, David

  Grant, Anthony (Harrow, C.)

  Bossom, Sir Clive

  Crowder, F. P.

  Gray, Hamish

  Bowden, Andrew

  Davies, Rt. Hn. John (Knutsford)

  Green, Alan

  Boyd-Carpenter, Rt. Hn. John

  d'Avigdor-Goldsmid, Sir Henry

  Gummer, Selwyn

  Bray, Ronald

  d'Avigdor-Coldsmid, Maj.-Gen. James

  Gulden, Harold

  Brewis, John

  Dean, Paul

  Hall, Miss Joan (Keighley)

  Brocklefcank-Fowler, Christopher

  Deedes, Rt. Hn. W. F.

  Hall, John (Wycombe)

  Brown, Sir Edward (Bath)

  Dixon, Piers

  Hall-Davis, A. G. F.

  Bryan, Paul

  Dodds-Parker, Douglas

  Harrison, Col. Sir Harwood (Eye)

  Buck, Antony

  Dykes, Hugh

  Hawkins, Paul

  Bullus, Sir Eric

  Edwards, Nicholas (Pembroke)

  Hay, John

  Butler, Adam (Bosworth)

  Elliot, Capt. Walter (Carshalton)

  Hayhoe, Barney

  Carlisle, Mark

  Eyre, Reginald

  Hicks, Robert

  Charmon, Paul

  Farr, John

  Higgins, Terence L.

  Chapman, Sydney

  Fell, Anthony

  Hiley, Joseph

  Chataway, Rt. Hn. Christopher

  Fenner, Mrs. Peggy

  Hill, James (Southampton, Test)

  Hordern, Peter

  Monro, Hector

  Sproat, lain

  Hornby, Richard

  More, Jasper

  Stainton, Keith

  Hornsby-Smith, Rt. Hn. Dame Patricia

  Morgan-Giles, Rear-Adm.

  Stanbrook, Ivor

  Howell, David

  Morrison, Charles (Devizes)

  Stewart-Smith, D. G. (Belper)

  Howel, Ralph (Norfolk, N.)

  Mudd, David

  Stokes, John

  Hunt, John

  Murton, Oscar

  Stuttaford, Dr. Tom

  Hutchison, Michael Clark

  Neave, Airey

  Tapsell, Peter

  Irvine, Bryant Godman (Rye)

  Noble, Rt. Hn. Michael

  Taylor, Sir Charlese (Eastbourne)

  Jenkin, Patrick (Woodford)

  Normanton, Tom

  Taylor, Edward M.(G'gow, Cathcart)

  Jessel, Toby

  Onslow, Cranley

  Tebbit, Norman

  Jopling, Michael

  Oppenheim, Mrs. Sally

  Temple, John M.

  Kellett-Bowman, Mrs. Elaine

  Owen, Idris (Stockport, N.)

  Thatcher, Rt. Hn. Mrs. Margaret

  Kilfedder, James

  Page, Graham (Crosby)

  Thomas, John Stradling (Monmouth)

  King, Evelyn (Dorset, S.)

  Parkinson, Cecil (Enfield, W.)

  Trafford, Dr. Anthony

  King, Tom (Bridgwater)

  Peel, John

  Trew, Peter

  Kinsey, J. R.

  Percival, Ian

  Tugendhat, Christopher

  Knight, Mrs. Jill

  Peyton, Rt. Hn. John

  Turton, Rt. Hn. Sir Robin

  Le Marchant, Spencer

  Pink, R. Bonner

  Vaughan, Dr. Gerard

  Lewis, Kenneth (Rutland)

  Powell, Rt. Hn. J. Enoch

  Waddington, David

  Longden, Gilbert

  Price, David (Eastleigh)

  Walder, David (Clitheroe)

  Loveridge, John

  Pym, Rt. Hn. Francis

  Walker-Smith, Rt. Hn. Sir Derek

  Luce, R. N.

  Rawlinson, Rt. Hn. Sir Pete

  Wall, Patrick

  McAdden, Sir Stephen

  Redmond, Robert

  Walters, Dennis

  McCrindle, R. A.

  Reed, Laurance (Bolton, E.)

  Ward, Dame Irene

  McLaren, Martin

  Rees, Peter (Dover)

  Warren, Kenneth

  Maclean, Sir Fitzroy

  Rees-Davies, W. R.

  Weatherill, Bernard

  Macmilan, Maurice (Farnham)

  Renton, Rt. Hn. Sir David

  Wells, John (Maidstone)

  McNair-Wilson, Michael

  Rodgers, Sir John (Sevenoaks)

  Whitelaw, Rt. Hn. William

  Maddan, Martin

  Rost, Peter

  Wiggin, Jerry

  Madel, David

  Russell, Sir Ronald

  Wilkinson, John

  Marten, Neil

  Scott, Nicholas

  Wolrige-Gordon, Patrick

  Mather, Carol

  Scott-Hopkins, James

  Wood, Rt. Hn. Richard

  Maude, Angus

  Shelton, William (Clapham)

  Woodhouse, Hn. Christopher

  Maxwell-Hyslop, R. J.

  Simeons, Charles

  Worsley, Marcus

  Meyer, Sir Anthony

  Sinclair, Sir George

  Mills, Peter (Torrington)

  Smith, Dudley (W'wick & L'mington)

  TELLERS FOR THE NOES:

  Mitchell, Lt. Col. C.(Aberdeenshire, W)

  Soref, Harold

  Mr. Tim Fortescue and

  Mitchell, David (Basingstoke)

  Speed, Keith

  Mr. Hugh Rossi.

  Moate, Roger

  Spence, John

New Clause 4

  ANNUAL REPORT ON WEALTH DISTRIBUTION AND CAPITAL TAXES
  The Board shall publish an annual report on the distribution of privately-owned wealth in the United Kingdom and the impact thereon of the taxes on capital.—[Mr. Marquand.]
  Brought up, and read the First time.
  Mr. David Marquand: I beg to move, That the Clause be read a Second time.
  As with the previous new Clause, this one calls for an annual report, and an annual report with more information than that already published by the Inland Revenue. One of our main reasons for suggesting it is that the statistics already published on the distribution of wealth by the Inland Revenue are clearly inadequate and in some respects even misleading.
  The second reason for the Clause is that it is clear that the Bill will have, in many respects, a markedly regressive effect on the distribution of wealth, and we believe that the extent of that regres
  988
  sive effect should be made clear so that Parliament and the public can know what is happening.
  The third reason for the Clause is that, in spite of the inadequacy of the statistics to which I referred, it is reasonably clear that the capital taxes, as they now operate, are in many ways ineffective and that some reform of the system of capital taxation is badly needed. But, in our view, it would be wrong to embark on reform without knowing precisely the facts.
  I wish to say a few words about the inadequacies of the information which is published by the Inland Revenue, although I do not wish to belabor the point, since I think that it is generally accepted. Certainly it is accepted by the Inland Revenue, which publishes in the Inland Revenue statistics estimates of the wealth of individuals. These estimates, however, are based on information derived from the existing taxes, and the Inland Revenue itself says that its estimates are subject to wide margins of error.
  In the Inland Revenue statistics for 1971 the Board says, in respect of the

  989
  tables dealing with the wealth of individuals:
  "The estimates given here are inevitably subject to fairly wide margins of error and are in some respects incomplete".
  It then lists a series of points from (a) to (g) detailing in which respects it believes its own estimates to be subject to error. Therefore, I do not think it can be disputed that the information at present available from Government sources is not adequate for the purposes we have in mind.
  Moreover—a point which the Inland Revenue does not make in its official statistics but which is patently true nevertheless—it is notorious that estate duty can easily be avoided because of the absence of an effective gifts tax. Estimates based on the operation of estate duty are therefore bound to be extremely dubious. I therefore hope that, whatever other arguments the Minister of State advances, he will not, should he feel inclined to reject the Clause, use the argument that we already have the information for which the Clause calls and that there is therefore no need for a report of the kind we propose.
  As I have said, the second reason for calling for a report is that it is clear, subject to the inadequacies of the statistics I have mentioned, that this Finance Bill is bound to have a highly regressive effect. It seems fairly clear that between 1960 and 1970 there was some movement towards greater equality in the ownership of wealth. In 1960 it was estimated that the wealthiest 1 per cent. of the population owned 42 per cent. of the privately-owned wealth and the top 10 per cent. owned 83 per cent. By 1970, according to a Written Answer which I received from the Financial Secretary last autumn, it was estimated that the wealthiest 1 per cent. owned 34 per cent. of the wealth and that the wealthiest 10 per cent. owned 75 per cent. Thus, it would appear that there was a slight move towards greater equality during the 1960s.
  That generalisation is borne out by the Inland Revenue's estimates of the famous Gini coefficient. According to the Inland Revenue, the Gini coefficient moved in an egalitarian direction between the early and late 1960s. One cannot be certain, because the statistics do not enable one to make precise judgments, but the prob
  990
  ability is that one reason was that the Labour Government, in the latter part of the 1960s, consciously strove for greater equality in the ownership of wealth.
  It is abundantly clear, however, that the present Government, in this Bill, are rapidly and deliberately moving in the reverse direction. Clause 12, dealing with the relief for surtax payers, will cost £38 million in a full year. It is true that not all of it, not even most of it, will go to the owners of investment income, but a substantial part of it will.
  Mr. Patrick Jenkin: It is earned income relief.
  Mr. Marquand: It is earned income relief, but, as the Financial Secretary him self said in answer to a Parliamentary Question asked by my hon. Friend the Member for Farnworth (Mr. Roper), it will have the effect of giving substantial benefit to people with unearned income in instances when they have both earned and unearned income. The Financial Secretary may have forgotten his own reply, but he told me—
  Mr. Jenkin: The hon. Gentleman need not waste the time of the House. I explained in Committee how the effect arose.
  Mr. Marquand: The hon. Gentleman accepts that the effect arises and therefore I shall not waste the time of the House. The point is that the Clause gives a significant benefit to property income.
  Clause 13, dealing with the disaggregation of children's income, will cost £15 million in a full year. Chapter 3 of the Bill—setting out the new system of personal taxation—lays down that what has been seemed a modest slice of investment income will be charged at the same rate as earned income. We do not know how large that modest slice is, but it became clear in Committee that the Government's interpretation of "modest" is not the same as ours. It is clear that there will be a significant, although unknown, benefit to property income resulting from the new system as the Government intend to work it. That is another reason why a report of this kind is needed.
  Clause 52, which carries through the substitution of capital gains tax for betterment levy, will cost £12 million in 1971–72 and £31 million in 1972–73. As became clear in Committee, and in debates on

  991
  the Land Commission (Dissolution) Bill, 40 per cent. of the benefit of that reduction is likely to go to a very small number of people. Clause 53 deals with short-term capital gains tax and costs £1,500,000. Clause 56, abolishing the charge to capital gains tax on death, costs, on the Government's own estimate, £15 million.
  As the Financial Secretary will admit, that is the effect in the immediate future only. He carefully refrained from saying how great the estimated loss of revenue would be in later years. Yet the yield of capital gains tax is likely to build up over time and therefore the effect of abolishing deemed disposal at death is likely to be very much greater 10 or 15 years from now than it would be next year. There again is an area where the facts are not clear.
  6.30 p.m.
  Clause 57 raises the estate duty limits and costs £20 million; Clause 58 relates to the payment of estate duty by instalments. The Financial Secretary told us in Committee that the cost, over an unspecified period of years, was likely to be £45 million.
  These sums add up to a significant and substantial total. It is clear that the net effect of this Budget is highly regressive. It is also clear that the extent of its re-gressiveness is unknown. The Government are unable or unwilling to say what the full effect of the Clause abolishing capital gains tax on death will be. They are unable or unwilling to say how large the "modest slice" of investment income will be. From the information we have been given by Ministers, it is therefore impossible to tell how great the regressive effect of the Bill will be. We know that it will be significant but not how significant.
  That is another reason why a full report should be published by the Board.
  My third reason for believing that a report of this kind is necessary is that it is clear that the capital taxes as they work at the moment have not been anything like effective enough. Despite the movement towards greater equality which took place during the 1960s—a movement which is likely to be reversed by this Finance Bill—the degree of inequality which remains is intolerable and
  992
  unjustifiable. It is clear that the distribution of wealth owned by individuals in our society is far more unequal than it is in other Western countries. It is far more unequal than in the United States, and the high probability is that it is more unequal than in any other Western mixed economy.
  Mr. Higgins: Would the hon. Gentleman give us the source of his information?
  Mr. Marquand: Yes. If the Minister of State would care to look up the January-March issues of the "Political Quarterly" he will find a series of articles dealing with many different aspects of the taxation system. One article in that issue, by Professor Atkinson of the University of Essex, examines the taxation of wealth, and compares this country with other countries, and comes without any serious doubt, to the conclusion that I have mentioned. The Minister of State may be able to prove that I am wrong and that other Western countries are no more equal in the distribution of wealth than we are, but I shall be surpised if he can.
  Mr. Higgins: The hon. Gentleman is jumping from one thing to another, from the distribution of wealth to whether the taxation system is or is not favourable. He started on the first, moved to the second, and has gone back to the first. I believe I am right in saying that Professor Atkinson did stress that the figures should be interpreted with great caution.
  Mr. Marquand: Of course they have to be interpreted with caution. That is one of the reasons why we are asking for adequate information. The Minister of State cannot get out of his difficulties in that way. Professor Atkinson's article makes two things clear. The first is that the taxation of wealth in this country is narrower in scope than it is in many other Western countries. The second is that the distribution of wealth in this country is more unequal than it is in other Western countries. Those two conclusions are not at all inconsistent, indeed they support each other. It is precisely because the taxation of wealth is less effective in this country than elsewhere that the ownership of wealth is more unequal than elsewhere. Both these points are established clearly by Professor Atkinson. If the Minister of State has not read the article I suggest

  993
  that he should do so. I think that he will find it convincing.
  Mr. Michael Meacher: Would my hon. Friend agree that a number of articles that have appeared by Lampman and Kolko in the "Review of Economic Studies" in the mid- and late 1960s have indicated that the degree of concentration of wealth held by the 1 per cent. or 5 per cent. who are richest is, if anything, twice as great in this country as in the United States?
  Mr. Marquand: The authors to whom my hon. Friend is referring are cited in the Atkinson article.
  It would be a pity to get too deep into an academic disquisition on all the sources and footnotes in the Atkinson article—[HON MEMBERS: "Hear, hear."] Hon. Members opposite should not cheer that point too loudly. After all, it was the pedantic insistence of the Minister of State on questioning me about the minutiae of the Atkinson article which got us involved in this discussion in the first place. I did not have any intention of going into the Atkinson article in this amount of detail. I was led into that academic bog by the Minister of State. If his hon. Friends want to blame anyone they should blame him.
  The other point which is indisputable is that the chief of the capital taxes that we now have, namely, estate duty, has not increased its yield as a proportion of personal wealth anything like as rapidly as would have been expected considering the increases in rates that have taken place over the past 40 years. It has been estimated that in 1927 the revenue from estate duty came to 0·42 per cent. of personal wealth and that in 1966 the figure was 0·43 per cent. of personal wealth. That is in spite of the fact that over that period there has been a significant increase in the rates. The inescapable conclusion is that a massive avoidance of estate duty was built up over the years. One estimate is that in 1966 the total amount of gifts inter vivos which avoided estate duty came to £350 million or a quarter of the total value of estates subject to estate duty in that year. It is impossible to make a precise estimate, but there is no doubt that there has been very considerable avoidance because of the absence of an effective gifts tax.
  994
  It is clear, too, that a whole host of other Western countries with economies comparable to our own operate an annual wealth tax. Such a tax does not appear to be inconsistent in any way with the existence of a market economy; it does not appear to have stifled economic growth, to have prevented people from saving, or to have produced a loss of initiative or dynamism on the part of entrepreneurs or of anybody else. Sweden has one of the highest rates of growth in the Western world and has both a gifts tax and a wealth tax. Germany, not normally thought of as a hotbed of Bolshevism, has a wealth tax. The United States buttresses its estate duty with a gifts tax.
  There can be no doubt that the scope of our capital taxes puts us way out on a limb in comparison with other countries. I hear the Financial Secretary muttering to his hon. Friend that we are way out on a limb because we have very high rates of estate duty. I entirely take that point. I am not saying that the existing rates of estate duty should necessarily be left unchanged. Not at all. What I am trying to establish is that our present system of estate duty with its combination of very high rates, and great ease of avoidance, has not achieved the purposes which, presumably, it was designed to achieve. Instead it has fortified a stubborn, and continuing inequality in the ownership of wealth which disfigures this society in comparison with other Western societies.
  It would not be right at this point to propose a full-blooded scheme of reform in this branch of taxation. All kinds of possibilities need to be examined and discussed during the next few years. One possibility is to have a gifts tax and slightly lower rates of estate duty—a combination or package of that kind. Another suggestion which has many advocates is an annual tax on wealth. A suggestion which I personally find more attractive is that there should be a tax on the transfer of wealth over a person's lifetime. All of these possibilities exist, and many others.
  I am not dogmatic about which of them, or which combination of them, should be adopted. What I do say is that reform is clearly needed, that we cannot go on as we are—and if we are to

  995
  have reform, then we must have first the information on which to base it. It is in that spirit that I move the Amendment.
  Mr. Peter Rees: I hope the hon. Member for Ashfield (Mr. Marquand) will forgive me if I do not follow him in his lengthy analysis of various taxes on capital from which we suffer. I would have thought that the length of the list of those taxes would suggest that it is time they were cut down—on that ground alone; and on that ground alone I welcome the repeal of short-term gains tax. I hope also that the hon. Gentleman will forgive me if I do not follow him in his rather esoteric views and those of the hon. Member for Oldham, West (Mr. Meacher). I would have thought that the new Clause could be objected to on two rather simpler grounds.
  First of all, it leads to a massive erosion of the principle of confidentiality. It has always been a principle of our tax system that information given by the taxpayer and received by the Revenue should be treated in absolute confidence and used primarily for the taxation of that taxpayer alone, in the assessment and collection of tax from him. I am sure that this principle is scrupulously observed by inspectors of taxes in most cases when information is given to them in absolute confidence, but the possible use of some of that information in the compilation of official statistics is not entirely consistent with that, and I hope that on another occasion the Financial Secretary will look into that problem.
  In any event, this Clause would lead to a really massive invasion of that principle and would weaken the confidence of taxpayers in the system.
  6.45 p.m.
  After all, taxpayers have to give a great deal of confidential information about their affairs so that sufficient revenue can be collected for the running of the country. If they are asked to go beyond that they may find that that confidential information could be a prelude to imposing yet further stringent, swingeing taxation, and I would think that the taxpayers will object to what is proposed.
  Secondly, there is a practical difficulty, that if this Clause were to be enacted and
  996
  were to be effective it would involve every taxpayer in listing annually every single piece of property he owns, and, further to that, having it valued, because if the property were not valued as well as listed the information would be of little use. This proposal goes far beyond the powers with which the Revenue are equipped by the Finance Act, 1965, to implement the capital gains provisions.
  The only possible precedent for this Clause is the Domesday Book of the eleventh century. Possibly, as a prelude to our entry into Europe, we should be reminded of our Norman past, and the hon. Gentleman should be reminded, although I am sure that his knowledge of history is far greater than mine, that when the information for the Domesday Book was collected, that met with considerable resistance, even in the eleventh century. I think that it would meet with considerable resistance in the twentieth century.
  This Clause is really a prelude to either a gifts tax or a wealth tax, or maybe to both. That is what the hon. Member suggested. I feel it is objectionable on those grounds, and also on the ground that it would impose an unwarranted burden on the taxpayer. Even though my right hon. Friend's Budget has lightened the burden of taxation, the taxpayers are still groaning under a fairly considerable burden of duties and obligations to the Revenue, and this proposal by the hon. Member would weaken the confidence of taxpayers in the whole Revenue system, to the point where it might not operate as effectively as hon. Members on both sides of the House would wish it to operate.
  Mr. Meacher: The hon. and learned Member for Dover (Mr. Peter Rees) should not make so much of the problem of assessment and suggest that it would be beyond the powers of the Inland Revenue. He must be aware that other countries, such as Germany, quite effectively get over this problem by operating a system of wealth assessment, with a scissors system to ensure that if there should be under-assessment the taxpayer can be caught on a capital gains tax assessment. I do not think that the objection the hon. and learned Member raises is a serious one.
  Mr. Peter Rees: Of course it is possible to devise a system of wealth tax which

  997
  might work in a rough and ready way, but that, as I understand it, is not the point of this Clause. As I understand it, the point of this Clause and what the hon. Member wants to extract from all of us is a very detailed and accurate analysis of our wealth for purposes which I would not regard as legitimate.
  Mr. Meacher: The purpose for which this Clause is designed is a matter about which people can have differing opinions. I was only saying that the possibility of its implementation is not beyond our powers at present.
  I should like to give strong support to my hon. Friend the Member for Ashfield (Mr. Marquand) and his proposals, and for exactly the opposite reasons from those which the hon. and learned Member for Dover has put against them, because I believe that a harbinger of a wealth tax is highly desirable.
  One of the main arguments used by my hon. Friend, which I support, is that a strong reason for the new Clause is the widespread existence of tax avoidance. While a full and probing annual report or a national wealth register, clearly, would not eliminate such practices, it could, clearly, be expected to induce a considerable decline in their frequency. I am sure that most hon. Members on this side would support the argument that that is the proper way to do it and not purely by a reduction of taxes. Tax avoidance, however, is not merely a drum with which to beat the rich. It clearly exists, and it exists in a form that contravenes the will of Parliament and any reasonable and proper canons of taxation, whether it is widespread or on a negligible scale.
  There are several indications of that. One is the suspiciously large drop in the proportion of property chargeable to estate duty which passes by means of settlement. Another pointer is the extraordinary concentration of wealth in the hands of the youngest generation of adults in their early 20s. Another indicator is the wide and increasing discrepancy between gifts charged to estate duty at the present time and throughout the 1960s and the gifts that were valued for estate duty during the same period.
  The latest calculation of the extent of this avoidance was made by Maurice Tait in 1967, when he estimated that the
  998
  under-enumeration of wealth in the Inland Revenue statistics due to avoidance amounted to between 34 and 50 per cent. I shall be pleased to give the Minister of State the exact references if he wishes to query this.
  By comparing the Inland Revenue figures of personal wealth with net national income over the last 60 years, I have calculated that Tait's figures for under-enumeration may themselves be an under-enumeration of the facts. Even if Tait is right, however, this suggests that wealth today may amount to £110,000 million and not merely the £88,000 million of the latest Inland Revenue figures. This is a huge shortfall and one which must inevitably cause much public disquiet.
  It may well be that if all the facts were known, our experience might be found to parallel that of America, where two United States Census Bureau experts, Miller and Herriot, reported three months ago that income and wealth studies which have produced the latest figures of 543 billion dollars had, on closer inspection, missed 76 billion dollars, or fully one-eighth of the total. The top income bracket had been thought to possess 1·8 per cent. of national income but was found on closer inspection to own 11 per cent. The degree of non-dutiability involved in these figures is, clearly, enormous and is not simply a small matter to be easily dismissed. Indeed, official ignorance of the actual position concerning the distribution of wealth is astounding.
  On 11th February I asked a series of Questions. I asked the Chancellor of the Exchequer
  "how many private discretionary and other family settlements are in operation in Great Britain; and what is his estimate of the amount of money covered by such trusts."
  I was told:
  "This information is not available."
  I asked the Chancellor:
  "how many accumulation settlements are currently in existence in Great Britain in favour of infants; what is the total capital value of the sums at present covered by them; and what saving in family liability to income tax, surtax and estate duty he estimates is at present achieved by their use."
  That was hardly an unreasonable Question. Again, however, I was told that
  "This information is not available."

  999
  I asked the Chancellor of the Exchequer
  "what estimates he has made of the annual loss in estate duty on policies of life assurance written on trust under the Married Women's Property Act, 1882".
  Again, I was told,
  "No estimates is available."
  I asked the Chancellor
  "how much death duty he estimates is at present lost each year on account of gifts inter vivos and settlements made in consideration of marriage"
  and I was told that
  "No estimate is possible because the information about gifts outside the estate duty net is incomplete."
  I asked the Chancellor—and this is precisely the kind of information that might be provided by implementation of the new Clause:
  "How much tax and estate duty he estimates is avoided as a result of covenants taken out in favour of their grandchildren by persons with an annual income over £5,000 and with capital holdings in excess of £20,000, respectively."
  Again, I was told:
  "Information on which to base the desired estimates is not available."—[OFFICIAL REPORT, 11th February, 1971; Vol. 811, c. 241–4.]
  That shows how little official knowledge there is about the existence, let alone the distribution, of wealth.
  To want approximately accurate answers to those questions is not, as the hon. and learned Member for Dover suggested, an unreasonable intrusion into privacy. If it was considered proper under the Companies Act, 1967, that directors' remuneration should be made public on an individual basis, it is surely all the more proper that aggregate figures for wealth, concerning the distribution of the ownership of wealth, should be made public. The public are entitled to know because of the massive overall influence which wealth has over the whole of society.
  It has rightly been said that today we take attitudes towards wealth which the Victorians reserved towards sex. It seems to me, however, that there are far more cogent reasons for bringing questions of wealth out into the open than there are for treating sex in that way, although I would not deny that there are reasons for that as well. But since it is the existing supply of capital which deter
  1000
  mines future wealth, and since, regrettably, the supply is inelastic, it is surely of the most acute importance that more information should be made available to the public about both its distribution and its availability, otherwise public debate is inevitably circumscribed, and in a free democracy there should be public discussion of this issue, which will affect future generations.
  There is another powerful reason for having the fuller information which would be supplied as a result of the new Clause. The experience of the last year has made it clear beyond doubt that demand management will not succeed except within the context of some kind of incomes policy. It is, I believe, equally clear that in the present climate of Britain an incomes policy will not succeed unless all sources of earning power open to all sections of the community are brought out into the open.
  It can be said at once that an undoubted quid pro quo that will be exacted for wage planning is precisely a controlled reduction of the enormous inequalities of wealth in our society today. There is at present no measure available available by which this could be done except in the crudest manner. The Gini coefficients, to which my hon. Friend referred, are far too indiscriminate and depend upon the all-inclusiveness of the wealth encapsulated in the Inland Revenue figures, a characteristic which is clearly lacking in most figures.
  No analysis of the distribution of wealth has been undertaken independently of the Inland Revenue figures since the study done by Lydall and Tipping, which related to 1954 and is now obviously dated. Yet their finding that the richest 1 per cent. owned 81 per cent. of company stocks and shares and that 5 per cent. owned 96 per cent. of company stocks and shares seems to me to be interesting enough for the public to be told a great deal more and on a regular, systematic, official basis and not by the chance result of a private academic study. If, however, one asks, as one has done, how the position has changed since that time, the official answer is, "We do not know."
  A full annual report on wealth would, therefore, open to public discussion a matter which is entirely shrouded in mystery, a situation which is entirely

  1001
  unhealthy if full and willing communal support for an overall raising of the level of national resources is to be obtained. This in itself seems to me to be a perfectly adequate justification for the new Clause, but it is, as I have said, buttressed by the need to satisfy public disquiet about the distortions created by tax avoidance.
  If the Government in appointing the Fisher Committee have shown themselves to be sensitive to the relatively few hundreds of thousands of £s that are no doubt mis-spent as a result of the fraudulent claiming of social service benefits they should show themselves to be far more sensitive to the much greater haemorrhage of funds which undoubtedly results from these dubious and anti-social manipulations of wealth. A full and probing annual report on wealth would be an earnest of the Government's intention to put a stop to these practices too.
  7.0 p.m.
  Mr. Martin McLaren: I can state my objections to the new Clause in a short compass. There are already a great many published figures. There are, for example, tables showing the annual yield from estate duty, from capital gains tax and from surtax, which is an income tax which has some bearing on this subject. An annual report on the distribution of privately-owned wealth would involve a valuation of the assets of taxpayers which would be unwieldy and difficult to achieve. On philosophical grounds, it may not be fair for society to include some rich men, but they do make charitable gifts. Looking back on previous generations, I say to the hon. Member for Oldham, West (Mr. Meacher) that if William of Wykeham had not been a rich man he and I would not have benefited from his liberality, and New College, Oxford, and Winchester College would never have been founded.
  The Socialists like having more civil servants doing more work and producing yet further reports. Those who have spoken in favour of the Clause are using it as a peg on which to hang their views on the distribution of wealth. The figures that we already have are enough. On those grounds I am not in favour of the new Clause.
  Mr. John Cronin: The hon. Member for Bristol, North-West
  1002
  (Mr. McLaren) made an interesting speech. It is refreshing to notice that the only argument he could produce for having people in the community who are very much richer than others was that William of Wykeham in the thirteenth century was able to found Winchester College and New College. That was a charmingly archaic aspect of his speech.
  We on this side of the House, who take this matter more seriously, feel real disquiet at the figures given by my hon. Friend the Member for Ashfield (Mr. Marquand) in the admirable speech with which he moved the new Clause. It is very unsatisfactory that 1 per cent. of the population owns one-third of the personal wealth of the population, and 10 per cent. own 75 per cent. I do not think that anyone contests those figures. The Minister of State disagreed that we were unique among Western industrial countries in the grossly unequal distribution of wealth. All the evidence we have so far is consistent with the view of my hon. Friend the Member for Ashfield that as a Western industrial country we are one of the worst in the grossly unequal distribution of wealth. I have no doubt there are other countries much worse in this respect than ourselves, countries like Spain, some of the South American countries and the various banana republics, but it is very unsatisfactory that this gross inequality still exists in a modern industrial country like ours.
  My hon. Friend the Member for Ashfield pointed out that the Finance Bill which we are discussing will greatly increase the inequalities of wealth, and this is evidently true. The relief of surtax, the aggregation of children's taxation, capital gains tax to be used instead of betterment levy, the abolition of capital gains lax at death—all these will increase the inequalities of wealth by hundreds of millions. This we must expect to some extent from the present Government but it is surprising that the Government should refuse to have a mere investigation into the distribution of wealth.
  It seems at first most odd that there has been no real change in the distribution of wealth in spite of estate duty which has been levied in increasing proportions for over a generation. There are reasons for this. One reason is that

  1003
  there is no adequate gift tax and, consequently, it is possible for wealthy men to give away a large proportion of their income provided they do so in conformity with the laws about inter vivos gifts.
  Another effect is the continuous rise in the price of equity shares which over a long period has made estate duty entirely derisory. I agree with the Financial Secretary that there has been some recent short-term decrease but, nevertheless, there has been a gradual gigantic increase in the value of equity shares, and that alone has made nonsense of estate duty by increasing the unequal distribution of wealth. There is alse the 40 per cent. reduction of estate duty for property held in the form of agricultural 'and and forest land. Every rich man makes sure that he holds a substantial proportion of his wealth in the form of agricultural or forest land, because that ensures a tremendous benefit to his heirs. Finally, there is the question of discretionary trusts and covenants for grandchildren. This has been reduced in scope to some extent but, nevertheless, covenants over the last 20 years or so have immensely increased the unequal distribution of wealth, and will probably continue to do so to a limited extent.
  We on this side of this House find that there is a strong case for reform. There is a strong case for having some form of gift tax, and a strong case for some form of wealth tax. We regard these gross differences of wealth in the community as socially repugnant. This is the basic difference in philosophy between this side of the House and hon. Gentlemen opposite.
  This grossly unequal distribution of wealth has immense social consequences, of which the most important is the overt and also the hidden hostility between trade unionists and industrialists. This is probably one of the most serious causes of our present economic difficulties.
  No one would deny that to a very large extent inflation is caused by increases in wages unaccompanied by productivity. That is a truism that everyone will accept, though some may make qualifications. The only way to overcome this state of things in any kind of democratic society will be by obtaining
  1004
  the co-operation of trade unionists. How can any Government obtain that cooperation when there is this obvious gross difference of enormous wealth and luxury and ostentatious high living on one side—[Interruption.]—and, on the other side, people living on what are barely subsistence incomes?
  Hon. Members opposite may laugh, but that there should be 10 per cent. of our population living in circumstances of intolerable economic misery is a disgrace to the country. There is nothing funny about it at all. That there should be this fantastic contrast between ostentatious wealth on one side and the submerged tenth of the population living in miserable poverty on the other is a national scandal. It will discourage in every possible way trade unionists cooperating with the present Government, or any other Government, if such a situation continues.
  I therefore suggest that there is a tremendous social need to reform the present situation of gross differences in personal wealth, if only to improve our economic difficulties and get more cooperation from the trade union movement, quite apart from questions of Socialist philosophy.
  I hope that the Minister of State will agree to this very modest request. We ask only for information, and I am sure that the cost of getting that information would be very small. It could be obtained by hon. Members on this side putting down questions or writing large numbers of letters, but that would be a laborious and uneconomic method. It would be so much simpler if the Government would get an annual report making the situation completely clear.
  Surely the Government approve in principle of the existence of estate duty and of capital gains tax—otherwise, presumably, they would abolish both completely. If they approve of those taxes, why do they not want any information about their effect? There may be some wealthy people who feel they have been unfairly treated and would like information themselves on the subject. Surely the Government are interested in how these various types of capital tax affect the economy? That being so, the Government themselves would in their own interests be well advised to accept the Clause.

  1005
  I suggest that what we seek is something which would improve the whole body of economic knowledge. Fiscal administrative knowledge would be greatly added to if we could have this simple information which could be obtained easily and at relatively small cost. Unless the Government have something to hide, unless they intend to persist in a grave lack of frankness about something so vital to our economy, the Minister of State should accept the Clause.
  Mr. Kenneth Lewis: Until I heard the hon. Member for Loughborough (Mr. Cronin) I had no intention of speaking. I do not know whether he has been to the South of France or to Spain over the weekend and has been meeting the wrong people, but though he finished by saying that he wanted information, most of his speech seemed to indicate that he had already made up his mind that anything the Labour Government had done to help the poor in the community was worse than useless, because the only Government so far to have done anything to help the lower one-tenth are my right hon. Friends, who have just done that in this Budget.
  Mr. Cronin: I do not wish to be rude to the hon. Member, but if he really believes that the present Government will be more helpful to the submerged tenth than were their predecessors, it is a very short intellectual step to believing that the earth is flat.
  Mr. Lewis: The fact is that it is the present Government which have provided additional income for those with whose incomes are below what it is considered reasonable to live on. Those people with families get an additional income, which they certainly did not get under the Labour Government.
  7.15 p.m.
  It was to be expected that hon. Members opposite would press for some form of redistribution of wealth—a gifts tax. One expects that when they next provide a programme for the country they will want to introduce such a tax. I would not very much mind a gifts tax if it took the place of what I consider to be overall an over-high estate duty rate. If there were an equalisation in this respect no one would greatly complain; but they
  1006
  would complain if there were a gifts tax on top of all the other taxes, including estate duty.
  One of the problems under both the previous Government and this is that we cannot get an equalisation of capital resources while we have such a high rate of surtax. It is extraordinary to note that hon. and right hon. Members opposite never suggest a reduction in surtax. Not only that, but they complain when we ease the rate. If they will look at company reports they will find that at present all the large companies are seeking opportunities for their junior directors and executives to buy into their companies—to get shares.
  These companies realise that because surtax rates are so high on incomes of £5,000 and above, it is very difficult for young men to get a stake in the firm for which they work. Therefore, at annual general meetings they ask shareholders to approve various schemes which enable those executives to buy in shares in the company with special arrangements for paying for them over a period. If hon. Members opposite want to equalise the distribution of capital they should look seriously at their own attitude to surtax, and agree that those who are running our great companies should have an opportunity to acquire a stake in the shareholding.
  Dr. John Gilbert: If it is so difficult for people to acquire capital under the present system of taxation, is it not therefore a fact that all those who are obtaining an advantage are getting the benefit of large sums of inherited capital, which is what the Clause is about?
  Mr. Lewis: But the people I am talking about do not have any inherited capital. The fact is that if surtax rates were not so high, those to whom I am referring would have the opportunity to go at least some part of the way towards acquiring small fortunes equal to those who have already got them.
  If hon. Members opposite decide to impose a gifts tax on top of penal estate duty, and if they intend to deal with covenants and gifts inter vivos, they will simply create a situation in which large numbers of people will send their wealth abroad. Some of them do so now—there is nothing to prevent it. But what the

  1007
  country needs at present is an increase in investment, and much of this investment comes from those with large amounts of money.
  What is the difference between a capital sum of, say, £100,000 or even £50,000 and £250,000, £500,000 or £1 million? A man needs only three meals a day. At most, he can have them at more expensive restaurants than other people. He may also have a bigger house and a better motor car. However, when he has done all that, he has to invest his money and he puts it into industry.
  Most of the wealth in this country is creative of more wealth. Those who have large amounts of money get more money because they put it into industry and it increases in value. It certainly provides them with larger capital resources, but it also provides industry with the means to grow and to employ more and more people and, if it is prosperous, at better rates of pay. If we had some of that capital now, we would find unemployment coming down from over 700,000 to a much lower figure of 300,000 or 400,000.
  The incentive to acquire wealth in a free enterprise society is necessary to the growth of industry. The sooner right hon. and hon. Gentlemen opposite recognise that, the better. When they talk about killing the rich, they had better be careful that, in so doing, they do not create a situation where the rich decide to scatter and we have no one left to stimulate industry to the benefit of the country as a whole.
  Mr. Higgins: I think this may reasonably be described as having been a fascinating debate. We have witnessed some remarkably prejudiced viewpoints by hon. Members opposite backed by a mass of reference to academic writings. However, when one referred to the footnotes, there seemed to be some reluctance to go into the details. It is important, if we are to quote this or that particular study, to include some of the qualifications which are made as well as referring to the broad conclusions which the author thereof may have drawn. I shall have something more to say about that later.
  The hon. Member for Oldham, West (Mr. Meacher) was nothing if not pre
  1008
  dictable. One of his remarks which struck me was that the wealth register would reduce tax avoidance. This, like many of his remarks, was asserted without being proved. I listened with greater intensity at that point and was disappointed that he did not enlarge upon it in his subsequent remarks.
  We have had a wide-ranging debate on this new Clause, as on the previous one. The Opposition have put down a new Clause which, though mentioned in the first two or three minutes of the speech of the hon. Member for Ashfield (Mr. Marquand), was diverted to whatever hon. Gentlemen opposite wanted to raise in the general discussion. I hope that I shall not be regarded as being unfair if I therefore treat the new Clause on its merits as a new Clause.
  Although the new Clause asks for an annual report, apart from the opening remarks of the hon. Member for Ashfield, no one has stressed why such a report should be an annual report. Yet this surely, from the amount of work which would be involved, is an important factor which needs to be taken into account.
  On the broad issues which have been raised, the great philosophical difference between the two sides of the House is that we on this side are concerned with building up wealth, whereas hon. Gentlemen opposite are merely concerned with redistributing it. That being so, we ought to look at the new Clause in the context of what is undoubtedly and clearly recognised to be the great difference between us.
  I was sorry that the hon. Member for Ashfield engaged in some somewhat heavy rhetoric in talking about a degree of inequality which was intolerable and utterly unjustifiable. It is significant that this is at the end of a period, apart from last year, of Labour Government which had been going for some years. It is strange, in view of the sudden enthusiasm for the idea of a wealth register of this kind, that this should be the first occasion since I came to this House in 1964 on which this topic should arise, although there were many other occasions on which hon. Gentlemen opposite, when on this side of the House, could have raised it.
  I turn now to the statistics which are already published. The estimates of wealth which appear in the Inland

  1009
  Revenue statistics are based on estate duty statistics. A great many things are assumed in reaching those calculations, including that estates passing on death are a representative sample both in number and in value of the property of individuals. It is recognised that they are subject to fairly wide margins of error and are in some respects incomplete. None the less, my hon. Friend the Financial Secretary, in answer to a Question by the hon. Member for Ash-field on 27th October last, gave an indication of the broad distribution of wealth so far as it can be established from available data. He also referred to the Gini coefficient, which is a broad indicator of the degree of inequality of wealth. In this context, it is worth pointing out that this coefficient as an indication of the trend is, on the whole, a fairly reliable indicator. Individual years may vary, but as a broad indication of the trend it is a good indicator which has changed little. The House will recall that whereas in 1960 the coefficient was 76, by 1968 it had declined to 68. Therefore, there is a considerable trend towards less inequality of wealth.
  One point which has been raised is that it is a question of what one regards as a reasonable trend in this context. Professor Atkinson says in his conclusion in his article that there is no clear evidence of a rapid reduction in inequality over time. I think that the kind of trend which I have described, a Gini coefficient of concentration going from 76 in 1960 down to 68 in 1968, is indeed a fairly rapid decline. I think that this is a better indicator than many which we have had.
  Mr. Marquand: I think that I conceded that point in what I said. Surely the hon. Gentleman accepts that the Inland Revenue itself pointed out, in the very publication from which he is quoting, that necessarily its estimates of the Gini coefficient had been based on the data that it gets from the taxes which it operates at present. It then goes on to list a whole series of defects in these data.
  Mr. Higgins: Yes. I have already stressed that a number of assumptions are made. The point which I am endeavouring to make is that, as an indication
  1010
  of the trend, the Gini coefficient is fairly reliable. Although there are imperfections in the basic data, taking a run of years these tend to even out.
  I turn now to what seems to be the crux of the case. The Inland Revenue is endeavouring to improve the statistics whenever possible. There have been criticisms, for example, of the statistics as they stand. One comment was that they do not include wealth the subject of discretionary trusts. Such wealth did not attract estate duty on the death of a discretionary beneficiary until the law was altered in the Finance Act, 1969. Following the alteration in the law, the amounts held on discretionary trust will be reflected in the published figures. It will take time, but the data will be correspondingly improved.
  The crux of the matter is whether we ought to produce this kind of data in an annual form. It is to that question that I want to devote my concluding remarks. Before doing so, I should like to answer the various allegations which have been made about whether the Budget is excessively regressive, whether it is a rich man's Budget, and so on. These points have been debated repeatedly in Committee, and my hon. Friend the Financial Secretary has dealt with them in great detail. In our view, the Budget meets the needs of the time, and we do not accept the views which have been put forward by hon. Gentlemen opposite in this respect. I should be out of order, Mr. Speaker, if I pursued that point further, but I felt it right to place that clearly on the record.
  7.30 p.m.
  On the need for such an annual report, there were big differences between the two sides of the House about the cost of producing such data. The hon. Member for Loughborough (Mr. Cronin) seemed to think that it would be absolutely trivial. My hon. and learned Friend the Member for Dover (Mr. Peter Rees) was much closer to the mark when he said that a great deal of work would be involved and that one would effectively have to carry out a census of wealth which would necessarily mean that every body would have to estimate their wealth and this would necessarily raise very difficult questions of valuation. This is surely something that we ought

  1011
  to take into account. Clearly, to a very considerable extent it depends on the reason why such a census of wealth conducted annually is or is not justified. Many hon. Members opposite made no secret of the fact that they felt that a wealth tax would be a desirable introduction into our tax system. One can understand that they may well feel that such a census would be justified in that case. As my hon. Friend the Financial Secretary made clear in Committee, this is not our view, and we consider that it would not be justified to expend the resources necessary to conduct a comprehensive survey of the kind which hon. Members opposite seem to have in mind.
  In this context it is not irrelevant to note that the trend in the Gini coefficient, to which I have referred, has been pretty constant over the years, and, moreover, that the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) did not seem to be persuaded when he was Chancellor by the arguments now being put forward from the Opposition Front Bench; indeed, he made it pretty clear on one occasion that he did not feel that the expense of such an operation would be justified. Such a proposal did not appear in the Labour Party's election manifesto.
  It seems to us that this proposal is not one which, in the present fiscal situation, ought to be supported by the House. I hope that the House will reject the new Clause.
  Mr. Marquand: With your leave, Mr. Speaker, and that of the House, I should like to reply briefly to what the Minister of State has said.
  I found the hon. Gentlemans' reply extremely disappointing and rather below his usual standard, if I may say that without presumption. He seemed to be unclear about whether he was in favour of greater equality in the distribution of wealth. He began by saying that there was a philosophical gulf between the two
  sides. Then he pointed to the movement of the Gini coefficient, and appeared to take pride in the fact that it had moved in an egalitarian direction under the last Conservative Government. It was not clear where he stood on that point.
  The other major argument was that the Labour Government had not introduced the sort of taxes which have been discussed by my hon. Friends in this debate. I remind the Minister of Stale that the Labour Government introduced the capital gains tax and the aggregation of children's income, tightened up the loopholes in estate duty and, in general, moved in the direction which the present Government are moving away from.
  I take up two other points made by my hon. Friends which seem to be of central importance to the philosophical gulf to which the Minister referred. As my hon. Friend the Member for Loughborough (Mr. Cronin) said, if we are to obtain the co-operation of working people in the operation of any kind of incomes policy, we have to demonstrate that we are moving in the direction of greater social justice and greater equality in our society.
  It is not only from the point of view of a philosophical commitment to greater equality and social justice that my hon. Friends and I believe that the taxes on capital should be reformed and that the information should be produced to enable such a reform to be carried out; we believe also that that reform is necessary because the experience of the past year has shown that a regressive and reactionary Government are incapable of running the economy efficiently, quite apart from moral and philosophical considerations.
  Because we believe this and because we find, in terms of that belief, that the reply of the Minister of State was disappointing and unsatisfactory, my hon. Friends and I will support the new Clause in the Division Lobby.
  Question put, That the Clause be read a Second time:—
  The House divided: Ayes 151, Noes 183.

  Division No. 407.]

  AYES

  [7.35 p.m.

  Allaun, Frank (Salford, E.)

  Blenkinsop, Arthur

  Carmichael, Neil

  Allen, Scholefield

  Booth, Albert

  Clark, David (Colne Valley)

  Archer, Peter (Rowley Regis)

  Bradley, Tom

  Cocks, Michael (Bristol, S.)

  Ashton, Joe

  Brown, Hugh D. (G'gow, Provan)

  Coleman, Donald

  Barnett, Joel

  Buchan, Norman

  Concannon, J. D.

  Bishop, E. S.

  Campbell, I. (Dunbartonshire, W.)

  Crosland, Rt. Hn. Anthony

  Cunningham, G. (Islington, S. W.)

  Jay, Rt. Hn. Douglas

  Palmer, Arthur

  Cunningham, Dr. J. A. (Whitehaven)

  Jenkins, Hugh (Putney)

  Pannell, Rt. Hn. Charles

  Dalyell, Tam

  Jenkins, Rt. Hn. Roy (Stetchford)

  Parker, John (Dagenham)

  Davidson, Arthur

  John, Brynmor

  Parry, Robert (Liverpool, Exchange)

  Davies, Denzil (Llanelly)

  Johnson, Carol (Lewisham, S.)

  Pavitt, Laurie

  Davis, Terry (Bromsgrove)

  Johnson, Walter (Derby, S.)

  Pendry, Tom

  Deakins, Eric

  Jones, Barry (Flint, E.)

  Pentland, Norman

  Delargy, H. J.

  Jones, Dan (Burnley)

  Price, J. T. (Westhoughton)

  Dell, Rt. Hn. Edmund

  Jones, Rt. Hn. SirElwyn (W. Ham, S.)

  Price, William (Rugby)

  Dempsey, James

  Jones, Gwynoro (Carmarthen)

  Reed, D. (Sedgefield)

  Doig, Peter

  Judd, Frank

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Dormand, J. D.

  Kaufman, Gerald

  Robertson, John (Paisley)

  Douglas-Mann, Bruce

  Kerr, Russell

  Roderick, Caerwyn E.(Br'c'n&R'dnor)

  Driberg, Tom

  Lambie, David

  Roper, John

  Eadie, Alex

  Latham, Arthur

  Ross, Rt. Hn, William (Kilmarnock)

  Edwards, Robert (Bilston)

  Lawson, George

  Sandelson, Neville

  Ellis, Tom

  Evans, Fred

  Lee, Rt. Hn. Frederick

  Sillars, James

  Ferynhough, Rt. Hn. E.

  Lewis, Arthur (W. Ham, N.)

  Silverman, Julius

  Fisher, Mrs. Doris (B'ham, Ladywood)

  Loughlin, Charles

  Skinner, Dennis

  Fletcher, Ted (Darlington)

  Lyons, Edward (Bradford, E.)

  Small, William

  Ford, Ben

  Mabon, Dr. J. Dickson

  Smith, John (Lanarkshire, N.)

  Spearing, Nigel

  Fraser, John (Norwood)

  McBride, Neil

  Spriggs, Leslie

  Freeson, Reginald

  Mackenzie, Gregor

  Stoddart, David (Swindon)

  Galpern, Sir Myer

  Mackie, John

  Strang, Gavin

  Garrett, W. E.

  Mallalieu, J. P. W. (Huddersfield, E.)

  Summerskill, Hn. Dr. Shirley

  Gilbert, Dr. John

  Marks, Kenneth

  Swain, Thomas

  Ginsburg, David

  Marquand, David

  Taverne, Dick

  Golding, John

  Marshall, Dr. Edmund

  Thomson, Rt. Hn. G. (Dundee, E.)

  Gourlay, Harry

  Mayhew, Christopher

  Tinn, James

  Grant, John D. (Islington, E.)

  Meacher, Michael

  Torney, Tom

  Hamilton, James (Bothwell)

  Mellish, Rt. Hn. Robert

  Tuck, Raphael

  Hamilton, William (Fife, W.)

  Mendelson, John

  Wallace, George

  Hamling, William

  Millan, Bruce

  Watkins, David

  Hannan, William (G'gow, Maryhill)

  Miller, Dr. M. S.

  Wellbeloved, James

  Hardy, Peter

  Morgan, Elystan (Cardiganshire)

  Wells, William (Walsall, N.)

  Hart, Rt. Hn. Judith

  Morris, Alfred (Wythenshawe)

  White, James (Glasgow, Pollok)

  Hattersley, Roy

  Morris, Charles R. (Openshaw)

  Whitehead, Phillip

  Heffer, Eric S.

  Morris, Rt. Hn. John (Aberavon)

  Whitlock, William

  Hooson, Emlyn

  Murray, Ronald King

  Williams, Alan (Swansea, W.)

  Horam, John

  Ogden, Eric

  Wilson, Rt. Hn. Harold (Huyton)

  Houghton, Rt. Hn. Douglas

  O'Halloran, Michael

  Woof, Robert

  Howell, Denis (Small Heath)

  O'Malley, Brian

  Hughes, Mark (Durham)

  Orme, Stanley

  TELLERS FOR THE AYES:

  Hughes, Robert (Aberdeen, N.)

  Oswald, Thomas

  Mr. Ernest Armstrong and

  Janner, Greville

  Paget, R. T.

  Mr. James A. Dunn.

  NOES

  Adley, Robert

  Corfield, Rt. Hn. Frederick

  Hay, John

  Alison, Michael (Barkston Ash)

  Cormack, Patrick

  Hayhoe, Barney

  Allason, James (Hemel Hempstead)

  Critchley, Julian

  Hicks, Robert

  Atkins, Humphrey

  Crouch, David

  Higgins, Terence L.

  Baker, W. H. K. (Banff)

  Crowder, F. P.

  Hiley, Joseph

  Barber, Rt. Hn. Anthony

  Curran, Charles

  Hill, James (Southampton, Test)

  Batsford, Brian

  d'Avigdor-Goldsmid, Sir Henry

  Holt, Miss Mary

  Bell, Ronald

  d'Avigdor-Goldsmid, Maj.-Gen. James

  Hordern, Peter

  Benyon, W.

  Dean, Paul

  Hornby, Richard

  Berry, Hn. Anthony

  Deedes, Rt. Hn. W. F.

  Hornsby-Smith, Rt. Hn. DamePatricia

  Biggs-Davison, John

  Dixon, Piers

  Howell, David (Guildford)

  Blaker, Peter

  Dodds-Parker, Douglas

  Howell, Ralph (Norfolk, N.)

  Boardman, Tom (Leicester, S. W.)

  Dykes, Hugh

  Hunt, John

  Boscawen, Robert

  Edwards, Nicholas (Pembroke)

  Hutchison, Michael Clark

  Bossom, Sir Clive

  Eyre, Reginald

  Irvine, Bryant Godman (Rye)

  Bowden, Andrew

  Farr, John

  Jenkin, Patrick (Woodford)

  Boyd-Carpenter, Rt. Hn. John

  Fell, Anthony

  Jessel, Toby

  Bray, Ronald

  Fenner, Mrs. Peggy

  Kellett-Bowman, Mrs. Elaine

  Brinton, Sir Tatton

  Fletcher-Cooke, Charles

  Kilfedder, James

  Brock ebank-Fowler, Christopher

  Fookes, Miss Janet

  King, Evelyn (Dorset, S.)

  Brown, Sir Edward (Bath)

  Foster, Sir John

  King, Tom (Bridgwater)

  Bryan, Paul

  Fowler, Norman

  Kinsey, J. R.

  Buchanan-Smith, Alick (Angus, N&M)

  Gibson-Watt, David

  Knight, Mrs. Jill

  Buck, Antony

  Goodhart, Philip

  Le Marchant, Spencer

  Butler, Adam (Bosworth)

  Gorst, John

  Lewis, Kenneth (Rutland)

  Carlis e, Mark

  Gower, Raymond

  Longden, Gilbert

  Chapman, Sydney

  Grant, Anthony (Harrow, C.)

  Loveridge, John

  Chataway, Rt. Hn. Christopher

  Gray, Hamish

  Luce, R. N.

  Chichester-Clark, R.

  Green, Alan

  McAdden, Sir Stephen

  Churchill, W. S.

  Gummer, Selwyn

  McCrindle, R. A.

  Clark, William (Surrey, E.)

  Hall, Miss Joan (Keighley)

  McLaren, Martin

  Clarke, Kenneth (Rushcliffe)

  Hall, John (Wycombe)

  Maclean, Sir Fitzroy

  Clegg, Walter

  Hall-Davis, A. G. F.

  Macmillan, Maurice (Farnham)

  Cooke, Robert

  Harrison, Col. Sir Harwood (Eye)

  McNair-Wilson, Michael

  Cooper, A. E.

  Hawkins, Paul

  Maddan, Martin

  Madel, David

  Price, David (Eastleigh)

  Taylor, Sir Charles (Eastbourne)

  Marten, Neil

  Pym, Rt. Hn. Francis

  Taylor, Edward M.(G'gow, Cathcart)

  Mather, Carol

  Rawlinson, Rt. Hn. Sir Peter

  Tebbit, Norman

  Maude, Angus

  Redmond, Robert

  Temple, John M.

  Meyer, Sir Anthony

  Reed, Laurance (Bolton, E.)

  Thatcher, Rt. Hn. Mrs. Margaret

  Mills, Peter (Torrington)

  Rees, Peter (Dover)

  Thomas, John Stradling (Monmouth)

  Mitchil, Lt.-Col. C.(Aberdeenshire, W)

  Rees-Davies, W. R.

  Trafford, Dr. Anthony

  Moate, Roger

  Renton, Rt. Hn. Sir David

  Trew, Peter

  Monro, Hector

  Rossi, Hugh (Hornsey)

  Tugendhat, Christopher

  Montgomery, Fergus

  Rost, Peter

  Turton, Rt. Hn. Sir Robin

  More, Jasper

  Russell, Sir Ronald

  Vaughan, Dr. Gerard

  Morgan-Giles, Rear-Adm.

  Scott, Nicholas

  Waddington, David

  Morrison, Charles (Devizes)

  Scott-Hopkins, James

  Walder, David (Clitheroe)

  Mudd, David

  Shelton, William (Clapham)

  Walker-Smith, Rt. Hn. Sir Derek

  Murton, Oscar

  Simeons, Charles

  Ward, Dame Irene

  Neave, Airey

  Sinclair, Sir George

  Warren, Kenneth

  Noble, Rt. Hn. Michael

  Smith, Dudley (W'wick & L'mington)

  Weatherill, Bernard

  Normanton, Tom

  Soref, Harold

  Wells, John (Maidstone)

  Onslow, Cranley

  Speed, Keith

  Wiggin, Jerry

  Wilkinson, John

  Oppenheim, Mrs. Sally

  Spence, John

  Wolrige-Gordon, Patrick

  Owen, Idris (Stockport, N.)

  Sproat, Iain

  Wood, Rt. Hn. Richard

  Page, Graham (Crosby)

  Stainton, Keith

  Woodhouse, Hn. Christopher

  Parkinson, Cecil (Enfield, W.)

  Stanbrook, Ivor

  Wylie, Rt. Hn. N. R.

  Peel, John

  Stewart-Smith, D. G. (Belper)

  Percival, Ian

  Stokes, John

  TELLERS FOR THE NOES:

  Pink, R. Bonner

  Stuttaford, Dr. Tom

  Mr. Tim Fortescue and

  Powell, Rt. Hn. J. Enoch

  Tapsell, Peter

  Mr. Victor Goodhew.

New Clause 5

  TAX RELIEF FOR EMPLOYED PERSONS
  The expenditure of any person taxable under Schedule E in respect of purchase of overalls, tools of trade, books, professional journals and courses of study, up to a total value of £50 in any year wholly and exclusively incurred for the purposes of his trade, occupation or profession shall be allowed as a deduction from the wages or salary in computing the amount of assessment.—[Mr. Barnett.]
  Brought up, and read the First time.
  7.45 p.m.
  Mr. Barnett: I beg to move, That the Clause be read a Second time.
  I suppose it could be said that this is a reasonably generous Clause and that it is, in effect, a device to give £50 of relief to those paying tax under P.A.Y.E. I do not apologise for the fact that the Clause proposes relief of £50 for those paying tax under P.A.Y.E., because those people do not fare so well under the Bill as those paying tax under Schedule D and those at the higher end of the scale.
  One of the effects of the Clause would be to remove a reasonable number of taxpayers from paying tax at the threshold. When the Government increased the child allowance by £40 they exempted 200,000 taxpayers from paying tax. Despite this, in 1971–72, 750,000 more people are paying tax than paid tax in 1970–71. This was revealed in an Answer given by the Chief Secretary on 15th June.
  1016
  One reason why we have tabled the Clause is to seek to put a little balance into a badly balanced Bill, because the Bill gives considerable relief to people paying tax on investment income and to those at the higher end of the scale. I will give examples of relief which the Bill gives to comparatively small numbers of taxpayers. In 1971–72 £38 million is given by means of the 15 per cent. earned income relief to those with incomes of more than £4,005, removing a comparatively small number of taxpayers from surtax and giving a comparatively small number of taxpayers additional earned income relief. There is £12 million relief on the separation of wife's earnings, again to a very small number of taxpayers. There is £9 million of relief for the self-employed paying tax under Schedule D on the annuity relief for the self-employed. There is £15 million on the disaggregation of parent-child income.
  There is £3 million of relief to a small number of close companies in relief from shortfall and £1 million of other reliefs to close companies and, as emerged in our debates in Standing Committee, £½ million of that to just 30 close companies—that is, to 30 families; that is, £½ million in retrospective relief. There is £1½ million relief to a small number of people for short-term capital gains. There is the increased car allowance from £2,000 to £4,000, a provision which was not mentioned either in the Budget or on Second Reading.
  On top of all this there is the unified tax system which is clearly intended to

  1017
  give further substantial relief to those paying tax on investment income.
  The Financial Secretary will no doubt tell us that the cost of implementing the Clause would be high. I said at the outset that this would be a generous Clause to those paying tax under P.A.Y.E. The fact that it would be a generous provision is no excuse for the Government's refusing to agree to the Clause, because it is open to the Government, if they wish to give relief of this kind, to make the necessary alterations in the Bill to allow it to be done.
  Apart from that, everybody other than the Government now recognises that there is a considerable need for more reflation; indeed, kites have been flown over the weekend to the effect that the Government propose to introduce another £1 million into the regions. That is a little belated. It is not very much, anyway, but if the Government want to reflate, to increase demand, and to reduce unemployment, one way would be to give £50 by way of relief for tax purposes precisely to those who would be given it by the new Clause.
  The present position is governed by Section 189 of the Taxes Act. That goes back to the famous or infamous Section relating to what should or should not be allowed by way of expenses for Schedule E purposes. It includes the word "necessarily". In order to qualify for allowance for Schedule E purposes an expense must be "wholly, exclusively and necessarily" incurred, unlike expenses for Schedule D purposes, which need to be only "wholly and exclusively" incurred.
  At present there is an agreement between the Inland Revenue and certain trade unions under which an allowance is made of £15–I am told that in other trade unions the sum is £10–for tools and overalls. All that happens is that the taxpayer puts a cross in a certain part of his tax return and receives that allowance. He receives it even though he may not have spent the money. It is given to him as a concession. In some cases he may spend the money but the expenditure may not be "necessarily" incurred, as the word has been defined over the years. The Amendment would take the position very much wider. We have deliberately excluded the word "necessarily". The expenditure of up
  1018
  to £50 would need only to be "wholly and exclusively" incurred.
  The last debate on this matter took place in 1957 and was concerned with the question of tools and overalls. It was replied by the then Financial Secretary—now the right hon. Member for Wolverhampton, South-West (Mr. Powell). At that time the debate centred around a word that had been included in a new Clause that was being discussed—the word "reasonably". It was argued that that word would be equally difficult to define. That is true. On this occasion the word "necessarily" has been removed, and the word "reasonably" has not been included. The expenditure would simply have to be wholly or exclusively incurred—in other words, it would be the same definition as is used for Schedule D purposes.
  The new Clause would cover other items—books, journals and courses of study. Generally one does not define a specific form of expense; the matter is left to the Revenue and the taxpayer. In the case of Schedule E generally the trade union often agrees a specific type of expenditure which should or should not be allowable. On this occasion we have added additional items because the expense provision is grossly unfair in its working in all sorts of ways.
  No tax system can ever be wholly fair and correct; with such a complicated tax system and so many tax laws as ours there are bound to be some occasions when it is never precisely fair as between one taxpayer and another. As it stands at the moment it is very unfair in the professions—for example, in respect of the purchase of books by teachers to enable them to do their jobs better.
  The purchase of those books would not be an allowable expense, as the law stands. Equally, technical and professional magazines would not be allowable for tax relief. That applies in accountancy. If I were assessed for Schedule D and I bought journals, magazines and books, they would be wholly allowable for tax relief, but if an accountant who is not in public practice were assessed under Schedule E and bought precisely the same books and journals, that expenditure would not be allowed. He would have to pay for them out of his taxed income.

  1019
  In the 1957 debate a Conservative Member pointed out that if a solicitor were assessed under Schedule D the books and journals that he bought would be allowable for tax, whereas if he were engaged as a town clerk and bought the same sort of books the expense would not be allowable. The position is grossly unfair between one taxpayer and another—between two taxpayers who are doing a similar sort of work. Moreover, in many cases the income of the man assessed under Schedule E is lower than that of the man assessed under Schedule D.
  The question of courses of study never used to be very important. Until a few years ago articled clerks not only did not earn enough to pay tax; they earned nothing at all. Frequently they had to pay premiums to their principals. That situation does not exist today, and articled clerks earn enough to pay tax. But people in my profession pay for their courses of study in a variety of ways. These courses are still largely correspondence courses, and their cost is quite substantial. The cost is not allowable for tax purposes, presumably on the ground that the expense is not incurred in order to earn the money. That is the general principle under which expenses are refused.
  In my opinion that is defining the matter a little too narrowly. I should have thought that that aspect of the expense incurred—courses of study for articled clerks and apprentices, who are young men and women out to improve their status, and paying out what to them are considerable sums of money—ought to be reconsidered, and that the least we could do is to allow that sort of expenditure as a deduction for tax purposes. I therefore submit that the Clause would not only go some way to give a better balance to the Bill; in its own right it is worthy of support by hon. Members on both sides of the House.
  In the debate in 1957 the then Financial Secretary quoted an argument presented by the Royal Commission. He sought to answer a series of questions that the Royal Commission posed. He said:
  "Those answers ought to be given correctly with the aid of the formula … The questions were these:—
  1020
  'are personal tools to be allowed for, if used in preference to those provided by the employer?
  'Books additional to those provided?
  'Overalls where their use is optional?
  'A private car where alternative travelling facilities are provided free?
  'Wife's or secretary's wages where the terms of employment do not require their assistance?' "—[OFFICIAL REPORT, 3rd July, 1957; Vol. 572, c. 1045.]
  That brings me to the whole question of the use of the word "necessarily" for Schedule E purposes. Whether an expense is allowable or not will turn upon whether an employer says to his employee, "I do not think it is necessary for you to have that overall or those tools"—or, "It is not necessary for you to purchase that journal" —"You can do the job I want you to do without those things". If the employer does not regard them as necessary, the Revenue takes the view that the expense is not allowable.
  8.0 p.m.
  I accept that there is a problem here administratively in the same sense that there is a problem in regard to all expenses for Schedule D purposes, though on a smaller scale under Schedule D inasmuch as there are fewer taxpayers under Schedule D than under Schedule E. In the circumstances of Schedule D, inspectors of taxes generally have professional people to negotiate with as regards what is or is not an allowable expense, and in any case the definition is broader, without the word "necessarily". None the less, I suspect that it may be argued that, if every taxpayer under Schedule E could claim relief of up to £50, even if the employer did not think it necessary, there might be an administrative problem in negotiating the question between each Schedule E taxpayer and the Revenue. I shall deal with that argument now.
  What happens in practice is that trade unions, on behalf of their members, even without the new Clause and with the word "necessarily", are able to negotiate a concession from the Revenue and secure relief of £10 or £15 for tools and overalls. It is not impossible that trade unions, again on behalf of their members, would be able to negotiate under the terms of the new Clause—and much more easily because the word "necessarily" would not be there—an allowance of up to £50.

  1021
  Perhaps, because of the more substantial figure involved here, the Revenue would be likely to insist on the amount having to be spent, or it might say that it would allow up to, say, £25 and that anything in excess would have to be proved. We know that the Revenue is generally quite flexible in all sorts of ways. It is flexible in the case of Schedule D expenses, for example, in negotiating the level of car expenses and the proportion of private benefit; where the precise amount of private benefit cannot be settled, it agrees a broad percentage with the taxpayer.
  I see no reason why that could not be done here, and it would be particularly beneficial at this time when, as I say, taxpayers under Schedule E have not had a fair share of what is being distributed under this Finance Bill. For those reasons, I commend the Clause to the House, confident that it will have not only the support of my right hon. and hon. Friends but the support of many hon. Members on the Government side, too.
  Mr. William Clark: I am amazed at the hon. Member for Hey wood and Royton (Mr. Barnett). I should have expected him, with his expert knowledge, to make a better case for a greater expenses allowance without any talk about reflating the economy or producing a better balance in the Budget. If one wants to reflate the economy, one need not play about with the expenses rule under Schedule D or Schedule E. That part of it was just a red herring.
  As the hon. Gentleman said, overalls and tools are covered at the moment. There may well be some justification for raising the allowance of £10 or £15 to £20 or £25. However, when he comes to the question of books and journals, the hon. Gentleman is in danger of exaggerating. I leave teachers out of it for the moment. Many employees who have to have professional and technical journals have them provided by the employer. This is allowed under Schedule D, and it does not cost the employee anything.
  When he talks about articled clerks and courses of study, the hon. Gentleman treads on dangerous ground. It is one thing to talk about articled clerks—if a professional man improves himself
  1022
  by passing examinations while he is earning, that is splendid—but what about the doctor who is not earning while he does his training but who—both himself and his family—has to bear the substantial cost of training? That argument does not hold water.
  There is some justification in the hon. Gentleman's case in one respect. I feel that the expense claim differential between Schedule E taxpayers and Schedule D taxpayers should be looked at. Also—I hope that my hon. Friend will be sympathetic to this—the complications of our tax laws now, particularly since 1964–I say this in no party sense—are such that the ordinary taxpayer is unable to understand his liability. The Schedule D taxpayer is probably all right, but the Schedule E taxpayer, if he has a mixed income, with earned income and a bit of investment income, must take professional advice to settle his liability.
  The time is fast approaching when the Inland Revenue should allow some sort of expense claim against Schedule E emoluments when sums are genuinely paid out for professional advice, whether to an accountant, a bank manager, a solicitor, or whoever may advise the taxpayer on his tax liability.
  I utterly refute the hon. Gentleman's argument about putting a bit of balance into the Budget and giving a little more to the small man rather than to the so-called rich. I remind him that the reduction in S.E.T. goes right through the tax range. [Laughter.] It is no good hon. Members joking. It goes right through the tax range. The family man has done very well in this Budget. About £200 has been given to the family man in tax remissions of one form or another, and it is quite wrong to say that only one section of the community has been looked after in this Budget.
  I hope that my hon. Friend will resist the new Clause, but I hope that he will say something encouraging about the possibility of investigating the expenses which may be allowed against the Schedule E assessment. I ask him to bear particularly in mind the need which the layman feels to have his tax problems and liabilities explained by professional advisers. I do not say that because I happen to be an accountant and hope to increase my fees. There is no doubt

  1023
  that the ordinary layman is bemused and bewildered by our tax laws. He must take professional advice, and it would be only equitable and just if, at some time in the future, an allowance were made in respect of the sums which he pays his professional advisers.
  Mr. Charles Loughlin: I am always fascinated by the reaction of hon. Members opposite to questions of this kind. Perhaps I have a working-class background which produces a sort of mental blockage in my mind when I listen to such people as the hon. Member for Surrey, East (Mr. William Clark). The Clause is primarily concerned with giving up to £50 in allowance to workers in industry. By a weird twist of intellect the hon. Gentleman manages to suggest that the Minister should look at the cost to the individual taxpayer of obtaining professional advice. I know mainly the ordinary industrial workers to whom the Clause was supposed to relate. I suppose that I know as many of them as any right hon. Member or hon. Member does. Very few of them employ professional tax advisers. It is unreal to introduce the argument that whilst rejecting the Clause the Minister might take into consideration the amount of money paid to an accountant for advice.
  Then the hon. Gentleman talked about S.E.T. I am sorry to take up the subject, but we have heard a lot about its effect on the ordinary taxpayer in the past two or three days. The Prime Minister and the Chancellor of the Exchequer have talked about the benefits likely to result from the reductions in S.E.T. I understand that they amount to £1·20 for the male adult assistant in shops and 60p for the female assistant. The minimum sales per male operative are about £120 a week in the distribution industry. A more realistic figure would be about £150. We do not need to be mathematicians to work out that the unit of distribution can concede to the consumer at best one new penny per £ of sales. [Interruption.] The Financial Secretary may wish to intervene.
  Mr. Patrick Jenkin: My hon. Friend the Chief Secretary asked me which Amendment we were on, and I replied that it was about Schedule E expenses.
  Mr. Loughlin: Exactly, and I apologised at the beginning for speaking about S.E.T., but if the hon. Member for Surrey, East mentions S.E.T. and the Chair does not object I am entitled to answer him. It is a con game.
  8.15 p.m.
  Just as I have practical knowledge of the effect of S.E.T. in distribution, I have practical knowledge of the effect the Clause would have on industrial workers. My hon. Friend the Member for Hey-wood and Royton (Mr. Barnett) spoke of an allowance of £15 and I corrected him, because in my experience the tax people will allow £10 for overalls. The Clause does refer to overalls. Shop assistants use overalls, and they not only buy them but have to pay to launder them. If he is to be reasonable in his approach to the customer, the average shop assistant will need four sets a year, and his weekly laundering bill will be at least 20p. for each overall. Many assistants also have to buy books. Even in distribution, today it is not a question of somebody obtaining a job as a shop assistant and eventually emerging, after about 27 years, as manager of a shop taking about £500 a week and having a wage of £18 a week. The whole system of distribution has changed. The assistant may well be a trainee manager, and if so his expenses will be far in excess of the cost of the overalls.
  I give the following information about what I did before becoming a trade union official not because I want to boast about it but because I think it is germane. Many people in industry are in precisely the same position as I was in then. I was in the fishing industry before I became a trade union official. I wore a white coat and white leggings, and on top of them I wore oilskin leggings and an oilskin apron. I had my white coat and leggings laundered every week. My oilskins were pretty expensive.
  I do not know what the hon. Member for Flint, West (Sir A. Meyer) is smiling about. These are the facts of life; I am describing what happens in the fishing industry throughout the country. If the hon. Gentleman thinks it is funny, I should like to know why. These are important facts to be borne in mind in the consideration of a Finance Bill. We are considering a Clause which seeks to obtain relief for people in the reality

  1025
  of the situation. I know that as a professional person today I can obtain all sorts of reliefs and that my accountant will look after me. I have only to give him the requisite information, and he will ensure that I get every relief possisble. But it is important that we should consider the men in industry—in fishing, distribution or in factories—who do not have accountants just as much as we consider the professional people who have access to professional advice. I believe that the hon. Member for Flint, West, who smiled in a scathing way, is Parliamentary Private Secretary to the Financial Secretary. I remind him that the people in the fishing industry have to meet costs incurred by the purchase of oilskins and the constant laundering of overalls and leggings.
  New Clause 5 refers to a value of up to £50. I do not want to talk now about the increased cost of living with hon. Members opposite, although it is the biggest joke of the century. But bearing in mind that the proposal is for a total of up to £50, I think that this is an eminently reasonable proposal. I hope that the Financial Secretary will not skate over the issue but deal with the practical points which arise in the fishing trade or in distribution—indeed, in the whole of industry—because I believe that the proposal for a total of up to £50 is more realistic than the £10 or £15 to which my hon. Friend referred.
  Mr. Dalyell: I would like to put forward two cases as sympathetically as I can in the hope that the Government, if not this year then next year, will look sympathetically at the new Clause. The first is the case of the young teacher. Here, I would not follow my hon. Friend the Member for Heywood and Royton (Mr. Barnett) in the general economic merits of the new Clause, although I happen to agree with him. But I would express the value judgment that there is good in itself in young teachers purchasing books and that the possession of books and the ability to build up some kind of a personal library helps them and helps the country indirectly in their profession. New Clause 5 would be an incentive to them to do so.
  Without such a provision, it is true that a large number of young teachers would probably start a library of their
  1026
  own, anyway, but I think that this would have an incentive effect at a critical time, that it would encourage the book-owning habit, which is in itself a value. This is not just my opinion but that of the Educational Institute of Scotland and, doubtless, of a number of other professional organisations. Therefore I hope that the Treasury will talk to Curzon Street and St. Andrew's House about this matter because some of us think that there is real value in the ownership of books and that there should be some tax advantages early on, knowing that people want to take advantage of them and not abuse them or neglect them. There is certain value in the proposal.
  The second case is that of the young professional man. As is known to some hon. Members, I work for the New Scientist, and there is no doubt that there is a feeling that many people now going into engineering, for example, are relatively less well paid today than they used to be—incidentally, engineers are finding it much more difficult to get jobs—and that they, too, would benefit greatly from some kind of financial incentive to buy what are not only books but increasingly expensive books.
  Ten years ago, as any publisher knows—and here I am not looking straight at the Chief Secretary, although I expect a little sympathy from him on this—books were relatively, even granted the rising cost of living, a great deal cheaper than they are now. But the price of books has soared. I do not blame the publishers; nor do I blame the printers. This is just one of the facts of life. In these circumstances, there is an added reason for the new Clause so that we can help young scientists, young engineers, young technologists and young technicians to own their own books. That would be good for the country and good for British industry.
  Mr. Patrick Jonkin: I was surprised to hear the hon. Member for Heywood and Royton (Mr. Barnett) saying, as a result of his researches, that this subject had not been debated since 1957. He himself took part in a debate in 1966 on a very similar proposal.
  Mr. Barnett Mr. Barnett indicated dissent.
  Mr. Jenkin: I have the debate here. It is no use the hon. Gentleman shaking his head. He must have been asleep at

  1027
  the time. But he did, in fact, speak. I have done him the credit of reading his speech. It was on 30th June, 1966, and his speech began in column 2269 of HANSARD. I mention this only because proposals along the lines of new Clause 5 have been put by successive Oppositions to successive Governments and have never been able to find favour, for reasons which I hope to explain.
  The Amendment in 1966 was moved by the hon. Member for Ashton-under-Lyne (Mr. Sheldon) and the exemption proposed was for overalls, tools and books. The amount suggested was £25. New Clause 5 adds professional journals and courses of study, and is for an amount up to £50. I take the point put by the hon. Member for Gloucestershire, West (Mr. Loughlin)—that the proposal is for a total up to £50.
  What new Clause 5 seeks to do is to apply the Schedule D rule wholly and exclusively for the purposes of the employment to certain expenses incurred by Schedule E taxpayers. It omits the word "necessarily", to which the hon. Member for Heywood and Royton referred and which appears in the Schedule E rule. It also omits the other very important leg to the Schedule E rule—that the expenses are only allowable if they are incurred in the performance of the duties of the office. It is probably fair to say that more horses fall at that hurdle of being unable to establish that expenses are incurred in the performance of the duties of the office than fall at the earlier hurdle of having to prove that they are necessary, although the rider must succeed in overcoming both hurdles.
  8.30 p.m.
  My hon. Friend the Member for Surrey, East (Mr. William Clark), while advising me to reject the new Clause, and I was grateful for his support, for I fear that I must advise the House to reject it, asked me to look at the differences in the treatment of Schedule D and Schedule E taxpayers. One must recognise that Schedule E and Schedule D incomes are taxed under different rules because, as the Royal Commission put it in 1955, of the inherent difference between the two types of income. The taxable income is arrived at in different ways and is computed on different principles and is
  1028
  therefore inevitably taxed under different rules.
  Schedule D income is the balance of the profits of a trade or profession, being the difference between the receipts of the trade and the expenses necessary to earn those receipts. The expenses rule uses the words "wholly and exclusively" because the test is not necessity, but commercial expediency.
  Unlike the Schedule E taxpayer, the Schedule D taxpayer has no duties within a defined area. He directs his own income-earning activities and he alone is judge as to whether expenditure is for the advantage of the business or profession in which he is engaged. No one else can know, and no one else can decide. All the Inland Revenue can do is, when it has been spent, decide whether the expenditure was wholly and exclusively for the purposes of the trade. This phrase allows the apportionment of an expense which is partly for the purpose of the trade and partly for other purposes.
  Mr. J. T. Price: The hon. Gentleman is trying to explain the philosophy which lies behind this system of levying tax differently on Schedule D and Schedule E taxpayers. Would he care to be more explicit and to bring his argument out of the realm of the abstract and to give a positive example? For instance, how would he distinguish in principle between the accountant, or solicitor, or barrister, who needs certain professional books to assist him in carrying out his professional duties and who is taxed on Schedule D and the teacher, or politician, or some other person who is pursuing another profession, or who may be a humble shop assistant, who needs certain technical information? How does he distinguish in principle at the two levels between the two different types of taxpayer? We know what the mechanics are, but we want to get at the principle.
  Mr. Jenkin: I am trying to deal with the principle. The hon. Gentleman started by asking, and I willingly accede to his request, that I should explain this in relation to specific cases. May I continue to distinguish in principle between the two categories and then give examples to illustrate my argument?
  I have dealt with the Schedule D taxpayer, who, on the whole, directs his

  1029
  own income-earning activities and decides whether certain expenditure is necessary in order to enable him to earn his profits, and about whom all the Inland Revenue has to decide is whether those expenses were wholly and exclusively incurred for the purpose of earning the profits.
  The Schedule E taxpayer, on the other hand, is in a totally different position. Generally he has an employer who deter mines the scope of the employee's duties and who often tells the employee exactly how he is to perform them. In the over whelming majority of cases, the employer it is who provides all the facilities and all the equipment necessary to enable the employee to perform his duties. If the employee incurs expenses in the per formance of his duties, overwhelmingly that expenditure will be paid for by the employer, whether they are travelling expenses—
  Mr. Loughlin: Those expenses are not paid for by the employer, and the hon. Gentleman knows it as well as I do.
  Mr. Jenkin: I am taking the overwhelming majority of cases. The hon. Gentleman should not argue too specifically from the position of a Member of Parliament. I do not think that we want to go into this too deeply at the present juncture, but as office holders we may be in a somewhat unique capacity in this regard. However, for the most part if the employer sends the employee away, for instance, to a building site, or to join a ship at a different port, or as a travelling salesman to go round the country, travel expenses are paid by the employer. I think that this is generally accepted by the House. But when the employee is required to provide certain facilities or equipment or to meet certain expenses, then under the law he is entitled to a deduction.
  The hon. Member for Westhoughton (Mr. J. T. Price) asked me to illustrate this point by giving the difference between, for instance, the accountant in private practice and the teacher employed by an education authority. In general, the accountant must buy his Simon on Income Tax; the lawyer needs to equip himself with the law reports. They pay for them out of their own pocket. They decide whether they should acquire them or rely for them on public or professional libraries. These are inevitably part of the expenses in earning profits.
  1030
  On the other hand, the teacher in school—and I take the generality of teachers—will be provided with the text books, blackboard, chalk and increasingly nowadays, language laboratory equipment. For domestic science courses, teachers are provided with washing machines and cookers and for secretarial courses they are provided with typewriters. In general, they do not have lo buy these things; they are provided by the employer, the education authority. I shall come later to the point raised by the hon. Member for West Lothian (Mr. Dalyell) because it must be answered. This in general is the difference between the two. The professional man must decide himself whether to incur expenditure to earn profits. In the other instance, the decision is generally made by the employer who provides or pays for the facilities and equipment necessary to enable the employee to carry out his duties.
  I come to the question whether we should extend the Schedule E expenses rule in the manner suggested by the new Clause. I make three broad points. First, the existing rule works pretty satisfactorily for the overwhelming number of Schedule E taxpayers, for a number of reasons. First, the flat-rate deductions to which the hon. Member for Gloucestershire, West referred meet many of the expenses which employees are obliged to bear—for example, overalls and tools. The hon. Member for Gloucestershire, West referred to his experience in the fishing industry. The figure which has been agreed with the relevant unions and professional associations for skippers, mates and deck hands on trawlers is £45, which the hon. Member may feel is not unreasonable, and £22 for engineers on trawlers. I could quote all the way down the scale to vehicle spray painters where the negotiated figure is £9.
  Mr. Loughlin: I do not want the hon. Gentleman to mislead the House. When one talks about the fishing industry, one does not necessarily talk about deep sea trawling. There is also freshing, curing, salt codding, and so on. I was not talking about skippers. I was unfortunate in that I was a deep sea fisherman apart from working on the inland side of the fishing industry. I was talking about people working on the docks, in the inland wholesale markets and in the inland

  1031
  retail markets. That has nothing to do with skippers, mates and engineers.
  Mr. Jenkin: I was merely giving examples which came from the industry to which the hon. Gentleman referred. A very large number of agreements have been made between the relevant unions and professional associations and the Inland Revenue. The hon. Member for Heywood and Royton has put down a number of questions asking Treasury Ministers to publish the full list in HANSARD. It would be impracticable be cause there are many hundreds of these agreements. I am prepared to answer individual questions about the amounts in any particular case by correspondence.
  Perhaps the point is that this is a matter for negotiation between the appropriate trade union or professional association and the Inland Revenue. If in any particular case it is felt that the sum no longer reflects the expenses incurred by the generality of workers in the area, and this is sometimes narrowed down considerably because of conditions of work, it is always open to the union to approach the Revenue to seek to negotiate a higher figure. The Revenue will require to be satisfied that the figure it is being asked to approve represents the necessary expenditure of the individual concerned on the upkeep of tools, provision of overalls and matters of that sort.
  There is no desire to try to restrict the figure unreasonably, provided that the Inland Revenue is satisfied that the amounts are being spent and are necessary. In such cases the figure will be agreed without a great deal of difficulty. It must be remembered that these are minimum figures. It is always open to an individual worker, be he a worker in a fish dock or a factory, to prove that in the performance of his duties he has necessarily incurred expenses above the figure which the union has negotiated. He is not bound by the union figure. He can approach the Inland Revenue and negotiate a larger sum—
  Mr. Loughlin: No.
  Mr. Jenkin: It is all very well for the hon. Gentleman to say "No" but I am stating the rules as they are. If he thinks that I am stating them wrongly I shall be happy to give way.
  Mr. Loughlin: What happens in the generality of cases is that there is an agreed figure, say £10. If I want, as an individual in any industry, to spend more than the £10, then the hon. Gentleman can bet his bottom dollar that the local insurance officer will not agree to my spending that amount.
  Mr. Jenkin: If the hon. Gentleman could show that he was required to spend this to perform the duties of his office, then the tax inspector would allow the higher sum. If it is merely a matter of personal choice by the individual, then I fully concede that that does not alter the tax rule. It is a question of whether the expenditure is wholly, exclusively and necessarily incurred in the performance of the duties of office. To revert to the white leggings and oilskins to which the hon. Gentleman referred when talking of his previous incarnation in the fishing industry, if he could show that because of the particular work in which he was engaged he needed to have more than the figure that had been negotiated by his union, then it would be open to him to persuade his inspector to accept that and, if it was not accepted, to appeal to the Commissioners. The flat deduction system, bearing in mind that it is a minimum figure and that people can apply for a higher sum, is the first reason why I say the rule is working satisfactorily.
  Secondly, we must take into account what is now Section 192 of the Taxes Act, formerly Section 16 of the Finance Act, 1958. Under that Section, following the recommendations of the Royal Commission—not exactly, but in spirit—Parliament decided that annual subscriptions and fees to professional bodies and learned societies should be allowed if they are connected with the taxpayer's employment. It has been generally recognised that the Section went a long way to meeting the point raised by the Royal Commission, particularly about professional people in employment.
  It often covers the professional journal which will be included within the annual subscriptions, and in other cases additonal subscriptions are admissible for periodicals which are devoted wholly or mainly to the society's principal purpose. Here again the Revenue has approved lists of professional societies and learned bodies for which the subscriptions are admissible provided that the employee is engaged in that particular area of activity.

  1033
  It is for these reasons that I say that the existing rule works satisfactorily. I have made the point that the employer normally provides the facilities to enable the employee to do his job and reimburses any expenses. I have given an example of the teacher in class who is usually provided with all the necessary books for teaching the class. In practice such teachers as, for instance, university lecturers and sixth form teachers are allowed to deduct the expenses of books which they buy for use in class.
  8.45 p.m.
  The hon. Member for West Lothian suggested that we should go further. He suggested there should be a tax allowance to encourage, as he put it, the book-owning habit, to help teachers to acquire background libraries to improve their knowledge of and skill in those subjects in which they are particularly interested, to enable them to keep up to date with their subjects. Naturally, it is desirable that a teacher or other professional person should acquire a library—I do not think I need any prompting by my hon. Friend the Chief Secretary to say that—but the question is whether this expenditure is, in fact, incurred in the performance of the duties of the office and the problem is where we draw the line. For instance, how do we distinguish between expenditure incurred to keep up to date in filling the existing office, and expenditure perhaps to enable a teacher to achieve promotion to a different office, or to take a different job? Perhaps there would be a relatively small amount for buying books, but what about a classics teacher who feels it is part of his duty to explore Greek and Roman antiquities? It seems to me that one is opening the gates extremely wide.
  The truth is that it is necessary to limit the Schedule E expenses rule to the expenditure incurred in the performance of the duties and to exclude expenditure of a personal nature whose only possible basis for a claim is that it is in some way related to the man's job. I recognise that the Clause will limit the expenditure to the five categories the hon. Member mentioned and to a figure of up to £50, but—
  Mr. Sheldon: I thought the hon. Gentleman would need to deal, as it is essential that he should, with the question
  1034
  of increases in relief needed because of the incidence of inflation. He seems to be coming to the end of his speech without having referred to it. What really is important is that the figure needs to change. The hon. Gentleman gave a number of figures as applied to different occupations. They show how relief needs to be increased as inflation goes on. Surely this is a most important matter But he has not yet mentioned it.
  Mr. Jenkin: I think it was before the hon. Gentleman came in that I was engaged with the hon. Gentleman the Member for Gloucestershire, West—I will not say in an altercation, for I would not wish to have one with the hon. Gentleman—in a discussion as to the relevance of the particular figures in particular occupations. I made it clear that it is always open to a union or professional association to approach the Inland Revenue to satisfy the Revenue that a figure which may have existed for a number of years is no longer representative of the expenditure which the members of the union or professional association have to incur in earning the emoluments of their offices. I also made the point that there are a very large number of these figures which have been agreed and I had the assistance of the hon. Member, whose speech in the 1966 debate I referred to briefly. The hon. Member will forgive me if I do not tread that ground again. The difficulty is that if we were to concede the principle embodied in this new Clause it would be increasingly difficult to resist its application to further items of expenditure. It would lead to the erosion of the tax base, and it would seem to me that, in these circumstances, it would be a very slippery path indeed.
  My third reason—I do not place as much weight on this as on the other two reasons, which are issues of principle—is a practical consideration to which the hon. Member for Haywood and Royton referred. It is not possible to estimate the cost of the new Clause except to say that it would undoubtedly be considerable. My predecessor, Mr. MacDermot, in reply to the debate in 1966, indicated that, and that, even on the basis of £25, the cost would be as much as £100 million, although he indicated that that included quite a lot of expenditure which was already allowed.

  1035
  As regards the cost, one is talking certainly in terms of tens of millions. More important, however, particularly in present circumstances, would be the manpower requirements in the Inland Revenue if we were to concede the case.
  I appreciate that the hon. Member sought to overcome that by arguing that trade unions could negotiate lump sum figures for individuals on the new, more relaxed basis. Even so, this would be bound to have considerable staff implications, and the fact that it was negotiated on a lump sum basis would be bound to increase the cost more than if it were done on an individual basis.
  Mr. Dalyell: We have seen many other slippery paths in this year's Budget and Finance Bill than granting these allowances. Could the hon. Gentleman disentangle the cost of a book allowance for teachers from the overall figure of tens of millions which he has given?
  Mr. Jonkin: Not without notice. I would not, however, encourage the hon. Member to believe that it could possibly be right to make a specific exception in respect of teachers' books and to refuse, for instance, in respect of examination fees for accountant's articled clerks. It would seem to me that one would be drawing demarcation lines that would be totally impossible to defend. I would not be tempted to go down that slippery slope. As I emphasise again, however, it goes without saying that everybody wishes to encourage people to acquire libraries and to undertake courses of study, but it does not necessarily follow that there should be a tax relief for engaging in those desirable activities.
  I therefore sum up by saying that I believe the existing law and practice meets the reasonable requirements of the overwhelming majority of Schedule E taxpayers. If further expense is incurred, it is, in general, a matter of personal choice. The taxpayer is not obliged to incur the expenditure, and he certainly does not do so in the course of performing the duties of the employment. It is not necessary to earn the income. In those circumstances, it seems to me that a case for further relief has not been made.
  Mr. J. T. Price: The Financial Secretary to the Treasury has made a valiant
  1036
  attempt to defend his wicket on the new Clause. It is the classical function of a Financial Secretary on the Treasury Bench to defend his wicket, and I do not criticise him for doing so in such an agreeable way. The hon. Gentleman has tried to give us a rational, reasonable, pleasant justification for something which is not quite as simple as he would have us believe.
  As the hon. Gentleman knows full well from many previous debates in the House, it is quite useless for him or any other Treasury Minister to point out to me that this kind of proposal has been resisted by both Labour and Conservative Governments for many years. That does not shake me at all, because I admit at once that some of my hon. Friends who have occupied office in the Treasury in former Administrations have been equally obtuse with their colleagues when they occupied the corridors of power.
  Without wishing to be tendentious, which is the last thing I would try to be in the House of Commons, let me leave the books alone for the moment, although I will say a word about them presently. I am very interested in them because long before I reached the age of 21 I had acquired 1,000 books of my own out of my very meagre pocket money. They have always been one of my greatest treasures.
  Let us take the question of protective clothing and the provision of tools. It is fashionable for Treasury Ministers in the House of Commons, when faced with this kind of request from back-benchers and others who are interested, to say that the question of protective clothing is dealt with fairly and in a liberal manner by many employers—and that is true. There was a time when it was almost unknown for companies or employers of any size to provide overalls, leggings or protective clothing of any kind. Going back a bit further, within my own lifetime, it was quite unknown for employers to produce the tools of the trade.
  Mr. James Dempsey: They still do not.
  Mr. Price: They still do not. The first thing an engineer does when he comes out of his time at 21 is to buy himself a box of tools if he has not inherited one from his father. He has had no allowance for this from the Treasury but, being a

  1037
  good craftsman and not blaming the tools for bad workmanship, he has bought the tools out of his own resources. A man used to have to pay for the sharpening of his picks, for his miner's lamp and the little bit of oil that went into the lamp—the lamp money of 6d. a week. This was the common historic procedure of British industry.
  In more recent years, there has been a liberalisation and greater co-operation from employers with more enlightened ideas, chiefly under pressure from trade unions and stupid Socialists like me and some of my lion. Friends—
  Mr. Sheldon: My hon. Friend is making excellent points, but is he not understating his case? Although employers nowadays are more enlightened about the provision of tools, nothing can replace the possession by an individual of tools he knows well and can depend on. If he gets tools from the store they may be of doubtful quality because they have been used by everybody else, or they may need to be calibrated, which is the case with engineers' tools. No engineer calls himself a skilled craftsman unless he posseses his own tools. He takes a pride in them and cherishes them all his life. I still have mine.
  Mr. Price: I am grateful for that intervention, which has given me a rest just for a moment. It tempts me to go into another aspect which I had thought to spare the House the torment of. I thought we all wanted to go home sometime. This is a fascinating theme and I come back to a perfectly serious point. I do not want to treat this matter flippantly, although I tend to be light-hearted about these things.
  The practice of Treasury Ministers is all too aften to quote the big, progressive employer and to forget the large number of bad employers who do not even provide protective clothing, and who do none of the things that are common practice in the great corporations which are so often cited as examples of liberal practice. I will tell the House the difference in practice between good companies and bad companies.
  A good company will provide overalls and protective clothing where dirty work is to be done, and will provide for the laundering of them at no cost to the workmen. When Schedule D has to be computed
  1038
  through the company's accountants—I am looking at one or two accountants on my own Front Bench who have done this job for many years—an ample allowance is given for what is spent. No arbitrary ceiling is fixed by agreement for such employees as are on the company's payroll to lessen the liability for tax in respect of those payments. This is well understood.
  Another employee doing the same job for another employer may not have the advantage of an agreement for the provision of free protective clothing, and he is faced with an arbitrary limit of perhaps £8 or £7, or a minimal amount that makes no reference to inflated values. The onus is on the workman to establish his case without any professional assistance.
  9.0 p.m.
  Mr. Patrick Jenkin: I thought for a moment that the hon. Member was leaving out of account the fact that this is not, as he put it, a ceiling but, in a sense, a floor. It has always been open to the man to establish that he has spent, more in doing those things covered by the agreement, and professional advice does not seems to be needed there at all. Receipts would be all that were necessary, or even a supported statement of some sort. The matter is not as difficult as the hon. Gentleman seeks to make out.
  Mr. Price: I am being sorely tempted. The last thing I want is to be involved in an altercation with the Financial Secretary, but he is being a little narrow on this question. The man in the small firm who has no professional assistance is in a different category in regard to tax relief for his purchases of protective clothing from that of his opposite number working for a large employer, who is not at such a disadvantage. I do not wish to press the point further except to say that if the Clause merely gets the matter debated until one day some Government have the sense to see that the practice in this case is not as equitable as we are sometimes told it is, it will be all for the good.
  I was naturally attracted by what was said earlier about books. The idea of putting a tax on books or putting any penalty on their circulation is completely obnoxious to me. It is just as senseless as was the old window tax. As a boy in Lancashire I saw large blocks of factories and offices and other premises with

  1039
  the windows bricked up because some stupid Tory Government about a century earlier—or it may have been a Liberal Government—put a tax on windows. Whatever the political persuasion, it was a very silly Government. Bricked-up windows were quite common in those days. It had been considered bad to have too much light shed on the work going on in a building, so a tax was put on windows. The occupants responded by getting bricklayers to brick up the windows. In Lancashire, there are still thousands of windows bricked up in very old buildings which stand as a memorial to the industrial age on which our greatness was founded.
  A tax on books is equally stupid. Any Government, Labour or Tory, who tax the circulation of literature are stupid. So long as we have this stupid idea that we can put a tax on the circulation of knowledge, we are not as enlightened as we once were. And if we are to replace purchase tax by a value-added tax on the massive scale expected by some Common Marketeers I will have more to say here than I would otherwise have said.
  Mr. Barnett: With the leave of the House. I thought it odd that we should have had a debate without mention of the Common Market. My hon. Friend the Member for Westhoughton (Mr. J. T. Price) has relieved our minds on that score.
  When talking of some of the reliefs which should be available, I was reminded by my right hon. Friend the Member for Birkenhead (Mr. Dell), who has some knowledge of history, that in the Elizabethan army soldiers had to pay for their own ammunition and did not get any tax allowance.
  The Financial Secretary put forward a most inadequate and somewhat complacent reply on the way that the system now works. He referred, in an intervention in the excellent speech of my hon. Friend the Member for Westhoughton, to the fact that the present system is not imposing a ceiling, but a flood. He is right about that. Most ordinary taxpayers under P.A.Y.E. have a floor. They have either nil or something above it, so they start from nil. In that sense we have a floor.
  We have had an interesting debate. The hon. Member for Surrey, East (Mr.
  1040
  William Clark), in reply to the point I made earlier about this not being a balanced Finance Bill, said that it was balanced because the S.E.T. reduction went right through. My hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) had something to say about that. I am sure that others of my hon. Friends would have had something to say, too, if they had been told that S.E.T. goes right through. I am not too sure who gets hold of it as it is passing through, but certainly not the people we are trying to assist with the new Clause.
  The points raised by my hon. Friend the Member for West Lothian (Mr. Dalyell) about an allowance for young teachers and the incentive effect of allowing such a Clause to the encouragement of the book-owning habit were in no way adequately dealt with by the Financial Secretary. The hon. Gentleman made one fundamental point which, as I hope to show, he answered himself. His main point was that for the Schedule D taxpayer, where the rule is that the expense has to be wholly and exclusively incurred, the expense does not have to be necessarily incurred. He said that only the Schedule D taxpayer can be the arbiter whether the expense is appropriate and that all that the inspector of taxes can do is to decide whether that expense is wholly and exclusively incurred.
  The hon. Gentleman went on to draw a comparison with the Schedule E taxpayer. He argued that in that case it was for the employer to decide whether the expense should be allowable. In effect, he said that if the employer does not consider that the employee should have additional overalls, tools, books, and so on, it should not be an allowable expense to tax. That was the main burden of his argument. I am paraphrasing it. If I have got it wrong, perhaps he will put me right.
  Mr. Patrick Jenkin: It is not a question of "should not be an allowable expense". What I intended to argue was that prima facie, in the great generality of cases, the employer will provide the employee with the necessary facilities to undertake the duties of his employment, but that, if he does not, the rule—I submit that it is a reasonable rule—requires that it is only if the employee is required to incur the extra expense for

  1041
  the purpose of performing his duties that he should be entitled to tax allowance.
  Mr. Barnett: That is not so different from what I was saying. The hon. Gentleman was arguing that if the employer does not provide the tools or overalls and the employee supplies them for himself, that would be a test whether that expense should be allowable. I gather the hon. Gentleman does not dispute that that is what I was saying.
  As has been said by many of my hon. Friends, there are many good employers who provide more than an adequate supply of overalls, tools, and so on; but, there is a large number who certainly do not supply an adequate amount of tools, overalls, and so on. For example, many women workers have to launder their own overalls every week. The good employers would meet that expense, but many others would not.
  The main burden of the hon. Gentleman's argument was that if the employer is not prepared to meet this expense, in itself this is an adequate test as to whether the expense should be allowable. He then virtually answered the main burden of his case, because he referred to a series of questions that I put to him a little while ago, when I asked how many agreements there were where there was an allowance for tools, overalls and the like. After giving a few examples of agreements between trade unions, employers and the Inland Revenue, again he said that there are so many hundreds of agreements between trade unions and the Inland Revenue that it is almost impossible to list them all.
  In other words, the Revenue is at present allowing, on a very large scale, expenses incurred by employees where the employers do not meet them. Therefore, the whole burden of the hon. Gentleman's point is broken. In all those cases, the expenses allowed by the Inland Revenue—it may well be that the Revenue do so virtually in contravention of Section 189 of the Income and Corporation Taxes Act—are very flexible; flexible in such a way that it completely invalidates the hon. Gentleman's argument.
  The hon. Gentleman said that he has no desire to restrict these expenses. If he genuinely has no desire to restrict them, one can only assume that by impli
  1042
  cation. Indeed, when he intervened during the speech of one of my hon. Friends, he seemed to imply that the Revenue should be prepared to review upwards the many agreements which exist.
  As my hon. Friend the Member for Gloucestershire, West pointed out, in one industry, with an allowance of £10 per employee, the Revenue would be prepared to consider revising that upwards. My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) pointed out that inflation has meant that there should be an increase in the amount of the allowances. In Committee the Financial Secretary pretty well conceded that there is a case for an increase in some allowances because of inflation. We debated the increase in the car allowance from £2,000 to £4,000. The Financial Secretary said that the Government had included a little bit for inflation. That little bit turned out to be about 43 per cent. I suppose that that was a little licence, bearing in mind what the Government are likely to do in the next year or so. In many cases the last time that these agreements were negotiated was some time ago. Therefore, in view of what the hon. Gentleman has said, I assume that trade unions should now seek to discuss this matter with the Inland Revenue with a view to revising substantially upwards the figure they have agreed, some years ago in many cases, for tools and overalls.
  Apart from that, the general case for giving an additional £50 allowance, especially to those paying tax under P.A.Y.E., was not answered by the Financial Secretary. There is a case for increasing the threshold, by giving an additional £50 allowance, which would remove a number of lower paid taxpayers on Schedule E.
  As I pointed out, in the Budget the Chancellor relieved 200,000 taxpayers from paying tax by the child relief, but another 750,000 were brought into the net this year because of inflation. For that reason alone there is a substantial case for giving another £50 allowance under P.A.Y.E. I am not saying that it should be for every person but only where there is an expense of up to £50 for tools, books, overalls, journals, and so on.
  In view of the wholly inadequate reply which we have had and the complacency

  1043
  of the Financial Secretary, I hope that my right hon. and hon. Friends will join me in the Lobby in voting for the new Clause.
  Question put, That the Clause be read a Second time:—
  The House divided: Ayes 163, Noes 192.

  Division No. 408.]

  AYES

  [9.15 p.m.

  Allaun, Frank (Salford, E.)

  Hannan, William (G'gow, Maryhill)

  Orme, Stanley

  Allen, Scholefield

  Hardy, Peter

  Oswald, Thomas

  Archer, Peter (Rowley Regis)

  Hart, Rt. Hn. Judith

  Paget, R. T.

  Ashton, Joe

  Hattersley, Roy

  Palmer, Arthur

  Barnett, Joel

  Heffer, Eric S.

  Pannell, Rt. Hn. Charles

  Bishop, E. S.

  Hooson, Emlyn

  Pardoe, John

  Blenkinsop, Arthur

  Horam, John

  Parker, John (Dagenham)

  Booth, Albert

  Houghton, Rt. Hn. Douglas

  Parry, Robert (Liverpool, Exchange)

  Boyden, James (Bishop Auckland)

  Howell, Denis (Small Heath)

  Pavitt, Laurie

  Bradley, Tom

  Huckfield, Leslie

  Pendry, Tom

  Brown, Hugh D. (G'gow, Provan)

  Hughes, Mark (Durham)

  Pentland, Norman

  Buchan, Norman

  Hughes, Robert (Aberdeen, N.)

  Price, J. T. (Westhoughton)

  Callaghan, Rt. Hn. James

  Janner, Greville

  Reed, D. (Sedgefield)

  Campbell, I. (Dunbartonshire, W.)

  Jay, Rt. Hn. Douglas

  Roberts, Rt. Hn. Goronwy (Caemarvon)

  Carmichael, Neil

  Jenkins, Hugh (Putney)

  Robertson, John (Paisley)

  Clark, David (Colne Valley)

  John, Brynmor

  Roderick, Caerwyn E.(Br'c'n&R'dnor)

  Cocks, Michael (Bristol, S.)

  Johnson, Walter (Derby, S.)

  Rodgers, William (Stockton-on-Tees)

  Coleman, Donald

  Jones, Barry (Flint, E.)

  Roper, John

  Concannon, J. D.

  Jones, Dan (Burnley)

  Ross, Rt. Hn. William (Kilmarnock)

  Cox, Thomas (Wandsworth, C.)

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  Sandelson, Neville

  Cunningham, G. (Islington, S. W.)

  Jones, Gwynoro (Carmarthen)

  Sheldon, Robert (Ashton-under-Lyne)

  Cunningham, Dr. J. A. (Whitehaven)

  Judd, Frank

  Sillars, James

  Dalyell, Tam

  Kaufman, Gerald

  Silverman, Julius

  Davidson, Arthur

  Kerr, Russell

  Skinner, Dennis

  Davies, Denzil (Llanelly)

  Lambie, David

  Small, William

  Davis, Terry (Bromsgrove)

  Latham, Arthur

  Smith, John (Lanarkshire, N.)

  Deakins, Eric

  Lawson, George

  Spearing, Nigel

  Delargy, H. J.

  Lee, Rt. Hn. Frederick

  Spriggs, Leslie

  Dell, Rt. Hn. Edmund

  Leonard, Dick

  Stoddart, David (Swindon)

  Dempsey, James

  Lewis, Arthur (W. Ham, N.)

  Strang, Gavin

  Doig, Peter

  Loughlin, Charles

  Summerskill, Hn. Dr. Shirley

  Dormand, J. D.

  Lyon, Alexander W. (York)

  Swain, Thomas

  Douglas, Dick (Stirlingshire, E.)

  Lyons, Edward (Bradford, E.)

  Taverne, Dick

  Douglas-Mann, Bruce

  Mabon, Dr. J. Dickson

  Thomas, Jeffrey (Abertillery)

  Driberg, Tom

  McBride, Neil

  Thomson, Rt. Hn. G. (Dundee, E.)

  Eadie, Alex

  Mackenzie, Gregor

  Thorpe, Rt. Hn. Jeremy

  Edwards, Robert (Bilston)

  Mackie, John

  Tinn, James

  Ellis, Tom

  Mallalieu, J. P. W. (Huddersfield, E.)

  Torney, Tom

  Evans, Fred

  Marks, Kenneth

  Tuck, Raphael

  Femyhough, Rt. Hn. E.

  Marquand, David

  Walden, Brian (B'm'ham, All Saints)

  Fisher, Mrs. Doris (B'ham, Lady wood)

  Marshall, Dr. Edmund

  Wallace, George

  Fletcher, Ted (Darlington)

  Mayhew, Christopher

  Watkins, David

  Foley, Maurice

  Meacher, Michael

  Weitzman, David

  Ford, Ben

  Mellish, Rt. Hn. Robert

  Wellbeloved, James

  Freeson, Reginald

  Mcndelson, John

  Wells, William (Walsall, N.)

  Galpern, Sir Myer

  Mikardo, Ian

  White, James (Glasgow, Pollok)

  Garrett, W. E.

  Millan, Bruce

  Whitehad, Phillip

  Gilbert, Dr. John

  Miller, Dr. M. S.

  Whitlock, William

  Ginsburg, David

  Morgan, Elystan (Cardiganshire)

  Williams, Alan (Swansea, W.)

  Golding, John

  Morris, Alfred (Wythenshawe)

  Wilson, Rt. Hn. Harold (Huyton)

  Gourlay, Harry

  Morris, Charles R. (Openshaw)

  Woof, Robert

  Grant, George (Morpeth)

  Morris, Rt. Hn. John (Aberavon)

  Grant, John D. (Islington, E.)

  Murray, Ronald King

  TELLERS FOR THE AYES:

  Hamilton, James (Bothwell)

  Ogden, Eric

  Mr. Ernest Armstrong and

  Hamilton, William (Fife, W.)

  O'Halloran, Michael

  Mr. James A. Dunn.

  Hamling, William

  O'Malley, Brian

  NOES

  Adley, Robert

  Boardman, Tom (Leicester, S. W.)

  Chapman, Sydney

  Alison, Michael (Barkston Ash)

  Boscawen, Robert

  Chataway, Rt. Hn. Christopher

  Allason, James (Hemel Hempstead)

  Bossom, Sir Clive

  Chichester-Clark, R.

  Atkins, Humphrey

  Bowden, Andrew

  Churchill, W. S.

  Baker, Kenneth (St. Marylebone)

  Boyd-Carpenter, Rt. Hn. John

  Clark, William (Surrey, E.)

  Baker, W. H. K. (Banff)

  Bray, Ronald

  Clarke, Kenneth (Rusholiffe)

  Barber, Rt. Hn. Anthony

  Brinton, Sir Tatton

  Clegg, Walter

  Batsford, Brian

  Brocklebank-Fowler, Christopher

  Cooke, Robert

  Bell, Ronald

  Brown, Sir Edward (Bath)

  Cooper, A. E.

  Benyon, W.

  Bryan, Paul

  Corfield, Rt. Hn. Frederick

  Berry, Hn. Anthony

  Buchanan-Smith, Alick (Angus, N&M)

  Cormack, Patrick

  Biffen, John

  Buck, Anthony

  Critchley, Julian

  Biggs-Davison, John

  Butler, Adam (Bosworth)

  Crouch, David

  Blaker, Peter

  Carlisle, Mark

  Crowder, F. P.

  Curran, Charles

  King, Evelyn (Dorset, S.)

  Rees-Davies, W. R.

  d'Avigdor-Goldsmid, Sir Henry

  King, Tom (Bridgwater)

  Renton, Rt. Hn. Sir David

  d'Avigdor-Goldsmid, Maj-Gen. James

  Kinsey, J. R.

  Rippon, Rt. Hn. Geoffrey

  Dean, Paul

  Kitson, Timothy

  Rost, Peter

  Deedes, Rt. Hn. W. F.

  Knight, Mrs. Jill

  Russell, Sir Ronald

  Dixon, Piers

  Knox, David

  Scott, Nicholas

  Dodds-Parker, Douglas

  Langford-Holt, Sir John

  Scott-Hopkins, James

  Drayson, G. B.

  Le Marchant, Spencer

  Sharples, Richard

  Dykes, Hugh

  Lewis, Kenneth (Rutland)

  Shaw, Michael (Sc'b'gh & Whitby)

  Edwards, Nicholas (Pembroke)

  Longden, Gilbert

  Shelton, William (Clapham)

  Farr, John

  Loveridge, John

  Simeons, Charles

  Fell, Anthony

  Luce, R. N.

  Sinclair, Sir George

  Fenner, Mrs. Peggy

  McAdden, Sir Stephen

  Smith, Dudley (W'vvick & L'mington)

  Fletcher-Cooke, Charles

  McCrindle, R. A.

  Soref, Harold

  Fookes, Miss Janet

  McLaren, Martin

  Speed, Keith

  Fortescue, Tim

  Macmillan, Maurice (Famham)

  Spence, John

  Foster, Sir John

  McNair-Wifson, Michael

  Sproat, Iain

  Fowler, Norman

  Maddan, Martin

  Stainton, Keith

  Gardner, Edward

  Madel, David

  Stanbrook, Ivor

  Gibson-Watt, David

  Marten, Neil

  Stewart-Smith, D. G. (Belper)

  Goodhart, Philip

  Mather, Carol

  Stokes, John

  Goodhew, Victor

  Maude, Angus

  Stuttaford, Dr. Tom

  Gorst, John

  Meyer, Sir Anthony

  Tapsell, Peter

  Gower, Raymond

  Mills, Peter (Torrington)

  Taylor, Sir Charles (Eastbourne)

  Grant, Anthony (Harrow, C.)

  Mitchell, Lt.-Col. C.(Aberdeenshire, W)

  Taylor, Edward M.(G'gow, Cathcart)

  Gray, Hamish

  Moate, Roger

  Taylor, Frank (Moss Side)

  Green, Alan

  Monro, Hector

  Tebbit, Norman

  Gummer, Selwyn

  Montgomery, Fergus

  Temple, John M.

  Hall, Miss Joan (Keigbley)

  More, Jasper

  Thatcher, Rt. Hn. Mrs. Margaret

  Hall, John (Wycombe)

  Morgan-Giles, Rear-Adm.

  Thomas, John Stradling (Monmouth)

  Hall-Davis, A. G. F.

  Morrison, Charles (Devizes)

  Trafford, Dr. Anthony

  Harrison, Col. Sir Harwood (Eye)

  Mudd, David

  Trew, Peter

  Hay, John

  Murton, Oscar

  Tugendhat Christopher

  Hayhoe, Barney

  Neave, Airey

  Turton Rt Hn. Sir Robin

  Heath, Rt. Hn. Edward

  Noble, Rt. Hn. Michael

  Hicks, Robert

  Normanton, Tom

  Waddington, David

  Higgins, Terence L.

  Onslow, Cranley

  Walder, David (Clitheroe)

  Hiley, Joseph

  Oppenheim, Mrs. Sally

  Walker-Smith, Rt. Hn. Sir Derek

  Hill, James (Southampton, Test)

  Owen, Idris (Stockport, N.)

  Walters, Dennis

  Holt, Miss Mary

  Page, Graham (Crosby)

  Ward, Dame Irene

  Hordern, Peter

  Parkinson, Cecil (Enfield, W.)

  Warren, Kenneth

  Hornby, Richard

  Peel, John

  Weatherill, Bernard

  Hornsby-Smith. Rt. Hn. Dame Patricia

  Percival, Ian

  Wiggin, Jerry

  Howell, David (Guildford)

  Pink, R. Bonner

  Wilkinson, John

  Howell, Ralph (Norfolk, N.)

  Powell, Rt. Hn. J. Enoch

  Wolrige-Gordon, Patrick

  Hunt, John

  Pym, Rt. Hn. Francis

  Wood, Rt. Hn. Richard

  Hutchison, Michael Clark

  Raison, Timothy

  Woodhouse, Hn. Christopher

  Irvine, Bryant Godman (Rye)

  Rawlinson, Rt. Hn. Sir Peter

  Wylie, Rt. Hn. N. R.

  Jenkin, Patrick (Woodford)

  Redmond, Robert

  Jessel, Toby

  Reed, Laurance (Bolton, E.)

  TELLERS FOR THE NOES:

  Kellett-Bowman, Mrs. Elaine

  Rees, Peter (Dover)

  Mr. Hugh Rossi and

  Kilfedder, James

  Mr. Paul Hawkins.

New Clause 10

  ALTERATION TO GENERAL BETTING DUTY
  As from 2nd August 1971

  (1) the rate of duty on any on-course bet made on or after that date shall (in lieu of the rate of 5 per cent. specified in section 1 (1)(a) of the Finance Act 1970) be 2½ per cent.;

  (2) any bet made on or after that date by means of a totalisator situated on premises forming part of the track shall be deemed to be an 'on-course' bet.—[Mr. Temple.]

  Brought up, and read the First time.
  Mr. John M. Temple: I beg to move, That the Clause be read a Second time.
  Mr. Deputy Speaker (Miss Harvie Anderson): It would be for the convenience of the House to discuss at the same time new Clause 8–Alteration to
  1046
  general betting duty in respect of on-course bets—
  In relation to any on-course bet made on or after 2nd August 1971 section 1 of the Finance Act 1970 (which relates to general betting duty) shall be read and have effect as if, in place of the words '5 per cent.' there were substituted the words '2½ per cent.'.
  and new Clause 37–On-course betting—
  As from 1st November 1971 the provision contained in section 1(1)(a) of the Finance Act 1970 shall be abolished, and the provision contained in section 1(3) of the said Act (defining an 'on-course bet') shall be amended by the addition of these words at the end of the subsection 'or the bet is made by a person on behalf of the Horserace Totalisator Board on premises not forming part of the track but in such event the bet made is transmitted to the premises forming part of the track and forms part of the pool on the course for the event in respect of which the bet is made.
  Mr. Temple: I am delighted that you have selected new Clauses 8 and 37 to be debated at the same time, Mr. Deputy

  1047
  Speaker. I cannot claim to be a novice at the question of betting legislation, and I can claim the honour of being relatively consistent in these matters in that I have proposed several new Clauses and Amendments directed to the same end.
  The object and principles underlying new Clause 10 are. basically, to reduce by half—that is, to 2½ per cent.—the duty on all betting on racecourses and at the same time to provide that all bets struck on the totalisator shall be deemed to be on-course bets
  I am not wholly convinced that new Clause 10 is properly drafted, but I am more confident about the drafting of new Clause 8, having been more associated personally over a period of years with the approach enshrined in the latter. A new Clause on similar lines was proposed by the Conservative Opposition in both 1968 and 1969.
  New Clause 37 is in the name of my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), who has been so dedicated to the cause of racing. I well remember how in 1966 he returned at a gallop on Gold Cup Day from Ascot in order to propose a new Clause designed to the same end. I am happy to say that I have not had to drag myself from Chester races on this occasion. These new Clauses are being debated at what I call a reasonably quiet time in the racing calendar, between Ascot and Goodwood, and we have time for a good review of the situation. In my view, the present situation is not healthy for racing generally or for the bloodstock industry.
  New Clause 10 has, as I say, two objectives, the second being to help the totalisator. I cannot claim to be an expert on the totalisator or its workings, but I know that it is in considerable difficulty at present. It has not been able to meet the contributions which it should have been making to the levy board in the last two years, and on present form there is little prospect that it will pay the levy in the foreseeable future.
  My hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) has had a good deal to do with the totalisator—
  Mr. Stephen Hastings: Not successfully.
  Mr. Temple:—and, if he can catch your eye, Mr. Deputy Speaker, he will, I am sure, deploy the case for the totalisator much better than I could. For my part, as I say, I have always endeavoured to be consistent in politics, and in no sphere, I believe, can I claim to have been more consistent than in the sphere of betting legislation.
  It is a great tragedy that the House lost a most respected Member by the death of Iain Macleod. I well remember the occasion when he moved an Amendment on this subject to the Finance Bill in Committee in May, 1968. I hesitate to mention this now in the presence of the Minister of State, but that Amendment was supported not only by the present Financial Secretary and the present Minister of State at the Treasury but by five Members who are now Ministers in the present Government and by two who are Government Whips. I was myself associated with the Amendment, so I cannot think it was other than highly respectable.
  It is, perhaps, good fortune that the present Chief Secretary to the Treasury is to answer this debate. He was not personally involved on that occasion, and I suspect that he has been picked because he is the one Treasury Minister not to have been involved in previous debates and who did not vote for the Amendment on the lines of new Clause 8 to which I have referred. I hope that he has at any rate read the OFFICIAL REPORT of the debates. I cannot do better than quote the late Iain Macleod, who said in the debate in 1969:
  "… I think that there ought to be a clear differential between the tax on on-course betting and the tax on off-course betting ".
  Then he said something which is very significant:
  "I hope in a not-too-distant Budget that will come about."—[OFFICIAL REPORT, 16th July, 1969; Vol. 787, c. 679.]
  Perhaps there is a hope on this occasion.
  9.30 p.m.
  I do not think that the Treasury would be losers if it took the action which I advocate. In 1970 hedging betting on-course was exempted from tax. That shows how persistency can have effect, for that was a matter I had pursued for a number of years. Moreover, the principle which I and a number of my right hon. and hon. Friends had enunciated, of

  1049
  a differential between on-course and off-course betting, was accepted for the first time, so there is no difficulty for my hon. Friend the Chief Secretary today. He will not have to say that he would be breaching a Treasury principle, for it has already been breached by the previous Government. I am trying to induce him to jump a little further through the hole already made in the Treasury defences to bring about the happier state of affairs in which on-course betting would be treated much more lightly than it is now from a tax point of view.
  Today there is a 6 per cent. duty on all bets struck off-course and a 5 per cent. duty on all bets struck on-course. I do not think that that difference of 1 per cent. is the difference to which Iain Macleod was referring. He was referring to a substantial difference, such as halving of the on-course duty.
  I should like to explain something of the figures, for the House is entitled to know whether I am seeking a remission of tens or hundreds of millions of £s of revenue or a mere £1 million or so. In 1970–71 the on-course turnover in both horse racing and dog racing was about £100 million, bringing in duty of £5 million. The off-course figure was gigantic. The turnover was £1,000 million, and the duty it brought in was about £61 million.
  I would encourage my hon. Friend by admitting that the hedging concessions granted last year has stimulated the on-course market to an extent. That is all to the good. But it is encouraging also from the Treasury point of view to realise that that concession did not diminish the revenue. That will substantiate the point I shall make later that the tax could well be reduced without reducing the revenue.
  A most serious matter has been the drop in race-course attendances. A very large number of people are now watching horse races on television. From about 27 racing programmes on television in a year, the figure has grown in the past few years to about 235. But on the racecourse the number of persons watching the racing has dropped by a third since 1953, from 6 million—a small enough figure—to only 4 million a year. The daily attendances on the track have fallen from an average of 8,500 to 5,000. We should expect to see more people at an average Third Division football match than at the average race meeting. These
  1050
  figures include the great meetings of Ascot, Goodwood, Aintree and everywhere else. One can deduce from them the fact that attendances at some of the small meetings are amazingly thin.
  Linked to the question of the small attendances is the viability of the racecourses themselves. A few years ago, in the period 1963–66, there was an average return on capital invested in racecourses of about 6 per cent. That was a modest reutrn in itself. Between 1967 and 1969 the return on capital dropped to 0·3 per cent.; in other words, one-third of one per cent. is the return on capital invested in racecourse. That is a most dangerous situation. If we want the bloodstock industry to prosper, we must have racecourses that can attract the public and give prize money. There is real danger of these courses being taken out of racing altogether for development for other purposes because the capital employed is not making a reasonable return.
  I have no wish to labour this point. The arguments are well known. They have been well put in previous debates. Recently Lord Wigg said that the racecourse market is the pyramid upon which the whole of the racing industry depends—on which off-course betting depends. At Chester races a few years ago, just before I spoke on this matter, I met those two mythical men, the representatives of the Sporting Life and the Sporting Chronicle who determine what is called the "starting price return". Many people imagine that bookmakers make the starting price return; the starting price is made not by them but by these two authoritative racing correspondents, who have the difficult job of assessing what the market is at the off. That market price at the off is the starting price which determines all the off-course betting throughout the country.
  The one thing I and my hon. Friends have always been concerned about is that we should have a strong market on-course. Mr. Sidney Bates, a respected racehorse owner, told me that the market was so weak at a meeting recently that no starting price could be made. That is one end of the scale. If a weak market develops at a very small meeting it is not difficult to influence the starting price odds by placing a few bets strategically in the market. This is why a strong market on-course is desirable.

  1051
  I hope that the Government will look favourably at the new Clause. The principle was supported in Opposition by the Conservatives, and indeed, received all-party support at that time. I do not believe that much revenue would be lost. If the betting duty on-course was halved, as things stand the loss to the Revenue would be about £2½ million, but I believe that there would be a big upsurge in betting on the course and that the Revenue would, therefore, soon gain back a great deal of what the Treasury thinks it might lose by this proposal, and, over and above that, would gain tremendously by the added encouragement this would give both to racecourses themselves and to the whole of the bloodstock industry. For these reasons, I hope that the Government will look favourably at the new Clause.
  Mr. W. R. Rees-Davies: The subject which we are discussing tonight is probably almost as popular among the public as the subject of the Common Market is in certain quarters. I make no apology for following my hon. Friend the Member for the City of Chester (Mr. Temple) in developing some of the arguments on a matter which affects millions of people who are fascinated by the sport of kings.
  There are four factors which arise, the first of them new. The new factor is that the Horse Race Totalisator Board is heading straight for bankruptcy. It behoves the House and the Treasury to take action either to save it, or to decide that it shall not continue.
  The second factor, of overriding importance, is to do something to encouraging people to go racing on course and not to sit watching the television. The third, which is vital, is to try to restore to racing the quality of racing which is a way of life, a hobby, an interest of so many of us. The fourth is to enable us to maintain this country as the leader of bloodstock and to enable the facilities of the racecourses to provide what they do not now provide—the highest amenities for racing for a country which should continue to give a lead in this rescect. Only one thing can achieve all four factors at the same time: it is to make people who want to watch pay for those
  1052
  who want to attend and to participate in racing.
  The essence of this begins in 1966 with Iain Macleod. It began when he forcefully pointed out to the House that there was all the world of difference between off-course betting and on-course betting, between being a goer and being merely a watcher. He pointed out that there should be a differential between being a participator and being merely an idle watcher, and we voted on it.
  In 1968, he followed that by opposing an increase in tax and again he singled out the necessity for a distinction between the off-course and the on-course market, having explained the essentials of the market in 1966. Finally, in the quotation which has been given, he said in terms that it was the policy of the Conservative Party, which would be pursued in a not-too-distant future Budget, to introduce a substantial differential between on- and off-course betting.
  Why is this so? First, one must look at the general betting duty picture. There are 64 racecourses racing on approximately 800 days with 5,000 races. In the financial year 1970–71, the immediate up-to-date figures show that the Government are receiving a total £71·149 million. They estimated to receive only £66·5 million, so they received £4·5 million more than they estimated this year. The off-course bookmakers provided £61·45 million; the on-course horse race tote only £1·52 million; the on-course bookmakers £2·77 million; the greyhounds provided on-course for the totalisator £2·95 million and the off-course bookmakers with the dogs £2·44 million. That is the complete picture for 1971. Therefore, the whole tax on course in respect of horseracing is just over £4 million, or less than the difference between the estimated and actual figures received this year by the Revenue, and it represents a tiny fraction of the money received.
  9.45 p.m.
  When the tax was introduced by mc Treasury in 1966, it thought that it would receive between £11 and £12 million. It received about £13 million. A couple of years later, it estimated that it would receive £30 million. It received £50 million. More recently, it estimated that it would receive £66½ million. It received over £71 million. The off-course punter

  1053
  has supported betting not racing. But there is no money in racing today, and this is the sad picture. It is entirely the off-course punter, who contributes nothing to the sport except the tax, who has provided the revenue which far exceeded the wildest dreams of any Chancellor of the Exchequer. The turnover producing a mere £10 million on a 2½ per cent. figure in 1966 went up to £55 million in March, 1968. This is the background of the figures against which we must work.
  Why is it said that we should either have no tax on course or a negligible tax—say, 1 per cent.? One of the major new reasons is that the tote is heading for, if it has not already reached it, complete insolvency. The facts are these. The debt to the Levy Board as at yesterday's date is £465,606. The loss by the tote last year was £250,000. The tote has no reserves, no capital and virtually no assets. The 1½ per cent. levy fixed by the Home Secretary was to be paid only in the event of its being able to make a profit. It had no chance of doing that. There was a nil return, and next year there will be a nil return. Therefore, one of the purposes for which it was set up, which was to provide a benefit for racing, cannot be achieved.
  I do not think that the tote should be blamed for this situation. It is not to blame. Over the past six years the tote contributed no less than £6 million. Now it is unable to do so. Unlike other commercial concerns, it had no capital and no power to obtain a commercial loan. Any profits which it made year by year had to be handed over for the benefit of the concerns it sought to serve. It is in no way to blame in this respect. It may be that there are steps which it can take to improve its profit position. But the situation calls for a keen, hard look because otherwise the Government will be faced with the same position in respect of the tote this coming year as they were faced with in respect of Upper Clyde shipbuilders and other concerns. I do not want that to happen.
  The best thing which can be done for the tote is, first, to give it the advantage of not having to pay the tax of £1½ million which it paid last year for on-course betting and, further, to enable it to have off course the advantage of treating as on-course bets placed at tote odds.
  1054
  For example, if there was a meeting at Chester and a person at Kempton Park wanted to bet at tote prices he could bet at Kempton and the money would go into the pool at Chester.
  It is perfectly true that this gives it an advantage to the tote as against the bookmaker. Let me say this with all the authority that I can command—and I have spoken to so many of the bookmakers in the country—that while it is true that they may not like giving an advantage to a competitor in this way, the advantage obtained by accepting the Amendment is one which they will universally accept. They will accept it because of the great advantage which would accrue to racing, and not having to pay the tax on-course would more than offset the advantage which would be carried to the tote, whom naturally they do not regard as the very greatest of competitors, nowadays with their tiny turnover as compared with bookmakers.
  A year ago they subscribed to that view virtually unanimously. They have only expressed a different view very recently and it is a view that I have no hesitation in saying would be acceptable provided that we could really secure the benefit for racing which the Amendment would contribute.
  There are many ways in which the tote can be assisted. It seems that the first thing to do is to get its tax position right and to ensure that it then is in a position to provide the facilities. The tote has to attend 792 meetings throughout the country and is obliged to provide facilities at all of these whether or not they are profitable. We should take a keen hard look and see whether it ought to continue to do so. There may be opportunities to provide different facilities, such as the tierce for the future which may provide a profit. We need action now or very soon indeed if we are to assist in the maintenance of a system which is of very great value to many small punters and to those who wish to go racing.
  Secondly, we must encourage people to go racing. Attendances have been falling year by year. In 1965, five and a quarter million people went racing. By 1969 the figure was 4,110,000. The lack of differential in betting, the cost of going racing, the advent of colour television and the increasing traffic problems are

  1055
  all factors which have militated against persons going to the course. The necessity for a strong betting market was always in the forefront of the mind of the late Iain Macleod. As a man with a phenomenal knowledge and appreciation of odds and mathematics he recognised a factor which I am sorry to say we will have to train our Front Bench to recognise.
  What he understood and what it does not understand at the moment—although many coming up in Customs and Excise are now becoming very well trained in gambling matters—is that we must have a strong betting market because one of the only reasons for sustaining the on-course market today is that the return is made from the course by the journalists whose integrity is undoubted and who return the market price. If there is no effective market on the course there cannot be an effective return and if it is very weak, one bookmaker, by throwing a weight of money in at the last moment, can change the whole range of the odds to his advantage. It is therefore essential that we ensure that people go racing, that they enjoy racing and that they make this a sport which is a living thing.
  If that be the third factory, the fourth and most important in many ways is that we maintain the quality of British racing, that we try to retain the best of British bloodstock. Recently, Nijinsky came for sale. This country was unable to find the money. It can find the money, I am happy to say, for a good picture but not for an outstanding racehorse. It was lost to the United States because the National Stud could not find the £2 million for the outstanding horse. It is said, "Oh, but there are many people who are owners today, who have horses." They have horses, poor horses in the main. The quality has fallen badly. If we consider those who owned the best racing stock in our country it was people like Paul Mellon and the late Charles Engelhard. It is the foreign money today.
  These are the people who sustain the bloodstock market today. These are the people who are non-United Kingdom taxpayers who are providing the money and who are draining away the bloodstock. Year by year it is being drained away.
  Although the Extel Company pays £700,000 a year to the racecourses of
  1056
  Britain to provide for the blower services, nevertheless this is a pretty poor way of treating our racecourses. They would be very much better supported if we could ensure that people go racing and pay at the gate and go in and provide the funds—which provide the prizes.
  Now I come to the shocking figures of prizes. In 1966 the amount was £3 million. In 1970 in flat racing it had risen to only £3·5 million. Although in that period the value in money and returns had gone up by nearly 50 per cent. in actual value they had fallen in this country. In France at the same date they had risen by 30 per cent. and in 1971 alone were up 10 per cent. In Australia, starting from a higher base, the figures were up over 50 per cent. In Greece, where they started racing only two or three years ago, the lowest prize money is £1,000 a race. We are not even as well off as Greece. The net training deficit for owners for last year was £6 million—£1,000 per horse per year. In New South Wales and Victoria, two States in Australia, with a population of 8 million, the prize money exceeds the whole of the prize in the United Kingdom with a population of 55 million.
  Mr. William Clark: Disgraceful!
  Mr. Rees-Davies: I am delighted that my hon. Friend, with his great knowledge of finance, is understanding these figures so well.
  It is perfectly true that a very high price is got for first class yearlings, but the owners who get it—where do they go? Abroad. The money goes to non-United Kingdom taxpayers. So the quality of racing goes down and down.
  I would refer to something said in Sporting Life about the tote. There was an article by Michel Rolfe on 1st July and I entirely agreed with a great part of it. He said:
  'If the Government cannot solve the tote problem let Lord Wigg run it".
  With all respect to his Lordship, I cannot agree with that, but if the Government cannot solve the tote problem through the Home Office let the Home Office transfer it to the Treasury, because this is really a Treasury problem now. It is certainly one which has not been solved by either of the late Home Secretaries, nor is it one which the present Home Secretary has yet done anything to solve.

  1057
  I think the proper place for it is Customs and Excise. There are the people who are most likely to understand the problems.
  In that article it was also said:
  "A realisation that the Totaliser Board is unlikely ever again to receive money from racing has been apparent to the Levy Board and bookmakers for some time and it is beginning to dawn on everyone else connected with racing. Roy Jenkins, James Callaghan and Reggie Maudling have in turn been the guilty men. Each of them has allowed the Tote position to slip from bad to worse."
  I have confidence that this Government, and the Treasury, will now, in the next year, take the action which is necessary to consider the position of the tote, but when they consider the position of the tote, which is there to serve racing, they must also consider the position of the people who participate in racing. There was much criticism of the proposal for a betting tax that bookmakers would be obliged to carry it out effectively. We were told they would evade it They cannot evade it, for the simple reason that if one has a permit and a licence to be a bookmaker, it is too dangerous to evade it.
  10.0 p.m.
  The bookmakers will ride honestly and properly. Admittedly, it is difficult to remove, perhaps entirely, the tax on course. A nominal one must probably be kept for security reasons, but that is merely to ensure that the Customs and Excise officers who have to administer this, and who have administered it extremely effectively in recent years, must be able to look at the books of the bookmakers on course to see that they are not being fiddled. They must also be able, therefore, to see the whole picture of racing.
  I am convinced, therefore, that the only way that we shall succeed in future is to reduce the differential on course to an absolute minimum, just sufficient to provide some type of pitch tax by the bookmakers, to bring in people to enjoy racing so that they can then increase, and increase substantially, the prize money to the levels which one finds in Japan, Germany, France and, possibly, one day, in the United States. This should be done not only for a few selected races, but for racing generally. In this way, the quality of racing could be restored to that of a sport which not
  1058
  only hon. Members sitting here tonight enjoy, but which the public regard as part of their heritage and want to see restored to the great position that British racing ought to hold if only we in this House will give it our support.
  Mr. John Golding: I cannot follow the detailed knowledge of the hon. Member for the Isle of Thanet (Mr. Rees-Davies), but it is important that tonight, when many of us are concerned with the cuts that are to be made in Government grants to small sports, we on this side should emphasise that we are not concerned with granting large subsidies to rich men who want to pursue their hobby.
  I speak as someone who has for a long time taken an interest in sport in Chester. One of my earlier sporting recollections is of noting the increased truancy that occurred in Chester schools during the month of May. Many of us were very interested in the racing on the Roodee. It was in Chester, too, that I learned some of the problems and intricacies of the tote, when I worked on the tote during the evenings helping the citizens of Chester to lose a considerable amount of their hard-earned money.
  Let us ask ourselves why many of us want the tote. It is because, for many people, it is easier to put a bet on the tote than to put a bet on with a bookmaker. One of the social characteristics of the tote is that, until recently at least, it has enabled working-class people to have a bet without spending too much.
  Many hon. Members will know that one of the disadvantages of going racing is that there are six races and it takes a very strong-willed individual not to bet on each race. It takes a man of iron will and great judgment, faced with six races, to decide that he will have a bet on only one, two, three or four of them and leave the others alone. In my youth, the man who could leave a race alone was regarded as a man apart, a cut above the rest of those of us who, being at the races, had to have a bet on each of the six races. Unfortunately, if one has six bets and if one's judgment is like mine, six times 10s. is £3. [HON MEMBERS: "Hear, hear."] In my days on the tote, I discovered that men who were nearly illiterate could tell what the tote odds would be minutes before the machine had

  1059
  calculated them. So I can tell the House that a person having six 10s. bets will spend £3, and £3 is often too much for a working man to spend at the races. In the old days, when a bet was 2s., one could at a pinch justify spending 12s. Then the ticket went up to 4s. Now we have to pay 30p for a 20p ticket, but still our betting can be restricted to £1·80. It is important that there should be facilities for the placing of small bets on all courses.
  I am advised that bookmakers are loth to accept small bets. Bookmakers have lower limits, and people find it hard to make bets of smaller amounts, so we want the tote. We want the tote, too, because some of us, having just escaped from our nonconformist background, cannot quite take the final step of putting the money into the bookmaker's satchel. We have been reared to believe that gambling and bookmakers are both evil. Some of us have escaped from the first proposition and gamble, but still believe bookmakers to be evil. We have been taught that they stand on street corners, or get other people to stand on street corners, to take away our hard-earned money. For some strange sociological reason, we are prepared to give the money to the tote because it does not go into the pocket of the bookmaker. We are loth to make the bookmaking fraternity richer than they are, so we want the tote for this social reason.
  The principle of the tote is that ideally it can never lose. It is the same as the principle of the pools. Money is taken in, a certain percentage is deducted and the rest is divided amongst the people who have backed the winners. This principle founders in years when there is bad weather. Kempton Park is not the only course to have suffered from the recent bad winters. The tote obviously has suffered, and this principle breaks down if for extended periods there is no racing so that overheads have to be met when no receipts are coming in. So we must do our best to keep the tote.
  I do not want to see the betting tax reduced for either the tote or the bookies. I certainly do not want to see it reduced because it will put more money into the sport because it will save the sport, and because it is for the benefit of livestock and owners. The responsibility rests very
  1060
  firmly on racing and on racecourse proprietors themselves to make the sport more popular.
  What racing is suffering from at present is that in England it has been the sport of kings. It has been an aristocratic sport. The reason for television, and colour television in particular, being at present such a threat to racing is not that it is more comfortable to sit at home and watch the races—although there is something to be said for that on a cold, damp November afternoon—but that for many of us it takes us for the first time off the course, out of the silver ring, into the paddock.
  I cannot emphasise that too much when addressing hon. Members opposite. I do not want to introduce the subject of the Common Market tonight, but I confess that the only French I was ever taught was "Gagner ou placé si vous plait"—"Win or place, please". What I learned on visiting France for the first time was the different nature of racing there as a spectator sport, and the different attitude adopted towards the racing public. The cost was much cheaper, and that was to be welcomed. But, most important of all, it struck me that there were not on the racecourse these social divisions. What must strike any social observer of the English racecourse is the social divisions that exist there.
  As a child, and I speak very seriously, I was surprised to learn that it was possible to go into a stand, because in my youth most working-class people assumed that they would go on the course and see nothing except the jockeys' caps. That to a very large extent, is true today. If one watches at the Roodee at Chester as one of the "plebs", one sees a colourful scene but relies upon rumour to find out what won—and the Roodee is one of the finest racecourses in the country for viewing [Laughter.] Hon. Gentlemen laugh, but it is true. Unless people who have the welfare of racing at heart recognise these facts, there can be no financial salvation. One can go to the races in this country and see little of the racing. Caps and horses' necks, yes, but races, no.
  10.15 p.m.
  It goes further than that. Even those who are prepared to spend a little more are divided between those who go into the silver ring and see the races and those who go into a far more expensive

  1061
  enclosure still and gain admittance to the paddock. Those who go into the silver ring see nothing of the horses before the races; they are cut off. It is only those who can afford what for working class people is a very large amount indeed who can see what television brings. The point I want to rub home is that all are equal watching racing on television. Most, if not all, are equally informed. All can participate. This is not so on the course. Only a small minority are being catered for on courses at present.
  The matter goes beyond this fundamental point of being able to watch a sporting event. Our racecourses are often ill-equipped. For example, if one goes to Uttoxeter on a fine summer afternoon to watch the jumping, it can be very difficult to get a cup of tea. It is simpler to get oneself a cup of tea between races whilst watching the I.T.V. seven than at Uttoxeter. Racecourses are difficult of access and often the refreshment facilities, at least for the general public, are extremely poor. I do not suggest that these poor facilities exist for the better off, for those who own, train and even ride the horses. But they must be aware, because their income depends on it, that they will not get large crowds at racecourses unless things are very much improved.
  The argument has been that there ought to be some differential between on-course and off-course bookmaking because the industry needs to attract money into itself. The argument is that the off-course punter is putting nothing into the sport. Whether it be little or great, I do not think that the off-course punter should be asked to put anything into the sport. However, there is an argument for the off-course and the on-course punter putting something into the Exchequer.
  Whether one gambles with the tote or with the bookies, I think that gambling ought to be taxed. I do not of necessity think that a sport, an entertainment, should be subsidised by the people who bet in this way. I no more think that there should be subsidies from the off-course punter to the racecourses than that there should be subsidies from the pools punter to Tottenham Hotspur, Stoke City or Arsenal. That is not the way in which the sport should be financed. It ought to be made sufficiently attractive
  1062
  that people would go to the course and pay admission money. Money could then be obtained from the selling of programmes and the profits derived from the sale of refreshments. We should not be running what is predominantly a rich man's sport by taxing people's off-course bets.
  On a previous occasion I have crossed swords with my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) and I have had to remind him that it is better for the country's economy that people be kept off the courses midweek. It would be a bad thing for us to discourage the punter to make his bets off the course and encourage him to go racing in the middle of the week.
  Mr. Denis Howell: Oh, no; I disagree.
  Mr. Golding: I realise that I have to uphold the nonconformist conscience in this debate, surrounded as I am, on both sides of the House, by men who obviously are here to give support to an industry which Lord Wigg has said that he would prefer to see run on its own two legs.
  Mr. Laurie Pavitt: Four legs.
  Mr. Golding: As far as I am concerned, it is generally two legs.
  It is important that the industry should not rely on contributions from betting. There should not be a greater tax burden placed on the man who bets in the betting shop than is placed on the man who bets on the course, because often the difference between them is financial. The man who uses the betting shop often has less money than the man who goes to the course. If one has only 5s. or 10s. in one's pocket one can place a bet in a bookie's shop; but one cannot go to the races with that amount of money. By taxing the man who bets in the betting shop more heavily than the man who goes to the course, we are saying to the man with less money that he has to pay more than his richer brother.
  Mr. Howell: May I put two points to my hon. Friend? They have nothing much to do with the nonconformist conscience in his constituency. When I visited his constituency to speak on behalf of my hon. Friend in that well known

  1063
  by-election, I did not find that conscience to be very pronounced. But I take it from my hon. Friend that it may be.
  My first point is that if people wish to bet on horse racing, as most of my hon. Friend's constituents do day by day, and most of my constituents, there can be no sport or interest for them unless the health of the sport as a whole is maintained. That must mean that those who want to enjoy their flutter, as many of us do, have an obligation to make a small contribution towards the health of the sport as a whole.
  Secondly, it is of tremendous importance to remember that one can have no sport at all unless one safeguards the atmosphere of the sporting occasion. In racing, unfortunately, one of the things that happen at far too many meetings is that there is a dearth of people on the course and one cannot establish a fair market for the betting and, therefore, a fair market for the punters in my hon. Friend's constituency as well as mine. We cannot do that unless we attract a reasonable number of people on to the course to safeguard the meeting as a sporting occasion in its own right.
  For those reasons alone, it has always seemed to me that the case for a differential in betting duty between off-course and on-course betting has been well and truly made.
  Mr. Golding: I shall not reply to the second point my hon. Friend has raised. I spoke for 15 minutes in my hon. Friend's absence about the need to attract people to attend races.
  Mr. Howell: I was here and I heard that.
  Mr. Golding: It is outrageous for an hon. Member to come into the Chamber at the end of another hon. Member's speech and make a point such as the one my hon. Friend made.
  Mr. Howell: I am sure that my hon. Friend in his felicitations towards me would not wish to do me an injustice. The fact that I was not sitting on the Front Bench does not mean that I did not hear my hon. Friend's speech. I heard him from the other end of the Chamber. That is why I came on to the Front Bench.
  Mr. Golding: Then I withdraw what I said.
  The first point my hon. Friend made was a serious one and was that the off-course punter depends on a healthy racing industry. We are living in different worlds. From time to time a horse like Arkle catches the imagination, and the fact that he is in a race will increase the amount of betting. For the most part the off-course bookmaker does not concern himself with whether a given horse can run the distance in one, two, three or four minutes. It is of no concern to the off-course punter whether the horses are of high quality. All that he is concerned with is whether he will pick the best of the bad bunch. He is concerned only with picking winners and not with the health of the industry. When he goes to collect any winnings from the betting shop he is concerned only with the return from his investment and not with the way in which the deductions have been spent.
  Major-General Jack d'Avigdor-Goldsmid: It is well known that in Britain there are many people who are extremely interested in racing and derive much pleasure from it. The racing industry employs over 150,000 people. The bloodstock we breed for those who are interested in it is probably the best in the world. We produce jockeys of worldwide prestige. People like Lester Piggott are acclaimed worldwide, which, although this is only in a sporting context, is no bad thing for Britain.
  Racing is in a bad way because, as has been said, attendances are falling. This is largely because of the 5 per cent. tax which is levied on on-course betting. The tax was instituted in 1968. The bookmaker deducts 5p in the pound from a winning bet—not only on winnings but on the original stake as well. If the punter loses the bookmaker pays the tax on his losings, but he can adjust that by adjusting the prices. He gives worse odds, especially in place betting, which was formerly at a quarter of the odds and is now at one-fifth.
  10.30 p.m.
  It is interesting to note that as a result of this the number of bookmakers attending racecourses is steadily falling. In the year ending 31st March, 1968, the average number of bookmakers attending racing per day was 90; then the on-course betting tax went up to 5 per cent., and by the end of this financial year the number had fallen to 74. If the betting tax could be reduced or abolished the ramifications would be very wide. First, we would have increased attendances at race meetings; people would rather go racing and have a bet there than go to a betting shop, where they have to pay a 6 per cent. tax.
  Secondly, the increase in the number of people attending race meetings would produce a stronger betting market. Previous speakers have emphasised that it would mean a wider variation in prices. The starting price emanates from the racecourse, and a wider range of prices might even attract further off-course punters, thereby increasing the revenue to the Chancellor.
  Thirdly, as was mentioned by my hon. Friend the Member for the Isle of Thanet
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  (Mr. Rees-Davies), the prize money could be increased. At the moment racecourses rely for their income on owners' entry fees, attendance fees, the sale of race cards and car parking. If there was an increase in attendances the amount of prize money could be increased and that, in turn, would have an effect. Not all the money goes to the winning owner; 10 per cent. goes automatically to the trainer, 7½ per cent. goes automatically to the jockey and 2½ per cent. goes to the stable. That 2½ per cent. is very important, because on the whole the workers in stables are not well paid and depend largely on the generosity of owners.
  Fourthly, we should be able to improve the amenities at racecourses. The hon. Member for Newcastle-under-Lyme (Mr. Golding) might be able to get a better cup of tea at Uttoxeter.
  We have already heard that the tote is in great trouble. Any help that we can give it in terms of on-course tax would be welcome. I therefore support the new Clause and I ask my right hon. Friend to listen to the arguments put forward and consider either the abolition of the tax or its reduction to 2½ per cent. I hope that he will bear in mind the six points that I have raised—increased attendance; a stronger market; increased prize money; more contented stables; help for the tote; and better amenities.
  Mr. Taverne: It is clear that the tote is in deep trouble. We want to know what the Government's attitude is to that predicament. Will they apply their "lame duck" philosophy, or, if the kind of solution advocated in one or other of the new Clauses does not commend itself to the Government, what other plans have they to deal with the problem?
  Second, on the face of it, as my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) said when he intervened during the speech of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), the case for a differential rate between on-course and off-course has always seemed attractive. There is, however, one danger which its advocates have not always recognised, I think; that is, the danger of evasion. I understand that this danger was considerable, but it could, perhaps, be met if a differential rate were introduced gradually.

  1067
  Last year a slight differential was introduced. Perhaps the Government could tell us how this has worked, and whether, on the basis of the experience gained of working a marginal differential, a somewhat larger differential might now be possible to achieve the results which many hon. Members on both sides would favour.
  Mr. Hastings: Most of the points which should be deployed have already been made, and we have heard a number of interesting speeches. My hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) gave a most eloquent exposition of the case for the new Clause, and I was delighted that my hon. Friend the Member for the City of Chester (Mr. Temple) was able to move it, for the third time, I believe, since he came to the House. I am sure that the Government will take note of what has been said.
  My only misfortune now is that I have lost my notes, and I shall have to do my best without them. I recall that my hon. Friend the Member for the City of Chester said that I had had a great deal to do with the tote. Like most of us, I have been in and out of the place from time to time, but I do not think that that necessarily qualifies me to speak in this debate. My interest in the matter arose from a lifelong interest in horse racing, and from an occasion when my well-known enthusiasm for the Industrial Relations Bill became a little less than strong one morning and I escaped to the Gold Cup at Cheltenham, a place which has always had a nostalgic apeal for me since the last race I rode in this country was at Cheltenham. I wish I could say that I succeeded; but I got round, anyway.
  In the course of interesting conversations at Cheltenham with members of the Totalisator Board, I became impressed by the extreme difficulties under which they are required to operate. Their difficulties stem from the failure of anyone—Government, Home Office or anyone responsible—to decide whether they are required to operate as a commercial concern or as a public facility operating under strict requirements imposed upon them by Statute. If that could be cleared up one way or the other, their lot would, I believe, be much easier.
  1068
  The tote is not allowed, for instance, to deal in ante-post betting. It is not allowed to deal in bets on anything but horse racing, which puts it in a category very different from the bookmakers, and, as one hon. Member said, it has no capital as such with which to engage in competition with bookmakers. I think it fair to say that the totalisator saw the opportunity of betting shops as quickly as any of its competitors, but it was unable to seize and profit from it because it has no capital, either equity or Government, and, in fact, it operates on an overdraft or on bonds.
  Such a situation is most unfortunate. If the totalisator were unable to operate it would be a grave loss to racing as a whole. It has now reached a stage after three years of running at a loss when the Government must do something to help it. The differentiation between on-course and off-course betting which is involved in the second part of the Clause in particular has already been admitted by the Government. All we are now asking is that the principle should be extended to avert what might well be a disaster for a sport which many people in every walk of life enjoy. That would be a tragedy for the country.
  I hope very much that the points made in the debate will commend themselves to my hon. Friend. I think that there has been only one speech against the proposal, and that was the speech of the hon. Member for Newcastle-under-Lyme (Mr. Golding), the original Marxist analysis of horse-racing—"Horses of the world unite. You have nothing to lose but your capitalist jockeys". I found it difficult to decide whether the hon. Gentleman was for or against, but in the end came to the conclusion that he was against. He was answered effectively by his hon. Friend the ex-Minister for Sport. I am sure that we can discount his arguments, such as they were.
  There has been a weight of argument in favour of the Clause. I cannot believe that my hon. Friend is insensible to it.
  Mr. Paget: For a good many years I was a member of the Tote Board. In those years we did a good deal for racing. We made quite a lot of money, and we were not really impeded by the Act. It enabled us to do the job for which we had been appointed, and it worked very

  1069
  effectively. What killed the tote was the turnover tax. Anybody who applied that percentage to the performance of the tote before the tax was put on knew that it must be crushed by the tax. The tote simply could not carry it, and it cannot now.
  The hon. and gallant Member for Lichfield and Tamworth (Major-General Jack d'Avigdor-Goldsmid) said that British racing and British horses were the best in the world. I can remember when they were, but they certainly are not now. I doubt whether we are in the first five, whether we assess this by the quality of the courses, the quality of the facilities, the cost to the public or the quality of the horses. I suppose that American racing comes first, then French, then Irish, and then probably Australian, and, trailing last, ourselves. The quality of our horses has fallen, as has the quality of our facilities. The reason why all the other racing prospers whereas we become more decadent, and, frankly more dishonest, is simply that betting is allowed to finance racing in those countries and it is not allowed to finance it here.
  I have always favoured a tote monopoly, which is the French system. I do not find that the bookmaking profession is a very productive element in the country or, indeed, in the sport. Certainly, it is the source of corruption in racing. Without it corruption does not really occur in French racing. I do not remember when there was last a scandal there. The French system works astonishingly well. Our racing will become a very small, sordid and rather unworkable thing unless something is done to help the racecourses.
  I can describe myself as an ex-racing man turned television viewer. I find today that, unless I have an interest in a particular horse which I go to watch, racing is much more pleasant on the television, and I pay nothing for it.
  Surely this is a very sensible proposal. I believe that racing should have the advantage of being able to tax betting. But if we cannot have that and have a tote monopoly, let us excuse the on-course betting, and let those who enjoy their racing from newspapers and television at least contribute by carrying the betting tax.
  10.45 p.m.
  Mr. Maurice Macmillan: This debate has, with few exceptions, been characterised by the personal knowledge, expertise and interest of those who have taken part in it from both sides. It must also be admitted by all those who have heard it that the main object of the new Clauses is not to gain a particular sectarian advantage for one group of persons over another but to find a method of solving a problem which has been clearly identified and stated in its various aspects by various speakers. That is, broadly speaking, the hope of the entire industry, and of the bloodstock industry which is associated with it.
  It was suggested by my hon. Friend the Member for City of Chester (Mr. Temple) that I was answering as the only Treasury Minister who was in no way associated with having moved a similar Clause when in Opposition, but in these circumstances perhaps I should declare what I might call a mild interest of a reverse kind. As a part-owner of what my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) would call "a poor racehorse", I think that, if anything, I should benefit indirectly from the sort of measures which have been suggested.
  If I may say so, I think that there has been a slight confusion between two things. It seems to me that the Clauses seek to kill two birds with one stone, and, if I may switch metaphors, there is a danger that those who have tabled the Clauses have fallen between two stools. The linking of the tote and its difficulties with the effect on the attendance at racecourses of the on-course betting duty is largely an attempt to deploy the issue which was put by the hon. and learned Member for Northampton (Mr. Paget). It is the problem of getting money from betting into racing which underlies the Clauses, and I must admit that I am by no means certain that this linking is necessarily the right way of dealing with this group of problems.
  Perhaps I may now try to examine the effect of the duty and charges on attendance and other matters. When the duty went up in March, 1968, from 2½ per cent. to 5 per cent., in the financial year 1968–69 the general betting turnover dropped by some 8 per cent., the on-course betting on horses dropped by 18

  1071
  per cent., and the off-course betting on horses dropped by 6 per cent. However, by the financial year 1969–70, general betting total turnover was back to the previous year's level, but the on-course betting on horses had not recovered, although the off-course betting on horses had.
  Then came the 1970 Budget when not only was the bookmakers' premises licence duty revised but the off-course betting duty was put up by 6 per cent. and hedging bets on course were exempt. Comparing the financial year 1970–71 with 1969–70–and this meets the point made by the hon. and learned Member for Northampton—the total turnover of general betting then dutiable went up by 3 per cent., on-course betting on horses went up by 11 per cent., and off-course betting on horses by 3 per cent.
  This is an indication that the argument put forward by my hon. and gallant Friend the Member for Lichfield and Tamworth (Major-General Jack d'Avigdor-Goldsmid) was more direct than some of the others adduced in the debate, for he made it clear that he thought that the difficulty was the tax on on-course betting rather than the differential between on-course and off-course betting. Certainly no one in the betting industry, or in the racing industry as a whole, would wish for any increase in off-course taxation in order to widen the differential. What is being suggested is that the attendance at race meetings may be encouraged by halving or abolishing the tax, that that may be a material factor in the recovery of attendance and the recovery of gate money and the benefits which would flow from that.
  The total abolition of on-course duty and the treatment of all tote betting as if it were on-course would cost about £9 million to £10 million in revenue. Even halving the on-course betting duty would decrease the revenue from total betting sources by at least £5 million.
  The differential was introduced last year and it is a little early to say whether it is having any great effect. The changes in the betting tax, so far as it has a history, have a history of changing things in the first years with the situation tending to be restored in the second year. This would be the first time for three
  1072
  years that there had been no alteration in betting duty, and it would be a good thing to try to reach a certain degree of stabilisation in the matter.
  Mr. Temple: My hon. Friend has given a figure of £9 million as the revenue from all on-course betting duties. The figure of £5 million has been frequently used during the debate and it has come from authoritative sources. As my hon. Friend's figure does not exactly agree 100 per cent. with mine, could he give a breakdown of the £9 million?
  Mr. Macmillan: It is a slightly complex calculation, but it is based on the fact that there would be a loss in off-course betting to on-course which would tend to reduce the yield from the off-course tax.
  My hon. Friend is perfectly right—the total on-course betting tax on bookmakers last year was £5·215 million; the tote was £3·746 million; giving a total of nearly £9 million of on-course betting duty in all. That extra is to take account of any switching, the effect which, if he is correct in his arguments in moving this new Clause, my hon. Friend the Member for the City of Chester would wish to see.
  Mr. Temple: My hon. Friend has now admitted that £9 million is a hypothetical figure and that it included what I might call the postulated switch from off-course to on-course betting. I think it misleading to use £9 million, and it would have been better if he had stuck to the actual figure of £5 million.
  Mr. Macmillan: No, I hope I did not mislead. I had no intention of doing so. I hope I made clear that what would cost £9 milion to £9½ million was the total elimination of on-course tax plus the relief of the tote from taxation by treating all tote transactions as if they had been on-course. The on-course element from the bookmaker is £5,250,000 and the tote element is £3,750,000.
  Mr. Rees-Davies: The figure is exactly this: £2·95 million which is totalisator, dogs; £1·52 million which is totalisator, horses; £2·77 million which is on-course horses with bookmakers; and about £2·4 million which is dogs and horses on-course, making up the total, the presumption being that if one makes the deduction, one must make it for horses and

  1073
  dogs, which I think one must. But that is not the argument relating to the removal of tax on course betting for horses only.
  On top is the hypothetical assertion of the Treasury that when one looks at this one has to say that if people do not bet off-course but go on-course, one will therefore lose the money one made off-course, which does not necessarily follow.
  Mr. Macmillan: Presumably one would hope, in moving this new Clause, to see this kind of increase in on-course betting. I do not think it would be reasonable, in view of what those using the argument have said about new facilities, to assume that it will all be new racegoers going to meetings rather than staying at home, instead of the hon. and learned Member for Northampton (Mr. Paget) leaving his television and going back to the course, because it is more comfortable There is bound to be a certain switching element, I must apologise for unintentionally misleading my hon. Friend by giving a total which included all the figures of on-course betting on horses and dogs. The other total of £5 million is far the more limited new Clause—the "horses only" proposition.
  It is true that off-course betting, however one looks at it, is much the larger yield, and it is equally true that the tote is getting a decreasing proportion of the business.
  If I could turn to the argument of my hon. Friend the Member for the Isle of Thanet and others about prize money and perhaps also mention the argument of the hon. Member for Newcastle-under-Lyme (Mr. Golding), the difficulty about the large sums of prize money which other countries are able to produce is that other countries do not, on the whole, seek to maintain the relatively large number of separate racecourses and they have a tote monopoly which provides a great deal of money, coming back from betting to racing in amenities on courses and prize money to the owners. We are not discussing large subsidies to a lot of rich men who wish to engage in racing. It is wrong to say that the home punter does not equally depend on the health of the sport. If it does not continue, he will not have anything to punt on.
  1074
  11.0 p.m.
  The suggestion of the hon. Member for Newcastle-under-Lyme that improvements could be made from the profits of the owners of racecourses was met by hon. Members who pointed out that the return on capital invested in racecourses is very low. But if racecourses were to be run in order to optimise profit throughout the industry, there would be far fewer facilities and racecourses, to the detriment of those who wish to attend them and the local nature of many meetings.
  There is no doubt that the tote needs help and support. My right hon. Friend the Home Secretary has made it clear in a Written Answer that he accepts the purposes and objects for which the tote was established and attaches importance to its continuing rôle in providing an alternative form of betting on horse races. I am sure that its rôle is important. There are a number of ways in which the Tote Board should perhaps adjust itself to change. The question of the rate of overheads, the method of operating, whether place betting is reasonable and profitable, the question of doing more forecasting and even the vexed and controversial quetsion of moving over to the tiercé are matters which should be considered before any question arises of putting the tote in a special privileged position as regards on-course and off-course betting.
  Part of the reason for wishing to have a differential between on-course and off-course betting was to reconcile the preferential treatment to the tote by ensuring that on-course the bookmakers received the same preferential treatment in the light of the fact that the tote is always on-course to all intents and purposes. I am not happy with this linking as I do not think that the case has been established that the differential in the duty is enough in itself to have a significant effect on attendances. We should examine that very carefully, just as we should examine the difficulties in which the tote undoubtedly finds itself.
  I must admit to a certain personal regret in being unable to accept any of the new Clauses, but I ask the House not to press them. I assure the House that there is at least one member of the Treasury Bench who is only too aware of the difficulties which face the tote and, from bitter personal experience, of the discomforts that face many racegoers on

  1075
  some racecourses, particularly in winter, and of the inadequacy of any return from even part ownership of a partly successful animal.
  Mr. Temple: I thank my hon. Friend for that careful reply, while expressing extreme disappointment. We all seek to improve the health of the bloodstock industry, and my hon. Friends and I thought that this was the way to go about the matter. I was interested to note that my hon. Friend admitted two things. First, there are the difficulties which surrounded the tote. The Clause sought to give help for that reason. My hon. Friend has given valuable information about the Treasury's thinking over the future of the tote. I have always thought that the tote had a rôle to play in a healthy racing industry.
  My hon. Friend said that the tote might be placed in a privileged position. He was thinking in terms of betting taxation. The approach we have put forward was reasonable and would have assisted the tote but would not have lost the Treasury the amounts of money my hon. Friend suggested. I was sorry to have a slight altercation with my hon. Friend but I think that he was wrong in fearing losses of between £5m. and £9m. as a result of the new Clause. The Clause would have lost half that amount because it sought only to halve the betting duties on on-course betting.
  I could not agree about the amount of money the Treasury felt it would lose because I made it clear that it was expected that the on-course turnover, which is such an important factor in any market situation, would have improved. I shall have regard to my hon. Friend's request not to press the Clause. I have in mind that we must approach this problem in what I call in racing terms "softly, softly" might catch a "monkey" and if it does so on another occasion I will be happy. We have won these long battles over a period of years and this is a step in the right direction. My hon. Friends can take heart from the Treasury reply. If we sustain this battle for another year or two we shall probably succeed. In the hope that that will be the case I beg to ask leave to withdraw the Clause.
  Motion and Clause, by leave, withdrawn.

New Clause 11

  CONTRIBUTION TOWARDS MAINTENANCE OF A CONTRACT OR POLICY OF INSURANCE
  Where, pursuant to the National Health Service (Superannuation) Regulations 1961 or any statutory modification thereof for the time being in force, the Secretary of State for Social Services in any year of assessment pays to a practitioner (as defined in those regulations) a contribution towards the maintenance of a contract or policy of insurance held by that practitioner such contribution shall be deemed for all purposes of the Income Tax Acts to be income of the practitioner for that year of assessment and shall cease to be assessable to tax under Case III of Schedule D and shall henceforth only be assessable to tax under Case II of Schedule D.—[Mr. Dell.]
  Brought up, and read the First time.
  Mr. Dell: I beg to move, That the Clause be read a Second time.
  The main object in tabling the Clause is to hear the Treasury's reaction to representations made to it by a deputation which waited on it last February. I understand that these representations were sympathetically received but that no commitment was made. The background is that when the National Health Service was introduced 800 doctors exercised the option to opt out of the service superannuation scheme.
  To do this, agreed endowment policies had to be set aside for this purpose with an undertaking that the policies should not be assigned. A total of 8 per cent. of the doctor's superannuable income has been paid by his executive council. For many years the contributions were taxed on an earned income level. Recently it has been insisted that they should be taxed as unearned income, in reliance on the case of Leahy v. Hawkins. This seriously affects the tax position of the doctors concerned. Would the Treasury be prepared to accept a Clause of this kind, which is intended to restore the earlier position?
  Mr. Patrick Jenkin: I am grateful to the right hon. Member for Birkenhead (Mr. Dell) for moving the new Clause so briefly, because that will enable me to reply briefly without seeming to be guilty of discourtesy either to him or to the House.
  The right hon. Gentleman has quite rightly set the context in which this matter arises in the introduction of the

  1077
  National Health Service and the arrangement which was made with the doctors shortly thereafter. On only one point would I take issue with him. The case of Leahy v. Hawkins was in 1952, and it was in that case that the High Court decided that the appropriate tax treatment of these payments made by the authorities in respect of a doctor's service was to tax them under Case III of Schedule D and not as part of his Case II remuneration. The doctor in question had appealed on the footing that the payment should not be taxed at all. If there was ever a case of the fox and the grapes, this was it.
  So far from gaining the contention that the payment should not be taxed, the result—not only in the case of the doctor, but in the case of all the other 800-odd doctors—was the treatment of the payment as a Case III receipt. That meant that it did not qualify for earned income relief. I well remember, last February, receiving a deputation to discuss these matters, and I hope that I would always have received such a deputation sympathetically, because I was anxious to hear the case that was made.
  The difficulty of the Inland Revenue in this matter is that the law is quite clearly stated in the High Court and the doctor did not appeal. No other doctor has thought it worth while to pursue the case to a higher court to try, perhaps, to reverse the judgment in Leahy v. Hawkins. In those circumstances, the Inland Revenue has no option but to tax the payments in the manner which the court declared to be the law.
  Mr. Paget: Surely that is why we are pressing to change the law.
  Mr. Jenkin: The hon. and learned Gentleman is very perceptive. His right hon. Friend has moved a new Clause to change the tax treatment.
  This is a fading problem because as the doctors retire so the matter becomes less relevant. Every year there are doctors who retire and these are, on the whole, the older doctors in the National Health Service.
  Secondly, the reality of the matter is the earned income relief. This is what the doctors are interested in. It is now worth a good deal more than it was in 1952, when the case was decided, because of the
  1078
  changes that were made in 1957, in 1961 and, again, in this year's Bill. I can understand that there is, therefore, a growing feeling that perhaps something should be done.
  We also have to look at this matter, however, in the context of the tax reform which my right hon. Friend the Chancellor announced in the Budget and which is embodied in Part III of the Bill, under which, as the right hon. Gentleman will remember, the first slice of investment income will after 1973 be taxed at the rate appropriate to earned income.
  Perhaps, without going in any way to disclose the figures—although no decision has been reached about what the first slice will be—I may put the matter into some sort of context. Taking the average doctor's remuneration, less the expenses which he is allowed to charge, of £4,800, the 8 per cent. National Health Service payment amounts to £384. Applying the 15 per cent. earned income relief and taxing it as Case II rather than Case III. the difference in the amount of tax would be about £23.
  It is not as if it is a very major matter for the taxpayers. That would indicate the sort of sum that might be involved should the first slice be sufficient to take account of the payment of that order, but I am making absolutely no forecasts and giving no indication that that is what it would be.
  11.15 p.m.
  One is not talking about a substantial sum in relation to these payments, and my advice to the House, therefore, is that it would be right to let the case of Leahy v. Hawkins stand, as it has stood for nearly 20 years without challenge by the medical profession, until 1973–74 when the new arrangements come in.
  In the light of this I give the right hon. Gentleman a categorical assurance that, if I still have any responsibility for these matters, I will undertake to look at this again to see whether any further changes are necessary. I hope with that assurance the right hon. Gentleman will feel able to withdraw his new Clause.
  Mr. Dell: I am grateful to the Financial Secretary for his sympathetic approach, and, in view of his assurance, I beg leave to withdraw the new Clause.
  Motion and Clause, by leave, withdrawn.

New Clause 17

  (ESTATE DUTY, GIFTS, PERIOD OF CHARGE REDUCED FROM SEVEN TO FIVE YEARS).
  Subsection (1) and (2) of section 35 of the Finance Act 1968 shall be repealed and the provisions of subsection 1 of section 64 of the Finance Act 1960 shall be revived.—[Mr. William Clark.]
  Brought up, and read the First time.
  Mr. William Clark: I beg to move, That the Clause be read a Second time.
  Mr. Deputy Speaker (Miss Harvie Anderson): I think it would be for the convenience of the House to discuss at the same time new Clause 18–"Estate Duty: property in which the deceased had an interest".
  Mr. Clark: The last time this matter was debated was in May 1968. I approach this debate with some degree of confidence in that my hon. Friend the Financial Secretary in the May, 1968, debate took a leading part in criticising the Labour Government for changing the gift inter vivos rule from five to seven years. It will be remembered that before March, 1968, the gift inter vivos was over a five-year period. If death occurred within the first two years, 100 per cent. duty was levied, but if death occurred in the third, fourth or fifth year the amount of duty was proportionately reduced. Any period, whether it be two, three, five, seven or ten years is an arbitrary length of time, but seven years is far too long for a gift inter vivos. We think the time has come to go back to the five-year rule with suitable tapering, and I hope that my hon. Friend will look upon this sympathetically.
  An investigation is going on within the Treasury into the whole of estate duty taxation, and possibly this point could be taken up in the investigation. I do not say this in any churlish sense, but I hope my hon. Friend will not give me a Treasury brief, because I would remind him of what he said in the May, 1968, debate:
  "It is always surprising and a little regrettable when the Financial Secretary, for whom we have such a high regard, finds himself obliged to resort to a Treasury brief which is as unsympathetic and as unforthcoming as that brief was."—[OFFICIAL REPORT, Standing Committee A, 29th May, 1968; c. 1708.]
  1080
  I hope that, after he has replied, I shall not have to say to my hon. Friend what he said to the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) in a similar debate.
  I urge upon my hon. Friend that the cost would be very small, and if we want to see the distribution of wealth before death, seven years is far too long. The five-year period was in force for some time and was very satisfactory. I commend the new Clause to my hon. Friend and look forward, in view of his past record in the May, 1968, debate, to a favourable response.
  Mr. Patrick Jenkin: I am grateful to my hon. Friend the Member for Surrey, East (Mr. William Clark) for recalling my speech of 1968 when our predecessors introduced a provision to increase from five to seven years the period outside which a gift must be made to escape estate duty as part of the donor's estate. The part of that speech which I was particularly concerned to get on the record was that dealing with retrospection. I can now repeat that the principles I then annunciated will, I hope, be the principles which will motivate the present Government in dealing with retrospective legislation in relation to estate duty.
  We attacked the proposal generally because the burden it would impose, particularly upon executors and to some extent upon donees, was thereby considerably exacerbated. The tapering did not take place until the fifth, sixth and seventh year and therefore a gift was left subject to the full charge of estate duty for the first four years after it had been made. It seemed to us that this provision exemplified much of what is wrong with the present estate duty and other capital tax systems, in that the tax pressed much too hardly upon much too narrow a base. It is for this reason that my right hon. Friend has, as part of our continuing review of the tax system, indicated that the taxation of capital is an important part of our studies.
  My hon. Friend was kind enough to throw me, as it were, a lifeline which I gladly pick up. I can assure him that we have this point very much in mind. We would not think it right to legislate piecemeal for minor changes in the shape of the estate duty. Although we have increased the exemption limit from

  1081
  £10,000 to £12,500, more as an earnest of our desire to seek to help those who die leaving relatively small estates, we do not put that forward as our final word on estate duty. I hope that, with my assurance that this point will be considered as part of our review of the general system of taxation in the coming year, my hon. Friend will feel it right not to press the Motion.
  Mr. Taverne: I am glad that the Financial Secretary has resisted the blandishments of the hon. Member for Surrey, East (Mr. William Clark). But some of the remarks which he has made about the review of estate duty fill me and my colleagues with alarm. The idea of a five-year period is acceptable if it is coupled with a gifts tax. It is surprising to find how many people, even Conservatives, favour the principle of a gifts tax as one which would extend justice. If one does not have a gifts tax, one must have a longer period, otherwise estate duty is too easy to evade. I welcome the hon. Gentleman's resistance of the new Clause, but I shall study carefully what comes out of the review of estate duty to which the Government have referred on a number of occasions.
  Mr. William Clark: I do not entirely agree with the hon. and learned Member for Lincoln (Mr. Taverne) that my hon. Friend the Financial Secretary has resisted blandishments advocated on behalf of the new Clause. I would put it rather that he has temporarily resisted them. But with the assurance my hon. Friend has given that he will look at the whole question of gifts inter vivos and the tapering provisions in the Government's review, I beg to ask leave to withdraw the Motion.
  Motion, and Clause, by leave withdrawn.

New Clause 22

  EXEMPTION FROM INCOME TAX OF ALLOWANCE PAID TO MEMBERS OF LIFEBOAT CREWS FOR TIME SPENT SAVING LIFE AT SEA
  Exemption shall be granted from income tax chargeable by virtue of section 156 of the Income Tax Act, 1952, in respect of any allowances awarded or other payments made, by the Royal National Life-Boat Institution to duly appointed coxwains and crew members
  1082
  of the lifeboats of the Institution solely in recognition of time spent at sea in the lifeboats with the express intention of saving human life at sea.—[Mr. W. H. K. Baker.]
  Brought up, and read the First time.
  Mr. W. H. K. Baker: I beg to move, That the Clause be read a Second time.
  Similar new Clauses have been brought before the House before—on the 1950 and 1967 Finance Bills. I took part in the debates on the proposal in 1967. It is interesting to note that on both those occasions a Labour Government were in power. I am therefore hopeful that this will be third time lucky, because my plea is addressed to a Conservative Government who are pledged to reduce taxation and, indeed, to have a very close look at the whole of our taxation system.
  The new Clause seeks to exempt from payment of tax lifeboatmen in the course of their duties while at sea attempting to save life. It is not in any way asking for exemption for all earnings of life-boatmen. It is not asking, for example, for exemption for payment made during a training run for the boat; neither is it asking for exemption from tax for full-time members of lifeboats such as those employed by the R.N.L.I. in the course of maintenance work—engineers, and the like. I repeat, it is a plea for the volunteers who man our lifeboats in trying to save life.
  The House knows that the R.N.L.I. is a wholly voluntary supported charity. It obtains its funds by flag days all over the United Kingdom, by local lifeboat guild functions along the coasts, and by holding coffee mornings, jumble sales and ordinary sales at all seasons of the year.
  Coming from and having the honour to represent a largely fishing constituency, I can tell the House quite definitely that the work of the lifeboats is an integral part of the local community. The support is national; the actions of the crew are local. A storm at sea is by no means uncommon, but the lifeboats around our coasts are almost as commonplace as the St. John's Ambulance men at sporting and other events throughout the country. They are in themselves two integral parts of the community and both as indispensable in their own particular ways as each other.

  1083
  A storm at sea instantly brings anxiety in many homes around our shores; not least in those communities which are supported by or support the inshore fishing industry. Indeed, many of the lifeboats are crewed by inshore fishermen—in some cases, wholly so. These men are prepared to give up a day's earnings to enable them to take part in rescues at sea. They are, to say the least, extremely brave men—I think that that is a vast understatement and is scarcely worth making—who are always ready to hazard their lives in the hope of saving the lives of their fellow men at sea.
  It might assist the House if I give a few figures. In 1970 the total launches of lifeboats around our coasts was 2,634. Of these, 1,216 were by conventional lifeboats. The remainder, 1,418, were by inshore rescue craft. The result of all these launchings was that 1,251 men—not an inconsiderable figure—were saved from drowning at sea. This works out at roughly one life saved for every launching of a lifeboat.
  With two notable exceptions, to which I shall refer later, there has fortunately been no loss of life among lifeboat crews since 1965. Nevertheless, during that period 73 crew members have either been badly or less seriously injured since 1968.
  The exceptions I mentioned were, of course, the tragic disasters of the Long-hope boat, which foundered on 17th March, 1969, with the loss of eight crew men, and that of the Fraserburgh boat on 21st January, 1970, when five of the crew died. Their sacrifice was supreme.
  11.30 p.m.
  The present allowance paid to lifeboat-men for saving life at sea is £1.50 for the first two hours spent at sea and thereafter 38p for each subsequent hour at sea. Over the last year, that has given an average allowance of £2 to £3 per crew member for every launching. Those figures for the allowances paid are not by any means large. They are a pittance for the bravery shown by these men. If we put those figures into terms of taxation at a rate of, say, 20p in the pound, they represent a mere £10,000 that the Revenue takes as a result of this taxation. That is by no means a large sum. In presenting the new Clause, all we are asking for is a shortfall to the Revenue
  1084
  of £10,000 which, in modern budgetary terms, is literally a drop in the ocean.
  It is important to realise that there is no contractual agreement between the Royal National Life-Boat Institution and the crewmen. Therefore, there is no employer-employee relationship. The exception is the coxswain, who is chosen and appointed locally, as are the second coxswain and the bowman. Each receive an annual retainer of £100. We are not asking for exemption from taxation for those men, but we are asking for tax relief on that sum paid in allowances when at sea saving or attempting to save life. As there is no contractual agreement it is quite unthinkable that any kind of compulsion is put upon the crewmen to turn out. It is entirely up to them whether they turn out when the maroon goes up. In every sense they are volunteers; volunteers of the best possible calibre.
  My hon. Friends and I realise that there are other categories of voluntary workers who have a like case with regard to taxation. I give but one example, that of firemen. Nobody would deny that people such as firemen face hazards in their calling, hazards which are voluntarily undertaken. But with the examples that I have given, such as the disasters met by the Longhope and Fraserburgh lifeboats, the enormous risks that these men face when going to sea are quite apparent. It is true that a great number of them come as volunteers from the inshore fishing industry and that they know the hazards to which they put themselves in attempting possibly to save their comrades.
  All these facts add up to a continuing piece of niggardly legislation in that their allowances are taxed. We want to stop that because it is unjust and because we feel that the recruitment to lifeboat crews may, to a marginal extent, be affected by the fact that allowances are taxable. The Institution, its crew members, and all those who have to do with the sea are owed an enormous debt by the nation, not least by those along our coasts who come from the inshore fishing industry, from the deep sea industry, from the merchant marine, and indeed by all those who have their business at sea. I therefore greatly hope that the third time will be lucky and that my hon.

  1085
  Friend the Chief Secretary will be able to accept the Clause.
  Mr. Iain Sproat: I congratulate my hon. Friend the Member for Banff (Mr. W. H. K. Baker) on bringing forward the Clause and in seeking to remedy a peculiarly petty injustice to a most worthy body of men. In view of the late hour I will not follow my hon. Friend into all the telling figures he deployed in support of his case.
  I ask my hon. Friend the Chief Secretary to ponder and weigh three facts. First, it is not exaggeration or hyperbole when we say that lifeboatmen risk their lives that those of others might be saved. Second, these men receive allowances of only £1·50 and, after that, only 38p an hour for this duty. Third, in the last year alone they have saved 1,251 lives. Is not my hon. Friend forced to the conclusion that we are getting a magnificent service on the cheap? To accede to this request would cost the Treasury less than £10,000, probably. Does my hon. Friend set so little store on the courage and service of these men? I hope not.
  The last time that the matter was discussed in the House—in 1967–the then Treasury spokesman trotted out a whole lot of threadbare arguments such as forms of employment, danger money, the need to prove financial loss, as though these men were jurors or members of hospital management boards, and the danger that if this concession were granted the floodgates would be opened for many other claims. These were arguments as unimpressive intellectually as they were mean and lacking in generosity emotionally. They were ripped apart by hon. Members who spoke in that debate. I hope we shall hear no arguments of that type from my hon. Friend the Financial Secretary tonight.
  Nobody did more in that debate to show up the foolishness of these arguments than the late Mr. Iain Macleod who replied from the Opposition Front Bench. He said, "We know that there are difficulties. All we are asking is that a way be found round the difficulties. We must do something". I hope that my hon. Friend the Financial Secretary, who has followed in the late Iain Macleod's footsteps so wisely and so well in so many matters at the Treasury,
  1086
  will follow in his footsteps in this matter and do something about this matter now.
  At the General Election people voted for a change in Government for many specific reasons, but also no less for certain general reasons which were not often articulated and perhaps not even spoken. Among those general reasons for which the Conservative Government were elected—reasons often poorly articulated but deeply felt—was the sentiment that resources and rewards were too often misdirected. I do not want to go into details, but, for example, scarcely trained secretaries could earn more than nurses; the average wage of dockers was more than the average earnings of solicitors; too often it paid a man not to go to work and earn an honest living but, instead, to go on to welfare. Those facts worried our people. There was a general feeling that hard work, thrift and service were less well rewarded than they ought to have been.
  I do not think that my hon. and right hon. Friends would dispute that when we were returned to power it was because, amongst other specific promises, like pensions for the over-80s, and other selective examples of welfare, we said that we would provide selectivity in a general sense. Surely this is an opportunity to put this matter right—to reward one uniquely-placed and uniquely-deserving section of the community which embodies so many of those qualities that we would hope to see flourishing in our society today.
  Mr. Hamish Gray: I congratulate my hon. Friend the Member for Banff (Mr. W. H. K. Baker) on the way in which he presented the new Clause and my hon. Friend the Member for Aberdeen, South (Mr Sproat) on his support. I shall be extremely brief. Most of the relevant points have already been made, but I hope that my hon. and right hon. Friends on the Front Bench will not forget that this is a very serious plea. I am sure that my right hon. Friend the Chancellor of the Exchequer is inundated through-our our proceedings on every Finance Bill with reasonable cases for exemption for various sections of the community, but nobody could say that those who rescue lives at sea are not worthy of serious consideration.

  1087
  It saddens me to look across at the benches opposite and see there only two hon. Members who are sufficiently interested in the Clause to attend the House—and there is not one Scottish Labour Member. That is a revealing fact; it shows where their priorities lie. We are pleading for a relatively small section of the community. It is significant that because they do not represent a vast vote-catching area they do not attract the same attention among hon. Members opposite as they do among hon. Members on this side of the House.
  I support wholeheartedly the plea of my hon. Friends the Members for Banff and Aberdeen, South on behalf of people who spend their spare time—because virtually it is their spare time—helping to make the seas safe. I will say no more. I am grateful to have had the opportunity to contribute at this stage of the debate.
  Dame Irene Ward: I hope and believe that the Clause will be acceptable. In my part of the world, too, we have great service from those who man the lifeboats.
  I have one small personal reason for supporting the Clause: my first public service ever was when I became honorary secretary, in Newcastle-upon-Tyne, for an organisation that was raising funds for all the lifeboat services. I always feel that whenever the opportunity occurs I should add my voice in support of their cause.
  11.45 p.m.
  The case has been well argued, and, indeed, it is well known. I wish to add a further point. No concession by the Treasury would give greater pleasure to the people of this country. I hope that we shall not hear about all sorts of difficulties. We are so used to difficulties in life that we sometimes forget how many difficulties we have had to overcome. If we had not overcome a lot of difficulties during the war, we should not have won the war. We can overcome the difficulties if we really want to, so that argument does not stand up. Whatever the difficulties, the Treasury ought occasionally to do something acceptable to the whole country. Everyone knows and admires what the lifeboatmen do.
  In Finance Bill after Finance Bill, back benchers ask for things, and the
  1088
  Treasury turns them down. If I had time, I could give a long list of concessions which the country generally would welcome. Time after time, we have to bring these matters before the House, but we can never succeed unless the Treasury is willing to be convinced, and sometimes it is rather difficult to know why it is convinced while on other occasions it remains unconvinced.
  The new Clause embodies a fine idea, and it is absolutely right to press it on the Treasury. I was glad that my hon. Friend the Member for Aberdeen, South (Mr. Sproat) referred to what Iain Macleod had said. I am sure that he would have liked to make this concession, and I know that the House would like to do something in the spirit of what he spoke for and supported. It is not good for Parliament that back benchers have to bring forward a good case year after year, only to have it turned down. It is difficult enough to have one's Amendment or new Clause selected, but, once we have a chance to make the case, as we have on this occasion, the Treasury should accept it.
  We are trying to be a modern Government, not always following the traditions of the past. A lot of traditions are good, but a lot are jolly bad, and the tradition of always refusing the case on this Clause is very bad. Let the Treasury accept the Clause with gratitude. After all, Treasury Ministers are as grateful to the lifeboat-men as everyone else is. Let them accept the Clause in a good spirit, so that we can all go home thinking that, at last, Parliament has done what it should for our lifeboatmen.
  Mr. Maurice Macmillan: We all have great admiration for lifeboatmen and the work they do. I in no way wish to suggest that that work is not worthy not only of our admiration but also of proper reward by the community, but I shall ask the House to reject the Clause.
  The reason has nothing to do with what it would cost the Revenue, which is a very small amount. We must realise what the Clause asks for. It asks not that the lifeboatmen should get a greater reward for the trips they make in saving life at sea but that the charity which provides that reward should have the burdens on it reduced by having to provide only a net rather than a gross sum, because what it provides will be tax-exempt. It is here that the question of

  1089
  fairness and differentiation between them and other similarly deserving people comes in.
  The unique quality which has been claimed for lifeboatmen is not that they give service to others, for there are many members of our community who do that, and not only that giving service to others brings their own lives into danger, because there are many others who with equal gallantry do the same. There is a third qualification which it has been suggested should single out lifeboatmen from other members of the community who risk their lives to serve the community, and that is that the funds from which the allowance is paid are raised on a voluntary basis. That is why I say that the Clause is in a sense asking that those who receive this type of reward from a charity should be exempted from tax, and it is just that that makes the difficulty very great, because there are other people who are rewarded from charities for serving the community, and there are other members of the community who take those risks.
  My hon. Friend the Member for Aberdeen, South (Mr. Sproat) said that the allowance was a pittance. I agree. There is a great deal to be said for that pittance being increased. There is perhaps a great deal to be said for the amounts received by, for example, mine rescue teams being increased. They get a very similar amount—a call-out payment of slightly more than a lifeboatman, £2.75 for the first two hours, and 47p an hour, with a little more if breathing apparatus is used. They are taxed in the same way.
  Mr. W. H. K. Baker: Why cannot my hon. Friend exempt them as well as the lifeboatmen?
  Mr. Macmillan: My hon. Friend has rather started to answer that question, because there then comes the question of the part-time firemen, the policemen and all those others who risk their lives.
  With great respect to my hon. Friends, and even more respect to the work that the lifeboatmen do, I do not think that a case has been established that makes lifeboatmen so nearly unique as to be the only people whose pay or allowances, no matter from what source they are derived, should be made free of tax rather
  1090
  than be increased by those who provide the funds.
  It seems to me that the essence of the complaint we have heard tonight with some justification is that the amount is too small. This is something that could be said of others who risk their lives in order to serve the community. I suggest that the remedy is to increase the amount rather than to single out the allowance for special tax treatment.
  Mr. Taveme: This is a very deserving case, and it always seems extremely hard when a Treasury Minister opposes such an obviously deserving case. Normally, the rôle of the Opposition is to press all Amendments and new Clauses because it seems to be an easy way of gaining some popularity. I do not suggest that that is why the Clause is being pressed by hon. Members opposite.
  I believe that what the Chief Secretary says is basically right. Every time a deserving exception is made it gives rise to other deserving exceptions, and the whole progression never stops. It is because of the occasional concession that has been made in the past that so many anomalies have been introduced into our tax system. Therefore, as a former Treasury Minister, I sympathise with the Chief Secretary. I think that what he says must be accepted by the House, however reluctantly, because there are so many other deserving cases. What ever one's admiration for the lifeboatmen is, I feel that the Chief Secretary is, on this occasion, right.
  Mr. Raymond Gower: j understand how my hon. Friend the Chief Secretary feels; it is difficult to differentiate between different types of work. Nevertheless, I believe that these people are in a somewhat special category. I cannot agree with the hon. and learned Member for Lincoln (Mr. Taverne) that we cannot make a distinction.
  The police, for example, make a lifetime career of their work. They join the service, spend their whole time in it, and can rise in rank to chief commissioner or chief constable on a very high salary. Similarly, the man who becomes a member of the fire service makes that work his career. But the lifeboatmen are in a very narrow category. In order to save life they do something totally different from their normal avocation,

  1091
  and how the hon. and learned Gentleman can say that they are all in the same category I just do not understand. He says that they are comparable with other people: I say that they are not. They voluntarily give their services as a spare-time occupation at great peril to their lives.
  I do not understand how in those circumstances some special exemption cannot be made. I do not think that the exemption need be extended beyond this special category. I must dissent from those who think that to accept the new Clause would be to open the door. These men are brave, they do this work voluntarily in their spare time and, by golly, we should encourage people like that.
  Mr. Jeffrey Thomas: Reluctant though I usually am to agree with the hon. Member for Barry (Mr. Gower) I must on this occasion do so. In my view, this is a typical piece of mean Pecksniffery on the part of the Government. These people are in a special category, they are all on their own, and in the circumstances special provision should be made for them.
  Question put and negatived.
  Further consideration of the Bill, as amended, adjourned.—[Mr. Maurice Macmillan.]
  Bill to be further considered tomorrow.

ROSSENDALE (FOOTWEAR INDUSTRY)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]
11.59 p.m.
Mr. Ronald Bray: In initiating this debate, it may be helpful to the House and the Minister if I briefly describe the background of the events leading up to my request for the debate. Although in the initial part of what I have to say I may give the impression that this is a maiden speech, I assure the House that the comments which have been passed in Rossendale in recent weeks about the cause of the debate have been most unmaidenly. It might also be helpful if I commented on the history of
1092
the industries in Rossendale, particularly the boot and shoe industry.
At the time of the Industrial Revolution, or just before, when the countryside was attractive, the area was known as the Dale of the Roses. There gradually developed the cotton textile industry which continued to succeed and grow from strength to strength over the years until the latter part of the 19th century. The prosperity of the textile industry then began to decline and what I would term "second tier" industry developed in the form of the manufacture of boots, shoes and slippers. This industry employed good local labour and re-utilised many of the old cotton mills, some of which are still regularly in use, with small modifications, to this day. It was an industry literally started on a shoestring and it continued willy nilly along its path, although the shoe string has become more and more worn as time has gone by.
With only limited capital resources at their disposal, due to recessions, the shoe manufacturers could cater for only the lower price range materials, but they did that with a certain degree of success. At one time some 16 per cent. of the country's total output was produced within the group of valleys known as Rossendale. However, there was little profit in the industry and very little was ploughed back as capital.
At the end of 1970, only 18 firms were operating and it is fair to say that some were in a poor way of business. One alone employed more than 50 per cent. of the operatives within the industry. In 1960 there were some 25 firms employing 6,400 operatives which produced 18 million pairs of shoes and slippers. Last year, 1970, the number of firms had fallen by seven, so only 18 were still in business, employing 4,400 operatives, 2,000 fewer, and they produced only 16 million pairs of footwear. That is a decline in production of one-ninth, or 2 million, over ten years.
By various means, I have taken the liberty of obtaining the figures of profitability in the industry. The figures taken from a sample of 10 per cent. are appalling. They show that in the ten years from 1960–61 the average company was earning 7 per cent. on its sales and that is subject only to income tax, the balance sheet figures being 21 per cent.

1093
Coming forward to 1969–70, the figure has dropped dramatically to the extent that this group of companies which I have examined was showing only a little over 2 per cent. on turnover and some 7 per cent. on capital employed. From this we can correctly assume that some were definitely trading at a loss and honestly had no funds whatever available for new plant or for re-equipment. Those are the employment and financial aspects.
Turning to the commercial aspect, fierce competition is experienced and has been more severe in the last 10 years from foreign and now from new Commonwealth countries, whose rates of pay and conditions of employment are far below our own. In many firms in Rossendale, short-time working has become the order of the week rather than the day. For a number of shoe firms, the outlook is grim and more, from what they tell me, could be driven into bankruptcy if swift Government action is not taken to protect the livelihood of many of my constituents for whom no other employment is immediately available. The outlook for them and for their families is equally grim.
These firms have not had the opportunity to utilise the £20 million showered by the previous Government, in their wisdom or whatever one may choose to call it, on Upper Clyde Shipbuilders. Not only in Rossendale, but throughout the shoe industry, the Government have refused to give urgent help by insisting on an origin marking Order for footwear. It is not asking too much to ask for an Order of that kind to be formulated.
I now come to an issue which has given all in the industry, and me, greater concern and worry than anything Rossendale has encountered in recent years, and that is the proposed implementation of the six-day suspension rule. In the last fortnight I have received about 1,000 letters of protest on this. That is a typical example. I have received them from all parts of Rossendale and from other constituencies. I am pleased to see my hon. Friend the Member for Nelson and Colne (Mr. Waddington) and the hon. Member for Accrington (Mr. Arthur Davidson) present, as well as other hon. Members who are similarly placed. All the letters I have received
1094
which have been individually addressed have had a reply setting out the Government view, as well as my own, in the most plain and lucid terms.
The effect of the Bill dealing with unemployment benefit will be that a large proportion of workpeople in the footwear industry, in which there is currently no guaranteed weekly wage, will have to exist for two or three days a week without any support other than the money they draw for the balance of the week by virtue of their labours. The trade is essentially seasonal and, in some circumstances, six, eight, and 10 weeks have been worked "on the trot". I submit that the intentions of the Government are not equitable for the employees of an industry which works on this basis. Strong representations have been made to me not only by the unions but by the Lancashire Footwear Manufacturers Association, which has requested a joint meeting between the unions, itself and myself in the very near future. This will take place, and I hope to have some good news to offer them.
Earlier I commented on the very difficult financial circumstances of certain companies. I am reliably informed that, while many of them would like to see a guaranteed working week agreement established, the extra cost involved as a direct result of continuous spells of short time working could be bankruptcy for some smaller firms and severe financial hardship for others. The local footwear trade union is also very conscious of this grim fact which could lead to many of its members, who are my constituents, being unemployed with little immediate choice of alternative work in the vicinity or in the immediate future. In time this could lead to further depopulation in the valleys, and I cite the borough of Bacup which at its optimum had a population of 24,000. Currently the figure is about 16,000. I suggest to the Government that every action should be taken to prevent a further decline in its population.
These are the difficulties of a major industry in Rossendale. The boot and shoe industry does not seek charity. It never has done so and I sincerely hope that it never will. All I ask is that it be given every reasonable consideration, and I am sure that the whole House supports me in this request. It wishes to have the opportunity to restructure itself and make

1095
itself ready to meet every challenge, to face our possible membership of the European Economic Community with confidence and to make a success of it. The president of the Footwear Manufacturers Association stated that only last week in his annual address. But a degree of restructuring must be effected in the interim.
The people who work in Rossendale are grand folk. They work hard. We have no labour difficulties. Sometimes there is a shortage of labour. But these are valley communities, and from generation to generation they have been dependent on the industries in the valley. We must ensure that, subject to their providing the effort and the right product at the right price, they are there for keeps and that they continue to prosper.
As I see it, three major Government Departments are intimately involved in the future of Rossendale's footwear industry, as they are in footwear industries in the rest of the country. I look to them personally for their joint and several co-operation in meeting the points raised in this short debate. The Department of Trade and Industry has it in its power to provide a degree of aid by discouraging the import of cheap-labour footwear from overseas, thus varying the policy of the previous Administration. In the first five months of this year. Britain imported 38 million pairs of shoes, of which 50 per cent. came from Hong Kong, which is a cheap-labour area.
Last year, total British production was just over 190 million pairs of shoes. In addition, 65 million pairs were imported—roughly one third of the total production. Of this total 53½ per cent. came from Hong Kong and 20 per cent. from Taiwan. The cost of these imports to the United Kingdom was £35 million, and I suggest that it is fundamentally wrong that when we have the capacity in this country such a high proportion should be imported, much of it from countries to whom we owe no allegiance and from whom we ask none.
I referred earlier to the introduction of an origin-marking Order. This would also help the customer who wishes to buy British and does not want to be foisted off with foreign footwear.
The next Department involved is the Department of Employment. It could
1096
well assist with guidance to employers and unions in respect of the advantages of guaranteed working week agreements. It would have little else to do, because in Rossendale we have, and will continue to have, excellent working relations between labour and management.
I come to the Department which has triggered off the debate by proposing to implement a Section of the 1966 National Insurance Act. I do not ask much of the Department of Health and Social Security, just that it should defer the implementation of the six-day suspension rule in those sections of industry—and here I broaden my remarks to include industry as a whole—where there is no guaranteed working week agreement. I suggest that it would not be asking too much that this be deferred for four or five years until such time as a satisfactory agreement can be established. This would give the respective industries a chance to restructure and consequently absorb the extra costs involved by the introduction of a guaranteed working week. I would welcome the introduction of a working week for all sections of industry, but I feel, and here I agree with the Government, that it is not for them to impose a guaranteed working week. This is for employers and unions to get together and work in their mutual interests to establish a system of working week which best suits the economics of the industry. I ask when the Minister replies that he speaks for all the three Departments involved and tells us how the Rossendale boot and shoe industry can prosper and look forward to the future with confidence.
Mr. Tom Boardman: I know of my hon. Friend's interest in the footwear industry, as he knows of mine. In making his remarks about the guaranteed working week, will he say whether he is taking the specific case of the Rossendale Valley? He has made general references to the shoe industry and the problems of certain sections of the industry. Are his criticisms on this narrower point related, as I believe they are, entirely to Rossendale Valley, which perhaps could have a special problem?
Mr. Bray: I thank my hon. Friend for that intervention. I am happy to say that the whole of the British shoe

1097
industry, with the exception of the Rossendale Valley, already enjoys a working week agreement which stands at 75 per cent. There are preliminary negotiations going on between the unions and the employers aimed at securing a working week agreement. As I have said, the employers are extremely dubious about the wisdom of implementing it, for financial reasons, and the unions, for their part, are equally dubious about the advisability of pressing their point for fear of redundancy. In the long term, I feel that there is everything to be gained by its implementation, but in the short term I appreciate the caution with which the trade union in the area approaches the subject.
12.20 a.m.
Mr. Arthur Davidson: I compliment the hon. Member for Rossendale (Mr. Bray) on pointing out to the House the difficulties that will hit employees in this important industry in North-East Lancashire if the Government continue with their policy of applying the six-day suspension rule to flat-rate unemployment benefit. It certainly would not be right for me to go into the merits of the Government's proposals, but the hon. Member is right to point out that this industry, because there is no guaranteed week and because it is subject to periodic short-time working, will be particularly hard hit by the Government's proposals.
Like the hon. Member for Rossendale, I have many constituents who work in the industry, and I also have received the letter to which he has referred. The union points out that due to the Government's intentions to implement these proposals, it has been given only seven months in which to negotiate a guaranteed week with the Lancashire Footwear Manufacturers' Association. The union says—I rely on the letter being factual— that that is a quite inadequate, ludicrous length of time. I would go further than the hon. Member—
Mr. David Waddington: Is not the difficulty that when the Labour Government, in the 1966 Act, took power to suspend the payment of unemployment benefit for short-term unemployment, they envisaged that time should be given to employees and employers
1098
to reach arrangements such as guaranteed weeks? Although that power was taken in 1966, however, precisely nothing has been done until now by management or by the unions.
Take the textile industry. I under stand from my inquiries the other day that it was only a month ago—
Mr. Deputy Speaker (Miss Harvie Anderson): Order. I hope that the hon. Member will remember the subject of the debate and the shortness of its duration.
Mr. Waddington: Yes, Mr. Deputy Speaker. Does not the hon. Member recognise that a great deal of time has been given to both sides of industry to put their own houses in order but that precisely nothing seems to have been done?
Mr. Davidson: I recognise that I have precisely a quarter of a minute to reply to that extremely long intervention. I will allow the Minister to reply to the debate.
12.23 a.m.
The Under-Secretary of State for Health and Social Security (Mr. Paul Dean): This has been an interesting debate, and I must be very brief in view of the short time available. I am grateful to my hon. Friend the Member for Rossendale (Mr. Bray) for putting the problems of the industry in his constituency so clearly. He speaks with knowledge and authority and he has put the case effectively and persistently over recent months to the three Departments he has mentioned.
The point which has been put by my hon. Friend has been amplified by the hon. Member for Accrington (Mr. Arthur Davidson) and by my hon. Friend the Member for Nelson and Colne (Mr. Waddington), who has cogently pointed out that there has been a great deal of time in which industry has had warning of what was afoot. That must be my answer to my hon. Friend when he asks me whether the introduction of the six-day suspension rule can be postponed still further.
The fact is, as my hon. Friend the Member for Nelson and Colne has just pointed out, that this matter was in the air as long ago as 1966, when it appeared

1099
in the Labour Government's National Insurance Act of that year. The rule applied to the earnings-related supplement straight away and it was to apply to flat-rate unemployment benefit from March, 1969. That was intended to give industry time to readjust and to make the appropriate arrangements. We now propose that it should apply from 1st January, 1972, which will mean that industry has had over five years in which to prepare itself. When Parliament agreed to the bringing into operation of the Order a few weeks ago, it was not opposed by either side of the House.
I am glad that my hon. Friend spoke in favour of a guaranteed working week arrangement. He said that he would welcome this at the earliest possible opportunity. I reiterate that this is exactly what my right hon. Friend the Secretary of State for Social Services has said. I think my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) when he spoke about the industry in other parts of the country was referring to the fact that the footwear industry generally has an agreement of this kind. We welcome guaranteed agreements, but we do not intend to introduce legislation to make them compulsory. We think it better that they should be freely negotiated so that they can be tailor-made to meet the requirements of individual industries.
Why is this six-day suspension rule being introduced? The first reason is that we are spending substantially more where the need is greatest. I need mention only the over-80s, the chronic sick, widows and the substantial increase in benefits in September, the biggest ever in money terms, a substantial increase in real value—all this costing £600 million, some of which will go to my hon. Friend's constituency. In addition, there
1100
is substantial extra expenditure on health and welfare.
If we are to achieve these things we must try to save where we can, where expenditure is no longer high enough on the priority list to be justified. The present system in modern times is a subsidy on short-time working which costs the National Insurance Scheme about £3 million a year. In other words, the National Insurance contributions of employees generally, including those on low pay but regular work, are subsidising earnings in a few industries, often highly paid ones like the motor industry. In our judgment this is neither fair nor equitable.
The present rules also lead to misunderstandings and uneven results, for example, between day and night workers, and in some cases the pattern of work is manipulated to obtain the maximum possible benefit. We feel, in our responsibility to those who contribute to the National Insurance Fund, that this is no longer a sufficiently high priority to warrant continuation of this expenditure and that the solution lies in agreements voluntarily reached between the employers and unions concerned.
My hon. Friend also mentioned several points which concern other Departments. As he will know, the parts of his constituency which he particularly mentioned are included in the North-East Lancashire intermediate area and therefore get the attendant benefits which come from that. An advance factory has been recently started, and there are a number of road programmes and improved housing programmes, all of which will help the economic prospects of his constituency and the area concerned.
Question put and agreed to.
Adjourned accordingly at twenty-eight minutes past Twelve o'clock.

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

SOUTH-WEST AFRICA: FUTURE ADMINISTRATION
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what action they propose in order to implement the decisions of The Hague International Court of Justice that the mandate of the Republic of South Africa over Namibia (South-West Africa) be revoked, its administrations transferred to a United Nations Commission, an economic boycott of South African trade deals on behalf of the territory instituted, and diplomatic representatives appointed by South Africa recalled.]
THE MINISTER OF STATE, SCOTTISH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, I presume that the noble Lord refers to the Advisory Opinion of the International Court of Justice. The text of the Advisory Opinion is being carefully studied in the Foreign and Commonwealth Office. Meanwhile, my right honourable friend is not yet ready to make a statement.
LORD BROCKWAY: My Lords, while appreciating that Answer, and also agreeing that a United Nations Commission is of limited value while it has no power, may I ask the noble Baroness—I ask this for consideration—whether or not effective steps could be taken in two directions: first, by making clear to the South African Government that their diplomatic and consular representations do not extend to Namibia; and, secondly, by proposing that United Nations representatives be appointed to represent Namibia on all international agencies—United
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Nations, Universal Postal Union and similar bodies?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I will certainly undertake to convey these views to my right honourable friend, but I think we must await the considered study of the Advisory Opinion.
LORD FRASER OF LONSDALE: My Lords, may I ask my noble friend whether she remembers that more than a half a century ago—
SEVERAL NOBLE LORDS: Oh!
LORD FRASER OF LONSDALE: I beg the noble Baroness's pardon. Did she learn at school that more than half a century ago the South Africans rescued these people from one of the most tyrannous Colonial Governments that ever existed and have looked after them with compassion ever since—compassion comparable with that with which they look after their own people? Can my noble friend tell me of any case in the world, in the last half-century or before that, where the United Nations or the League of Nations have undertaken successful government?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I am afraid that I did not, over half a century ago, learn these facts at school; but even in retrospect I am aware of the history of South-West Africa. But, so far as the second part of the noble Lord's supplementary question is concerned, I am afraid this particular Question merely refers to the Advisory Opinion of the International Court of Justice.
LORD BROCKWAY: My Lords, while I can remember the events to which the noble Lord has referred, I appreciate that the noble Baroness cannot. But may I put this point to her, for further consideration by Her Majesty's Government? In view of the recommendation of an economic boycott, could not the British Government require withdrawal by British companies from all trade contracts and the prohibition of further contracts in Namibia?
LORD CONESFORD: My Lords, if the matter is under consideration, why does the noble Lord who has asked the Question assume that the consideration will necessarily result in the way he wishes?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, so far as the supplementary question by the noble Lord, Lord Brockway, is concerned, he will no doubt have noticed that these are conclusions of the Advisory Jurisdiction of the International Court of Justice. They are not decisions as such. So far as the question by my noble friend who has just sat down is concerned, I would only say that one cannot know what the legal advisers will come up with.
LORD MILVERTON: My Lords, may I ask two brief questions? Is it not a fact that the South African Government offered to hold a plebiscite of the native tribes concerned in South-West Africa in the full expectation, which is shared by those who know something about that country, that the Africans themselves would have preferred to remain under the tutelage of South Africa rather than of the United Nations? Secondly, is it not a fact that the South African Government have declared their policy towards these people of training them to manage their own affairs in four different sections so that there should be no tribal conflict in the process, and that they intend, when they have so trained them, to make them independent States in economic partnership?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I should just like to say to my noble friend who has asked that question that a cursory examination of the Opinion does not show that it recommended, as the Question says, "that its administrations be transferred to a United Nations Commission". But all points of view will certainly be taken into account.

TOY IMPORTS AND SAFETY STANDARDS
2.42 p.m.
LORD AUCKLAND: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what proportion of toys currently on sale in the United Kingdom are imported, what steps are being taken to ensure proper safety standards and
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whether they are satisfied that these standards are adequate.]
THE MINISTER OF STATE, HOME OFFICE (LORD WINDLESHAM): My Lords, in 1970 about 25 per cent. of the toys on sale in this country were imported. Importers and manufacturers are encouraged to comply with the relevant British Standard Code, and certain of the safety requirements of the code have been given statutory backing in the Toys (Safety) Regulations 1967. Further regulations are in prospect. The code is kept under review by the British Standards Institution, and there is no reason to doubt its adequacy.
LORD AUCKLAND: My Lords, in thanking my noble friend for that reasonably satisfying Answer, may I first ask him whether he is aware that the Home Office, under both Governments, has gone a long way towards resolving this matter? May I also ask him whether it would be possible to put pressure on the Governments of the countries largely responsible for the importation of these dangerous toys, particularly Hong Kong, to make quite sure that when they enter this country they are in a reasonably safe condition? At the moment there is evidence that they are not safe.
LORD WINDLESHAM: My Lords, the Hong Kong Government have been very active in ensuring that so far as possible toys manufactured in the Colony are safe. The code of safety requirements for children's toys has been translated into Chinese and distributed to all manufacturers of toys in the Colony. The Hong Kong Government are determined to see that the requirements of the code are complied with. As regards other countries of origin, many importers in this country when placing orders overseas now make it their practice to include a provision in the contract to the effect that the toys supplied must comply with the British Standard requirements. This is a useful practice.
LORD SHEPHERD: My Lords, is not the responsibility upon the buyer in this country? Is he not the one who sees the samples and makes the decision whether to buy and whether the toys conform to the standard? It is up to those in Hong Kong to see that they carry out their contract.
LORD STONHAM: My Lords, would it not be practicable to prohibit the importation of toys which do not satisfy our safety standards?
LORD WINDLESHAM: My Lords, anyone who imports toys which do not meet the standards laid down in the Toys (Safety) Regulations—and certain items such as the toxicity of the paint are covered by these Regulations—lays himself open to prosecution. I agree with the noble Lord, Lord Shepherd, that it is very much a matter for the importers concerned to satisfy themselves. My Department has received a good deal of co-operation from importers; in one particular case the importer acted swiftly and took off the market at once all supplies of a particular toy.
VISCOUNT ST. DAVIDS: My Lords, will the noble Lord ensure that every effort is made to put the utmost pressure on these foreign manufacturers, even up to and including legal methods if necessary? Will he please remember that Ruskin said that there is nothing on earth which cannot be made a little cheaper and a little nastier?
LORD WINDLESHAM: My Lords, I think that those close to this subject who have taken an interest in it, such as my noble friend Lord Auckland and the noble Lord, Lord Crook, on the Benches opposite, feel that the situation has been improving over the years as a result of the methods I have described.

PROCEDURE OF THE HOUSE
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move that the Eighth Report from the Select Committee be now considered.
Moved accordingly, and, on Question, Motion agreed to.
The Committee's Report was as follows:
CO-OPERATION WITH THE HOUSE OF COMMONS
The House of Commons Procedure Committee have suggested co-operation between the Houses in examining the following four subjects:—

(a) the distribution of Bills between the Houses;

(b) joint pre-legislation committees;

(c) joint post-legislation committees;

(d) a joint committee to examine or debate statutory instruments.

The Procedure Committee welcome this initiative and have asked the Chairman of Committees and the Leaders of the three parties, attended by the Clerk of the Parliaments, to convey this response to the House of Commons Procedure Committee. These Lords will have the opportunity of exploring with the Commons Procedure Committee the best means of promoting co-operation between the Houses on the four suggested subjects and related matters, and thereafter will report back to the Lords Procedure Committee.
THE EARL OF LISTOWEL: My Lords, I beg to move that this Report be now agreed to.
Moved, That the Report be agreed to.—(The Earl of Listowel.)
On Question, Motion agreed to.

MEDICINES BILL
Brought from the Commons; read 1a, and to be printed.
CRIMINAL DAMAGE BILL [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments to be printed.

INDUSTRIAL RELATIONS BILL
2.47 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I beg to move that this Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Drumalbyn.)
On Question, Motion agreed to.
Schedule 1 [Provisions as to certain closed shop agreements]:
LORD STOW HILL LORD STOW HILL moved Amendment No. 41A:
Page 133, line 27, at end insert—
(" 27. Where the Commission has stated in its report to the Industrial Court that by reason of the ephemeral character of a significant number of the employers and potential employers in the trade or industry or section of a trade or industry in question, it is not reasonably practicable for closed shop agreements to be made with all such employers and that in consequence the purposes specified in paragraph 5(1) of this Schedule could not reasonably be expected to be fulfilled unless such closed shop agreement were binding on every employer in such trade or industry or such section of a trade or industry, the order made

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by the Industrial Court in accordance with paragraph 8 or 14 of this Schedule shall be expressed to be, and shall be, so binding.")
The noble Lord said: My Lords, on the Marshalled List there are three Amendments that are directed, broadly speaking, to the same objective, which I would comprehensively describe as the protection of the position of, in particular, Equity and any other trade unions that may have to cope with a problem similar to that with which Equity has to cope. My noble friends and I considered whether we could assist your Lordships best in considering the various features of these Amendments by moving them separately and explaining those features in relation to each Amendment or whether we could more expeditiously address ourselves to our task by moving all of them together and, as we went along, pointing out their different aspects. I hope that your Lordships, having considered them, will approve the view that we formed that it would be much more to the convenience of the House, if we moved each Amendment separately. That is the course which I and my noble friends would desire to follow. We feel that if we moved them all together it would be very difficult to avoid confusion in referring to them successively. Although they are directed to the same objective they are each differently structured and represent an entirely different approach to try to achieve the end we have in view.
LORD DRUMALBYN: My Lords, may I just say to the noble Lord, Lord Stow Hill, with respect, that we agree with that view.
LORD STOW HILL: My Lords, I am grateful to the noble Lord. I, certainly—and I am sure my noble friends will, too—will do my level best not to take up your Lordships' time unnecessarily. When your Lordships' House sat last I moved an Amendment which was designed to produce the effect that an application for an approved closed shop could be made unilaterally by a trade union even though the employer did not wish to join in the application; and vice versa, although that was a much less likely situation. Amendment No. 41A is designed to narrow that proposal very considerably in order to fit it to the situation of Equity.
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When I moved my last Amendment your Lordships felt that I was going too wide and doing something which would involve the imposition of an agreement upon an unwilling party. This Amendment seeks to involve an employer in a closed shop agreement under the provisions of Schedule 1 if, and only if, the Commission report that there are certain circumstances in that industry which make it impossible to achieve the objective set out in paragraph 5 of the Schedule without making a closed shop arrangement binding on all employers wishing to enter the industry.
I promise not to repeat the argument I used last Thursday, but your Lordships may remember that a cardinal feature of Schedule 1 is contained in paragraph 5, which requires that before the Commission can recommend an approved closed shop agreement certain things have to be proved and they are set out in subparagraphs (a), (b), (c) and (d); in particular, that the closed shop is necessary—not desirable, but necessary—to achieve reasonable terms, stable relationships and all the rest, and that an agency shop would not serve the purpose equally. The situation of Equity has been explained before and I do not want to go over the same ground unnecessarily; but it is essential to bear in mind the very special problem with which Equity is confronted. Equity has been built up over a number of years, and I think that every noble Lord will agree that it has done most valuable public work in an industry—if acting may be described as an industry—in which the situation of the would-be entrant, and the person who has entered but not yet climbed high in the ranks of the profession, is extremely precarious. There are far too many in the profession for employment to be found for all. Employment is very irregular and lasts for short periods. Actors and actresses of high renown find their services are not called on with the regularity which in other occupations gives a sense of security and a steady income.
The life of an actor is up and down. The life of a young, ambitious actor, who may have great talent but little experience and service in the profession, is extremely dangerous. I submit, respectfully, that they have a special claim to the protection of a Bill of this sort in order to safeguard their position in the

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early years of their career and also throughout their life. One reason which makes it difficult to safeguard their position is the nature of the employer structure. Again this has been said before and I apologise for reminding your Lordships of it. As your Lordships will know, in the theatre world, and also in the film world, it is a regular feature of the employer structure that companies are formed for a single production; and when the production is brought to an end the company disappears. The line of such a company may last for months or years, or it may be less than months. It may be a company which has very limited assets, and frequently those in control—I withdraw the term "frequently" and say sometimes those in control—are persons who are not really entitled to great confidence. I am not saying that this is a profession in which most of the employers are unreliable; that would be grossly untrue. But, as with so many human communities, such persons do not infrequently enter on the scene. If unreliable managements engage on contracts which are not standing contracts, and with young actors and actresses desperately in need of a job in an overcrowded profession, one can easily see what is likely to happen unless a powerful union like Equity intervenes to protect them.
The protection which the Government introduced after this Bill has been considered in another place is contained in Clause 17 and consists of the provisions relating to the approved closed shop. It is strongly represented on behalf of Equity—it has been represented to the Secretary of State and urged on your Lordships—that when you have a structure of employment in which there are a whole number of companies, short lived, formed particularly for one production, it is absolutely impracticable to try to include those employers in approved closed shop arrangements such as are envisaged in Clause 17. They are not long enough lived.
As has been pointed out before, the procedure envisaged in Clause 17 and Schedule 1 is lengthy. There has to be an application to the Court; the Court has to refer to the Commission; the Commission has to be satisfied about all the matters to which reference has been made. Even if it thinks all those circumstances
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are present it has to be satisfied that the objective would not be equally well attained by the institution of an agency shop. Then there is a report back to the Court and an opportunity has to be given for a ballot. The whole process may take weeks, or even months. The result of the ballot may be questioned. In the case of a large union, with a large employer or group of employers to deal with, it is inconvenient, and may be highly undesirable, that so many months should be allowed to go by without a decision. But it would be absolutely disastrous and shattering in the case of Equity with the sort of employers with which Equity has to cope. I submit that I am not putting the matter too high when I assert that, with the Bill in its present form, Equity and its whole structure and all its public work is in jeopardy. It simply cannot function if, in order to protect those who wish to enter the industry or who are serving in the industry, it has to go through all the complicated process envisaged in Clause 17 and Schedule 1.
My Lords, that is the argument on which I base the Amendment which I submit to your Lordships. It is now appropriate that I should explain how in the first of these three Amendments we try to approach the problem. It involves—and I frankly accept it—an order being made by the Court applicable to employers who have not indicated their willingness to agree to a closed shop agreement. We are acquainted with the structure of the legislation relating to approved terms and conditions in industry. If you are an employer you must accept that those terms are binding on you although you may not agree individually to accept those terms. Here, by an analogy, is a reason. If an employer wishes to put on a production or to make a film or play and before putting it on for that purpose wishes to engage the services of actors and actresses, he must face the same situation. He comes in and out of the industry and is ephemeral. Is it unreasonable or an infringement of the liberties which we think essential in this country to say that if he elects—and he need not, if he does not want to do so—to enter this field of activity or to be remunerated for entry into this field of activity, he must do so only in certain circumstances: he must

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accept the provisions as to casting arrangements and various arrangements which Equity has instituted?
The Amendment assumes, because it is in the form of a new paragraph 27 in the Schedule, that the Commission has had seizure of the matter and that the Commission, having been consulted by the Court, reports back to the Court as follows, in the wording of the Amendment:
"that by reason of the ephemeral character of a significant number of the employers and potential employers in the"
profession
"or industry in question it is not reasonably practicable for closed shop agreements to be made with all such employers…"
That is the first thing. Because of this wide array of employers—and they tend unfortunately to group at particular times of the year, in the pantomime season and in the summer and so on: that is when they proliferate—that is the first thing the Commission has to report.
The second part of the Amendment provides:
"that in consequence the purposes specified in paragraph 5(1) of this Schedule could not reasonably be expected to be fulfilled unless"
the closed shop binds all employers, in which case the Court ought to make n order which is binding on all employers who enter into that industry. I respectfully stress the second part which relates to the circumstances set out in paragraph 5 of the Schedule. In the acting profession one cannot achieve these purposes—stable employment, orderly relationships and so on and—avoid the sub-standard contracts and the various abuses which one knows from time to time are practised in that very great profession and on those who act in it, male and female, unless one makes the closed shop provisions binding on everyone who enters into it as a producer.
My Lords, I submit that that does not involve any break in our traditions of personal liberty. If it does, there are precedents in legislation to which I have referred. One need not put on a play if one does not want to do so nor make a film if one does not want to do so. All I say is that if the Commission, with all its experience, having examined the matter, reports to the Court that there
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are circumstances in the particular industry about which it has been asked to report by which it cannot be put on a good footing unless the closed shop arrangements apply to anyone who comes into it, the Court should have that jurisdiction by judicial process. That is the way in which the Amendment is meant to work. Those are the objectives it is meant to achieve. I submit that without them it is no exaggeration to say that the prospects of actors and actresses who need protection in this industry in future will be very gloomy indeed. I beg to move.
3.5 p.m.
BARONESS LEE OF ASHERIDGE: My Lords, may I repeat what I said on a previous occasion, that in an ideal world I do not think that anyone in any part of your Lordships' House would want to advocate the closed shop principle. We should want as free movement as possible in and out of any industry, trade or profession. But no one can have any idea at all of the problems facing Equity and A.C.C.T.—not just for the most gifted of our younger people in the world of the theatre and the cinema but many of our older actors as well—without knowing that this kind of protection is essential. There is not much we can do for them. They deliberately choose this way of life, knowing that they are going to be unemployed for a good deal of the time in their younger years and many of them face unemployment all through their years. My noble friend, Lord Bernstein, and others on previous occasions have given the exact figures. I believe that sometimes unemployment is for several weeks in a year, even for very accomplished actors.
If your Lordships are in contact with theatre or film personnel you will know that they are so dedicated that they are prepared to put up with hardships which few workers in any other industry will face. To begin with, they know that they are choosing a way of life in which they will be unemployed for a great deal of the time, but there is nothing which the dedicated ones are not prepared to do while they are getting their experience and training. If your Lordships are looking for cheap labour, you should know that the cheapest labour on the London market at present is gifted young actors and cinema personnel, who can be hired

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for 6s. 6d. an hour. I have a small garden with a terrace and I wanted the stones on the terrace cleaned up. I telephoned about it and was told that if I wanted it done professionally, the minimum fee would be £50, but I could have a young unemployed actor to do the work for 6s. 6d. an hour, and all I had to do was to supply a pail and a scrubbing brush.
There is nothing which the young ones will not do; they will clean, scrub and paint or go to work in the back kitchens of the sleeziest restaurants. They are prepared to make that kind of contribution and regard it as part of their apprenticeship while they are young. They are prepared to do this to survive and to get experience, and the ungifted and undedicated are weeded out. We are discussing those who are gifted and dedicated, who are trying to add to the prestige and glamour of this country by their talents. I said that there is not much that we can do for them, but should we allow an unregulated flow of people without any qualifications and without belonging to any organisation to come in? In the summer season, for instance, many of these young people are glad to take odd jobs at the seaside, and one of our potentially great Shakesperian actors or actresses will be glad to put on a false nose or comic hat so as to earn a living. If we are to say that people can come into this profession without this minimum protection, we shall be putting a still further intolerable burden on gifted people. It is not only the young ones who suffer, but others, and it is making the job of Equity and A.C.C.T. almost impossible. So I hope, not only on grounds of pity and compassion but of plain common sense and ordinary decency, that we may have the unanimous support of your Lordships' House for this essential Amendment.
LORD BERNSTEIN: My Lords, we have heard the moving speech of my noble friend Lady Lee of Asheridge and also the cogent and sensible argument from my noble friend Lord Stow Hill in moving this Amendment. I know that the arguments that were put forward on Committee stage against this Amendment may have sounded valid in theory, but surely the views of those with direct and practical experience in the theatrical profes-
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sion should override those arguments, unless a better case can be put forward. It would not be possible for a company to move into a theatre quickly, because first they must be registered and, as my noble friend Lord Stow Hill said, in the meantime they might have lost the theatre.
The problem is that a number of fringe employers have reluctantly accepted the standing conditions, including the union shop, and without the joint powers of the organised employers and Equity they would not have had to subscribe to these arrangements. As my noble friend Lord Archibald said, entering Equity is a point of entry, not of pre-entry. When somebody wishes to become a member of Equity, he or she has to get work with a producer and then they have the right to join Equity, unless Equity can produce an alternative or better candidate for the casting or the position. I think that the Government underrate the importance of the considerable body of people trying to get into the profession, who would certainly be willing to co-operate with fringe managers, if allowed to do so.
We should not concentrate our attention on the West End theatres. An increasing number of young and dedicated people are looking to the provincial, particularly repertory, theatres which are now being well supported by local authorities and the Arts Council. They look upon these as of great and growing importance and would be content to work in them. Whose views are we to take? The views of those who have had practical experience for 20-odd years with Equity and A.C.C.T. or the views of people hidden away in some back room in Whitehall who want to carry out a doctrinaire policy?
I suggest that it is very surprising that the Government should wish to change something that has been so successful over so many years. Surely that is a very un-Conservative point of view? In another place suggestions were put forward to try to deal with the problem. Equity has said definitely that these suggestions will not deal with their problem. Is it unreasonable to believe that there may be some validity in what they say? Why should we assume that Equity, with their reputation and record, should be

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trying to get the Government to agree to something which is unnecessary? As the Bill now stands, an agreement outside the Theatrical Managers' Association for a closed shop in the British commercial theatre could presumably be declared necessary by the C.I.R., but it might take a long time before that could be done and before a company, formed in a moment of enthusiasm, could produce its theatre and its play. If the fringe management, who cover a considerable part of the actual employment of members of the unions, cannot be brought into these agreements and are able to employ outside artistes, it is doubtful whether the Managers' Association would be willing to make agreements at all. There will always be managers, however reputable, who will take advantage of a situation of this kind.
I do not know what more information the House would care to have, but it is interesting to know that last year in the West End 16 out of 42 theatres had productions by non-members of the Society of West End Theatre Managers, the society that supports Equity. The provincial theatre's percentage of non-members was higher. In the film industry in 1969, of 82 feature films, 19 were made by nonmembers of the Film Producers' Association—roughly 24 per cent. In 1970, the figure was 33⅓ per cent. And it is the Film Producers' Association which is supporting Equity and A.C.C.T. in this matter. Can the Government accept in this connection the voice of practical experience? I support the Amendment.
THE EARL OF BALFOUR: My Lords, may I ask one or two questions? I feel that this Bill must work in all fields of industry and I am not too sure in the case of Equity that they could really be in a position, in a closed shop agreement, of getting agreement between the union or unions and the employer or employers as described in paragraph 1 of Schedule 1, and whether, with such a flexible number of people in such a profession, they could even get them all to agree together in any ballot.
I would ask your Lordships to take into consideration two other industries that employ a large amount of casual labour—the agricultural and the building industries. As the Amendment says, the workers are of an ephemeral character.
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While in the theatrical profession on the whole people are of a quite high standard of education, and could group themselves together, I feel that this would be rather disastrous in the agricultural field. Here I must declare a slight interest, though I have never employed casual labour except completely out of season to do something like clearing trees. I have never had the problems of potato harvesting or fruit picking. But there is an awful type of casual Irish labourer who comes to this country, and I do not think that it would be in the interests of the National Farmers' Unions or the agricultural workers' unions to have people of this sort attempting to organise themselves into some sort of closed shop. I do not think it would work. It is not something which should be encouraged legally.
In the building industry we have wonderful trades—electricians, painters, carpenters, bricklayers—but we also have a complete cross-section of all sorts of casual labour. It would not be in the interests of the building industry if the casual labour could organise themselves into a closed shop as suggested in this Amendment. I am making this point because I really do not know. I know little or nothing about the theatrical profession, although I very much sympathise with what noble Lords have said about it. But we must look at this from more than just the point of view of Equity. We must throw the net wide when discussing legislation and I think that this Amendment may not be such a good idea.
3.19 p.m.
BARONESS WHITE: My Lords, with the greatest respect to the noble Earl I think that a little closer study of the Amendment would indicate that it refers to the casual nature not of the work-people but of the employers. It is the employers who are ephemeral in the theatrical industry, as well as the workers. That is an unusual situation. There are a number of occupations where there is casual labour, but it is difficult to think of any other profession in which both sides are of an ephemeral nature to the degree to which they are in the theatre and cinema industry. This is why we are taking so much time over this problem. It is, I think, a correct use of the word "unique". I do not believe that

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there is any other occupation—certainly one has not come to my notice—in which one has the same degree on both sides, both employers and workers, who change their form so often.
It is for this reason therefore that we have been pressing the Government so hard, both in another place and here, and we fully recognise that the Government have accepted the position up to a point. It was largely the arguments addressed to them on this particular problem in the theatre and cinema industry that made them agree to the closed shop in the first place, that has since made them prepared to apply it to some other industries, and to relax somewhat the conditions for the ballot. The last occasion we discussed this Bill the noble Lord, Lord Drumalbyn, on behalf of the Government, also offered a further concession so far as the organisation of employers are concerned. So bit by bit the Government are moving. What we want now is to get them to move just that little bit further. They have recognised that this is an extraordinary matter, and that it does not apply to industry in general.
The reason we are being so persistent is as my noble friend Lord Bernstein has said—and who can have had greater experience in this industry than he, on the cinematograph side in particular? He knows, and anyone who has had real experience in this matter recognises, that what would be normal for the greater part of industry is not effective in the peculiar situation in this industry. We assert that to carry out, as my noble friend Lord Stow Hill said, all the procedures which are necessary for the formation of a closed shop—which the Government have agreed is desirable in this particular occupation—cannot be done in the time, because the employer does not exist as an employer for long enough to carry out all the procedures; nor can the workers on their side go through all the procedures of a ballot and so forth in the period allowed. So often one has a situation where, as my noble friend Lady Lee has reminded us, a management is formed almost literally over-night. If they can find a theatre available, and proceed rapidly to gather a cast and go into rehearsal and so on, very often they will form a company for that single pro-
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duction; and it is equally so in the film industry. They are therefore not a static body of people of long standing.
My noble friend Lord Bernstein has given your Lordships some account of the number of productions in the last couple of years, both in the theatre and in the cinema, which were embarked upon by persons who were not members of the appropriate associations—the film producers' Association for the film industry, and the Society of West End Theatre Managers in London and the appropriate organisation in the Provinces. We have very carefully considered a suggestion which the Government might have in mind, that the employers' organisations should be asked to arrange some sort of temporary membership which would bring these people within the ambit of any agreement that might be reached for a closed shop in the industry. We look to this as a possible practical way out of this dilemma. We were assured, however, that the organisations concerned would be extremely reluctant to take into membership people about whom they did not know enough. They have their own standards. They usually insist on a fairly long term of probation before they will accept into full membership an organisation about whom they do not know sufficient as to their commercial standing, their probity and so on. One can understand this, and I do not think we should force them to take into membership people whom they feel are not perhaps fully appropriate to their organisation.
If one accepts that line of argument, then I think one has little alternative but to accept some of the proposals which we are now putting before the Government; otherwise, as I said on a previous occasion, all that the Government have done by way of concession—and we are aware that they have come quite a long distance—will be nugatory, in our view, in regard to quite a significant proportion of employment in the theatre and cinema industry. One is assuming that satisfactory agreements can be made with those who are what one might call permanent members of the Film Producers' Association or the Society of West End Theatre Managers, or any other comparable organisation; but from the very nature of the occupation they will never cover everyone in the industry. There will always be a significant fringe of what

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we call in the Amendment "ephemeral employers". We think this is inevitable in the nature of the industry, and unless proper arrangements can be made to deal with these on the employers' side, leaving out for the moment the ephemeral nature of employment for actors and others, we do not think the aim which we believe the Government share with ourselves can be achieved. It is for that reason, my Lords, that we are trying in every possible way to meet what we think to be the realities of the situation.
3.28 p.m.
LORD DRUMALBYN: My Lords, I certainly cannot complain if noble Lords opposite try to improve the provisions we already have in the Bill. What one has to be careful about, however, is that when such proposals are made we should be certain that they are necessary, so far as they mean restriction, and also that they would be effective if actually put into force. I am bound to tell your Lordships that I am not really satisfied that this Amendment meets either of those criteria. As the noble Lord, Lord Stow Hill, has said, the purpose and effect of the Amendment is to empower the Commission of Industrial Relations, where it concludes that an application for a closed shop ought to be approved, to decide that the proposed agreement should be extended not just to the parties to the application but to every employer in the industry or sector concerned. The C.I.R. would be entitled to reach such a decision if it thought that the conditions in paragraph 5(1) of Schedule 1 could not be met by the operation of a closed shop in the area covered by the application and could be met only if the closed shop were extended to a wider area of employment.
Your Lordships are certainly by now sufficiently familiar with the provisions of Clause 17 and Schedule 1, and also with the Government's policy, to be well aware that it is a basic principle of this part of the Bill that a closed shop may be approved only where, first of all, there is a joint application, and, secondly, the C.I.R. is satisfied that in the area covered by the application a closed shop is necessary for the purposes specified in paragraph 5(1), and where an agency shop agreement would not be an adequate alternative. In short, a closed shop may
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lawfully be operated only where the employer or employers concerned believe it to be desirable and concur in an application. The Amendment would of course be directly contrary to that principle, and we should find it difficult to accept the Amendment on that account alone.
I understand the misgivings which organisations such as Equity entertain about the possibility that a minority of non-conformist employers would not be prepared to consider a joint application with Equity for a closed shop. I understand the point about there being many employers characterised in the Amendment as ephemeral. Furthermore, I understand that such employers will be enabled by these provisions of the Bill to undermine the agreements and conditions established in the theatre and film industry by failing to keep to the Equity rules. That is what is said.
As your Lordships will know, the Government have discussed this problem on many occasions and at great length with representatives of Equity and other interested people in the entertainments field. The Government are not convinced that the imposition of a closed shop on unwilling employers is a necessary, or effective, means of maintaining reasonable conditions of employment or stable negotiating arrangements in the theatre, or indeed in other industries. As my noble friend Lord Balfour pointed out, this Amendment would not be confined to Equity alone. In the Government's judgment—and I accept that Equity does not entirely agree with that judgment—the maintenance of reasonable terms and conditions in the theatre is secured mainly, in the first place, by the loyalty and solidarity of the established players and managers; secondly, by the readiness of Equity members to refuse engagements from managers who offer sub-standard conditions, and thirdly, by the common interest of most reputable managers in offering a reasonably attractive career to those who enter the industry and in maintaining standards which will attract people of talent.
The Government believe that the closed shop provisions as they stand will help to buttress the interests which Equity and managements in the theatre, and in film and similar forms of entertainment, share

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in maintaining high standards in the profession. As I have made clear in previous debates, the Government cannot go further than repeat their undertaking that if, in due course, it becomes clear that standards in the theatre are jeopardised, we shall be ready to consider what special tailor-made scheme may be desirable to meet the special problems. I should have thought that this was a better approach than to try to tailor-make proposals for a particular industry and then extend them to all who fit that particular pattern. I should add that, quite aside from the basic difficulty of principle in accepting this Amendment, it would be very difficult to justify giving the C.I.R. this wide discretion without also requiring the C.I.R. first to examine the employment position throughout the industry, the sector or profession to which its decision would apply.
The reference application will define the limits of the area which the C.I.R. will be required to investigate. How can it then satisfy itself that an extension of the closed shop outside that area will be needed to meet the conditions in paragraph 5? It can be satisfied that a closed shop within the reference area is needed, but no more. This is not simply a technical or debating point. It goes to the heart of the limitations of the C.I.R.'s discretion to investigate only what is referred to it—a limitation with which I gathered, from the debate on the original Clause 117 (now Clause 121), the Opposition agreed. If we want to examine an industry, not just a part of it, then that is what must be referred to it.
I am not at all sure that noble Lords opposite have fully understood how far the provisions in the Bill will go already to meet their case. If Equity registers under the Bill and the Registrar approves its rules, and if the rules include a provision that anyone who accepts employment at less than the agreed rates is liable to forfeit his membership of Equity, I cannot see that it is at all likely that the Registrar will subsequently decide that Equity was not entitled to discipline its members. The collective resistance of Equity membership to accepting rates lower than those agreed does not depend on a pre-entry closed shop. It depends first on the will of the membership to protect their livelihood and the desire of employers to uphold the
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standards of the profession. It depends also on the unwillingness of Equity to accept into membership a person who by his previous conduct has shown that he is not willing to abide by the rules to accept engagements at rates agreed between Equity and theatre managers.
If noble Lords will look carefully at Clause 17, they will see that it is not an unfair industrial practice for an employer to refuse to engage a worker who has been excluded from being such a member. Clause 18 explains what that means. It follows that where a member of Equity takes employment below the rates, and if, because that is in breach of the rules, he is disciplined and excluded, it will not be an unfair industrial practice for Equity to refuse to allow him to be admitted to its membership when he again applies for employment. I should have thought that very few members of Equity, whatever the pressures within the profession, would be tempted to accept employment at less than the rates when they know that in so doing they would be jeopardising their whole career. I should have thought this was a very strong deterrent indeed.
I can only reiterate what my right honourable friend said in writing to Mr. Hugh Jenkins:
"I do not believe that the Bill will create insurmountable problems for the industry and, given the concessions we have made on the closed shop, I believe that with minor modifications existing agreements in the industry can continue to work effectively."
I would only say to the noble Lord, Lord Bernstein, that this is not an assumption; this is something that has been very carefully examined from both the legal and the practical points of view, and it is our considered opinion. Therefore, I regret that the Government are not in a position to recommend my noble friends to accept this Amendment.
3.38 p.m.
LORD GARDINER: My Lords, I am sure it is not only on this side of the House that noble Lords will have heard with deep disappointment what the noble Lord, Lord Drumalbyn, has said. We appreciate of course that he has his brief. What we really are engaged on on the Report stage of this Bill, I suspect, is trying to advance such arguments as will convince Mr. Carr that an exception for Equity ought to be made somehow in the Bill before its Third Reading.

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It is therefore not my intention to be at all contentious, but I should like to ask Mr. Carr how far we can agree, and see what the real point of divergence is.
Can we agree, first, that the reputation of the English theatre is at least as high as that of any other theatre in the world? Are there not always more plays by English playwrights, with English actors, on Broadway than there are American productions here? Is not one of the first things which nearly all visitors, particularly perhaps American visitors, want to see the English theatre? If we can agree about that, can we agree (and I have in mind, in particular, what the noble Earl, Lord Balfour, said) that this is an industry with not only an ephemeral aspect but casual labour and an extraordinarily high degree of permanent unemployment? Is there any other industry in which the average number of weeks worked in a year is 17 for men and 14 for women, as in the theatre; and an average of 9 days in films or television for men and 11 for women, and in which the average annual remuneration is of the order of £800 a year for men and £450 a year for women? As my noble friend Lady White said, this is really unique; it is sui generis and I should have thought it ought to be the aim of an enlightened Administration to provide an exception for an exceptional case.
If Mr. Carr agrees with that, then the next question I should like to ask him is, what does he say is the cause of this situation in this very unusual industry? If I may suggest the answer, I think it was that on which the noble Lord, Lord Conesford, put his finger when he said that this is not an industry at all, it is a profession and an art. Of course the stage has never called itself an industry; for some reason the film industry has. I think perhaps that is for two reasons: in the first place, it has for many years been the case—particularly since America has stopped making films here—that a very powerful position has been occupied by two groups which own so many large cinemas and have their own studies, so that in many cases one goes to them with one's film script and proposed cast, with the names of the producer and director, partly because frequently they put up either the whole or some of the money and partly
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because it is no good making a film if it is not going to be shown. The finance of the stage, on the other hand, is quite different. There are theatrical managements of long-standing, and also the money is provided by those people who, rather delightfully, are called "angels", and who, because of their love of the theatre, put up money for a particular production.
In the second place, it is perhaps because when a film has been made one has something in a tin box which one can sell. But when Lord Olivier and a large cast are playing Henry V, whether it be in a theatre or on film, what they are doing is acting, and that is a form of art. Is it not true of all the Arts that there is this very high permanent rate of unemployment, for the simple reason that there are always people who feel that this is the only thing they want to do in life and there are more of them than there is demand? All of us know that the painter says that if he starves in a garret, he must paint; certainly he will take a job as a waiter when he has to earn some money, but the only thing in which he is interested is painting. What proportion of those engaged in any of the Arts really make the sort of living which any worker in a motor car factory would look at for a moment? I do not know even whether the figures I have given for their average remuneration are anything outstanding in the sphere of Art. If one is unable to get into the Academy there is the wall on Hampstead Hill and there are the park railings; but there are always more books written than are published, and how many of the books published would produce the standard of living on which a motor car worker expects to live?
Here I should like to make two points: first, what is it in particular about which Equity is so frightened? The answer of course is Mr. Brimelow, because Mr. Brimelow has always been there. If I may remind your Lordships of the facts, Mr. Brimelow the plaintiff against Mr. Casson (as he then was), was the manager of a touring theatrical company. The facts I take from the report in 1924 (1) Chancery Division at page 302, as follows:
"From Christmas, 1922, until March, 1923, he ran a touring pantomime, which ended at Maidenhead. His company was then reconstituted on a co-operative basis, under which profits were to be equally divided, the chorus

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girls receiving a minimum salary of £1 a week. Under this regimé the plaintiff ceased to be the employer of members of the company. It came to an end on June 23, 1923. The plaintiff then began to run the company, and still ran it, as an employer, but on a percentage basis, with minimum guarantees. In the case of chorus girls, their contracts provided for a weekly wage of 3 per cent. of the net takings, with a guaranteed minimum of £1 10s. weekly, for one week's rehearsal without pay, and for `no play, no pay '. The contracts were for no fixed duration; they ran from week to week. No tour was booked for any fixed period or for any appreciable time ahead. The plaintiff admitted that under the new arrangement the chorus girls never got beyond their guarantee—that is to say, they never received more than their 30s. a week… Before the contracts were signed the plaintiff was asked by Kennedy's agent how he stood with the association, and replied: 'Quite all right. I have never been approached by any of the association ever since I have been on the road '. This statement was false, and the plaintiff knew it to be so."
The learned judge went on to say:
"For some considerable time past the Actors' Association (which included all the leading actors and actresses among its members) had been struggling to secure a living wage for chorus girls. Experience had shown in the past that in a very large number of cases the absence of a living wage drove such girls to prostitution. The minimum wage stipulated for by the Actors' Association, and embodied in what was known as the Valentine Contract, was in the case of chorus girls £2 10s. a week. Another feature obnoxious to the Actors' Association was the sharing system or commonwealth company, not because it was bad per se, but because experience had shown that in most cases most of the money went to the manager and the others were paid too little or not at all. It was a system obviously capable of abuse, and one in which failure would hit hardest those least able to afford it. The Actors' Association had for some time past occupied itself in dealing with the question of 'the bogus manager '—that is, a manager who recurrently failed to meet his obligations to his company or who paid them so little that they could not afford to live decently."
The learned judge found that some of the girls in this particular company had been driven to a life of immorality in that way.
The two things to note about this case are, first, that although it sounds like something from the middle of the last century, this was happening when I was taking my Bar examinations in 1924 and the embryo organisation for which Mr. Casson was acting was the Association of Touring Managers. That is perhaps an example showing that from the very first all the good managers and employees have always acted together—the Associa-
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tion of Touring Managers, the Variety Artists' Federation, the Actors' Association, the Musicians' Union and the National Association of Theatrical Employees. Another seven years elapsed before Equity was constituted. Here I should like to pay tribute to Mr. Carr's predecessor, who did so much to help Equity to arrive at the constitution it now has—I refer to Mr. Oliver Stanley, who was Minister of Labour in 1934 and 1935.
There is no employer/employee relationship in this country which is more happy than that in the theatre and films. Equity has at least obtained minimum standards of pay and minimum conditions; there are no strikes; Equity not only does not induce anybody to break a contract but it is adamant that any artist who makes a contract must carry out his contract, and there is no victimisation. Would it not be ironical if the result of a Bill intended to improve industrial relations were to break up this organisation?
LORD DRUMALBYN: My Lords, may I ask the noble and learned Lord this question? The noble Lord, Lord Bernstein, mentioned that about one-third of those who put on plays in the West End were not members of any employers' organisation. Is it suggested that they were employing labour at less than the agreed rates? If they are not employing labour at less than the agreed rates now, when they are not members of Equity, on what grounds is it suggested that there will be a tendency to employ labour at less than the agreed rates when this Bill comes into operation?
LORD GARDINER: My Lords, I do not think so. I understood my noble friend, so far as the theatre was concerned to refer to the West End Managers' Association, but there is also the Theatre Managers' Association; there are several reputable organisations, and we do not in fact get our Brimelows under existing conditions. The problem is: what would happen if the Bill were passed in its present form? It is always better perhaps to take a case one knows about, and I take a particular case to ascertain the noble Lord's view about it. I happen at the moment to be an "angel" to a limited extent in relation to a play which was sent to me. I read it and I thought it a good story and very funny. By the

669
time a sufficient number of other "angels" had been found the cast had been assembled and one of the well-known "try-out" theatres outside London had been obtained for two to three weeks. These things always have to be done very quickly, and so as to coincide. The show has been playing two or three weeks. Although tempted to do so, I will not mention the name of the play, because I do not think your Lordships' House should be used for commercials; but I can say that it has broken all records at the theatre; but there was no London theatre available. This is a situation which is quite well known in the theatre and is the rock on which many productions have foundered. The particular company that is putting on the play is a well-known management company, but it might have been a company formed especially for the purpose of this play, as happens in many cases—and still more so with films. Many companies are formed to put on one film.
That was the situation only three days ago, when the producer, who has his ear very close to the ground, heard a whisper of a rumour that some play might be coming off—quite unexpectedly I think, because this is the time of year, when all the tourists are in London, when the plays that are on probably continue to run better than at any other time of the year. He got on the telephone and found that the rumour was right. He was the first arrival, so to speak; he was offered the theatre and said "snap", and the play will be starting in the West End in ten days' time.
Supposing, at this point, that this Bill becomes law, what happens? The noble Lord will correct me if I am wrong. As I understand it, the Government are saying that even if it is a new company, the position is perfectly simple. The Government have specially put in Clause 17 and Schedule 1. It is quite easy, the company and the artistes have only to go together to their solicitors, who will instruct counsel to produce a case for the consideration of the National Industrial Relations Court—to give it its full title. When they have done that, the Court assembles. The members, as I understand it, are all part-time on that work, so it may be a matter of difficulty to assemble the Court; it is probably not worth doing for one short applica-
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tion. But when the Court has been assembled there will be the High Court Judge, the representative of the Confederation of British Industry, and Mr. Scanlon—or, I rather think, from what I have heard, probably not Mr. Scanlon—possibly a rather one-sided Court.
If the Court says there is a prima facie case the Commission must go into it. The parties go to the Commission, to satisfy it. They go into the detail, and then the Commission makes a report back to the National Industrial Relations Court, which says, "Yes, this is all right; counsel says he is instructed that all employees are agreed, but we must be certain; we will ask the Commission to take a ballot among all the eight members of the cast who are the company's employees and see whether there is a two-thirds majority ". I hope the noble Lord, Lord Conesford, is not going to be difficult at this point and ask me what is two-thirds of eight. Six would be three-quarters. If five and a half vote one way, that is reported back to the Industrial Relations Court.
I am bound to point out two things to the noble Lord, Lord Drumalbyn. While I am as passionately concerned as other people that everybody should spend as much money as possible on lawyers, we have only enough money to put on the play. And long before this all the cast will have gone; and also the theatre. Either you can get a theatre or you cannot. The effect of saying, "We quite agree with the peculiarities of this industry, and we quite appreciate that all the reputable managements and Equity are all agreed to the closed shop, but we cannot possibly make this binding in any way on some new company which is formed unless we go through this enormously elaborate procedure", will simply be to make the whole thing quite impossible. This is only one of three Amendments by which we are trying to put forward some sensible scheme for obviating this difficulty in this form of art. I have not put down an Amendment. My Amendments, as I know from experience, are always too clear, too precise and too short. If I put it down it would be at Clause 164(5): "This Act does not apply to Equity". Perhaps Mr. Carr would kindly consider whether that is not all we need.

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I must tell the noble Lord, Lord Drumalbyn, and, through him, Mr. Carr. that Equity has, I know, given the most careful attention to the two offers made by the Government. The first is that entry to Equity should be limited by some form of examination or certificate. Let me get this right. The noble Lord, Lord Drumalbyn, during the proceedings of May 11, at col. 994 of the OFFICIAL REPORT, said:
"I must acknowledge straight away that what has been said about Equity is absolutely true. It does a very fine job. I know out of my own personal experience that what the noble Lord, Lord Strabolgi, for example, said about maintaining standards of performance and vetting dubious contracts is right… I accept the need in the entertainment world to regulate entry to protect established workers and to safeguard reasonable standards and conditions of employment for those already in the industry… The Bill will not prevent unions from making agreements with employers about qualifications, skill, experience or the like, for employment in particular occupations…"
And on June 29, at col. 308, he said this:
"There is no doubt that the entertainment industry is an industry where employment is casual and intermittent, and where there is high unemployment. It is also very probable that the C.I.R. would find the criteria satisfied in respect of this industry… What it"—
the Bill—
"does not do is to prohibit an agreement to regulate entry into an occupation by laying down the necessary qualifications, training, skill or experience required of a person wishing to enter that occupation. It is not enough simply to say that there are no qualifications laid down for entry into the entertainment industry; it surely must be possible to devise qualifications so as to enable engagement to take place on that basis. It must be possible in some way to assess the skill, the potentialities, the talent of people entering the industry."
I want to assure the Government that I know that Equity has given the most careful consideration to this matter, but they find it to be quite impossible. The real reason, again, is simply that this is an art. One cannot imagine a situation where nobody would be allowed to paint a picture unless he obtained a certificate from an art school, or where nobody would be able to accept a commission to compose some music unless he had obtained a certificate from the Royal School of Music. Or may I speak of a line of country with which the noble and learned Lord, the Lord Chancellor, and I are rather more familiar? In order
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to be a successful barrister you must know the law and have some aptitude for advocacy. For the first we have an examination, because it is very proper, but we have always found it impossible to have an examination in advocacy. Every barrister knows men who have taken a First in jurisprudence at Oxford or Cambridge and a First in their Bar examinations, with Certificate of Honour of the year, but who have failed miserably at the Bar because they have no aptitude for advocacy at all. On the other hand, there are those who only scrape through their Bar examinations but become outstanding advocates. I very much doubt whether Sir Edward Marshall Hall or Sir Patrick Hastings did particularly well in their Bar examinations. I had the privilege and instruction of sitting in many cases behind Sir Patrick Hastings and at the first conference in any new case the first question always was, "There is no law in this, is there?". I hope it is not thought to be any demerit to him if I say that he was manifestly less happy in arguing a point of law before the Court of Appeal than he was in cross-examining witnesses or addressing juries on facts.
THE LORD CHANCELLOR (LORD HAILSHAM OF ST. MARYLEBONE): My Lords, the noble and learned Lord would do well to remember the statement of his predecessor and mine, Lord Erskine, that a man cannot become a good advocate unless he is also something of a lawyer. "The thing", he added "is impossible".
LORD GARDINER: My Lords, I quite accept that these things are matters of degree, but, as the noble and learned Lord knows, when you have passed your Bar examination with flying colours and have been called to the Bar, you still may not hold a brief until you have been apprenticed for some period to a barrister in Chambers, because of the difficulty of advocacy. There you will read all his papers, you will memorise all the facts of the case, you will consider how you would conduct the case if you were going to do it and then you go with him to the court and see how he conducts it. That is the only way in which you can learn. So I am afraid that is not really a practicable suggestion at all.
The other suggestion which the Government have made is the resurrection legislation proposal. I must get that right also.

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What the noble Lord, Lord Drumalbyn, said on June 29, at col. 310 of the OFFICIAL REPORT, was
"I would say, once again, that the Secretary of State has said that he will watch the position extremely carefully, and if a certain industry requires particular and special treatment, then he will consider whether that should be dealt with by legislation."
I know that Mr. Carr considered that this offer was a very important one to have made. In a letter of May 11, written to Mr. Hugh Jenkins, the honourable Member for Putney, who was at one time an official of Equity, he says:
"I acknowledge that we may be wrong in our assessment of the effects which the new legislation may have upon the acting profession. We have genuinely attempted to amend the Bill to meet your problems; and, as I have said, I believe we have provided a reasonable basis for the development of industrial relations both in the theatre and in other sectors where there are similar problems. If, in the course of time, it becomes clear that the Government has under-estimated the ill effects which the Bill's provisions may have upon industrial relations and conditions of employment in the theatre, we shall certainly be prepared to consider whether any further special, and possibly statutory, arrangements may be necessary in order to deal with the problems of the industry more effectively than is possible under the terms of the present legislation."
Equity naturally considered that and are perhaps hardly to be blamed for preferring to continue to live rather than being told, "When the Act kills you, we will think about legislation to resurrect you". But Mr. Carr was disappointed because, in a further letter written on June 24, he says:
"I confess I am a little disappointed with your response to the undertaking, which I gave in the final paragraph of my letter of 11 May, that the Government would be prepared to reconsider the position if, in the light of experience, there were undue adverse effects for the entertainment industry arising from the provisions of the Bill. That was not an undertaking lightly given."
Of course I fully accept the bona fides of anything which comes either from the
noble Lord, Lord Drumalbyn, or from Mr. Carr, but really this proposal, that if the Bill kills Equity consideration will then be given to introducing legislation to resurrect it, has caused me to work very hard to accept the bona fides of it. I think it must be due to the fact that Mr. Carr has not had a word with Mr. John Davies, who could tell him all about the Blagden Committee on Bankruptcy Law and how no legislative time has been found for that for 14 years and is not likely to be found in the next five years. It looks as though next year we shall have all the Common Market legislation, and the inevitable pressure during the Session after that will be enormous—if the Government are still here. Really, it is quite impracticable to expect Equity to accept this.
So I should like finally to ask Mr. Carr to consider again a question I raised a long time ago on this Bill, when I said that if the will was there to save Equity, why did not the Government, before the Report stage of the Bill, say to the draftsman, "The Government have decided to save Equity. You consider the best way to do it and draft a clause". Then we could have had that clause for the Report stage of the Bill. I must of course believe, if Mr. Carr says so because it is implied in the offer he has made—that he believes that if the Bill kills Equity it will be possible, by some form of drafting, to resurrect it. Why therefore can he not now instruct the draftsman to draft the clause which in that event he would have to do? If only he would draft it now, in readiness for the Third Reading, it would not be necessary for this Bill to kill Equity and for it then to be resurrected. It could continue to live.
4.6 p.m.
On Question, Whether the said Amendment (No. 41A) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 87.

CONTENTS

Airedale, L.

Buckinghamshire, E.

Douglass of Cleveland, L.

Amulree, L.

Burntwood, L.

Gaitskell, Bs.

Archibald, L.

Burton of Coventry, Bs.

Gardiner, L.

Bacon, Bs.

Byers, L.

Garnsworthy, L. [Teller.]

Beaumont of Whitley, L.

Caradon, L.

Greenwood of Rossendale, L.

Bernstein, L.

Champion, L.

Headfort, M.

Beswick, L.

Chester, L. Bp.

Henderson, L.

Birk, Bs.

Crook, L.

Henley, L.

Brockway, L.

Delacourt-Smith, L.

Hilton of Upton, L.

Brown, L.

Diamond, L.

Hoy, L.

Janner, L.

Popplewell, L.

Sorensen, L.

Kennet, L.

Rusholme, L.

Stocks, Bs.

Leatherland, L.

Sainsbury, L.

Stonham, L.

Lee of Asheridge, Bs.

St. Davids, V.

Stow Hill, L.

Lindgren, L.

Samuel, V.

Sttabolgi, L. [Teller]

Llewelyn-Davics of Hastoe, Bs.

Segal, L.

Summerskill, Bs.

McLeavy, L.

Shackleton, L.

Taylor of Mansfield, L.

Morris of Grasmere, L.

Shepherd, L.

White, Bs.

Moyle, L.

Shinwell, L.

Wootton of Abinger. Bs.

Platt, L.

Silkin, L.

Wynne-Jones, L.

Plummer, Bs.

Slater, L.

NOT-CONTENTS

Aberdare, L.

Fraser of Lonsdale, L.

Mowbray and Stourton. L.[Teller.]

Ailwyn, L.

Goschen, V.[Teller.]

Allerton, L.

Grenfell, L.

Napier and Ettrick, L.

Amory, V.

Grimston of Westbury, L.

Northchurch, Bs.

Balfour, E.

Hacking, L.

Nugent of Guildford, L.

Belhaven and Stenton L.

Hailes, L.

Oakshott, L.

Berkeley, Bs.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

O'Neill of the Maine, L.

Bessborough, E.

Orr-Ewing, L.

Bridgeman, V.

Hankey, L.

Poltimore, L.

Brooke of Cumnor, L.

Harris, L.

Rankeillour, L.

Brooke of Ystradfellte, Bs.

Hatherton, L.

Rathcavan, L.

Buccleuch and Queensberry, D.

Hylton-Foster, Bs.

Reigate, L.

Caccia, L.

Ilford, L

Robbins, L.

Carrington, L.

Kemsley, V.

St. Aldwyn, E.

Clwyd, L.

Killearn, L

St. Helens, L.

Coleraine, L.

Kilmany, L.

Sinclair of Cleeve, L.

Colgrain, L.

Kilmarnock, L

Skelmersdale, L.

Cork and Orrery, E.

Somers, L.

Cottesloe, L.

Latymer, L.

Stonehaven, V.

Craigavon, V.

Lothian, M.

Strange of Knokin, Bs.

Crathorne, L.

Loudoun, C.

Teviot, L.

Daventry, V.

Lovat, L.

Teynham, L.

Denham, L.

Lucas of Chilworth, L.

Thomas, L.

Drumalbyn, L,

MacAndrew, L.

Tweedsmuir, L.

Dundee, E.

Macpherson of Drumochter, L.

Tweedsmuir of Belhclvie, Bs.

Eccles, V.

Mancroft, L.

Vivian, L.

Elliot of Harwood, Bs.

Merrivale, L.

Wakefield of Kendal, L.

Emmet of Amberley, Bs.

Milverton, L.

Willingdon, M.

Exeter, M.

Monck, V.

Windlesham, L.

Ferrers, E.

Morrison, L.

Wrottesley, L.

On Question, Amendment agreed to.

4.13 p.m.
BARONESS WHITE BARONESS WHITE moved Amendment No. 41B:
Page 133, line 27, at end insert—
"27.—(1) Where proposals have been made by one or more trade unions to one or more employers or to an organisation of employers for an agreement which, if made in accordance with proposals approved by the Industrial Court under this Schedule, would be an approved closed shop agreement and the employer or employers or organisation of employers has refused or failed to enter into such an agreement, then, if it appears to the Secretary of State that it is necessary for the purposes set out in paragraph 5(1) of this Schedule for the workers of the description or descriptions the subject matter of the said proposals to be comprised in a closed shop agreement, the Secretary of State shall refer such proposals, accompanied by a draft of the proposed agreement, to the Industrial Court. The Industrial Court and the Commission shall deal with such draft agreement as though it were
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a draft agreement the subject of a joint application under paragraph 1 of this Schedule.
(2) Where the Industrial Court makes an order in respect of such proposals in accordance with paragraph 8 or paragraph 14 of this Schedule, then the said proposals embodied in the draft agreement shall be binding upon the employer or employers or organisation of employers (as the case may be) in every respect as though such draft agreement had been made between the trade union or trade unions concerned and the employer or employers or organisation of employers concerned and as if it were a closed shop agreement within the meaning of section 17 of this Act."
The noble Baroness said: My Lords, I beg to move the Amendment in the name of my noble friends and myself. We have had such a thorough debate on the previous Amendment that I would not presume to take too much of your Lordships' time on this one, except that of course the previous Amendment was not agreed to. Had it been agreed, I should not have had to trouble your

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Lordships further, nor would we be moving the next Amendment but one, Amendment No. 41D. In the circumstances, as what we consider to be a sensible way of dealing with the situation has not been found agreeable by the Government, we have no option but to pursue our course.
The proposal that we have included in this Amendment is to deal with the situation which would be found, as we have already described, in this industry. My noble and learned friend Lord Gardiner described it with such brilliance that I felt that at the last moment the Minister might have got up and announced his conversion. I have never heard more persuasive advocacy—though it was interesting to feel, as my noble and learned friend was speaking, that perhaps only lawyers can now afford to finance theatrical ventures. The Amendment with which we are here concerned is to deal with this kind of industry only. It would have to be an industry in which an approved closed shop agreement would be applicable. I must admit that in this Amendment we have not defined the conditions in the industry as closely as in other Amendments; that is, by description of the nature of the employment, the high degree of unemployment, the casual and intermittent nature of the employment and so on. If that were the only objection to this particular Amendment, that could be quite easily remedied.
We are suggesting that if the union is of the view that only the closed shop procedure would be suitable and efficacious in the conditions in which they find themselves, and the employers are not prepared to enter into the agreement—or not all the employers, because this is the difficulty; there may well be some employers who will not, and we are trying to deal with the employers we discussed on the last Amendment—in those circumstances we feel that one must go to the highest source of appeal; namely, to the Secretary of State himself. In most of this Bill the Secretary of State has committed various functions to other bodies but does not intervene directly, and we are only suggestingt that he should do so in this particular Amendment because no other way seems open to us.
If we are unable to persuade the Government to move in the direction which we suggest, then almost as a last resort we are suggesting here that the union should have a right of access direct to the Secretary of State; and if he was satisfied that the union had made out a prima facie case that it was necessary, for all the purposes set out in Schedule 1, that there should be a closed shop agreement, that he should then refer the union's proposals (including such draft agreement as they might have prepared), to the Industrial Court. The Industrial Court and the Commission would then deal with the matter as though it had been the subject of a joint application by both the union and the employer, or the organisation of employers, as the case may be. Otherwise, in the circumstances we have already described, we fail to see how the closed shop provisions, which we are all agreed are necessary in this particular profession, can be brought about throughout the industry. We assume that they will be available in parts of the industry, but there can be sectors of the industry where the employers may not be co-operative, or where they may have so much else on their mind in the circumstances which prevail in trying to launch a production that they may feel that they really cannot be bothered to go through all the hoops which are set out in this Schedule.
I do not pretend that we would regard this as the ideal way of dealing with the situation, but we nevertheless feel that we must put it to the Government because, as I say, they have turned down other proposals we have made, including what we thought were the very reasonable ones in the Amendment we discussed immediately before this one. Therefore, we feel that the union should not be put in a position where, in certain sectors of the industry, an unco-operative or negligent employer is, in effect, given an unchallengeable veto in circumstances where I think we should all agree that the closed shop procedure is the proper course of action. In some other industries the time factor is not so important.
In other parts of the Bill, it is made quite clear that it would be an improper practice to put pressure on an employer but, in the nature of things, time is short. So we believe that in these circumstances an employer should not be given an

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absolute right of veto; that the union or unions should have the right of appeal to the Secretary of State, and should be able to say, "These are the conditions which we believe fully meet the very stringent proposals in Schedule 1. We simply ask you to look at them and say whether we have made out a prima facie case, and then refer it to the Industrial Court and the Commission and allow the normal procedure and examination to take place." My Lords, I beg to move.
LORD DRUMALBYN: My Lords, the Amendment which the noble Baroness has moved would have very much the same effect as Amendment No. 31A, which we discussed last Thursday. That Amendment would have dispensed with the requirement in paragraph 1 of the Schedule, that a closed shop can only be approved by the Industrial Court if both the employers' side and the union side want it. The effect of the Amendment would be to allow the proposals of one side or the other to be submitted for the Court's approval without any agreement between them. I was not quite certain whether the noble Baroness was suggesting that this Amendment, like the one with which we have just dealt, would also have extended to the whole industry, although I do not think that is the case. I thought she made a fleeting reference to it, but did not refer to it again.
This Amendment goes further than Amendment No. 31A. As the noble Baroness said, it introduces the Secretary of State into the arrangements. Where proposals from the union side, but not from the employers' side, are not accepted, the Amendment requires the Secretary of State to do what the Commission has to do; namely, to consider whether the criteria in paragraph 5(1) are met, and if, but only if, he thinks they are to pass on the unilateral proposals for processing under Schedule 1 as if they had been agreed between the parties. I need not go over again the argument that there ought to be agreement between the parties before a closed shop can be approved. We discussed that on Amendment No. 31A. I shall confine myself to the new point which the noble Lord, Lord Stow Hill, wants to discuss separately; namely, the bringing in of the Secretary of State.
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One effect of the Amendment would be that both the Secretary of State and the Commission might have to consider, one after the other, whether the criteria in paragraph 5(1) were met. As the C.I.R. is an independent body, it might well be that it would decide that they were not met, even if the Secretary of State thought that they were. In any case, the right body to examine this is the C.I.R., and the Secretary of State might wish to ask the C.I.R. to advise him on whether the criteria were met. If so, when the Court referred a matter to the C.I.R. all that would be left for it to do would be, first, to consider whether the purposes referred to in paragraph 5(1) would not equally well be met by an agency shop agreement, and then, later, if the Court had approved the agreement, to hold a ballot if one was demanded within the period allowed by paragraph 7(2).
Apart from the question of principle that there should be an agreed and not a unilateral application, we think there are serious objections to involving the Secretary of State in a matter of rights of this kind. He would undoubtedly be subject to political pressures. Imagine also, my Lords, the political pressure on the C.I.R. if the Secretary of State had to submit proposals to the Court without consulting it. We do not think there can, or should, be any substitute for agreement between the parties in the very exceptional circumstances of an application for an approved closed shop. Nor do we think there is much likelihood that the employers' side would refuse to agree to appropriate proposals where the circumstances were such that an approved closed shop appeared to be needed. As I pointed out last Thursday, in most cases where there has been pressure for a closed shop it has, so far as I know, come from both sides and I should have thought, in the kind of case which the noble Baroness and the noble Lord, Lord Stow Hill, have in mind, that there would not be any necessity for a provision of this kind. For the reasons I have given, we think that the Amendment is undesirable and we ask noble Lords to reject it.
BARONESS WHITE: My Lords, I do not wish to detain your Lordships for any length of time, because I fully understand that one does not wish to

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bring in the Secretary of State if one can help it. I can only repeat that we are proposing this procedure simply because we have found it impossible to bring the Government to a point where they will understand the realities of the entertainment industry. This is what the whole argument is about. If the Government had any real conception of how the industry works, then we should not have all these arguments. It is for that reason that we have to put forward one suggestion after another.
The noble Lord said that the situation we envisage would not arise, but of course it could arise. We have already said, almost ad nauseam, that there are employers in this industry who, because of the conditions of employment and the ephemeral nature of an organisation, are under less compulsion and may fail to enter into these agreements. Furthermore, there is the sheer practical difficulty of going through all the steps which were so graphically described by my noble and learned friend Lord Gardiner, which in many cases makes nonsense of the procedure. The whole closed shop procedure is going to be extraordinarily difficult to get through if on each occasion there has to be agreement by the employer and one has to try to persuade a possibly recalcitrant employer who has so much else on his mind, especially if he is trying to set up a pantomime or a summer show, that he may feel he cannot devote his time or money to going into all this procedure. The noble Lord referred again to the agency shop as a possible alternative, but I thought we had all agreed that the agency shop was not a practical alternative in the entertainment industry.
LORD DRUMALBYN: My Lords, I merely pointed out that the Schedule requires that the C.I.R. should consider whether the agency shop would be a possible alternative. Since the noble Baroness has been kind enough to give way, may I ask whether she appreciates that, according to her Amendment, where proposals have been made to one or more employers or to an organisation of employers, and those employers have refused or failed to enter into such an agreement, the proposals can become an agreement in respect of those employers only and not in respect of the whole industry?
BARONESS WHITE: My Lords, I do not know whether we are considering the whole industry in this Amendment. We do not think that the situation would be in the least likely to arise. But, as the Amendment states, there might well be an employer or a group of employers who refused or failed to enter into an agreement. There may be somebody who did not want to be bothered, or somebody who had carefully considered the matter and, on balance, decided that he did not want it. There are all kinds of situations. But having agreed that the entertainment industry is an exceptional industry, we are proposing an exceptional course—namely, to bring in the Secretary of State—which otherwise we should never have thought of doing. I do not think I should detain your Lordships longer, because we are coming to a very long Amendment which I hope my noble friend Lord Stow Hill will move, and I think I should leave this Amendment at that.
THE LORD CHANCELLOR: My Lords, I was not quite sure from the noble Baroness's last words whether she wants me to put the Question, or whether she is seeking leave to withdraw.
BARONESS WHITE: My Lords, I do not think that I wish to withdraw. It may be negatived, but I think one ought to let it stand, because we really are trying our utmost to get some recognition of this point.
On Question, Amendment negatived.
Clause 18 [Supplementary provisions as to approved closed shop agreements]:
4.30 p.m.
LORD GRAY LORD GRAY moved Amendment No. 41C:
Page 16, line 17, leave out (" a worker subsequently engaged ") and insert (" any other person ").
The noble Lord said: My Lords, we are here concerned with supplementary provisions relating to approved closed shop agreements. The Amendment, however, is addressed to a point of clarification only, and I do not think I need detain the House for long, but provide, perhaps, a brief intermission before, as the Marshalled List suggests, the curtain rises once again on the Equity story. In any case this Amendment is a companion to one

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which I moved and which the House accepted when, last week, we discussed the agency shop proposals. Furthermore, and likewise, it is the fruit of discussion with the Government since our Committee stage, and I have received official help with the drafting.
Clause 18 provides that a person shall be held to have refused to join a union with which an approved closed shop agreement has been made if he does not apply for membership of that union before the expiry of the relevant period. Subsection (4) of the clause defines that relevant period for different categories of persons. In paragraph (a), it allows three months to those workers who are affected by the agreement on the day on which it comes into force; in paragraph (b), which my Amendment seeks to alter, it allows one month to a worker subsequently engaged. I am asking the House to substitute in subsection (4)(b) the words "any other person" for the words "a worker subsequently engaged", and thereby to remove any doubt about the position of a person who becomes subject to an existing agreement by any process other than engagement, which itself will still be covered by the new wording. I hope the House will agree to this extension of subsection (4)(b) of Clause 18, and I beg to move.
LORD DELACOURT-SMITH: My Lords, may a ask the noble Lord, before he rises to reply on behalf of the Government, whether he could explain what categories of people there can be who will be embraced by the Amendment but who would be excluded by the original wording of the clause?
LORD DRUMBALBYN: I did not quite catch the noble Lord's point.
LORD DELACOURT-SMITH: I am asking what categories of people, if any, there could be who would be embraced by the wording of the Amendment and who would not have been embraced by the original wording of the clause.
LORD GRAY: Perhaps I am too early to exercise my right of reply, but if the House will give me leave to speak again perhaps I could answer the noble Lord. It is quite possible that any one company could have more than one works; it could have a series of works or offices, not even
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necessarily in the same neighbourhood. A person transferred within that employer's employ from any part of the organisation where he was not subject to an agreement to a section where he would be subject to an agreement would be caught. Equally, the other day I mentioned persons who were undergoing full-time training prior to their first job, or who were about to undergo a period of retraining prior to appointment to a post which was subject to such an agreement.
LORD DRUMALBYN: My Lords, I hope the noble Lord, Lord Delacourt-Smith, is as grateful as I am to my noble friend for having explained the purpose of his Amendment so clearly. The Government are very happy to accept this Amendment, as they did the corresponding Amendment moved earlier.
4.36 p.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 41D.
After Clause 18 insert the following new clause:
Provision for closed shop in certain trades or industries where unemployment endemic.
".—(1) Notwithstanding any provision in this Act if it appears to the Commission—

(a) that among workers of one or more descriptions in any trade or industry or section of a trade or industry there exists a high level of unemployment; and

(b) that such unemployment is endemic and is especially associated with work of that description or those descriptions in that trade or industry or section of that trade or industry; and

(c) that the employment is of a casual or intermittent nature; and

(d)that the employment is normally of short duration;

then the Commission may designate that trade or industry or that section of that trade or industry as the case may be for the purposes of the following provisions of this section which upon such designation shall have application thereto.
(2) If in such trade or industry or section of a trade or industry a trade union or trade unions or organisation or organisations of workers shall have enrolled into their membership a substantial majority of those working in the trade or industry or section of the trade or industry such trade union or trade unions or organisation or organisations of workers may declare that its or their members as the case may be employed in such employment will work only with other members of the trade union or trade unions or organisation or organisations of workers, and may further declare that only existing members of the

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trade union or trade unions or organisation or organisations of workers shall be employed in that trade or industry or section thereof.
(3) If such a declaration is made by any such trade union or trade unions or organisation or organisations of workers, it shall be an unfair industrial practice in respect of which a complaint may be presented to the Industrial Court under the provisions of section 101 of this Act for an employer to engage employees in that employment in that trade or industry or section of trade or industry other than employees who are members of such trade union or trade unions or organisation or organisations of workers contrary to the terms of such declaration, otherwise than with the express consent of the trade union or trade unions or organisation or organisations of workers which made the declaration:
Provided nevertheless that it shall not be an unfair industrial practice for an employer to engage employees contrary to terms of such a declaration and without such express consent as aforesaid if the employer has before engaging such employees applied in writing to the Commission for a direction that such employees shall on application by them be admitted as members of such trade union or trade unions or organisation or organisations of workers and the Commission has given such a direction and the employees concerned have applied for such membership in accordance with the relevant rules of such trade union or trade unions or organisation or organisations of workers:
Provided also that the Commission shall not make any such direction without giving such trade union or trade unions or organisation or organisations of workers an opportunity of making representations to the Commission and taking into account such representations."
The noble Lord said: My Lords, this is the third of the three Amendments. It embodies a completely different approach, and my principal hope in moving it is that the Government may be able to say that it contains proposals which they could with confidence—possibly recast, but at any rate in one form or another—embody in the Bill. Its objective, as your Lordships know, is again primarily to protect the position of Equity, but it is so drafted as to be applicable possibly to other industries in which the conditions described in subsection (1) of the clause appertain.
May I at the outset say this about the new clause? Your Lordships will see that the new structure which it embodies is that the Commission may designate a trade or industry, or section of a trade or industry, in certain circumstances. If the Commission is of opinion (and then I summarise paragraphs (a), (b), (c) and (d) of subsection (1)) that there is a high level of unemployment, that such unem-
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ployment is endemic and is particularly associated with that sort of work, that employment is casual and intermittent in that sector of industry, and is normally of short duration—if the Commission is satisfied that all those circumstances are present, then it is given the power by subsection (1) to designate that trade or industry for the purposes of the clause. If it so designates that trade or industry, or the section of it in question, then certain consequences result under subsections (2) and (3) of the new clause.
My Lords, before I go to subsections (2) and (3), may I indicate to the House the broad thinking upon which this new approach is based? It does not, in my submission to the House, constitute any departure from the structure of the Bill. It involves no infringement of principle. It is so conceived as to follow very closely in the train of consequences which stem from Clauses 120 and 121 of the Bill. If your Lordships will be so kind as to glance at those two clauses, it will be seen that they vest very substantial powers of inquiry (if I may so describe it) in the Commission. The Commission may be asked by the Secretary of State to undertake certain research and inquiry on a wide variety of topics, and to prepare a report setting out its conclusions. The topics on which, under Clause 120, the Commission can he asked to make an inquiry and advise are the wide range of topics which span things like collective bargaining, procedure agreements, matters with which a procedure agreement can deal, sole bargaining rights and so on, including the disclosure of information by employers and training facilities. So one starts with Clause 120, which vests in the Commission, at the request of the Secretary of State, these very wide powers of inquiry and advice.
That is supplemented by Clause 121 which goes further still and enables the Secretary of State to make regulations enabling the Commission, without being asked by anybody, to undertake certain inquiries on its own initiative. Obviously, the concept behind that, a concept with which we are all well familiar in relation to the existing Commission, is that the Commission will be a body assembling a great deal of wisdom and expertise, acquiring over the years much knowledge and information with regard to industry and particular sectors of industry and

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therefore in a position to advise the Government (and anybody else relevant) with great authority as to the proper course to be adopted in relation to any such problems that may arise.
To go back to the Amendment, what it is designed to do in subsection (1) of the new clause is to include among the inquiries which the Commission may undertake, either at the request of the Secretary of State or in pursuance of regulations vesting in it the power to make those inquiries, or completely without any such request, entirely on its own initiative, an inquiry with regard to any particular industry whether the conditions prescribed in (a), (b), (c) and (d) appertain in the case of that industry. If your Lordships accept Clause 18, then the Commission could on its own initiative undertake the task of looking into and examining the theatrical profession or industry, the film industry or any other sector of industry, and ask itself, if it thought it appropriate in the circumstances to undertake such a labour, this question: do the conditions specified in (a), (b), (c) and (d) exist in that industry or sector of industry: high unemployment and casual types of employment? If the Commission comes to the conclusion that the answer to that question should be in the affirmative, the Commission (and here one follows Clauses 120 and 121 closely) may designate that trade or industry. It is really only a slight extension of the powers now vested, under the Bill, in the Commission. Surely it is a very wise and sensible procedure, when you have a body like the Commission, which will grow in authority and confidence over the years, to entrust it precisely with that task.
Up and down industry there may be a number of sectors with regard to whom the description contained in subsection (1) may be true. Those branches of industry, your Lordships may well think, merit particular treatment. The whole burden of my argument in the present case is that the industry with which Equity deals merits that special treatment. The first step is that the Commission may designate the theatrical or film industry. If it does so designate, what follows? The result of such a designation is that, while the industry is so designated—and in "industry" I include a section of
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industry—if there is a trade union which can claim to have enrolled into its membership a substantial majority of those working in the industry or section of the industry, that trade union can make a declaration of the kind I shall shortly describe. The words "substantial majority" have been carefully chosen. It is not meant to refer to a union which can simply point to a large membership or even a majority membership. The wording is limited to the case in which some union, and in particular Equity, in the instanced case, can claim to have in its membership the vast majority of those engaged in the industry.
If one has that situation in the case of a designated industry, the union is enabled by subsection (2) to make a declaration that its members will work only with other members of the trade union and that only members of the trade union may be employed in that trade or industry or section. That is the scope of it. Your Lordships may say that that is an invasion of the general principles which the Government Front Bench uphold. I submit that it is not. It is not as if one is applying those provisions to all industries: it is applied only to industries or sectors of industry in relation to which the Commission has thought it right to make the necessary finding which enabled it to be designated. If, contrary to the declaration, or without the consent of the union, an employer engages employees who are not members of the union, he commits an unfair industrial practice and a complaint can be presented under the appropriate subsection of Clause 101 in respect of that unfair industrial practice. But in order that the position should not be left unfair to the employer, the employer is entitled to ask the Commission to direct that employees whom he wishes to engage shall, if they ask to be admitted, as members of the union, be admitted. Once they have made the application to be admitted as members he is perfectly entitled to employ them, whether they have been accepted or not and he, in employing them, does not commit an unfair industrial practice even if they are not members of the union. There is a proviso which requires the Commission to give the trade union an opportunity to be heard.
That is the general structure of this new clause, my Lords, It is nothing like

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so elaborate as it appears. There are two basic components, the designating process and the consequences that follow after designation. It is designed to achieve the same purpose that your Lordships have had described this afternoon and with that explanation I beg to move.
4.47 p.m.
LORD DRUMALBYN: My Lords, this new clause is a fairly elaborate and very ingenious scheme proposed by the noble Lord again to meet the needs of Equity, as I understand it. I think I should say at the outset that, while a great deal is made of the fact that even with the present closed shop agreements which are said to be effective, unemployment among actors is very high indeed, two conclusions can be drawn from the unemployment level. They suggest themselves. The first is that the closed shop has little to do with it; it is there already. The second is that it is almost impossible to assert what is a reasonable and acceptable level of unemployment. The theatre, as the noble and learned Lord, Lord Gardiner, indicated, is by its character overstocked. The purpose of the closed shop is not so much to reduce the level of unemployment to a half or a quarter, or any particular proportion, of the present level, but is primarily to ensure that actors who are engaged work at not less than the agreed rate. I think that the point has to be made that Equity maintain—and this is the difference here between us—that the only viable basis for limiting entry to the theatrical profession is previous membership of Equity; but they acknowledge that Equity membership is regarded as a substitute (as it were, a proxy) for previous relevant experience: it is an indication of previous relevant experience. The Government view is that previous relevant experience can be attested in other ways than by Equity membership alone. I think it is in that context that one wants to look at this Amendment.
First, the Amendment says that the Commission, without apparently having been given any reference to investigate a particular industry, may designate it as one which suffers from the defects mentioned in subsection (1) and as one to which, in consequence, the remaining provisions of the new clause should apply. In the course of his remarks, the noble Lord, I thought, rather tended to
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imply that it was not necessary to give the Commission these powers that it would have to investigate before it designated.
LORD STOW HILL: My Lords, I am sorry if I gave that impression, I was not intending to do so. I accept that under this new clause the Commission can undertake the inquiry on its own initiative. Under the similar Clauses Nos. 120 and 121, there has to be a request by the Secretary of State or regulations.
LORD DRUMALBYN: My Lords, the noble Lord does not say in his clause that the Commission may investigate; it merely says "may designate". From what he was saying, I think he was indicating that on second thoughts he would rather have put in "may investigate". I recognise that the Secretary of State might, if he thought fit, make a reference to the Commission, with a view to the purposes that the noble Lord has in mind; but the drafting would have to be looked at very closely were we to be in favour, in general, of this kind of procedure. Under the Bill, the Commission has no power to investigate matters not referred to it, except within the context of Clause 121. Noble Lords opposite, somewhat to our surprise, criticised that clause rather severely during the Committee stage, and they will see that, in deference to their wishes, we have put down an Amendment to leave it out. As was said by the noble Lord, Lord Stow Hill, the role of the Commission is to investigate and advise, and I would add, to conciliate as well. The noble Lord says it is a very slight extension of powers, but it seems to me to take the Commission outside the role of adviser altogether and to give it executive power, a role not at all envisaged in the Bill in the allocation of functions.
Secondly, the Amendment provides that an organisation or organisations of workers, whether registered or not, which contains a substantial majority of those working in the trade or industry or section can then make a declaration that its members are not willing to work with anyone who is not a member of that organisation or those organisations—I take it that the noble Lord did not exclude their working with members of other trade unions; for example, a member of Equity working with an electrician or a decorator, or whatever it might be

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—and that only existing members of the organisation of workers shall be employed in the trade or industry or section of it concerned. This is a very closed shop indeed, so far. And it is to be an unfair industrial practice to engage anyone other than an existing member—no ballot to determine the wishes of the workers in the industry; no consultation with the employer; the C.I.R. is not required to investigate this aspect of it at all. My Lords, this is a very sweeping proposal. Thirdly, it goes on to say that nevertheless employees other than existing members can be engaged if the organisation of workers gives its express consent. Fourthly, it allows employees other than existing members to be engaged if the employer applies to the Commission and gets from it, before engaging them, a direction that they shall be admitted to the union, on condition that they have applied for membership before they were engaged. I hope that I have faithfully summarised the Amendment.
As the noble Lord himself says, there is designation by the Commission without a reference or even an application, and a unilateral declaration of a complete closed shop by the union, subject to licensing of exceptions by the Commission. That is the essence of it. My Lords, this is completely out of keeping with the concept of the Commission's functions under the Bill, which are to be investigation, conciliation, recommendation and advice; not decision on the status of an industry or the licensing of an employer to admit new entrants to a union which is otherwise to be an almost monastic closed shop. Perhaps the most serious objection to the Amendment is that it is designed to meet a particular situation in a particular industry which the Government have already sought to meet. It is expressed in terms of general application to any industry which the Commission may think meets the criteria about a chronic or inherent state of unemployment.
I might add that the noble Lord, Lord Archibald, laid great stress during previous debates on the need to avoid delay in the engagement of employees in the theatre and film industries. By the time an employer had indicated his willingness to take on particular employees, the employees had applied for membership
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of Equity, the employer had applied to the Commission for direction and the Commission had considered the matter and given a direction, it would appear that quite some time must elapse, unless it is intended that the whole procedure should be virtually automatic, in which case it would simply be an elaborate facade. If it is not to be a facade and the C.I.R. are really to consider the employer's application, what are to be the criteria? If they are to be experience or talent, there is nothing which prevents them from being the criteria for employment, without any reference to the C.I.R. But can the C.I.R. really be a judge of these? If, on the other hand, one of the criteria is to be the state of employment in the industry at the time, how can the C.I.R. judge that, in the light of experience and talent and the desirability of not excluding an entrant with real talent?
My Lords, I suggest that this is clearly not the right way to cope with exceptional circumstances in a Bill designed to deal with industrial relations in general. Surely the right thing to do—and I must come back to this—is to make use of the power in the Bill to refer special cases to the Commission to investigate as they arise, so that it may make appropriate recommendations. What is certainly not acceptable is to make a provision of this kind which cuts right across the distribution of functions in the Bill. The Amendment is ingenious, but it is both incompatible with the principles of the Bill and also, I submit, unnecessary. My Lords, I am sorry to be rather firm about this, but we believe that the Amendment seeks to do what we regard as the wrong thing in the wrong way, and we cannot accept it.
LORD SHINWELL: My Lords, I wonder whether, for the purposes of clarification, the noble Lord, Lord Drumalbyn, would address himself to a point on which I dare to address your Lordships' House? The proposed Amendment appears to deal with one particular section of the theatrical profession that is associated with what is known as Equity. To my mind—the noble Lord, Lord Drumalbyn, admitted this—the clause is of general application. What is provided here in relation to Clause 121 could be applied not only to those associated with the theatrical profession or ancillary professions but also to general industry. Let us assume a situation which, at first

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sight, might be regarded as hypothetical but which might occur in the foreseeable future, arising out of existing circumstances—I refer to a large volume of unemployment and the problems which will arise. Let us assume that, for some reason over which the workers have no control—and neither has the appropriate trade union—there is something in the nature of a trade recession, as a result of which many men have to be laid off, for what period of time it is impossible to say.
Let us assume that it is a closed shop. But in a closed shop—and this has been admitted in the course of our frequent debates on the subject—it is understood that a number, perhaps a substantial number (it is difficult to forecast how many; it might be a mere handful or a substantial number) of persons employed on the shop floor have refused to join the appropriate trade union and decided to opt out, and are subject only to the payment of a contribution to charity or some organisation designated by the appropriate authority. What is to be the position there? If a number of men are laid off, are those men to be those who belong to the trade union or those men who have opted out of trade union membership and merely make the contribution asked for?
I would venture to assert that in a situation of that kind, which is not altogether hypothetical but is within the bounds of possibility, or even probability, those who are members of the union would resent a state of affairs emerging where they were laid off whereas those who opted out of membership of the trade union were retained in employment. This may be quite a novel point and hitherto no reference has been made to this possibility in the course of our debate. My noble friend, Lord Stow Hill, in his observations, has brought it to my mind and I think that it should be given some consideration. Putting the point quite simply, it would be this: in a situation where unemployment is rising which affects adversely the men on a particular shop floor associated with an important industry, if men are to be laid off, who should be laid off first—the men who belong to the trade union or those who merely pay a contribution, having opted out of trade union membership? I think, if I may say so with respect, that I am entitled, and your
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Lordships' House is entitled, to an answer to that question. In the opinion of the noble Lord, Lord Drumalbyn, there may be nothing in this point, but I am not so sure of that, and I venture to put it forward for the consideration of your Lordships.
5.3 p.m.
LORD DONALDSON OF KINGS-BRIDGE: My Lords, the question asked by my noble friend Lord Shinwell illustrates extremely well the difficulty of dealing with Equity because the situation he envisaged does not arise in the case of Equity. In relation to Equity one does not lay off people by degrees, but one closes the show down and so the whole lot go—the noble Lord, Lord Olivier, and everyone else. This illustrates the problem we are all up against. Most of this Bill is Party-controversial, but this particular item is not. I believe the Government are anxious to meet the case concerning Equity and I think generally they have shown this, but Equity has made it perfectly clear that what the Government have suggested is entirely unsatisfactory. My noble friend Lord Stow Hill has brought forward an ingenious Amendment in introducing more or less a new clause. This Amendment would introduce to the Bill, which is generally about one kind of industrial problem, something to apply to an entirely different one.
I wish to say only two things. I think it terribly disappointing that on a non-Party point of this kind the Government should go so little a way to meet us. It seems to me that the case put by Equity is unanswerable. The noble Lord, Lord Drumalbyn, has said nothing whatever about the main fear of the people running Equity, which is that if people are engaged who are not members of Equity they could provide casts for sharks and fly-by-night employers, whereas if they agreed to come in through Equity, Equity would say, "He left the cast in Bradford on Avon last week, and another one at Stockport at Tuesday this week, and he is not safe to deal with; you cannot take a job from him." This is absolutely fundamental to the whole question. The greater the over-supply of would-be workers the more serious is the situation. It is a situation which is utterly different from the industrial situation to which most of the Bill applies.

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I think it rather dreadful that a Government with the talent possessed by noble Lords opposite cannot apply their minds to this perfectly simple problem. Do you want to do something which everyone knows to be wrong, or to maintain something which people at the moment think is right? The noble Lord, Lord Drumalbyn, suggested that there should be a ballot, but every noble Lord's young and beautiful daughter is a potential voter in this. There is no one you can choose to ballot. There is no working force in the acting profession without Equity. Anyone could walk on any stage at any time and do anything and would qualify. I feel that this is a serious attempt on the part of my noble friend Lord Stow Hill to make a constructive suggestion which should be dealt with more generously. I think the comment made by my noble friend Lord Shinwell deals with an extremely difficult matter, but it does not apply to the problem I am dealing with. However, I think it is a real problem and that it needs an answer.
LORD SHINWELL: My Lords, I raised it only because the noble Lord, Lord Drumalbyn, himself admitted that the proposition applied not only to Equity but was of general application. I take the point about Equity and I agree with what my noble friend Lord Donaldson of Kingsbridge has said; but it seems to me that if this Amendment were accepted it would have general application. All I want to know is, what would be the position if unemployment increased in a particular section of industry?
LORD DONALDSON OF KINGS-BRIDGE: My Lords, I thank my noble friend and agree. I was about to finish on the note that what I have said does not excuse the noble Lord, Lord Drumalbyn, from answering the question put by my noble friend Lord Shinwell, too.
5.7 p.m.
LORD BERNSTEIN: My Lords, I support the Amendment which has been so clearly explained by my noble friend Lord Stow Hill. My noble friends Lord Donaldson of Kingsbridge and Lord
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Shinwell have raised other points which should be considered.
My Lords, surely we can assume that the Government will have some trust in some people outside their own Ministry. This Amendment suggests that the Government should place some confidence in the Commission that they will be responsible for appointing. The Commission would be able to move quicker than the other place and to make a change if it were necessary. This will not be so quick as some noble Lords on this side of the House would wish them to move in regard to Equity and A.C.C.T., but it will be quicker than a Ministry or a stolid Whitehall official.
When I was giving the figures about the West End theatre I perhaps did not explain the reason why I gave those figures. It was to point out the difficulty that there is in getting people in the managerial organisation as quickly as they have the inspiration and desire to put on a show. Managerial organisations consist of responsible people with fairly strict rules—desirable in themselves—about vetting applicants for membership. This involves lengthy investigation, at the conclusion of which it would he too late as the productions would be over and the casts dispersed. Many people would then have lost money before a decision had been come to. The idea behind this Amendment would allow the Commission to move in before the undertaker. I suggest that that is better than the promise of the kiss of life.
5.9 p.m.
LORD DELACOURT-SMITH: My Lords, I should like to offer a few words on the Amendment now before us, but I do not wish by so doing to close the debate or in any way to preclude or discourage my noble friend Lord Stow Hill from replying to the debate before the vote is taken, if, unhappily, it should be necessary after all to proceed to a vote.
My Lords, we are dealing in this Amendment with one of a series of efforts made by noble Lords on this side of the House to deal with a problem which is exemplified by the position of Equity. We have put forward a series of Amendments designed to deal in one way or another with this problem, but all have been rejected by the Government. It must, I think, be rather irksome for the

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Government that there are facts and problems of industrial situations which do not easily accommodate themselves to the rather rigid lines which they have laid down in the Bill.
I am quite sure that there is widespread disappointment throughout the House this afternoon at the response which we have had from the Government on this matter and at the response which we had, on Tuesday last I think, when the noble Lord, Lord Drumalbyn, took up what I thought to be a rather dogmatic position (particularly for him because he is not inclined to be a dogmatic person) saying that in the whole matter of which this was a part the Government had moved as far as they could possibly move and had taken their stand and could go no further. I hope that he will not maintain that position on this Amendment and that at least, if he cannot accept it, he will give some indicaion of a real desire to go further to meet this problem.
I do not feel that many of the noble Lord's detailed arguments—excessively detailed, I thought, in some respects—about the wording of the Amendment were convincing. I am surprised that he should have continued such an attitude, in spite of the case that had been put up on an earlier occasion, particularly by my noble friend Lord Archibald, and again this afternoon by my noble friends Lord Stow Hill, Lady White, Lord Bernstein, Lady Lee of Asheridge, Lord Shinwell, Lord Donaldson of Kingsbridge, and of the completely unanswerable case I thought of my noble and learned friend Lord Gardiner. The noble Lord has not replied to the substance of the case, put forward with such a wealth of detail and cogency from differing points of view. I was surprised at his references to the closed shop in relation to unemployment. It has never been the argument that a closed shop would prevent unemployment in the acting profession. If Equity and the other unions in the entertainment world had followed far more rigid and restrictive attitudes, then over a period of time the level of unemployment might not have been so high as it currently is, but they have judged—and I believe judged rightly that the course they have followed has been the one in the greatest long-term interests of the theatrical profession and of the British theatre.
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There is certainly no argument at all for what the noble Lord, Lord Drumalbyn, seemed almost at the point of saying; namely, the fact that there was such high unemployment suggested that this kind of regulation in the industry was unnecessary and ineffective. Surely the argument is twofold. Without the regulation which has grown up over many years, unemployment would have been even higher than it is. After the figures we have heard quoted, none of us could think that the situation is one which any reasonable person would want to contemplate. Secondly, without this kind of collective regulation and this is perhaps the vital point—the living standards, exiguous already in the case of the vast majority of members of the profession, would be subject to still further attack and erosion. These are the justifications for a measure of this sort, put forward to deal in a balanced fashion with a happily unusual situation.
What has the noble Lord said in response to all the weight of argument which has been heard not only from this side of the House, because when we debated this matter in Committee powerful speeches were made by noble Lords in all parts of the House. I do not ever recollect a case when the sense of the House was so manifest as it was in that debate, and frankly I was astonished that the Government did not see their way to make some move to meet the feeling so widely and strongly expressed.
I do not think that I am misinterpreting the noble Lord, or summarising him unfairly, if I say that the crucial point he made this afternoon was that we must rely on the goodwill and public spirit, the loyalty and concern for the profession, of responsible managers and actors and actresses. That was the essence of his answer to our case. There is no division about the fact that we are, fortunately, able to rely upon the loyalty and concern of the great majority of managers and the great mass of those who have given their lives to this profession. But the whole history of the British stage in the twentieth century shows that we cannot rely upon these facts in themselves being sufficient protection. While these things are the foundation of the arrangements that have come into being, the members of the profession would be the first to

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say that their goodwill and loyalty and their concern for the stage are not enough. All these things must be organised into some formal institutions otherwise, with all the goodwill and concern, they will find their efforts greatly prejudiced by those who do not adopt these standards. There are those on the management side who are ready to try to make money quickly and to take a gamble, but it is a gamble at the expense of those they are employing.
On the other hand, naturally attracted by its glamour and unique character, and driven by pressure of an unemployment rate even higher and employment even more difficult to find than they expected and, despite the advice of the trade unions and their own commonsense, there are those who come into the profession and accept engagements with very poor conditions and rates of pay. This was exactly the situation which existed in the late 'twenties and early 'thirties, before the present form of collective regulation of the theatrical profession came into existence. I do not believe that there was any less goodwill on the part of management, or any less concern for the profession on the part of actors and actresses, than there is to-day, but experience has shown that without some kind of arrangements of the sort envisaged in this Amendment the reasonable standards of the profession could not be maintained.
We are not talking here of things that are illusory or theorotical. One has only to look over a period at the Newsletter published by Equity to see that even now, with the standards that have been established, every month there are still cases arising in which members have to be instructed not to take engagements with particular ephemeral managements. They are the minority, of course. Surely all of us want them to remain the minority, and to remain subject to the strong collective regulations of the two sides of the industry, dominated by responsible people on both sides. We have to bring into this Amendment, to try to fit into the framework of the Bill, the various arrangements concerning the Commission. Under the aegis of the Commission would continue the kind of sensible regulation which has been so good for the profession and for the stage.
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We are not talking of strengthening or weakening the trade unions. I am talking of the strengthening or the weakening of the whole collective regulation of the theatrical profession and other professions which have similar problems. This is a serious problem. Noble Lords opposite must surely recognise that they have not themselves produced an answer to it; and it is not good enough for them to go on rejecting, one after another, the variety of efforts which we have made, and which noble Lords have made elsewhere, to try to propose practical solutions to this problem.
5.21 p.m.
LORD BEAUMONT OF WHITLEY: My Lords, I am sure that on the whole there is definitely a desire on the part of the Government to try to meet the problem raised by Equity, and I am also sure that their failure to do so by not accepting any of the Amendments that have been put forward stems from a complete lack of understanding of the theatrical profession itself. If this is so, I think they will admit that this is the nature of the two sides of the argument, that they think the results of this Bill will have one effect and the rest of us think it will have another. If this is so, we are brought back to the final and almost unanswerable question asked by the noble and learned Lord, Lord Gardiner, at the end of another Amendment. If they wish to help—and they have said that if as the result of this Bill Equity suffers they will do something about it; they will produce more legislation—why cannot they nut it into this Bill, and if they say that to put it into this Bill would be to incorporate matters which they would rather not incorporate unless they have to, why do they not put the machinery for amending legislation into this Bill before it receives the Royal Assent?
The case for Equity has been argued this afternoon very strongly and fully, and it is not my intention to argue any of it again. I merely rise to my feet before the debate is wound up to say that later on in the Report stage my noble friends, the noble Lord, Lord Archibald, and myself have an Amendment down, No. 98, which is designed to deal exactly with this matter, to write in the potentiality of putting this Bill right if it goes wrong without introducing completely

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new amending legislation. I hope that the Government will take note of all that has been said this afternoon, and if they are unable to accept the Amendment we are debating to-day that they will at least have another think before we get to the stage of that Amendment. If it should be, as it may be, that they do not regard Amendment No. 98 as sufficiently well drafted, I hope that they will consult again with their own draftsmen as to some way of meeting the Equity point, if not immediately in this Bill then in some way so that it can be activated without new legislation.
LORD GARDINER: My Lords, before my noble friend Lord Stow Hill replies, may I say that I hope the Minister is going to say something. He has not so far made the slightest attempt to answer anything I have said. It may be that he has not got any answer, but he did not make any observations on anything I said. Do the Government agree or not that of all employer and employee relations in the country this is a very good example indeed of how good they can be? Do the Government know of any other sphere in which relations between employer and employee are as good? If so, do not the Government agree that it would indeed be an ironical thing if, in a Bill which is intended to improve industrial relations, so far as this art form is concerned it will merely destroy them? Do they agree that if Equity and the managers have gone through Clause 17 and Schedule 1 and a closed shop has been approved, if a new perfectly reputable manager comes along and is accepted by the other managers and by Equity they cannot make with their cast the same agreement without going through all the paraphernalia of Clause 17 and Schedule 1? Surely that cannot be right. The result can only be that the play could not be put on.
The Government, while finding difficulties about whatever Amendments are suggested, have come forward with no proposal of their own except the proposal that when Equity is broken they will then consider legislation which will resurrect it. Would it not be possible, as was suggested by the noble Lord, Lord Beaumont, and myself for the Govern-
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ment to produce now the sort of clause they have in mind? Mr. Carr would not have suggested this if he had not believed that there is a clause by which, when Equity is broken, it can be resurrected. Cannot they now produce this clause so that we can consider it then?
LORD DRUMALBYN: My Lords, I did not reply to the noble and learned Lord on a previous occasion because of the rules of order at this stage of the Bill, but if the House will give me leave I shall gladly respond. May I first of all deal with the point raised by the noble Lord, Lord Shinwell. I doubt whether it really comes under this Amendment. The question he asked was: "Who is to be laid off first in the case of unemployment on the shop floor? Is it to be the non-members of the trade union within a closed shop—those who make a contribution to charity—or is it to be the members?" I think it is quite clear from the Bill that if the criterion of whom to lay off should be, "Are you or are you not a member of the trade union?", that would be exercising discrimination, so that that could not be done within the terms of the Bill as it is at present.
My Lords, turning to the broader aspects of the debate we have had, I would certainly again acknowledge the efforts of noble Lords opposite to deal with the Equity problem, but I hope that they will acknowledge what has been done already in this Bill. After all, approved closed shop provisions were put in largely on the representations of Equity and of the seamen's union. I think it would be unfair not to recognise that the Government have gone a very long way indeed, despite the principles enunciated in Clause 5 of the Bill, to meet the point of Equity. Quite frankly, the Government believe they have gone as far as is necessary and that the arrangement they are suggesting will meet the needs of Equity. Obviously Equity would like to make doubly sure of this and I do not blame noble Lords for bringing in further provisions and asking us to accept them. But there are limits to which one can go within the framework of the Bill as it stands at present without violating and upsetting the whole principle of the Bill and I do not think we ought to do that at the present stage.

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The noble Lord, Lord Beaumont of Whitley, asked: Why do you not put the machinery into the Bill? We have put the machinery into the Bill. We have done it in the approved closed shop arrangements we have suggested. To say that we should go further and put in some new machinery to meet the fears that have been expressed, when the Secretary of State himself and his advisers believe that those fears are not well grounded, would be rather an absurdity. The argument that because we have refused a number of Amendments, therefore we should accept this one, is not a particularly good one. I say to the noble Lord, Lord Stow Hill, that in spite of the gracious way in which he moved the Amendment, this is probably the least desirable of the Amendments he has moved and the furthest away from any we could have accepted. The fact that there is unemployment in an industry surely cannot in itself justify giving a union, which claims a substantial proportion of the workers in the industry as members, power to make a unilateral declaration of a closed shop limiting membership to existing members except with the consent of or with direction from the Commission. That is not a viable proposition.
It is stated that living standards will be subject to further erosion, but no proof of that is given. I ask this question. One-third of those who are putting on plays in the West End are not members of the employers' organisations (I think this is what the noble Lord, Lord Bernstein, said), but are they, or are they not, maintaining the rates that are agreed? I strongly suspect that they are maintaining them.
LORD BERNSTEIN: May I answer that, my Lords?
LORD DRUMALBYN: Yes, certainly.
LORD BERNSTEIN: My Lords, the point is that these are organisations that come into production for a single play or a single film. They are not accepted as members of either the Film Producers' Association or the West End Managers' Association until they have been vetted and it is established that they are reliable and responsible people. There is nothing wrong with them—they are not fly-by-nights—but they honour the Equity agreements because, if they did not, Equity, with its present power, would take facili-
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ties away from them and they would not be able to survive.
LORD DRUMALBYN: My Lords, that is exactly the answer to the noble and learned Lord, Lord Gardiner. He put up the proposition that each of these so-called ephemeral companies, which very often have a well-known producer who floats a new company in order to deal with a particular production, would have to make separate application for a closed shop agreement. Of course that is not so. They will go on exactly as they have been doing before. The West End producers will continue to observe the rules agreed in just the same way as they have in the past. The same applies to what the noble Lord, Lord Donaldson of Kingsbridge (who is not now in his place), was saying. Equity lays down its rules and, as I said before, if those rules are approved by the Registrar as being reasonable it can discipline those who do not observe them, including its own members. So anybody who does the things referred to—leaving staffs quite un-catered for in different distant parts of the country—will have a good deal of difficulty the next time he comes along, if ever he does come along again, as I daresay he will, because in such a case Equity will be very careful indeed to ensure that the rules are observed. I cannot see that there is going to be any difference in the future. Of course, I am not an expert in this field, but I have been to more trouble in going into this particular aspect of the Bill than in going into any other single aspect of it, and I say two things to your Lordships. First of all, I wholly agree and I am convinced, just as my right honourable friend is convinced, that these Amendments have not been necessary. We might turn out to be wrong and, if we did, then the Secretary of State says that the appropriate action would be taken. But until we know what turns out to be wrong we cannot possibly take the appropriate action.
To sum up, my Lords, it would not be fair to say that the Government have done nothing. They have introduced this closed shop procedure; they are making two other Amendments at this stage of the Bill, and we have gone a very long way, and I think many members of Equity recognise that we have gone a very long way, towards meeting the arguments that have been put up by them.

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One must also face the position that the Amendments go far beyond the protection that exists at the present time in Equity. This may be right or it may be wrong, but it is as well to recognise that this issue is not just a question of making an exception in the Bill; it is going very much further than the existing circumstances at the present time. So I do not think that, at this stage of the Bill, we should be right to do what is proposed, given the principles set out in the Bill and given the Secretary of State's belief that it is not necessary to do so.
5.36 p.m.
LORD BROWN: My Lords, we are all pretty familiar with the situation in this House this afternoon. We know what it is like to be a Minister on the Front Bench. I have a shrewd idea of the situation in which the noble Lord, Lord Drumalbyn, is placed. My heart bleeds for him. He is putting up a magnificent stonewalling performance but, with great respect, he is not answering the questions and points made by my noble and learned friend Lord Gardiner or by the noble Lord, Lord Beaumont of Whitley. The point has been made, for example, why cannot the Government, knowing that a place for legislation is difficult to find by any Government—and that it would be extremely difficult to find a place for legislation amending the conditions of a single industry such as that which Equity represents—give an assurance now that they will be prepared to give the Amendment of the noble Lord, Lord Beaumont, very careful consideration? This, I am quite sure, would cause my noble friends on the Front Bench to withdraw their Amendment. But the noble Lord, Lord Drumalbyn, has not touched on that. He goes on implying that the situation is probably all right. He has not met the point that this is an industry where there are very good relations—it is probably one of the best industries in the country in this respect—and what a tragedy it would be if a Bill, designed to promote good industrial relations, had the result of spoiling very good relations in one industry. It is certainly not going to help relations in a number of other industries.
Quite obviously, the noble Lord, Lord Drumalbyn, is not in a position to rise and make any reassuring noises. Perhaps
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he might after I have finished speaking; but if he is not then I am quite sure that the noble Viscount, Lord Eccles, sitting on the Front Bench, is seriously disturbed. The noble Viscount is Minister for the Arts and knows what this means to this artistic profession. I feel certain that a number of Members on the opposite Benches are going to vote loyally with their Party but are nevertheless very disturbed about this issue. I appeal to them to help Lord Drumalbyn. He cannot do anything about it. He must have some buttressing behind him to go back to the Minister of Employment and persuade him that his rigid stand on this point is not in the interest of the Government or of Equity, or political realism or anything else. Cannot we just for once in this House fling Party attitudes aside? I have given an example when I have sat on these Benches on a number of occasions and refused to vote with my Party because I thought it was wrong. I have not seen many others show the courage of their own convictions. I am sure that on the opposite Benches a number of Members have been convinced by the arguments put forward in the debate this afternoon that in fact the Government are making a mistake—probably through ignorance; I am not going to imply anything else.
I appeal to Members on the other side to help the noble Lord, Lord Drumalbyn, and the Government to do the wise thing, to show the dignity of this House by saying that this is not good enough and to vote in favour of this Amendment. No doubt it is not particularly relevant, in the light of the other Amendment which has fallen, but it will cause the Government to re-assess their position and come back, and we shall have done something really worth while in this House to help an extremely valuable industry. I am making an appeal to the other side, when it comes to a Division, to sit tight and to show the independence of this House in dealing with a matter which is not a political matter but a matter of pure logic.
5.41 p.m.
LORD CONESFORD: I assure the noble Lord, Lord Brown, that if I thought that any of these Amendments was good I should vote for it. I do not believe that this Amendment is a

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possible way of dealing with the problem. At the same time, I have not changed my view from what I said at a much earlier stage, part of which was quoted by the noble and learned Lord, Lord Gardiner, in a most brilliant piece of advocacy in support of one Amendment.
As the House may know, I am not happy about Clause 17 and this Schedule. I am against this legislative provision for a closed shop for various reasons, which I have given on earlier occasions and which I shall not now repeat. But at the same time I thought that there was a great deal to be said for what I believe to be the Government's aim behind this clause and Schedule. They wish to ensure that the other provisions of this Bill do not do serious injury to Equity or to the Seamen's Union. I believe that to be their object. But for some reason they would not state that simple object, and as a result Clause 17 and the Schedule appear to have caused a doubt in certain quarters about whether the Government have saved what they wished to save. There is also a fear in the minds of many of us that they have given an opportunity for others to ask and press for a closed shop, a claim outside any Parliamentary control, for a number of bodies who have no case for it whatsoever.
My objection to the Government's scheme is that they have not carried absolute conviction that they will save what they wish to save, and have caused fears that they will enable a closed shop to be introduced where no closed shop should be introduced. I think that the reasons given by the noble Lord, Lord Drumalbyn, in his earlier intervention—I am afraid that I missed part of this debate—were very good reasons. I did not vote in the ensuing Division because I felt I was in great difficulty, holding the views that I did. But I think that the Government are quite right to resist these Amendments. If anything at all is reconsidered at this stage I hope it will be the possible alternative: that, instead of this immense complexity in providing for the closed shop by the clause and the Schedule, the Government will consider a very simple Amendment along the lines that the noble and learned Lord, Lord
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Gardiner, said he had contemplated: that the Bill should not affect Equity.
BARONESS WHITE: Before the noble Lord, Lord Stow Hill, replies, may I again plead with the Government to recognise what the noble Lord, Lord Conesford, has reinforced in his remarks about the speech of my noble and learned friend: that although we dearly love Lord Drumalbyn we do not love the way in which the Government have dealt with this particular matter. It has not been effective. We are all convinced that they wish to do the right thing, and I would not for one moment suggest otherwise. They are quite sincere in trying to meet this particular problem. What all of us are trying to tell them is that in the belief of those in a position to know their proposals will not be effective.
What disturbed me somewhat was the remark made by Lord Drumalbyn with reference to the speech made by the noble Lord, Lord Beaumont of Whitley. With very great respect, I am sure that when the noble Lord looks at Hansard tomorrow he will appreciate that what he said in reply to the noble Lord, Lord Beaumont, was really quite beside the point. The tenor of what the noble Lord was saying was that, even if Mr. Carr is in earnest—as all of us fully accept he is—in his assurances of possible subsequent legislation, we are all experienced people in this House and we know the difficulties of getting legislation in the list, however much one may wish to have it in. Surely the sensible thing is to put machinery in the Bill whereby some alteration could be made in favour of Equity and the Seamen's Union without having to have a fresh Bill. We do not believe that a Bill dealing with this particular matter is going to be practical politics.
It disturbed me greatly when the noble Lord apparently misunderstood the noble Lord, Lord Beaumont, and said that the machinery existed in Clause 17. As Lord Conesford pointed out, Clause 17 really does not do the job. I sincerely hope that the assurance given in the letter to which the noble and learned Lord, Lord Gardiner, referred, from the Secretary of State on June 24 to Mr. Hugh Jenkins, will lead the Government to what is surely the logical and desirable next step if they cannot accept this particular

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Amendment—which I hope they will do—that is, at least to take this very seriously indeed. In writing that letter, the Secretary of State repeated an assurance which he had given earlier: that if, in the light of experience, it was found that there were undue adverse effects upon the entertainment industry arising out of the provisions of the Bill, the Government would be prepared to reconsider the position. He went on to say that that was not an undertaking lightly given it was given after very careful consideration of the obvious difference in view between them as to the likely effects of the Bill. If that is the position of the Secretary of State, then I hope that, well before the time when we come to debate Amendment No. 98, the Government will give very careful consideration to including in 'this Bill provisions whereby, if our fears prove to be better founded than their hopes, something can be done without the full panoply and paraphernalia of a full Bill which we do not believe we should get in time.
5.47 p.m.
LORD STOW HILL: My Lords, I wish to reply very shortly, because very powerful speeches from this side of the House have contributed to the debate. The only reason I wish to reply is because I submit that the noble Lord, Lord Drumalbyn, misunderstood some of the effects of this Amendment. It is really not drafted as unthoughtfully as I believe he considers it to be. May I begin with subsection (1)? To begin with, he said that there is no provision in it for the Commission to make inquiry. Nor is there in Clause 120, but it is obviously implied by the words, "if it appears to the Commission". Secondly, he asked what criterion, in the form of level of unemployment, the Commission was to take as the test. With the greatest respect, that also is a misunderstanding. There are four separate requirements, each of which has to be complied with. Not only has there to be a high level of unemployment; it has to be unemployment characteristic of that particular sector of industry: the word "endemic" is used. That is what is intended. It has to be something that one cannot separate from that sector of industry when it is considered. It has to be the sector of industry where, if one is unemployed,
710
one can hope at least for employment of a casual or intermittent nature and that in any event the unemployment will be of short duration.
With great respect to the noble Lord (I know that he has given this thought and he gave a very careful and courteous answer), it is greatly to misunderstand subsection (1) to suppose that all the Commission has to do is to take a careless glance and say, "Yes, there is some unemployment there." That is miles away from what the Commission has to do. It has to go into it most carefully, and see whether it is one of those exceptional sectors of industry of which all these four situations can he predicated.
LORD DRUMALBYN: My Lords, I was simply speaking of the criterion for giving a direction in the first proviso, not the criteria under subsection (1).
LORD STOW HILL: My Lords, certainly those are the criteria which enable the Commission, if after inquiry it thinks those criteria are satisfied, not to give the direction but to designate that sector of industry. I must have been remiss if I did not say that. That is what I certainly thought I had said, and I had something to do with the drafting of it. If the Commission thinks that all those things are present it can then designate that sector of industry. I thought there really could not be much disagreement about that, but perhaps I am wrong.
Then the noble Lord criticised the provisions of the next two subsections, broadly upon the basis that they were far too drastic. I frankly accept that their object is to enable a closed shop to be set up. They would fail in their object if they did not provide for that. The noble Lord reproached us for ingratitude in that he, with his advisers and his colleagues, had embodied Clause 17 into the Bill in order to meet the predicament of Equity, and implied that we should not go further. But the whole reason for this debate and for our discussions this afternoon is that Equity, and those who are concerned with the welfare of Equity, after examining Clause 17 are profoundly and absolutely convinced that Clause 17 will not meet the requirements of the situation. That is the whole point. Therefore, while I am sorry if the noble

711
Lord thinks we are ungrateful to the Government, that must be our answer, and we would not be doing our duty if we did not forcefully represent to the Government that in our view, and in the view of those who have been advising us, Clause 17 is not adequate for the purpose for which the Government designed it.
May I now reply shortly to the criticisms made by the noble Lord in regard to subsections (2) and (3). Certainly, once you find that, in that situation nearly everybody—and in those words I paraphrase the expression "a substantial majority"—who works there is a member of a particular union, if that industry has been designated that union can make the declaration which is described in the subsection; but my submission to the noble Lord and to the House is that the noble Lord has failed to give adequate protection to the counter-balancing proviso which is included for the purpose of relieving the employer. The employer wishes to take on employees who are not members of that trade union. He is not baulked in so doing; what he has to do is to ask the Commission for a direction that they will be admitted to the union if they apply. If they apply, whether or not they are admitted, he has a perfect right to employ them, and in employing them he does not permit an unfair industrial practice. So that whereas subsection (2) confers upon the union a drastic power, subsection (3) confers upon the employer what I think I may characterise as a drastic counterbalance.
I submit that the balance is fairly held between the two: the union says, "You must only employ our members", the employer says, "I do not want to, and therefore I ask for a direction from the Commission that you must admit them if they ask to be admitted". That, I submit, is fair. The noble Lord then said that it would take time. I have made a rough estimate and I think it would be about a fortnight or three weeks, and I contrast that period with the period of several months which will very likely elapse before the complicated procedure envisaged in Clause 17 can be gone through. That is a very different period of time. It may be I am wrong, but it could not take much longer than that. The Commission knows all about the industry, and I should have thought it could say perfectly well whether, in the case of a particular request by an employer, the direction should be issued.
I hope the noble Lord will be able to say that at any rate he will go into it further, because I cannot help feeling, from his very careful reply, that he did not fully apprehend the basis of the thinking on which this clause is drafted. It is not as bad as that: it is really very carefully balanced, and I hope he will look at it again.
5.56 p.m.
On Question, Whether the said Amendment (No. 41D) shall be agreed to?
Their Lordships divided: Contents, 67; Not-Contents, 87.

CONTENTS

Archibald, L.

Gaitskell, Bs.

Peddie, L.

Ardwick, L.

Gardiner, L.

Phillips, Bs.

Bacon, Bs.

Garner, L.

Platt, L.

Balogh, L.

Garnsworthy, L.

Plummer, Bs.

Beaumont of Whitley, L.

Gore-Booth, L.

Popplewell, I.

Bernstein, L.

Henderson, L.

Rusholme, L.

Beswick, L.

Henley, L.

Sainsbury, L.

Blyton, L.

Hilton of Upton L.

St. Davids, V

Brown, L.

Hoy, L.

Samuel, V.

Buckinghamshire, E.

Hughes, L.

Segal, L.

Burton of Coventry, Bs.

Janner, L.

Shackleton, L.

Byers, L.

Kennet, L.

Shepherd, L.

Caradon, L.

Leatherland, L.

Shinwell, L.

Champion, L.

Lindgren, L.

Slater, L.

Chorley, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Sorensen, L.

Crook, L.

Stamp, L.

Davies of Leek, L.

Lloyd of Hampstcad, L.

Stocks, Bs.

Delacourt-Smith, L.

McLeavy, L.

Stonham, L.

Diamond, L.

Morris of Grasmere, L.

Stow Hill, L.

Douglass of Cleveland, L.

Moyle, L.

Strabolgi, L. [Teller.]

Faringdon, L.

Norwich, V.

Summerskill, Bs.

Taylor of Mansfield, L.

White, Bs.

Wynne-Jones, L.

Wells-Pestell, L.

Wootton of Abinger, Bs.

NOT-CONTENTS

Aberdare, L.

Eccles, V.

Morrison, L.

Ailwyn, L.

Effingham, E.

Mowbray and Stourton, L.

Allerton, L.

Elliot of Harwood, Bs.

Nugent of Guildford, L.

Alport, L.

Emmet of Amberley, Bs.

Oakshott, L.

Amory, V.

Exeter, M.

O'Neill of the Maine, L.

Balfour, E.

Ferrers, E.

Orr-Ewing, L.

Belhaven and Stenton, L.

Goschen, V. [Teller.]

Poltimore, L.

Berkeley, Bs.

Gray, L.

Rankeillour, L.

Bessborough, E.

Grenfell, L.

Rathcavan, L.

Bledisloe, V.

Grimston of Westbury, L.

Reigate, L.

Bridgeman, V.

Hacking, L.

St. Aldwyn, E.

Brooke of Cumnor, L.

Hailes, L.

St. Helens, L.

Brooke of Ystradfellte, Bs.

Hail sham of Saint Marylebone, L. (L. Chancellor.)

St. Just, L.

Brougham and Vaux, L.

Salisbury, M.

Buccleuch and Queensbcrry, D.

Hanworth, V.

Sandford, L.

Caccia, L.

Hatherton, L.

Selkirk, E.

Carrington, L.

Hood, V.

Sinclair of Cleeve, L.

Clwyd, L.

Hylton-Foster, Bs

Skelmersdale, L.

Coleraine, L.

Ilford, L.

Somers, L.

Colgrain, L.

Jellicoe, E. (L. Privy Seal.)

Stonehaven, V.

Conesford, L.

Kemsley, V.

Strange of Knokin, Bs.

Cork and Orrery, E.

Killearn, L.

Tweedsmuir, L.

Craigavon, V.

Kilmany, L.

Tweedsmuir of Belhelvie, Bs.

Crathorne, L.

Kilmarnock, L.

Vivian, L.

Crawshaw, L.

Latymer, L.

Wakefield of Kendal, L.

Daventry, V.

Loudoun, C.

Willingdon, M.

Denham. L. [Teller.]

Macphcrson of Drumochter, L.

Windlesham, L.

Derwent, L.

Merrivale, L.

Wrottcsley, L.

Drumalbyn, L.

Milverton, L.

Dundee, E.

Monck, V.

On Question, Amendment agreed to.

Clause 20 [Right of employee not to be unfairly dismissed]:
6.3 p.m.
THE LORD PRIVY SEAL (EARL JELLICOE)THE LORD PRIVY SEAL (EARL JELLICOE) moved Amendment No. 42:
Page 17, line 21, after ("specifying") insert ("by description or otherwise").
The noble Earl said: My Lords, I hope it will be helpful to your Lordships if we take along with No. 42 Amendments Nos. 43 and 44. This also has the advantage that ever since my prep school days I have always considered 44 one of my lucky numbers; that is why I am proposing they should be taken together. Your Lordships will no doubt recall that we discussed the points covered by these Amendments at some length at Committee stage, and I agreed, under the promptings of an alliance which I then thought was rather unholy, both from behind me and in front of me, but which I now regard as purely holy, to look again at the wording of subsection (2)(b) and (c) of Clause 20, to see whether we could clarify the points in that clause with which a number of noble Lords on both sides were finding difficulty. These
714
Amendments I am now moving flow from that undertaking, and I hope your Lordships will find them satisfactory.
May I just run over the two points which I think were worrying noble Lords, The first point was that the requirement under subsection (2)(b) to specify a person appeared to require employers to identify a person for this purpose by name, and it was thought this could create a great deal of difficulty, particularly for firms which experience frequent changes in personnel. I explained that this was not the Government's intention, and also that we did not think that the clause as drafted would have this effect. What we have in mind here is merely that an employer should identify a person in such a way that the employee clearly knows to whom he should apply when he has a grievance concerning his job, and that person could well be as well identified by his title—section foreman or departmental manager or what have you—as by his name.
The first of these Amendments, which now introduces the phraseology "specifying by description or otherwise" a person to whom the employee can apply is designed to meet, and I hope it does indeed meet, the objection which was

715
raised by noble Lords on both sides. It would not, of course, mean that some worker who felt he had a grievance could not go first to his shop steward and ask his advice; obviously that is possible, and is in no way precluded by the phraseology we are now importing.
The second point which worried some noble Lords was that subsection (2)(b) and (c) appeared to require employers to set up formal grievance procedures where none at present exist. Again I would make clear this is not the Government's intention. The object of this provision in this part of the Bill is to ensure that if a formal grievance procedure is available to the employee he should be told about it, and the stages it includes. We have no intention to oblige employers to set up grievance procedures, other than the rather limited arrangement of identifying the person to whom the employee can go with his grievance, where such grievance procedures do not exist. We have no intention of manufacturing "bumph", which was the word used in the debate on this part, merely from some masochistic pleasure in manufacturing paper, although I know the noble Lord, Lord Brown, has a great belief—and I would not dispute this—in this efficacy of written understandings.
We certainly hope, however—and I should like to make this equally clear—that these provisions will help to encourage thought on this whole subject and lead to the development of better and more procedures—better, clearer and cleaner procedures was, I think, an acceptable formula which I used at Committee stage—and of course the code of practice urges employers in that direction. I hope that your Lordships on both sides—I was pressed from both front and rear at Committee stage on this part of the clause—will agree that these Amendments discharge the undertaking I gave to the Committee to look again at this part of the Bill and try to introduce more acceptable phraseology. I beg to move.
LORD BROWN: My Lords, this is a welcome show of flexibility in the Government's response to debate at the Committee stage. Not being technically expert, but nevertheless looking at these Amendments, they seem to me to meet
716
adequately the points made during the debate at Committee stage. I merely add one thing and that is this. I had an opportunity of speaking on the code during our debate on it and I would merely say one thing. These Amendments enable a firm to point first to a man's manager as the man to whom he should go, and then subsequently to his manager once removed, if I may coin the phrase. The clarity of the heirarchy of managers is very important, and should be clarified in many concerns. I hope that supplementing this sound Amendment, the Government will turn their thoughts to the requirement, under the code, of those companies to clear up the hierarchy in the managers, so that employees know who is their own manager and who are the managers further up the hierarchy. I think that is an important point, and this Amendment clearly makes it possible to begin the process of cleaning up what is frequently a very confused situation in industry. The more rapidly it is cleared up, the better.
LORD SINCLAIR OF CLEEVE: My Lords, may I follow the noble Lord, Lord Brown, in saying to my noble friend the Leader of the House that those of us who were associated together in proposing the original Amendment feel that both in substance, and in essence, the Government's Amendments now completely meet the point which we endeavoured to secure in the original Amendment. I should like to express our gratitude for the attention that has been given to it.
VISCOUNT AMORY: My Lords, I should like to associate myself with what my noble friend Lord Sinclair of Cleeve has just said.
LORD SLATER: My Lords, in regard to the recommendation in Amendment No. 43 may I say to the noble Earl that as one who has had something to do with conciliation, in my opinion it will be readily accepted by people who are employees, when they know that they have an opening whereby they can make their representations to the one in charge of them and also further up the ladder, as indicated by my noble friend Lord Brown. I think that is something for which one can be nothing but grateful.
LORD DELACOURT-SMITH: My Lords, as has already been apparent,

717
noble Lords in all parts of the House appreciate the action of the Government, and of the noble Earl, in responding to the debate which took place on this matter at Committee stage. I associate myself fully with what other noble Lords have said. So far as I can judge, the Amendments now proposed meet the points which were raised in the discussion.
Perhaps I may also make the observation that in the course of the Committee proceedings relating to these points I made a suggestion, on which, let me say at once, the noble Earl gave no commitment at all, that consideration might be given to some measure rather similar to that which has prevailed for many years in the Civil Service in respect of a reference to trade union membership being communicated particularly to all the new entrants. This is something which might be taken up in the code of practice, which is of course so intimately associated with the terms of this particular part of this clause. That is all I wish to say on these Amendments.
EARL JELLICOE: My Lords, I do not wish to prolong the discussion. I should merely like the permission of your Lordships' House to thank noble Lords for the reception from both sides of the House to these Amendments. I was under pressure from both sides at Committee stage, and I am glad that these Amendments seem to be acceptable both to my noble friends and to noble Lords opposite. First of all, I should like to thank my noble friends Lord Sinclair of Cleeve and Lord Amory (who, I think, had an Amendment down at Committee stage on this point), for their research. I think neither noble Lord—who were described by their co-sponsor as the "stroke and cox" of this particular boat—was in fact present. At Committee stage the noble "Casablanca"—the noble Earl, Lord Dudley—rowed very well on their behalf. I should like to thank them for their reception of these Amendments, and likewise the noble Lords, Lord Delacourt-Smith, Lord Brown and Lord Slater. The point made by the noble Lord, Lord Brown—backed up by the noble Lord, Lord Slater—and also the suggestion of the noble Lord, Lord Delacourt-Smith, I will certainly undertake to draw to my right honourable friend's attention, and ask him whether, in his consultations and cogitations on the Code of Industrial
718
Practice, he will see whether they can properly be brought in within that framework. I gladly undertake to do this.
EARL JELLICOE: My Lords, I beg to move Amendment No. 43.
Amendment moved—
Page 17, line 21, leave out from ("whom") to ("and") in line 24 and insert ("the employee can apply for the purpose of seeking redress of any grievance relating to his employment")—(Earl Jellicoe,)
EARL JELLICOE: My Lords, I beg to move formally, but with particular pleasure owing to its numerical significance for me, Amendment No. 44.
Amendment moved—
Page 17, line 27, leave out ("subsequent steps in that procedure") and insert ("steps consequent upon any such application")—(Earl Jellieoe.)
6.15 p.m.
LORD HOY LORD HOY moved Amendment No. 45:
Page 135, line 26, leave out paragraph 7.
The noble Lord said: My Lords, I beg to move Amendment No. 45. Perhaps it would be for the convenience of your Lordships' House if we dealt with Amendments Nos. 46 and 47 at the same time. I assure the noble Earl that there is no numerical significance in doing this. I do so in the hope that if he is to reply he will only have to say "Yes" once instead of three times.
The purpose of these Amendments is to strike out the provisions introduced with what we thought was a fairly inadequate explanation during the Committee stage of the Bill. In our view, they constitute an unfair and anomalous treatment of a worker who falls sick during the closing period of his employment with an employer who has already served him with a redundancy notice. The new proposals came in Amendment No. 198A during the Committee stage, and it was taken in the early hours of the morning—I think about one o'clock. The significance of it was certainly not realised by myself. Having examined it, we thought it was necessary to put these Amendments down. May I tell your Lordships why. At present, an employee of a firm

719
which operates a sick pay scheme under which his State sickness benefit is made up to his normal wages by his firm receives, when under notice of redundancy, both the State sickness benefit and the guaranteed minimum pay, which is required by law to be paid by the employer without any reduction, during that period. Therefore, if we take as an example a worker who earns normally £25 a week and receives £15 a week sickness benefit, he will, if employed by a firm which operates such a sickness pay scheme receive £25 a week when he is away ill, but £40 a week when he is away ill and under redundancy notice. That is the law as it at present stands.
This overlap is perfectly understandable, because the worker is suffering two disabilities. First of all, he is suffering from sickness for which he is receiving his benefit; and, secondly, he is suffering from having had a redundancy notice served on him, so that he qualifies for the second payment. The Government regarded the position as anomalous and they therefore introduced—and I must say that we rather disliked it when we realised what was being done—the provisions in paragraphs 7, 8 and 9 of Schedule 2. As a result, when a worker is away sick during a period of notice he will receive the same amount as if he were not sick; namely, £25 per week in the example chosen. The State will pay the same sickness benefit, but the employer will now be allowed to deduct the sick pay from the guaranteed minimum pay, with the result that the worker will receive £15 less, and the employer will save £15. I want to make it perfectly clear that it is not the Government who will save money as a result of this process, but the employer. So all that will happen is that, while the Government will not save money, the employer will, and, as a consequence, the worker will be £15 poorer. In short, this is a dodge to save the employer money, and it takes no account of the injustice done to the worker who gets no extra benefit to compensate for his being sick during the closing weeks of his employment, when he is unable to look around for a new job and may have many added expenses, such as prescriptions and so on.
Your Lordships may like to contrast the position of the man in a sick pay
720
scheme with the position of the worker whose employer does not operate one. The brother of the man in the first case, engaged at the same pay for the same work and with the same sickness benefit but working at a neighbouring firm, will continue to receive £40—that is, for sickness benefit and guaranteed minimum pay—as before, as these provisions do not affect him. Surely an anomaly will be created which your Lordships' House will not want to persist: that one brother will get a total of £25 a week and the other brother will get £40 a week in identical circumstances, if the new provisions are enacted. It is clear that the Government's proposals are both unjust and anomalous and they ought to be withdrawn by leaving out paragraphs 7, 8 and 9. It is also perfectly clear that when the minimum redundancy pay arrangements were originally enacted it was intended that every worker who suffered the double misfortune should get the double benefit; and if one looks at the figures one can see that for oneself.
The anomalous position was certainly not explained when the noble Lord, Lord Drumalbyn, moved his Amendments. It certainly was not explained to your Lordships that the result of passing the Amendments was that this anomaly would he created; in fact, my noble friend Lord Diamond has had some correspondence on this issue with the noble Lord, Lord Drumalbyn. When the noble Lord was challenged as to the number of people who might be involved, he said that it was very difficult to make an assessment. But if one looks at Hansard it will be seen that the noble Lord said that the vast majority of employers who provide full wages during sick absences in normal employment situations take into account the amount of any sickness or industrial injury benefit which the employee receives. So it can hardly be argued that the noble Lord was not certain of the figures, when at the same time he was arguing that the vast majority of employers take benefits into account.
There is a third argument which is always put: that there are many workers who go sick while they are getting redundancy payments. To put it in common parlance, they are accused of

721
"swinging the lead". But noble Lords will surely agree that before a worker can qualify for sickness benefit, he must have a certificate from his doctor declaring him unfit for work. So to use an argument of that kind is to attack not politicians but doctors who are carrying out their jobs by certifying, or otherwise, the health of their patients. I do not think that there was anyone in your Lordships' House who believed when we accepted the Amendments that the Government were creating an anomaly of this kind and penalising the man who is in a sick scheme but not the man who is not in a scheme, by providing that the man who is not in a scheme is going to draw much greater benefits than the man who is in one. Having realised what we have done, I hope that your Lordships will want to support these Amendments to rectify the position. My Lords, I beg to move.
6.27 p.m.
EARL JELLICOE: My Lords, as the noble Lord, Lord Hoy, said, the provisions which he wants to delete were introduced at Committee stage, but although the hour was fairly early then, I think the noble Lord, Lord Hoy—unwittingly, no doubt—did my noble friend Lord Drumalbyn less than justice in implying that the case was not very clearly put at the time. I remember my noble friend's speech on this Part of the Bill, and I have refreshed my mind on it since, and I think the Government's intention was very plainly put then. I am the first to agree that the hour was rather early at the time, and it became earlier, or later, because that was about the middle of our May marathon. But in view of what the noble Lord, Lord Hoy, has said in moving these Amendments, I think I should recapitulate the position as seen by the Government.
As I think the noble Lord, Lord Hoy, suggested, under Schedule 2 to the Contracts of Employment Act the employee's pay is guaranteed during the appropriate minimum period of notice laid down in the Act. The employer is able to count towards such guaranteed payment any sick pay or holiday pay which he makes to the employee in relation to that period, but there is no provision which enables him to offset sickness or industrial injury benefit received
722
by the employee in respect of that period. This has meant that employees who were away sick during the notice period could receive both sickness benefit and a guaranteed payment under Schedule 2 to the Act which, as a result of earnings-related benefit, could be more in total in many cases than their normal earnings at work. I know that this was mentioned at Committee stage, but perhaps noble Lords now present were not in the House at that rather early hour. So I should make it clear that this seemingly relatively small matter—though it is not an unimportant one—has created serious difficulties for certain industries.
I know, for instance, that it has created very considerable difficulty in the coal-mining industry. When redundancies there have become necessary, there have in fact—I am not wishing to put this in a particularly pejorative sense, but it is a plain truth—been dramatic increases in sick absences during the weeks that the employees have been under notice. In some instances—and this applies to the industry which I have mentioned—the rate of absences on account of sickness has risen to over 50 per cent. I am not saying where the abuse lies, but there certainly has been abuse; and this has the serious practical effect that high rates of sick absence like this certainly seriously impede redeployment of the labour force and the run-down arrangements—the salvage of equipment and so on. Certain industries—for example, the coalmining industry—have felt this very keenly, and have made very strong representations indeed. That is why we think it right that some adjustments should be made to Schedule 2 to the Act, to deal, at least in part, with this situation. Most employers who have a sick pay scheme which operates in normal employment circumstances offset against the sick pay any sickness or industrial injury benefit which the employee receives in respect of the period, and we think it right and reasonable that these normal arrangements for sick pay should also apply during the period an employee is under notice—and this is what this paragraph of the Schedule provides.
My Lords, the guarantees provided by the provisions of Schedule 2 to the Contracts of Employment Act are, of course, left completely intact. They are in no

723
wise whittled down or tampered with; but an anomaly is removed. This means that the employee will be no worse off during notice than at any other time when he has been away from work sick, but it also means that he will not be able to receive, when sick during notice, more than he would normally earn. I must again say—and I think it is wrong to be mealy-mouthed about these things, whichever way we come down on these points—that the earnings as a result of what I think is an anomaly have been very high indeed. They have in some cases amounted to 185 per cent. of normal working pay. We feel that this provision should help to reduce the high rate of sick absences among employees under notice, and the very real problem this engenders. For those reasons, we consider paragraph 7, unamended, to be an important one, and to make a very necessary improvement to Schedule 2 of the Contracts of Employment Act.
My Lords, may I just summarise? I apologise for speaking at some length on this matter, but the noble Lord, Lord Hoy, developed an important argument on a not unimportant point, and I think that perhaps it merits more consideration than, for one reason or another, we were able to give it at a very early hour of the morning on Committee stage. All we are doing or seeking to do, here in the Bill is to ensure that those workers in employment whose employers operate a voluntary sick pay scheme and who are away sick or industrially injured during the period they are under notice are no better treated than those who are in employment but are also sick or industrially injured. I should like to emphasise that, under our arrangements, an employee would be no worse off if he were sick during his notice than if he was in normal employment. It is quite true, as the noble Lord, Lord Hoy, has said, that we have been unable to quantify (and I have looked into this matter as a result of the Amendment) the size of this particular problem. The reason for that, as I think was made clear in the letter which my noble friend Lord Drumalbyn sent to the noble Lord, Lord Diamond, is that insufficient information is available as to how many employers operate sick pay schemes. All I can say is that a considerable number of em-
724
ployers operate such schemes—and I may add, in parenthesis, that I think there is a great deal to be said for more operating such schemes—but I am unable to quantify it. All I would say is that I believe that if we were to incorporate the Amendment we should be perpetuating a situation which is wrong in theory and in practice has extremely undesirable consequences. That deals with the plain issue.
The issue is complicated by the other point to which the noble Lord, Lord Hoy, referred. I should like to make it clear that if the Bill stands unamended, if your Lordships do not accept these Amendments or they are withdrawn, the Government recognise that the provision deals only in part with the problem of abuse of the present guarantee payment arrangements under Schedule 2, and I should like to explain what is the difficulty here. In order for an employer to be able to take into account in calculating a payment he is making to an employee the amount of sickness benefit received, he needs to have written evidence of the employee's sickness benefit entitlement. That information, however, is regarded, and I think rightly regarded, as private as between the employee and the Department of Health and Social Security; and we feel it would be wrong to compel an employee, by law, to disclose his sickness benefit position to his employer or his ex-employer. There is a problem of confidentiality here.
Where, however, voluntary arrangements which the employer and employee have both agreed to operate already provide for the employee to disclose this information, so that sickness benefit re-received may be taken into account in calculating the employee's entitlement under an occupational sick pay benefit scheme, then we think this arrangement should be allowed to apply to a guarantee payment made under Schedule 2 to the Act where an employee is away sick while under notice—and that, of course, is what paragraph 7 provides. That is why we feel there is this great difficulty of making the provision which we think right in the case of workers in employment where there is a voluntary sick pay scheme operate in the case where there is not one working, though we should like the provision to do so. The reason we

725
feel unable to do so is because it breaches a very important principle of confidentiality. That is why we feel unable to make that tightening up where there is no sick pay scheme in operation. But I should like to point out that employees receive only sickness benefit when they are away sick during normal employment circumstances, and there is probably, therefore, an element of rough justice in the provision.
My Lords, our evidence is that the difficulties which arise from an abuse of the present provisions are most acute among the larger undertakings. More of the large firms can be expected to have an occupational sick pay scheme of some kind, and the provisions in paragraph 7 of Schedule 2 will therefore deal with the main problem area, although they admittedly leave an anomaly. I would say only this in conclusion and I apologise for the length at which I have spoken. The fact that there is one anomaly that we are leaving in the Bill unamended is not necessarily, I think, a reason for leaving two in an important area here. If we must have one anomaly left, there is also the question of the rough justice. There is also another point: if we leave the Bill unamended, this will work to the advantage of the employers who have introduced, with the agreement of their employees, voluntary sick pay schemes. I think this will be an encouragement to those employers who have not introduced such schemes—which we consider, on the whole, desirable—to do so. This is a consideration that I hope noble Lords opposite will weigh in making up their minds on this issue.
In conclusion, I should say that I have convinced myself beyond doubt on the basic issue of the majority of cases where employees are in employment where there is a voluntary sick pay arrangement operating and that it will be wise to leave the Bill unamended. I hope that I have given more background information than was perhaps available earlier.
6.41 p.m.
LORD SLATER: My Lords, I do not think there is any need for the noble Earl to apologise for the length of time taken up in reply to my noble friend's speech. Noble Lords must remember that the Government and the local authorities, are the largest employers in the country.
726
I was very sorry to hear the noble Earl in reference to the mining industry, speak of a 50 per cent. increase in absences while under notice. These people follow the most arduous occupation in the country. I ought to know something about this for I was in that industry for over 30 years. I came straight from the coal face to become an M.P. I am sorry that the noble Earl should have made that reference. The fact is that these people could not in any circumstances absent themselves from the colliery in which they were working unless they had a medical certificate from their medical officer. When the noble Earl took that line in his argument I could not help reflecting on what once used to happen in the mining industry. If a man happened to feel ill in the course of his work and wanted to leave his shift, the management required that man immediately to present himself to the local practitioner, to get a medical certificate from him and to lodge that certificate in the colliery office before he went home. I was rather upset to hear the noble Earl make that statement in respect of this class of people and in regard to that 50 per cent. in his speech against the Amendment so ably moved by my noble friend.
LORD HOY: My Lords, we are grateful to the noble Earl for the explanation he gave in defence of the Amendments moved on the Committee stage. His arguments were certainly much broader than those in the speech delivered when we accepted them. But what the noble Earl has said this evening is exactly what was said during the Committee stage: that whether we like it or not, we are left with the anomaly that a man who pays into a sick scheme is going to be much worse off, benefit-wise, than a man who does not pay in at all. I should have thought that that anomaly was so great that if one anomaly were to be removed it would be that one. I find it difficult to understand what this Amendment has to do with this Bill; for it is a matter of insurance benefits. It seems extraordinary that the Government should take steps to penalise certain workers, to take insurance benefits away from them, in the course of promoting a Bill for good industrial relations. It is completely contradictory. So I say to the noble Earl that while I am grateful to him for the explanation he has given, I could not accept

727
it because it is taking steps under the Bill to penalise a section of workers. I can understand the feeling of my noble friend, Lord Slater. It is one of the great difficulties in this life that whenever one chooses some section of the community as an example one gets oneself into trouble. Only too frequently is the miner used as the example. This is surprising when one remembers the arduous duties and tasks that these men have to undergo. Considering that what the Government are doing is to penalise the workers who pay into an insurance scheme while leaving the others free, I must advise my noble friends to take this matter to the Division Lobby.
EARL JELLICOE: My Lords, I should like to dissuade the noble Lord from taking this Amendment to a Division because this is not a Party matter and not a matter upon which the House should divide at Report stage. I have not sought your Lordships' permission to speak again; but I hope that I have it. I recognise that paragraph 7 bites on those employees whose employers have made a voluntary sick pay scheme and that it does not bite on those employees where there is no such voluntary sick pay scheme. I recognise that this is an anomaly. I have explained why the anomaly exists and that to remove it would be to breach confidentiality in a very important area. Also I pointed out that these employees do not receive, and quite rightly, the same advantages as do those employees who are members of a voluntary sick pay scheme; so although there is an anomaly remaining, there is a certain rough justice. I have also pointed out that if we pass the Schedule unamended, this will afford an encouragement
to employers and employees to try to make voluntary sick pay agreements, which we consider desirable, where they do not now exist. Those are not unimportant considerations to set against the arguments of equity and unfairness which the noble Lord, Lord Hoy, has advanced. This is a difficult area. I feel that, right or wrong, there is considerable, or at least some, abuse going on at present. What is more, there are very serious practical disadvantages which have been pointed out by one employer—not a mean one—in a very important industry.
My Lords, I should merely like to say to the noble Lord, Lord Slater, that I hope I recognise the force of what he has said. I hope that the noble Lord will not think I was casting aspersions on the employees in any one particular industry in this country. We recognise that a particular industry has a great problem and that the employees in it probably work under more arduous and difficult conditions than most people in our national life. I was merely stating facts which I think are incontrovertible; and because in certain instances they are painful I did not think I should be mealy-mouthed about it. But I was not wishing to cast aspersions on the industry or those who work in it. I hope that the noble Lord, Lord Hoy, will not divide the House on this Amendment merely because he has coupled with it two succeeding ones which I think would cut out other things we need for other reasons in the Bill. But I can only put that suggestion to the noble Lord.
6.51 p.m.
On Question, Whether the said Amendment (No. 45) shall be agreed to?
Their Lordships divided: Contents, 47; Not-Contents, 83.

CONTENTS

Archibald, L.

Faringdon, L.

Phillips, Bs. [Teller.]

Bacon, Bs.

Gaitskell, Bs.

Popplewell, L.

Beaumont of Whitley, L.

Gardiner, L.

Rusholme, L.

Bernstein, L.

Henderson, L.

Sainsbury, L.

Beswick, L.

Henley, L.

St. Davids, V.

Blyton, L.

Hilton of Upton, L.

Segal, L.

Brockway, L.

Hoy, L.

Slater, L.

Brown, L.

Hughes, L.

Stocks, Bs.

Buckinghamshire, E.

Janner, L.

Stonham, L.

Burntwood, L.

Kennet, L.

Stow Hill, L.

Caradon, L.

Leatherland, L.

Strabolgi, L.

Champion, L.

Lindgren, L.

Summerskill, Bs.

Crook, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Taylor of Mansfield, L.

Davies of Leek, L.

Wells-Pcstell, L.

Delacourt-Smith, L.

Lloyd of Hampstead, L.

Wootton of Abinger, Bs.

Evans of Hungershall, L.

Norwich, V.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Drumalbyn, L.

Milverton, L.

Ailwyn, L.

Dundee, E.

Monck, V.

Allerton, L.

Ebbisham, L.

Monsell, V.

Amory, V.

Effingham, E.

Mountevans, L.

Auckland, L.

Elliot of Harwood, Bs.

Mowbray and Stourton, L.

Balfour, E.

Exeter, M.

Oakshott, L.

Bellhaven and Stenton, L.

Ferrers, E.

O'Neill of the Maine, L.

Berkeley, Bs.

Goschen, V. [Teller.]

Orr-Ewing, L.

Bessborough, E.

Gowrie, E. [Teller.]

Poltimore, L.

Birdwood, L.

Grenfell, L.

Rankeillour, L.

Bledisloe, V.

Grimston of Westbury, L.

Rathcavan, L.

Bradford, E.

Hacking, L.

Reigate, L.

Bridgeman, V.

Hailes, L.

St. Aldwyn, E.

Brooke of Cumnor, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

St. Helens, L.

Brooke of Ystradfellte, Bs.

St. Just, L.

Brougham and Vaux, L.

Hanworfh, V.

St. Oswald, L.

Buccleuch and Queensberry, D.

Harvey of Tasburgh, L.

Sandford, L.

Burgh, L.

Hatherton, L.

Selkirk, E.

Carrington, L.

Hylton-Foster, Bs.

Sinclair of Cleeve, L.

Clwyd, L.

Jellicoe E. (L. Privy Seal.)

Skelmersdale, L.

Coleraine, L.

Kemsley, V.

Somers, L.

Conesford, L.

Kilmany, L.

Stamp, L.

Cork and Orrery, E.

Latymer, L.

Stonehaven, V.

Craigavon, V.

Lauderdale, E.

Strange of Knokin, Bs.

Crathorne, L.

Lindsey and Abingdon, E.

Strathclyde, L.

Crawshaw, L.

Loudoun, C.

Sudeley, L.

Davenlry, V.

Macleod of Borve, Bs.

Vivian, L.

Denham, L.

Macpherson of Drumochter, L.

Windlesham, L.

On Question, Amendment agreed to.

6.59 p.m.
LORD DRUMALBYN: My Lords, I beg to move that further proceedings on Report on the Industrial Relations Bill be adjourned until after the Second Reading of the Pool Competitions Bill.
Moved, That further proceedings on Report on the Industrial Relations Bill be adjourned until after the Second Reading of the Pool Competitions Bill.—(Lord Drtinlalbytt.)
EARL ST. ALDWYN: My Lords, before the next Business is called I think it would be convenient to the House for me to say that discussion on the next Business should not take very long and that the House will then adjourn during pleasure until a quarter to eight.

POOL COMPETITIONS BILL
7.0 p.m.
LORD WINDLESHAM: I beg to move that this Bill be now read a second time. Although this Bill looks somewhat complicated it has a simple purpose which I should explain at the outset. This is to safeguard the position of certain charities and sporting activities which derive a substantial part of their income from
730
what are often described as charity pools. These take the form of competitions, usually based on the outcome of football matches and in many ways similar to fooball pools, which have as part of their appeal to the public the fact that considerable sums are paid over to charities out of the proceeds. The Spastics Society, for example, has benefited to the tune of between £1½ and £2 million a year from competitions of this sort. This is probably the largest single charitable organisation affected, but there seems no doubt that several million pounds a year are going to deserving charities and sporting interests.
As your Lordships are aware, for some years a number of competitions have been operating from which charities and sport derive considerable benefit. Until recently these competitions purported to operate as lawful pool betting, but the decision of your Lordships' House in the case of Singette & Others v. Martin established that they were in fact unlawful lotteries. The purpose of this Bill is to restore to a limited extent and for a limited period the position which was thought to obtain before that decision. It does no more than make the necessary changes to enable those competitions to be treated again for a limited period as pool betting.
The schemes which the House of Lords found were unlawful lotteries had many

731
similarities with legitimate pool betting, but there were also some significant differences. The principal difference was that the overwhelming majority of those taking part made no forecast. These schemes had other features which distinguished them from ordinary pool betting. The most important, of course, is that they operated to provide substantial financial contributions to charity and sport. Another distinguishing feature is the much greater reliance placed by them on the collection of weekly entry moneys by local collectors organised under a system of regional supervisors. One other feature to which I should like to draw attention is the combination of these schemes with other forms of benefit—notably Premium Bonds or gifts—which do not purport to be pool betting at all and which accordingly do not come within any part of the existing system of control. Some of these distributions of benefits proved to be lotteries, and unlawful on that account. In other cases distributions are made in such a way as to avoid this illegality. In addition, some competitions are associated with modest insurance schemes which act as an inducement to the entrant to maintain his regular weekly payments.
These collateral schemes are of considerable importance in considering the provision that has to be made in this Bill. It has been the practice for some promoters to run the whole scheme by a series of separate companies, one company running the pool competition and other companies being responsible for the related benefits. In some cases the contribution to charity or sport has in fact been made out of the turnover of the company concerned with the related benefits. It is not, therefore, sufficient to deal with the pool competition itself in isolation, but it is necessary to take into account the whole operation.
It would seem that the financial pattern of these schemes is subject to a good deal of variation. In one scheme, for example, 25 per cent. of the entry money goes into the pool competition and 75 per cent. goes into the related schemes. Other competitions have been differently organised, with a much greater proportion of the entry money going into the competition proper. The amount of benefit going to charity and sport has
732
also varied from scheme to scheme. In some cases it has averaged about 10 per cent. of the total turnover, and in other cases it has reached a higher figure. The total turnover involved has been very substantial. The annual turnover of what may be the largest of these schemes has on occasion reached a figure as high as £15 million.
It is the size of the benefit to charity and sport which has led the Government to decide that it would not be right to allow this source of income to be suddenly brought to an end. It would clearly be impracticable for the charities affected to find comparable sources of income to replace what would be lost without strenuous efforts over a long period. At the same time it would not have been practical to introduce comprehensive permanent legislation to regularise the situation in time to save the income on which certain charities and sport had come very largely to depend. The Government, therefore, decided that the right course would be to introduce temporary provisions in the nature of indemnifying legislation, to enable those charitable and sporting interests concerned who had come to depend on this form of income to continue to enjoy it while the whole of the law in this field is reviewed.
This review has now been put in hand. The laws concerning lotteries, pool betting and prize competitions are far from straightforward, and it seems sensible to consider the implications to the public as widely as possible and not in a piecemeal way. There are, of course, many other interests involved as well as charities who have benefited until now from this sort of income, and it should not be assumed that the law will be permanently altered to enable arrangements of this kind to continue in the future. What the Bill does, therefore, is to provide a breathing space, a period of five years, in which charities which have depended on this form of competition for such a large part of their income can seek alternative sources. I should add that the Bill only applies to those schemes which were already in operation at the time of the decision in Singette and others v. Martin last November. There will not be any opportunity for new entrants to come into the field.
The Bill is concerned only with competitions for prizes depending on the

733
sporting events. What is meant by the words "competition for prizes" is defined in Clause 7(2). This establishes that the allocation of prizes must depend on the outcome of a sporting event; that there is a right to forecast the outcome, even though it is not exercised; and that prizes can be won whether or not a forecast is made. The Bill legalises the competitions in question by providing a procedure for identifying those which are intended to be covered by it and licensing them to continue to operate in the way they have done, subject to new controls.
The cornerstone of the new procedure is the Gaming Board, which has very willingly taken on this new task. It has been necessary to introduce a central authority of this kind because of the wide variations which exist from scheme to scheme, and the difficulty of knowing, without full information about the various schemes, what general or particular provision ought to be made. Accordingly the Gaming Board is given power to issue certificates identifying the schemes which will benefit under the Bill, and to license those schemes to continue subject to controls. The procedure for issuing certificates is contained in Clause 1. The essential criteria are that the promoter must have held during the year preceding the House of Lords decision at least nine competitions, which must have benefited some charities or sporting organisation or other organisation not established for private gain, and that the competitions must have been of a certain kind, closely analogous to pool betting. Once an applicant has satisfied the Board a certificate must be issued.
The licensing provisions are contained in Clauses 2 and 3 of the Bill. The effect of the grant of a licence will be to treat these competitions as lawful pool betting. This will remove them from the lottery law and ensure that they are subject to the ordinary provisions of the pool betting law. In addition to issuing the licence the Board is given power to impose conditions. The primary object that the Board must satisfy in exercising its powers is set out in Clause 2(2), namely, to ensure that financial benefit continues to accrue to the relevant society. In addition the Board is required to impose conditions which will ensure
734
that full information about the whole operation of the scheme is made available to those who take part.
Licences under the Bill will run for a year at a time and the Board is given wide power to extend or revoke a licence. This power to extend or revoke will enable the Board to keep these licences continually under review. The financing of the new procedure will be covered by fees payable to the Board by applicants for certificates and licences. The amount of these fees will be prescribed by the Secretary of State by Order under the power conferred on him by Clause 5.
The Gaming Board have already invited applications for certificates from pool promoters whose competitions fulfil the criteria in Clause 1 of the Bill, and a number of applications have already been received. As soon as the Bill has received Royal Assent the Board will act as quickly as possible in issuing licences, to ensure that existing schemes are brought within the law so that the contributions made to the benefiting organisations can continue. My right honourable friend the Home Secretary is very grateful to the Chairman and members of the Board for taking on this new task.
This is a small Bill, but an important one to the interests concerned. It is an agreed measure between the Parties, and for the reasons that I have given I hope it will commend itself to your Lordships. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Windlesham.)
7.12 p.m.
Loon GARDINER: My Lords, the House will be grateful to the noble Lord, Lord Windlesham, for the clear way in which he has explained this Bill to us. At first sight, is is a rather complicated Bill, and it seems an odd piece of legislation to put before Parliament, because it enables people to go on doing something which your Lordships' House has found to be illegal. But when one looks into it, one finds that it is a good example of that common sense which we hope in the end the Government will show in relation to Equity and the Industrial Relations Bill.
It is the fact that a limited number of charities have been raising large sums by these pool competitions which they

735
believed to be legal. Not only do the Spastics Society stand to lose something between £1½ million and £2 million a year, but the National Fund for Research into Crippling Diseases and the Imperial Cancer Research Fund together are in danger of losing more than £200,000 a year. One must realise therefore that if this fund raising had suddenly stopped, as it would if there were no legislation, the good work clone by the Spastic Society for spastics, for example, would at once have been drastically curtailed. Therefore, it is only common sense in the circumstances that the Government of the day should say: "We have always known that the law about pools competitions and lotteries has been a troublesome one, and we will appoint a Working Party to go into it; meanwhile, we will have this short Bill to enable these socieites to go on doing what they have done so far."
As the noble Lord has said, this Bill received unanimous support from all Parties in the other place, and the reason, I apprehend, why there are not the usual cheering crowds behind me is not solely due to another attraction which is now taking place in your Lordships' House, but to the fact that nobody would wish to say anything against this admirable Bill.
7.14 p.m.
LORD EBBISHAM: My Lords, I should like to give a brief but warm welcome to this Bill on behalf of first-class cricket. 'Those of your Lordships who are interested in first-class cricket will know that the financial position of most county clubs is at a very low ebb indeed. Some clubs, one of which is Surrey, of which I happen to be honorary treasurer, are wondering whether they can survive at all. For some years now most county clubs have been relying on pools competitions, in common with some charities and football, for additional income. The most noticeably successful in cricket has been the Warwickshire County Cricket Supporters' Association, which has from its funds so collected helped many aspects of cricket as well as the Warwickshire County Club. So when the decisison in Singette and Ors v. Martin came to be known it was a great blow to first-class cricket in general.
I am well aware that the main purpose of this Bill is to help those charities, both
736
great and small, which have been counting on this harmless form of gambling to produce a useful source of income, and to compare the worth and value of the work which these organisations do with cricket and football would be absurd. Yet I venture to think that cricket is part of our national heritage—a heritage which we have imparted to many parts of the Commonwealth, and which forms a bond between us wholly for good. Indeed, cricket has spread beyond the bounds of the Commonwealth, and can be found in such unlikely places as California, Corfu and the Netherlands. As such, it is surely worth preserving.
We are therefore extremely grateful to the Government for acting so promptly. This Bill, as has been said, is admittedly only a holding operation, but we must hope that the review later on will lead to the permanent restitution of the right to hold these pools competitions, or to some similar right. I thank the Government warmly for introducing the Bill, and I hope that your Lordships will give it a second reading.
7.17 p.m.
LORD WINDLESHAM: My Lords, I think all that remains for me to do is to thank both noble Lords who have spoken in this brief debate. The Bill represents, as the noble and learned Lord, Lord Gardiner said, a common sense approach. There was no other course of action that could be taken. We were aware of the significance of these competitions to first-class cricket and I believe it to be the fact that the Warwickshire County Cricket Supporters' Association has been paying a sum of approximately £750,000 to first-class county cricket and also to certain football activities. The cricket grounds of Gloucestershire and Leicestershire were both purchased recently out of grants made from that source. However, the whole question is now under review and we should not assume that the shape the law finally takes will necessarily correspond to this temporary measure. I thank noble Lords once again for what they have said.
On Question, Bill read 2a, and committed to a Committee of the whole House.
[The Sitting was suspended at 7.18 p.m. and resumed at 7.45 p.m.]

INDUSTRIAL RELATIONS BILL
7.45 p.m.
LORD DRUMALBYN: My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Drumalbyn.)
Clause 23 [Meaning of "dismissal"]:
LORD STOW HILL LORD STOW HILL moved Amendment No. 47A:
Page 18, line 18, at end insert—
("or
(c) his employer has by a consistent course of conduct in relation to that employee intentionally brought about circumstances in which it is reasonable for that employee to give notice terminating his employment and he has given such notice wholly or mainly in consequence of such circumstances.")
The noble Lord said: My Lords, I beg to move this Amendment which is designed to extend the definition of "dismissal" contained in Clause 23(2). At the moment, that subsection provides that an employee is to be taken to be dismissed if the contract under which he is employed is terminated by the employer with or without notice, or if his contract comes to an end and is not renewed. The addition which I seek to embody by the Amendment which I am moving is designed to provide for the situation in which perhaps there has been friction between an employer and a particular employee, and the employer in consequence wants to get rid of the employee. It is expressly to provide for the case in which the employer has, by a consistent course of conduct in relation to that employee, intentionally brought about circumstances in which it is reasonable for him to give notice and he has given notice because of those circumstances. One hopes that that is not a very common occurrence but if one is trying, as the Government are, in these clauses to work out a general code relating to unfair dismissal, it is the submission of this side of your Lordships' House that it is right, in order to see that justice is done overall, to provide for the kind of case even if, as
738
I have said, it is an infrequent one. Whether the drafting is satisfactory I leave to the noble Lord, Lord Drumalbyn, to judge.
I submit that the Amendment is properly conceived to apply to the circumstances, and only to the circumstances in which an employer has, on purpose and intentionally, brought about circumstances, a state of affairs, not on one particular day but by a consistent course of conduct, and that that conduct has been designed to affect that employee himself particularly, and that that conduct has continued to such an extent and with such effect that any ordinary person, looking at the situation from outside, would say, "It is reasonable for that employee to leave that employer." When the situation is such that the employee as a consequence of these circumstances gives notice to terminate his employment, then, if the House accepts my Amendment, the result would be that within the meaning of Clause 23 the employee has been dismissed, and if there were no circumstances justifying dismissal then he could claim compensation as for an unfair dismissal. This is a completely non-Party point and I submit that it completes the code in a not altogether unimportant particular. I beg to move.
LORD STONHAM: My Lords, I hope that the Government will accept this Amendment, which is most reasonable. It is not designed to deal with the good or average employer, but is aimed at the unscrupulous employer who will adopt any device to make life impossible for a particular employee, with the object of getting rid of him and, at the same time, disqualifying him from receiving the benefits to which he would otherwise be entitled; for example, employment pay or redundancy benefit, to which the employer would have to make a contribution. I cannot see that there can be any possible objection to giving employees this protection. It is no good saying that it does not or cannot happen. The Amendment describes particular circumstances in which some employees are dismissed. Life can be made intolerable for them in their employment, designedly so, to ensure that they are goaded eventually to resigning and leaving their employment. The position is very clear and is not to be answered by any sophistries.
7.52 p.m.
THE LORD CHANCELLOR: My Lords, we had a very full debate on precisely this point in the course of Amendment No. 204 on the Committee stage. While I did not seek then to pretend either that circumstances of the kind envisaged in the Amendment could not conceivably take place or that, if they did, the conduct of such an employer would not be open to strong criticism, I made it plain that I did not think it was possible to give effect in this Bill to a direct remedy by way of compensation for unfair dismissal. I gave my reasons at some length in the course of three interventions in the Committee. I do not know—and I say this without disrespect to either of the noble Lords who have spoken—that I can usefully add very much to what I said then.
The noble Lord, Lord Delacourt-Smith, who at that time moved the relevant Amendment (No. 204), began by admitting with the candour one has been accustomed to expect from him that the Labour Government's Bill was in exactly the same position as ours. That fortified me in the conclusion that, despite the confidence of the noble Lord, Lord Stonham, that there could be nothing said against art Amendment of this type, the matter had been considered by the previous Administration, who had been driven, no doubt against their will, as we were, to the conclusion that Amendments of this kind were not really a feasible proposition. It is fair to the noble Lord, Lord Delacourt-Smith, to say that he expressed the confidence that had the Labour Government's Bill been, as he put it, "refined" in the fires of the Committee stage (a pleasant enough simile for those of us who have endured those fires) they would have managed to secure a solution; but he did not suggest any solution that would be attractive to the Government; or convince the Committee. I do not know that this Amendment in the name of the noble Lord, Lord Stow Hill, which puts the point very succinctly, puts the matter any better.
It is conceivable to imagine a situation, especially in a very small employment (though not so easily in a very large one) where an employer, as in a marriage, deliberately makes life unendurable for the employee, as a husband or wife in marriage can do to a partner,
740
with the direct intention of getting rid of her or him. It is an extremely difficult and complex inference to have to draw in matrimonial cases. I should be reluctant to introduce it into a Bill dealing with industrial relations. I cannot help mentioning, in parenthesis, that it seems to me to be quite extraordinary that in Amendment after Amendment the Party which condemns us so wholeheartedly for introducing a complex, legal framework within which industrial relations have to be carried forward in future should again and again propose Amendments which can only open the doors to an unlimited spate of litigation, arguing about problems the resolution of which was next to impossible.
I can only remind the House of what I said to the Committee. I said in the first place that one should remember that by providing a remedy for unfair dismissal the Government were proposing a new remedy with a new source of compensation over and above that provided by the law of contract. You begin to argue about compensation for unfair dismissal at the point where you assume that neither the employer nor the employee has directly broken the terms of contract of employment, but the employer has unilaterally terminated it. We, and also the Labour Government, thought that although the argument was complex enough, when you came to discuss what dismissals were unfair (and the two respective Governments arrived at solutions which were different, ours being slightly the more generous to the employee), the test of what constituted or did not constitute a dismissal should be as simple as possible. Clearly, even in relation to strike and lock-out situations it is difficult to define dismissal in terms which are incapable of argument. Fortunately, the great number of dismissals take place out of the context of the strike or lock-out situation. Therefore it is possible to define them in terms of a unilateral action by an employer against an employee. If you abandon that and start introducing cases where the contract of employment is terminated by mutual consent or mutual dislike, or is terminated by the employee either on terms of mutual dislike or because of unilateral dislike on his part, you open the floodgates to a series of hotly contested cases of litigation in precisely the situation in

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which neither party can be said to have broken the contract.
As I pointed out in the Committee, in a sizeable minority of what I hope will be an extremely small minority of cases, the employer would have broken the contract, and if he had done so he would be liable to an action for damages at common law. At present under the county courts procedure, when Clause 112 is activated by the Secretary of State, the employee will be able to go to the industrial tribunal, at least as an alternative, but in a number of cases the law already provides a remedy. At the end of the day, I would firmly say that the decision arrived at in Committee was correct. Both Governments have come to the conclusion that this extremely rare type of wrong-doing is not capable of remedy within the framework of this Bill, though it may turn out that someone more ingenious than myself might find a remedy—but certainly not within the framework of this Amendment. I feel that the Amendment would lead to a vast number of cases in the courts, some of which would be difficult and some equivocal. At the moment, the Government do not know what load will be placed on the industrial tribunals. There are, I believe, some 10 million terminations of contract already. I could not willingly accept this Amendment, though I accept without resentment the extremely moderate way in which the noble Lord, Lord Stow Hill, has proposed it and the arguments advanced by the noble Lord, Lord Delacourt-Smith, when similar points were raised under different Amendments. I very much regret that I cannot give the noble Lord satisfaction by accepting this Amendment.
8.2 p.m.
LORD DELACOURT-SMITH: My Lords, I do not wish to terminate the debate by intervening, particularly as my noble friend Lord Stow Hill may wish to address himself to the legal aspects of the argument on which the noble and learned Lord on the Woolsack relied. As the noble and learned Lord said, we traversed this ground on Committee stage, when the Amendments bearing upon this matter were withdrawn after discussion in the hope that by further consideration, although the noble and learned Lord was fairly discouraging at
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the time, some solution would he found. It was in the 'light of our consideration of the Committee proceedings that my noble friends and I put down this Amendment, which we hoped might assist the position.
I should like to make one or two observations on the necessity for the insertion of some such provision if we are to make the arrangements for dealing with unfair dismissals as comprehensive as is reasonable in practice. I do not see all the difficulties. It seems to me desirable that we should have this third category in subsection (2). After all, this is a clause which defines dismissal. The remaining clauses deal with the issues of dismissal, but those do not begin to arise until a dismissal has been established. I recognise fully that it might be hard for an individual to establish that his resignation falls within the Amendment, but it is common ground among noble Lords who have spoken that such cases do arise. The harshest and hardest cases of this type tend to be cases of elderly men and women who have given a considerable period of service to the organisation from which they feel themselves under an obligation to resign. I appreciate the noble and learned Lord's point about the possibility of cases which did not have substance. However, I think that that is a consideration which applies to many proceedings which might arise out of this Bill, and the point has frequently been made that if there is any possibility of even a small number of cases of injustice arising, we should do our best to deal with them.
Although I appreciate the noble and learned Lord's desire to meet the point, I cannot feel that he has given a convincing answer. While I realise that it may be difficult for an individual to substantiate his claim, I still think that there is virtue in having the provision in the Bill, so that even in such a limited number of cases people are not left—even though there are possibilities of proceeding in other ways—without any possibility of establishing that they had in effect been dismissed and were therefore entitled to have their cases considered under the succeeding clauses of the Bill.
LORD STOW HILL: My Lords, while I thank the noble and learned Lord for his answer, I would have been glad had

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he been able to say that he would give a little further thought to this. I think that we are agreed that injustice might result, if provision is not made for this sort of case. I accept that a counterbalancing consideration is that we may get a number of cases before the industrial tribunals in which an employee has left and the tribunal is called upon to decide the extremely difficult issue of fact as to why he left—whether as a victim of persecution, or in a pique because he was over-sensitive or (a much more obvious case) because he thought he could discern a better opportunity of employment in some other direction. I accept that the balance is difficult to hold.
My own view is that of my noble friend Lord Delacourt-Smith, that the resulting cases of hardship and injustice might be sufficiently numerous for another effort to be made to try to formulate some more satisfactory drafting terms. That is why I would have been glad to hear the noble and learned Lord say that he had not closed his mind. There is time between now and Third Reading. I do not think that, ordinarily, it would be so difficult for an industrial tribunal on an issue of fact to come to a reliable conclusion. The employee would have to say what circumstances he relied upon, they could be investigated and the tribunal would have to conclude on them, as on other issues raised in cases of unfair dismissal. However, there is the argument and the reply. I would be glad if the noble and learned Lord said that, even at this late stage, he would give some further thought to it. The tribunals are intended to be courts of justice, and I would have hoped that an Amendment could be drafted to provide for the cases I have envisaged.
8.10 p.m.
THE LORD CHANCELLOR: My Lords, the noble and learned Lord has appealed to me. I can only utter again by permission of the House. I have not given the noble Lord the smallest encouragement either on Committee or now, but since he asks me to give further thought to this matter let me give him this general assurance: I will always continue to reflect on matters of this kind, but I do not think the difficulty consists in finding a form of words but in finding a solution which would be capable of practical application in the courts. There-
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fore, I do not think it is a matter of drafting. If it were I would be much more optimistic but the noble Lord having made this appeal to me, I would like to tell him that there is nothing to which I shall close my mind even at this late stage although I do not want to give him the smallest encouragement.
LORD STOW HILL: My Lords, I ask leave to speak again, just to say "Thank you very much". I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 24 [Fair and unfair dismissal]:
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 48:
Page 19, leave out lines 10 to 14 and insert—
(" (1) In determining for the purposes of this Act whether the dismissal of an employee was fair or unfair, it shall be for the employer to show—

(a) what was the reason (or, if there was more than one, the principal reason) for the dismissal, and

(b) that it was a reason falling within the next following subsection, or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held.

(1A) In subsection (1)(b) of this section the reference to a reason falling within this subsection is a reference to a reason which")
The noble and learned Lord said: My Lords, it would be possible to propose this Amendment in two ways, a long way and a short way. I propose to take the shortest route that I can to the objective. This and the next two Amendments arise from an undertaking given in Committee on what was then Amendment No. 203. Members of the Opposition considered that the unfair dismissal provisions did not clearly and unmistakably place the onus of proof on the reason for dismissal on the employer, and my noble friend the Leader of the House agreed to look again at the provisions of Clause 24.
The purpose of these Amendments is to make it absolutely clear that the onus of proof on the reason for dismissal rests fairly and squarely on the employer. I have used the expression "these Amendments". The Amendments are Nos. 48. 49 and 50, but there is a consequential Amendment No. 56. Your Lordships

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will see that what is proposed in subsection (1) is to substitute a clear statement of what the employer has to show, and then, in subsection (1B), at the end of line 23, it is proposed to insert a provision that
"Where the employer has fulfilled the requirements of subsection (1) of this section, then, subject to sections 25 and 26…"
with which at the moment I shall not concern your Lordships—
"the question whether the dismissal was fair or unfair shall be determined in accordance with the following provisions of this section".
Then, at page 20, line 5, it is proposed to put in this new subsection—
"Subject to subsections (2) and (3) of this section, the determination of the question whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether in the circumstances he acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee;"
If I may add a word of commentary on the last of these insertions it is this: supposing you get a situation in which an employer has dismissed an employee for lateness, there can be circumstances, and there can be employments, in which the smallest degree of lateness might be a reason for terminating the employment. Ordinarily it is not. If an employee comes a quarter of an hour late very occasionally, and has a good reason for doing so, no sensible or reasonable employer would terminate the employment, although if it happened habitually every day, he might take a different view. On the other hand, there would be sensitive employments when a whole town might be put in danger and when a small degree of lateness would justify dismissal. These are questions of fact for the tribunal. That is why it is established by the last Amendment that before you can decide the question in the ultimate, you have to look at the actual conduct complained of, even if it is established, to see whether in the circumstances it is reasonable to terminate the employment on those grounds. I beg to move.
LORD STONHAM: My Lords, may I take it that in deciding whether the dismissal has been fair or unfair the employee will have full opportunities to state his case? The kind of example I have in mind is that of a man perhaps employed satisfactorily for some years and of whom little has been heard during the course of his employment. He
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becomes a shop steward and it seems, both to his fellow work-people and to his employer, that his whole character has changed. From being a cog in the wheel he has become a thorn in his employer's side. This may be because he is properly and responsibly fulfilling his duties as a shop steward. The employer, however, may take a different view and may decide he does not want him in his employ. If he does so decide, there may be several ways in which he can achieve his objective—for example, in the selection of work. In such a case I have little doubt that the employee could prove that he had been unfairly dismissed. I should like to know whether such a case could be dealt with under this clause of the Bill?
THE LORD CHANCELLOR: My Lords, if I may reply to that with the permission of the House, the answer is Yes, he would have an opportunity of stating his case.
LORD DELACOURT-SMITH: My Lords, this Amendment is not an easy one for those of us who are not deeply experienced in legal matters to appreciate, but I am fortified by the assurance of the noble and learned Lord, which naturally I accept, that its intention and effect is to place beyond any doubt at all the proposition that the onus of proof is on the employer to establish that the dismissal was a fair one. I appreciate the actions of the Government in putting forward Amendments that are designed to make this clear.
THE LORD CHANCELLOR: My Lords, I beg to move Amendment No. 49.
Amendment moved—
Page 19, line 23, at end insert—
("(1B) Where the employer has fulfilled the requirements of subsection (1) of this section, then, subject to sections 25 and 26 of this Act, the question whether the dismissal was fair or unfair shall be determined in accordance with the following provisions of this section").—(The Lord Chancellor.)
THE LORD CHANCELLOR: Amendment No. 50 is a consequential Amendment. I beg to move.
Amendment moved—
Page 20, line 5, leave out from beginning to ("shall") in line 18 and insert—
("( ) Subject to subsections (2) and (3) of this section, the determination of the question

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whether the dismissal was fair or unfair, having regard to the reason shown by the employer, shall depend on whether in the circumstances he acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and that question").—(The Lord Chancellor.)
8.20 p.m.
LORD DELACOURT-SMITH LORD DELACOURT-SMITH moved Amendment No. 50D:
Page 20, line 19, at end insert—
("( ) Where a registered disabled person is dismissed and the principal reason is shown to be the employee's lack of capability, then in deciding for the purposes of this section whether the dismissal shall be regarded as fair, the Tribunal shall take into account whether or not the employee was replaced by a registered disabled person.")
The noble Lord said: My Lords, I beg to move Amendment No. 50D standing in the name of my noble friend Lord Diamond. This is a simple Amendment the effect of which will I am sure commend itself to your Lordships. There is very little need to explain it; it largely speaks for itself. As will be seen, it deals with a situation in which a registered disabled person is dismissed and the principal reason given is that he is not able to perform the duties for which he has been employed. It would, in our view, be most material for the tribunal to be aware of whether in fact the employee in question had been replaced by another registered disabled person. I am sure that this general proposition—the desire to do something in respect of this point—will commend itself to the Government, and I hope that they will find themselves able to accept this Amendment or, at any rate, the substance and spirit of it. I beg to move.
THE LORD CHANCELLOR: My Lords, I wholeheartedly agree with the purposes which the noble Lord, Lord Delacourt-Smith, has in ensuring proper protection for registered disabled persons under the "unfair dismissal" provisions of this Bill. The difficulty that arises is this. Quite obviously, to my mind, if the employer purports to dismiss the registered disabled person on the grounds of capability (which for the purpose of discussing this Amendment is the relevant ground upon which he could do so
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without being unfair) should the employee challenge the bona fides of this ground he would be entitled without any Amendment of this kind to draw the attention of the tribunal to the fact that the employer had in fact replaced him by somebody other than a disabled person. I have no real doubt about that. It would be a relevant factor, although it would not be a conclusive factor. To that extent the Amendment is not a necessary Amendment.
Difficulty arises from two sets of related circumstances. It may well be, to take one set of circumstances first, that an employer employs a disabled person with a particular disability and comes to the conclusion, after seeing him attempt to work, that it either is not safe or is not wise to continue with a disabled person to do that particular work. In those circumstances, I do not think anyone would wish to say that the employer was not entitled to terminate the employment without his action giving rise to a claim for unfair dismissal. In the second place, all disabilities differ in kind: there can be a disability of the eye, of the hand, of the leg. Therefore, whether one replaces a whole employee with a registered disabled employee, or replaces a disabled employee with a whole employee, is not a conclusive test of whether the previous employee is a person who was dismissed for want of capability.
Those circumstances would not in themselves be an insuperable objection to an Amendment of this kind—which, as I say, is more to be criticised on the grounds of its want of necessity than of its want of desirability—were it not for the fact that the Disabled Persons (Employment) Act 1944 provides, I submit to the House, the correct protection for employees of this kind, and the one which Parliament has designated for the purpose, and which is as a matter of fact designed for this purpose. It does not apply to very small establishments, but it applies to all employers with 20 or more employees, and requires such employers to give employment to a quota. Failure to employ the quota of registered disabled persons does not in itself constitute an offence, but there are two safeguards. The first is that an employer must not discharge a registered disabled person without reasonable cause—and I

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use the phrase "without reasonable cause" because it is the actual language of the Act—if he is below his quota, or if the discharge would bring him below it. If he does so he renders himself liable to prosecution under Section 9 of the Act. Moreover, while an employer to whom the Act applies is below quota he may not engage anyone other than a registered disabled person without the Secretary of State's permission.
The view of the Government is that the provisions of this Act, which was I think one of the fruits of the Coalition Government, provide adequate protection in this field, and probably more suitably designed protection than that which the noble Lord has in mind. In addition to that, I would have argued and urged the factor to which I attach importance; namely, that I am myself quite convinced that if anyone wanted to challenge the bona fides of an employer's dismissal of a disabled person for the purposes of a claim for compensation for unfair dismissal before the industrial tribunal under these provisions, he would in fact be entitled to refer to the nature of the person who was engaged to take his place. For those reasons, and without any want of sympathy in the case, I would submit that the Amendment is not one which ought to be pressed.
LORD STONHAM: My Lords, I find myself in some difficulty over this Amendment because it says:
"Where a registered disabled person is dismissed and the principal reason is shown to be the employee's lack of capability…".
But the employee's lack of capability is known when he is engaged, and therefore I find it difficult to see that that would be adduced as a reason for dismissing him. Disabled persons fall broadly into two classes: those who can do a particular job, in certain conditions as well as a person who is not disabled, and those who, by reason of their disability—blind persons, for example—have an output far below that of a well person. The degree by which the second class of disabled person falls below the output of a well person is quite remarkable.
On Saturday, at a meeting with a trade union organiser, one of the items discussed was the position of one of my own employees who is terribly disabled. I hasten to add that he was not in danger
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of dismissal; it was a question of deciding how his wages should be increased. The trade union official himself suggested that this man should be regarded as doing a 20-minute hour; that is to say, his output, in the estimation of the trade union, was one-third that of a normal worker. That is how it was decided. I do not quite see how any employer on that basis could eventually discharge a disabled person because of a lack of capability. The man's lack of capability was assessed when he was engaged, and I do not sec how a dismissal in any case could he regarded as fair. I feel that the addition of these words will create dubiety in a situation where at present good will exists among the overwhelming majority of employers.
LORD SOMERS: My Lords, the noble Lord, Lord Stonham, has said that a man's lack of capability is known when he is engaged. But is it not true that that disability might increase during the period of his engagement? Supposing, for instance, it is a question of poor sight: it is quite true that during a year's work his sight may have deteriorated very greatly. Therefore I do not think one could say that his disability was known when he was engaged.
VISCOUNT HANWORTH: My Lords, I was going to make the same point as the noble Lord, Lord Somers, has just made; but I make one more. If the nature of the firm's business changes or increases in scope, it is quite possible to envisage circumstances where the disabled man will be no longer able, with the best will in the world, to perform these duties.
LORD SLATER: My Lords, while it may have been a short debate on this matter, I am grateful that the noble and learned Lord on the Woolsack brought out the position of the previous Act and the powers that exist under that particular section with regard to these disabled people in firms with 20 or more employees. However, on the point made by the noble Lord, Lord Somers, in regard to poor vision which may deteriorate and have an effect on the man's capabilities, there is something else which noble Lords must never forget. Within industry, where certain people rise in the ranks it is possible for a certain type of individual to be put into a position of authority.

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He may be able to curry favour with a certain number of people, but not with the majority of people in that factory. Because of that, he must have an outlet somewhere, and that is in regard to the disabled person. I have seen that happen.
The outlet has the effect of his thinking that this man has not the capability, and he therefore recommends that the man be dismissed and be replaced by another disabled person, if only to brine the number up to the quota enforced by the regulations. I have seen a situation in which an individual, because he cannot get his own way with the language he has been accustomed to use with people with whom he has worked side by side, once he reaches that standard of promotion is able to talk only to the disabled person because he knows what answers he will get. This disabled person has to be very cautious and wary; he must watch his step, because he knows that the first wrong move, so far as this individual is concerned, will mean that he will be given notice arid will be dismissed from service. I have seen this operate, and I have had to take action. In many cases I have taken action against the recommendation made when I was in a particular Ministry. That is one instance where I have had experience.
Apart from the advice, which I believe is reasonable, given to us by the noble and learned Lord, the Lord Chancellor, I do not know what is the attitude of mind of my noble friend who has moved this Amendment.
LORD DELACOURT-SMITH: My Lords, the position of the registered disabled is always a somewhat complex one, and it is of great human importance in industry. Noble Lords who have contributed to this short debate have touched on a number of aspects, but if one looks at the actual Amendment which is before this House I am certainly disposed to say that what has been said by the noble and learned Lord on the Woolsack is perhaps the best line for the House to take at this stage on the matter. In the light of the statement which he has made, and the advice which he has given to the House, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 26 [Dismissal in connection with a strike or other industrial action]:
LORD STOW HILL LORD STOW HILL moved Amendment No. 50A:
Page 21, line 25, leave out ("not be regarded as unfair unless it is shown") and insert ("be regarded as unfair if it is shown").
The noble Lord said: My Lords, this is a short and simple Amendment. My only purpose in proposing it is really to do no more than simplify the language by removing one double negative. As at present drafted, if the principal reason for dismissal was that the claimant took part in the strike or other industrial action, the dismissal shall not be regarded as unfair unless it is shown to be as in paragraphs (a) and (b). I seek to substitute for the words "not be regarded as unfair unless it is shown" the words "be regarded as unfair if it is shown". I have puzzled over those words; I do not think that they alter the meaning and I think they are easier to read and to follow. It is for that limited purpose that I propose this Amendment.
THE LORD CHANCELLOR: My Lords, at this stage this Amendment, unless it is related to some other Amendment, appears to be purely a matter of drafting and to have no significant effect on the Bill at all. That is the advice that I have received. Should I turn out to be wrong about it, I should like to come back and tell the noble Lord that I have erred, but I tend to resist the Amendment on the Report stage on the grounds that it would make no significant difference to the Bill.
LORD STOW HILL: My Lords, I moved this Amendment separately for that limited purpose, but if the noble and learned Lord feels that the change is not really desirable or helpful I do not press it. As the noble and learned Lord has suggested, there are other Amendments on the Order Paper which at first sight might be thought should be read with this Amendment. I desire to move them separately because they deal with a separate aspect of the clause, but perhaps I may leave that aspect until we come to it. I do not press this Amendment; it is simply a small change of language which, speaking for myself. I should have thought would make the clause easier to

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read. In the circumstances, I beg leave to withdrawn the Amendment.
Amendment, by leave, withdrawn.
8.39 p.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 50B:
Page 21, line 33, at end insert—
("or
(c) that the dismissal took place in circumstances which involved a conflict with any of the provisions of the Workers' Representatives Recommendation 1971 adopted by the General Conference of the International Labour Organisation in June, 1971,").
The noble Lord said: My Lords, I submit that this is an Amendment of considerable importance. Before explaining its purport, may I remind the House of the general purport of Clause 26. Previous clauses dealing with unfair dismissal have dealt with cases of dismissal for various reasons. This clause is limited to the case in which a worker is dismissed because he has taken part in a strike or in other irregular action short of a strike. Obviously, therefore, from its very nature it is a clause of considerable importance because it deals precisely with what is sometimes loosely referred to as "the right to strike".
The structure of the clause is this: if the reason for the dismissal of the complainant is that he took part in a strike, that is to be deemed to be an unfair dismissal if one of two things is shown. The first is that he was dismissed whereas others who were in exactly like case and who also took part in the strike were not dismissed, or that they were offered re-engagement and he was not. That is the first thing that has to be shown: in other words, that there was a srtike and that afterwards the complainant was not kept on (if I may use a neutral phrase) whereas others were. He had to go and they were allowed to stay. Prima facie that raises a case of unfair dismissal. But it is not enough by itself, because as the clause is drafted it goes on to provide that the dismissal is, nevertheless, not to be regarded as unfair unless something further is shown, and that further element in the proof is contained in the lines which follow from line 34. Broadly speaking, if I may summarise from line 34 to the top of page 22, line 1, that
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requirement is as follows: it must be shown, in addition to the fact that he was dismissed and others were not, that the reason for his dismissal was that he was—and I quote
"exercising, or indicating his intention to exercise, any of the rights conferred on him by section 5(1) of this Act:"
Your Lordships will remember that Clause 5 is the clause which, subdivided under particular sub-headings, gives the worker the right to be a member of the union that he chooses, or the right to be a member of no union, and, in paragraph (c) of subsection (1), where he is a member of a trade union, the right to take part in the activities of the trade union. Therefore, before he can win his case it must be shown that he took part in a strike, that he was dismissed when others were not, and that the reason why he was dismissed and others were not was that he had carried out his intention of taking part in the activities of the union. That is what has to be shown. But the puzzle does not end there, because there is a proviso to that which has the following effect. Even if he can show that the reason for his being dismissed was his indication that he proposed to take part in the activities of the union, he does not succeed in his claim if the activities which he said that he wanted to take part in—I summarise again, and I hope accurately—really consisted in taking part in the strike after the strike had begun.
If that is approximately a summary of this really very complicated provision, I submit that it needs careful consideration. It means that a worker who has struck and has been dismissed will not be able to claim compensation for unfair dismissal if the fact is that he continued to be involved in and took part in the strike after it had begun. That is clearly penalising him for exercising what is loosely called his "right to strike". He renders himself liable to dismissal if he does not immediately desist when the strike begins. I submit that is the effect of the clause.
The Amendment which I am moving at the moment is Amendment 50B, which would seek to add to the paragraphs in subsection (2) of this clause a further provision, which would be that the worker succeeds in his claim that he was unfairly

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dismissed if he can show (in the terms of the Amendment)
"that the dismissal took place in circumstances which involved a conflict with any of the provisions of the Workers' Representatives Recommendation 1971 adopted by the General Conference of the International Labour Organisation in June 1971,"
That is a document with a number of different articles, but I think it is sufficient to call your Lordships' attention to Article for this purpose. It reads:
"Workers' representatives in the undertaking shall enjoy effective protection against any act prejudicial to them, including dismissal, based on their status or activities of a workers' representative, or on union membership or participation in union activities in so far as they act in conformity with existing laws or collective agreements or other jointly agreed arrangements."
I submit to the House that if I have summarised with approximate accuracy the content of this clause, it does conflict directly with that Article 1. It penalises a striker who continues to take part in the strike after it has begun. In other words, it offers a direct challenge to the right to participate in a strike. That is not one of the activities of the union, once the strike has begun, in which you may participate without jeopardising—and indeed putting an end to—your claim for compensation if you are dismissed as a result of engaging in the strike. As I have said, that involves a direct conflict with Article 1 of that recommendation. I submit that it is right on general priciple that when we, in this country, are framing a general code of industrial relations (as this Bill is intended to be) we should not so frame it as to run directly counter to this recommendation of the which, in my submission, impinges directly on the situation and is designed to safeguard precisely that right to strike as the clause as at present drafted intends.
My Lords, it might conduce to a saving of your Lordships' time if, with the agreement of the House, I refer to the content of Amendments 50C and 51, because they really both have the same effect. They leave out that part of the clause which contains the language which I have submitted to your Lordships is the offending language. If one leaves out from line 34 on page 21 to the top of the next page, one leaves out all those words to which I have referred and in consequence produces the result that the clause
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as it would be left after the omission of those lines no longer offends against that I.L.O. recommendation. Even if it did not offend against the I.L.O. recommendation, I would submit to your Lordships that in any event that part of the clause should be left out. It is surely most unfair if, when you say that a striker may take part in a strike as part of his union's activities, you qualify that by saying that his participation must not continue in effect (if I may summarise) after the strike has begun. In my submission that is illogical and difficult to justify, but that is the effect of the clause, and I would submit that in any event those words should be deleted. But, technically, at the moment I am commending to your Lordships Amendment No. 50B, and for the reasons I have given I ask your Lordships to agree to it. I beg to move.
THE LORD CHANCELLOR: My Lords, the short answer to this amendment is that I am going, when the noble Lord moves it, if he does move it, to accept Amendment No. 51. Of course, if Amendment No. 50C were to be accepted (and I am not going to accept No. 50C) he would not be able to move No. 51, because it would have fallen. But my intention is to accept 51, but not 50B or 50C, and the reasons I may give later when the noble Lord moves No. 51.
LORD STOW HILL: My Lords, if the noble and learned Lord would permit me, would it be of help if I said I shall be very content to ask leave to withdraw No. 50B if the noble and learned Lord will advise the House that No. 51 should be accepted. The only caveat, if I may respectfully say so, is should it not be, with respect, No. 50C. Because if one does not accept No. 50C one leaves in the first three lines of subsection (3) which would seem not to have a very satisfactory effect. But I would be quite content, if the noble and learned Lord feels able to advise the House to accept No. 51, speaking for myself, to withdraw No. 50B.
THE LORD CHANCELLOR: My Lords, I do certainly say that I will accept No. 51, but I can only do it on condition that No. 50C is not moved, or not accepted if it is moved, because I am advised by the Table that if No. 50C were to be agreed No. 51 could not be moved.
LORD STOW HILL: My Lords, I hope the noble and learned Lord does not think I am being tiresome, but I am trying to help. I shall be perfectly content, if the noble and learned Lord feels able to advise the House to accept No. 51, to ask the leave of the House to withdraw No. 50B, and when No. 50C is called not to move it.
THE LORD CHANCELLOR: My Lords, I can give that assurance; I will accept No. 51.
LORD STOW HILL: My Lords, in those circumstances, unless any other noble Lord wishes to intervene, may I beg leave to withdraw Amendment No. 50B.
Amendment, by leave, withdrawn.
8.53 p.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 51:
Page 21, line 42, leave out the proviso.
The noble Lord said: My Lords, I have deployed the reasons for this Amendment. If the proviso is left out I think the clause no longer offends against the I.L.O. recommendation to which I have already referred. I have already given my reasons for submitting to your Lordships that, even apart from the fact that the proviso offends against the recommendation, it is one which in any event on the merits is difficult to justify, and in my submission is not justifiable. I do not think I shall assist your Lordships by repeating the reasons. I beg to move.
THE LORD CHANCELLOR: My Lords, as I promised, I am going to accept this Amendment. We did re-examine this after the Committee stage, partly, admittedly, because of possible difficulty with the I.L.O. Convention, which was at that time very new, but not directly on that question, but on the merits. Our present Clause 26 is, we believe, considerably more liberal than the corresponding clause in the previous Government's Bill. But I came to the conclusion when I analysed it that the proviso would serve no useful purpose, and my advice to the House is to accept Amendment No. 51 without qualification.
LORD DELACOURT-SMITH: My Lords, might I ask the noble and learned Lord—and I am sure he would receive the leave of the House to do so—if he could comment on one or two matters? If it were in order for him to do so, perhaps he could indicate why he would have regarded Amendment No. 50C as unacceptable although he is advising the House to accept No. 51. Further, could he give a very firm assurance to the House that the clause, as it will stand with Amendment No. 51 in effect, will not in any way be in breach of the convention to which my noble friend has referred? The noble and learned Lord will appreciate that there are aspects of the convention which we may yet think it proper to draw attention to on later clauses, for example, when we come to questions of reinstatement after dismissal. But they do not arise at this stage, and the assurance I am asking for in respect of the I.L.O. Convention is limited solely to the subject-matter of the present Clause.
THE LORD CHANCELLOR: My Lords, to answer the question which the noble Lord, Lord Delacourt-Smith, has posed to me, and if I may speak again by leave of the House, I shall have to explain first of all why we originally put in the proviso in order to explain why we then took it out again. I should begin, therefore, by explaining why Clause 26 was formulated as it is. The unfair dismissal provisions are meant to safeguard individuals as such, and are not really appropriate to collective confrontations which are involved in either strike or lockout situations. We wish the unfair dismissal proposals to protect the rights of individuals, but to be neutral in what one might call industrial confrontations, either of the one category or the other.
Most strikes, of course, are settled on the basis of an agreement to avoid victimisation, and this is what we would wish to remain. An agreement on non-victimisation will, one hopes, be honoured by both sides who are parties to it, and this is what we would wish to encourage. The particular phraseology of Clause 26 applies to the minority of cases where this is not done. We have to have in mind two situations. The first is where, as part of the ritual of the

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strike situation, the employer dismisses all the strikers, but as a way of putting pressure on them to come to the bargaining table; this is not affected by the Amendment. Secondly, we do not wish to handicap those employers who from time to time have dismissed persons they regard as irresponsible, and in respect of whom no non-victimisation agreement applies. We came to the conclusion that the proviso goes too far in seeking this second objective. The cross-reference in Clause 26 applies only to trade union activities which will be interpreted as taking part in the activities of a registered organisation. In view of the requirements as to registration, the activities of a registered union will be limited to what one might call the respectable activities in accordance with the rules of a union; the activities of a union would not include the activities of a group of, say, completely unofficial trouble makers.
Clause 26 in essence only enables employers to dismiss strike ringleaders without the risk of legal proceedings; it does not free them from the risk of industrial action jeopardising the settlement of the strike; and they are only likely to get that freedom to dismiss strike ringleaders with the co-operation of the trade union leadership. This is because, as I say, the ordinary end of the strike is a non-victimisation agreement. Under neither Bill, neither the Labour Bill nor ours, would employers who are found to have unfairly dismissed strikers for taking part in trade union activities during a strike have to face compulsory reinstatement, only compensation. Having reconsidered the question, I came to the conclusion, and so have the Government, that the proviso in subsection (3) should be withdrawn.
I would, however, stress that the Secretary of State, in deciding to omit the proviso, has come to that conclusion primarily on the merits of the case, and not as a result of any possible difficulty in regard to the I.L.O. Convention, although he is mindful of his international obligations and desires to maintain our excellent record in the ratification of International Labour Conventions. In reply to the other two questions put by the noble Lord, Lord Delacourt-Smith, I can only say that the advice that I have received is that
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this is the only point at which we could be in possible breach of that Convention, and I found that an additional reason why we should accept Amendment No. 51, which removed that possibility. If there are, or can be, other situations in the course of the Bill to which the noble Lord wishes to draw my attention, I will of course consider them in that context.
LORD STOW HILL: My Lords, I only intervene to thank the noble and learned Lord for accepting that Amendment. I had myself independently examined the recommendation, in order to form a view on whether the clause conflicted with it in any sense apart from the proviso. I have arrived at the same conclusion as that which is indicated by the noble and learned Lord. The noble and learned Lord has been so good as to say that if both he and I are mistaken about that the matter can be reconsidered; but I hope we are both right, that with the removal of the proviso there is no contradiction of the recommendation.
Clause 27 [Excluded classes of employment]:
9.2 p.m.
BARONESS WHITE BARONESS WHITE moved Amendment No. 51A:
Page 22, line 18, leave out paragraph (a).
The noble Baroness said: My Lords, we did discuss this matter at an earlier stage and, as one would expect, had a most conciliatory answer from the noble Earl, Lord Jellicoe. Nevertheless, we thought that we should present this matter once more to your Lordships' attention, because we have received considerable pressure, especially on behalf of the agricultural workers, in this regard. The effect of the Amendment will be to leave out paragraph (1)(a) in Clause 27, which says that the safeguards against unfair dismissal (except in certain respects, which are referred to in what is now Clause 29) would be withheld where there are establishments with fewer than four employees who have been continuously employed for a period of not less than 13 weeks, and so on.
Any who have knowledge of farming at the present day will appreciate that the whole trend in British farming is to

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reduce the number of men working on farms, and to replace them by machines. Therefore, there are a number of establishments in which there would be fewer workers, and they might not qualify under this proviso. The Agricultural Workers' Union have assured us that they are very anxious indeed about this. They are very well aware of the drive for greater productivity in agriculture, and they appreciate the reasons for it. It can cause hardship for some of their members who have to leave the land and change their employment, and this happens very often in areas where there may not be very much choice of other employment. This is a process which has been going on now for some years, and we think it is likely to continue.
They have put to us the situation which would arise when, at one point of time the workers would be protected, and then, because of a reduction in the labour force, they would be outside the protected category, and they think that this could lead to feelings of frustration and injustice. I do not pretend that we have had such strong representations from unions in other industries, but I know there are quite strong feelings about this matter in, for example, the distributive trades, where again the unit of employment in any one establishment can be quite small, and also in other service industries such as garages, and establishments of that kind.
One of the reasons why we are concerned about this is because it is precisely in such establishments that trade union organisation is apt to be at its weakest. In other words, the particular individuals, whose position may be just as deserving as those working with a larger labour force, are less likely to have the protection of their trade union organisation in these circumstances than those who work in larger establishments. It is for these reasons that we have put down this Amendment again because we appreciate, as the noble Earl said on the last occasion, that in the proposed legislation of the last Administration there was a limitation comparable with this one. We are also well aware that under what is now Clause 29 the Secretary of State is taking powers to add to, or vary, any of the provisions of Clauses 27 and 28 of the Bill, and we are fully apprised of this, and it is on the record.
However, because we have had considerable pressure, particularly on behalf of the agricultural workers, we thought that it was only right to bring this yet again before your Lordships, so that there should be no doubt at all that we are concerned that everyone should have justice if his employer should dismiss him improperly, and that it should not be confined, at any rate for any length of time, to those who are working in the larger establishments. The ones in the small establishments are normally less well protected by their organisation, and they are in greater need of protection, not in less. Therefore, we think that we should take this very much into account. I beg to move.
9.7 p.m.
EARL JELLICOE: My Lords, the noble Baroness very kindly said that I had spoken in a conciliatory vein when we discussed this—I suspect it was pretty early in the morning—at the Committee stage, and I should like to echo what she has said; I think she has put this Amendment in a very conciliatory and winning way.
BARONESS WHITE: My Lords, I am most obliged to the noble Earl. It was 7.10 a.m., and he was remarkably conciliatory for that hour.
EARL JELLICOE: My Lords, I am not certain whether it was my conciliatory nature or whether sheer weariness had affected me at that time, but I know that it was at a reasonably early hour of the morning. As the noble Baroness has explained, this Amendment would remove from the exclusions in Clause 27 employees in undertakings with fewer than four employees who had been continuously employed for 13 weeks or more. I think I explained at about 7 a.m. in mid-May what lay behind our feeling on this point. There are two main reasons why we feel it is right that Clause 27 should contain this exclusion. In the first place, this is really a question of the nature of the employment in the case of a very small concern such as a farm. One is there usually relying on very close personal and, indeed, intimate relations. Therefore, when there is a dismissal the circumstances usually turn on issues which may not lend themselves to a legal adjudication. If we were to include those cases, they would present

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the tribunals with extraordinarily difficult problems of sorting out the rights and wrongs and of determining the right remedies; because in such cases the remedy of re-engagement would in many cases probably not be the right one. That is the first leg of the argument for the exclusion of the very small concern from the unfair dismissal provisions.
The second leg is a purely practical one. I explained this at Committee stage and perhaps we may come back to it on a subsequent Amendment. The exclusion of the very small concern would, to some extent, help to relieve the heavy case load which we anticipate is going to fall on the industrial tribunals. I do not wish to repeat the arguments and considerations which were in our minds at Committee stage and of which I know the noble and learned Lord, Lord Gardiner, is well aware. I will only summarise them here and say that, through independent research, we anticipate that unless we take some action to reduce the anticipated case load, the annual case load facing the industrial tribunals might be around 250,000 cases. That is our fear, as I think it was the fear of the previous Government, who, for this practical consideration among others, came to the same conclusion as we did on this question of what should be excluded and why it would be right to exclude the very small concern under Clause 27.
Then there is the question of the thirteen weeks. Perhaps I should touch on that, because it is a point which was introduced at Committee stage in regard to an Amendment which I think I moved myself. The underlying reason was that we felt it was right to exclude most casual or temporary seasonal workers from the aggregate, thus avoiding what would he an absurd anomaly, whereby a regular employee might be excluded from the unfair dismissal provisions for the greater part of the year, but could come within their scope for a very short period when the labour force was temporarily expanded by casual or seasonal labour. This happens in the agricultural field; for example, at the time of hop picking in Kent and in orchards and elsewhere. It would be absurd if regular employees in small concerns were able to pop in and pop out of the exclusion provisions, merely as a result of very temporary
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and purely seasonal circumstances. Those are the considerations which we have had in mind and which underlie paragraph (a) which this Amendment seeks to delete. I suggest that they are valid reasons and I hope that your Lordships will accept them as valid, as I think they were accepted during the Committee stage. I hope that the noble Baroness will not wish to press this particular Amendment.
I would just add this, because it is something to which she herself alluded in moving her Amendment. I think we are right, and for the same reasons as I think the last Government, who had this particular provision in their draft Bill, were right. But if we are wrong, and if the last Government were wrong, in having this particular provision excluding the small concern, I would point out that there is the provision in subsection (2) of Clause 29, to which the noble Baroness referred, which will allow the Secretary of State to make variations in Clause 27 if he so thinks fit. I made it clear at Committee stage that my right honourable friend would not hesitate to use his powers under that particular subsection if he thought this was right and justified, and he would have in mind very much then the experience of the case-load of the tribunals as it works out in practice.
In summarising my argument, I would say that I think we are right here, but there is an escape clause if we find through experience that this is not so—and this is a matter on which I think we shall need much more experience than we have at the present time. If, through that experience, we find that we are wrong, then there is a way forward which will allow us to make the sort of change for which the noble Baroness is pressing in her Amendment.
9.16 p.m.
LORD GARDINER: My Lords, the noble Earl knows that I am very ignorant about all this. May I just ask him: is the effect of this subsection, apart from the effect of any other subsection, that if a play runs for three months or for less than three months the manager has the right of unfair dismissal, but not if the play runs for more than three months? And, if so, does this not show that the Bill is not very well adapted to the theatrical profession?
EARL JELLICOE: My Lords, I hesitate to align myself with the theory that the noble and learned Lord is ignorant about this. But I should have thought it might depend on whether the play was Waiting for Godot, with a very small cast or a large cast.
BARONESS WHITE: My Lords, I think I should just say, in reply to the arguments put forward by the noble Earl, that the reason, as I understand it, why this exclusion was made in the draft Bill of the last Administration was because of the problem of the case-load and desire not to overload the tribunals, particularly in the initial stages and until one saw how it worked out. This was the reason for it, and that reason I think we would accept as convincing, particularly in the light of the provision that is made in Clause 29(2). I should, how-ever, like to put it on record on our behalf that the first leg of the noble Earl's argument does not appeal to us. Justice is justice wherever it occurs, and injustice is injustice; and the fact that it happens to be in a small establishment is no comfort whatever to the man who has been unjustly treated. So we really cannot accept that argument.
Let us be frank about it. Those who know something about country life know that the greatest injustice can sometimes take place precisely with the small employer and in conditions where it is very difficult for an employee to find other employment. If he is working in a large establishment he is much more likely to be in an area where there are other opportunities open to him. If he is in a small country town, or in the countryside, and particularly (if I may put it rather vulgarly) if his employer is in cahoots with other people, he may find it not at all easy to get another job, and so great injustice may be done. So I would not let it pass for one moment that we accept that part of the argument.
Also, I do not believe that it is beyond the wit of the tribunals to find out the truth. I do not think they would find it more difficult if there were only a few people concerned than if there were several hundred people concerned. Sometimes it is more difficult to find the truth when there is a large number of people concerned; and I am quite sure that any lawyer present would not say, if he were
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in court, "I am sorry, but I cannot try this case because it concerns only four people instead of 500". So that argument, quite frankly, is one that does not appeal to us. But the practical one of the case-load on tribunals, especially, as we have indicated, in the earlier stages, when they will be feeling their way to some extent, I think we do accept. For that reason, having aired the matter again—because we attach importance to it—I do riot wish to press this particular Amendment, and I ask leave to withdraw it.
Amendment, by leave, withdrawn.
9.20 p.m.
BARONESS WHITE BARONESS WHITE moved Amendment No. 51B:
Page 22, line 40, leave out paragraph (f).
The noble Baroness said: My Lords, this is quite a different Amendment. This is to exclude paragraph (f) of Clause 27(1). This means that we would wish to bring within the purview of these provisions, that is to say, of possible appeal against unfair dismissal, those who are working less than 21 hours a week. Again we appreciate that this could add quite considerably to the case load. We are concerned with various groups of workers who we think could well be dismissed unfairly and ought to have some real redress. Our attention has been particularly drawn in this connection to the increasing number of contract cleaning workers, and I would draw the attention of the House to Report No. 168 of the National Board of Prices and Incomes, published in April of this year, on the pay and conditions in the contract cleaning trade where they estimate that there are now some 90,000 workers so employed, the greater majority of whom would be liable, at some period at any rate, to come under the exclusions in this clause.
Part-time workers are not easy to organise in trade unions. A great many of them, not all, are women. We have discussed in other clauses the difficulty of trade union organisation for these part-time workers. Once again we are dealing with groups of workers who may suffer injustice but who are less likely than full-time workers to have the protection of trade union organisation. We do not feel that the protection afforded to other workers should be withheld from workers in these circumstances. I do not wish

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to repeat the argument: if you are unjustly dismissed, you are unjustly dismissed; and that rankles whether you are working for 18 hours or 22 hours a week. I think that this Amendment is something that we should press; because whereas we appreciated the practical difficulties in bringing in all the small establishments at the outset it seems to me that on this one, where you have quite a large body of workers on part-time work—and the Government are anxious to give them full rights in other connections where we thought that perhaps they were not so much deserved—the Government should at least be prepared to give them the full benefits of the protection afforded by this part of the Bill. I beg to move.
THE EARL OF BALFOUR: My Lords, one of the problems about these people employed for very short periods is the lack of standards, of knowing exactly what to pay them, of knowing what conditions they should be employed under and so on. Let us take the case of a typical country estate where people are employed in maintenance. The only yardstick that. I have to work on—and here I must speak from personal experience—is the Agricultural Wages Board. If it were not for that body I do not know where I would go for a standard. There are numbers of people employed in, say, school cleaning, the school meals service, cooking, and so on, for anything from 18½ to 27 hours a week. If it were not for the local authorities getting together with the various unions who cover local authority workers, what sort of standard would we have? Not one! I think the problem involved in bringing these people into the field of unfair dismissals is that their hours can be so irregular. The job may be so irregular, and I think it would be impossible, although I have sympathy for the Amendment, to include it in legislation.
9.25 p.m.
EARL JELLICOE: My Lords, I do not feel that I should detain your Lordships long on this Amendment, if the noble Baroness, Lady White, as she half intimated, is proposing to press it to a Division whatever I say. I may, of course, have misunderstood her. Again my argument against this Amendment would be three-legged. The first leg is familiar to
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your Lordships. The problem which we face is the size of the anticipated caseload on the tribunals. We are anxious to make this part of the Bill a success and that the tribunal should not be swamped in the initial stages. Therefore, like the last Government we fear to include in the provisions of the Bill—I will talk about the substantive merits in a moment—large categories which we feel would tend to swamp the industrial tribunals, at least in the initial stages of the operation of this Bill. I do not wish to lean unduly on that argument. The example given by the noble Baroness of the contract cleaners frightened me because she instanced the P.I.B. Report and the number involved of 90,000. I do not know how many people might be involved were the Amendment accepted. It might be a considerable additional case-load that we should be imposing on the tribunals. That is the practical leg of my argument.
There is the theoretical leg which the noble Baroness disputed when I advanced the same argument in resisting the last Amendment. We think there is a strong case on merit—apart from the practical grounds to which I have alluded—for excluding part-time employees who work fewer than 21 hours a week in a particular employment. It is our view that probably such part-timers do not rely on that employment for a substantial part of their livelihood, and it is questionable whether it would be right to bring the requirements of the unfair dismissal provisions to bear on relationships which may, in certain cases, be very tenuous. By her Amendment the noble Baroness is taking out paragraph (f) of Clause 27, but she is not substituting anything else. We say that 21 hours and under should be excluded, but she is not advancing any particular yardstick. So far as I can make out she is not saying it would be unreasonable to have a ceiling of 21 hours but that it might be reasonable if the figure were 19, 17, 13, 11 or 9. One may question whether one should trigger off the rather elaborate provisions of unfair dismissal at 21 hours, but I think it would be absurd to trigger them off on people who, however deserving, are in part-time employment for say only three hours a week. It seems to me that if your Lordships accepted the Amendment there would be no ceiling at all. Therefore, on these grounds, if on no other grounds, I cannot advise your Lordships to accept

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the Amendment if the noble Baroness, who moved it in extremely winning terms presses it.
We are feeling our way in this particular area of the Bill. This is terra incognita to a certain extent, and I think there is a case for treading rather warily. I believe that we have it about right here. There are quite definite precedents. The 21-hour exclusion obtains both in the Contracts of Employment Act, 1963 and in the Redundancy Payments Act, 1965. I do not think it is in those Acts just by chance. This has been thought out and there are respectable precedents—the earlier Acts, and the Bill which was drafted for the last Government—but we have Clause 29(2) and, as I have said, the Secretary of State has made it absolutely clear—I was able to give this assurance to your Lordships—that, having got further experience, if he thinks it right and sensible to lower the ceilings of the exclusions, he will have no hesitation in doing so. On these three-legged grounds. I hone that the noble Baroness, having listened to the case I have deployed, which has become stronger to my mind as I have gone on, will not insist on the Amendment.
LORD BEAUMONT OF WHITLEY: My Lords, I think the point made by the noble Earl. Lord Jellicoe, that 21 hours has not been chosen just by chance, because it is repeated in a couple of statutes, may not necessarily be in itself a good one. What happens is that someone chooses an arbitrary time and this is regarded as a precedent and the more Bills that go through saying that it is a precedent, the greater the precedent becomes. Therefore I do not think there is anything magic about 21 hours. The noble Earl has not been able to produce a specific argument in favour of that figure. Nevertheless, the challenge which the noble Earl made to the noble Baroness, Lady White was a perfectly fair one. On the debate so far, the advice which I would give to my noble friends, if it came to a Division—and the noble Baroness said that it might come to a Division—would depend on whether she was able to produce an answer to his perfectly fair challenge on what she would put in place of 21 hours, and how she would justify that.
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I think the Government ought to justify every single exclusion. As one noble Lord or noble Baroness on the Labour Benches said, it does not became any less an injustice because it is done to someone who does not work for very long. Nevertheless, I agree with the noble Earl, Lord Jellicoe, that it is probably necessary to protect the machinery of the Act from people who are working for only a very small number of hours a week. I agree that this right is important to every individual in every situation. Nevertheless, we are erection immense machinery in this Bill, and one has obviously to exclude a number of minor cases. When we come to the next Amendment I shall speak more about that. At the moment we are looking forward to hearing the noble Baroness's answer to the question as to where exactly she would put the exclusion and whether she proposes to put down an Amendment on Third Reading if, by chance, she manages to get this Amendment carried.
LORD GARDINER: My Lords, I hope that the noble Earl, Lord Jellicoe, did not think, when I asked a question, that I was seeking to be facetious. I am trying to see what the practical effect of this Bill will be on the members of the theatrical profession. Not the only, but certainly the main, benefit conferred on employees is the right not to be unfairly dismissed. Therefore people should not be excluded without some reason. Everybody in industry knows what the hours of work are—9 to 5, or whatever it may be. But has anybody ever seen a theatrical contract which specified the hours of work? They are for the run of the play. A normal play, with intervals, takes two and a half hours; six evening performances and one matinee come to 17½ hours, and two hours would make 20 hours. Again I only ask: has anybody ever applied his mind as to whether this subsection does or does not (one might have to include make-up time) exclude theatrical artistes from the right not to be unfairly dismissed? Or is this again just a case where it has never occurred to anybody?
BARONESS WHITE: My Lords, I am grateful to all noble Lords who have taken part in this brief discussion, and not least my noble and learned friend Lord Gardiner, who has indicated some

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of the practical problems which arise from the Bill as now drafted. I think the noble Earl, Lord Jellicoe, and the noble Lord, Lord Beaumont, were quite right in indicating that perhaps we ought to have gone further in our Amendment than simply to try to exclude this paragraph. I agree that if one had no limit whatever, then the overloading of the machine would be almost inevitable. I think a good yardstick would be to leave out those who are not liable to pay insurance contributions on the ground that they are working too few hours—eight hours a week. That, I think, would be a reasonable limit. We cannot discuss it formally now, because we have not put down an Amendment in that sense, but that, I think, would bring in the kind of person about whom we are concerned and who is doing a substantial amount of work, even though not full-time. It would exclude those who are doing very brief casual work—mostly domestic work probably—and who could quite fairly, be regarded as people who, if they were included, would bring in numbers far too large, on the whole, in circumstances where possibly the provisions of the Bill might not be so important.
Having had this discussion, I think the best thing to do is to consider carefully the point quite fairly put by the noble Earl, Lord Jellicoe, and the noble Lord, Lord Beaumont, and to ask leave to withdraw the Amendment, on the understanding that we shall consider this between now and Third Reading, and put down a further Amendment, possibly on the lines that I have suggested; but I shall have to consult with my noble friends. I beg leave to withdraw the Amendment.
EARL JELLICOE: My Lords, if I may have your Lordships' leave to speak again before the noble Baroness withdraws her Amendment—and I am grateful to her for the reply—I, too, should like to avail myself of the opportunity to consider the point made by the noble and learned Lord, Lord Gardiner.
Amendment, by leave, withdrawn.
Clause 28 [Exclusion of certain contracts for a fixed term]:
9.38 p.m.
LORD BEAUMONT OF WHITLEY LORD BEAUMONT OF WHITLEY moved Amendment No. 52:
Page 23, line 19, leave out ("104") and insert ("52").
The noble Lord said: My Lords, I beg to move Amendment No. 52 standing in the name of my noble friends Lord Byers and Lord Henley, and myself. The debate appears to have reached the stage of errors which it had reached at exactly the same point in the Committee stage. The noble and learned Lord the Lord Chancellor has gone, but why I moved before I made my speech was that I was in great danger of getting into a situation that a number of your Lordships got into, of making a very moving speech, with a terrific peroration, and the noble and learned Lord then saying: "Does the noble Lord move the Amendment?". Well, I have moved it at the beginning, which gives me considerable liberty.
Quite frankly, at 7.15 a.m. that morning we were not in very good order. The noble Lord, Lord Hoy, moved the Amendment at the time and the quotations I am going to make from our OFFICIAL REPORT for May 13, column 1500 et seq., speak for themselves. The noble Lord moved to leave out the whole of this particular part of the Bill which excludes people from the "unfair dismissal" arrangements if they have less than 104 weeks' service. The noble Earl, Lord Jellicoe, told us very fully and frankly the reason for this provision. He said that Clause 26 (which is now the present clause we are dealing with) was not one of his favourite clauses in the Bill; and he went on to explain that the Government administratively would want to move on from these particular exclusions to far less rigid ones. He told us there were something like, so far as his independent investigators could discover, 250,000 cases a year which could come under these particular provisions and give rise to appeals against unfair dismissal. That is a tremendous number, and one sees that even if the industrial tribunals are expanded as quickly as they should be and as indeed the Government have told us will happen, this would overload the machinery tremendously.
The proceedings had got to the stage at that moment that even the noble Lord, Lord Stow Hill, who is generally an absolute stickler for accuracy, misheard the number and put it at 450,000. We got it down again to 250,000 and then

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reached the stage where the noble Earl, Lord Jellicoe, said:
"I said that independent research indicated that there may be in a year anything up to 250,000, but independent research has also shown that something like 80 per cent. of those cases might fall within the first two years."—[OFFICIAL RIPORT, 13/5/71; col. 1504.]
It was not only at 7.15 a.m. that morning that I was unable to understand that statement: I was unable to understand it for quite a bit afterwards. I concede to the noble Earl that I was probably being exceedingly stupid and I now realise that what he meant was that about 80 per cent. of the 250,000 cases occur to employees who have been employed for less than two years, but it did not actually read or sound like that at the time.
EARL JELLICOE: My Lords, I must apologise to the noble Lord. I should like to make it clear that he has interpreted my views which, in view of the advanced hour of our debate then, I had necessarily compressed. I had thought that the Committee would immediately have realised what I was after, but I was using "shorthand" for that particular reason.
LORD BEAUMONT OF WHITLEY: My Lords, I am grateful to the noble Earl. I am glad that we now have this absolutely right. I entirely take the point which the noble Earl the Leader of the House makes about overloading the tribunals. On the other hand, these are terrifying things—250,000 a year coming under the unfair dismissals appeal machinery—and the fact that 80 per cent. of them may be excluded does not mean that I particularly wish to make this exclusion. We have every right to ask the noble Lord, the Leader of the House, to say what would, for instance, be the result of making the exclusion eighteen months or a year. How much would one overload the machinery in that way? How does this 80 per cent. break down in lesser periods?
The Government have taken on the tremendous responsibility of putting this Bill forward. On the whole, we on these Benches think it is basically a constructive Bill, although not nearly so forward-looking as it should be. We also think
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that the Government should take the responsibility for the full results of what they are putting forward. In this case if they are really saying that to start with and, presumably, for the foreseeable future (although they have made reasonable pledges about reductions in these conditions in the future) they will not be able to cope with more than 20 per cent. of the cases which they themselves say will come under the unfair dismissal clause, we have a right to say to them that they must do better than this. This was our attitude on the Committee stage. Here I have to confess to the absolute nadir so far as I am concerned that we reached on that particular morning.
The Labour Front Benches moved an Amendment to do away with the exclusion, and the argument against overloading the tribunals was put forward by the noble Earl, Lord Jellicoe. At that moment I heard a discussion on the Labour Front Bench, when the noble Lord the Leader of the Opposition said. "Shall we go along with the Liberals?". At that moment we had also put forward exactly the same Amendment, which I must confess I did not move. I did not take the hint from the whisper on the Front Bench because I was so weak that I could not even get to my feet and say, "I beg to move the Amendment". We are now at a more reasonable hour of the night, and we have had time to digest the various discussions put forward on the Committee stage, and that is why we have put forward this Amendment again.
May I say one word to the Labour Party Front Bench about their next Amendment, No. 53? Whereas if our Amendment is defeated I advise my noble friends to support the Labour Party's Amendment, nevertheless I seriously think that unless we get a very good answer from the Conservative Front Bench our Amendment is the better one. In their Amendment No. 53 the Labour Party are setting forth an enormous number of problems to an Industrial Court or tribunal. It is better than nothing but (and I hope they will forgive me for the phrase) I regard this as a mucky Amendment. It is very vague indeed. If we are not supported, and if the Government do not give way to us, I would invite my noble friends to support the

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Labour Party's Amendment because we must have some move in this direction.
I am sorry if I have detained your Lordships over long on this matter, but I should like to pose this question again: what would be the result to this 80 per cent. that we are told about of cutting the 104 weeks by half? What would be the result of cutting it by a quarter? There is presumably some kind of curve of cases on the time scale and I should like more information about it. We have another stage in front of us, Third Reading. We should like more information than the Government have been able to produce, although I had every sympathy with them at 7.15 on that Friday morning. I beg to move.
9.50 p.m.
EARL JELLICOE: My Lords, I think that, with one possible exception, the shorthand answer on the two years which the noble Lord mentioned is this. I think he was being a little less than fair to your Lordships in putting it forward at 7 o'clock in the morning. I am not addicted to my own speeches, but I have just read the speech which I made on this Amendment on Committee stage, and it seemed to me everything a speech should be so far as clarity and cogency are concerned—I speak with my usual modesty but I realise we were debating this very early in the morning and it is right that we should come back to it. The noble Lord asked me a perfectly reasonable and pertinent question. The figure of 80 per cent. is one of the fruits of that independent research which we did—or rather which the last Government did, and we saw the fruits of that research. The estimate was that something like 80 per cent. of the anticipated case load of 250,000 might be excluded by the initial ceiling of 52 weeks. I am speaking in shorthand, but I think the noble Lord knows what I mean. My understanding is that if that ceiling were reduced to the one year it becomes under the noble Lord's Amendment, the estimate of 80 per cent. would fall to something like 70 per cent.
BARONESS WHITE: My Lords, the noble Lord said 52; did he mean 104?
EARL JELLICOE: Precisely; I meant 104. I was wrong by a factor of two—that was all. It is 80 per cent. at 104
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weeks, 70 per cent. at 52. I do not know what it is between 52 and 104, but I suspect that it must be something over 75 per cent. It seems to me from the shape of the curve that it must rise steeply in the first year. But if and when we come back to this matter I shall be glad to elaborate on this, and I think it might be helpful to noble Lords interested in this matter of the case load if I circulated the further figures on it. I think I could make these available. All I can do is to repeat what I said before, that the only reason why we wish to adhere to the 104 weeks is the purely practical one of case load.
The noble Lord referred to the assurance by my right honourable friend, which I was empowered—rather more; I was specifically asked—to give to your Lordships, and which the noble Lord described as reasonable. I think that it was rather more than reasonable, because I put it advisedly in the strongest possible terms, as my right honourable friend asked me to do so. If I may refer to it, I should like to do. I quote from Hansard of May 14, column 1497.
"I should like to make it very clear here and now that it is my right honourable friend's firm intention to institute a review of the operation of the unfair dismissals machinery at an early date. He wishes to do so as soon as it has developed far enough in order for us all to form a judgment on its ability to cope with a bigger through-put, and as soon as there is a possibility of invoking Clause 27 "—
that is now Clause 29—
"I can give your Lordships a very firm assurance indeed that my right honourable friend will not hesitate to do so,…"
My Lords, that was more than a reasonable assurance—it was, I suggest, a cast-iron and watertight assurance from my right honourable friend, and I am glad to repeat that assurance.
LORD DIAMOND: My Lords, is not the noble Earl getting into dangerous territory in talking about cast-iron and watertight assurances in this House?
EARL JELLICOE: My Lords, I would say "touché". I can only reply to the noble Lord that it was a deliberately mixed metaphor applicable to both dry land and the sea. My Lords, I should like to repeat that assurance because it was not lightly given and I was specifically asked by my right honourable friend

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to give it. I should like to repeat that in principle I have absolutely no objection to this Amendment. I, too, should like to see 104 become 52. I do not believe that there is anything sacrosanct about 52; I think it could well come down. I am certain that my right honourable friend would like to see the ceiling lowered, but there is the purely practical consideration of fears about the case-load which we anticipate. As the noble Lord said, this is a rather terrifying figure. I do not think we need take the figure as sacrosanct.
When we begin to operate the Bill we may find that our independent researches have thrown up a higher figure than we are likely to be faced with. In any case, it is my right honourable friend's intention, and the Government's intention, to extend the network of tribunals and their coverage as rapidly as posible. I would hope, as that machinery gets into operation, that their own throughput would be quicker. It is also our hope that the actual case-load will fall because of the voluntary procedures under a subsequent clause which will become more and more popular, and that, as a result, this will lighten the case load. If all these things do in fact come to pass, I am quite certain that my right honourable friend will use his powers under Clause 29(2) to reduce that ceiling as rapidly as possible.
Having said that, I would add that, for very much the same reasons as the last Government had in mind, I think it would be quite wrong for us, from all we know or all we can at the moment guess about the likely case-load, to impose a burden on the industrial tribunal machinery which might well break it at the outset. I suggest that your Lordships should be very careful indeed about accepting an Amendment with the principle of which I am entirely in agreement but which could have that result. My Lords, I cannot say any more than that. I am merely basing myself on such independent research as we have and upon a desire not to impose a greater burden on the machinery than I fear it might be able to bear. At the same time I am in full sympathy with the thought behind the noble Lord's Amendment, and I hope that he will not wish to press it. That is all I can say.
LORD BERNSTEIN: My Lords, it is rather sad that legislation should be based, even in one detail, on somebody's independent market research. I accept that market research has some place in modern life, but I still think that market research must be subject to the acid test that comes from a cold look by sensible and experienced people. I had hoped that the noble Earl was going to say that he was opposing the Amendment on grounds other than market research. You have an independent market research—independent of whom, I do not know, but we assume independent of the last Government and this Government—and on this basis a clause is introduced into the Bill which over a period of time could be very damaging to a great number of people.
10.1 p.m.
BARONESS WHITE: My Lords, I fully accept what my noble friend Lord Bernstein has said about not being utterly wedded to market research. But, even if we accept the report, if I understood the noble Earl aright, what he said was that 80 per cent. would be included if we had the limit of 104, and 70 per cent. would be included if we had the limit of 52. In other words, there is only 10 per cent. between these two. When we were discussing this matter on a Labour Party Amendment in the earlier stages we wanted to eliminate this provision altogether. But, again one sees the practical problems. It seemed to me, quite frankly, that the Amendment was a fair and sensible compromise. I was reinforced in that belief by what I understood to be the information given us by the noble Earl; namely, that if the first year was brought in—in other words, if there were no limits; you did not have 52 in substitution for 104—then one might have a very, very heavy case load. But the difference between 52 and 104 is of the order of only 10 per cent. This really is not quite the picture which the noble Earl painted for us.
It seems to me that the Liberal Amendment is a sensible one. I know we have a later Amendment which my noble friend may or may not move according to what happens to this one. Again, I do not know whether the noble Lord, Lord Beaumont of Whitley, is going to press his Amendment. If he were to do so I would certainly hope that

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my noble friends might support him, because, as I say, his Amendment seems to me quite a sensible compromise. The noble Earl has said there is no matter of principle in it; he accepts the principle. On the grounds of practicality, it seems to me that for that 10 per cent. we might come down on the Liberal side of the fence for once, because 10 per cent. is not going to make or break the machinery. It would be an extension of justice and we would then, for the time being at any rate, until the machinery had been running for some time, save the tribunals from the 70 per cent., which we are informed would be likely to arise if one had no limitation at all in the first year. In those circumstances, should the noble Lord, Lord Beaumont, wish to press his Amendment, as I say I hope my noble friends might be prepared to go with him.
LORD BEAUMONT OF WHITLEY: My Lords, I do not think I need to reply to the debate at length because the noble Baroness has made the real point which comes from those figures which the noble Earl, Lord Jellicoe, has given us. At one moment I felt hopeful that Lord Jellicoe was going to give way to us, so much did his argument appear to give credit to our arguments and so charming was his delivery. But it was not to be. He was adamant at the end.
I would make it quite clear that we on this side of the House do not underrate the problem. I am quite aware that if we reduce the case-load of cases from 80 per cent. to 70 per cent. we are actually putting up by 50 per cent. the number of cases which will be dealt with; I entirely take this point. If the independent research is right, the number will increase, presumably, from 50,000 to 75,000. But I still think that for the gain, possibly even for just the psychological gain which people will feel in security after a year, instead of security after two years—and the gap between one year and two years is not just a year, but is psychologically considerably more than that—it is worth reducing this. I hope that the Government, who are obviously not going to give way at this stage—
LORD DIAMOND: Why not?
LORD BEAUMONT OF WHITLEY: Maybe they will; I hope they will.
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However, I hope that the Government will take this away and think about it again. But since they have not given much thought to it at the moment I must ask your Lordships to decide, as a good prod to them to bring something back at Third Reading.
LORD DIAMOND: My Lords, I am sure the noble Lord, and indeed my noble friend, would much prefer the noble Earl to do what his natural liberal tendencies encourage him to do—namely, to begin by erring on the side of generosity. There are provisions for adjusting the matter, should it transpire that the administration argument was a solid one. What we are saying at the moment is that it does not appear to be a sufficiently solid argument to put against the other arguments, which are very substantial indeed.
As the noble Lord has made absolutely clear, it is not a question of only 52 weeks; it is a question not of degree but of kind when one comes to divide those two. All I say to the noble Earl, Lord Jellicoe is that he seems to me to be so anxious to meet what I hope I can say are the feelings of the House on this, that he has said he is prepared to think about it again. There are certain technical difficulties about thinking about too many things again, as we are now getting on in our consideration of the Bill. Would he not be willing to accept this Amendment to the Bill now, knowing that he if he errs on the side of generosity the matter can be brought under control almost, to quote Ovid (or was it Thucydides?) who said "at a stroke".
EARL JELLICOE: This is a purely practical point and I should like to be able to meet the noble Lord, Lord Beaumont, and the noble Lord, Lord Diamond, who have pressed me in the most agreeable way. But I should point out the practical considerations involved. It is quite true that it is a matter of simple mathematics to cut the 104 weeks by half; that, which we would all agree, would cut the anticipated case-load only by 10 per cent. But the noble Lord, Lord Beaumont, was quite right; with computer-like speed and accuracy he immediately realised that that would increase the anticipated case-load by something like 50 per cent. falling to be heard by the tribunal. However, the point I

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should like to dwell on is that 10 per cent. of 250,000 is 25,000; and 25,000 more cases would, so I am informed, require anything from 50 to 60 more tribunals with full time and legally qualified chairmen. That is my understanding and my best advice at the present time. I think that is a very exigent requirement indeed.
The noble Lord, Lord Diamond, has pressed me to exercise my usual liberal judgment on this matter—and I am quite happy to have the small "1" as a prefix to my Conservative views; but at the same time I should also like to have a little "p" attached to those views, which is the word "practical".
I really think if I had to form a snap judgment like this (which is what the noble Lords, Lord Beaumont and Lord Diamond, are asking me to do) I would
err—and here I am not speaking from my brief; I am exercising my own independent judgment—on the safe side, because I think it is important that the tribunal should make a good start and should not be overwhelmed at the beginning. Because I am being asked to exercise that judgment I must, with regret—because I am in great sympathy with everything that lies behind what the noble Lord,, opposite have been pressing me to do—say that I could not advise noble Lords to accept this Amendment if, perchance, the noble Lord, Lord Beaumont, insists on pressing it to a Division.
10.10 p.m.
On Question, Whether the said Amendment (No. 52) shall be agreed to?
Their Lordships divided: Contents, 20; Not-Contents, 62.

CONTENTS

Ardwick, L.

Champion, L.

Rusholme, L.

Beaumont of Whitley, L. [Teller.]

Delacourt-Smith, L.

St. Davids, V.

Diamond, L.

Shackleton, L.

Bernstein, L.

Garnsworthy, L.

Stow Hill, L.

Beswick, L.

Henley, L.

Wade, L. [Teller.]

Brockway, L.

Hoy, L.

White, Bs.

Byers, L.

Hughes, L.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Dundee, E.

Mowbray and Stourton, L.

Ailwyn, L.

Elliot of Harwood, Bs.

Nugent of Guildford, L.

Allerton, L.

Exeter, M.

Oakshott, L.

Balfour, E.

Falkland, V.

O'Neill of the Maine, L.

Belhaven and Stenton, L.

Ferrers, E.

Orr-Ewing, L.

Berkeley, Bs.

Goschen, V. [Teller.]

Rankeillour, L.

Bessborough, E.

Gray, L.

Ruthven of Freeland, Ly.

Brabazon of Tara, L.

Hailes, L.

St. Aldwyn, E.

Bradford, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

St. Helens, L.

Bridgeman, V.

St. Just, L.

Brooke of Ystradfellte, Bs.

Hatherton, L.

Sandford, L.

Buccleuch and Queensberry, D.

Jellicoe, E. (L. Privy Seal.)

Selkirk, E.

Carrington, L.

Kemsley, V.

Selsdon, L.

Conesford, L.

Kilmany, L.

Sinclair of Cleeve, L.

Craigavon, V.

Kinnoull, E.

Skelmersdale, L.

Craigmyle, L.

Latymer, L.

Terrington, L.

Crathorne, L.

Lauderdale, E.

Thomas, L.

Daventry, V.

Lothian, M.

Tweedsmuir, L.

De L'Isle, V.

Macleod of Borve, Bs.

Tweedsmuir of Belhelvie, Bs.

Denham, L. [Teller.]

Macpherson of Drumochter, L.

Wakefield of Kendal, L.

Drumalbyn, L.

Monck, V.

Windlesham, L.

Resolved in the negative, and Amendment disagreed to accordingly.

10.18 p.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 53:
Page 23, line 26, at end insert—
(" (2) For the purposes of sub-paragraph (a) of subsection (1) of this section, the Industrial Court or an Industrial tribunal before which proceedings are brought by an employee on a complaint that he has been unfairly dismissed from any employment may treat the employee as having been continuously employed for a period of not less than 104 weeks ending with the effective date of termination if in all the circumstances it seems to the Court or tribunal as the case may be, just and equitable so to do and the employee has been employed in that employment for riot less than 80 weeks whether continuously or otherwise.")
The noble Lord said: My Lords, I apologise for reverting on Report to an Amendment in similar terms which I moved on Committee, and I will, if I may, move this one quite shortly, and I will indicate the reason why I ask your Lordships' indulgence to look at it again on Report. What it purports to do is as follows. If an employee claims compensation on the basis that he has been unfairly dismissed, we have just been discussing a situation in which he has to show that he has been employed continuously for not less than 104 weeks up to the date of the termination of his employment. If one looks at Clause 150 of the Bill, one finds there set out how one is to determine whether employment has been continuous or not.
Clause 150 refers one to the Schedule to the Contracts of Employment Act 1963, and one is directed to answer the question whether employment has been continuous in accordance with the provisions of that Schedule, and any order there may be, which I think cannot have effect in this case, under Section 7 of that Act. Prima facie, without further examination, that might seem to be a satisfactory resolution of the position; if an employee comes before an industrial tribunal, and a question arises whether his employment has been continuous or not, one looks at the Schedule to the 1963 Act and one finds the answer.
The only difficulty is that the answer provided by that Schedule is not a very satisfactory one, for this reason. If I understand it correctly and it is contained in this enormous volume (which I
784
do not propose to read in full), if the employee, in the course of the period about which you are inquiring whether it was continuous employment or not, has taken part in a strike, if that strike has caused a cessation of work, even for a short time, his employment becomes discontinuous. Equally, if I understand the Schedule correctly, even if the strike has not resulted in an actual cessation of the employment, nevertheless if he has struck in breach of the terms of his employment—that is to say without giving the appropriate notice—that also results in a discontinuance of his employment.
There are other situations described in the Schedule which involve a discontinuance of the employment. However, for these purposes I think that is the most important one; namely, the one which consists in a cessation owing to a strike or, in the alternative, a strike in breach of the terms of a contract of employment. I submit that is not a really very satisfactory position in which to leave the matter. If an employee exercises his right to strike, particularly if he has given the due notice, then if there is a cessation that should not produce the result that he is not enabled to say that his employment has been continuous. What the Amendment purports to do is to give the tribunal before which the case comes, a discretion; the discretion of being able to say that, notwithstanding the fact that the employee could not show that his employment had been continuous for the necessary number of weeks, nevertheless if he had been in the employment of the particular employer for not less than 80 weeks, if it were just and equitable in all the circumstances the tribunal could treat him as if he had had continuous employment for the necessary period.
That is simply what the Amendment does. I suggest it to the House as being something that should form a permanent feature of Clause 28. That is to say, it should be applicable, whatever the period named in the clause is; whether it is 104 weeks, or something less, or something more. I say "something less, or something more" because under Clause 29 the Secretary of State has power either to increase it or decrease it. As I read that clause, he would not have the power

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to change Clause 150, or to change the Schedule to the 1963 Act, but he could always change the figures. Therefore, if there is a build-up of cases before the Court and I recognise the problem that was discussed on the last Amendment, and obviously it is a serious practical problem the Secretary of State could, under the provisions of Clause 29, either enlarge or abbreviate the 104 weeks, and equally enlarge or abbreviate the period of 80 weeks during which the employee must have been in the employ of that employer.
I submit that it is desirable in principle to give the tribunal some discretion, for example, in those strike cases; but there would be a number of other cases in which his discretion might have to be exercised despite the provisions of Schedule 1 to the 1963 Act. There might have been a difference of opinion between the worker and his employer; a dispute, friction, anything of the sort, which might have resulted in the employee having left his employment for a very short period of time in circumstances in which the tribunal could, and ought to, come to the conclusion that it would be just and equitable to overlook that break in the employment.
Otherwise, really unfortunate positions might result. A man might have been in employment for 20 years, and if some break of that sort happens in the last 104 weeks he cannot claim his compensation for unfair dismissal under Clause 24. That would be a very unfair situation in which to leave an employee, and I hope the House will say that, whatever figure is fixed upon—whether it be 104 weeks or 52 weeks—by the Secretary of State hereafter under the provisions of Clause 29, there should be as a permanent feature in Clause 28 this discretion which I seek to outline in this Amendment. My Lords, I beg to move.
10.26 p.m.
EARL JELLICOE: My Lords, the noble Lord has expressed his concern about the position of certain employees who have worked for an employer over a 104-week period, but who have suffered breaks in their employment for one reason or another. I understand his concern about
786
this matter, and I should like to explain how, in my view, the Bill makes reasonable provision for those cases most likely to excite the sympathy of your Lordships which are likely to fall within the provisions of the Bill as drafted. The noble Lord has directed our attention to Clause 150 and, although this matter was ventilated in Committee, I should like to dwell on two points in reply.
In the first place—and the noble Lord did not in any way gloss over this—I should like to draw attention to the fact that subsection (2) of Clause 150 provides that
"a person's employment during any period shall, unless the contrary is shown, be presumed to have been continuous."
Thus, where an employee who has suffered a very short break in his employment during the 104-week period makes a complaint of unfair dismissal, his employment will normally be held to have been continuous unless his ex-employer successfully challenges his eligibility to claim. Secondly and, again, the noble Lord did not gloss over this; he referred to the large volume beside him which I must confess I have not read in full—the clause provides that the provisions of Schedule 1 to the Contracts of Employment Act 1963 shall apply for the purposes of this Bill in determining the period for which the employee may be held to have been continuously employed. That Schedule incorporates detailed provisions for this purpose.
I do not wish to weary the House, any more than did the noble Lord, Lord Stow Hill, with an overlong recital of that. But, putting it as briefly as I can, the Schedule describes various circumstances in which a contract of employment will be regarded as continuing; for example, where an employee has a continuous contract of employment involving employment for 21 hours a week and, in some cases, where he works for less than 21 hours. It also instances spells of absence through sickness, temporary lay-offs and so on. These do not break continuity for so long as the contract continues. This position, as I understand it, is totally safeguarded under the Bill because of the applicability of Schedule 1.
My Lords, we consider that Schedule 1 to the Contracts of Employment Act

787
makes reasonable and adequate provision to safeguard the continuity of the employment of employees in all reasonable circumstances, and that it provides a reasonable basis for calculating continuity in relation to the clause which we are discussing, Clause 28(a). Although I have listened carefully to the noble Lord, Lord Stow Hill, I cannot in the present state of our discussion really advise your Lordships to accept this Amendment. It would, again, have the effect—it might be fairly marginal in this case; I am not quite certain—of reducing the qualifying period and thereby helping to overload the tribunals. But I believe—and this is the main burden of my argument that Schedule 1 to the Contracts of Employment Act, which is specifically made to apply by Clause 150, provides a very reasonable safeguard for almost all the situations which are likely to confront the tribunals.
LORD STOW HILL: My Lords, I do not want to prolong the discussion, hut, with very great respect to the noble Earl, I submit that the Schedule is really not satisfactory. The noble Earl referred to cessation of work. Subsection (3) of Clause 5 specifically says that that shall not apply to a temporary cessation of work on account of a strike in which an employee takes part. That is one obvious fallacy. It does not apply to the case where an employee and his employer have a difference and the employee walks out for a day, or something of that sort.
The noble Earl also referred to subsection (2) of Clause 150, which I certainly had in mind. That says:
"For the purposes of any proceedings under this Act a person's employment during any period shall, unless the contrary is shown, be presumed to have been continuous."
I should have thought that that could have practically no effect. An employee goes before the tribunal, and the first question he is asked is, "Have you worked continuously for 104 weeks?" and he says, "Six months ago I had a bit of a row and I walked out". He is asked, "How long were you out?" and he says, "I was out for half a day, then I thought better of it and I came back". That immediately destroys the presumption. The presumption does not work
788
there because the plain evidence before the tribunal is that there was a cessation, that there was an interruption. Therefore, the presumption has no effect.
I should have thought that the presumption provision might just as well be taken out of the Bill. All it means is that if neither side knows, the presumption is that work has been continuous. If the employee has a very bad lapse of memory and cannot remember, then the presumption is in his favour. But it really has no effect. However, the Government have obviously considered this and have obviously taken a view against it. I would be grateful if the noble Earl could give the matter some further thought because I think that justice requires something of this sort; but, obviously, there would be no advantage in asking your Lordships to divide upon it in view of the stance that the Government have taken. Therefore, unless any other noble Lord wishes to contribute to the debate, I think the best course I can adopt is to ask your Lordships' permission to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 32 [Revocation of exclusion under section 31]:
10.35 p.m.
EARL JELLICOE EARL JELLICOE moved Amendment No. 54:
Page 25, line 26, after ("effect") insert ("and shall have an extended time for presenting a complaint under Part VI of this Act in respect of a dismissal where the effective date of termination falls within that period").
The noble Earl said: My Lords, I should like to suggest that it might be for the convenience of your Lordships to take this Amendment and Amendment No. 55, which is linked with it, together. I should like to start the few words I am going to say on these two Amendments with an apology.
These Amendments are, in fact, consequential upon Amendments being proposed to paragraph 5 of Schedule 6 of the Bill. Those Amendments are not yet before your Lordships' House. I realise that this is rather unsatisfactory and I should like straightforwardly to say that I am sorry that this is the position. But as noble Lords know, for one reason

789
or another we had a week less between the Committee stage and the Report stage and this has not made things easy; there have been practical difficulties involved. I should like to say that the blame rests on me and not upon the very hard pressed officials.
Having said that, I must give the House a preview of what those Amendments will be because otherwise these Amendments are meaningless. I think that they are very virtuous. I do not think that noble Lords opposite will dissent from their purport. The Amendments which we shall be proposing to paragraph 5 of Schedule 6 will provide that, instead of having a broad discretion to extend the time limit for making complaints under Clause 106 "for special reasons", the tribunals will have to be satisfied that in the circumstances it was not practicable for the complaint to be presented before the end of the four-week period. Therefore, the issue wil be confined simply to one of practicalities. Regulations made under paragraph 5 of the Schedule will be made subject to any order made by the Industrial Court under Clause 32.
The Amendments to Clause 32 which we are now discussing are designed to accord by providing that an order under that clause may direct that employees dismissed during the transitional period prior to the date of the order shall have an extension of the time limit for making a complaint under Clause 106 and that the tribunals shall comply with such directions. These Amendments, therefore, linked with the Amendments which will be shortly before the House (if they are not so already), ensure that the employee's right of appeal against unfair dismissal is fully preserved when an exempted voluntary procedure breaks down and ceases to provide a satisfactory alternative to the statutory machinery. I am sure that this is something which will commend itself to noble Lords on all sides of the House. I think it is clearly to the advantage of the employee who is likely to be affected in this way. I should like to commend these two linked Amendments to the House, coupled with an apology that they have not been made more intelligible by the Amendments which they are designed to bite on being also provided at the same time. I beg to move.
LORD DELACOURT-SMITH: My Lords, we are grateful to the noble Earl for explaining these Amendments, Needless to say, we fully accept the explanation that lie has offered of the rather unusual circumstances in which these Amendments appear. We accept the intention behind them and we should not wish to quarrel with it; although we shall want to look at the provisions of the Amendments to the Schedule when they are before the House.
EARL JELLICOE: My Lords, may I say that if, when noble Lords opposite have the substantive Amendments before them, they wish to quarrel with these Amendments, I should not in any way hold their acceptance at this stage against them.
On Question, Amendment agreed to.
EARL JELLICOE: My Lords, I beg to move Amendment No. 55 formally.
Amendment moved—
Page 25, line 36, leave out from beginning to ("shall") in line 39 and insert ("a complaint to which those provisions apply")—(Earl Jellicoe.)
On Question, Amendment agreed to.
Clause 33 [Pressure on employer to infringe rights of workers]:
THE LORD CHANCELLOR: My Lords, this Amendment is consequential on Amendment No. 48. I beg to move Amendment No. 56.
Amendment moved—
Page 26, line 1, leave out ("good reason") and insert ("reason fulfilling the requirements of section 24(1)(b) of this Act").—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD GARDINER: My Lords, I beg to move Amendment No. 57.
Amendment moved—
Page 26, line 21, at beginning insert ("knowingly").—(Lord Gardiner.)
On Question, Amendment agreed to.
LORD GARDINER: My Lords, I beg to move Amendment No. 58.
Amendment moved—
Page 26, line 28, at beginning insert ("knowingly").—(Lord Gardiner.)
On Question, Amendment agreed to.
LORD GARDINER: My Lords, I beg to move Amendment No. 58A.
Amendment moved—
Page 26, line 30, at end insert ("knowingly").—(Lord Gardiner.)
On Question, Amendment agreed to.
LORD GARDINER: My Lords, I beg to move Amendment No. 59.
Amendment moved—
Page 26, line 34, at beginning insert (" knowingly ").—(Lord Gardiner.)
On Question, Amendment agreed to.
LORD GARDINER: My Lords, I beg to move Amendment No. 60.
Amendment moved—
Page 26, line 37, at beginning insert (" knowingly ").—(Lord Gardiner.)
On Question, Amendment agreed to.

  PARLIAMENTARY CONSTITUENCIES: THE BLUE BOOK
  PARLIAMENTARY CONSTITUENCIES: THE BLUE BOOK
  OIL POLLUTION: RECOVERY OF CLEARANCE COST
  OIL POLLUTION: RECOVERY OF CLEARANCE COST
  E.E.C. AND AIR SERVICES AGREEMENT
  E.E.C. AND AIR SERVICES AGREEMENT