Sitting of 22 March 1973

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS
GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)
Order read]or resuming adjourned debate on Question [6th March], That the Bill be now read a Second time.
Debate further adjourned till Tuesday next.

ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    North Sea Oil
    Mr. Eadieasked the Chancellor of the Exchequer when he expects to finish consultations and make a statement on how taxation policy will operate in relation to North Sea Oil.
    The Chancellor of the Exchequer (Mr. Anthony Barber): I expect the consultations referred to in my Budget Statement to be finished in time for legislation on artificial losses to be included in next year's Finance Bill.
    Mr. Eadie: The right hon. Gentleman must agree, however, that the statement of intent which he made during his Budget proposals has certainly stirred up a great deal of interest in the country. Will he give the House the categoric assurance that whatever proposals he presents, he will certainly be concerned about the people of this country, and the country in general, rather than about the welfare, or future welfare, of the oil companies?
    Mr. Barber: The consultations to which the hon. Gentleman has referred
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    were consultations which I mentioned in the course of my Budget speech, and they were about current losses and accumulated losses. I explained then that I would be having these consultations. With regard to the wider matters, I said in the Budget Statement that the Government already had under consideration the other important questions affecting licensing terms and the Government's take from operations on the United Kingdom Continental Shelf.
    Mr. Marten: How will the Norwegian companies which operate in their part of the North Sea but which send their products through pipelines to England fare under this scheme?
    Mr. Barber: I could not, off the cuff, answer a question about particular companies, or various companies in particular circumstances. That would not be wise. If my hon. Friend will write to me, or table a Question, I shall try to answer him.
    Mr. Sheldon: As neither oil nor profits have so far been extracted from operations in the North Sea, will the Chancellor of the Exchequer what he estimates will be impeded in any way, by either the introduction of a barrelage tax or a change in the way in which profits are computed for taxation, in raising any money that he thinks fit?
    Mr. Barber: Obviously a Chancellor is not impeded by what his predecessors have done. In reducing taxation I have not been impeded by what my predecessor did.

    Personal Taxation
    Mr. Frank Allaunasked the Chancellor of the Exchequer what he estimates to be the average weekly tax burden of both direct and indirect taxation of a family of four; and by how much this would be reduced by reducing Government expenditure by £3,365 million, assuming all taxes to be reduced by equal proportions.
    The Chief Secretary to the Treasury (Mr. Patrick Jenkin): The answers are, very roughly, £12 and £2 respectively.
    Mr. Allaun: Does the Minister accept the figures prepared by the House of Commons Research Department, which indicate that the arms bill mentioned in

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    the Question costs the average family of four £4·64 a week, which is an increase of £1·12 a week on the figure of two years ago? Is it not unreasonable that we should reduce the share of the GNP spent on arms to the average figure of the other European NATO countries?
    Mr. Jenkin: As my answer indicated, I certainly cannot accept the figures to which the hon. Gentleman has referred as I have given different figures based on figures worked out by my right hon. Friend's Department.
    On the second part of the question, it is right to point out that as against total growth of public expenditure averaging 2½ per cent. a year, defence expenditure is growing at 2·4 per cent. whereas such programmes as health and personal social services are growing at 4·8 per cent., education at 5 per cent., and law and order at 6·2 per cent. That is not a bad balance.
    Mr. Winterton: Can my hon. Friend say how much of the defence budget is spent on wages of the many thousands of people employed in our defence industries?
    Mr. Jenkin: That must be a question for my hon. Friend the Minister of State for Defence, to whose attention I shall draw my hon. Friend's remarks.

    £ Sterling (Value)
    Mr. Skinnerasked the Chancellor of the Exchequer what, on the basis of the General Index of Retail Prices, is the purchasing power of the £ sterling now, taking it as l00p on 18th June 1970.
    Mr. Kaufmanasked the Chancellor of the Exchequer what, on the basis of the General Index of Retail Prices, is the purchasing power of the £ sterling now, taking it as l00p on 18th June 1970.
    Mr. Carterasked the Chancellor of the Exchequer what is the value of the £1 sterling now, taking it as l00p on 18th June 1970, on the basis of the General Index of Retail Prices.
    The Financial Secretary to the Treasury (Mr. Terence Higgins): I have nothing to add to the reply given to the hon. Members on 22nd February.
    Mr. Skinner: Since 22nd February is a long time ago, and since the purchasing
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    power of the pound has continually floated down, has the Financial Secretary any idea at what point it will settle and when?
    Mr. Higgins: The important point is the one which my hon. Friend the Minister of State made on 22nd February, which is that it is necessary to look at this situation in relation to what is happening to personal disposable income per head. If that is done, as my hon. Friend pointed out, the rise in the standard of living over the period referred to is almost double the rate in the period 1964–70, and that is something which should be generally welcomed.
    Mr. Redmond: Would it not help far more if the Opposition, instead of putting this identical Question down every time Treasury Questions are first in the list, did something to help the counter-inflation policy?
    Mr. Higgins: I very much agree with my hon. Friend. I do not wish to inhibit anything which Labour Members may wish to put on the Order Paper, but the counter-inflation policy which the Government are pursuing is of vital importance to every member of the community and I would therefore hope that that would be reflected in the attitude of all Members—but that is not always the case.
    Mr. Kaufman: Should not the Financial Secretary add to the previous answer to which he referred the 14 per cent. increase in egg prices between last Sunday and this Monday; the 10 per cent. increase in bakery prices permitted by the Government; the Government-decreed increase in rents due next week; the massive rate increases brought about by Government policy; and the forthcoming mortgage interest rate increase, carefully postponed until the day after the county elections? In view of these blows against the standard of living of ordinary families, how can the Prime Minister have the nerve to say that prices are being stabilised?
    Mr. Higgins: The answer to the hon. Member is simple—I would not wish to endorse any of the points he has made. [Interruption.] We have discussed these points on previous occasions in great detail. My point is that the picture as a whole should be considered, and on that

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    basis, in spite of the rise in food prices the standstill has succeeded in halting the acceleration of prices evident in the months before it was announced.
    Mr. Adley: Is it not clear from a walk along any High Street that the shops, supermarkets and stores are displaying notice after notice clearly indicating a reduction in prices on the introduction of VAT?
    Mr. Higgins: That is a matter of common experience for those who have eyes to see. But, of course, it is important to take a balanced view, which is why the Government have published notices in the Press and will be publishing a leaflet setting out clearly the effects of VAT, so that the public will know where they stand. It is also why we have proposed powers in the counter-inflation legislation to enable us to control prices affected by the abolition of purchase tax and SET and the changeover to VAT to ensure that the price changes properly reflect the changes in tax.
    Mr. Carter: Is the Minister aware that this catastrophic fall in the value of money, far from creating the one nation that the Prime Minister promised in June 1970, has created two nations—those who can keep pace with inflation and those who cannot? If this fall in the value of money is to continue at the present alarming rate, would it not be a good idea for the incomes of the unemployed, the sick and the pensioners to be pegged to a cost-of-living index authorised by the quarter and not by the year?
    Mr. Higgins: That comes oddly from an hon. Member who supported a Government which changed pensions only every two years. However, I agree with him 100 per cent. that the vital need to stop inflation and control the rate of increases in prices stems from the fact that it hits the weakest members of the community hardest. That is why we are determined to succeed in our counter-inflation policy.
    The total increase in pensions announced by the Government will be 55 per cent. by October—more than in the last 12 years and certainly more than twice the rate that prices have risen. It is the overall battle against inflation which is most important to the pensioners.
    Mr. Healey: Will the Financial Secretary explain his unprecedented refusal to
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    give us the figures this month, as compared with four weeks ago? Is it because there has been no further fall in the purchasing value of the pound, or is it that the fall has been so great at a time when the Government are purporting to maintain a price freeze that if that fall came to the notice of the people the whole prices and incomes policy would be blown to kingdom come?
    Mr. Higgins: I deny categorically that there has been any deliberate delay by the Government in publishing the price index for February. It would normally be published tomorrow, and that is when it is due.

    Currency Speculation
    Mr. Hugh Jenkinsasked the Chancellor of the Exchequer if he will introduce legislation to prevent speculation in currency.
    Mr. Barber: No, Sir. There are already extensive powers in the Exchange Control Act 1947.
    Mr. Jenkins: Is it not plain that the activities of the multi-national companies are affecting the external value of the pound to a much greater degree than internal inflation? Is it not absurd of the Government to be so hard on hospital workers and soft on international speculators? Will the Chancellor do something about it?
    Mr. Barber: The hon. Member misunderstands the situation. Obviously, we have no means of controlling speculation by non-residents—
    Mr. Jenkins: Multi-national companies are resident here.
    Mr. Barber: —and transactions by United Kingdom residents in foreign currency unconnected with commercial operations are illegal.
    Mr. Dykes: Does my right hon. Friend the Chancellor agree that speculation, in the sense of speculators rather than finance directors of companies and their activity, has been minuscule this time, with the flotation of the pound, compared with 1967.
    Mr. Barber: United Kingdom residents —and that includes multi-national companies in the United Kingdom—are subject to the exchange control rules—
    Mr. Jenkins: They are fiddling all over the place, and the right hon. Gentleman knows it.
    Mr. Barber: —as they were under the previous Government, and transactions by them in foreign currency which are not connected with commercial operations are illegal.

    Economic Growth
    Mr. Knoxasked the Chancellor of the Exchequer what is his latest estimate of the rate of growth.
    Mr. Barber: As I said in my Budget Statement, I believe the economy will continue to grow at an annual rate of around 5 per cent. over the 18 months from the second half of 1972 to the first half of 1974.
    Mr. Knox: Does my right hon. Friend not agree that an absolute assurance that we would have a 5 per cent. rate of growth over five years would do a great deal to restore confidence in this country, increase investment on a permanent basis, and enable us to increase living standards to a level comparable to that of our friends in the EEC?
    Mr. Barber: I know that my hon. Friend is a fervent supporter of the Government's policy on growth. It is the case that we are now achieving double the rate of economic expansion of the past decade. There is plenty of evidence to support a 5 per cent. growth rate. Industrial production in the three months to January was 1½ per cent. higher than the previous three months and 6½ per cent. higher than a year earlier. Consumer expenditure rose a further 2¼ per cent. in the fourth quarter, to be about 7 per cent. higher than a year earlier and within that the retail sales index rose by 2¼ per cent. in the three months to January, to be about 8 per cent. higher than a year earlier. Unemployment has fallen in March by over 29,000, and is now 240,000 lower than a year earlier.
    Mr. Joel Barnett: Will the Chancellor tell us that he is not planning a 5 per cent. level of growth for five years, but for 18 months? What are his plans for the rest of the period?
    Mr. Barber: I have said on a number of occasions that the Government are committed to a higher rate of growth—
    Mr. Barnett: Not 5 per cent.
    Mr. Barber: —much higher than the rate of growth achieved by the previous administration. Having heard that the Opposition are now committed to a faster growth rate, I would have thought that they would welcome what we have achieved. I look forward to the hon. Member making that point when he next speaks from the Dispatch Box.
    Mr. Bruce-Gardyne: Will my right hon. Friend confirm that it is no more in the power of the Government to guarantee a given rate of growth over five years than it is within their power to guarantee the state of the weather in the month of June?
    Mr. Barber: What a Government can do, and what this Government have done, is to create the conditions which will enable the economy to grow faster.
    Mr. Joel Barnett: Industrial investment?
    Mr. Barber: It is all very well for the hon. Member to say these things, but it would be a welcome change if, just for once, he and his colleagues would refrain from running down our country.
    Mr. Healey: The Chancellor of the Exchequer will be well aware that in my Budget speech I congratulated the Government on achieving, for the time being, a 5 per cent. rate of growth. Will the right hon. Gentleman clear up the confusion between what he has just told us and what the Prime Minister said last autumn? In September the Prime Minister said that he was aiming at a 5 per cent. growth rate for a further two years from that time. The Chancellor appears to have cut that period by nine months. Can he explain the disparity between the two estimates?
    Mr. Barber: There is no inconsistency between what the Prime Minister said and what I said in my Budget speech.

    Money Supply
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what was the increase in the money supply (M3) in the latest period of three months for which figures are available, expressed as an annual rate; whether this rate of increase was in conformity with Government policy; and if he will further define the

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    objectives of monetary policy in the year ahead.
    Mr. Patrick Jenkin: For reasons discussed in the March issue of the Bank of England quarterly bulletin, M3 is not at present a reliable indicator of the thrust of monetary policy. Although, therefore, the rise at an annual rate in the three months to mid-January was about 30 per cent., this has to be compared with the corresponding figure for Ml which was 6 per cent. On the last part of the Question, I have nothing to add to my right hon. Friend's Budget Statement.
    Mr. Brucc-Gardyne: I am grateful to my hon. Friend for that answer. I accept that M3 may in future leave something to be desired as the right statistic of monetary growth, but can my hon. Friend shed a little further light on the Government's clear monetary objectives in the year ahead? Did not my right hon. Friend tell us in his Budget Statement that the objective was to ensure that the very large borrowing requirement did not lead to an excessively fast rate of monetary growth? Will my hon. Friend define an excessively fast rate of monetary growth? Was the rate of monetary growth in the last period for which we have statistics excessively fast in that context? If it was, how much less would not be excessively fast?
    Mr. Jenkin: It must be clear that there cannot be any one correct indicator of monetary policy, particularly in a period when we have rapid structural change in our financial institutions. It is essential to consider the whole array of published information. As well as the two measures of money supply this must include reserve ratios, bank lending to the private sectors, interest rates, and other indicators.
    My hon. Friend quoted correctly my right hon. Friend's Budget Statement. However, the range of these indicators has to be kept under constant review to ensure that the thrust of monetary policy is consistent with our objective of rapid economic growth and steadier prices.
    Mr. Sheldon: The hon. Gentleman did not answer the question of his hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). In his Budget Statement the Chancellor said that he would limit to the maximum extent the
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    money supply resulting from the excessive borrowing requirement. What is his definition of "maximum extent"?
    Mr. Jenkin: My right hon. Friend deliberately used qualitative words. We do not regard it as helpful to try to lay down rigid targets in advance for the development of monetary policy. Under the new arrangements it is essential to have flexibility.

    European Economic and Monetary Union
    Mr. Deakinsasked the Chancellor of the Exchequer if he will raise the issue of progress towards EEC economic and monetary union at the next meeting of EEC Finance Ministers.
    Mr. Martenasked the Chancellor of of the Exchequer if he will make a further statement about economic and monetary union and the parity of the £ sterling.
    Mr. Croninasked the Chancellor of the Exchequer if he will make a further statement on his policy with regard to the parity of sterling in relation to other Common Market currencies.
    Mr. Moateasked the Chancellor of the Exchequer if the question of progress towards economic and monetary union is to be discussed at the next meeting of EEC Finance Ministers.
    Mr. Barber: I shall be attending a meeting of EEC Finance Ministers in Brussels tomorrow morning, but that meeting will be concerned primarily with the reform of the international monetary system, prior to the meeting of the Committee of 20 which I shall be attending in Washington on Monday. I have nothing further to add to the many statements which I have made recently on the subject of economic and monetary union and the parity of sterling.
    Mr. Deakins: Is not the objective of European economic and monetary union a mirage so long as the British Government are determined—and rightly so—to seek fixed but adjustable parities for the £ sterling.
    Mr. Barber: No, that does not follow. A number of objectives were set out in the summit communique, and those are the objectives to which we are working.
    Mr. Marten: If it is right to have a floating pound, independent of the Common Market at this time, what are the criteria by which it would be judged wrong to have the same floating pound?
    Mr. Barber: I have already told the House that I explained to my colleagues in the EEC that in present circumstances it was not practical for the United Kingdom to join a common float on the basis of the sort of conditions which were embodied in the Community's scheme. I have said repeatedly that it is the intention of Her Majesty's Government to join as soon as conditions permit.
    Mr. Cronin: Will the right hon. Gentleman consult his EEC colleagues and try to do something to bring about a much more stable situation? Does he agree that another international monetary crisis is bound to occur in the next 12 months, under the present arrangements? Will he bear in mind that unless the Government improve their management of the country's economy the pound will float down to a level where the cost of food and raw materials will become even more intolerable than at present?
    Mr. Barber: The best way to improve the economic condition of this country and standard of life for the British people is for all sections of the community— which means both sides of the House—to join in fighting inflation.
    I entirely agree that reform of the international monetary system is of paramount importance. That is one of the principal reasons for my leaving for Brussels this afternoon to attend a meeting tomorrow prior to the meeting of the Committee of 20. Like ourselves, Mr. Shultz, the Secretary of the United States Treasury, who was here earlier this week, recognises the urgency of this matter.
    Mr. Moate: I congratulate my right hon. Friend on his determination to allow the pound to continue to float in present circumstances. Will he explain under what circumstances he would regard it as right for the pound to return to a fixed parity?
    Mr. Barber: I do not think that that would be appropriate. That is a matter for the Government to judge.
    Dr. Gilbert: May I further congratulate the right hon. Gentleman on setting
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    conditions for a joint float which were intended to be impossible for the other Common Market countries to accept in the first place? Further, can the right hon. Gentleman give the latest best estimate of the change in the value of the £ sterling against the weighted average of all the other currencies since June last year?
    Mr. Barber: I could not give that without notice.
    Mr. Norman Lamontasked the Chancellor of the Exchequer whether, as part of the developments in European monetary co-operation, he will seek agreement among the Finance Ministers of the European Community to allow international settlements between Community central banks to be made in gold at a price more approximating towards that obtainable in the free market.
    Mr. Higgins: No, Sir.
    Mr. Lamont: Without expressing a view on the ultimate role of gold and the international monetary system, may I ask my hon. Friend whether it is not the case that any addition to the SDR system will take time, and in that situation is it not unfortunate that the gap between the official price of gold and the price on the free market effectively sterilises part of the world's monetary and foreign exchange reserves? If the Americans will not adopt a realistic attitude to the subject is it not about time Europe did?
    Mr. Higgins: The future role of gold is a matter for discussion in the Committee of 20. There are powerful objections to any change in its official price and we believe that there are better ways of tackling world monetary problems, on the lines that my right hon. Friend put forward at the meeting before last of the International Monetary Fund. Certainly, the role of gold is important and it has to be looked at in that context.

    Trades Union Congress (Meeting)
    Mr. R. C. Mitchellasked the Chancellor of the Exchequer if he will seek an early meeting with the Finance and General Purposes Committee of the Trades Union Congress.
    Mr. Barber: I am always ready to meet the TUC.
    Mr. Mitchell: When the right hon. Gentleman next meets the TUC, will he discuss with it the proposals in the Green Paper about family allowances and the tax credit system? Will he now clarify the statement which he made in his Budget Statement because many of us could not understand exactly what he meant then.
    Mr. Barber: The reaction to that part of my Budget Statement was one of welcome. It was quite clear what it meant. I shall be delighted to discuss any aspect of the Green Paper with the TUC whenever it likes to see me about it.
    Mr. Kenneth Lewis: Does my right hon. Friend agree that the Government have done a great deal to meet the TUC on many matters of Government policy on which it has made representations, including the 5 per cent. growth rate? Is it not now desirable that the TUC should give something to the Government so as to get a stable situation in industry?
    Mr. Barber: As I have said, we are ready to talk these matters over with the TUC. Indeed, earlier this month I wrote to Mr. Feather saying that the Government would welcome any views that the TUC might wish to express on the consultative document on the Price and Pay Code. I said that if the TUC wished I was ready to make arrangements for discussion. To my regret the TUC chose not to pursue that suggestion.
    Mr. Eadie: The right hon. Gentleman has expressed to the House his wish to see the trade unions at any time. Does he recollect that last year he and I met at about one o'clock in the morning at 10 Downing Street and settled the miners' strike? Does he wish to remain a member of a Government that pursue a policy of brinkmanship, that break their word to the miners' union, and pursue brinkmanship to the extent that we may be plunged into another miners' strike? Is it credible for a Minister to speak, at the Dispatch Box, about negotiations with the trade unions?
    Mr. Barber: The latter part of the hon. Gentleman's observations was not particularly helpful in the present circumstances. I have no doubt that the solid
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    good sense of the majority of the British people will prevail.

    War Loan (Repayment)
    Mrs. Sally Oppenheimasked the Chancellor of the Exchequer if he will now repay at par all original owners of 3½ per cent. War Stock over the age of 60 years.
    Mr. Patrick Jenkin: One must have great sympathy with these people, but I fear there can be no prospect of our acceding to my hon. Friend's request.
    Mrs. Oppenheim: While I welcome my hon. Friend's sympathy, may I ask him whether he is aware that many original owners of War Loan are now pensioners who, out of patriotism, loaned the British Government £100 for which they can now get only £6, in 1932 terms, after receiving a derisory rate of interest over the years? Do not the Government have a moral obligation to these people who if they had been similarly treated by a private finance company would have been entitled to the protection of the Fraud Squad?
    Mr. Jenkin: I believe that many people share my hon. Friend's views, although they may not express them with such force. It has always been a basic principle of Government policy that all holders of a particular stock are treated alike. It would be extremely difficult if we were to accede to the request that my hon. Friend makes and do nothing for another elderly person—a pensioner— who had just disposed of his or her holding of war stock. That would seem to be grossly inequitable. It is for that reason that successive Governments have said that we must treat all holders of this and similar stock alike, and I believe that is right.
    Mr. Pardoe: Can the hon. Gentleman say how many original holders of War Loan are still alive, and what would be the cost of making this repayment? Is he aware that his statement is exactly the same as all statements by all Governments of all political complexions, but that it is nevertheless a crooked, swindling statement.
    Mr. Jenkin: In the unlikely event of there ever being a Liberal spokesman at this Dispatch Box, I strongly suspect that he would make the same statement. It

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    is not possible to extract from the registers the information for which the hon. Gentleman asked without disproportionate expense in manpower and money. We recognise that there is great hardship among the holders of these stocks. Despite the search, over many years, by successive Governments no acceptable way has ever been found of dealing with the problem.
    Mr. Kenneth Clarke: While agreeing that all holders of undated gilts should be treated alike, may I ask my hon. Friend why he cannot make a start, at least, and allow part of the estate duty payable to be satisfied by the surrender of long-dated gilts at par? Would this not make the market far more attractive and help those who put their money into non-dated gilts and have seen it being eroded year after year?
    Mr. Jenkin: This suggestion has been examined, and it obviously has superficial atractions, but I must regretfully tell my hon. Friend that in reality it suffers from exactly the same disadvantages which affect all the other suggestions for dealing with this problem. I would not want to hold out any prospect of the Government's being able to meet this request.

    Economic Affairs
    Mr. Dykesasked the Chancellor of the Exchequer what factors have appeared since 6th March which may have a bearing on the Budget judgment for the medium-term course of the economy.
    Mr. Barber: None, Sir.
    Mr. Dykes: Does my right hon. Friend not agree that among many factors there are, perhaps, three principal ones at the moment, namely, the overseas currency situation, the substantial spare capacity in industry, and the relatively low level of stocks to total output? Does that not lead him and others to believe that the concept that early over-heating is creeping into the economy is a ridiculous exaggeration?
    Mr. Barber: My hon. Friend is right. Almost all commentators agree on one point, namely, that there are still plenty of spare resources to sustain a fast growth rate for some time to come.
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    Making a general observation in relation to my hon. Friend's Question, I have no reason to diverge in any way from the view I took in my Budget Statement on 6th March about the medium-term course of the economy.
    Mr. Ashfon: Is not one such factor which has arisen since the Budget the decision by the building societies to increase interest rates? Was that not caused to a great extent by the Chancellor's decision on Budget Day to raise interest rates on national savings and premium bonds, which has made them less competitive? Is this not a major cause of inflation, for which he is partly responsible?
    Mr. Barber: I was talking about the medium-term course of the economy, and nothing that has happened since 6th March affects my judgment on that

    Coinage
    Mr. Goldingasked the Chancellor of the Exchequer whether he will introduce a new coin of the value of ¼p.
    Mr. Higgins: No, Sir.
    Mr. Golding: Since the minimum percentage increase that can practically be added to an item costing 5p is 10 per cent. and the minimum that can practically be added to an item costing 2½p is 20 per cent., will the hon. Gentleman tell us what will be the amount of VAT upon items which cost less than 5p?
    Mr. Higgins: This is a well-known difficulty with price changes on items with a low unit value. The prices unit of the Department of Trade and Industry and the Ministry of Agriculture, Fisheries and Food is advising traders to look at the range of goods they supply as a whole and to ensure if they round up to the nearest ½p in some cases they round down to the nearest ½p in others. Provided that, overall, they pass on to their customers the net effect of the tax changes, this is perfectly fair. There are provisions in the Counter-Inflation Bill to ensure that this is done, and if any constituent of the hon. Member or any other hon. Member has a case in mind, he can refer it to the machinery which has been provided. In this context, it is a very different situation from that which existed before decimalisation.
    Miss Fookes: Would it not be more to the point if my hon. Friend increased the size of the ½p, which seems to be specially and perversely designed to cause the maximum inconvenience and cursing to the general public?
    Mr. Higgins: Many hon. Members— on the Government side of the House, at any rate—voted on the question of the form of decimal currency on a free vote, unlike hon. Members opposite, who were whipped into support of the pound system, of which many people have expressed disapproval. The ½p is fulfilling a useful function, particularly in relation to the point made by the hon. Member for New-castle-under-Lyme (Mr. Golding) about price saving.

    Mortgage Interest (Tax Relief)
    Mr. McCrindleasked the Chancellor of the Exchequer if he will state the value of income tax relief on mortgage interest in March 1971 and at the latest available date.
    Mr. Patrick Jenkin: Relief was about £340 million in 1971–72.
    Mr. McCrindle: That figure indicates the considerable importance of mortgage lending rates to a large number of people.
    Is it too late to suggest that some consideration might still be given to adjusting the rate of tax paid by the building societies in the forthcoming year so that, while it would not affect the rate a society pays to its investors, it would mean that the increase in the mortgage lending rate could be eliminated, or reduced to a figure below that anticipated?
    Mr. Jenkin: I took most careful note of what my hon. Friend said on this subject during his speech in the Budget debate. Following the introduction of a unified tax, building societies will have to pay a lower composite rate of tax on behalf of their investors. Many societies have already been able to raise the rates they pay. There is no evidence that unification by itself will make any difference to the rates they charge.
    Mr. Frank Allaun: If tax relief to owner-occupiers is to continue at £340 million a year, and is to be increased as house prices increase, is it not unfair to cut the subsidy of £160 million a year to
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    council tenants, as the Government are doing?
    Mr. Jenkin: We have always taken the view that these two things are not to be compared. They are different in kind. The rules which provide tax relief for mortgages are exactly the same as those which were on the statute book when we came to office.
    Mr. Joel Barnett: Will not the Chief Secretary consider disallowing mortgage interest relief for a second house, or for those with a high level of income? If he is not prepared to do this, does it mean that he is willing to allow mortgage interest rates to rise to 10 per cent. or more as a result of the interest rate war which the Chancellor of the Exchequer started? Did the Chancellor specifically ask the Building Societies Association not to increase the mortgage interest charges until the day after the local government elections?
    Mr. Jenkin: As I said, the rules are exactly the same as they were under the Labour Government which the hon. Gentleman supported. I do not believe that the changes in the rules which the hon. Gentleman is urging upon us would have any effect on the mortgage lending rate. We naturally welcome the decision of the Council of the Building Societies Association to defer its decision on mortgage rates until its next meeting, but I must make it absolutely clear that that was a decision of the association. We do not take responsibility for the rates which building societies charge from time to time.

    Low-Paid Workers
    Mr. Meacherasked the Chancellor of the Exchequer what is the value of the total gain in the Budget to workers earning less than £25 a week.
    Mr. Patrick Jenkin: The zero-rating of children's clothes and shoes and of purchase tax foods, together with the reduction of national insurance contributions for those with less than £24 a week, will help the low-paid. It is not possible to quantify the benefit for any particular income group.
    Mr. Meacher: Is the Minister aware that low-wage earners did not get from the Budget any increase in the tax

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    threshold in respect of the 13 per cent. increase in money earnings last year? Is he further aware that before next year's Budget the tax threshold on current trends will have fallen to an all-time low of about 53 per cent. of average earnings, which makes nonsense of any claim of fairness to low-paid workers?
    Mr. Jenkin: What makes nonsense of the hon. Gentleman's question is that while his Government were in office tax thresholds fell, in real terms, by 12 per cent. Since this Government have been in office, tax thresholds have risen by 81 per cent. in real terms.
    Mr. Peter Rees: Will my hon. Friend confirm that a married man with two children with an income of £20 a week was paying tax at the rate of £1 a week in 1970–71 as a result of the Labour Government's tax measures, whereas he has been completely relieved of tax by the two Budgets of my right hon. Friend?
    Mr. Jenkin: I am happy to accept my hon. and learned Friend's expertise in these matters.
    Mr. Pardoe: Will the Minister please remember that it is not good enough to excuse his Government's performance by pointing a finger at the Labour Government's performance, which was not very good either? Will he accept that all our partners in the Common Market have found that family allowances are the only satisfactory way to help the low-paid families, and that the Government must redeem their promise to increase family allowances?
    Mr. Jenkin: I am sure that the hon. Gentleman recognises that in working out and publishing our proposals on the tax credit scheme we are ahead of the rest of the world, and that this system will give the greatest help to the low-paid, the pensioners and others who will benefit from it.

    Value Added Tax
    Mr. David Mitchellasked the Chancellor of the Exchequer whether he will arrange for VAT-registered small traders who have difficulty in producing quarterly returns to be enabled to make estimated VAT payments quarterly, fully and properly adjusted at the time of their annual audit.
    Mr. Higgins: There is no provision in the Finance Act 1972 for traders to make estimated payments of VAT each quarter. Customs and Excise will be reviewing the operation of VAT in the light of practical experience and my hon. Friend's suggestion will be borne in mind.
    Mr. Mitchell: In view of the high administrative cost of VAT, particularly to small traders, will my hon. Friend bear in mind that anything he can do of this nature to help the small business trading community will be welcomed by it?
    Mr. Higgins: I do not accept that these costs are high. Small traders, by our £5,000 taxable turnover limits, will be exempt. The whole basis on which we have provided the machinery—after widespread and extensive consultations—has been to cut the administrative burden to the minimum. We have looked carefully at my hon. Friend's proposal. Although at first glance it appears to offer a significant reduction, on detailed examination it reveals considerable difficulties—but we will bear it in mind.
    Mr. Joel Barnett: Does the Financial Secretary still intend to penalise the small traders who, because they did not understand his complicated tax, were not able to register? Does he intend that they shall not receive a rebate of purchase tax on stocks?
    Mr. Higgins: There are provisions lor rebate of tax for those who are registered. The hon. Gentleman has a Question on the Order Paper which is unlikely to be reached. The answer gives a full explanation of the present situation. There is no reason to suppose that the tax cannot go ahead on schedule and as planned.

    WORKER PARTICIPATION
    Ql. Mr. Meacherasked the Prime Minister what representations he has received regarding the issue of industrial participation from interested bodies.
    The Prime Minister (Mr. Edward Heath): Representations have been received from the CBI and TUC. The Government have made clear that they welcome the principle of closer involvement of employees in the progress of firms. The Industrial Relations Act and Code of Practice contain provision for this, and the share savings scheme.

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    announced by my right hon. Friend the Chancellor of the Exchequer in his Budget speech, is a further step forward.
    Mr. Meacher: Even so, the question of worker participation was carefully excluded from the Government's code of industrial relations practice. Is this to be the only area of policy in which the Prime Minister has not changed his mind? How long will Britain remain the only Common Market country without legislation on worker directors, and without a mandatory works council system?
    The Prime Minister: It was agreed at the summit that we should now work for a European policy in this matter, and various proposals have been prepared. We are considering these proposals, which relate in particular to works councils.
    Mr. Redmond: Did my right hon. Friend notice the speech last week made by the Leader of the Opposition in which he said that a future Labour Government would legislate for many things that are already included in the Industrial Relations Act?
    The Prime Minister: Yes, that is true. Most of the items in the speech of the right hon. Gentleman the Leader of the Opposition are already the law of the land.

    ECONOMIC AFFAIRS (PRIME MINISTER'S SPEECH)
    Mr. Skinnerasked the Prime Minister if he will place in the Library a copy of his public speech delivered at the London Hilton Hotel on Thursday 1st March 1973 on the economy.
    The Prime Minister: I refer the hon. Gentleman to the reply which I gave to my hon. Friend the Member for Conway (Mr. Wyn Roberts) on 15th March.— [Vol. 852, c. 1469.]
    Mr. Skinner: Does the Prime Minister remember saying in his speech at the Hilton Hotel that he was in somewhat of a dilemma about the resources going to wages? Had that anything to do with the fact that on the same day he had announced the appointment of the Chairmen of the Pay Board and the Price Commission—each at a salary of £16,000
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    —together with salary increases that went straight through the phase 2 proposals?
    The Prime Minister: There is no dilemma and no problem about the appointments. These were new appointments, and the salaries fixed were on the level of similar appointments.
    Mr. Edward Taylor: Will my right hon. Friend say whether the official speech to be made by the hon. Member for Bolsover (Mr. Skinner) in the House tomorrow represents the official policy of the Opposition?
    The Prime Minister: Her Majesty's Opposition had better wait to hear it. and then try to make up their mind.
    Mr. Pardoe: What investigations have the Government undertaken to discover whether perfectly suitable people would undertake these two jobs for less than £16,000? [Interruption.] I assure the Prime Minister that I would offer my services for a good deal less than that. If the Government could have obtained perfectly suitable people to do this job at less than £16,000, why are they wasting the taxpayers' money by paying a salary in excess of that which they need to pay?
    The Prime Minister: Unlike the Liberal Party, it is not the Government's policy to go for sweated labour.
    Mr. Thorpe: Arising out of that interesting exchange, I take it that the Prime Minister is so worried about sweated labour that he will back the Liberal Party's demand for guaranteed minimum earnings?
    The Prime Minister: We discussed with the TUC in the tripartite talks at Chequers the aim of ensuring a proper wage for all lower-paid workers and we are placing the emphasis on this in the Price and Pay Code.

    PRICES AND INCOMES (UNITED STATES POLICY)
    Mr. Carterasked the Prime Minister if, at any future meeting with President Nixon, he will discuss the prices and incomes policies of the USA and their possible application to the British economy.
    The Prime Minister: The Government naturally keep themselves informed about the way in which the United States system operates. This was one of the points which I discussed with President Nixon during my recent visit to the United States and I also discussed it with Secretary Shultz both in Washington and earlier this week during his visit to London. However, our policy must be framed to meet the particular circumstances of the United Kingdom.
    Mr. Carter: When the Prime Minister next meets the President of the United States, will he discuss with him the minimum income laws as they apply in the United States? I agree that they are not perfect, but will the right hon. Gentleman accept that the only way in which the lot of the underpaid and low-paid can be permanently satisfied in the long term is by the introduction of a minimum wage into the British economy—a wage of not less than £25 for a 40-hour week?
    The Prime Minister: As I have said, we discussed the question of minimum earnings with the TUC in the tripartite talks. There was a general view that it would be unwise to try to institute a minimum wage law at this moment of time, particularly at the level the hon. Gentleman suggested, largely because it was thought that in many industries, particularly those covered by wages councils, it would not be possible to move to that figure or even others, which were discussed in one go, by passing legislation. Therefore, it was generally agreed by the TUC, the employers and the Government that we should endeavour to bring up the lower-paid as rapidly as we can, and by voluntary agreement.
    Mr. Body: Does the Prime Minister agree that an essential part of President Nixon's proposals was a reduction in public expenditure?
    The Prime Minister: That was not a central part, and was not connected with the prices and incomes policy. The President introduced a prices and incomes policy on 15th August 1971 and has now moved into stage 3. At this stage he has reduced his Government expenditure.
    Mr. Edwin Wainwright: Does the right hon. Gentleman agree that the Government's policies have now widened the breach between the trade union movement and his Government? Does he not
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    think that it is now time that he wiped away all the existing laws which have caused the breach and got together with the TUC to start again on industrial relations?
    The Prime Minister: No, Sir; I cannot agree anything of the sort. I do not believe that the breach, if such there be, between the TUC and the Government has been widened by the law. There is a wide range of issues on which we are constantly having discussions with the TUC. I regret that the TUC, on its own decision, did not take part in the discussions on stage 2. I hope that it will do so on stage 3.
    Mr. Kinsey: Has the Prime Ministers attention been drawn to the fact that food prices in America are bearing heavily on United States counter-inflationary policy and, indeed, throughout the world? Will he consider instigating an international conference on food prices to see what can be done to bear down on world inflation?
    The Prime Minister: It is true that the United States is suffering from increases in food prices, as are Europe and the United Kingdom. The United States Government have released large stocks which were being held and in addition have put 60 million acres of land into production in an endeavour to meet world requirements. I have no doubt that we, as well as other countries, will benefit.

    CITY OF LONDON INSTITUTIONS
    Mr. McCrindleasked the Prime Minister what recent discussions he has had with institutions representative of the City of London.
    The Prime Minister: I have frequent discussions with individuals or groups from the City, but I have had no recent discussions with institutions representing the City itself.
    Mr. McCrindle: Next time the Prime Minister speaks to representatives of the banks, insurance companies and other financial institutions will he, after paying tribute to their continued contribution to our invisible exports, ask them whether they will estimate by what percentage they think their efficiency will increase if

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    and when they are taken into public ownership, as seems to be the policy of the Labour Party? Will my right hon. Friend ask them to give some thought to the future international rôle of the City in that event?
    The Prime Minister: I do not think that I would put such an extremely hypothetical question to those in the City, but it is true that the surplus of earnings over payments from the City has grown very rapidly—from £200 million in 1965 to £650 million last year. I am content that the invisible earnings should continue to increase at that rate under a Conservative Government.
    Dr. Gilbert: In the light of soaring bank profits and interest rates, is it not high time that the Government required all financial institutions to disclose real interest rates, joint stock banks to disclose their bank charges and, worst of all, the merchant banks honestly to disclose their true profits?
    The Prime Minister: That is a very mixed bag of requirements. I do not think that many people in the world would criticise the honesty of the British banking system—a system which for many decades has been the envy of the rest of the world. I do not see how any Opposition Member who is concerned with finance could even think of raising such a question.
    Mr. Marten: To what extent does the Prime Minister think that the bank earnings are due to the operation of the Eurodollar market, and, if that is on the way out—as it might be—what effect is it likely to have on our overseas balance of payments?
    The Prime Minister: That, again, is a hypothetical question. It is difficult to make any calculations as to the extent to which changes in the number of dollars in the Eurodollar market will affect invisible earnings in this country.
    Mr. Paget: Does the Prime Minister agree that at the rate he has been running inflation the City could hardly miss? It has been so wonderfully easy to make money there that one would expect profits to double, as indeed many of them have.
    The Prime Minister: The hon. and learned Member for Northampton (Mr.
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    Paget), who always sees things in a rather simple way, should realise that a battle is being carried on against inflation and that under the present Government's policy the charges and everything except interest rates for the whole of the banking system come under the code.

    HOUSING LAND
    Mr. Redmondasked the Prime Minister if he is satisfied with the coordination between the Departments of Environment and Employment regarding action about housing land shortage in view of the availability of building operatives.
    Mr. Adleyasked the Prime Minister if he is satisfied with the co-ordination between the Departments of Environment and Employment concerning arrangements to be made concerning the availability of housing land, in view of the present shortage of building trade operatives.
    The Prime Minister: Yes, Sir. I am satisfied with the arrangements which the Departments have for co-ordinating their responsibilities.
    Mr. Redmond: We all await with great interest the announcement on land charges by the Secretary of State, and, above all, we welcome the fall in today's unemployment figure, but does my right hon. Friend agree that the desperate shortage of building workers will make it extremely difficult to get more houses built even if more land is released?
    The Prime Minister: Yes, Sir. Regrettably, the construction industry ran down the total number of its employees at the end of the 1960s. [Interruption.] It is true that under the Labour Government they had no work. The Government have increased the number of places available for training, and by the spring of this year the number of places in Government training centres had risen from just under 3,000 to nearly 4,000. At the same time we have seen a doubling in the rate of recruitment of apprentices in the two years since 1970. We are making an effort to secure the skilled labour essential for the construction industry.
    Mr. Grimond: Although one cannot deny that there is availability of building

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    operatives in some parts of the country, it is equally true that in other parts of the country, including my own constituency, there is a shortage of building labour. Since mobility of labour is one of the difficulties—and the housing shortage is fundamental to the problem—what steps are the Government taking to deal with the situation?
    The Prime Minister: On the question of mobility of labour, we have greatly increased the arrangements in respect of payments to cover the costs of moving families, housing, and so on, in an endeavour to help those who are prepared to move from one part of the country to another. I would be the first to agree that the lack of mobility in certain kinds of labour is a great problem.
    Mr. Adley: Will my right hon. Friend confirm that the Chancellor of the Exchequer's arrangements will apply to local authorities, hospital boards and other statutory bodies? Does he agree that this is a first step towards abolishing one form of local government secrecy which has done more to hold up the supply of available building land than has any other single factor for many years?
    The Prime Minister: I believe that it will provide a valuable incentive, and this is appreciated by the bodies concerned.
    Mr. Heffer: Does the Prime Minister agree that one of the greatest factors in the rundown in the numbers of apprenticeships over the last 10 years has been the development of self-employed labour-only workers—otherwise known as "the lump"—in the building industry? Will he not support the Bill which I have presented to Parliament which deals with the question of labour-only sub-contracting and will allow the country to return to the situation of regular apprenticeships at all building firms at every level?
    The Prime Minister: I do not entirely agree with the hon. Gentleman about his Bill. Nevertheless, I agree with his general thesis. As he knows, this has been the consequence of certain changes in taxation, again during the 1960s, and all these problems confronting the construction industry are real and deep-seated.

LOFTHOUSE COLLIERY (ACCIDENT)
Mr. Albert Roberts(by Private Notice) asked the Secretary of State for Trade and Industry whether he will make a statement concerning the disaster at Lofthouse Colliery.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker): As hon. Members will know, we have learned with the greatest regret that at approximately 2.30 a.m. yesterday during the night production shift at Lofthouse colliery there was a sudden and serious rush of water into a coal face where 19 men were working. Twelve of the men reached safety, but seven were trapped by the rising water.
The face is in the 3 ft high Flocton seam, some 250 yards below ground. Because of the gradients of the seam and the roadways we all hope that at least some of the men may have reached positions where there may be sufficient air for them to survive until they can be reached. Every effort is being made to reduce the water level by pumping and by plugging four old shafts in the vicinity which appear to be supplying at least some of the water. In addition, an attempt is being made to drill a narrow hole into the place where the men are most likely to be.
I must not, however, minimise the difficulties. The presence of waterbearing strata and the depth of the seam make operations difficult. Mr. Ezra, the Chairman of the NCB, two other members of the Board, and Her Majesty's Chief Inspector of Mines and Quarries have already visited the colliery. My hon. Friend the Minister for Industry is there at this moment.
I know that I was speaking for all Members of the House, too, when I asked for our sympathy to be conveyed to the anxious relatives and friends of the missing men. I know, too, that all Members of the House will wish to associate themselves with the following message which I have received from Her Majesty the Queen:
"I was deeply distressed to learn of the accident at Lofthouse Colliery yesterday. My

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thoughts today were with the relatives of those who are trapped as well as those who are so courageously trying to rescue them. 1 pray that they may be in time."
Mr. Roberts: I am sure that the whole House will be grateful both to Her Majesty the Queen and to the right hon. Gentleman for sending these expressions of sympathy. The agonising suspense that the relatives must be going through is something that we can well understand.
I should like to refer to my hon. Friends the Members for Wakefield (Mr. Walter Harrison) and Leeds, South (Mr. Merlyn Rees) as I understand that two of the miners involved come from their constituencies.
I was a mines inspector before coming to the House of Commons. Lofthouse was one of the pits that I used to inspect before 1951 and it was always looked upon as a safe pit.
I am sure that the right hon. Gentleman will agree that many questions ought to be asked. I do not want to speculate. I am pretty conversant with the Coal Mines Act 1911 and the Mines and Quarries Act 1954, in which I played a part. I will leave the matter there at the moment because now is not the time to speculate.
Mr. Walker: I assure the hon. Gentleman and his colleagues that when more facts are known to me I shall decide which is the best and most appropriate method of a quick and effective inquiry into exactly what has taken place.
Mr. Varley: Following what my hon. Friend the Member for Normanton (Mr. Albert Roberts) and the Secretary of State said, may I ask the right hon. Gentleman whether he is aware that the thoughts of all on this side of the House are with those who have been keeping their vigil at Outwood during the long, agonising hours and that thousands in mining communities throughout the country share in the spirit of that vigil?
The right hon. Gentleman told us that eveything possible is being done. We pray, even now, that the men will come out alive. Whatever the outcome, an inquiry into this accident will clearly be necessary. In addition, will the right hon. Gentleman urge the Coal Board to launch an urgent survey of uncharted abandoned mine workings? For, even in today's
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modern mining industry, the Coal Board and the miners have to cope with the legacy of the past—a legacy at least partly responsible for the sombre tally of 63 miners killed down the pits in the past year as well as for the horrifying plight of the seven men on whom the whole nation's attention is focussed today.
Mr. Walker: Certainly I associate myself with the views expressed by the hon. Gentleman as to the anxiety of all mining communities throughout the country, and, indeed, the whole country, during this period.
Regarding previous shafts and their dangers to the mining industry, I think it is true to say that the National Coal Board has a good record of safety, certainly by international comparisons, and I am sure that it is always anxious to improve upon this position.
Concerning the presence of old shafts in this area—the hon. Member for Normanton (Mr. Albert Roberts) told us that within his knowledge this was known as a safe pit—there are shafts which were last used in the 1830s which were known to the Coal Board but not considered to be of danger. One of the difficulties is that there are areas where mine shafts go back to Roman times and it is difficult to discover exactly where they have been made. I am sure that the view expressed by the hon. Gentleman—that everything possible should be done to prevent danger to the lives of people mining coal— will be noted.

BUSINESS OF THE HOUSE
Mr. Harold Wilson: May I ask the Leader of the House whether he will please state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): Yes, Sir. The business for next week will be as follows:
MONDAY, 26TH MARCH—Remaining stages of the Consolidated Fund (No. 3) Bill.
Second Reading of the National Health Service Reorganisation Bill [Lords].
Motion on the Import Duties (General) (No. 2) Order.
TUESDAY, 27TH MARCH—Conclusion of the Second Reading of the National
Health Service Reorganisation Bill [Lords].
Motions on the Rate Support Grant (Scotland) Orders.
WEDNESDAY, 28TH MARCH AND THURSDAY, 29TH MARCH—Debate on a Motion to Approve the Northern Ireland Constitutional Proposals (Command No. 5259).
At the end on Wednesday:
Motions on the Northern Ireland Orders on (Temporary Provisions) Act (Extension) and Appropriation.
At the end on Thursday:
Motions on the Firearms (Amendment) (Northern Ireland) Order and on the Docks and Harbours Valuation (Amendment) Order.
FRIDAY, 30TH MARCH—Private Members' Motions.
MONDAY, 2ND APRIL—Second Reading of the Finance Bill.
Mr. Wilson: First, may I express the thanks of hon. Members on both sides of the House for the fact that the right hon. Gentleman has agreed to a two-day debate on Northern Ireland, which so many of us feel is right?
Secondly, may I ask whether the right hon. Gentleman expects to announce a debate in Government time to deal with the basic problems of agriculture and food prices, having regard to the statement made by the Minister of Agriculture, Fisheries and Food yesterday and the meeting early next week between the Food Ministers of the Community to pronounce upon the Commission's recommendation about the level of food prices in 1973–74?
Mr. Prior: I certainly could not promise any Government time. In the last 20 years we have had only five debates specifically on farm price review matters and those have been taken in Supply time. We would very much welcome an opportunity to debate agriculture in Supply time.
Mr. Wilson: Apart from the fact that in those 20 years we have never seen anything like the inflation in food prices that we have today, may I ask whether the right hon. Gentleman realises that the situation is now quite different? This is not an agricultural price review of the old style, for which he and his predeces-
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sors were responsible. This matter is now dominated utterly by the decisions to be taken next week. May we have Government time to debate this matter? We heard a lot of sob stuff from right hon. and hon. Gentlemen opposite during the passage of the EEC legislation. Surely this House has a right to debate in Government time decisions taken in Brussels in our name affecting food prices for 15 million homes in this country, decisions over which there is no parliamentary control by this House.
Mr. Prior: These matters are suitable for debate at any time. I should not have thought it unreasonable to suggest that the Opposition should provide time to debate these matters. I understand from what my right hon. Friend said that there is no question of an early decision on prices within the Community. I should have thought there would be time for debate after next week if this could be arranged.
Mr. Powell: Will my right hon. Friend find early time to debate the motion on the regulation concerned with the wearing of safety helmets by motor cyclists, which is an important matter of principle and has aroused great public interest?
Mr. Prior: My right hon. Friend refers to a Prayer in the names of some of my hon. Friends. I should like to consider when we can find time for a debate after ten o'clock one night on this matter, but I am afraid that it will not be next week
Mr. English: Is the right hon. Gentleman any nearer ensuring that we get our copies of HANSARD and our Order Papers? Since it is not on the Order Paper, would he tell us whether he can find time next week for a debate on Motion No. 253, standing in the names of my hon. Friend the Member for Mansfield (Mr. Concannon) and myself, about the extraordinary attempt at bribery by BUPA of hon. Members of this House, just before the debate on the National Health Service?
[That this House regards with contempt BUPA's attempted bribe to the Nottinghamshire Members of Parliament offering them a 20 per cent, subscription rebate with an added bonus of immediate entitlement to benefit on acceptance, which if accepted by those Members would have enabled them to jump the existing

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queue of 42,145 people in their area, nearly half of whom have been waiting over six months for a hospital bed.]
Mr. Prior: I will draw the latter point to the attention of my right hon. Friend. I have seen the hon. Member's motion. On the other point that he raised, I understand that there is some reason to hope that the supply of parliamentary papers will be back to normal next week. Under the very difficult circumstances of the last few days, we have good reason to be grateful to the people who have kept us going.
Mr. John Wells: When will my right hon. Friend find time to debate the Quirk Report? In view of the fact that five separate Departments are involved with this, can he say which of the five separate Ministers will be involved?
Mr. Prior: I must confess that although perhaps I should know all about the Quirk Report, in fact I do not, so I cannot promise time to debate it next week. However, having found out exactly what it is all about, I will get into contact with my hon. Friend.
Mr. David Steel: In advance of the National Health Service Reorganisation Bill, shall we have a statement of the Government's intention with regard to the amendment carried in the other place providing for free birth control services, or shall we have to wait for the debate for the Government to make their policy clear?
Mr. Prior: These are matters with which my right hon. Friend will deal in his speech at the start of the debate on Monday.
Mr. Jeffrey Archer: When will the promised statement on allocation of rooms in Somerset House be made? The debate was several months ago and there are people who would like to know.
Mr. Prior: I have no further information at the moment on that, but I will get in touch with my hon. Friend.
Mr. Faulds: In view of statements by the Paymaster-General in another place in connection with VAT on acquisitions by our national museums and galleries, when will the right hon. Gentleman arrange for an announcement to be made
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of the Government's decision to abandon museum admission charges?
Mr. Prior: These are matters which I will discuss with my right hon. Friend and I will either write to the hon. Member during the course of next week or let him know at next week's business Question time.
Mr. Biffen: Is my right hon. Friend aware that, on Monday, considerable interest was shown in the House at the prospect of a wider debate upon the Government's decision concerning BSA? Is he aware that that interest will have been intensified by the highly contentious statements of Lord Shawcross on Tuesday, which, among other things, suggested that the sums involved were considerably greater than was revealed to this House?
Mr. Prior: I have noted what my hon. Friend said. Also, my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has written to me on this subject. I have conveyed these views to my right hon. Friend. All that I can tell my hon. Friend at the moment is that I cannot find time in the immediate future for a debate on this subject. It seems to me to be something which comes well within the bounds of Supply, and there might be a prospect of a debate in that way.
Mr. Michael Foot: Will the right hon. Gentleman undertake to reconsider his reply to the Leader of the Opposition about a debate on food prices and the first major decision under the Common Market rules for proposing to settle this important question? Will he also consider the interlocking issue of when we are to have a debate on the whole question of the powers of this House over secondary legislation and the Report of the Select Committee on the subject? While we understand that the Irish business makes it very difficult for the right hon. Gentleman to arrange that debate next week, will he consider that he should provide for such a debate in the week after that? I believe that he indicated that he would consider it favourably. Would he do so, especially because the answers that he gave the House last week and the week before on this matter mean that the House of Commons does not know whether the Government now accept or do not accept the recommendations of the Select Committee on this subject?
Mr. Prior: I am not certain that the last part of that question is entirely fair. I cannot find time next week or, I think, the week after that, for a debate on the first report from the Select Committee. However, I hope very much that we can. the week after that—and certainly before Easter—have the debate for which the hon. Gentleman asked.
As for debates generally along the lines mentioned, I can only say that the sooner we can decide how we are to organise our debates on Common Market legislation or draft legislation the better, but of course there have been many delays in getting the ad hoc Committee set up. It will be some time, I imagine, before we know its views in its second report. But, in the meantime, I will consider what other arrangements can be made.
Mr. Marten: Is my right hon. Friend aware that there is growing dissatisfaction on both sides of the House about the Government's failure to provide time for debating our domestic legislation which now goes through the machinery of the Common Market? Is he aware of Motion No. 243, in my name, concerning the proposal to raise the age at which a driving licence may be taken out in this country from 17 to 18—a proposal which has emanated from Brussels and which no-one in this country wants? There is no reason why we should have it. This House must be given time to debate this matter and to say that it will not have that sort of thing. Would my right hon. Friend please provide time for this?
[That this House rejects the proposals contained in a draft directive of the Commission of the European Communities (No. C 119/1 dated 16th November 1972 in the Official Journal of the EC) namely, the Raising of the Age for a Driving Licence from 17 years to 18 years and other related matters.]
Mr. Prior: I am certain that this is a matter which the House will wish to debate before a decision is reached in Brussels. I must point out to my hon. Friend and to all hon. Members that we have given the ad hoc Committee the responsibility for advising us on these matters. It should have been set up very much earlier than it was and I do not think that the Government can be blamed for the delays over this matter.
Mr. Michael Foot: On that last point, it is not satisfactory for the right hon. Gentleman to put any blame on the ad hoc Committee when it has, on this matter made recommendations unanimously to the House. First, the right hon. Gentleman was confused in his reply whether the Government accept them, and, second the right hon. Gentleman has so far refused a debate. No one but himself is to blame for any confusion over this matter.
Mr. Prior: I did not put any blame on the ad hoc Committee, but I did put some blame on hon. Members opposite for not agreeing earlier to the setting up of the committee.
Mr. Adley: Following my right hon. Friend's unwillingness to accept my instruction to the Select Committee on Map-lin about the Channel Tunnel, has he noticed that, by sheer coincidence, the Green Paper was produced yesterday, the day before the winding up of the proceedings of the Select Committee on the hybrid Maplin Development Bill? Can he assure us that this Green Paper will be discussed before Report stage on the Maplin Development Bill?
Mr. Prior: No, I could not give that assurance. The Report stage of the Maplin Development Bill will be coming in front of the House before many weeks have passed, but I thought that it would be for the convenience of the House to have a Green Paper on the Channel Tunnel as early as possible.
Mr. Russell Kerr: When shall we have an opportunity—I am sorry to keep repeating this question—to debate the Report of the Select Committee on Nationalised Industries concerning the Independent Broadcasting Authority? Meanwhile, can we have an assurance that no decision will be taken pre-empting the future of British broadcasting in the way that has been rumoured?
Mr. Prior: I said last week and 1 repeat this week that I think that the House will want to debate this issue as soon as we can conveniently arrange time for a debate, but, as for the decision to be taken, the Government have set out their views in their reply. I should like to consider what the hon. Member said about whether any decisions on those views are necessary before the debate.
Mr. Stainton: On the BSA affair, may I support the plea of my hon. Friend the Member for Oswestry (Mr. Biffen) in asking the Leader of the House for at least a short debate if only to put beyond a peradventure the expedition and expertise of the Government in handling this matter?
Mr. Prior: I have noted what my hon. Friend said.
Mr. Clinton Davis: Would the Leader of the House consider arranging for a statement by the Attorney-General next week, or at the latest in the following week, to announce the Government's policy on the recommendations which have been made by the Lord Chancellor's Advisory Committee on raising the limits of eligibility for legal aid, bearing in mind that that Committee said it was essential that this should be done before 2nd April?
Mr. Prior: I will certainly refer the hon. Member's question to my right hon. and learned Friend and arrange for him to make a statement, or at any rate to get in touch with the hon. Member and let him know.
Mr. Kenneth Lewis: Following the representations made by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) regarding the wearing of safety helmets by motor cyclists, will the Leader of the House bear in mind that it is also proposed that there should be compulsion for the wearing of seat belts? As these matters are for persuasion and for the insurance companies and not for the law of the land—[HON. MEMBERS: "No."]—would it not be better to withdraw these proposals altogether and then we need not discuss them?
Mr. Prior: These obviously are matters for debate—[HON. MEMBERS: " Hear, hear."]—and I have been asked to arrange for it. I have already stated that we shall try to find time for discussion of the Prayer not next week but perhaps in the week after.
Mr. Alfred Morris: If not next week, when will the right hon. Gentleman arrange for time to debate the two annual reports on Section 72 of the Chronic Sick and Disabled Persons Act 1970? Is it not wholly wrong that we should
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have been unable to debate either of these reports?
Mr. Prior: Quite obviously the House would like to have an opportunity to debate these reports. The House must recognise, however, that next week we are to have two days on the National Health Service Reorganisation Bill and two days on the White Paper on Northern Ireland, by special request. The House must know that the job of the Leader of the House is made impossible if we have requests for two two-day debates—for which there are sound and sensible reasons—and at the same time hon. Members bombard me with requests for further debates on every item. I will do my best, but I cannot promise everything.
Mr. Bruce-Gardyne: With reference to the matter raised by my hon. Friends the Members for Oswestry (Mr. Biffen) and Sudbury and Woodbridge (Mr. Stainton), may I put it to my right hon. Friend that there is a serious problem as there appears to be a total discrepancy of fact as to the amounts of taxpayers' money discussed and offered for BSA between my hon. Friend the Minister for Industry and the chairman of the company concerned? Bearing in mind that it is very difficult to reconcile the circumstances of BSA with the criteria which we were told last year would govern provision of taxpayers' finance under Section 8 of the Industry Act, and further bearing in mind that we were assured by the Minister for Industry and the Secretary of State for Trade and Industry that where there were substantial allocatins of taxpayers' finance to individual firms there would be possibilities for debate on the Floor of the House, and notwithstanding the pressure of business, would the Leader of the House reconsider the matter and provide an opportunity for an early debate on the BSA rescue operation?
Mr. Prior: There is no dispute between my right hon. Friend and the noble and learned Lord on the facts of the situation. As for the sums of money, as my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) knows, if the amount should be above £5 million under Section 8 for any single project—
Mr. Bruce-Gardyne: It would be.
Mr. Prior: As my hon. Friend says that it would be over £5 million he is bound to get his order.
Mr. Kaufman: Will the Leader of the House arrange for the Secretary of State for the Environment to make a statement in the House next week about the attempts by Manchester Corporation to acquire land for one thousand houses in Manchester? Will he ask his right hon. Friend the Secretary of State to repudiate the attempts of the Conservatives to obstruct the acquisition of that land which is needed to help Manchester's homeless?
Mr. Prior: I doubt very much whether that is a matter for debate next week.
Mr. Harold Walker: While appreciating the difficulties of the Leader of the House in responding to the many requests made to him, may I ask him to bear in mind that it is eight months since the Robens Report was published and eight weeks since I first asked for a debate on it? Does not the grim statement made in the House this afternoon about the disaster in Yorkshire give another indication of the urgent need to discuss this report, for otherwise the belief will grow that this House is indifferent to the question of industrial health and safety?
Mr. Prior: Of course I recognise the importance of what the hon. Member said and I hope that my right hon. Friend will be able to make a statement fairly soon outlining his intentions concerning the report. The hon. Member will agree that it is important for us to get the decisions right and that the new system should make a real and lasting improvement.
Mr. Benn: May I ask the right hon. Gentleman to consider again the request made by the hon. Members for Oswestry (Mr. Biffen) and South Angus (Mr. Bruce-Gardyne) for an early debate not only on BSA but on industrial policy generally? There has been a major change of Government policy in this respect and the House has not had an opportunity of debating it adequately since the Budget debate 12 months ago. If public money is to be invested on this scale, the Government have the responsibility to allow us to debate the reasons for it and the background in each individual case.
Mr. Prior: I note what the right hon. Gentleman said, and, of course, what was
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said by my hon. Friend the Member for Oswestry. I cannot arrange time for a debate in the near future. I should have thought this a suitable subject for a Supply Day. I have answered my hon. Friend on the whole question whether an order will have to be laid. Should the sum exceed £5 million, as he told me it would, an order would have to be laid.

NUCLEAR DESIGN AND CONSTRUCTION INDUSTRY
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker): Last August the Government announced their intention to encourage the consolidation of the nuclear design and construction industry into a single strong unit. Since then we have held wide and detailed consultations with firms both inside and outside the nuclear industry, and with the Atomic Energy Authority, trade union and staff association representatives and the electricity supply authorities.
These consultations have confirmed strongly the Government's view that there should be a single nuclear company which will use the skills and experience of the existing industry; that its management should be dedicated solely to the company's success; and that the present consortium arrangements are not compatible with the strength and unity of management which we all regard as vital.
The basis on which I am now discussing the establishment of the company is that 50 per cent of the share capital would be held by the General Electric Company whose international standing and financial and managerial strength will be most valuable, 35 per cent, of the share capital would be offered to other companies with an important interest in the nuclear design and construction industry, and 15 per cent, would be taken up by the Government through the AEA. This should give the new company a private sector shareholding of 85 per cent. GEC would also play a supervisory role on a basis agreed with the main board of the new company and would be paid for services provided.
The Government would have special rights in certain matters where the public interest is closely involved. These would include the formation of international

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links and securing that an open purchasing policy is pursued in order that neither the company's shareholders nor GEC subsidiaries should obtain preferential treatment in the allocation of contracts.
The company's normal business will be the design and construction of nuclear steam supply systems, since the main domestic customer, the CEGB, wishes to be free to place separate contracts for the nuclear steam supply system and the turbogenerators and associated plant and works. The company will however be able to supply complete power stations, in association with other firms, where the customer so requires.
The Government, with the support of GEC, consider that the board of the company should include people of experience and standing in the nuclear and electrical business. I am glad to say that Lord Aldington has agreed to become chairman and Lord McFadzean deputy chairman.
The Atomic Energy Authority will continue to play a vital part in the nuclear industry as the principal instrument for carrying out research and development. British Nuclear Fuels Ltd. will be closely associated with the new company in marketing and exploiting reactor systems and their fuel.
The skills and experience of the staff of the existing consortia are crucial to the successful completion of the existing business and the prospects of the new company. It is essential that the power stations now being built by the consortia should be completed successfully and quickly. To achieve this, it is intended that current contracts should be completed by existing staffs under arrangements to be agreed between the present consortia, which are responsible for the contracts, and the new company. The employment of staff on new work will be negotiated by the new company as a matter of high priority in full consultation with the unions and staff associations concerned.
These complex discussions on the reorganisation of the nuclear design and construction industry have necessarily involved prolonged consultation. Now that the basic decisions have been taken the important thing is to complete quickly the formation of the company so as to
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give renewed momentum to our nuclear business at home and abroad. The company structure we are adopting offers good prospects for this and I ask all involved to co-operate fully to ensure its success.
Mr. Benn: The right hon. Gentleman has made a very important statement constituting the second massive intervention in private industry in a week, in this case realising the objective which the Labour Government and the Select Committee on Science and Technology attempted unsuccessfully to carry through with the help of Lord Kearton of the IRC.
May I ask the right hon. Gentleman the following questions? What cash investment by Her Majesty's Government will be involved in the solution that the right hon. Gentleman puts forward? Secondly, in view of the fact that all the nuclear technology and almost all the engineering technology was funded by public money, either through investment in the AEA or through the CEGB's purchasing, how can the right hon. Gentleman justify a public stake as low as 15 per cent, instead of the majority holding which the Opposition would favour? Thirdly, will the open purchasing policy to which the right hon. Gentleman refers mean that the CEGB will not be committed to British systems which have been produced under the auspices of the AEA, and will American systems be offered to the CEGB through the new company? Will there be open tendering by American concerns for CEGB orders?
At the end of his statement, the right hon. Gentleman says:
"Now that the basic decisions have been taken…".
Does that mean that there will be no parliamentary approval for this scheme? Is the right hon. Gentleman saying that we have to accept his statement when we still await the publication of the report of the Select Committee which is now examining this very important matter and in the absence of the Vinter Committee's report, which was the basis of the right hon. Gentleman's decision?
Finally, may I ask the Leader of the House to notice that here is another major aspect of industrial policy which calls for an early debate in Government time?
Mr. Walker: I welcome the right hon. Gentleman's endorsement of the concept that there should be a unitary company.

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Dealing with his point about the investment, the suggested paid-up capital of the company is £10 million. Therefore the Government will put in their 15 per cent. shareholding in terms of that sum.
I concede that there has been a vast amount of Government research, but I disagree that this should be a more publicly owned company and less in the private sector. It is important that the company should be commercially oriented so as to take advantage of the considerable export opportunities available. It will have most momentum by having this substantial private stake.
The future systems to be adopted are a matter on which the Secretary of State will depend upon the advice of the Nuclear Power Board which a previous statement on 8th August said was to be set up comprising a wide range of scientific advisers drawn from the AEA and the CEGB. There will also be representatives of the new nuclear company and a number of other advisers. It will be the job of the Nuclear Power Board to advise the Government on the systems which the country should pursue.
As for a parliamentary debate on this topic. I always welcome a debate on industrial matters as it is obvious that this Government are succeeding so much better than their predecessors.
Mr. Skeet: What is the effect of my right hon. Friend's statement upon the other leading companies in the industry? As my right hon. Friend has selected a national as opposed to a European solution, what is the way ahead for the industry in terms of export sales? Does my right hon. Friend envisage links with the West German firm KWU, or does he intend to leave matters to the consortia? Will the companies about to be terminated receive compensation for the losses which will accumulate as a result of their going out of business and having no profitable undertakings to carry through?
Mr. Walker: Dealing with my hon. Friend's first question about the effect on leading companies in the electrical business, the solution that we have reached, after careful consultation with the companies, will be in the interests of the British electrical industry as a whole. I am certain that the very substantial orders being obtained by a wide range of
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British firms from abroad will continue, aided by the expansion which the new company will provide.
It is right that the Government should bear the responsibility of creating the international links, because much of them will be related to research which is in the possession of this country and which has been done by the Government. The creation of the new company will give better prospects to sensible and rational links with Europe, and ones which can be obtained from a position of British strength.
As for the existing companies, the completion of their contracts must be a matter for negotiation between them and the new company. I am sure that negotiations will start quickly.
Mr. Grimond: Will the right hon. Gentleman say what estimates have been made of the profitability of the new company? If 85 per cent. is to be in private hands, why is no part being offered on the market? Will Lord Aldington and Lord McFadzean continue with all their present commitments in industry?
Mr. Walker: The chairman and vice-chairman both intend to see that the time available to the new company is such as will meet its requirements, and Lord McFadzean has announced recently his retirement from his main executive rôle with BICC. Both have massive international reputations and a great deal of good will in the industry.
The future profitability of the company obviously depends not only on the future national success of reactors purchased in this country but on its ability to compete with the powerful American companies already engaged in this sphere of activity. How successful or unsuccessful it might be in a very competitive world is a matter of speculation. I have endeavoured to create a company which, internationally, is strong competitively and which, I hope, will prosper internationally and nationally. I believe that the leadership Lord Aldington and Lord McFadzean give to it will be of considerable importance.
A number of major companies linked with the two existing consortia have done a great deal of work and, having eliminated the two consortia, it is right to ensure that they can be represented

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on the new company. A number of firms in the consortia will obtain international prestige as being part of it, which will be important to our export chances.
Mr. Tugendhat: Will there be a Government director as there is on the board of British Petroleum? Who will be the full-time chief executive? Will he come from GEC? May we have some indication of which are the companies with the 35 per cent. to which my right hon. Friend referred? It is a very large percentage.
Mr. Walker: I am unable to do so because obviously one has now to discuss with the companies concerned the stake they would wish to have, if any, in this company. The chief executive's appointment will be one which is approved by the GEC and the Government. I was asked about a Government director on the board. Since the directors have to be approved by both the GEC and the Government, I do not believe there is any need to have a specific director as a Government director. I wish to see a board which will be small and effective and of such calibre and repute as to be able to work successfully, as I am sure it will, to ensure that this company is a success.
Mr. Palmer: Although the right hon. Gentleman has not mentioned it, he will be aware that Sub-Committee B of the Select Committee on Science and Technology is now investigating this issue and hopes to report fairly soon. Could I ask him, therefore, why his Department has refused essential information to the Select Committee, including that on the Vinter Report, and, secondly, whether Sir Arnold Weinstock is to have a specific management contract with the new company, apart from the influence he will exert as a shareholder in the company? Will he also reconsider the answer he gave my right hon. Friend the Member for Bristol, South-East (Mr. Benn) about a majority State holding? Will he appreciate that many hon. Members on both sides of the House feel that the State should have a major interest in this matter, and will he therefore wait until the Select Committee finally reports before making up his mind?
Mr. Walker: I have made up my mind and I am against having a majority State holding in this company. I want it to be very commercially oriented and I think that a majority State holding would be wrong. The hon. Gentleman knows full well that the Vinter Report was prepared by civil servants for the Government and that it has not been customary either for the previous Government or for this Government to publish such reports, particularly when information is given in confidence to Government officials. But, as he knows, my hon. Friend the Minister for Industry has offered a considerable amount of information from the Vinter Report to the Select Committee. Finally, there will be no management contract with GEC.
Mr. Crouch: May I put it to my right hon. Friend that his statement this afternoon is an example of massive intervention of the private sector into the public sector? While I accept that his obvious desire is to introduce a very commercial element, I am concerned that the research and development contribution of the AEA, which in the past has been and I hope will continue in the future to be very considerable, is not sufficiently represented by this 15 per cent.? I am also concerned about the position of parliamentary control in this key sector of our energy policy and production.
Mr. Walker: I would remind my hon. Friend that the AEA had a direct interest in the two previous consortia that existed and it was agreed that they should be united into one strong consortium. We are dealing here with what is very much a commercial operation which has enormous worldwide prospects. I believe it to be right to have a commercially oriented company with strong management, for that reason. The important point about parliamentary control is that the Nuclear Power Board, which will advise the Government and, of course, the Secretary of State for Trade and Industry, will have considerable powers, for which, as always, the Secretary of State will be answerable to Parliament— powers over international links, over open purchasing policy, over the research programme which will continue to be done by the AEA, and over the advice which will be made available to him on choice of reactor.
Mr. Benn: Is the right hon. Gentleman aware that to use the word "commercial" in respect of nuclear power is to turn language on its head? Nuclear power has never been commercial. It is entirely research and development. Well over £500 million has been paid for that by the taxpayers and that is to be handed over in return for a £1½ million stake in the equity of a company which is to be privately controlled, without a Government director and without parliamentary approval. For the Minister to say, "I have made up my mind" indicates the contempt with which he regards the legitimate interest of the House in this matter.
Mr. Walker: If the right hon. Gentleman holds those views I can only say that if he should have responsibilities in this field again, all the major American nuclear companies would be delighted that he was in that position, because he would be handing over one of the fastest expanding industries in the world to the much more competitively successful and commercially oriented companies of the United States.
Mr. J. H. Osborn: I would ask my right hon. Friend whether he is aware that, unlike my hon. Friend the Member for Canterbury (Mr. Crouch), I welcome this very bold statement, as do many Members on this side of the House, and wish this new company every success. I would ask him whether it is not a fact that this company will be in competition with two private enterprise companies in the United States—General Electric and Westinghouse—which have gained Government contracts in research and development for over 25 years and have developed a commercial expertise which has been denied us in this country, and whether it is not a fact that we are now taking a bold step which should be welcomed?
Mr. Walker: It is certainly true that this is potentially a massive world-wide market. More than two large American companies are already penetrating world markets and a number of European companies are also emerging into this sphere. I believe that with our expertise it is absolutely vital for us to penetrate these markets.
Mr. Ronald Brown: Is the right hon. Gentleman aware that his statement on the publication of the Vinter Report is extremely disappointing since exactly the same argument was raised by him or his predecessor on the Doxey Report? There is no excuse for the Government withholding this important information from the Select Committee.
Mr. Walker: All previous Governments have withheld advice given to Ministers by their officials. Any previous Minister—including a relative of the hon. Gentleman—will advise him that that is a fact.
Mr. Adam Butler: May I re-echo the feeling that most hon. Members have on this side of the House over the faith which my right hon. Friend has shown in the private sector and ask him to confirm that it will be the Government who have the vital choice on reactor, when that choice is likely to be made and orders placed with the new company?
Mr. Walker: The new nuclear company will as quickly as possible enter into discussions with the CEGB. Obviously it is our intention quickly to establish the active work of the Nuclear Power Board which will advise the Government of the best system to pursue in the future.
Mr. Rost: While congratulating my right hon. Friend on taking an initiative on a decision on a commercial fooling for this industry and restricting the Government's stake to 15 per cent., may I ask whether he will confirm how the loan capital will be provided, whether it will be in equal proportion to the equity and whether the 35 per cent. contribution from the existing companies will be on an open competitive basis or by invitation?
Mr. Walker: It will be by invitation, looking at those companies which have particularly participated in the nuclear industry in the past. It is not envisaged that any new loan capital will be required.
Mr. Ginsberg: Can the right hon. Gentleman say what is to happen to the CEGB's holding in APC and whether that is to be additional to the AEA holding of 15 per cent.?
Mr. Walker: No, Sir.

COMPLAINT OF PRIVILEGE
Mr. Concannon: While I do not wish to delay the business of the House, Mr. Speaker, I rise on what I consider to be a prima facie breach of privilege, due to the nearness of the debate and vote on the National Health Service Reorganisation Bill [Lords] next week. I understand that hon. Members from Nottingham and other areas have received a letter from the Nottingham branch of BUPA, which—and I quote from the letter—
"exists to assist subscribers with the cost of private treatment in health and injury."
It offers to me and other Members a group scheme which, first, would give us a 20 per cent. subscription rebate and, secondly, immediate entitlement to benefit on acceptance.
I see this as a blatant attempt to offer me various privileges and queue-jumping facilities in an area where over 42,000 people are awaiting beds in hospital, and over half of them have been waiting more than six months. I can only construe the timing of this letter as an attempt to affect my vote on the National Health Service Reorganisation Bill [Lords] on Tuesday next and I consider this to be a breach of privilege.
Mr. English: I support my right hon. Friend the Member for Mansfield (Mr. Concannon), Mr. Speaker. This is precisely why we tabled the early day motion standing in our joint names. It is an extraordinary thing that the individual concerned in this organisation should have attempted to do this at this time.
Mr. Speaker: If the hon. Member for Mansfield (Mr. Concannon) is founding his complaint on a piece of paper, will he kindly bring the piece of paper to the Chair?
I shall consider the matter and rule upon it tomorrow.

ROYAL ASSENT
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:
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1.Furnished Lettings (Rent Allowances) Act 1973.

2.Concorde Aircraft Act 1973.

3.Coal Industry Act 1973.

4.Counter-Inflation Act 1973.

STATUTORY INSTRUMENTS (STANDING COMMITTEES)
4.20 p.m.
The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): I beg to move,
That during the remainder of the present Session—

(1)There shall be one or more standing committees, to be called Standing Committees on Statutory Instruments, for the consideration of statutory instruments or draft statutory instruments referred to them.

(2)Any Member, not being a member of such a Standing Committee, may take part in the deliberations of the Committee, but shall not vote or make any motion or move any amendment or be counted in the quorum.

(3)Where—

(i) a Member has given notice of a motion for an humble address to Her Majesty praying that a statutory instrument be annulled, or of a motion that a draft of an order in Council be not submitted to Her Majesty in Council, or that a statutory instrument be not made, or

(ii) a Minister of the Crown has given notice of a motion that a statutory instrument or draft statutory instrument be approved,

a motion may be made by a Minister of the Crown at the commencement of public business, that the said instrument or draft instrument be referred to such a Committee, and the question thereupon shall be put forthwith; and if, on the question being put, not less than twenty Members rise in their places and signify their objection thereto, Mr. Speaker shall declare that the noes have it.

(4)Each Committee shall consider each instrument or draft instrument referred to it on a motion, 'That the Committee has considered the instrument (or draft instrument)'; and the chairman shall put any question necessary to dispose of the proceedings on such a motion, if not previously concluded, one and a half hours after the commencement of those proceedings; and the Committee shall there upon report the instrument or draft instrument to the House without any further question being put.

(5)If any motion is made in the House of the kind specified in paragraph 3(i) or 3(ii) of this Order, in relation to any instrument or draft instrument reported to the House in accordance with paragraph (4) of this Order, Mr. Speaker shall put forthwith the question thereon; and proceedings in pursuance of this paragraph, though opposed, may be decided after the expiration of the time for opposed business.

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It may be for the convenience of the House that I should speak at the end of the debate, and if that is so, I just move the motion formally.
4.21 p.m.
Mr. Michael English: I congratulate the right hon. Gentleman. When we last discussed this matter, on 18th December, I had some reason to suggest that there had not been adequate consultation, and the right hon. Gentleman promised to act on those matters. He has done so, I congratulate him on doing that and on fulfilling the assurance he gave to the House then.
I do not propose to move my amendment, but I should like to mention that this is a matter not of party but of distinction between Government, irrespective of party, and Opposition, irrespective of party. I should have preferred to have seen the Standing Committee arrive at a decision before it came back to a vote on the Floor of the House. I think that my views are shared by other hon. Members. As this is for the remainder of the present Session, I hope that we have an opportunity of reconsidering the matter after we have seen how it works under the motion.
As the Government could, if they wished, reverse a Committee decision on the Floor of the House, I see no reason why a Committee should not arrive at a decision instead of simply discussing something in mid air on an innocuous motion. It would be better to have a proper debate.
I do not wish to oppose the motion. I welcome the procedure suggested. I am grateful to the right hon. Gentleman for the way in which he has dealt with this matter.
4.23 p.m.
Mr. Albert Booth: The Leader of the House will be the first to appreciate that, while the motion states very clearly what will happen to those statutory instruments which will be referred to the Committee if the motion were passed, the motion cannot by its nature give us an indication of what will happen to those instruments which are not sent to the Committee.
To consider objectively the feasibility or otherwise of passing the motion depends upon the House having some assurance of
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what will happen to those motions which did not go to the Committee. Therefore, is it the intention of the Leader of the House that where there is an objection to an instrument being sent to Committee by 20 hon. Members, or the whole of the Opposition or any substantial number of hon. Members above 20, to arrange a Prayer on the instrument in the event of it being an instrument subject to annulment, and will time be found for that?
In the absence of such an assurance, hon. Members would be faced at times with a very difficult choice, if not an impossible choice. If they felt very strongly about the merits of a particular statutory instrument which was subject to annulment, they would have to make a choice. They could allow it to go to a Committee, if a Minister proposed that it should go there, in the knowledge that there they could discuss it but could not take a decision, while appreciating—if I understand the motion correctly—that it would come back to the Floor of the House for a vote, but if hon. Members blocked it by rising in their places in numbers of 20 or more, they might not have an opportunity to debate it in the House and to vote upon it.
It is not the wish of the House that this should be so. All the evidence of recent years has been that where hon. Members feel strongly on the merits of the issue contained in a statutory instrument subject to annulment it is their wish that it should be debated on the Floor of the House. This procedure motion, in the absence of some firm declaration as to what is to be the practice with instruments not referred to Committee, leaves us with a danger—I put it no higher than that—that it will help us in dealing with non-controversial instruments but will leave us with a problem on controversial instruments.
I am justified in saying that in part by the failure of the Government to respond to a suggestion made in the Brooke Committee's Report, which offered three alternative ways of creating more time on the Floor of the House to deal with Prayers. These were that there be modification to the 11.30 p.m. rule, which would allow a debate on an instrument subject to negative procedure after 11.30 p.m.; that there be certain Friday sittings at which Prayers could be taken, subject to a 1½-hour time limit on the

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debate; and that the time between 10 p.m. and 11.30 p.m. on Supply Days should be reserved for Prayers.
All of those alternatives seem to be feasible. No one with a knowledge of the procedure of the House would contend that it would be impossible to introduce any one of them. Certainly, one of those must be within the scope of the methods of the House.
I agree with my hon. Friend the Member for Nottingham, West (Mr. English) that paragraph (4) of the motion imposes what could be a very unreasonable limitation. If hon. Members in Committee express views and debate contentions in relation to an instrument but at the end of that, in so far as they are members of the Committee and entitled to vote, merely vote upon the motion that the Committee has considered the instrument, it will not be open to the voting members of that Committee to report succinctly any view on the merits of the instrument.
Surely it is not challenged that the only reason why this Committee is being set up is that there should be an opportunity to debate the merits of instruments. We have had machineries for looking at questions of technicalities and vires. What is proposed here is a Committee or Committees to deal precisely with questions of merit. Yet the terms of the only motion which can be moved in such a Committee can give no indication one way or another on the question of merits.
I ask the Leader of the House to confirm, therefore, that what is intended is that a report of the Committee should be available and that before the vote takes place on the Floor of the House it would be open to any hon. Member to read the views expressed by those who attended the Committee and took part in the debate. That still leaves open the possibility that there may have been those wishing to attend the Committee to take part in debate and express a view who, as a result of the time limit, could not do so. Therefore, their views will never be on record and will not be known to people voting in the House on the merits of the instrument.
That particular problem is not one which offers itself to a ready or easy solution, but the House should be aware
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that this is one of the limitations of the procedure which has been put before it.
Lastly, I make what is a continuing protest for me. This motion, in common with a number of others moved by previous Leaders of the House on the subject of delegated legislation, will enable Governments to continue to prevent debate upon a statutory instrument subject to annulment in the House if they choose to do so. They can prevent it going to Committee, and, having done so —because there is control of the time of the House in the hands of the Leader of the House—they can prevent time being available for it. This is an intolerable situation to exist in a democratic Parliament, particularly at a time when more and more important decisions are being taken in a way which ensures that they can be subject to control of the House only if the House has adequate control over delegated legislation.
It was bad enough when decisions were taken by Ministers in this country. I put it to the House in all seriousness that it is even worse when some of the decisions affecting our law are decisions being taken in Brussels which can appear here for consideration and control only in the form of delegated legislation.
In view of all these considerations, we can regard this proposal before us as no more than a partial amelioration of a very serious problem and one which requires some view from the Leader of the House as to the Government's thinking on the further steps that will be taken to deal with the major problem of statutory instruments subject to annulment which will not be sent upstairs and which Members of this House wish to see dealt with upon the Floor of the House in order that they can take a decision on important matters of principle or merit.
4.32 p.m.
Mr. Edward Short(Newcastle-upon Tyne, Central): I wish to associate myself with my hon. Friend the Member for Nottingham, West (Mr. English) in thanking the Leader of the House for going some way to meeting the points made in the debate that we had on this matter. He has had the motion on the Order Paper for a considerable time, facilitating scrutiny and discussion of it. Indeed, my hon. Friend tabled an amendment to it. As we said in the debate

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and as my hon. Friend the Member for Barrow-in-Furness (Mr. Booth) has just said, it goes some way to meeting our difficulty, but of course it is not the whole answer.
I should like an explicit assurance from the right hon. Gentleman that this procedure will not be a substitute for normal debates in the House on Prayers and affirmative orders after 10 o'clock. The amount of time allowed must not be diminished in any way because of this. Indeed, we hope that it will be increased. One of the difficulties under the present Government during the last two years has been that we have been increasingly deprived of the right to debate Prayers.
Delegated legislation is one of the worrying aspects of democracy. It is law made by civil servants. I know from experience that very often Ministers who sign the orders do not have time to scrutinise them. Frequently they are worded in completely incomprehensible gobbledygook which only lawyers understand and the Minister himself often does not know what laws are being made in his name. It is extremely important that Parliament should have the opportunity to scrutinise and debate these matters.
I very much hope that the Leader of the House will consider the problem, which I have raised from the Dispatch Box previously, of the diminution in the time allocated to us for debating Prayers.
Very often nowadays when we come to debate such matters, we debate not a Prayer to the Queen that she should annul the order, but something quite different; it is a peg on which to hang a motion.
I know that it does not happen very often, but the House must have the right to annul an order. When the statutory period has elapsed, we do not have that right. Merely to allow us to debate the matter after the time has lapsed is not good enough. I therefore hope the Government will consider this matter and try to make more time available.
I am not very attracted by the idea of reverting to our previous practice of debating Prayers, even if they are non-controversial, after 10.30 p.m. We suffered a great deal from that in the past
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and we have left that practice behind us. I should not like to return to that situation. I should like an assurance from the right hon. Gentleman that he does not see this proposal as a substitute for debating Prayers in the House.
I associate myself with what my hon. Friends have said. We should very much prefer it to have been made possible to have a vote in the Committee. However, as the order says in its first line, this applies only to the remainder of this Session. It is a sessional order. Four or five months remain in which to see how it works out, and we can look at it again before the next sessional order is introduced. It may well be that when the next sessional order comes we shall put down an amendment. The right hon. Gentleman may himself change his mind about this and decide that it is better to let us vote in the Committee.
I know, and we have had the assurance of the right hon. Gentleman, that nothing will go to the Committee unless it has been agreed. Indeed, as the order states, it is subject to the right of 20 Members to object. But sometimes objection to an order arises during debate. Indeed, after hearing the Government's reply, we might decide we want to take a vote on the matter. I therefore hope the Government will watch how the situation develops and discuss it with us over the next few months. It may well be, as I have said, that by the time of the next sessional order we will wish to have changes.
Subject to those reservations, we are grateful to the right hon. Gentleman for meeting most of our demands.
Mr. Prior: I am grateful to the right hon. Member for Newcastle-upon-Tyne, Central (Mr. Edward Short) and the hon. Member for Nottingham, West (Mr. English) for the remarks they have made. I hope to take up the points made by all right hon. and hon. Gentlemen during the course of the few words I have to say.
The House will know that there remains outstanding from the recommendations of the Brooke Committee its proposal for the setting up of a Standing Committee to consider the merits, as distinct from the purely technical propriety, of statutory instruments. It is that with which we are concerned this afternoon.

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Both the right hon. Gentleman and the hon. Member for Barrow-in-Furness (Mr. Booth) have asked me for an assurance that the Committee would be used as an addition to, and not as a substitute for, the procedures we already have for the consideration of delegated legislation. That assurance I readily give.
I know the right hon. Gentleman feels strongly that the Government and the business managers of the House are not allowing sufficient time for debates on Prayers and on other statutory instruments. I do not think the record has been too bad over the past few months. The last time I checked we were doing considerably better than we were a couple of years ago. But for all that, statutory instruments are becoming a very much more important part of Government legislation. We hope that the setting up of this merits committee will ease the problem somewhat, but I agree that it is only a partial amelioration, as the hon. Gentleman pointed out.
I wish to make some reference to the description of the right hon. Gentleman of some of these statutory instruments as "gobbledygook". I am looking very carefully to see whether, as a Select Committee of this House has recommended in the past, we should take some action to see that our legislation is printed in more readily understandable English. I hope to be making an announcement before long on that subject.
The hon. Member for Barrow-in-Furness mentioned the three ways put forward by the Brooke Committee in which we might achieve more discussion. I shall come to one of them at the end of my remarks. I am not in total agreement there with the right hon. Gentleman the Deputy Leader of the Opposition, but I will come to the subject at the end.
Queries were also raised about the procedure in the Standing Committee, about what would happen when instruments were reported back to the Floor from such a Standing Committee and whether the House would be able to express a view on such instruments.
The motion now before the House proposes that for the remainder of the present Session any affirmative instruments or any negative instrument against which a Prayer has been tabled could be re-
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ferred to such a Standing Committee by motion. Such a reference, would, however, be made only if agreement to this course had been reached through the usual channels and provided that twenty or more Members did not object to the motion.
This generally follows the procedure when the Bill is referred to a Second Reading Committee and would prevent the Standing Committee procedure from being used in individual cases against the wishes of a substantial body of members. Statutory instruments committed in this way would be debated on a "take-note" motion for a maximum of one and a half hours corresponding with the time normally allotted to the consideration of a statutory instrument on the Floor of the House and would then be reported to the House. Thereafter the House could decide a Question on it forthwith.
It is proposed that any Member of the House not being a member of the committee should be able to take part in any of its deliberations but would not be able to vote in the committee or move motions or count as part of the quorum. The hon. Member for Nottingham, West and the hon. Member for Barrow-in-Furness mentioned, as did the right hon. Member for Newcastle-upon-Tyne, Central, the point about voting in the committee.
Mr. Edward Short: May we be quite clear on this? If the motion before the merits committee is a prayer that the order be annulled do I take it that the merits committee will have a motion to take note of that Prayer, and then when it comes back to the House the House will vote on the Prayer?
Mr. Prior: That is the procedure. It would come back at the start of public business. The motion is
"That the Committee has considered the instrument".
That is the motion that is put in the merits committee, whether it is an affirmative or a negative instrument. It is a take-note motion and when it comes back to the Floor of the House the Question is put in the ordinary way in which a Prayer or an affirmative resolution is put.
Mr. English: What happens if the committee defeats this mysterious motion? The motion may be untruthful, but what happens if the committee resolves that it has not considered it?
Mr. Prior: If it were an instrument subject to affirmative resolution the Minister would have to put it in front of the House again. If it were a Prayer, the Prayer would fall unless it was raised on the Floor of the House. In practical terms I imagine that if that sort of thing happened an opportunity would very quickly be provided on the Floor of the House either for the Government to put the matter right or for the Opposition to take advantage of the obvious embarrassment into which the Government would have come.
Mr. Ronald Bell: Will my right hon. Friend the Leader of the House explain what will happen if the motion is passed? It is a little obscure to me how it should matter whether it is passed or defeated because in one case, I presume, the House gets a report that the matter has been considered and in the other that it has not. How are we further forward?
Mr. Prior: It then has to come before the House having been put down on the Order Paper in the ordinary way. It is not subject to debate and the House takes its decision immediately after the start of public business at 3.30 p.m. when the vote is taken. Or, if it is not a matter which it is considered requires a vote, the vote is not taken. The House will recognise, however, that nearly all the matters which are likely to be contentious will not go to the merits committee. As the right hon. Gentleman said, there may be a matter which becomes contentious only when it has been debated. In that case for the moment the merits committee would have only a take-note motion before it. That applies for this Session alone. I would suggest, in the time honoured words of Leaders of the House, that we see how we get on this Session before deciding whether we should give the committee greater voting powers in another Session. I can say only that the Brooke Committee came down against greater voting powers. Consultations I
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have held have indicated that it would be more generally convenient to the House if the Questions on these instruments were decided on the Floor of the House and not upstairs.
Mr. Edward Short: Not all of them.
Mr. Prior: No, not all of them, but a number of important consultations have suggested to me that this arrangement at the moment meets more with the approval of the House.
The hon. Member for Nottingham, West proposed amendments to the original motion put down by the Government providing that the House could establish more than one committee of the kind proposed. These amendments have been incorporated, with the agreement of the hon. Member, in the present motion before the House.
Another proposal raised by the hon. Member this afternoon was that additional time should be provided after 11.30 p.m. for up to one and a half hours for consideration on a take-note basis of Prayers against negative orders. I confirm the Government's acceptance of this proposal. It is intended, however, for the present to table appropriate motions as necessary rather than to propose an amendment to Standing Orders. I also confirm that the taking of Prayers at this time would be proposed only after agreement through the usual channels.
I believe that with the safeguards these proposals represent a useful further improvement in our procedures for the consideration of delegated legislation. I am quite certain, as the hon. Member pointed out, that we have to pursue these matters a good deal further, particularly now within the context of EEC draft legislation. I would like very much to see what progress the merits committee now makes and how it settles down. This is only a sessional order and we have many important matters concerning the EEC to discuss. Hon. Members will know that we have put a proposal to the ad hoc Select Committee which would involve a Standing Committee for draft EEC legislation. It would be for the benefit of the House if we pass this motion now. We could always have further discussions later to see whether it was meeting the full convenience of all hon. Members.
4.48 p.m.
Mr. Ronald Bell: I am obviously glad to see this motion on the Order Paper because it is at least progress towards what we have asked for in the past. We shall have a trial for the remainder of this Session, but in any case we have no alternative to such a trial. It would be a great mistake to imagine that this building is full at the moment of Members who have come here in order to oppose this motion, or, indeed, to believe that the building is even full. We shall be trying the arrangement out but I should not like my right hon. Friend the Leader of the House to think that it will make much of a contribution.
The central problem is that the safeguard of praying against statutory instruments is now quite worthless. When one reflects on the battles that have taken place in the past in order to ensure that some power conferred upon a Minister shall be exercised subject to Prayers against the exercise of that power, and how the attainment of that has been thought to be some achievement for the control of Parliament over the executive, one becomes a little cynical about the results of parliamentary battles. Let us get it clear in our mind that the right to pray is absolutely useless.
First, a Prayer when it is put down has very little chance of being debated in the House. If those who put it down want to challenge an order and to vote against it, it has even less chance of being given time. The first thing one is asked when one puts down a Prayer is, "Do you want to divide on it? If you do not want to divide it is much easier to find time for you. If you want to divide, that will be difficult."
The right to put down a Prayer and to have a short debate in the middle of the night, on the understanding that it will not be carried to a vote, is not a very valuable scrutiny of administrative legislation. As we all know, no statutory instrument is ever annulled. When we last had a debate on this subject, which was not very many months ago, I mentioned that the only instance of which I knew when a statutory instrument was annulled was about 15 years ago. On that occasion it was annulled by mistake because one side forgot to put in
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Tellers. That is the only occasion about which I know when a Prayer was successful and a statutory instrument was annulled.
The fact is that statutory instruments pour out in hundreds. Like the hon. Member for Nottingham, West (Mr. English), I am a member of the Statutory Instruments Committee. I have been a member for 18 years. I should not like to say how many statutory instruments that I, as a member of the committee, have scrutinised, but it must be many thousands and probably tens of thousands. They pour out in profusion. All that the committee is entitled to do is to scrutinise the technical aspects or the form or wording in which the instrument is cast. The committee is not, by its terms of reference, allowed to consider the merits or to report on the merits. Therefore, there is a vast volume of legislation at which virtually no one looks.
We cannot say that we are doing our job as a parliament, which is a legislature, and scrutinising the executive—and all executives need to be scrutinised, and some more than others—when tens of thousands of instruments have gone through unchallenged and with their merits unscrutinised.
Although I am glad to see this motion on the Order Paper, we should be clear about its effect. As my right hon. Friend rightly said the committee will deal mainly with non-controversial orders. Its procedure will not be very useful in the case of a controversial order. The report to the House will be that an instrument has been considered. Of course, that is excellent. However, there are 630 Members of this House. Is it imagined that all hon. Members who are not members of the committee will go to the Vote Office and clamour for the verbatim report of the proceedings of the Standing Committee? Hon. Members are deluged with printed matter which they never succeed in reading. The reports will be read by very few people if any.
The reports to the House will come up at 3.30 p.m. and will be decided without debate. That means that they will go through on the nod, without debate, because nobody will know anything about them. It is not as if there will be a report. At least the Select Committee

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on Statutory Instruments reports or draws an instrument to the special attention of the House on the ground that it does something objectionable, that it is retrospective in its effect, that its meaning is obscure or that it makes unexpected use of the powers in the statute. They are not long reports. They are only a few sentences which tell the House what the committee, which was set up to consider these matters and in which party considerations never enter, thinks is the defect in the statutory instrument.
Hon. Members can read those reports. It takes them only 30 seconds to read them. They then know whether they are interested. If the Standing Committee on merits were to make a report of only one paragraph, and that went on the daily papers, the report could be considered. But when the report is just that the instrument has been considered, nobody will be very much the wiser.
In the end we come down to the practicalities of politics. It is a great abuse that in practice Governments cannot be defeated on the Floor of the House. The foolish convention has been allowed to become accepted that the Government must not be beaten in the House of Commons. That has always been welcomed in the school books as the final triumph of the House of Commons in its control over the executive. In fact, it is the final triumph of the executive in its mastery of the House of Commons. We have the apparatus of Whips instead of the Government submitting their business to the House and the House making a decision. The whole thing is cut and dried. Everybody knows that if there is one defeat of the Government on the Floor of the House the traditional questions will be asked about when polling day will take place.
That is a lot of nonsense. The only place where this House can exercise its scrutiny and control is in committee, where for some reason Governments may be defeated with impunity. They are not defeated as often as they should be, but they are occasionally defeated. No one suggests that there should be a General Election because the Government have been defeated in committee.
If we cannot reassert the control of this House over legislation, I do not know for what purpose we have come here. The

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way that Governments submit legislation to this House is as if its acceptance is a mere formality. Statements are made at 3.30 p.m. which begin, "The Government will propose …". After that it is taken for granted that it will be passed. We are told how it will operate and the consent of the House is treated as a mere formality. If we are to reassert our control over delegated legislation—which is most of the legislation—it must be done in committee. We must have operative votes in committee. Of course, if a matter is of great importance and of a controversial nature the Government of the day must be entitled, through the procedure, to raise it again on the Floor of the House and to ask the House to reverse the Committee's decision. Merely to have debates in committee and then to take decisions on the Floor of the House will never meet the situation.
I thank my right hon. Friend, as I always thank him, because he is always doing good things. However, I remind him that he has not done a sufficiently good thing this time. We shall wear it as a first step—anyway, we have no choice —but we shall be back next term.
Question put and agreed to.
Ordered,
That during the remainder of the present Session—

(1) There shall be one or more standing committees, to be called Standing Committees on Statutory Instruments, for the consideration of statutory instruments or draft statutory instruments referred to them.

(2) Any Member, not being a member of such a Standing Committee, may take part in the deliberations of the Committee, but shall not vote or make any motion or move any Amendment or be counted in the quorum.

(3) Where—

(i) a Member has given notice of a motion for an humble address to Her Majesty praying that a statutory instrument be annulled, or of a motion that a draft of an order in Council be not submitted to Her Majesty in Council, or that a statutory instrument be not made, or

(ii) a Minister of the Crown has given notice of a motion that a statutory instrument or draft statutory instrument be approved,

a motion may be made by a Minister of the Crown at the commencement of public business, that the said instrument or draft instrument be referred to such a Committee, and the question thereupon shall be put forthwith; and if, on the question being put, not less than twenty Members rise in their places and signify

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their objection thereto, Mr. Speaker shall declare that the noes have it.

(4) Each Committee shall consider each instrument or draft instrument referred to it on a motion, ' That the Committee has considered the instrument (or draft instrument)'; and the chairman shall put any question necessary to dispose of the proceedings on such a motion, if not previously concluded, one and a half hours after the commencement of those proceedings; and the Committee shall thereupon report the instrument or draft instrument to the House without any further question being put.

(5) If any motion is made in the House of the kind specified in paragraph 3(i) or 3(ii) of this Order, in relation to any instrument or draft instrument reported to the House in accordance with paragraph (4) of this Order, Mr. Speaker shall put forthwith the question thereon; and proceedings in pursuance of this paragraph, though opposed, may be decided after the expiration of the time for opposed business.

NOMINATION OF STANDING COMMITTEES
Ordered,
That during the remainder of the present Session—
Standing Order No. 62 (Nomination of Standing Committees) shall have effect as if, at the end of line 10 thereof, there were inserted the words ' or on each Standing Committee for the consideration of Statutory Instruments or draft Statutory Instruments referred to it'.—[Mr. Prior.]

ORDERS OF THE DAY

  CONSOLIDATED FUND (No. 3) BILL
  Order for Second Reading read.
  Motion made, and Question proposed. That the Bill be now read a Second time. —[Mr. Prior.]

  COMMITTEES (EXPENDITURE)
  5.1 p.m.
  Mr. Michael Hamilton: We are now concerned with considering certain increases in expenditure. One of these increases concerns the expenditure of Committees of this House. It is stipulated in the report just how the money is expended—shorthand-typists, foreign travel, specialist assistance and so on. These items are not cheap and I would not wish to see a Committee unduly reined in. I do not begrudge these increases in expenditure, provided that I feel confident that such expenses on the part of Committees are properly directed.
  Unfortunately I do not always feel that confidence. Therefore I have felt bound to raise this issue this afternoon. On 18th December I raised in this House the question of the Select Committee on the Parliamentary Commissioner. My right hon. Friend the Leader of the House was very helpful. He said,
  "I have sympathy with what my hon. Friend said and those of us who heard his speech must have been impressed with what he had to say. I know that the House will want me to discuss the matter."—[OFFICIAL REPORT, 18th December, 1972; Vol. 848, c. 1068.]
  Unfortunately there are occasions when sympathy is not quite enough. There are occasions when a clear statement is called for about whether correct procedures have applied. I am delighted to see my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) present today. He is a senior member of the Select Committee on the Parliamentary Commissioner. The initial error, I claim, was that that Select Committee took evidence in public, employing shorthand writers, without inviting the hon. Member concerned. This is not a simple matter of common courtesy, it is a matter of principle and of a Member's ability to

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  safeguard the interests of his constituents. A Member is entitled to sit in on a Committee when evidence is being heard in public.
  The Select Committee on Procedure of which I am a member makes plain that this is so. We have only to turn to the Third Report of that Committee for 1971–72 to find confirmation of that. Equally, Erskine May is perfectly clear on the point. Thus if what happened was contrary to the traditions and practices of this House I would expect the Minister to say so this afternoon.
  After this initial error it might be thought that the Committee would be anxious to make amends. It might be thought that when approached it would agree to see the Member concerned. Did it? It did not. The Chairman of the Committee wrote—
  Mr. Deputy Speaker (Mr. E. L. Mallalieu): Order. Surely the way in which the hon. Member should approach this problem is by tabling a substantive motion. I do not think he should do this on the Consolidated Fund Bill.
  Mr. Hamilton: With respect, Mr. Deputy Speaker, the Consolidated Fund Bill as I understand it, provides an opportunity for back bench Members to raise grievances before expenditure is incurred. I am merely taking this as an example to show why I am hesitant to approve increased expenditure for Committees. If you will bear with me I will not take more than five minutes of the valuable time of the House. I see you wish it to be less than five minutes.
  What the Chairman wrote was:
  "The Committee have considered this but did not fee) that they could ask you to meet them."
  There was no hint of regret or of making amends. Thus I am afraid that the original error was compounded. It would have been so infinitely simple for the Committee to have suggested to the hon. Member concerned that he should attend one of its informal meetings, without a shorthand writer being present. No such suggestion was made.
  So you will begin to see, Mr. Deputy Speaker, why I am hesitant to approve an increase in the expenditure of Committees of this House. The much respected Chairman of this particular Select

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  Committee, the right hon. Member for Fulham (Mr. Michael Stewart), is occupied this afternoon on the business of the Council of Europe. Naturally I notified him that I would be making a passing reference to his Committee. In any case the issue is procedural and not personal.
  What was the reason given for this refusal to see the hon. Member in question? I was told:
  "The Committee have always shown a determination to resist setting themselves up to retry cases such as this."
  If the Committee does not wish to retry a case why has it called in and examined publicly one party only in what is a highly controversial issue? Why does hearing evidence from civil servants not constitute a retrial whereas hearing evidence from an hon. Member does? I cannot fathom the logic of this and I cannot believe that there is logic to it.
  Having reached this impasse I wrote to the Chairman of the Select Committee and said, "If you feel unable to look at the matter again, will your Committee consider a paper if I submit it, and secondly will it consider publishing that paper in its report?". That was a modest enough request but it went unanswered. Finally—
  Mr. Deputy Speaker: Order. It may have been a modest request and it may have been unanswered but it does not help the hon. Member to bring what he is saying into order under the Bill.
  Mr. Hamilton: I take your point, Mr. Deputy Speaker. What has happened is that a Select Committee of this House has accorded facilities to civil servants and yet has denied the same facilities to an hon. Member. We are always careful in this place, rightly so, to abate criticism of civil servants for the reason that they have no opportunity to defend their actions. Yet here is a case where top civil servants have been welcomed into our Committee Rooms, where their narrative and opinions are spread over 18 columns of a Stationery Office publication at public expense, while the hon. Member whose constituents are affected waits in the corridor.
  The lesson is clear. Any Member of this House who writes a letter to the Parliamentary Commissioner—and which

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  of us does not?—is liable to find his constituency publicly debated, put on the public record by fellow hon. Members without his knowledge, without his presence and without his participation. What has the Leader of the House to say about this? I have every confidence in the ability of the Parliamentary Secretary to make his views clear. With his usual courtesy the Leader of the House notified me that he had to go to an important meeting this afternoon and would not be able to speak in the debate. We all appreciate that my right hon. Friend cannot dictate the actions of this or that Select Committee. What he can do is to give a lead, to point a way whereby such things can be resolved. What can happen once can happen twice. What can happen to one hon. Member can happen to another.
  5.9 p.m.
  Mr. Charles Fletcher-Cooke: In the absence of the right hon. Member for Fulham (Mr. Michael Stewart) perhaps I might say a word, not so much in defence but in explanation of the behaviour of this Committee of which I have been a member since its inception. I suppose that at a Sitting we often deal with as many as 20 to 25 cases, sometimes more. Purely from the point of view of administration it would be almost impossible to communicate in advance with each hon. Member—for it is only Members who can bring cases before the Parliamentary Commissioner—because we do not always know which way the discussion is leading and which cases will be taken. I should have thought that from the administration point of view the burden upon the Clerks if they had to inform hon. Members which cases we shall take would be almost impossible.
  Secondly, my hon. Friend is quite right in saying that he is entitled to attend. His difficulty may be that he does not know when his case is coming up—I follow that—but he is entitled to attend. I understand that it is a rule of all Select Committees that, unless and until the Select Committee itself, or this House, decides that it shall meet in secret or exclude other hon. Members, any hon. Member can attend any Select Committee. Particularly is this the case when evidence is being taken.

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  When we take evidence from the accounting officers of the Departments— that is to say, usually the Permanent Under-Secretaries—we do our best to avoid retrying the case. That is not our function—I often wish it were, but it certainly is not—and we scrupulously observe this in spite of the difficulty of sometimes straying over the border, as all committees are apt to do in their enthusiasm. We try our best not to do that, but we have to examine the accounting officers because from time to time the Parliamentary Commissioner makes criticisms either of their behaviour during the conduct of the case into which he is inquiring or of their failure to put right subsequently procedures which he has found to be defective or, for example, to examine their internal rules, as he sometimes advises should be done. We have to help the Parliamentary Commissioner by seeing what the Departments have done to follow up his criticisms and complaints and hearing why they do not choose to accept the criticisms, if they have not so chosen.
  This is important work, although I cannot say it is thrilling, and we work quite hard. We range over a great many cases, but we are not retrying them. We could not do it in the time. We should have to sit every day of the week if we were to do that. We try to draw some general lessons, we go through the annual reports, but taking evidence afresh on an individual case is something we seek most resolutely not to do. If we had called my hon. Friend as a witness, we should have been doing just that, because, unfortunately for us, my hon. Friend is not in a position to put right wrong procedures in Whitehall in order to remedy defects which the Parliamentary Commissioner has discovered in the interstices of the Department, or anything like that. I wish he were, but he is not. Therefore, if we were to examine him, we should be reopening the case, which is something that is forbidden to us.
  I hope my hon. Friend will not mind my intervening to express that point of view, because I was not privy to his correspondence with the right hon. Gentleman the Chairman, although I know enough of the way his mind works to assure my hon. Friend and the House that there was no question of discourtesy. It was simply

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  that if we had afforded him an opportunity of going into the witness box we should have been doing exactly what we are most strictly forbidden to do.
  5.13 p.m.
  The Parliamentary Secretary to the Civil Service Department (Mr. Kenneth Baker): I listened to my hon. Friend the Member for Salisbury (Mr. Michael Hamilton) with great interest. I hope he will not mind my saying that I think I should have been a little surprised to hear him make those remarks had he not been kind and courteous enough to tell me yesterday evening that he wished to make this particular point at this stage of the Consolidated Fund Bill.
  The precise subject which he put forward is the increase in expenses of Select Committees which came under Clause 1 Vote 2, and the items referred to here are the cost of shorthand writers, specialist assistants and travel abroad incurred during the past year. The particular case to which my hon. Friend referred—as has my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke)—does not relate very closely to the increased expenditure under these heads, but as the points have been raised I hope, Mr. Deputy-Speaker, that you will allow me to reply briefly to them.
  First, I should like to make it clear to my hon. Friend that I am fully aware of the background to the case which he summarised today. He has made clear in this House on several occasions his feelings about the particular proceedings of the Select Committee on the Ombudsman as regards a case which concerns his constituency, Salisbury, and his constituency only. I have studied the remarks he made on 18th December when he sought to raise this matter on a procedure debate. I have also studied the reply which my right hon. Friend the Lord President of the Council and Leader of the House made on that occasion. My right hon. Friend then noted my hon. Friend's remarks and commented that this was a matter for the Chairman of the Select Committee concerned—the right hon. Member for Fulham (Mr. Michael Stewart)—but agreed to bring my hon. Friend's remarks to the attention of the Chairman of that Select Committee.
  I can confirm that since that debate my right hon. Friend has seen the right

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  hon. Member for Fulham and made him aware of my hon. Friend's feelings. But I must immediately make it clear that he has in no way attempted to influence the Chairman of the Select Committee— and this is the crux of the case.
  I was asked by my hon. Friend the Member for Salisbury if the correct procedures had been followed and I can assure him that as regards the relationship of Select Committees and Ministers, the correct procedures have been followed.
  My hon. Friend has raised this important matter. He feels—and I can understand this—that as the hon. Member for Salisbury he should have been called before the Select Committee on the Ombudsman when it considered the case which he had referred to the Commissioner. He goes on to imply that hon. Members generally should not just be invited to Select Committees at the discretion of the Chairman of the Select Committee in question but that hon. Members should have an absolute right to be called before Select Committees when they are discussing a matter which significantly affects their constituencies. This is a very important constitutional point and I am sure that hon. Members present today will understand why my hon. Friend is continuing to press it.
  What I have to say to him as a Minister, however, is that this is not a matter on which Ministers can express an opinion. It is not for me—or the Lord President of the Council and Leader of the House—to sympathise with the hon. Member on this matter, because that could be taken by the House to indicate that I was seeking improperly to influence the Select Committee in what it did or how it conducted its business. I am sure all hon. Members would agree that it would be undesirable for it to be felt that Select Committees were merely the poodles of Ministers to be told when to sit and when not to sit, to be given commands on what they should do and what they should not do, to be told what evidence to hear and what evidence not to hear. I must confess that that is not an accusation about Select Committees that I have heard since I have been in this House or since I have been a Minister.

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  I feel that this is a constitutional issue of some importance and I would only say to my hon. Friend that I and the Leader of the House must remain neutral in this matter. Select Committees are appointed by the House for the business of the House, and they report to the House. It would be quite improper for a Minister to seek to influence either the Chairman or the Select Committee in its deliberations.
  Mr. George Cunningham: Is the Minister aware that, when the Select Committee on Expenditure made a proposal to the Leader of the House recently that its sub-committees should be able to report directly to the House, the Leader gave the pretty firm reply that the Government were not in favour of that? Is that not a breach of the principle he has just enunciated?
  Mr. Baker: By no means. It is a related issue but it does not affect the principle that Ministers should not seek to influence the procedures of a Committee and make it reopen a case which the Committee feels it has finished with, as we are being invited to do in this case. I think there is a fundamental distinction between that and the example given by the hon. Gentleman. It seems clear to me that this is a matter which must be decided not by Ministers but by the House.
  My hon. Friend, as a well-known and respected Member of the House, will be aware that this is a matter which can be raised with the Select Committee on Procedure, of which he is a member. He will also know that at present there are some uncertainties about the rights of hon. Members in relation to Select Committees and Standing Committees and their right to actually attend Select Committees, and the Third Report of the Committee on Procedure is lying on the table of the House at the moment.
  The Select Committee on Procedure would be in a position to consider the issue raised by my hon. Friend. He referred to a paper which he wished to submit. I suggest that it would be appropriate for the Select Committee on Procedure to take that paper if my hon. Friend wished to submit it and to persuade

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  the Committee that his point is worthy of consideration.
  I fully support the views expressed by my hon. and learned Friend the Member for Darwen. This is an important constitutional matter which cannot be properly dealt with in the way in which my hon. Friend the Member for Salisbury would like.
  I am sorry that I cannot be more forthcoming and make the statements which my hon. Friend encouraged me to make. I hope the House will agree that this is a matter which must be decided by the House and the institutions which the House has set up to be guardians of its procedure. The way in which Select Committees of this House conduct their business must be decided by the House, by the Select Committee on Procedure and by the Select Committees themselves. It is not a matter for Ministers.

  ICELANDIC FISHERIES
  5.21 p.m.
  Sir Geoffrey de Freitas: I am raising the fisheries dispute under the Pay, Allowances etc., Vote of the Royal Navy because I am worried that the Government may use the Navy, instead of relying on tugs, negotiation and our clear rights in international law. It is tempting to act tough and show the world that our trawlers will not be pushed around. On Monday, the hon. Member for Haltem-price (Mr. Wall) suggested that in certain circumstances there should be "a naval demonstration". After all, the argument runs, we have the largest Navy in Europe so why should we be pushed around?
  Iceland is a tiny country of only 200,000 people. I am only one of 600 hon. Members, but I represent far more than half that number of people. I like Iceland and I like Icelanders. I have enjoyed their hopsitality, even when it involved my having only three hours' sleep in three days.
  My constituents in Northamptonshire live in the heart of England and the fish they catch are those which they catch from the river bank. There are no trawlers registered in Kettering. On the face of it my constituents, unlike the constituents of my hon. Friends the Members for Kingston upon Hull, West (Mr. James Johnson) and Kingston upon Hull,

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  North (Mr. McNamara), are involved in this dispute only because they eat fish caught in these waters just as their ancestors have eaten fish caught in these waters for 300 years. But they have also another concern in this dispute. On the whole, they are a law-abiding people and they recognise the importance of obeying the law, whether it is our own domestic law or the international law of the sea. I have much sympathy with Iceland, but I have even greater sympathy with the rule of law.
  Dr. E. D. Brown, Reader in International Law in London, has recently published a study of the legal aspects of the dispute. He points out that the most important provision of the Exchange of Notes which ended the cod war of 1961 was in paragraph 4 of the Icelandic Note. It referred to the extension of fisheries jurisdiction and read as follows:
  "… in case of a dispute in relation to such extension, the matter shall, at the request of either party, be referred to the International Court of Justice."
  A year ago in February 1972 the Althing—the Icelandic Parliament— resolved that the 1961 Notes were "no longer applicable" because of a fundamental change of circumstances. Everyone who has studied international law, even in the most modest way, knows that every treaty is deemed to include a rebus sic stantibus clause permitting termination of a treaty in the event of a fundamental change of circumstances. But it is very difficult for any lawyer to agree that there has been a "fundamental change of circumstances" as defined in Article 62 of the Vienna Convention on the Law of Treaties. In any event, consultation and negotiation are always required when a Government seek to invoke this clause.
  In this case, the obligation to consult and negotiate is even stronger because Iceland is seeking to avoid her agreement to refer disputes to the International Court. In some ways the weakest point in Iceland's case is that there is international machinery established for dealing with fishing conservation problems.
  In 1959, the North-East Atlantic Fisheries Convention set up a commission with power to recommend conservation measures on the basis of scientific advice. The United Kingdom has agreed to limit her annual catch to 170,000 metric tons,

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  compared with the 210,000 tons which we took from these waters in 1971.
  In August 1972 the International Court of Justice acceded to the British request and indicated certain interim measures of protection. The order made by the Court did not prejudice the Court's power to find eventually that it had no jurisdiction, but last month the Court confirmed, with only one dissenting judgment, that it had jurisdiction. It is a very serious matter when a State ignores the considered suggestions of the judicial organ of the United Nations, and that is what Iceland has done.
  Because of the very nature of international law it is constantly beset by problems based on the confusion between what the law is and what the law may become. Of course, international law changes. There are many illustrations of this. Since the developing countries have taken a more active part in world affairs, there have been great changes in what States claim as their territorial waters. I have a special interest in one developing country in East Africa and another in West Africa. Ghana now claims 100 miles for fishery conservation and Kenya, in certain circumstances, claims 200 miles. I heard on the radio this morning that Pakistan had also extended its claim to territorial waters. In the past decade there have been great movements of this kind.
  In 1960, of all the countries in the world 43 per cent. claimed three miles and 22 per cent. claimed 12 miles. By 1972–12 years later—the figures were almost reversed and 47 per cent. of the countries claimed 12 miles, and 25 per cent. claimed three miles.
  For many centuries three miles was almost universally recognised. There were very few exceptions. Spain always claimed six miles because three miles was originally the range of cannon and the Spaniards maintained that their cannon were twice as good as anyone else's and claimed six miles. It is interesting that we have got to the position of the majority having a 12-mile limit, which is about the limit of human vision.
  It is likely that the law of the sea will be changed. On this very day in New York at the United Nations there is a preliminary conference arranging for the big International Conference on the Law

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  of the Sea which is to be held at the end of this year. I think that there will be changes, and it is understandable that there should be.
  It is impossible to ignore the strength of Iceland's feelings about the Continental Shelf. I quote from an Icelandic Government publication—and I do not see how the world can ignore this argument for ever—which reads as follows:
  "It is unrealistic that foreigners can be prevented from pumping oil from the continental shelf but that they cannot in the same manner be prevented from destroying other resources which are based on the same sea-bed."
  Mr. Kevin McNamara: We have all heard this argument made by the Icelandic Government, but is not the point that we have exploited the North Sea as a result of international agreement? But what has happened here has been through unilateral action.
  Sir G. de Freitas: I agree with my hon. Friend and if he had listened to my argument he would have heard me expressly cover that point. I was supporting what the Court had said and I was rebuking the Icelanders for disobeying international law but I was looking to the future. It is no good thinking that we shall be able to dictate the law of the sea for ever. Big changes are coming largely because countries such as ourselves have claimed that the continental sea-bed is to be divided up, as the North Sea has been in respect of oil. I am sure that there is nothing between my hon. Friend's argument and mine on this point. I am merely recording the fact that the sort of argument which I have quoted is well worth listening to. However, it is not the law today, and the legal rights of the United Kingdom must be determined by the law as it is and not by what it may become.
  In international law as in domestic law it is the weak who benefit most in the long run from the rule of law. Therefore, I am greatly surprised that Iceland should break the law and refuse to accept the jurisdiction of the International Court.
  I ask the Government to make it clear that they support the rule of law and will not give way to the temptation to be tough. I ask the Government to assert in the International Court our

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  legal right to fish where we have fished for 300 years and to fish in accordance with internationally agreed fishery conventions, as we are now doing in limiting our catches. But looking ahead I believe that there is a possibility that international law may be changed to the advantage of Iceland. If so we in this country will have to obey the new law.
  It is often argued that our civilisation could be brought down by the godless. I am not so sure about that. I believe that the dangers are much more that it will be brought down by the lawless— people who do not keep to the law. That is as true internationally as it is nationally. I am reluctant to vote this money for the Navy until I receive from the Government the assurance for which I have asked.
  5.34 p.m.
  Mr. Kevin McNamara: The House is grateful to my right hon. Friend the Member for Kettering (Sir G. de Freitas) for having raised this important subject. The fishing dispute affects the interests of our constituents as consumers or fishermen and in the catching of fish it affects the safety of our fishermen—which, of course, is an issue of great importance. But it is even more important as an issue which relates to the way in which nations conduct themselves in the good management of the world's affairs.
  The reason I intervened in my right hon. Friend's speech was not that we differ in our views, or that I had not followed the trend of his argument. I intervened in an attempt to make clear that the argument by the Icelandic Government to which he drew attention is so often dealt with not so much by comparisons involving exploitation of the North Sea and the unilateral action of the Icelandic Government in seeking to abrogate agreements, as by drawing attention to an even more important issue which is at stake and which I shall attempt to explain.
  There can be two types of international blackmail. The first involves the use of the big stick wielded by a great Power to deal with a Smaller Power to the effect: "Do this or that— or else!". The other type of blackmail is that used by a small Power which uses its very weakness as a weapon to

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  tease, to tantalise, to goad a great Power into action and then to accuse the other power of bullying. Her Majesty's Government, with the support on this occasion of Her Majesty's Opposition, have been careful in the past about the use of the Navy in these disputes. It would have been easy to send in the Navy if the fishing industry had wanted that to happen—and incidentally the Icelandic people have been fortunate in never having to maintain a large navy.
  But what would have happened had our Navy gone in? What could they have done? When the moment arrives when there is a possibility that one of our constituents—a fisherman or whoever it may be—may suffer injury or death from a dispute of this nature, as almost happened last Sunday afternoon, the pressure for the Navy to go in becomes great. What is the logic behind such a move? What can the Navy do which tugs cannot do? The moment we begin to use the Navy in retaliation by the use of gunfire, boarding parties and all the rest of it, we put ourselves in exactly the same blackmail position as that to which I referred a little earlier.
  It is in our interests and ultimately in the interests of the Icelandic people, that we must turn to the International Court and seek to obtain agreements on these matters. I suppose if the Navy were to go in our fishermen could fish in "boxes", but certainly the fishermen would not like that, particularly those with sidewinders who go out for specialised catches. We could have restricted the area in which the trawling fleet operated and arranged for our frigates to sail quickly round the fishing fleet, but though that might have kept off the Icelanders, those trawlers would not have caught much fish. The reason the fishermen try to catch fish is to feed our people and to make a profit for themselves. If it were possible to make a profit elsewhere and still feed our people, we would not have kept our fleet there for a very long time.
  We all commend the courage of the men in the fishing fleets—the crews, engineers, skippers, all of whom have suffered tremendous provocation in terrible weather. They must be congratulated on having kept their cool. There were occasions involving tremendous frustration when they asked the Navy to

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  go in, but the majority of the men have kept calm and thus have put us in a situation in which we can hope for successful negotiations.
  When we attend the International Conference on the Law of the Sea we must make it clear that these great resources do not exist for the benefit of only countries which happen to have long coastlines— such as the United States, Iceland, United Kingdom, Canada, Australia, India, Pakistan and many South American countries. Obviously these countries, particularly the under-developed countries, have an interest in using the resources of their part of the ocean bed, but the world also has a common humanity interest in the proper use and exploitation of all resources not only of the land, but of the ocean bed.
  We, as a people and a Government, should be in a position to say that we have not used our force, that we have not acted as the bully boys, but have attempted to reason, even where our vital interest were being affected. We should tell the other countries of the world, land-locked or with sea coasts, to consider well and wisely the implications of allowing countries to extend willy-nilly their sea limits.
  It is often thought that all we are talking about is a small industry based upon towns in the far regions of the country—Hull, Grimsby, Fleetwood, Aberdeen, Lowestoft and other such places. But there is more at stake than the mere employment of our constituents as fishermen in the fishing industry. There are in our areas great opportunities for employment in the spin-off not only in shipbuilding, ship-repairing and the processing of fish, but in the freezing plants which supply continuous employment to many women in the frozen food industry based, for example, on Humberside and other fishing ports which would not be there but for the capital investment. It is not only the employment of 10,000 or 15,000 people in fishing, distribution, shipbuilding and ship-repairing which is at stake, but the whole question of the food of this country.
  I am sure that if the Navy had been called in it would have acquitted itself well. I am glad that so far, because of the patience shown by so many people concerned in these difficult matters, it has not been necessary.
  5.42 p.m.
  Mr. Jeffrey Archer: I congratulate the right hon. Member for Ket-tering (Sir G. de Freitas) on the ingenious way in which he got within the Consolidated Fund Bill an issue on which so many of us feel very strongly. I privately confess that he must have been nearer to the problem when he was the hon. Member for Lincoln. Nevertheless, I congratulate him on giving us this opportunity to represent our views to the Minister.
  I am sure that I have the agreement of hon. Members on both sides that this is in no way a party issue. The right hon. Member for Grimsby (Mr. Crosland) and his hon. Friends the Members for Kingston upon Hull, North (Mr. McNamara) and Kingston upon Hull, West (Mr. James Johnson) and myself have worked in unison for our aims and there has never been any question of a party issue involved. It would be a sad day indeed if the two sides were ever divided over matters relating to our fishermen.
  My constituency borders on Grimsby, so I have among my constituents many owners and skippers of trawlers who feel strongly about this issue. The owners have made it very clear that they have no desire for the Navy to come in at this time. They have said that the Government's move with the tugs is what they wanted and how they would like matters to continue. Nevertheless, they have some feelings they would like aired, one of which has already been mentioned by the right hon. Gentleman.
  We have a tendency to be the one nation that always keeps to the rules, whether it be with a bigger nation going for us or a smaller nation telling us how wrong we are. We always keep to the rules. The man in the street, who greatly admires the attitude of the British people towards fair play, finds it a little tough that at every level it is the English, the Irish and the Scots who go right down the middle and make sure that the rules are kept. It is admirable that we have done it again.
  I join the hon. Member for Kingston upon Hull, North in praising the skippers and those who work in our ships. We in this House cannot know the provocation that they have come under in the last few weeks. I often think, with the many sub-

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  jects that we discuss in this House, how different our views would be if we had been present the day before when a situation arose. This problem has been going on for some time. When incidents have not been happening, there has been the fear of them taking place every day. I am delighted that we are to have talks. The more talking that can be done and the more we can get a civilised attitude to this matter, the better.
  Many owners and skippers agree with what the right hon. Member for Grimsby mentioned in his supplementary to the Private Notice Question asked by my hon. Friend the Member for Haltemprice (Mr. Wall) last week: that Notes can take a long time to pass from hand to hand. It is all very well to make a complaint on Monday morning, a few hours after an incident has happened, and not receive a reply for five days, when another note is sent, but by that time everybody has forgotten what it was about.
  I hope that the Minister appreciates that when shootings over bows or other incidents occur we want instant action, if only talking action. We do not want to sit in our rooms for five days waiting for a reply to come back from the Icelandic embassy.
  The right hon. Member for Kettering pointed out that we have been fishing in these waters for 300 years. We have kept to the international rules. I suspect that in the rules of fishing our record is far prouder than that of most European nations. I believe that is why our fishermen now feel even more strongly about what has happened in the past few weeks.
  We do not want the Navy there, but we want it to know that if, in the final analysis, it is needed we shall expect it to do its duty without hesitation. I hope that the situation does not arise, but if we have to call in the Navy I hope that it will be aware of and will do its duty.
  I call upon the Minister to bear in mind that we are very serious about this subject. We do not want him to drift away from the debate afterwards and to say, "I hope it sorts itself out at Foreign Office level." We want all Ministers to be aware that we shall badger them until this situation is sorted out. I hope that my hon. Friend will treat the matter with the energy and enthusiasm that it deserves.
  5.48 p.m.
  Mr. James Johnson: It is usual in this place to thank the right hon. or hon. Member who initiates a debate of this nature. I do so wholeheartedly because not only hon. Members representing fishing ports but the whole industry should thank him.
  This debate has ranged wide in the geographical sense and I should like to take up two points mentioned by my right hon. Friend the Member for Kettering (Sir G. de Freitas) before saying why I am speaking again today. The Minister may be sick and tired of me, but he did not give me an answer last night. That is why I am speaking again today.
  My right hon. Friend has done his homework very well. I wish to touch on two points that he mentioned. The first point is that there are such things as North-East and North-West Atlantic conferences and North-East and North-West Atlantic agreements and the like. The Icelanders, along with the Green-landers, the Danes, the Canadians, the Portuguese, ourselves, and others, are members of the North-West Atlantic conference. But Iceland is also a member of the North-East Atlantic Conference —like the North-West Conference, it has 14 members—along with the Norwegians and many others, including Communist States. What is amazing is that the Icelanders can go to the North-West Conference and agree to a limitation of catch with sister fishing States. If there is one area in which there are truly sisters and brothers it is on the high seas, where we all depend upon one another for hospital ships and anything else. So this small but very old nation, which has a very intelligent people and has produced some fine international statesmen, can agree to a limitation of catch at the North-West Conference, but cannot do so at the North-East Conference. This is an appalling contradiction.
  My right hon. Friend also mentioned the sea bed. It is a nonsense to compare the fish swimming in the ocean with any metals, oil or gas in the geological substrata. Tens of thousands of tons of the fish which are caught began in Greenland. They float or swim towards the west and north-west capes of Iceland. What I do not understand is why the

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  Icelanders should then wish to have a monopoly, to collar all those mobile fish, which cannot be compared to static geological deposits, which have been below the Continental platform, lying 50 to 70 miles outside their high-water mark, for thousands of millions of years. These are two complete contradictions in the case.
  But I do not wish to argue against the Icelanders tonight. I want to say why I am speaking now after having taken part in the Navy debate yesterday. Last night, the Under-Secretary of State—I am relying on my memory—said that he did not think that I would expect to be told the deployment of the frigates. They lie outside the 50-mile limit, and since they are paid for by the taxpayers, we expect that they will go to the aid of those Hull and Fleetwood taxpayers who are plying their lawful business.
  The Under-Secretary also said that he was sure that, if he gave these figures to me—I thank him for the compliment—I would not leak them. Many politicians do leak things like details of party meetings—and they do so outside the House as well. But he added that he believed that the negotiations would succeed—
  The Under-Secretary of State for Defence for the Royal Navy (Mr. Antony Buck): I hoped.
  Mr. Johnson: I turn now to the Hull Daily Mail, which also circulates on the south bank of the Humber. As Winston Churchill said, jaw-jaw is better than war-war. This newspaper, under the heading "Iceland Peace Bid May Come In April", said:
  "New talks aimed at finding an interim arrangement for ending the six-months-old Cod War could begin in Reykjavik about the middle of next month."
  We all hope that these talks will succeed, but I wonder whether they will.
  As I said last night, I do not speak for a naval dockyard, but I do speak for a fish dock. I want to talk as I would expect the fishermen to talk if they were here. I am not of a legalistic turn of mind and do not have the gift of my right hon. Friend the Member for Kettering for talking about international conferences and international law.
  I want to quote a report on the tape yesterday of what the Foreign Secretary said. This shows the note of caution in all this. This is why I accept what the

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  hon. Member for Louth (Mr. Jeffrey Archer) said, that this is our Navy and we expect it to look after our people in danger on the high seas. The Foreign Secretary emphasised that these discussions would not be negotiations:
  "They are designed to pave the way for ministerial talks, which I hope will be renewed very soon."
  Like the Minister, I am cautiously optimistic. With all my heart I hope that they go well, but the Secretary of State was a little jocular. He said:
  "We have not landed our cod yet. I like to have my cod on the bank beside me."
  He is right. Our fish have not yet been landed.
  If and when talks begin, we should see that our men are no longer harassed, that there is no more warp cutting. These incidents must end. Our Navy must ensure, and our Government must make it clear in these talks, that the status quo is maintained over the next few weeks. I hope that the discussions go on for the next few months, until the international conference in Santiago next year.
  Having listened to owners and people like Captain Tom Neilson of the Skippers' Guild in Hull and David Shen-ton on behalf of the deckhands, I know that they do not wish the Navy to go in at this moment in these circumstances. Thus, when I heard my neighbour, the hon. Member for Haltemprice (Mr. Wall) last night, I was shaken by his talk of manoeuvres within the 50-mile limit. I accept that the limit is an invisible line on the ocean which we do not accept, but it would be more than provocative, now, in these conditions, to go inside the 50-mile line.
  I do not mind our ships going in later if shots are fired. If one of the tugs engaged in peace-keeping operations gets into difficulties or a vessel goes down after a collison, that is a totally different matter. Owners and skippers accept this, as do the hon. Members who try to be articulate on their behalf.
  I do not accept the owners' attitude— Austin Lang is here speaking on behalf of the full committee of owners, skippers and men—that if our ships went in this would concede the case and put everything into the Icelanders' laps. I do not believe that. As my right hon. Friend the Member for Kettering said, in the

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  international field things are not quite so simple. People know our past history as the world's greatest naval Power. They know our record on the high seas and they know that it is unblemished. If the Navy went in legitimately to defend our fishermen, I do not think that would be looked upon as aggression or as a big, bold, bad wolf acting against Iceland whose population is smaller than that of Sunderland. They would not think that the third largest navy in the world was taking action against a small nation.
  We do not concede the case. It is in the International Court and, as my right hon. Friend has said, on two occasions we have come out of that Court clean. As someone who knows a little about Africa, it seemed significant to me that the one judge who dissented on both occasions—on whether the Court was competent to judge on this matter and whether the Icelanders should go to the International Court at the Hague—was a judge from Senegal.
  Sir G. de Freitas: I am afraid my hon. Friend is wrong. It was a Mexican judge.
  Mr. Johnson: In one case it was a Mexican and in the other case it was a judge from Senegal. I will check this later. Some of these States are judges in their own court. One nation has moved to a 200-mile limit, never mind a 50-mile limit. With our past record in international affairs we could stand up in any court, and we can do so next year at Santiago. The debates, discussions and decisions there will be about much bigger issues than whether we go down 25 per cent. from a catch of 200,000 tons.
  I shall not go into over-fishing curbs and whether we shall be able to catch the same amount of fish in 10 years' time, but I point out that many other nations, black nations such as Senegal and Somalia and big, powerful white nations such as the USA and Canada, also want to increase their limits. Some of the big nations would be on the side of the small ones and the small developing nations, which need fish badly for protein, because they have not millions of cattle on their land surface. There will be a most unusual line up then in the International Conference. We may find ourselves sitting beside Communist States such as Poland which, although landlocked, has one of

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  the biggest fishing fleets on the high seas. These are some of the wider issues to which I know the Government are turning their minds. The Minister and his colleagues must look very carefully at our case.
  We pay for our Navy and vote this money for it to do its legitimate work. If our fishermen are in difficulties next month or in six months time, I hope that Her Majesty's Government will not hesitate to go to the aid and support of our men fishing in these dangerous and difficult Arctic waters.
  6.5 p.m.
  The Under-Secretary of State for Defence for the Royal Navy (Mr. Antony Buck): I wish to add to the thanks expressed by other hon. Members to the right hon. Member for Kettering (Sir G. de Freitas) for giving us the opportunity to debate this important question. I am marginally inhibited from replying to the debate because it is on the Navy Vote and the wider issues referring to Santiago and so forth are the concern of my right hon. Friends, but I shall do my best on those aspects.
  This matter was provoked to some extent by what was said by my hon. Friend the Member for Haltemprice (Mr. Wall). I am sorry that he is not in his place. I suppose he would have been given notice, but I am not in a position to protect him as I did not know that what he said would be referred to.
  Sir G. de Freitas: All I said was that at Question Time on Monday the hon. Member for Haltemprice (Mr. Wall) referred to a naval demonstration. It did not occur to me for a moment that he would not be present at this debate.
  Mr. Buck: That is a matter between the right hon. Gentleman and my hon. Friend.
  I express gratitude to the right hon. Gentleman for enabling the House to consider this matter, which we have done, as in the debate yesterday, in a non-partisan way. Hon. Members have made valuable and constructive contributions and have not spoken on a party basis. I shall try to deal with as many points as I can.
  One which was rather different from the generality was raised by my hon.
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  Friend the Member for Louth (Mr. Jeffrey Archer), whose deep concern about these matters relevant to his constituency interests are well known to the House. He said that he wanted a quick reaction to any particular incident. I can assure him that there is no sitting back and waiting to make a protest if an incident takes place. In one particular incident, I have been told, there was a telephone call straight away by our ambassador to the appropriate Minister. This certainly is the sort of reaction one likes to see and I can assure my hon. Friend on that. [An HON. MEMBER: "Big deal."] My hon. Friend asked a serious question and I am giving him the assurance that response is as speedy as it can be. What more could hon. Members suggest could be done than to make a speedy response?
  The House will not expect me to rehearse again at length the Government's general policy in this dispute. It has been stated with complete clarity in recent weeks by my right hon. Friends the Secretary of State and Minister of State for Foreign and Commonwealth Affairs. But we are invited tonight, technically I think, to look particularly at the question of support for our trawlers. That is the way in which, ingeniously, it has been focused by the right hon. Member for Kettering. It is not possible to deal with this question without placing it briefly in the wider policy context within which support, naval or civilian, stands to be considered.
  It is basic to our position that this is a dispute which should be solved by negotiation rather than by force. This is the point which has been made by hon. Members on both sides of the House. We, of course, believe in the rule of law. We have said that we are prepared to accept genuine conservation measures and to take account of Iceland's special position as a coastal State overwhelmingly dependent upon fisheries. We have, in negotiation, been prepared to accept interim arrangements which would significantly reduce our fishing. We have taken this reasonable attitude throughout.
  We started proceedings in the International Court of Justice, as we were entitled to do, under the 1961 agreement. This is mentioned in the very interesting article to which the right hon. Gentleman referred. As the House has been reminded, on 17th August 1972 the Court

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  made an interim order whereby it was provided that we should limit our catch to 170,000 tons and it was ordered that Iceland should not enforce her regulations while the Court considered the dispute. Both sides were called upon to do nothing which would aggravate the situation pending a solution of the dispute.
  Early last month the Court ruled that it had jurisdiction, notwithstanding Iceland's refusal to recognise that fact. The right hon. Gentleman has rightly drawn attention to the importance of obeying these orders of the International Court. I can only reiterate that it has been one of the cornerstones of our policy throughout the dispute both to observe the restraints which have been asked for by the International Court and to pursue our case before the forum in which we and Iceland explicitly agreed in 1961 such disputes should be resolved.
  We are trying to negotiate. We are very conscious of the International Court's order not to take any action to aggravate the dispute. In the circumstances, the last thing that we wish to do is to escalate the dispute unnecessarily by inaugurating a naval confrontation. I think that that is the assurance for which the right hon. Gentleman asked. But, as hon. Members have pointed out, there are other aspects of the dispute. Regrettably Iceland has not followed the order of the International Court, as we know only too well. In attempting to enforce her regulations she has caused a succession of very dangerous incidents on the fishing grounds. But she has not prevented us from making very good catches although there is no question of our going beyond that which the Court has indicated to be appropriate.
  I add to the tributes which have rightly been paid from both sides of the House to the restraint and the skill of our fishermen in the face of very severe provocation. The Government's policy has always been to take, in consultation with the representatives of the industry, the appropriate steps to provide support and reassurance for our fishermen within this general policy of restraint.
  I now deal with the specific matter raised by the right hon. Gentleman, which concerns support. Since last September there have been two civilian support vessels on station in the disputed

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  waters to provide medical, meteorological and other assistance required for the safety of our trawlers. The recent reinforcement of those vessels by the tugs is designed to provide the trawlermen with more active support in the face of growing Icelandic harassment.
  Mr. McNamara: I realise that the vessels are chartered by the Ministry of Agriculture, Fisheries and Food, but is the hon. Gentleman in a position to tell the House what is the Government's intention about finding more tugs of this type in the regrettable event of the negotiations breaking down and our needing more of them to protect our fleet?
  Mr. Buck: The hon. Gentleman was kind enough to point out that this is not strictly a matter for me. But no doubt he will have observed the exchanges in the House recently about this matter. There are difficulties due to the fact that this type of vessel is in short supply internationally. But as my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs said, we are looking into the availability of other craft, should they become necessary. We are doing what we can to see what is available. We have not any Royal Navy tugs appropriate for this rôle, but we do not rule out the possibility of using naval vessels if it should become necessary, though we should hesitate to use them since they might be regarded as a minor escalation of the dispute.
  By manoeuvring and positioning, the tugs can make it very much more difficult for Icelandic coast guard vessels to interfere with fishing. I understand from private conversations with hon. Members who have constituency interests that the tugs are having a fairly successful time. My right hon. Friend has said that we are looking into the possibility of providing more vessels of this type, and I assure the right hon. Member for Kettering that the deployment of these vessels is strictly legal.
  Turning to the Navy's position, it has been agreed between the Government and representatives of the industry that the moment has not come when the Navy should be deployed. I am glad that that has been indicated as being the correct view by those whose constituencies are immediately concerned with the personnel involved here.

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  It is hardly necessary for me to repeat the many assurances which have been given, but I do so gladly in view of what the hon. Member for Kingston upon Hull, West (Mr. James Johnson) said. Naval forces are assigned specifically to fishery protection duties around Iceland. I am grateful to the hon. Gentleman for saying that he does not expect me to divulge the exact deployment of naval craft in the area.
  No one should doubt our ability and our will to intervene if we have to in the last resort. But I share the hope that this will not come about. The Navy is already helping in other ways. We are examining with the industry what counter-measures can best be employed to prevent warp cutting, and again it would not be sensible to give details in public. But we are continuing our studies in co-operation with the trawlermen to try to help in every way.
  I come now to the Law of the Sea Conference. As Under-Secretary of State for Defence for the Royal Navy, I should be in some difficulty in trying to go into depth about it. It is a matter that we take very seriously. We regard it as the appropriate forum in which a medium- to long-term solution of these difficult problems might be reached. We hope that eventually Iceland will come to the same view.
  My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs informed the House yesterday that the discussions are now under way in Reykjavik designed to pave the way for ministerial talks. As has been said from both sides of the House, we hope profoundly that the preliminary talks and any others which may follow will be successful.

  OVERSEAS AID
  6.19 p.m.
  Mr. George Cunningham: From the not too warlike waters of Iceland we turn to the even more peaceful waters of Britain's overseas aid programme.
  In the course of this debate I wanted to discuss two very different subjects which are covered by the Estimates before us. Now that I am on my feet, I am not sure that anything could be

  722
  done if I proceeded to do so. However, in accordance with your wish, Mr. Speaker, that each hon. Member should submit only one topic, I shall confine my remarks to one, although it is an odd state of affairs when this House restricts each Member to only one subject, even when there is a shortage of Members wishing to discuss matters dealt with in the Estimates. The whole procedure for these debates needs to be looked at again more thoroughly than was done recently by the Procedure Committee. Manifestly, the way that we proceed now is totally unsatisfactory.
  The Bill which we are passing covers a total of £303 million. That is the amount for which the Government are asking. None of the proposals for expenditure covered by that amount has been looked at by any Committee of this House. I repeat what I have said before, and will probably say many times again, that until we devise a method by which, when expenditure proposals of this kind come to the whole House, they have already been examined to some extent at least by a Committee of the House, we shall not get proper scrutiny of Government expenditure before it takes place comparable with the excellent scrutiny of expenditure as it takes place which is done by the Public Accounts Committee.
  Another unsatisfactory feature of our habits is that Government Departments in Whitehall get notice of what is to be discussed only about a day and a half before a matter is actually discussed. This is less notice than one has to give to a Minister when asking a Question for oral answer. That seems to me to be odd. The point arose in the Procedure Committee when it considered the procedure on these Bills, but I believe that the Committee too lightly accepted the opinion expressed by the then Leader of the House that Whitehall would put up with whatever nonsense the House chose to impose upon it. That may be a very good parliamentary doctrine but it gives rise to severe inconveniences for the House, quite apart from the inconvenience to Whitehall.
  It means that because Ministers have not had sufficient notice of what is to be discussed, they can reasonably get away with a less thorough answer than had they been given longer notice.

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  Therefore, the House is not exercising its right to impose inconvenience upon the executive. It is simply making do with a manifestly unsatisfactory procedure when, with just a little effort, it could follow a better method.
  Turning to aid itself, I should apologise to the Minister for subjecting him to these occasional rantings of mine in which I seem always to stand in a majority of one, but I am afraid that he and his colleagues are likely to have to put up with them for some time longer. I thank him for the letter he wrote me following the last similar discussion about a complaint which I have expressed on some occasions, namely, the fact that it is impossible to find within the Estimates all the items which are booked to the overseas aid programme. He has again undertaken to see what he can do to find a way round this mighty problem by identifying the items in the Chief Secretary's memorandum presented to the House at the same time of year as the main Estimates.
  If I may add a further comment on what has been said before about that, what is required is that all the individual items which are booked to the aid programme should be identifiable. It does not matter very much whether they are all included in one Vote. That is perhaps a more difficult exercise to get done; it is certainly not likely to be done in the near future. But what can be done in the near future is to find a regular way of supplying the House, without my having to ask for it each time, with the kind of list of individual items with which the Minister supplies me when I take the trouble to put a Question down on the Order Paper.
  When we last discussed Supplementary Estimates on overseas aid, I believe on 31st January, I made the point that it was wrong that the Sub-Committee of the Expenditure Committee which covers defence, foreign affairs and overseas aid should never look at the aid Estimates. The situation has, of course, become worse since then because we now have, besides the Sub-Committee of the Expenditure Committee whose job it is to look at these things, a Select Committee on Overseas Aid.
  I am confidently prepared to predict that that Sub-Committee, on which I

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  have the honour to serve, will not look at the Estimates, either. Thus we are to have two Committees of the House, both concerned with overseas aid—a ridiculous situation in itself, by the way— and neither of them is to look at the Estimates proposals for expenditure before we go through the process of voting perhaps £10 million, £20 million or £30 million at a time. This cannot go on. It goes on only because the public and informed public institutions outside the House do not take any interest in how we run our affairs in this House against the results of the decisions we take.
  It is manifestly silly that we should not submit the Estimates to committee consideration before we pass them through the House when we have not just one Committee, but two Committees well fitted for that task by their terms of reference and that we manage to devise our habits in such a way that neither of them does so. It is almost impossible to believe that any legislature in the world would put up with such a situation, and I am prepared to say that the only legislature which does put up with it is this one.
  In the Estimates at which we are now looking there are a number of items, some of them quite detailed, which it would have been appropriate to look at in a Committee if a Committee bothered to do so. I do not want to trouble the House with going into them now but I wish to make one or two points of detail. There is, for example, the provision for voting a small sum of £4,000 to the Voluntary Committee on Overseas Aid Development, which appears in Document 78, at page 75. It seems to me that the provision of an extra £4,000 for additional rent for a very small organisation like the VCOAD is something which could do with a word of explanation, not necessarily this afternoon.
  Then there is the provision of, I believe, £500,000 of extra money to the United Nations Development Programme, referred to in Document 166 at page 4. If it is possible to do so, it would be useful if the Minister could say something about what has happened to the Jackson Report on the United Nations aid-giving family, because some of us at least have felt that until the United Nations agencies put their own house in order, much as one would wish to increase the amount of our aid going into

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  the United Nations aid agencies, and probably UNDP in particular, we ought to use refusal to do so as a means of stimulating production of the information for which Sir Robert Jackson called in his report in 1969 or 1970.
  Finally there is the provision in Document 78, at pages 46 and 74, under the heading "British Council", in which reference is made to changed arrangements for dividing the costs of the council between the Foreign and Commonwealth Office and the Overseas Development Administration. I have missed something here but if it is the case that there are new arrangements which have not been previously explained in the House, this would be a good opportunity for that to be done.
  There are two principal items in the documents to which I wish to make reference. The first is the takeover of responsibility for overseas pensions. This appears in item D.22 in Document 78, at page 52. This item is a very good illustration of the importance of the Estimates which nobody else seems to believe in except me. When the Government first decided to take over responsibility for these pensions, the authority for that purpose was secured by means of a notional £10 item in the Estimates. That was in the Estimates presented in February last year.
  A Bill is now going through the House to give the Government the authority to do these things, but they have done some of them without that, simply on the authority of the Appropriation Act, based upon a one-line item of £10—no more—in the Estimates. Nothing could better illustrate the need for the House to find a means in Committee to go into the Estimates in some detail, because the amount of money involved, tokenly expressed in the Estimates as £10, is in fact £50 million. That is what the Gov-enrment get the authority to forgo—not to spend—by means of what is superficially such a tiny item in the Estimates.
  On the substance of the pension takeover, I want to revert to the point mentioned during the Second Reading of the Bill, namely, whether the expenditure of £12 million under this head should be booked to the overseas aid programme. As has been said before, this is a significant item. If it is the case that this

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  expenditure does not need to be booked to the overseas aid programme it is like giving the programme £12 million extra, which is like giving it a 4 per cent. increase—in fact, rather more—in its present volume.
  When I raised this matter on Second Reading the Minister gave some explanations of why he thought it ought properly to be booked to the overseas aid programme. He said, first, that our taking over this expenditure relieved the overseas Governments from having to do it and, secondly, that the work done by the personnel in respect of whom these payments were made was normally of a developmental character. I should not dispute both those facts. What I should dispute is that it follows from them that the money ought to be booked to the overseas aid programme.
  We are saying that the obligation to pay these pensions belongs legally to the British Government and not to the overseas Governments. As long as we were helping overseas Governments to discharge an obligation which legally rested upon them that money was properly booked as aid, but now that we are legally taking on the obligations ourselves it seems conceptually wrong that we should book it as overseas aid.
  I recognise that the sum of £12 million is likely to tail off, but in the meantime the Minister will have to deny to other possible recipients of overseas aid the £12 million which is to be taken out of his programme. I know that it comes out of the Minister's programme under the present arrangements. My case is that under the new arrangements it is no longer logically sensible to do that.
  Am I right in thinking that the Minister could not make these payments under the Overseas Aid Act? I think I am right in that view. The Overseas Aid Act, goodness knows, is widely drawn and allows the Minister to do almost anything, but I do not think that it allows him to make payments to former civil servants, experts and so on, in developing countries in respect of services already discharged. I do not think that that can be argued to be payment for developmental purposes.
  I assume that that must be the case, otherwise there would not have been a need to introduce a new Bill. If the

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  Minister, under his principal legislative authority, should not have made these payments, it is all the more clear that they ought not to be booked to the overseas aid programme. In order to safeguard myself, may I say that if I am wrong and the money can be paid under the Overseas Aid Act I should still argue logically that it ought not to be booked to the aid programme.
  Finally, there is the matter of aid to Uganda, which appears in Document 78 at page 57. It shows that the Minister is asking for £80,000 under one loan, and £750,000 under another, to be spent during the remainder of the financial year 1972-73. That means that in the next 10 days the Minister will disburse to the Amin régime £830,000—the better part of £1 million.
  The figures in the document show that these are tranches of disbursements from two loans which have been almost wholly disbursed, but these payments, even if made in the next fortnight, will not wholly discharge the loans. There will remain nominally due to Uganda the sum of about £250,000 under one loan and £600,000 under the other. A total of £850,000 will still be due to Uganda under those two loans after the end of this financial year.
  I am all in favour of meeting our obligations, but the commitment of funds to a developing country is not something to which we should feel ourselves absolutely tied if that country behaves in the manner in which Uganda has behaved towards this country and its own citizens. I find it offensive and unnecessary that we should be proposing to disburse the better part of £1 million to Uganda in the next fortnight and that we should appear to accept the obligation to disburse the same amount again some time after the end of the month. I hope that the Minister will be able to say that the whole business of disbursing from current commitment to Uganda will now be reviewed.
  I know that the Government have put on the shelf their earlier idea of a £10 million loan to Uganda—I should think so too—but it is not enough to say "We will not give you anything new, but we will go on disbursing to you out of the loan you are now receiving". The occasions on which we should allow non-

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  aid considerations to interrupt our aid programme are very rare, but if ever there was one such instance it is Uganda.
  There needs to be some kind of relationship between the giving Government and the receiving Government if the aid is to work. No one can have any confidence that the present Government of Uganda can make good use of £10, far less £1 million, and it is wrong that £2 million should go to or be in prospect for Uganda over the coming months when people in this country have suffered so much at the hands of that Government.
  I know that the Minister will not be able to say that the money will be stopped, but I hope he will be able to say that, in consultation with his right hon. Friend the Foreign Secretary, he will review current aid to Uganda based upon past commitments as well as any commitment which it was previously expected would be undertaken.
  6.40 p.m.
  The Minister for Overseas Development (Mr. Richard Wood): The hon. Member for Islington, South-West (Mr. George Cunningham) raised in the House an identical or very similar subject when I was in Africa at the end of January. I begin by congratulating him on his astonishing good fortune in again drawing a very high place in the ballot. If I may offer a word of advice, it is this. If he could continue this excellent good fortune, for instance, in raffles in his constituency, he would soon be a very rich man. But because he is not only a wizard at figures and, obviously, very interested in figures, but also draws a very high place in the ballot, I shall continue—in deference to you, Mr. Speaker—to refer to him as the hon. Member for Islington, South-West when privately thinking of him as the recurring decimal. This is a very difficult thing for me ever to put out of my mind.
  The hon. Gentleman has raised a very serious question. There may be arguments to the effect, and in support of the arguments he has adduced, that the ideal methods of conducting the business of the House of Commons could and would be better if they were different from the present methods. But the hon. Gentleman will agree that the House of Commons has been willing over the years to try to adapt itself and to evolve its procedures.

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  It may be that one day the hon. Gentleman may be seen as one who has effected a significant change in our procedures.
  A number of hon. Members are interested in these matters. Much of what the hon. Gentleman has said today is a matter, perhaps—although it has been attached to these particular Estimates—of more general significance and a matter for my right hon. Friend the Lord President of the Council and the usual channels. I wonder whether the hon. Gentleman might operate effectively at one end of the usual channels in order to try to achieve the reforms which he has in mind. He will be considered later to have been a reformer, because I am sure that his persistence will bear fruit. For most of the time today he has been rather in the position of a lone reformer, but I see that he is now supported in the Chamber by one of his hon. Friends.
  We remember times when Parliament conducted its business on the Supplementary Estimates rather differently from the way it does now. When I first arrived in the House of Commons, a critical Opposition would table an amendment reducing a Minister's salary by £10. I am glad that that expedient has died out. I should take it as a personal insult if the hon. Gentleman had suggested that in this case. But it is probably more than the effects of inflation which have led Oppositions in more recent years, instead of following that method, to substitute reasoned motions criticising the Government or a Minister for particular activities. The House of Commons has for long chosen to conduct its scrutiny of public expenditure in broad terms rather than from subhead to subhead. Here the hon. Gentleman may have a point, which my right hon. Friend would certainly want to consider, as to whether there should be some means of scrutiny, as he suggested, before these Estimates are considered by the whole House.
  Recently things have taken a new turn, both in the lifetime of the present Government and when the previous Government were in office. It was then expected that the principal debates on public expenditure would be those on the While Paper on Public Expenditure rather than those on the departmental Estimates. I say "expected" because it has not quite turned out that way. This place is full

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  to overflowing to hear the Budget Statement of my right hon. Friend the Chancellor, but the debate on the White Paper has already been diminished from two days to one day. Even during that single day a great many hon. Members have found duties outside the Chamber more important than listening to the debate.
  Therefore, the hon. Gentleman is not alone in his experience this evening of conducting this debate in a thin House of Commons. All this may show that the hon. Gentleman has a point when he comments on our scrutiny of expenditure. On the other hand, experience shows that the House has come, over the course of time, to arrange its procedures in a perfectly pragmatic way, so that the matters to which it wants to give attention in fact receive attention. We have gone some way to provide more detailed scrutiny for the effort we make in the overseas development sector. My right hon. Friend the Lord President has set up a Select Committee, which the hon. Gentleman will complain will not scrutinise the Estimates in the way that he would have in mind. But he has pointed out that he is a member of that Committee. I understand that the Committee is free to decide its procedure. Any comment from me on the way that the Committee does its business would not be particularly appropriate or well received.
  Over the last few years, under the previous Government and the present Government, the establishment of Select Committees has been the means by which the House has tried to secure a more detailed scrutiny of policies and expenditure, perhaps not detailed Estimates but certainly the general direction of the way we are doing our job in overseas development. It may be that in any further improvements to the Committee structure we may move further in the direction suggested by the hon. Gentleman.
  This is a general point about the way in which we conduct our business. Therefore, I shall certainly see that my right hon. Friend studies the hon. Gentleman's views. I cannot, however, add very much to what either he would say or that which I now say.
  I do not have the details of the hon. Gentleman's point about the rent for the VCOAD. I shall get them and write to him as soon as I can.

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  On the question of the United Nations agencies and the very important Jackson Report, this is a matter where progress has to be made which involves about 100 countries. The difficulties are similar to those I described recently on Second Reading of the Overseas Pensions Bill. The United Nations agencies have to secure the agreement, assent and consideration of a number of countries to a certain course of future action, and it all takes time. Therefore progress is slow. But we are doing what we can to try to push on with this matter, which we regard as very important.
  On the question of the British Council and the division between the Foreign Office and the Overseas Development Administration, in general there has been some transfer to the British Council of functions which were previously exercised elsewhere, such as the matter of training, which has necessitated an adjustment in the Estimates. I can explain further on that matter if the hon. Gentleman will allow me to write to him.
  The hon. Gentleman raised the important matter of overseas pension policy. I was aware, as I think the hon. Gentleman was aware in retrospect, that the policy which was announced in March 1970 by the previous Government was unanimously accepted by Parliament. Therefore, that acceptance having been given, it seems a perfectly logical way for Parliament to proceed by the means of this expendient of the £10 in the Estimates, which would draw attention to the matter, which has been announced to the House and has won its unanimous approval. I do not believe that there is anything either improper or unsuitable in that procedure.
  As to the second stage of that policy, we realised that it would be impossible to continue to make that change under the authority of the Overseas Aid Act alone and it thus became necessary to introduce the Overseas Pensions Bill.
  The hon. Gentleman asked me this evening, as he did the other day, about the propriety of putting pensions on the aid programme. I cannot add very much to what I have already said to him. I do not wish to waste his time or that of the House but I gave him as good an answer as I could, as reported in

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  HANSARD of 1st March at col. 1798. I cannot improve on that now. The acceptance that the hon. Member gave to two of the points I made on that occasion has given me encouragement that eventually he might accept the first point also.
  Mr. George Cunningham: Is it possible that the right hon. Gentleman has given any consideration since 31st January to the precedent I mentioned then of the Central African Pensions Fund where, in a directly comparable matter, we did not count our contribution to that fund as part of the overseas aid programme?
  Mr. Wood: I can only reply to the hon. Gentleman that the matter is being further considered, but I do not believe that any direction in which that consideration leads us will make a very great difference to the principle that he discussed on that occasion and again tonight about which I expressed my views both then and again tonight.
  The hon. Gentleman also mentioned aid to Uganda which is covered on page 57 of the Estimates. He will know that in a statement in November 1972 my right hon. Friend the Secretary of State announced the withdrawal of the loan of £10 million and also announced the future arrangements that we intended to make for the British people working in Uganda in various forms of education and assistance.
  At any one moment in any developing country which we are aiding on a considerable scale there is a good deal of economic activity which our aid is supporting. That was so last November and remains so today. A number of economic activities are supported by our capital aid. However rapidly we want to withdraw our assistance for the reasons to which the hon. Gentleman has properly drawn our attention, I cannot believe it can make very much sense for the developing country, for instance, to leave a bridge half built or a road completely unconnected with anything else, nor can it be in the interests of our contractors and firms working in that developing country.
  We therefore took the view that certain economic developments that were taking place in Uganda must be completed because their complete disruption would lead to great difficulties for our citizens,

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  firms and contractors as well, no doubt, as the Ugandans, I cannot believe that it would make any sense at all to bring all capital aid to an abrupt conclusion and cut it off without taking into consideration the damage that would be done to interests we do not want to damage.
  That completes the explanation I ought to give to the hon. Gentleman, but I repeat my undertaking that I will draw to the attention of my right hon. Friend what he has said as I believe that this would be handled more suitably in general than by the particular references to the overseas Estimates. I hope that the hon. Member will be satisfied with that conclusion.

  PRISONS
  6.55 p.m.
  Mr. Norman Fowler: In this short debate I wish to raise the question of the increased expenditure on prisons in England and Wales. As will be seen from the Supplementary Estimates, this amounts to some £916,000, the lion's share of which results from pay awards and increased overtime. It is the staff side of these increased costs on which I wish to concentrate and to which I wish to draw the attention of my hon. Friend the Minister of State.
  Many ideas have been put forward on penal reform. It is said that we should build new prison buildings, and so we should. It is said that we should keep everyone except criminals out of prison, and so of course we should. In the end, however, progress within the penal system depends very largely upon the staff who are serving in the prisons, the prison governors and the prison officers. It is they who control and influence the whole climate inside prison. The finest buildings in the world would be of no avail without a good staff and—this is the essential point, I believe, to come out of the figures—unless the staff had the time to carry out the job which has been given to them in fulfilling the rôle of the prison officer.
  The question of increased overtime mentioned in the Supplementary Estimates worries me most. Here I have some specific questions to ask my hon. and learned Friend about the amount and nature of increased overtime in the expenditure total.

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  First, would my hon. and learned Friend confirm my impression that prison officers are now working long hours of overtime, not irregularly but on a regular weekly basis? There seems to be no question but that our whole prison system now depends heavily upon the overtime that is worked by those prison staff.
  Will my hon. and learned Friend also confirm that the present average weekly overtime of prison officers is 12 hours? Even this, I think it will be agreed, seriously understates the position in some prisons. According to my information, at some prisons regular overtime of over 20 hours a week is being worked. In other words, prison officers are working what amounts to an extra half a week in each week. Again, this is happening not just once or twice a year but on a regularly weekly basis. This gives cause for concern because it means that the prison service must be depending very heavily upon the overtime now being worked in many of our prisons, to my mind, in an excessive manner.
  Can my hon. and learned Friend say which prisons are particularly affected by the increased overtime shown in this expenditure? In particular I wish to know the position in the dispersal prisons for maximum security prisoners, for the following reasons. In latter years we have seen a number of disturbances in such prisons as Gartree and Parkhurst. Needless to say, this has reopened the whole debate on the question of how dangerous prisoners should be held. This again has relevance to the question of staffing and overtime.
  I know that my hon. and learned Friend will recall what the Mountbatten Committee said about prison security, namely, that maximum security prisoners should be housed in one separate prison. I know he will also recall what was said later by the Penal Advisory Committee on this question as he was at the time a member of that committee. It argued that these prisoners, whose escape would be highly dangerous to the public, the police or the State, should be dispersed to several prisons within the general system. Therefore, I ask my hon. and learned Friend how he sees the position today, because with his experience he is in a first-class position to answer that very question.

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  We were latterly thinking theoretically about maximum security prisons and we now have experience of them. One of the results of the policy that the Penal Advisory Committee put forward—it was accepted by the Home Secretary at the time—was to put extra pressure upon the staff which whom we are concerned in this debate. It has involved more overtime in those prisons. There can be little question of that.
  Surely it has meant that by definition extra security has to be maintained for a greater total of prisoners. That is what it must mean because, if we disperse a small number of maximum security prisoners to a number of prisons within the system, the security of those dispersed prisons must be of an order to prevent the escape of maximum security prisoners. It will have an effect also on the other people already housed in those prisons.
  I realise that it is difficult to distinguish between category A and category B prisoners and it is difficult to draw the division in this way, and that sometimes there is very little difference between the degree of risk they present to the public. The whole question has an important bearing on the subject of overtime worked by prison staff and on pay awards which account for the lion's share of the expenditure in the Supplementary Estimate. It could mean that the system which we have devised is putting particular pressure, indeed maximum pressure, on our prison staff.
  In the prison population, it seems to me, there are two categories which cause concern. The first are those whose escape would be a matter of public concern, namely, the category A prisoners as defined by the Mountbatten Committee. Secondly, there are those who disrupt the prison population, the young, violent offenders. It may be that sometimes the two categories merge into one, although it may not necessarily follow that that is the case.
  When we discussed this matter in 1966 and 1967 we were concerned solely with the escape side. We were not concerned then with the development that has now shown the young, violent criminal as being the real disruptive minority inside the prison system. It is these people who are now causing a new threat to our

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  prison system, men who have used violence in their crimes outside prison and who are prepared to take violence into the prison system. These are the ones who are threatening the whole penal system. It is they who are disrupting the prisons, who are placing an extra burden on, and causing extreme difficulties to prison staff.
  Would it not be better, not only from the point of view of the penal system generally but from the point of view of the prison staff, if we examined again the proposal that there should be one prison where most of our worst and dangerous prisoners could be kept? This is a difficult question and in the past I have been ready to accept the argument that the risk of such a course is to create one unmanageable prison. However, in the light of the experience of the last few years, I wonder whether the alternative danger to that is not even greater, the danger being that by failing to isolate this group we spread the trouble, which might otherwise be confined to one prison, to five or six prisons around the country. Evidence of this can be found in the disturbances last summer at prisons like Gartree. What is happening is putting strain essentially on the maximum number of prison staff inside the system.
  How we regard this position depends upon our judgment of the problem. I know that my hon. and learned Friend the Minister of State will remember what the Radzinowicz Committee report said about this matter when it referred to a small but disruptive minority of prisoners. The impression given was that it was a very small problem in the context of the penal system. I would not dispute that a minority of prisoners is causing damage and danger within our penal system, but I wonder what assessment has been made by the Home Office of the precise size of the problem today. It is my impression that the size of this disruptive minority has increased appreciably in the last few years. Although it is a minority group, it is big and strong enough to have a really disruptive influence within the prison system.
  I put it to my hon. and learned Friend that we should consider whether it is not now in the interests of the prison system, and in the interests above all of the prison staff, to have a single high security prison. Clearly the population will not be the same. There is no question that when

  737
  a person is sent to such a prison he will remain there for ever and a day. That has not been proposed. The categories of security, and of risk of danger to prison staff, obviously change as sentences increase. Therefore, it would be a changing population within that small or medium-size security prison, and prisoners could be transferred into the mainstream of prison life if this were considered necessary. This proposal, I believe, would be in the interests of the prison system and the interests of the prison staff. These factors should be carefully considered, especially in the light of of our experiences over the last few years.
  No one will dispute that a prison officer's job is a difficult one. It is regrettable that sometimes it is dangerous. It involves long and inconvenient hours. It must follow that that must be recognised in the pay which is given to prison officers. The pay scales indicate that an officer is first paid a basic weekly rate of £22·54, which rises to £30·62. A senior officer receives from £32·90 to £35·85. At the top of the scale is the chief officer who receives £2,782 per annum. The basic officer is paid about £30 a week at the top of his scale. I ask my hon. and learned Friend to accept that that is not generous treatment. It is not the most generous pay scale for a job which involves such difficulty. I am not seeking to urge my hon. and learned Friend to announce a sudden and dramatic increase for the prison service. However, I hope that the prison service will put its case, which I think is a good one, before the Pay Board.
  There is a strong case for upgrading the status, the conditions and the pay of the prison service in the same way as the police service has been upgraded during the last 10 years. Following the Royal Commission in 1962 police service conditions were improved dramatically. We should now consider the prison service and ensure that similar treatment is adopted.
  I hope that everything I have said indicates the importance that I place upon the role of the prison service. Some people say that prisons are outdated and should be phased out. That is nonsense. Crime is increasing, not only in London but in the main provincial centres. Serious crime is increasing dramatically—for example armed crime, crimes of violence.
  738
  robbery and crimes which the general public consider most serious. It follows that we face the problem of the serious criminal. It is sometimes forgotten that that is the logical result.
  The service which will bear the brunt of the problems caused by the serious criminal is the prison service. The situation is in some ways new to this country. It has developed dramatically during the last five or seven years. As we are not experienced in dealing with the problem of serious crime and the serious criminal, it is reasonable that we should feel our way and should not find ourselves on a hook because some years ago a proposal or policy was adopted which necessarily must be continued in the 1970s.
  It is essential that we learn from experience, and I hope that we will learn from the experience of dealing with the serious criminal. I am convinced that in any policy emphasis must be put upon the prison staff and upon the basic prison officer, who does a good if underrated job.
  7.15 p.m.
  Mr. Thomas Cox: I welcome the opportunity that the hon. Member for Nottingham, South (Mr. Fowler) has given the House to spend a few moments talking about the prison service. While we have many debates on many important subjects, this subject is rarely discussed in the House.
  I have contact with the prison in my constituency, and I know that there is a shortage of staff. This, indeed, applies to most of the prisons in our large cities. Many officers have to work many hours of overtime each week. That is the situation at Wandsworth Prison. One of the main reasons is the lack of housing accommodation for prison officers. When officers come to Wandsworth and other prisons in the London area from the training school at Wakefield they are aware that initially they will not have accommodation made available to them. But they feel that within a reasonable time accommodation will be made available for themselves and their families. Unfortunately they soon learn that that is not the case.
  All hon. Members will realise that no man wants to be separated from his wife and family. From the discussions which I have had with officials of the Prison

  739
  Officers' Association at Wandsworth, that is one of the reasons why men who enter the prison service with enthusiasm, thinking that it is a worthwhile job, soon become dissillusioned not with the job and its prospects but because they realise that they will be separated from their families. They realise that they will live in furnished accommodation in a city for a year or even more. Possibly they will know very few people. Unfortunately this means that men will leave the service. When we consider the cost that must be involved in training prison officers, that is something which we should regret very much and seek to stop.
  The hon. and learned Gentleman will agree, following the consultations which he must have had with prison governors, that all governors say that they seek most of all a stable staff. The potential trouble makers who are found in the larger prisons require a stable staff of officers. These are men who will find out the potential troubles which possibly are being considered by prisoners. I know that that point is often made to me by the Governor of Wandsworth Prison. That is why he encourages wherever possible the stability of staff. If housing is not made available, that stability, which we should all like to see, cannot exist.
  I hope that the, hon. and learned Gentleman will give an assurance that where there is a shortage of accommodation and where there are properties on the market that can be bought, no restrictions will be placed by his Department on moneys being made available to prison governors to ensure that they can offer accommodation to men coming to staff the appropriate prisons.
  The hon. Member referred to the longer sentences which are being given. This has caused us a good deal of concern. The people who are being given these longer sentences are the potential trouble makers. These are the people who, when they are sent to prison, sometimes for the most appalling and vicious crimes, think that they have a right to rule the prison as they obviously tried to rule the area in which they lived.
  It is the duty of the Government to see that these people are not allowed to do this. The only way we can ensure
  740
  that this does not happen is to be certain that every prison has its full quota of staff. The hon. Member made the point about dispersal. There are two schools of thought about this. The Prison Officers' Association believes that there should be one prison to which long-term prisoners, potential trouble makers, should be sent.
  I take the point made by the hon. Member about the salary scales of prison officers. I am sure that the Minister is aware that prison officers are feeling very bitter just now about the Government's freeze. We know that all workers are feeling bitter. I am aware, too, that groups of workers say that they are special cases. I do believe that the police and prison officers are special cases by the very nature of their work.
  The police officers were able to get their wage increased before the freeze. The prison officers were not so lucky. I hope that the hon. and learned Gentleman will tell us that prison officers will be given an assurance that the present salary scales will be readjusted and that there will be a substantial increase in their pay. It is wrong to expect prison officers to work long hours of overtime to get a decent weekly wage. I know that shortage of staff is one of the reasons but another is the inadequate pay scale. I know from recent correspondence that there is a feeling of great bitterness among prison officers. There should have been a salary increase in January this year, but it was stopped.
  I welcome the opportunity which the hon. Gentleman has given the House to talk about the problems of prison officers. We rarely discuss such matters in this House. I am certain there would be a great deal of agreement on all sides when I say that we ought to tell prison officers, wherever they are, that we recognise their problems, we realise the potential dangers and as far as is humanly possible we shall do everything we can to see that they obtain the best possible conditions, by way of salary, prisons and living accommodation. If we can say that to them, we shall ensure a continuing increase in the number of men entering the service, remaining there, and playing a useful and constructive part. This is something we all want to see happening.
  7.24 p.m.
  The Minister of State, Home Office (Mr. Mark Carlisle): The House is grateful to my hon. Friend the Member for Nottingham, South (Mr. Fowler) for introducing this debate—at a slightly earlier hour of the evening than on other occasions when he and I have discussed such matters on the Consolidated Fund. I particularly enjoyed his thoughtful speech. I agreed with him and the hon. Member for Wandsworth, Central (Mr. Thomas Cox) when they said that it is the staff which influences the climate within a prison.
  None of us would dispute for a moment that a successful prison service, however success is measured, is utterly dependent on the staff, in terms of numbers and calibre. I am glad that, thanks to the initiative of my hon. Friend in raising this subject, I have the opportunity to pay a well-deserved tribute to the many thousands of officers of all grades within the prison service who day after day carry out onerous duties in difficult conditions on behalf of the rest of society.
  We all know that working with people, even at the best of times, imposes certain severe demands on one's reserves of patience and tolerance. When a person is dealing with people in custody, many of whom may be disturbed, many of whom will have an inbuilt antipathy towards the system and those whose job it is to operate it, this must be about the most demanding job which it is possible to impose.
  It is greatly to the credit of our prison staff that they manage so successfully to live with and surmount the various problems. I sympathise with those among the Prison Officers' Association and others who say that the only time they hit the headlines is when something goes wrong and suddenly public opinion is focussed on their work.
  Three of the main points which have come out of this debate are pay, overtime and the effect on the prisoner and the prison officer of the dispersal policy as against the concentration policy for long-term criminals.
  Before dealing with pay, let me make one or two comments about numbers. We have to give a high priority to building up the size of the prison service, both to meet unavoidable additional demands
  742
  and also to improve the regime within prisons and borstals and so on. Over recent years we have met with considerable success. From the beginning of 1968 until the beginning of this year the number of prison officers increased from just over 8,000 to just over 13,000. That is an average net increase of 700 a year. With such a net growth it means that the recruitment rate was over 1,000 a year.
  In 1972 we had an all-time record of over 1,500 new recruits to the prison service. It can be said that that is still not enough. My hon. Friend was right to say that we still want more prison officers. There is a limit to the rate at which new officers can be recruited, trained and absorbed into the system. The fine recruitment rate of last year means that at the moment one in six of basic grade officers are still in their probationary period and about 30 per cent, of those basic grade officers have no more than two years' service. Although the quality of recruits is high—and I am glad to acknowledge this—the relatively high level of inexperience that follows from rapid expansion in itself creates problems. Therefore we have to be careful not to think in purely numerical terms, and in any case we should delude ourselves if we were to think that the pool of potential prison officers in the population is unlimited.
  Leaving numbers, I come immediately to the question of pay and conditions. This was a major part of what my hon. Friend the Member for Nottingham, South said and also a major part of the speech by the hon. Member for Wandsworth, Central. In reference to pay, at this moment, when looking to the future, I can only say that this must be subject to the Government's overall counter-inflation policy. I accept that prison officers, being civil servants, will be subject in phase 2 of that policy to whatever arrangements are devised for dealing within the overall limit with civil servants' pay, and that any anomalies or special difficulties to which the hon. Gentleman referred will have to be matters for examination in phase 3.
  I accept what the hon. Gentleman said —and it is right that I should do so— that the prison officers would be negotiating now for a pay award backdated to January 1973. But I must in all fairness make it clear at once that that award will

  743
  have to operate within that overall Governmental policy, as will awards for other groups.
  I think one ought to put this in perspective and look back over recent years and see what has happened to prison officers' pay during that period. My hon. Friend mentioned the analogy with police pay as it existed at the time of the Royal Commission in 1962. I would suggest to him that this is not a very valid analogy because, if I recollect correctly, the Royal Commission found that since the war police pay had lagged behind pay movements generally and had got seriously out of line with the general level of wages and incomes then applying. To restore that position, very substantial increases in pay were recommended.
  The arrangements we have used for reviewing prison officers' pay in recent years have been designed specifically to prevent that situation arising. Those arrangements, which have the agreement of the Prison Officers' Association, followed the recommendations of the independent Wynn Parry Committee, which reported in 1958. That committee found, perhaps not unnaturally, that, unlike other grades in the Civil Service, prison officers had no analogue in the outside world with whom their pay could be compared. They therefore proposed that the pay of prison officers should be lined up with certain other Civil Service grades with which their pay was then comparable. The pay of those other Civil Service grades followed outside analogues, and prison officers' pay then followed any changes in the pay of those other grades based on that analogy. But the committee also recognised that future changes in the nature of the prison officer's job might affect the link with the other grades, and provision was therefore included for "special factors" to be adduced which might call for modification of the straightforward test of comparability.
  That is how the pay of prison officers has been dealt with over a number of years and to my knowledge the Prison Officers' Association has certainly not shown any inclination to depart from that arrangement. Nor, let me say, has the system led to any lagging behind of prison officers' pay as compared with outside
  744
  rates. Indeed, if 1 may quote the prison officers themselves, in an article about the pay review system in their magazine two years ago they said
  "Since the Wynn Parry formula was introduced the national average wage "—
  that is, since 1958—
  "has improved by 71 per cent. … Wage rates for prison officers have improved by "
  94 per cent, at the minimum of the basic grade scale and 105 per cent, at its maximum. That was between 1958 and 1970, and those figures do not take account of the fact that there was a 14·6 per cent, increase effective as from 1st January 1971 and a further 7 per cent, increase which took effect a year later.
  Therefore, corning to the pay rates at the moment—and I confirm what my hon. Friend said—the present rate for a newly joined officer under training, in round figures, is £22.50 a week. On completion of his initial period of training he gets an increase of £1.50 a week, his pay rising to £30.60 after eight years. That is for the basic grade of officer, but before reaching that maximum he comes into the field for promotion to senior officer, and subsequent promotions within the prison officer grade can take him up to a salary of £2,782 a year. These rates represent increases dating back from January 1972 of between 63 per cent, and 72 per cent, over a period of seven years.
  The other point that must be made is that it is somewhat misleading to think in terms of basic pay rates only, because in addition to the basic pay, in addition to the allowances he may receive for particular skills and particular kinds of duty, every officer has a free house, maintained at public expense, or a rent allowance.
  I want to break off here to tell the hon. Member for Wandsworth, Central that at this stage I am afraid that I have not the answers to his points about housing. He has raised these with me before and we have discussed them in the past. I am only too willing to look at what he said and to write to him about any matter that may be of help, or to get my noble Friend who is now directly responsible for prison matters in the Home Office to write to him.
  As the House knows, the prison officer also has the non-contributory pension

  745
  scheme—a recently negotiated, highly attractive scheme. He has the opportunity to retire at 55 with every year of his service after the twentieth year counting double for pension purposes. I suggest therefore, that over these years since the Wynn Parry Report the salary of prison officers has become more than level with those in other forms of employment.
  Overtime, too, is relevant to pay and very relevant to conditions in the prison service. Overtime is widespread, and one must accept that it is likely to remain so for some time to come, given the demands on the prison service and the limited speed with which it can be expanded.
  Demands for additional staff press upon us all the time. An increased emphasis on security followed the Mountbatten Report, much of which rested on physical improvements and increased the demands on individual officers. There is also the constant endeavour to improve the regime within the prison, which again imposes additional burdens on the staff. There are the new establishments which we are opening and the extension of existing establishments. There is the ever-increasing amount of court work to which we have to respond in terms of escort duty and the manning of the courts.
  All this means that our substantial recruitment has only just about managed to keep level with the demands that have been imposed. More recently, we have had to find a considerable number of officers to assist in the prison service in Northern Ireland. It is not surprising that overtime remains substantial.
  I confirm my hon. Friend's figures. The average overtime worked weekly, week in, week out, is about 12½ hours but, like all average figures, it includes wide variations and fluctuations. Doing the best I can to answer the question put to me by the hon. Member for Wands-worth, Central, I would say that in the local prison the average amount of overtime worked is between 15 and 16 hours a week. In the remand centre, which is where the real pressure exists because of escort duties, the average weekly overtime worked is about 20 hours. The training establishments, the more modern prisons and the young offenders' establishments follow the average. I cannot give the exact figure for the category A prisons.
  746
  but it is above the average of 12½ hours worked throughout the prison service and falls somewhere between that figure and the 16 hours worked in the local prison.
  In the category A dispersal prisons within my own knowledge up to a year ago—and I have no reason to think that this does not still apply—a greater number of overtime hours were worked in some prisons than in others. We must remember that the disturbances last summer imposed considerable extra work and overtime on the prison service. I am sure that my hon. Friend and the hon. Gentleman, who take such an interest in this matter, will remember that my right hon. Friend the Home Secretary gave a specific acknowledgement of the extra work that those disturbances had imposed on the staff.
  Both hon. Members have asked about the dispersal policy. If I am right in saying that work in the prison service calls heavily on the prison officers' patience and tolerance, obviously they are subjected to additional strain when working in prisons which contain a high proportion of dangerous men. There is no simple answer to this. The problem will not be solved merely by changing the method of containment. Prison officers will still be working with dangerous and violent men who have to be carefully contained by whatever method. I will not go into the detail of the distinction between concentration and dispersal. My hon. Friend summarised it in his speech.
  We are conscious of the effect that the dispersal policy has had on staff. At the time of the prison disturbances last year my right hon. Friend the Home Secretary acknowledged that and set up a review of the operation of the dispersal policy. It is hoped that this review, which is being carried out in the Home Office, will shortly be completed. My right hon. Friend will then have an opportunity to consider the results of the study in relation to the views expressed at the time by the Prison Officers' Association and the effect of the dispersal scheme on prison staff before coming to a decision.
  I reiterate what my hon. Friend said about the danger of over-simplifying that distinction between category A on the one hand and the disturbers on the other. My right hon. Friend the Home Secretary said in a Press statement at the time

  747
  that it was a gross over-simplification of a highly complex problem to confuse these two separate issues. He said that there were prisoners who were dangerous and must not be allowed to escape and there were prisoners who were trouble makers who tended to disrupt the prisons that had to contain them, but not all the dangerous men were the trouble makers and not all the trouble makers were the dangerous men.
  In the review of the operation of dispersal, the Home Office has very much in mind that "category A" and "troublemaker" are not necessarily two different names for the same person. We have set up this review to see whether the operation of the dispersal policy can be improved. The Home Secretary hopes to have the advantage of looking at the results of the review in the near future.
  I am grateful to my hon. Friend for raising this subject and to the hon. Member for Wandsworth, Central. They have both always taken an interest in penal matters. I am grateful also for the interest which they have always taken in the Prison Officers' Association and the members of it. We in the Home Office are conscious of the work that they do and are grateful to them for the way in which they carry it out, often in difficult circumstances with a high degree of patience, tolerance and skill.

  HANDICAPPED CHILDREN
  7.50 p.m.
  Mr. GreviHe janner: I am happy to have the opportunity of drawing attention to the plight of disabled children in the light of the £3 million grant which is now to be made by the Government. I wish on this occasion to turn the spotlight on the children who cannot trace their disability to the drug thalidomide. I am in no way seeking to minimise the courage of those children who have thalidomide disabilities, nor that of their parents, and of course I do not minimise their great need. I wish publicly to pay tribute to those people such as my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley), who has been so active in this matter, and also Lady Hoare and all the work which she and her fund have
  748
  done for thalidomide children. I understand that some 500 families are directly affected by thalidomide and that Lady Hoare's fund looks after 700 children.
  There are in total about 400,000 handicapped children and I know that the Government are concerned about all of them. Therefore, I feel it right that the House should examine the £3 million grant and should consider where it is to go, what it can do, how far it can reach, who is to administer it and how.
  We must always bear in mind that while there are many children on whom the spotlight can be turned—such as Jimmy Martin, the young boy in my constituency who has one limb and whose case has become nationally known—there are thousands of other children whose cases cannot be publicised in any way. For every child whose case is placed before the public, thousands are dealt with privately.
  I appreciate that this subject concerns hon. Members in all parts of the House. We all have these cases to deal with and mostly they are dealt with in total privacy.
  When we consider that there are, as I have said, over 400,000 handicapped children under the age of 16, it means that few families in the country are not affected in some way or other by the problem of handicaps amongst youngsters within their ranks. Therefore, it is right that the Government should recognise the importance of the attendance allowance which up to now has been the only form of grant towards meeting the needs of these families. In many cases the allowance is not sufficient and it reaches too few families. It will now reach more families—a move which we all applaud. But, however many people it is given to, it will provide no more than a minimum allowance for attendance upon these unfortunate young people. There is a vast need for all sorts of other help.
  The grant of £3 million is welcome insofar as it is a recognition of a need. However, I regard the sum of £3 million as pusillanimous, pathetic, sad and out of all proportion to the suffering of these families. A figure of £3 million is vast when stated as a whole, but when spread among almost half a million children who should be helped it is a very small sum

  749
  indeed. Therefore, I hope that the Minister will tell the House tonight that this sum is only a start and that the Government have plans to set up a fund which is worthy of this nation on behalf of the disabled children. I hope he will also assure the House that its administration will be undertaken on a logical and proper basis.
  The first question we must examine is —to whom will the money go? I understand that the money is to go to severely congenitally handicapped children. A pamphlet issued by The Fund for Families of Handicapped Children tells of a scheme set up by the Government but to be administered independently by the Joseph Rowntree Memorial Trust. It would appear that this excellent trust has taken on a task with which very few would wish to cope, and that an unfair burden has been imposed upon it. If things happen to go wrong in the administration of the grant, I suggest that no blame whatever should be attached to the Joseph Rowntree Memorial Trust.
  The fund exists, as the pamphlet says,
  "for families with a child or a foster child born with a very severe disability, or who becomes severely disabled within four weeks of birth."
  What is a "severe disability" and, indeed, who is to decide this matter? How can we introduce a definition involving degrees of severity? How can one say who is born with a disability when the disability may not become apparent for years after the birth?
  Many youngsters suffer from muscular dystrophy, and that disability may not become severe until the child is five or six years old. Will the Minister please inform the House tonight—and through the House the families of children who suffer from muscular dystrophy—whether it is intended that those children whose disability does not become apparent until the child begins to walk are included in the definition of
  "a child born with a very severe disability"?
  The passage in the pamphlet continues:
  "… although the disability may not be recognised until later".
  I should like to ask—how much later? What is the time scale, and is muscular dystrophy covered?
  I understand that cerebral palsy, which is the disability from which spastics suffer,
  750
  is usually the result of damage at birth and that a complete diagnosis may take up to four years. Is it intended that spastic children should be covered?
  The Invalid Children's Association says that there may be as many as 500,000 children under the age of 16 who are handicapped. How many of these children are expected to benefit from the £3 million? How thin is this meagre ration of kindness to be spread? Within the groups of disabled children which were at one time ruled out by the Minister were deaf children and blind children, but apparently severe disability is now to include not only limblessness but serious deformities, total blindness or deafness and severe mental handicap children.
  If total blindness is to be included, why should partially blind children—children who can just see—not be included? I hope that the hon. Gentleman will tell the House. Furthermore, is not a child who can just hear to be regarded as suffering from a very severe handicap, and why should such a child be excluded? What has the Minister to tell the families of children who have very little hearing? Are they to remain totally excluded from grant?
  According to the Association of Spina Bifida, there are between 6,000 and 7,000 child sufferers from this complaint. Are we to presume that these children will be included? According to the National Society for Mentally Handicapped Children, there are about 40,000 severely subnormal children. Are these to be included? I presume that mental handicap is regarded as seriously as physical handicap—and, if it is not, it certainly should be. According to the form put out in the pamphlet issued by the Rowntree Memorial Trust, severe mental handicap is included. What is "severe mental handicap" and who is to decide?
  It appears that we have no diagnosis of the vast numbers of children who require help, and it is right that people should know at this stage which children are to benefit and in what way.
  The Rowntree Trust in its pamphlet says that the fund will open on 2nd April 1973 and people are told, if they think that the fund could help them, to write to the secretary and details will be given.
  It is understood that social workers are expected to take charge and advise, that the secretary of the fund will be the

  751
  administrator, who is the Assistant Director of Social Services, Cambridgeshire and Isle of Ely County Council, and that the trust will be treaty to receive applications from 2nd April from those families who have a severely disabled child aged between 10 and 15 inclusive. Is that correct? Is it only families with severely disabled children aged between 10 and 15 inclusive who will benefit? If so, why? I appreciate that we must start somewhere. Is it intended that the £3 million should be spent on them? If not, how much is to be spent on them and what is to happen to the rest? Surely £3 million is a small sum even for the children aged between 10 and 15.
  According to this document, applications should be made by the parents. But we all know that parents rarely know when an application is to be made. Whether an application is for a rent rebate, for an attendance allowance or, indeed, for an adult who is applying for compensation for unfair dismissal, we know that the applicant rarely knows.
  The document says:
  "The Trust is required to confine its assistance to those families with a child suffering from a severe disability which is congenital."
  What is congenital? It is no help to state, as this hand-out does,
  "It is not possible to define these terms precisely."
  Why should a child not benefit who is injured in a car accident shortly after birth and cannot obtain compensation from a negligent driver? Why should a child not benefit who falls when tiny and is injured and suffers from epilepsy thereafter? Where is the element of fairness which is so essential if a fund of any kind is to be regarded as just and proper?
  I understand that the Minister intends,
  "it will be a matter for the Trust on the advice of its professional advisers to decide in any case whether the disability is of sufficient severity, whether physical, mental or both, to render a family eligible for assistance, and whether it is congenital in nature."
  Is it fair that the trust should have imposed upon it what should be a function of the Government? Why should a separate body have this kind of burden thrust upon it in this way? How can the unfortunate trust cope?
  We know already from the defects in the Attendance Allowance Board that
  752
  even such a body as that, which is totally independent, if Government sponsored, causes grave dismay to hon. Members on both sides of the House. There is a motion standing in my name on the Order Paper with 120 signatures calling for the procedures of that board to be reformed so as to be in accordance with the rules of natural justice.
  Is the trust to carry out its functions, as the board does, in secret? Is there to be a right of appeal? Is this another gesture which is so much more apparent than real—a gesture which is totally admirable in concept but which, because of its paucity of administration, may in the long run cause vastly more ill will than it cures?
  The document goes on:
  "It will be for the Trust to decide whether in any particular case the economic and social circumstances of the family and the stress imposed on it by the disabled child are such as to bring it within the criteria adopted by the Trust."
  I suggest that it should not be a matter for the trust. It should be a matter for the public acting through the Department of Health and Social Security which, as we know, is very concerned to help. Have the Government recognised that this gesture is very small and is but a beginning and that the time must come soon when the amount should be increased? How much should the increase be? What should the fund contain?
  Professor Peter Townsend and his colleague, Dr. Walker, have estimated that it will cost about 30 times £3 million annually if families are to receive adequate financial support for handicapped children—in other words, about £90 million a year.
  This country is not in the finest of financial circumstances. We have a counter-inflation policy. A certain amount of tightening of the belt is to take place. However, this is a compassionate country which is desperately concerned about the welfare of the handicapped. It is a country in which people of all political beliefs are concerned to ensure that children can make the best of their lives and that children who start their lives with less should have the advantages which can at least help them to make what they can of happiness and of the education which they can receive. I do not believe that £90 million a year

  753
  is a large figure in that context. I do not believe that it would be regarded as inappropriate by any person in this country that a sum of about £1·50 a year per head should be allocated for the care of the worst-off children and, through them, of some of the worst-off families in our society. This is a modest, moderate sum.
  If the Government were to announce through the Minister tonight, that this was to be done, it would be greeted with satisfaction through the House. Indeed, we all recognise that the Minister, who is good enough to attend at this early hour instead of the very late hour at which we usually meet on these occasions, takes a great personal interest in these problems. I hope that he will accept the figure of £90 million; and that Professor Townsend is correct; and that the spending of money in this instance will also amount to a saving of money because children who are kept at home are not only happier but they save the community a vast sum.
  For every child who is kept at home at a cost of £4 or £5 a week, it would cost £20 or £30 a week for him to live in not nearly such good circumstances in most cases, emotionally at least, in an institution. I trust that the Minister will accept that we should attempt to keep as many children as possible at home not only through the use of attendance allowances but through the use of these new grants. These children and their families should be given maximum independence through the provision of this money. Therefore I hope that the hon. Gentleman will say that this sum is a forerunner of much larger payments to come.
  Finally, I ask for an assurance that the Government will do their best to ensure that the administration of the fund is not only fair but manifestly fair. I ask the Minister to look at the definitions which have been placed upon the payment of grants from this £3 million. Is it not grossly unsatisfactory to ask an organisation to administer a fund and to say to it, "It is not possible to define the terms under which the grant is to be given."? Is it not asking for terrible upset and trouble which has been produced by a gesture which of itself is kindly and intended to be generous? Will the Minister indicate to the families of the half-million disabled children in this country what the Government's inten-
  754
  tions are and how they are to be carried out? May we have an assurance that the small sum of £3 million will grow in time and that it will be administered by an organisation which has public control over it and incorporates a right of appeal in its procedure?
  8.10 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Michael Alison): I congratulate the hon. and learned Member for Leicester, North-West (Mr. Greville Janner) on having secured another opportunity—I am glad to say, at a reasonable hour—to debate the challenge presented to families, to the wider community and not least to the children themselves by severe handicap in childhood.
  I want to say two things at the outset. First, although I must set out what we are doing over a wide field to help meet the challenge, I do not want the House to think that I am under any illusion that everything possible and necessary is being done. I concede that there is land to be possessed. The social services have a long way to go yet before they can be said to be fully effective in every direction concerning children but we are making progress and intend to go on doing so.
  My second introductory point is that it would be misleading to see the Rown-tree Trust £3 million as anything other than one aspect—and that by no means the most important—of a whole complex of provisions going right across the spectrum of social and medical need. Indeed, it is only the tip of the iceberg. The hon. and learned Member invites us to spend £90 million a year on special provision for children. But even that figure is very small fry in the amount of money that we are already spending. We have plans for extending provision right across the spectrum of need for children, handicapped and not so handicapped, sick and not so sick, going into hundreds of millions of pounds in the current public expenditure period.
  However, I want to say something about the Rowntree Trust, because it is on this item in the Vote that the hon. and learned Gentleman has hung the debate, and he made extensive reference to it. In order to assist severely handicapped children generally, who the Government recognise command a special priority, the

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  Joseph Rowntree Memorial Trust has been given an initial sum of £3 million. I must emphasise that I cannot at this stage say whether and how much additional money might be available to the fund. From Monday 2nd April—imminently, in other words—the trustees will be able to make grants or provide services to assist families of congenially handicapped children, whether the handicap is physical or mental or both.
  My Department is represented on both the trust's management committee and the consultative committee which provides the expert advice. The Government are additionally bearing the cost of administration of the fund, responsibility for which will be reviewed in three years.
  This very day, local authorities have been sent a letter from my Department— the hon. and learned Member has had a sight of it, I think—explaining the procedure for applying to the fund and asking for their assistance both in the provision of advice and in letting the trust know of families who, they believe, need help over and above that which the authorities themselves can provide.
  I accept that this is only a start. Adolescents—that is, those of 16-plus— and those whose handicap is not congenital will not be eligible for help, but it should provide some help for families which tend particularly to suffer stress and as such, I believe, it will be warmly welcomed. However, I accept the hon. and learned Member's warning that any partial support made in provision to meet need, as we saw with the attendance allowance, generates at the margin certainly dissatisfaction, sometimes even resentment. But this is the concomitant of progress and we have to accept it.
  Although during the first few months the trust will be inviting applications only from families with seriously disabled children between the ages of 10 and 15, it is intended that lower age groups will be included no later than 1st August. The pressure of administering the new scheme is clearly the reason to have to start in phases. While it will normally be for parents themselves to apply, where it is more appropriate the trust itself may offer help directly to families and may assist families and children after they reach the age of 16 where those
  756
  families have earlier received help from the trust.
  The help to be given is designed to complement the services which are already provided by statutory and voluntary bodies, but could include services which it is in the power of the statutory bodies to provide although for some reason they are not providing them. Although this does not relieve local authorities of their statutory duties, the trust may, for example, be able in an individual case to help temporarily until an authority can meet that need.
  Above all, the trust intends to administer its scheme with the maximum flexibility. Only in the light of its experience during the first few months will it be able to determine the best way to get the maximum help to those in need in the right way and at the right time. I have no doubt that changes will have to be made in the light of experience.
  I am also sure that, apart from the help which will be given, there will be great value in the establishment of the fund in teaching us more about handicapped children and the problems that their families face.
  The hon. and learned Member asked a number of detailed questions about the operation of the fund. It is not possible to give dogmatic or specific answers at present because it is precisely the flexibility that we wish to impart to the fund from the outset which makes it necessary not to be too clear and specific. The hon. and learned Member asked whether muscular dystrophy, partial blindness or deafness and conditions such as spina bifida would be included. I can tell him that a member of the Association of Spina Bifida and Hydrocephalus is on the trust's consultative committee. It will be for the trust's professional officers to determine, taking account of the strain on individual families, exactly where the need exists and how it should be met.
  Mr. Janner: If that is so, how can the hon. Gentleman explain the phrase in the pamphlet put out by the trust which says, in effect, that only children who are totally blind or deaf will be included?
  Mr. Alison: This is a start. If the hon. and learned Member has in mind a particular case that he thinks has fallen the wrong side of the margin, I hope he

  757
  will let us know. As he will see from material that I shall present to him presently, however, those who are suffering from partial conditions of deafness or blindness have a whole range of services available to them both in the hospitals and educationally which, so far as I know, more than adequately cater for their special needs.
  However, if the hon. and learned Gentleman feels that there is a case of partial deafness or blindness, producing such exceptional stress upon the family it may be prelingual deafness, producing great difficulties of communication and resulting in turn in a mental condition which is disturbing the other children in the family, and the sort of situation which gives rise to great concern—perhaps he will let us know and we will bring it to the trust's attention.
  As for the trust's remit, although it is in some cases obviously specific, the hon. and learned Gentleman knows about the boundaries, which we want to keep as flexible as we can. This is one reason why I do not want to be too specific in answering the detailed questions. If I can give the hon. and learned Gentleman further information on them, having studied them in cold print, I will certainly write to him to clarify anything which is still unsatisfactorily vague.
  I said that the Rowntree Trust Fund is only one of a complex range of provisions even on the cash side alone. Taking the wider range of cash benefit, as the hon. and learned Member himself acknowledged, the focal point is the attendance allowance. Perhaps I may give the latest figures which I am able to produce on the provision we make. I think that in some ways we tend to take this radical innovation too much for granted, but it has had very great significance for the disabled. For example, taking the rates of benefit which are proposed for the autumn uprating, some 20,000 children will be getting £6·20 per week, or about £120,000 per week in all. When attendance allowance is extended at the end of the year, perhaps another 50,000 children will be getting £415 per week, some £200,000 per week in all. This represents a very significant addition to resources available to the families with severely handicapped children.
  758
  The attendance allowance was first introduced as an initial step in providing specific cash benefits for disabled people not covered by the war pensions and industrial injuries schemes. The original allowance, now known as the higher-rate attendance allowance, first became payable from December 1971 to severely disabled people who need a great deal of help from another person both by day and at night. The allowance is now extended in stages, by four age groups, to severely disabled people who need a lot of help by day or at night. This must be placed against the modest sum under the Rowntree Trust and represents really massive sums under the heading of the attendance allowance.
  I have a great many further facts and figures which I could give about the development of the attendance allowance, but it would be of more value to move from the cash spectrum to other services in kind which have a profound bearing on the needs of handicapped children. For example, in the health, hospital and general practitioner services, advice and help from health visitors, home nursing and other domiciliary health services are of course available to the families of severely handicapped children and to the children themselves, as they are to other families.
  One of the main aspects of health service provision for handicapped children is that made by my Department's limb and appliance service. Many improved devices are now being introduced for patients of all ages and are of particular benefit to children. For example, the plastic splints and heel cups developed under departmental auspices at Hartshill Hospital are of special value in correcting and controlling physical disabilities in children. Work supported and stimulated specifically for children includes the development of special equipment for sufferers from spina bifida, cerebral palsy and other diseases undertaken at Shrewsbury, Guy's Hospital and Chailey Heritage.
  One particular step which the Government have taken to promote the interests of handicapped children is in what we call multi-disciplinary assessment. The Government have expanded the assessment services in hospital and approxi-

  759
  mately £1·5 million has been allocated in a special capital programme to build comprehensive assessment centres at 50 hospitals. The Government are emphasising to regional hospital boards that the new facilities should result in truly comprehensive assessment planned in conjunction with local authorities. This means that disciplines of every sort in the medical and social spheres determine the basic needs and requirements of handicapped children.
  On mental handicap conditions, which impose perhaps the greatest distress on families, our 1971 White Paper "Better Services for the Mentally Handicapped" set out the deficiencies in the present services and outlined the facilities required. It set out a programme to achieve these, estimated nationally to take 15 to 20 years. In the service of the future we envisage that at an early age in the life of a mentally handicapped child there will be a multi-disciplinary assessment of the needs of the child and the family. This will involve health, social service and education staff as appropriate, the needs being reappraised from time to time.
  We recognise that the family will require practical assistance of many kinds, for example home helps, domiciliary nursing, laundry services, day centres, day nurseries and youth clubs, with temporary as well as permanent residential care being available for the mentally handicapped. Education for these children is now provided within the ordinary educational system of the country.
  I list some of the services to remind the hon. and learned Member that £3 million in the context of the range of services we are providing in the hospitals and through the local authorities and in the education service is almost a small sum in relation to the vast sums, capital and revenue, made available precisely for those conditions which he suggested were almost neglected until the thalidomide cases occurred. A whole complex of services has been provided by many Departments day by day and year by year over a long period and committed to handicapped children whatever their handicap, physical or mental.
  We do not claim that all the services necessary are available at present. We are far from the ideal. There is a lot

  760
  to do to make up for the neglect of the past. But we have asked hospitals and local authorities jointly to produce plans for developing the services needed and indications of developing services are certainly present. For example, capital expenditure in England on hospital services for the mentally handicapped has risen from £5½ million—at 1972 prices—in 1968–69 to an estimated £10 million for 1972–73. This is an increase in real terms of more than 80 per cent. There has been an enormous spin-off of benefit to children from this great increase. Hospital revenue expenditure on these services increased by 11 per cent. in real terms during 1971–72.
  On the local authority front, the number of places under construction in residential homes for mentally handicapped children in 1972 was 142, about 18 per cent. higher than the figure of 120 in 1971. Indeed, local authorities have responded well to the challenge set by the White Paper, and developments are very much in line with what was projected.
  The great majority of severely handicapped children are educated in special schools suited to their needs, the largest groups numerically being the more severely handicapped among the educationally subnormal and physically handicapped. Quite a number have multiple handicaps. Each child is placed in school after an individual assessment which takes account of educational, medical and psychological factors, and his or her progress is kept under review. Many of these children have problems of mobility, or need aids in the classroom such as typewriters, tape recorders or teaching machines to enable them to make the most of their educational opportunities. Local education authorities will provide whatever aids are considered to be required for education. There is no stinting of this service, which has been developed consistently and satisfactorily over the years.
  Severely handicapped children who attend special schools benefit greatly from the close co-operation which is possible there between staff of different disciplines—teachers, therapists and child care staff—working together in the classroom. The staff are not concerned with only one aspect of the children's needs but help out wherever required. A physiotherapist may join forces with a teacher of physical education in the

  761
  gymnasium and swimming pool or with a speech therapist helping a child to relax so that he can derive greater benefit from this form of therapy. Many of these children can and do participate in a wide range of activities at their schools, given this kind of help.
  Parents have the right of appeal to my right hon. Friend the Secretary of State for Education and Science about the arrangements made by local education authorities for the education of their children. Here again there is a warning mechanism if facilities are inadequate.
  The educational building programmes for special schools announced in our White Paper "Education: A Framework for Expansion", published in December last year, will give a very high priority to the needs of severely handicapped children.
  I hope that the hon. and learned Gentlemen will see, even from this very quick impressionistic sketch, that though the Rowntree Trust Fund of £3 million is a significant sum by any standards in relation to the needs of the community, placed against the vast scale of public expenditure it is but one additional and welcome element in the continually expanding provision made for handicapped children in hospital, by the social services, or in education, and it must be kept in its right perspective.
  Mr. Janner: While this is a very welcome addition, can the hon. Gentleman indicate how much a family which successfully applies for a grant from the fund may reasonably hope to get?
  Mr. Alison: Since the services provided may take the form of cash or of provision in kind, it is impossible for me to make a judgment about what the advantage to a beneficiary will be. Obviously that will turn on the number of applicants, the scale or degree of need which is assessed in each case and, in many cases, the extent to which once they have been identified—and they may identify themselves as never having been come across before—a liaison may be feasible with the local authority which hitherto has made no provision for them. It may

  762
  be that an initial sum will be forthcoming from the fund which will lead to a greater scale of expenditure by statutory bodies—
  Mr. Janner: But has the hon. Gentleman given any guidance to the trust? What guidance has it been given about the limits of cash or benefits that an individual family may receive?
  Mr. Alison: This is entirely within the flexibility—
  Mr. Janner: The hon. Gentleman must have told the trust something.
  Mr. Alison: It is not right to set up a consultative body of expert people, including people from the Department, and then for someone in my position to predict in advance the pro rata, pro capita benefit that individual children will receive. I am sure that on reflection the hon. and learned Gentleman will feel that his question does not deserve an answer. The £3 million is available. The consultative committee has been established. Viewed in the perspective of the scale of provision that we are making, the £3 million of the Rowntree Trust Fund will prove very welcome and will bring immeasurable benefit and happiness to families who at present are in very great need.
  Question put and agreed to.
  Bill accordingly read a Second time and committed to a Committee of the whole House.
  Committee tomorrow.

  WELSH GRAND COMMITTEE
  Ordered,
  That during the proceedings on the matter of Unemployment in Wales, the Welsh Grand Committee have leave to sit twice on the first day on which they shall meet.—[Mr. Clegg.]

  ADJOURNMENT
  Motion made, and Question proposed. That this House do now adjourn.—[Mr.Clegg.]

  ANGLING CLUBS
  8.33 p.m.
  Mr. Ernle Money: Of the books which hold a special place in the affections of the English people, probably a unique one is held by that remarkable work "The Compleat Angler" by Izaak Walton. Perhaps, therefore, it is not altogether inapposite if I begin by quoting to my hon. Friend the Undersecretary of State some words from that remarkable volume:
  "Gentlemen, let not prejudice prepossess you. I confess my discourse is like to prove suitable to my recreation, calm and quiet; we seldom take the name of God into our mouths, but it is either to praise him, or pray to him: if others use it vainly in the midst of their recreations, so vainly as if they meant to conjure, I must tell you, it is neither our fault nor our custom; we protest against it. But, pray remember, 1 accuse nobody; for as I would not make a ' watery discourse,' so I would not put too much vinegar into it; nor would I raise the reputation of my own art, by the diminution or ruin of another's. And so much for the prologue to what I mean to say."
  There is no doubt that ever since the days of Izaak Walton angling has been and remains a major—perhaps the major —performance sport in this country. I refer to the findings of the study commissioned through my hon. Friend's Department in 1970 under the aegis of the Natural Environment Research Council, in the National Angling Survey of that year, as to just how many people are involved. At that time, the estimate was that 2,790,000 people went fishing during the year ended May 1970, that 67 per cent. of those people went coarse fishing and that on that basis it worked out that 10 per cent. of all the households in England and Wales contained at least one angler.
  On any showing, as the report rightly concluded, angling must therefore be considered as a major recreation. Over 1 million coarse anglers go fishing at least once a week, constituting almost double —as I regret to say, wearing another hat in this building—an average Saturday's crowd at professional football matches during the football season. Unhappily, I even have to include in that estimate the increasing crowds we have had at Portman Road as a result of the spectacular success of my own team.
  764
  There can be no doubt that a great number of regular fishermen—and by that term I adopt the terminology of the report that this means those who fish at least annually—are members of angling groups. Those who are more than regular—in other words, those who go fishing once a week—are probably an even higher proportion than the four in every 10 coarse fishermen who were recorded in the survey in 1970 as being members of a club. It is for those people particularly that I would like to put a number of questions to my hon. Friend this evening, especially because I believe that they constitute a large proportion of the fishermen population of this country including, above all, old-age pensioners and children of school age, many of whom join clubs because it is a cheap and reasonable way to fish.
  Prior to 1874 sporting rights were not rateable when severed from occupation of the land over which they were exercised. They were only made rateable specifically by the Rating Act of that year. I believe it is from there that a number of the financial problems which are facing angling clubs at this stage stem, because there is no doubt that the amount of money which is now payable to local authorities by angling clubs is very great. Many of them already have considerable expenditure with regard to the rent of the sites which they occupy, the stocking of fish and the work they do in improving waters and in building up banks. On top of that they have to pay a rate based on the estimate of the rental which they pay for that property, which may come as a very substantial proportion of the expenditure that a club has to face and very often puts up the expenses of a club and, therefore, its subscription over and above what many people can really afford to pay.
  I believe that the whole situation with regard to the rating of fisheries and sporting rights in this regard is doubly wrong. It is wrong because it is double taxation of a kind that my hon. Friend knows we in East Anglia particularly dislike since it was from there that the great battle against tithes to a considerable extent originated. It is wrong also for a second reason: that in so many cases local authorities which call for rates give absolutely nothing back in return by way of services.

  765
  An attempt was made to mitigate this situation by the General Rate Act 1967 which enabled rating authorities at their discretion to reduce or limit payment of rates charges in respect of
  "any other hereditament which is occupied for the purpose of a club, society or other organisation not established or conducted for profit and is wholly or mainly used for purposes of recreation".
  At this point one comes to the position that commercial fisheries are exempt, and this is one example of the rates bearing heavily on the amateur fisherman who fishes for fun while favouring the professional who fishes for a living.
  This discretionary exemption which can come to 50 per cent. of the total rate to be levied is extremely vague, and many clubs do not know whether they will be entitled to it. Perhaps I may quote from a letter received by the Gipping Angling Preservation Society in my constituency last October. It was from the treasurer, who said:
  "Your application for relief was brought before the appropriate committee on 11th September 1972 and after discussion and a proposition that relief should be granted it was decided that no relief should be given.
  On the committee's report going before the full Council on 29th September 1972 the decision not to grant relief was questioned and the application was again discussed fully, and eventually the decision of the committee was adhered to.
  From the foregoing you will gather that the application for relief received some support, but the Council as rating authority, has, of course, complete discretion in this matter and decided that the society was not an organisation to which relief should be granted."
  Against that sort of background, how is an angling club to know where it stands? It is strange that this form of relief, which in some cases could be a life or death matter for certain clubs, is so uncertain and so discretionary that I as a lawyer do not understand what, if any, reasons the local authority was giving for deciding not to grant it in that case.
  This is a particularly difficult time for angling clubs because again, for another strange reason, they are faced with a double difficulty in regard to the application of VAT. The taking of game and fish is one of the almost unique cases as far as the majority of sports are concerned where rents on land for sporting facilities are included as subject to VAT. Thus, angling clubs are faced not only

  766
  with having to pay this arbitrary and only occasionally half-discretionary sporting rate, but also with the effects of the new tax.
  Prior to the Local Government Act 1948 the law was applied less strictly, and many of the bodies which now face sharp increases in rate liability on their valuations were looked at reasonably sympathetically by their local authorities. They then suddenly found that the Inland Revenue authorities had to enforce them very strictly indeed. Now they are faced in addition with a revaluation of rates generally, and angling clubs will find themselves having to pay even more.
  It is scarcely surprising that that kind of situation has engendered a good deal of anger, and I quote briefly from a report of a meeting of the North-West region of the NFA held in February of this year. The secretary for the region said
  "Why anglers should pay rates at all is beyond my comprehension"
  and pointed out that one local authority subsidises bowls by £25,000 a year—and a very good thing to subsidise, too. He went on to say:
  "I should like to see us all withhold payment of rates. What facilities do local authorities provide for the angler? "
  That is a very fair question, which he went on to answer by saying:
  "They don't even provide toilets in most cases."
  When one thinks of what is provided by the angling clubs from the point of view of stocking, conservation, anti-pollution, roads, and so on, and then of what they get in return for their rates, one realises that it is very little if anything at all. The speaker at that meeting called for unilateral action by the regions and said:
  "It's up to the North-West to lead a campaign. Rebates are discretionary … I'm saying anglers should not pay rates. We should go as far as withholding rates and I'm willing to take the chance of losing fisheries."
  The meeting decided that all possible action should be taken to gain exemption from rates on fisheries.
  My hon. Friend has on many occasions met representatives of angling clubs. I am convinced that he has sensed the feeling among them, and I would assure

  767
  him that it is a general feeling throughout the country.
  Where one has a sport which gives as much pleasure to as many people as this one does, and where angling clubs provide a large part of this pleasure as they do, I believe that it would be right to have a completely new look at this whole situation of the imposition by local authorities—albeit involuntarily, because apart from discretion regarding rating they have no right to do otherwise—of a sort of modern version of jus prima noctis, a sort of almost feudal power in return for which they give nothing back at all.
  As my hon. Friend the Undersecretary is present and is being good enough to reply to the debate, I should like him to turn briefly to a few other subjects concerning angling and angling clubs. Everyone concerned with this subject will be grateful for the anti-pollution action taken in the last few years by my hon. Friend's Department. I should like to pay tribute to my hon. Friend and his Department. I hope that the Department will continue to fill gaps in the anti-pollution laws where they arise and I hope it may be possible to encourage consultation on this among river authorities, local authorities and angling clubs, particularly with regard to the minimum acceptable flows as denned under the Water Resources Act 1963 and with regard to new conservation laws. I hope also that a good deal will continue to be done by new research into and future legislation on fish diseases.
  I should also like to see action to encourage a sensible approach to the filling up of gravel pits. This is something that local authorities could do. If this were to be done it would be a way of giving something back to angling clubs. Full use should also be encouraged as has been done by the Department on water supply reservoirs for angling of the kind best suited to each water.
  There is another subject I should like to raise arising from talks 1 have had in my constituency with sea anglers. There is considerable concern regarding the enforcement of regulatory measures to protect immature sea fish. A great

  768
  deal needs to be done on a number of these matters, including the examples we have heard mentioned recently regarding inland trawling and the preservation of fish. More needs to be done about increasing the penalties involved. Stricter enforcement is needed so far as the protection of sea angling is concerned, with a greater number of enforcement officers if we are not to have a position of being fished right up to the pebbles on the shore. That applies particularly to young fish.
  I hope that so far as both these sides of the sport are concerned—sea anglers and coarse anglers—my hon. Friend will have something to say about the Sports Council and the recommendations of his Department regarding grants for angling clubs.
  I should like to close, as I began, with the words of Izaak Walton:
  "upon all that are lovers of virtue; and dare trust in His providence; and be quiet; and go a-Angling"
  may there be suitable blessings.
  8.49 p.m.
  Mr. J. D. Concannon: By the luck of the draw I am able to thank the hon. Member for Ipswich (Mr. Money) for bringing this matter to the attention of the House and for quoting Izaak Walton, who came from Derbyshire. There, in the Derwent Valley, there are some marvellous fishing courses. At the turn of the century, and even before then, it was one of the heavy industrial areas, and the mining industry in the Erewash Valley was particularly prevalent.
  When talking about the calm and quiet, I think Sir Izaak Walton at that time had in mind particularly the mining villages and the miners. Because of the pressures of their job, the relaxation of fishing from the work of mining is part and parcel of doctors' orders in our area. This is one of the ways in which workers can get away from the terrible industry of working underground into the pleasant, quiet, relaxing mood of fishing.
  The hon. Member talked about 3 million fishermen and 10 per cent. of all households. I should imagine that just about every public house and working men's club in my area has a fishing club. The local paper runs columns on fishing and has run and

  769
  continues to run regular features on the issues the hon. Member has raised tonight. In my area this amounts to particular pressure upon us as Members of Parliament.
  I wish to bring to the attention of the Minister the sports councils which are now branching out and looking for other things such as fishing clubs. I know that in Mansfield I am 80 miles from the coast, but there are miners' clubs buying their own boats to go deep fishing. These angling clubs have been relatively disappointed in not acquiring any grants to assist them buy their own boats or getting any other help that might be forthcoming for these ventures.
  We are talking about an industry, as the hon. Gentleman said, involving 3 million fishermen. In heavy industrialised areas such as mine the average is predominantly more than the 10 per cent. which has been quoted. All of us at one time or another must have gone along to the local reservoir to get the relaxation, the quietness and the calm of fishing that Sir Izaac Walton talked about.
  I thank the hon. Member for raising the subject tonight. I wish to give him the backing and assurance that I am able to give him from my own area.
  As I have to remain here as one of the Whips who lock the place, I thought I would go out on a swan song tonight.
  8.52 p.m.
  Mr. Norman Buchan: I have been having a busman's holiday for the last half hour. I stayed, possibly like some others, because I am waiting for a sleeper at half-past eleven.
  I was delighted to hear the hon. Member for Ipswich (Mr. Money) raising a question which is peripheral to my own responsibility. The key question with which we have to concern ourselves is how the maximum number of our people are to gain access to a very cheap and useful sport.
  This is particularly true of us in Scotland, if I may drift there. Looking at the subject of the Adjournment debate, I observed that it referred to the English and Welsh situation. We in Scotland have a rather different problem. We are never quite clear what is meant south of the border by "coarse fishing". It is rather like the art of coarse rugby because, of

  770
  course, it is game fishing north of the border involving salmon and trout. The problem is a very different one because, instead of reservoirs, gravel pits and so on, what we have in Scotland is to a very great extent a tyranny by large landowners.
  I was born on the banks of the River Helmsdale, but the crofters did not get fishing there because they were not even allowed access to the waters or the banks. It was a question not of riparian rights or ownership but of the hereditary rights to the salmon in the river. It passed a certain point and it became Lord Lovat's it passed another point and it became the Duke of Buccleuch's property. One hoisted one flag and one showed another.
  We even have our own definition of land. "Land" includes salmon rights in areas of Scotland. It is not only the rating and public problem but also the private grip that is the great difficulty for us in Scotland.
  There is also the question of the cost of fishing in terms of the two or three hundred guineas that may be necessary to fish in a small stretch of one of these rivers. Even then one may not be entitled the keep the salmon when one has caught it, and I am sure Sir Izaak Walton too would have been horrified at the thought that it was not for the pot. There is, therefore, a quite different problem in Scotland.
  The general problem remains that south of the border this problem must be faced. I promise that with my responsibilities I will look at the rating situation to see how we can give encouragement.
  On the aspect of sea fishing, to which the hon. Member referred, the problem has been worsened by all those Members who supported our entry into the Common Market because of the Community's open-beach policy making it difficult for us if we do not get a proper derogation, in 1982. Neither agriculture nor fishery can divorce itself from conservation. It is a question not only of maximising fishing but of securing a conservation policy for future commercial fishing and for the quality of life to make sure that the conservation takes account of the requirements of the man who wants to fish for pleasure and relaxation.
  This matters too and we must keep it in mind. For example, deep-sea diving

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  often conflicts with the interests of lobster fishermen. This is where a lot of hard thinking will need to be done. I promise the House that I will look at this to examine the complaints of the sea anglers.
  On the rating side I promise also to work more assiduously towards some of the English and Welsh local government rating problems that we have dealt with in a recent Committee stage of legislation to see what can be done about the double taxation problem.
  I congratulate the hon. Member for Ipswich on raising this subject and on reminding us of the words of Izaak Walton and the problems of access which that gentleman faced in England. I assure the hon. Member that the problem Izaak Walton faced was nothing compared with the problem in Scotland, where there are more waters but where, because of the sheer expense of exclusive fishing, people are deprived of the opportunity of participating in it.
  8.56 p.m.
  The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): I am grateful to the hon. Member for Renfrew, West (Mr. Buchan) for introducing a Scottish flavour into our deliberations. On the last occasion that we met in Committee he succeeded in quoting Burns and I wondered tonight whether he would be able to trump the Izaak Walton ace of my hon. Friend the Member for Ipswich (Mr. Money), but he did not do so. My hon. Friend charmed us by his quotations from Izaak Walton at the beginning and at the end and I notice that he quoted Izaak Walton as saying that all was "calm and quiet" and there should be not "too much vinegar". He managed to import a little vinegar into his remarks but I do not complain about that.
  I am glad that the hon. Member for Mansfield (Mr. Concannon) reminded us of the very great interest that the mining community has in fishing. My interest in this matter arises for a number of reasons—because of my general national responsibilities, because in my constituency in East Anglia there are many fishermen who fish various streams running into the Great Ouse, because many of my constituents go fishing in the sea and also because I grew up in a mining community in the North. I well remem-

  772
  ber that miners, working in enclosed circumstances and a dusty environment, welcomed very much the opportunity to fish.
  My hon. Friend rightly referred to the national angling survey of 1970 and I confirm that the figures he gave are correct, except that the numbers con-erned are now greater. It may be that there are now over 3 million anglers falling broadly into three categories, the coarse fisherman—or the fisherman of coarse fish—the game fisherman who fishes for trout, sea trout and salmon, and the sea fisherman.
  About a third of all anglers belong to a club. In the Midlands and the North a large number of anglers take part regularly in competitions. At the time of the national survey the gross expenditure by anglers on their sport in England and Wales was between £200 million and £250 million a year. An average at that time was between £70 and £90 per fisherman. I gather that today the average expenditure of a fisherman is nearer to £100.
  The Government are very much on the side of anglers. We want to encourage this excellent and reposeful sport. We encourage it in several ways. One way is through the Sports Council, which is now an independent Royal Charter body. The second way is through legislation, and in particular through the Water Bill which is now in Committee. The Sports Council pays grants direct to angling clubs for the provision of facilities such as stocking and restocking water with fish and the provision of fishing rights. The amounts of the grants are not large but they are significant. They are paid because the Sports Council does not regard fishing as a local pastime. Generally we look to local sources such as local authorities and others to provide entirely for local amenities.
  It is because many anglers—and perhaps most of them—travel some distance away from their local district to fish that the Sports Council has taken the view that applications for grant may be considered as satisfying a larger than local demand. I know that the Chairman of the Sports Council, Dr. Bannister, and the Chairman of the Eastern Sports Council, have a keen interest in the development of water-

  773
  based recreation. I recently attended in Ipswich a conference arranged by the Eastern Sports Council, which took account of the need to provide more water-based recreation for local people.
  The House will be glad to know that for the first time in any country we shall be requiring the new water authorities, as a statutory duty, to make the best use of their rights for the use of water for sport, recreation, amenity and conservation. Some of their duties are water supply, sewage disposal and the management of rivers. However, for the first time we are requiring them to develop the water space under their control—for example, the rivers, the gravel pits, where appropriate, and the reservoirs—for recreation in the fullest sense of the word.
  The Bill provides for the formation of a Water Space Amenity Commission, which will advise the Secretary of State, the National Water Council and the regional water authorities on their recreation and amenity functions. The Commission's job will be to develop national water recreation policies, and angling will be one of the most important of those functions. I know that the angling community regard that as an important step forward. I intend to ensure that the voice of the recreations, including the anglers, will be fully heard in the new structure.
  In making appointments to the new regional water authorities, the Government will consult all the recreational interests, including the anglers. Each water authority will have at least one member with knowledge and experience of water recreation. In fact, some will be anglers. The same will apply to the National Water Council and the Water Space Amenity Commission. I give the assurance that we shall take pains to ensure that the interests of the anglers are taken fully into account.
  My hon. Friend the Member for Ipswich raised some specific questions in a slightly more vinegary part of his otherwise calm remarks. He mentioned VAT. This is not the occasion for a long debate on VAT. This is in principle a comprehensive tax and it would be wrong for consumer expenditure on leisure activities to be excluded from the scope of a general tax. If we were to exclude recreation, or any particular type of

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  recreation, we should in effect be asking the general body of taxpayers and those who do not participate in that form of recreation to give it a concealed fiscal subsidy. While many special interests could ask for exemption, it would be wrong to say that leisure and recreation should be among those excluded.
  Mr. Buchan: The hon. Gentleman says that it is a general tax. So is income tax. A person sending his children to public schools at enormous expense can claim relief. Why cannot relief be given here?
  Mr. Griffiths: The hon. Gentleman knows that I could raise debating points just as effectively as he. I do not imagine for one moment that he would suggest that fishermen should be excluded from income tax. VAT is a general tax and I do not see how we can exclude recreation.
  The rates problem is much more difficult. My hon. Friend, who knows his law, will recognise that until 1874 the rights of sports, including fishing, were not rateable when severed from the occupation of the land over which they were exercised. These rights were expressly made rateable by the Rating Act 1874. We can, of course, change that Act. The position has been made much more complicated by the derating of agricultural land.
  The situation in England and Wales is that sporting rights, including fishing rights, are always rateable when severed from the occupation of the land over which they are exercised. They are rateable when not so severed only when the land is not agricultural. In 1961 the Bledisloe Committee presented its report to Parliament dealing with the regulation of fisheries. It recommended that all fisheries should be rated, irrespective of whether they were appurtenant to agricultural land. In other words, that particular provision recommended that the exemptions at present in existence should be disposed of, making the exempt area very narrow indeed.
  I know my hon. Friend would be much opposed to that. Perhaps he will consider that successive Governments have been wise to do nothing about it. He must recognise, however, that a committee which looked into this recommended in exactly the opposite direction from that which he has proposed.

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  Angling clubs are rateable and therefore they contribute to local authority expenditure. I do not think my hon. Friend would quarrel with that. But he suggested that they got nothing in return. I hope he will recognise that rates, unpleasant as they may be, are not a payment for a particular service. We do not pay rates and expect to get specific things back. They are a tax on the beneficial occupation of land and other assets and their purpose is to help finance the costs of local authority services as a whole.
  Let us consider education. A large number of ratepayers will be retired and will make no direct use of the education facilities but no one would doubt that they benefit from them. In the same way, the services provided by a local authority benefit all those who live in the area whether they be fishermen or not. It is only reasonable that the payments made to the local authority, however they arise, should be regarded as contributing to the services and the costs of the local authority as a whole.
  Mr. Money: Is this not exactly the argument which has been put forward to Her Majesty's Government by that great man President Makarios of Cyprus with regard to the use of the roads outside the sovereign bases available by permission to the British forces there, and which has been resisted most forcefully by Her Majesty's Government?
  Mr. Griffiths: I am not responsible for Cyprus. I can say only that the services provided by a local authority are for everybody in general terms, whether it is education, roads, or anything else, and that the revenues which they obtain from the rating of the beneficial occupation of land must be paid by everybody within that community as a whole. To hypothecate particular rate payments against specific returns is a proposition which I do not think—I was about to say "can hold water", but I am not quite sure that is the right metaphor.
  I say to my hon. Friend that in the future, when the new regional water authorities have placed upon them the statutory duty to develop their water space for amenity purposes, including angling, they will also be able to use their funds

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  arising from the services they provide for those statutory objectives. It may well be—indeed I expect it—that the new regional water authorities will be much better placed to provide, as they judge right, financial support for the development of angling, among other things.
  It is also the case that rating authorities have a discretion under Section 40 of the General Rate Act 1967 to reduce or remit rates on hereditaments that are occupied for the purpose of a club not established for profit and wholly or mainly used for purposes of recreation. A club house occupied by an angling club could qualify for discretionary relief.
  My hon. Friend referred to the unwillingness of some local authorities to exercise that discretion, but they certainly have it to exercise. Local authorities must be responsible to their local community, and it is open to every angling club and every local elector to complain if they feel that their local authority is not handling the matter in a proper fashion. But this must be a matter for the local authority and cannot be a matter for national government.
  I am advised that it is possible—but I cannot establish this on a legal precedent—that as rateable occupiers of fishing rights an angling club may be able to benefit from discretionary charitable relief for those fishing rights provided that the local authority is disposed to give it.
  I must deal briefly with my hon. Friend's other points. He talked about sea angling and the protection of immature sea fish saying that he did not want to see the small fish taken away up to the very pebbles on the beach. I am very glad to be able to tell him that the Immature Sea Fish Order 1968 provides a very clear minimum size limitation on the taking of sea fish. I will send him the details, but I think he might like to know that a fisherman—and indeed anybody else—is not allowed either to take display or sell any of the following fish if they are under certain sizes. In the case of cod, they must not be taken if they are under 30 cms; in the case of haddock, it is 27 cms; hake, 30 cms; plaice, 25 cms; sole, 24 cms; whitings, 25 cms; and dabs, 15 cms. I shall be happy to send details to my hon. Friend and I assure him that there is a limit on the immature fish which can be taken.
  Mr. Money: I am very sorry to ask my h on. Friend to give way, but I was aware of the existence of the order. The point I was hoping to ask him to deal with was specific.
  Mr. Griffiths: If my hon. Friend has any examples of dabs being taken under 15 cms I shall be very glad to have the matter looked into at once, but I recommend him to take out his tape measure because he may have to prove it before a magistrate. However, if there are examples, I will deal with them.
  My hon. Friend referred to pollution. We have had one or two problems in East Anglia with oil pollution and other chemical spillages. We had hoped to include 30 clauses in the Water Bill to deal with the pollution of water courses. It has not been possible to do that for lack of parliamentary time, but my right hon. Friend has told the House that we hope, within the lifetime of this Parliament, to bring in further legislation to cover water pollution.
  Broadly, we propose that all trade sewage discharges to tidal waters shall be controlled, and that after a transitional period no vessel shall be used on a fresh water stream if it possesses equipment for passing sewage into the stream which is not sealed. Where river authorities are also navigation authorities they will be expected to provide reception facilities for polluting wastes from boats. River authorities will also be required to

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  register boats, the charge for which will include an element designed to meet in whole or in part the anti-pollution facilities I have mentioned. This is necessary because we have so many boats.
  We intend to strengthen controls over discharges of trade effluent to the sewers and through the sewers and to make it an offence to cause or permit any polluting matter to enter underground water. The reasons for that are obvious.
  We intend to provide for the publication of details of applications for consent to discharge so that riparian owners and others, including fishermen downstream of the discharge, will have the right to apply to the water authority requesting that the consent be revoked or varied if that discharge is thought to be causing damage. I have had many discussions with the national anglers' representatives and the Anglers Co-operative Association, and I am happy to say that they are content with our proposals.
  This has been a useful debate. The new Water Bill, which places on all who manage rivers, gravel pits and reservoirs a statutory obligation to develop that water space for recreation and amenity, will bring great benefit to anglers, to whom we all wish the very best of good fortune.
  Question put and agreed to.
  Adjourned accordingly at seventeen minutes past Nine o'clock.

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Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Wakefield.

BLUE ASBESTOS IMPORTS
LORD KENNET: 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 whether they will now require importers of asbestos to distinguish in their returns the more poisonous blue asbestos from the less poisonous white.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK): My Lords, this would not be justified in current circumstances. Trade sources indicate that imports have declined in recent years and it is believed that there were no imports of blue asbestos in 1971 or 1972.
LORD KENNET: My Lords, while it may be true that trade sources believe that there have been no imports, is it not still the case that the Government are relying on trade sources, and, with the best will in the world, trade sources cannot be sure? Would it not be better for the Government to make sure themselves by introducing this distinction into the import returns?
THE EARL OF LIMERICK: My Lords, I am doubtful whether statistics provide the right way to tackle this. I am hoping shortly to hold discussions with the industry so that we may consider these matters further.
LORD DAVIES of LEEK: My Lords, may I thank the noble Earl for the reply he has given. Can he tell the House whether enough publicity is being given to the incidence of asbestosis generally, and particularly about blue asbestos which causes malignancy? Is enough information supplied to the building
858
industry and other industries using new processes in asbestos?
THE EARL OF LIMERICK: My Lords, I think that is another question, and I will gladly look into it. It is fair to say that the application of the regulations has been sufficiently strict for us to have seen a great dwindling, and finally apparently the disappearance, of imports of this raw blue asbestos.
LORD KENNET: My Lords, is it not the case that now there is no longer any real need for blue asbestos in industry? If that is so, in the course of the discussions which the noble Earl has mentioned, will the Government look positively at the desirability of having a complete import ban on blue asbestos?
THE EARL OF LIMERICK: My Lords, a ban on the imports of raw blue asbestos could certainly form one subject of my discussions with industry.
LORD DAVIES OF LEEK: My Lords, without being tiresome, may I ask the noble Earl whether he is aware that asbestosis can affect even the wives of dockers working with asbestos on ships; and that when I was at the Ministry of Social Security we had many cases involving wives who were suffering from asbestosis of a malignant type simply as a result of washing the clothes of their husbands who were dockers working with asbestos?
THE EARL OF LIMERICK: My Lords, I will take note of what the noble Lord says.

SEX EQUALITY IN EMPLOYMENT
3.9 p.m.
LORD GARDINER: 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 why, in paragraph 26 of the White Paper Employment and Training: Government Proposals, it is stated that the Secretary of State
"will continue to promote the policy of equal employment opportunity for workers regardless of race, colour and origin"
but makes no reference to non-discrimination on the ground of sex.
THE EARL OF GOWRIE: My Lords, the Government are opposed to discrimination based on prejudice in employment on grounds of sex. Paragraph 26 of the White Paper deals exclusively with existing legislation concerning employment opportunities and complaints under the Race Relations Act 1968. It would therefore be inappropriate to make reference in the paragraph to non-discrimination on the grounds of sex.
LORD GARDINER: My Lords, I thank the noble Earl for that Answer. May I ask whether he is aware that the Select Committee in this House on the Antidiscrimination Bill has had massive evidence of discrimination against women which exists both in employment and also in training? Is it not very odd that paragraph 24 of this White Paper shows that the Minister of Employment will remain responsible
"in relation to the employment of women for policy",
but nowhere states what that policy is to be? Can the noble Earl assure the House that it will be a policy to end such discrimination?
THE EARL OF GOWRIE: My Lords, I think I can give the noble and learned Lord that assurance. As I have said, the Government are opposed to discrimination of this kind. They recognise that inequality between men and women exists in many fields of employment, and the Department of Employment is therefore carrying out a detailed study of the problems encountered by women in securing equal treatment with men in the whole field of employment and training. As to the Select Committee of this House of which the noble and learned Lord is a distinguished Member, the Government have said they will take account of the evidence submitted to the Committees of both Houses and of their Reports in determining future action.
BARONESS STOCKS: My Lords, have the Minister and the Government considered that, should a policy of anti sex discrimination be adopted, it might be very embarrassing for the right reverent Prelates on the Episcopal Bench, in view of the fact that the Church of England at present exercises a bar on the ministry of women, which I gather will remain effective until 1974, and at present possibly applies to training for ordination?
THE EARL OF GOWRIE: My Lords, I am sure that the House will be aware that there are three right reverend Prelates present, and I am sure they will take note of what the noble Baroness has said.
BARONESS SUMMERSKILL: My Lords, is the noble Earl aware of the fact that the Prelates are past hope?
THE EARL OF GOWRIE: My Lords, I am not quite sure whether that is a question for the Government.
THE LORD BISHOP OF WAKEFIELD: My Lords, is the noble Earl aware that at the theological college in my own particular See we already have women among the students?
BARONESS SUMMERSKILL: My Lords, is the noble Earl aware that he must not believe that? They certainly have women in subordinate positions, but not women on equal standing with men, because the Church regards them as very inferior creatures.
LORD HAWKE: My Lords, is the noble Earl aware that the third Estates Commissioner of the Church Commissioners is a woman?
THE EARL OF GOWRIE: Yes, my Lords.

SOUTH AFRICA: WAGE RATES AND BRITISH INVESTMENT
3.12 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will publicly discourage investments in British companies in the Republic of South Africa which pay their African employees less than the officially recognised level to prevent malnutrition.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): No, my Lords; but we will continue to urge British companies with subsidiaries or associates in South Africa

861
to examine urgently the pay and conditions of their non-European workers and to make any improvements which may be necessary.
LORD BROCKWAY: My Lords, I welcome that reply. May I ask Her Majesty's Government to consider two proposals which I hope are constructive? Would Her Majesty's Government consider a British initiative to establish an international convention, supplementing the I.L.O. Conventions, to control conditions of financial investment in South Africa and developing countries which would require acceptable wages, conditions, and trade union rights; secondly, whether the Government would prohibit investment from this country abroad which would deny those rights?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, so far as an international convention to control investment is concerned, I do not think this would be in the interests of those concerned. This is also partly applicable to the second question, which was whether Her Majesty's Government would prohibit investment. I understand that opinion is divided in South Africa about this. No doubt the noble Lord, if he reads the Daily Telegraph, will have observed to-day that Chief Buthelezi has said that to withdraw British capital from South Africa would be a sterile exercise, and that every job is vital.
LORD SHEPHERD: My Lords, would the noble Baroness agree that not only Her Majesty's Government but also the people of this country generally were much concerned at the reports, and that perhaps one of the quickest ways of changing this situation would be for confirmation as to which companies have been indulging in this practice and which companies in the meantime have improved the situation, so that the investors would know which of the companies they have invested in had not put their house in order?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I think I would agree with the noble Lord. I am sure that the publicity and the pressure of shareholders on the boards of companies is much the most successful way of achieving any change.
VISCOUNT MASSEREENE AND FERRARD: My Lords, would my noble friend agree that statistics show that the wages paid to African employees in South Africa are far greater than those paid to African employees in the African Republics? Further, would not she agree that there is no official world recognition of malnutrition; that it depends entirely on the climatic conditions, the vegetation grown and other such matters?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I think my noble friend is also correct, because, for example, the situation varies greatly between the rural and urban areas. But I hope that this publicity will make those companies which do not pay the minimum wages necessary seek to put their houses in order.
LORD AVEBURY: My Lords, can the noble Baroness say what she means by "improvements which may be necessary?" Does this mean that she would recommend British companies with subsidiaries in South Africa at least to bring the wages up to what is known as the poverty datum line? Could not the Government reinforce the advice they have given to this effect by refusing to award contracts to parent companies in this country of any subsidiaries which have failed to honour that commitment?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, as the noble Lord is aware, the Department of Trade and Industry last August issued a leaflet which sought to show British business operating in South Africa that it is not necessary to pay only the minimum wage; that apart from that, it was also possible to give many fringe benefits of one kind and another. We hope that a great deal of attention will be paid to what is said in this House. There is a certain difficulty in that, although there are many British South African subsidiaries which are under direct control from their British head offices, there are others which are locally controlled.
LORD BARNBY: My Lords, reverting to the original Question, and while expressing sympathy with the human motive of the Question, I should like to ask my noble friend whether it would not be placing an unacceptable burden on British Government agencies to ask them

863
to police the internal affairs of other countries for which we have no responsibility—places such as Brazil, where there is considerable British capital, or a country like the Soviet Empire of Russia, whose oppressed satellites experience the need to object to below subsistence wages, as shown by the riots in Danzig and elsewhere last year?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I hope I have not implied that the British Government are trying to police everything. I think I can do no better than quote from the Prime Minister's recent letter which was made public, in which he said:
"I would hope that British companies in South Africa would recognise their own interest in establishing a name as good employers, in particular by keeping abreast of the best current practice in respect of pay and conditions of employment and opportunity of advancement."
LORD KENNET: My Lords, would the noble Baroness, whose answers I think are giving a good deal of satisfaction to the great majority of the Members of your Lordships' House, share my view that the Guardian newspaper is to be complimented for having blown this one open?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I will compliment the Guardian newspaper; but I would also say that many of these disparities were known before, which is why the Department of Trade and Industry took the initiative last summer.
LORD GEORGE-BROWN: My Lords, could I just ask your Lordships to realise that the British companies operating in South Africa—
SEVERAL NOBLE LORDS: Order, order!
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, perhaps I should intervene. I think there would be no objection if the noble Lord addressed his question to my noble friend.
LORD GEORGE-BROWN: My Lords, may I ask the Minister whether she realises that a number of very distinguished British companies operating in South Africa are raising the standards, not only of the Bantu but also of the Coloureds and the Asians, far higher than they would otherwise have been raised?
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Would the Minister also bear in mind that a number of those companies do not observe the job reservation law of the South African Nationalist Government and that this raises problems for them? May I further ask the Minister to bear in mind that Chief Buthelezi would wish these companies not to go out? Finally, would the Minister say to Mr. Alistair Hetherington, the Editor of the Guardian, that he has done no service to anybody by the articles he has written?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, on the last question put by the noble Lord my reply is, No. On his first question—and I am glad he has given me this chance to mention it—of course there are some British companies which are well ahead of normal practice in what they give those who work for them. However, I would also say that it is worth recalling in public what the Department of Trade and Industry's leaflet said, which was to the effect that the idea that South African legislation effectively prevents employers from improving the wages or conditions of service of non-white employees is mistaken. Employers have a great deal of flexibility, and I hope that will be used to the best advantage.
LORD SEGAL: My Lords, is the noble Baroness aware that the conditions of work in many of the South African mines are little short of appalling and that this question of danger to life and limb deserves at least as high a priority as improvements in wages?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we have always said consistently that we are thoroughly against the practice of apartheid, but I think the noble Lord was really referring to safety practices in industry, which is a very important point.
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, I have observed frequently in your Lordships' House that in general your Lordships feel that Question Time should be rather restricted, but when it comes to the particular then your Lordships' practice is sometimes more variable. I should like to suggest that it is now time to move on to the next Question, and in doing so I apologise sincerely to the noble Lord, Lord Nunburnholme.

MINIMUM WAGE LEVELS AND GOVERNMENT POLICY
3.23 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will discourage the managements of public services and companies in the private sector of this country from paying their employees less than a living wage.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, from the time of the Chequers talks last year the Government have repeatedly stressed the importance they attach to improving the relative position of the lower paid. In the Consultative Document on The Price and Pay Code they have made it clear that they expect negotiators to have full regard to the objectives of improving the position of the low paid within the Stage 2 pay limit.
LORD BROCKWAY: My Lords, while thanking the Minister, may I ask him whether or not he thinks this is rather an inadequate way to deal with the problem? Would not the best example to businesses in South Africa be to put our own house in order in this matter? Did not the noble Lord's own Department issue a Statement last December showing that 5·7 per cent. of adult men do not get more than £20 a week and that 58 per cent. of adult women workers—an appalling figure—do not get such a living wage? Would Her Majesty's Government consult with the Trades Union Congress to establish a minimum living wage for all workers in this country?
LORD DRUMALBYN: My Lords, Her Majesty's Government are extremely anxious to improve the position of the lower paid. Experience abroad, howe-ever, shows that fixing a minimum wage is not necessarily the best way to tackle this problem, particularly because it is the needs of families and not just the needs of an individual which are important. But the Government have in
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the last two and a half years been presiding over, if that is the right expression, a considerable improvement in wages. If I may quote the example of the National Health Service ancillaries, there has been an increase between October, 1970, and October 1972, of 33·1 per cent. for men and of 42·6 per cent. for women in full-time employment, against a Retail Price Index increase of 18 per cent.
BARONESS SUMMERSKILL: My Lords, is the noble Lord not aware that despite this increase these women are the lowest paid in the country? Many people would regard what they receive as below subsistence level. What we want to know, in view of the revelations of the ancillary workers in the hospital service and their miserable rate of pay, is what the Government are going to do to prevent the same exploitation in other public services and in private industry.
LORD DRUMALBYN: My Lords, dealing with the first part of what the noble Baroness has said, there was a reduction in the differential between men's and women's wages in the ancillary services last October. There can be another one under Stage 2, of a third of the remaining difference between men's and women's wages. I can assure the noble Baroness that the Government are very sincere about this, and I think their record so far shows that they are taking the mater seriously and dealing not only with the wages front but also with the family incomes front.
LORD SHINWELL: My Lords, is the Minister aware that few of us would deny that the Government are undoubtedly anxious to improve the conditions of those at the lower end of the wage scale? We accept that. But would the Minister deny that in some sections of the retail trades, and also in some sections of the catering trade, the rates of pay are below what is regarded as subsistence level? May I further ask the noble Lord whether he is aware that in the negotiations between the unions and the Ford Company it has now been suggested (and possibly agreed by the company) that though they cannot go beyond the norm embodied in the Government's policy, at any rate they will provide fringe benefits? Is it possible to do something of that kind in other spheres?
LORD DRUMALBYN: My Lords, even within Stage 2 something of that kind is being done, and I can assure the noble Lord that the Government are most anxious to secure that the remuneration of the lowest paid is improved. The evidence is that this is being done, and we are anxious to negotiate with the Trades Union Congress to secure improvements, for example, by the setting up of a board to deal with the lower paid and by the arrangement of threshold agreements.
BARONESS SUMMERSKILL: My Lords, if that is so and the Government are thinking afresh on this question, why did they, only two days ago, offer the women in the ancillary service a one-eightieth increase and the men two-eightieths?
LORD DRUMALBYN: My Lords, that is a more complicated question. It was suggested that each should be offered one eighty-eighth and the result would have been the same for both; but in either case, of course, the noble Baroness will recognise that this reduction in the differential to which I have referred is outside the pay rise.
LORD GEORGE-BROWN: My Lords, may I ask the Minister this: do we not all recognise that, whatever should be done about wealth or about income, the Trades Union Congress should be asked to understand that if we are to move the hospital ancillary workers, the nurses, and anybody else one likes to mention, forward, then some fellows have to stand back? May I further ask the Minister: Is this not the same problem that I had at the beginning of 1965? The question is: Are the Transport and General Workers' Union or the A.E.U. willing to ask the dock workers, or the car workers in Coventry, to stay still while the underpaid essential workers go forward?
LORD DRUMALBYN: My Lords, Her Majesty's Government entirely agree with the noble Lord in this matter. I would only add, if I may, that the Trades Union Congress is still more ready to listen to the noble Lord than to listen to me, and I hope that they will do so.
THE EARL OF ARRAN: My Lords, may I ask one more question?
SEVERAL NOBLE LORDS: No!
THE EARL OF ARRAN: My Lords, I am sorry, but this is something that I care about. Would Her Majesty's Government agree that regarding the Ford workers and fringe benefits it would be possible, without breaking the so-called Government rules, to consolidate the workers' bonuses which at present are subject to penalisation? Could some solution be found on that basis? I have been to Dagenham; and perhaps Her Majesty's Government will allow me to express this point of view.
LORD DRUMALBYN: My Lords, these are matters of course at the present time for negotiation within the framework of Stage 2. I do not think I can go further than that, except to say that the services of the Department of Employment are always available to help out in these matters.

FUTURE BUSINESS
3.31 p.m.
EARL ST. ALDWYN: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Drumalbyn will be making a Statement on the reorganisation of the nuclear industry. It has been agreed through the usual channels that it would be more appropriate for this House to debate the Northern Ireland White Paper and the Northern Ireland Order on Wednesday, March 28, rather than on Tuesday, March 27. The noble Lord, Lord Bowden, has therefore kindly agreed to postpone his Motion on the effects of the European Commission regulations and directives on United Kingdom professions from next Wednesday until Tuesday, April 10. I should like to take this opportunity of expressing my appreciation for Lord Bowden's co-operation in this matter. The Docks and Harbours (Valuation) (Amendment) Order will be postponed from Wednesday, March 28, until Thursday, March 29.
In the place of the Northern Ireland debate which was down for the Tuesday, March 27, the noble Lord, Lord Maelor, is putting down a Motion calling attention to the Errol Report on the licensing laws. I hope that these arrangements will commend themselves to the House and that noble Lords who were going to take part

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in these two debates next week will not be unduly inconvenienced by the rearrangements. I have already taken steps to ensure that those noble Lords intending to speak have been, or will be, personally informed of these changes.

COUNTER-INFLATION BILL
Returned from the Commons, with the Amendments agreed to.

EUROPEAN INSTRUMENTS
EARL JELLICOE: My Lords, I beg to move the Motion standing in my name on the Order Paper. In doing so, may I say that all your Lordships will concede that the Committee, under the chairmanship of Lord Maybray-King, is an important one. I know how sad the noble Lord, Lord Robbins, is that he has felt that his other onerous commitments do not permit him to give this Committee the attendance which it requires. Having said that, I feel that it is a source of gratification that the noble Lord, Lord Fulton, will be taking his place on this Committee.
Moved, That the Lord Fulton be appointed a member of the Select Committee on European Instruments in the place of the Lord Robbins.—(Earl Jellicoe.)
On Question, Motion agreed to.

GAMING (AMENDMENT) BILL
LORD GOODMAN: My Lords, I understand that no Amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(Lord Goodman.)
On Question, Motion agreed to.

ROYAL ASSENT
3.34 p.m.
THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE): My Lords, I have to notify the House, in accordance with the Royal Assent Act
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1967, that the Queen has signified Her Royal Assent to the following Acts:

Furnished Lettings (Rent Allowances) Act,

Concorde Aircraft Act,

Coal Industry Act,

Counter-Inflation Act.

INSURANCE COMPANIES BILL [H.L.]
3.36 p.m.
Report of Amendments received.
Clause 2 [No authorisation for insurance company under control et cetera of unfit persons]:
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 1:
Page 2, line 14, after ("any") insert ("director,").
The noble and learned Lord said: My Lords, I rise to move on behalf of my noble friend the first Amendment standing in his name. In doing so I should like to speak also to Amendments Nos. 2, 28, 31 to 34, 41, 42 and 50, although of course they will be separately moved. It would be convenient if I might also speak to some extent on the subject matter of the Amendment to be moved by my noble friend Lord Aldington, which is Amendment No. 3, because it is closely aligned to the subject matter of the Amendments which I am speaking to now, although I do not wish in any way to preclude my noble friend from either moving or speaking to the Amendment when the time comes.
When this matter was discussed in Committee, the Committee expressed anxiety on a number of different points. I undertook to report these points to my right honourable friend Sir Geoffrey Howe and, in addition, I know that my right honourable friend has had conversations with several of the noble Lords who took part in that debate. It is the fact that my noble friend Lord Limerick and I have had other conversations. As a result, both my noble friend and I, and Sir Geoffrey Howe, have considered carefully all that has been said, both in public and private, and the series of the Amendments, the first of which I now

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propose, is the result. They require explanation since they are expertly drawn, which means that they would be wholly unintelligible if they were not explained in ordinary language.
I hope that the House will feel when I have explained the purpose and effect of the Amendments both that the Governments have gone a long way to meet the criticisms which were made on Committee, and, where we have not done so to the full extent, we have had good reason for the attitude which we have decided to adopt.
Before I deal with the major matters which occupied the attention of the House when in Committee, may I say we have taken careful note of the criticisms coming from the Opposition, and others, about the drafting of Clause 11. Apart from the Amendments of substance, we have decided to substitute the word "desirable" for the word "expedient" where it occurs in subsection (1) and subsection (3) and, as part of a rather more substantial package (which it may be desirable to explain in greater detail when we come to it), to restrict the operation of subsection (4) to ten years, but on condition that the enabling power can be exercised art any time in the first five years of the company's life.
But it was with the problems of natural justice that the Committee was most exercised in earlier debates. Starting again with the smaller matters first, we have taken to heart the criticisms directed at the definition of the word "controller" in subsection (2) of Clause 2, and have decided to remove what I believe was called the lone director from the definition. The effect of this involves first of all that a mere change of director, other than the managing director, will not require prior approval under Clause 32. Secondly, it will relieve any company whose individual directors only change from the ambit of Clause 11(1)(f) which enables the powers provided in the subsequent clauses to be exercised on the ground that there has been a change of control.
The third consequence of altering the definition of "controller" in the direction which I have explained is that we have decided to put in subsection (1) of Clause 2 individual members of the board
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so that they remain within the ambit of that subsection and therefore Section 61 of the principal Act of 1967, which affects the entrance of new corporations into the insurance field. But the director of a holding company other than a managing director will no longer come under scrutiny.
Passing from that relatively minor but I fear rather complicated matter, by far the most serious criticism, to my mind, was directed to the changes in the law contained in Clause 21(3) and Clause 22(3) of the Bill as drafted which, if passed as they are drafted, would exonerate the Secretary of State from giving particulars of unfitness to a company or a person where a person's fitness is in question when a question arises as to the use of powers under Section 12 et al by the Secretary of State. Under the law as it stands, that is to say under the law as enacted by the Companies Act, 1967, the Secretary of State is under an obligation to give such particulars, but by the two subsections I have named it was proposed, under the Bill as it is drafted before your Lordships, that he should be relieved of the obligation to give such particulars. This gave rise to criticism from noble Lords in all parts of the House that it was contrary to natural justice. It was argued that the individual or company affected could not know what case he had to meet if he were not given the particulars, and that to this extent the omission to give particulars stultified the right which was given to make representations, since without knowledge of what was alleged it was impossible to aim the representations and to define the target.
I am happy to tell the House that my right honourable friend has taken these criticisms to heart and has decided to revert to the status quo under which the particulars have to be granted—the status quo, that is, under the Act of 1967. And indeed to show that he is dealing with the question in no niggardly spirit he has gone a little further than this and in the case of those who are not executive officers (that is mere directors as well as officers) he has decided to confer an additional privilege; namely, the right to receive a notice of one month and to make representations to the Secretary of State before any notice of intention is given by the Secretary of State to his

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employing company, and to apply that procedure not only when the action contemplated is a restriction order under Clause 12 but in addition when any exercise of the less lethal powers is in question on his account.
Only on one point of substance has my right honourable friend felt that he should stand firm, and here on reflection I hope the House may support him, as in our opinion much, if not most, of what is valuable in the Bill might otherwise be lost or at least jeopardised. At present as the law stands, that is under Section 61 of the Companies Act 1967, a company which is a new entrant to the insurance business has to satisfy the Secretary of State (among other things) that its directors, controllers and managers are fit and proper persons to be associated with an insurance company. If it appears to the Secretary of State that they are not fit and proper persons the company is not authorised to carry on an insurance business. That is the law as it stands. It is the law as it was enacted by our predecessors, the Labour Administration; it is the law which was considered by the previous Parliament to be essential after the Savundra scandal, and my right honourable friend regards it as essential that this provision should be maintained. Therefore he has re-enacted the existing provisions of Section 61 in Clause 2 of the present Bill, and he repeats them in Clause 32, which in his view raises the same point of principle as Clause 2 raises, because it applies the principles of Clause 2 not merely to a new entrant company—that is to say, a new corporation seeking to conduct business—but to those who enter the business by buying an existing company or buying themselves into an existing company.
So in the view of my right honourable friend and of the Government there is all the difference in the world between depriving an existing business, lawfully carrying on its trade and/or an existing individual lawfully carrying on his calling—between them and a new entrant, and this distinction was very clearly recognised by the noble and learned Lord the Master of the Rolls sitting judicially when he came to consider the activities of the Gaming Board in connection with giving authorisations to new entrants. I speak with feeling because I spoke in the House of Commons at the Committee stage of
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the Bill when it was passing through, and I spoke before the Master of the Rolls when the case was being decided. It is not that the principles of natural justice differ from one place to another; it is simply that their application can be different. There are a great number of occupations—and I am happy to think that there are a great number of occupations—public and private, where before you can join in, whether you are self-employed or whether you are employed by somebody else, you have to satisfy the competent authority of your fitness from the point of view of skill, from the point of view of experience and from the point of view of moral reliability. In such cases the rule which applies—and I am here quoting from the Judgment of the Master of the Rolls in the case to which I referred—is that
"They must give the applicant an opportunity of satisfying them of the [matters specified in the particular case]. But I do not think they need quote chapter and verse against him as if they were dismissing him from an office or depriving him of his property. They are simply inquiring into his capability and diligence and having regard to his character, reputation and financial standing. They are there to protect the public interest; to see that people running the gaming clubs"—
in that case—
"are fit to be trusted."
It is of course the general law of this country that a person may engage in a lawful occupation without any prior authority from anybody, but as I have said there are many exceptions to this. One cannot become a solicitor or a barrister without satisfying the appropriate authorities, both of one's competence and of one's skill. The same, I am told, is true of members of Lloyd's; the same is true of, I think almost all, if not all, the great professions; it is true of the London Stock Exchange; it is true of the licensees of public houses. It is not here a case of being innocent unless and until you are proved guilty; it is a case of positively establishing your reliability and suitability, owing to the inherent nature of the insurance business, and I am sorry to say that recent experience of insurance scandals has established this beyond a peradventure.
Take, for instance, the life insurance business. The business of insuring people's lives is almost like having a Trustee Savings Bank, in which relatively poor

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people put their money against old age, against sickness or against their own decease. The company which takes that money has to be as sound as the Trustee Savings Bank is sound; not in the same sense as the manufacturer of pots and pans is sound. It must be sound over a period of twenty years and not simply sound over a period of six months. And I would think that this is no ordinary responsibility. Or take the case of general insurance. Let us take, for instance, the ordinary motor car or fire insurance risks. That insurance lends itself, as we have learned to our cost, very easily to fraud or to doubtful practices. Premiums are paid at once. They are paid in advance. Claims on the other hand fructify and must be settled only over quite a long period of succeeding years. It is fatally easy to put premiums low, too low, in order to attract the business. The claims do not come in and the money is there, but premiums do come in and the money in unscruplous hands can be siphoned off through devious channels to Lichtenstein or to other places. We know that this sort of thing has happened in the past. I need name no names and I need thereby incur no pack drill. But all of us have startling recollections of recent scandals.
Thirdly, it is much more difficult to discern from the outside whether a particular ship has sprung a leak or not. The total liabilities are hard to ascertain because they are at the best, contingent, and in many cases, disputed. The assets are visible and for a long time may appear solidly respectable or, better, still, even liquid. All these factors have created scandals in recent years both here and elsewhere, and they have led to special legislation in almost every country in the world. For those reasons my right honourable friend has put forward the present group of Amendments as a kind of package. Taken as a whole I hope they show that he has taken to heart, and sincerely taken to heart, and that the Government have sincerely taken to heart, the criticisms made of the Bill as drafted in Committee. We have altogether resiled from the position that a person can have his existing livelihood put in peril without a chance of answering a specific charge. We have proposed numerous other improvements of one sort or another but we adhere to the view, to which the
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last Government were also committed and which is enshrined in the existing law, that new entrants must establish their bona fides and suitability.
I hope that this Bill, which is a genuine attempt to meet the views of the Committee without compromising the essential safeguards to the public, will meet with the approval of the House and with that in mind I beg to move Amendment No. 1 standing in the name of my noble friend.
THE EARL OF ONSLOW: My Lords, I am almost sure I am out of order, for which I apologise, but before the noble and learned Lord sits down, would he like to elucidate to the House what percentage of motor claims and fire claims have failed to be met by fraudulent companies? Because he gave the impression that there was a very large percentage of fraudulent claims arising.
THE LORD CHANCELLOR: My Lords, I certainly did not intend to give that impression. I only said that I would name no names and incur no pack drill. Certainly as a percentage of the whole they are a tiny percentage. People would very soon not tolerate that kind of thing. But there have been scandals resulting in judicial inquiries, and sometimes in prosecutions, and it was those very small numbers that I was referring to.
3.54 p.m.
LORD STOW HILL: My Lords, I was one of the Members of your Lordships' House who sought to raise the criticisms which the noble and learned Lord referred to in his speech. May I at the outset thank him and his colleagues in the Government most sincerely for obviously giving the difficulties that we felt in raising those criticisms the most careful attention. May I also thank him for explaining with such clarity and so comprehensively the conclusions which he and his colleagues finally arrived at after considering the arguments that were put forward in your Lordships' House. I most sincerely thank him and his colleagues for having gone as far as they have. They have gone a very considerable distance. Having said that, I hope that I shall not be thought to be ungrateful if I, in a moment or so, proffer considerations to your Lordships' attention which at any rate lead me to the conclusion—and I

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can only speak for myself—that the Government should have gone a little further than they have.
In developing my argument may I try again to crystallise the differences as they seem to me and as they emerge after the changes which the Government propose in these Amendments. The noble and learned Lord explained that the principle on which the Government have addressed themselves to this matter is that there is a radical distinction between the situation of a person who is already engaged in a particular vocation, profession, calling, or business undertaking, on the one side, and a person who has not yet entered it on the other and whose living therefore is not put at jeopardy if, for some reason or other, he is prevented from carrying on in the field of activity which he has chosen. May I say at once that obviously that is a most important consideration and the distinction is a very real one.
Having said that, may I nevertheless look at the field of activity which is not covered by the Amendments which the noble and learned Lord has proposed. He referred to Clause 2 and to Clause 32. Those two clauses are not affected by the changes, as he explained to us extremely clearly, and of course he gave his reasons. I would submit to your Lordships that the Government should have included new entrants under Clause 2 and new entrants under Clause 32. In practice, if I understand the effect of the Amendments correctly, so far as Clause 2 is concerned, its scope is considerably widened by the Amendment which seeks to insert into the clause the simple "director". I do not know whether I have it right or wrong?
THE LORD CHANCELLOR: My Lords, may I just say to the noble and learned Lord that I think he is mistaken about that. The insertion of the simple "director" in Clause 2 does not add to the meaning of Clause 2 as at present drafted, but if it were not inserted the change of definition in one of the later subsections, which leaves out the simple "director" from the definition of "controller", would restrict the operation of Clause 2 as at present drafted. It is to preserve the status quo after the amended definition that that new change is made.
LORD STOW HILL: My Lords, I am most grateful to the noble and learned Lord for what he has said. I had read it, and no doubt wrongly, as meaning that under the provisions of Clause 2 the Secretary of State could refuse to give a certificate enabling the company to begin business not merely if a controller or manager was in his opinion not a fit and proper person, but also if a simple director was not in his opinion a fit and proper person.
THE LORD CHANCELLOR: My Lords, the noble Lord is quite right about that, but what he is not so right about is in thinking that that is a change. That is a maintenance of the status quo. Under the old definition of "controller", the simple "director" was included. As we have changed the definition of "controller" to leave out the simple "director" we have had to specify him in subsection (1) to keep him in.
LORD STOW HILL: My Lords, I am much obliged. I quite see that. Therefore, the scope of the clause, I think I am right in saying in view of what the noble and learned Lord has said, is that the Secretary of State can say, "No certificate, because a simple director is in my opinion not a fit and proper person". That is the way I read it and I understand the noble and learned Lord agrees with me on that. I do not think that it would be taking up your Lordships' time to any useful purpose if I simply sought to restate the argument which I ventured to advance on the Committee stage of the Bill and which led me to the view that that was the clause which really required amendment. Your Lordships are in possession of that argument. I think it goes too far.
I make the same observation with regard to Clause 32. Again in the case of Clause 32 the Secretary of State does not have to give any grounds. The noble and learned Lord and his colleagues have explained perfectly clearly, in relation both to Clause 2 and to Clause 32, why they have left them out of the scope of these changes. I quite understand the explanation; it is a question of balancing the considerations on one side and the other. Should one give reasons to a person who has not yet entered and who wants to enter, or to a person whose presence is considered an obstacle to the

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granting of a certificate? That is the sort of question. I feel that reasons ought to be given. I accept at once that the 1967 Act does not require that reasons should be given in that sort of situation. I think it was drafted on a mistaken principle in that respect. I am as much guilty as anyone else in not having sought to raise it at the appropriate occasion, but I did not.
The reason I would venture to proffer for your Lordships consideration—I hope I am not too repetitive—is simply this: to be told that one's presence as a director, controller, or manager of an insurance company is so objectionable that the company cannot be allowed to trade if one is associated with it, means, so I would submit to the House, that one is virtually converted into a pariah; one is beyond the pale. Again I apologise for repeating myself. Certainly that fact will become known. I should have thought it was a very serious thing for anybody to find himself in that situation. The noble and learned Lord pointed out, I thought with great force, that when you are entering other professions, for example, the Bar, the solicitors' profession and a number of others, roughly speaking the same situation obtains. With great respect, I do not think that the situation is parallel. You are there dealing with young men who are not, as it were, in the full flight of their careers. When you are considering the controller, director or manager of an insurance company, or the prospective controller, director or manager, you are considering somebody who is probably in the full flight of his career, who has probably had years in the field of commercial and industrial undertakings before he ever reaches the situation in which he might be considered for such a position. You are saying with regard to a man of that sort, "Stop! You are so undesirable that your presence is not to be tolerated".
I would submit that that is a distinction in principle from the case of a young man of 22 or 23 who wants to enter a profession. It is extremely hard on him, but in some bodies, at any rate, he has an opportunity of having his case considered by a large number of members of the profession. The noble and learned Lord will know the kind of arrangements to which I refer. I there-
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fore simply round up that part of my argument by saying that, while I thank the noble and learned Lord very sincerely for going as far as he has gone, I wish he had felt able to go that degree further.
The other matter I would seek to raise in this context—I hope relevantly—is the question of appeal. When we were discussing this matter on the Committee stage of our proceedings your Lordships had under consideration an Amendment which would have provided an appeal to a Judge, who might hear the matter in chambers—a Judge of the High Court. There might be difficulties about that. Speaking for myself—and I can speak only for myself—I should feel much happier if there were some appeal, perhaps not to a Judge in chambers but to some committee. Speaking for myself again, I would go so far as to say that, having regard to the special situation with which one is dealing, having regard to the considerations mentioned by the noble and learned Lord that one is, after all, dealing with organisations which have the fate and happiness of large numbers of people in custody, I personally should be perfectly content if the onus of showing that he was a fit and proper person—on the hearing of an appeal, say, to a tribunal—were placed on the applicant, or the appellant I suppose one should say. I should be content if the position were that, the Secretary of State having said, "You are not a fit and proper person", and having given reasons for so saying, the appellant could go to a tribunal and have to shoulder the onus of showing that, contrary to the view formulated by the Secretary of State, he was a person who could properly be associated with an insurance company.
We all have the same objective here, and I accept entirely the purpose behind the arrangements which the Government have embodied in this Bill and which were embodied in the 1967 Act. There is no difference between us on that. We should probably all think that if a man is a rascal he deserves what he gets. But the anxiety that other noble Lords and I felt when we raised our criticisms was for the individual who did not deserve to be so stigmatised. Occasionally there may be a mistake of identity; and there may be many cases—I do not know how

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many and I do not know what proportion they would be—in which the interpretation put upon their conduct is unfair to them, in which it was thought they had behaved in a way which was disreputable and which rendered them unreliable, whereas if the full facts were known and the individual were enabled to state his side of the case he might show that it was unfair to him. It is that sort of person that, personally speaking, I have in mind. We are embarking on a rather dangerous course if we do not provide for some outside hearing, outside the walls of the Department, in order to safeguard against what is really, in terms of our thinking in our community, a disaster, namely, the infliction of an injustice. It is a thing which we cordially detest and which we have always gone a long way to try to avoid.
Those are the reasons which impel me to say to the noble and learned Lord a very sincere "Thank you" for going as far as he has gone, and another sincere "Thank you" for having considered as carefully as he has the representations made, both in the debate and subsequently to him personally. He has taken a great deal of trouble, and for that I am personally sincerely grateful to him. I can only say that I wish he had been able to go further. I certainly would not seek to oppose the Amendment he has moved or those associated with it. I am most grateful to him, but wish he could have gone further.

NUCLEAR INDUSTRY REORGANISATION
4.8 p.m.
LORD DRUMALBYN: My Lords, it may be for the convenience of the House if I now repeat a Statement which is being made by my right honourable friend the Secretary of State for Trade and Industry in another place on the Nuclear Industry. It is as follows:
"Last August the Government announced their intention to encourage the consolidation of the nuclear design and construction industry into a single strong unit. Since then we have held wide and detailed consultations with firms both inside and outside the nuclear industry, and with the Atomic Energy Authority, trade union and
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staff association representatives and the electricity supply authorities.
"These consultations have confirmed strongly the Government's view that there should be a single nuclear company which will use the skills and experience of the existing industry; that its management should be dedicated solely to the company's success; and that the present consortium arrangements are not compatible with the strength and unity of management which we all regard as vital.
"The basis on which I am now discussing the establishment of the company is that 50 per cent. of the share capital would be held by the General Electric Company whose international standing and financial and managerial strength will be most valuable, 35 per cent. of the share capital would be offered to other companies with an important interest in the nuclear design and construction industry, and 15 per cent. would be taken up by the Government through the A.E.A. This would give the new company a private sector shareholding of 85 per cent. G.E.C. would also play a supervisory role on a basis agreed with the main board of the new company and would be paid for services provided.
"The Government would have special rights in certain matters where the public interest is closely involved. These would include the formation of international links and securing that an open purchasing policy is pursued in order that neither the company's shareholders nor G.E.C. subsidiaries should obtain preferential treatment in the allocation of contracts.
"The company's normal business will be the design and construction of nuclear steam supply systems, since the main domestic customer, the C.E.G.B., wishes to be free to place separate contracts for the nuclear steam supply system and the turbo-generators and associated plant and works. The company will however be able to supply complete power stations, in association with other firms, where the customer so requires.
"The Government with the support of G.E.C., considers that the board of the company should include people of

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experience and standing in the nuclear and electrical business. I am glad to say that Lord Aldington has agreed to become Chairman and Lord McFadzean Deputy Chairman.
"The Atomic Energy Authority will continue to play a vital part in the nuclear industry as the principal instrument for carrying out research and development. British Nuclear Fuels Limited will be closely associated with the new company in marketing and exploiting reactor systems and their fuel.
"The skills and experience of the staff of the existing consortia are crucial to the successful completion of the existing business and the prospects of the new company. It is essential that the power stations now being built by the consortia should be completed successfully and quickly. To achieve this, it is intended that current contracts should be completed by existing staffs under arrangements to be agreed between the present consortia, who are responsible for the contracts, and the new company. The employment of staff on new work will be negotiated by the new company as a matter of high priority in full consultation with the unions and staff associations concerned.
"These complex discussions on the reorganisation of the nuclear design and construction industry have necessarily involved prolonged consultation. Now that the basic decisions have been taken the important thing is to complete quickly the formation of the company so as to give renewed momentum to our nuclear business at home and abroad. The company structure we are adopting offers good prospects for this and I ask all involved to co-operate fully to ensure its success."
My Lords, that is the end of the Statement.
4.13 p.m.
LORD DIAMOND: My Lords, I am sure it is your wish that I should thank the noble Lord for repeating that Statement, and may I say straight away that we on this side of the House welcome the Government's achievements as made clear in the Statement. We welcome the part-
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nership between private and public enterprise and we welcome the wise intervention in the private sector along the lines of the modern Conservative Government; and we think that nothing but good will come of the enterprise that the Government have shown. So, my Lords, I have very few questions to ask and they relate really to management and to control.
The noble Lord has been good enough to tell us what the share capital is. Can I take it that control would follow the shares in the proportion which he has indicated? With regard to management, has he anything more to say or should we make the natural assumption as to who would be the chief person concerned in management having regard to the interest of G.E.C.? Thirdly, with regard to that, do I take it that the distinguished individuals, indeed Members of your Lordships' House, who have been good enough to consent to act as chairman and deputy chairman of the new company, will be part-time and not full-time? I do not think the noble Lord, Lord Aldington, for example, would accuse me of impertinence if I were to suggest that he has not all the time in the world to act as a full-time chairman of this new organisation. And may I say straight away that I acquit the Government of having intervened at this moment to declare the onerous responsibilities which he has undertaken just at the moment when he was about to deliver a withering attack upon the Government on the Bill which we were considering. I acquit them of that.
Those are the only questions which I put to the noble Lord, and I share with him the hope that this new body will meet with success.
4.15 p.m.
LORD AVEBURY: My Lords, I also thank the noble Lord for making that Statement. May I ask him whether he is aware that the solution now proposed by the Government is remarkably similar to the one put forward by the Select Committee on Science and Technology in its Report some five years ago? The two reasons why at that time the Government did not accept our Report were that the C.E.G.B. favoured continuation of competitive tendering by more than one consortium and we were assured that the

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possibility of European links with companies such as Siemans would be jeopardised if there was only one company in the design and construction industry here. Could the noble Lord assure us that the C.E.G.B. is happy about the arrangement he is suggesting, and that he personally is satisfied that the future possibility of link-ups with European design and construction companies are not being jeopardised by these arrangements? Will he also say whether among the other companies with important interests in the design and construction industry who will take up this 35 per cent. is included British Nuclear Fuels Limited? Further, what arrangements are going to be made in regard to the staff concerned who were seconded by A.E.A. to the nuclear power group? Finally, under its articles of association will the new design and construction company be able to build and offer all reactor types, including American light water reactors?
4.17 p.m.
LORD DRUMALBYN: My Lords, I am grateful to both noble Lords for the welcome they have given to this Statement. First of all, may I say to the noble Lord, Lord Diamond, that the share capital is expected to be £10 million fully paid up. As to management, there will be two companies, the main company and an operating subsidiary. Directors of the main board will be appointed with agreement between the Government and the G.E.C., and the chairman of the main board will also be chairman of the operating subsidiary. Other shareholders will be invited to make proposals for board membership. I can confirm that the chairman and the deputy chairman will be part-time.
My Lords, in reply to the noble Lord, Lord Avebury, I note what he said. I can confirm that the Central Electricity Generating Board is happy about the arrangements. I can also confirm that the link-ups with the international companies so far from being jeopardised we think will be enhanced by these arrangements. As to the shareholders, it is not expected that they will include British Nuclear Fuel Limited. I am afraid I have forgotten the noble Lord's last question.
LORD AVEBURY: Staff seconded from A.E.A.
LORD DRUMALBYN: My Lords, it is through the A.E.A. that the Government's shareholding will be held, and they will be represented on the board.
LORD AVEBURY: And whether they can build American light water reactors.
LORD DRUMALBYN: My Lords, this will be a matter entirely for the board themselves. Of course, so far as this country is concerned, the type the new company builds will be largely determined by what the Central Electricity Generating Board, who will be its main customer, will want.
LORD BROWN: My Lords, may I ask one or two brief questions? There is a very important electrical firm, Parsons Reyrolle, on the North-East coast. Can the noble Lord say whether their commercial interests are likely to be deleteriously affected by this change, because employment in that part of the world is very important? Secondly, can the Government give the House some assurance that the comments in the Statement about opening up for free competition—that is, I take it, international competition—for power equipment will not be carried into effect until it is clear that other countries in Europe are also doing the same thing? I am very much afraid that the Chativenistie instincts of most countries in Europe will continue to mean that those companies will order their power equipment from their own national concerns; and we certainly do not want to be the first to lead the way to letting other European countries supply our equipment unless our companies have equal rights to supply their equipment.
LORD DRUMALBYN: My Lords, in reply to the first question, I fully appreciate the noble Lord's anxiety, but it is of course intended that most of the participants in the existing design and construction companies will have an opportunity to offer for shareholdings, and they will thus be able to participate in the new company. We attach the greatest importance to open tendering for the orders that are put out by the new company, but we expect that the new company will build the reactor systems ordered by its customers, and particularly by the Central Electricity Generating Board. I agree with the noble Lord's final comments.

INSURANCE COMPANIES BILL [H.L.]
4.21 p.m.
Report stage resumed.
LORD ALDINGTON: My Lords, if I may talk about the Insurance Companies Bill, I think we are all grateful to the noble and learned Lord the Lord Chancellor for introducing the Report stage of this Bill with a fairly wide-ranging statement. It is a little embarrassing for me to put down an Amendment and hear it shot down before I have been given a chance of moving it, but I am sure that the House will allow me to give the arguments for it when the proper time comes. As the noble and learned Lord, Lord Stow Hill, said earlier, there are some good arguments. Over the last few days, many of your Lordships may have found yourselves in the difficulty in which I have found myself, that as we have not had the Marshalled List of Amendments in good time it has not been very easy to consider them all together, or to put down one's own Amendments reacting to others. In my case, some of the Amendments put down by the Government were a little disappointing after some of the conversations which I have had, and I have therefore been taken a little on the wrong foot. I am not saying that the Government have not done what they indicated to me they were considering doing, but I am an optimist and I had hoped that they would do more. The other difficulty in which I find myself, which I hope none of your Lordships shares with me, is that I have a most terrible throat and if your Lordships cannot hear me I hope you will forgive me. I am also suffering from the effect of what the doctors did, so I may not be so bright as I otherwise would be.
May I take separately the points which the noble and learned Lord the Lord Chancellor made? On the definition of the word "controller", I think it is right to take the simple director out of the definition of "controller", and therefore I think that Amendments Nos. 1 and 2 are right, so far as they go. But I must put to the Government my feeling that, though the fairly broad definition of "controller" in Clause 2 is right, it may well not be right in other clauses of the Bill. Let us take the chief executive
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or the managing director. He changes by the law of nature, so to speak, every ten years or so; actually, I think it is an average of every seven years or so. As the Bill is now drawn, all the powers in Clauses 12 to 20 come into operation in any company on the change of controller, and the new subsection (4) of Clause 11 has been drafted so as to give the Secretary of State carefully defined powers over a period of five to ten years for no reason at all, if there has been a change of controller. I cannot believe that the Government, or this House, want any Secretary of State to have powers like that just because, in the ordinary course of events, one chief executive has grown too old and has retired and been replaced by another.
I do not think I need say again that my noble friends connected with insurance, who spoke earlier, and I are wholly with the Government in their aim in this Bill, and, in particular, in seeking stronger powers. But I hope that the Government and my noble friends, and others, too, support the proposition put forward on both sides of the House that those powers should be carefully drawn to fit in with the needs of the case and should not give Governments—the present Government or future Governments—of whatever type one can imagine, powers going wide over the whole industry, without any specific reason being stated. That is what I think will happen, because of the way the Bill is drafted at the moment.
Secondly, I come to particulars, and at this stage I do not really think I can add anything to your Lordships' discussion, other than to say that I wholly agreed with what the noble and learned Lord, Lord Stow Hill, said, as I agreed with him on the appeal. I regret that there is no provision for an appeal procedure in these Amendments. I have not put down an Amendment with an appeal procedure in it because I hoped the Government would produce one and there has not been time since I received my copy of the Marshalled List. But my noble friends in the Government are aware that some work has been done by, or on behalf of, the British Insurance Association and a possible procedure was worked out. The House will have in mind, too, the procedure which was summarised in the Amendment moved on the last occasion by my noble friend Lord Selkirk.

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So there are ways of ensuring that there is an appeal procedure and I think that that is an important matter of natural justice.
It has been said that the application of natural justice can, and should, be different in different circumstances. In particular, the noble and learned Lord the Lord Chancellor argued that the new applicant to an industry can be treated differently in terms of natural justice from the way we treat a company which is already in the industry. I doubt, as the noble and learned Lord, Lord Stow Hill, doubted, whether that argument is as valid as at first sight it looks. Presumably, even a new applicant company with executives, directors or managers in it has some existing business. If you tell that company that it is, as it were, blackballed against entering the insurance industry, is it not right to tell it why, so that it can at least be put in a position to answer or to take action to improve itself? I think the noble and learned Lord the Lord Chancellor assumed that there would be some kind of procedure which would enable the company concerned to be given an opportunity to satisfy the Secretary of State that things were right, and that the managers, directors, controllers and so on were fit and proper persons. I say that because when the noble and learned Lord was referring to the gaming clubs, he read an extract—which I did not hear very well—from a judgment of the Master of the Rolls which seemed to me to say that it might suffice, in the case of a new entrant, if the person concerned was given an opportunity of satisfying the Secretary of State that he was a fit and proper person.
As I read the Bill at the moment, there is nothing in it that gives any new applicant, or a controller of a new applicant company, any such opportunity. It was indeed with that in mind that I drafted the Amendment to which I referred earlier and which the noble and learned Lord the Lord Chancellor has rather roughly treated so far. But I should like to know whether my interpretation of the Judgment of the Master of the Rolls in that case was correct, and, if so, what opportunity the Government have in mind to give to a person or a company applying to join the industry to prove to the satisfaction of the Secretary
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of State that the persons concerned are fit and proper. Perhaps when the noble and learned Lord has answered that and other questions it may be easier to decide what to do when we come to the Amendment at the end of Clause 2, which I hope to be able to move.
There is only one final observation that I would make, and it really concerns the subject of the controller, the subject of the particulars and of the appeal. It is that the Bill seems to me to assume that it is only the particular person—that is, the chief executive, the director or the manager—who has to be looked at here. Business does not work that way. In fact, the chief executive or the managing director is appointed by a board of directors. In fact, the main duty of a chairman of a great company is to see that the right man is appointed chief executive and, with his colleagues on the board, to watch over his running of the business of the company. It seems to me—and in this regard I have down some Amendments later on—that the Bill as now drafted does not take into account the duty of boards of directors to appoint fit and proper persons. It is they, as well as the person concerned, who should be consulted by the Secretary of State if he is in doubt, and who should be informed of what, in the view of the Secretary of State, is wrong.
LORD BROWN: My Lords, this is rather difficult debate. One has to make one's position rather clear here. I am not really in favour of this group of Amendments, because I think the Bill is better as it stands. Yet I rise to my feet not to argue against the Amendments, because I think the pressure of the situation has made it necessary for the Government to relax to this extent. I rise rather to argue against the arguments put against certain principles of the Bill, and particularly those put by the noble Lord, Lord Aldington, and my noble friend Lord Stow Hill. I always listen to my noble friend Lord Stow Hill with the greatest possible admiration. Not only does he show a humility and courtesy which is outstanding, but also his logic is almost invariably impeccable. The logic he used to-day I think stood the test of that; but his position, and that of the noble Lord, Lord Aldington, was weak, not because of failures in the logic

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of the argument he put forward but because he completely ignored one total aspect of the whole situation.
I do not think either of the two noble Lords has mentioned the consumer at all in discussing this issue. Were it merely a question of ensuring natural justice to people, and one could do so without other dangers to the consumer in this instance, then I think there would be no argument in this House at all. Of course one must give people the right of appeal; one must tell them as much as one can about one's reasons for coming to certain decisions, and all the rest of it. Who could argue against that? Except that past experience has shown beyond reasonable doubt that it is necessary to inflict this degree of injustice on probably an extremely small number of people in order to protect the interests of potentially large numbers of the public who can ill-afford to lose the money that they have paid in insurance premiums—either life assurance, car insurance or fire. Indeed, we all know that many thousands of people have already suffered in this respect. There was no mention of this side of the case made at all and this I deplore.
THE EARL OF ONSLOW: My Lords, perhaps I may ask the noble Lord to give way and again support the noble and learned Lord. How many people in the fire insurance business have suffered from fraudulent companies over, say, the last five years? Before the noble Lord makes these sweeping statements about protecting the consumer, can he say how many fire insurance claims have been reneged upon in the last five years?
LORD BROWN: My Lords, I doubt if there were many. I was referring to potentialities in the future about fire, and I can refer to thousands of claims, which the noble Earl must be aware of, in the car insurance field. Those were the ones that hit the headlines, but there have been others, too. I do not have to give a statistical basis for my comments because the facts are known to every Member of this House and to the public—and that is the danger. In a previous Committee stage debate it was argued that this Bill would be damaging to the status of the insurance industry of this country. I would plead that this Bill, with
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its full powers, is essential for the maintenance of the status of the British insurance industry; and that the provisions in it, far from causing other people to think that there is something wrong with the industry because this Bill has become necessary, are far more likely to mean that the international market, which takes advantage of the very efficient British insurance industry, will be reassured that certain failures that have taken place in the past are much less likely to take place in the future as a result of the great powers in this Bill. I think it will redound to the status of the industry rather than the reverse.
Dealing now with the question of natural justice, I think we are faced with a situation which is really not uncommon. If one enters the Army to-day, one knows in advance that one may lose one's life. That is a condition of entering the Army. If one is a miner, one knows that one hazards one's life, and regrettably we are in the situation to-day when some men are probably going to die as a result of an accident in a mine. If one enters the insurance industry in the future, one knows in advance that there are certain hazards one will have to face. That is part of the penalty one pays for taking on a job in that industry, although there are of course very substantial gains to be made in an economic sense because it is, for the directors of insurance companies, an extremely lucrative profession. So it is not without is benefits as well. There is nothing wrong, if it is necessary for the protection of the consumer, that the industry should be put in this position; and it is my belief that those who manage the industry, as opposed to the boards of the industry, which often contain amateurs who do not manage the industry, are in favour—it certainly was the case in the past—of these rigorous controls in order to keep their own industry clean. So I regret the fact that the Bill is being very marginally weakened, but I can understand the reasons why this has come about.
There is one last point I should like to make on the argument that a right of appeal should be given. It is of course familiar to the House that from time to time boards of directors in public and in private companies have to consider succession to the job of chief executive. Some men who have apparently been

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heading for that position are turned down. Are they stigmatised? No. Are they given clear reasons why they have been turned down? Seldom. Are they allowed to argue their case in front of the board? No. Have they a right of appeal? No—and I will tell your Lordships why. It is because the judgments that have to be made of the potential capacity of people, let alone their integrity, are subjective judgments. It is the burden of a board of directors and of many managers to make subjective judgments of subordinates. You cannot give a right of appeal. It is an opinion formed over a long period. In the case of people who were turned down by the Department of Trade and Industry, the basis will be largely subjective. It may be based on opinions offered in the past by the industry, who have offered them in a very responsible way. If there is a necessity to state these you will not get the real opinions, and if there is an appeal you will not get information from the insurance industry that you need and which the insurance industry are anxious to give to the Department in an effort to keep their industry clean. In the face of these arguments and the overriding argument that it is the duty of the Government to protect the many, even if perhaps at the risk of a tiny number who might clearly suffer injustice, the Government are doing the right thing in arming the Department of Trade and Industry and the Secretary of State with these powers.
LORD CACCIA: My Lords, perhaps from these Benches I may be allowed to say something, and I start by thanking the noble and learned Lord, as the noble Lords, Lord Aldington and Lord Stow Hill, have done, for the consideration which the Government have given to the views put forward by us and by others. In the second place, I should like to say again, and in comment on what the noble Lord, Lord Brown, has just said, that I think everybody concerned in the insurance industry would much prefer a Bill of this character, giving discretion and powers to the Department, rather than the Continental system, which is the only existing alternative and in which Continental insurance companies are very much restricted in the manner of their operation. I do not think there is really anything at issue in the general objec-
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tive. I hope the noble Lord, Lord Brown, will agree with that.
The question, the very important and, if you like, marginal question, is this: what powers do you give? In that I should like to associate myself briefly with what was said by the noble Lords, Lord Stow Hill and Lord Aldington, on the two subjects; that is, the narrowing to existing companies and existing controllers, and so on, of the right to be told what is wrong. I think that that is too narrow. I should prefer to see it widened. I cannot see why a new company could not be told, "We do not like the look of you for such and such a reason. We do not think you will be able to stand up and in the long term meet the requirements of the consumer." Naturally that is, and should be, not only one determinant but the main determinant in their mind: will they be able to perform their contracts? That is the point. I should have thought that there is a very strong case for the extension to new companies as well as old of the provision of informing. That is on that side.
On the appeal side I would also urge that there should be some form of appeal procedure. In saying that, may I at once repeat to your Lordships that, speaking as an ex-head of a Department of State on the official side in Whitehall, I had the greatest possible respect for the then Board of Trade officials and no doubt now have for their successors in line. I have the greatest respect for their good intent in carrying out the provisions of this Bill with scrupulous honesty and good purpose. There is no question about that. They are that sort of people. We are not arguing about that. Equally, I say, with great respect to the noble and learned Lord, that I was brought up to believe that the Litany omitted one extremely important clause and that was:
"From all lawyers and doctors, good God deliver us."
Nevertheless I think the noble Lord, Lord Stow Hill, made a very strong case last time when he asked why a Judge sitting in chambers should not have at least the same independence of mind and at least the same experience. He is more likely to have experiencee of these matters than people sitting in a different Department of State from the one I sat in down the road. He would have more experience in judging cases of this

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kind in seeing whether a reasonable case had been made or not. If you do not like an appeal to a Judge in chambers (and the advantage of having that was that in certain circumstances he could be given confidential information and could take that into account) perhaps some other form of tribunal could be considered; and the noble Lord, Lord Aldington, said that such a thing had been mooted and was perhaps before Ministers at this time.
I do not want to say more on the subject, but I think it is important to the insurance industry, not only that the Department shall be seen to have sufficient powers to give confidence to the consumer, to the policy holder, that he will not be "done down"; but also that the Department shall not have more powers than is strictly necessary to carry out that important function. I would say that not only as regards the restricted matter of the insurance industry. I think that in natural justice you go beyond it. It is said that even if it is somewhat to the disadvantage of the insurance industry when looked at from abroad, the Government here do not seem to have sufficient powers, looked at from the Continental, external, eye, to control possible accidents. Even if that is so, we must accept these consequences because we do not think them to be real and because once you have introduced into an Act of Parliament the concept that a class of people cannot be told why you object to their engaging in a certain form of industry—and I agree with the noble Lords, Lord Stow Hill and Lord Aldington, on the difference in this regard between a commercial enterprise and specialised bodies such as the Bar and the solicitors' profession—you run a grave danger that what is all right in one case will be quoted sooner or later as being a sufficient reason for doing it in another case. For that reason also I would urge that these two points might be reconsidered.
TILE EARL OF SELKIRK: My Lords, as I moved the original Amendment on this subject I should like to thank the noble and learned Lord, the Lord Chancellor, for the Amendments which have been put down and for the attention which noble Lords on the Government Bench have given to
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representations which have been made. I am grateful to them. I think they have heard fully, if they have not necessarily agreed with, the many points that have been made. I should like to make one particular point on what the noble and learned Lord, the Lord Chancellor, said. He emphasised the status quo. We are doing all and more than was done in 1967. I objected to the 1967 Act; I was very unhappy about it at the time and I still am. My argument is primarily one of precedents. If I want an example, it is what the noble Lord, Lord Brown, has said. He said that we are inflicting a degree of injustice. He actually said that. That is his defence of the Bill.
I believe that justice is mutual; that if you are unjust to one person, it is unjust to you in the long run. I hesitate to refer to a case that the noble and learned Lord, the Lord Chancellor, referred to—I think it was Regina v. The Gambling Board. I only glanced at it. One word comes out, I believe, truly: "Did the board act fairly?" The Department of Trade and Industry can never show that they act fairly. They may act wisely or properly but they will never be able to show that they act fairly. I believe that this will be greatly to the disadvantage of the Department itself. It is important that the Department should be seen to act fairly. They have not gone far enough to do that. This is very sad. If we are going to quote precedents of six or seven years ago, in ten years' time these precedents will be quoted at us and we shall have stepped further down the line. This worries me. If you do this with the insurance industry you can do it with quite a range of other things—banks, building societies and, for all I know, doctors, lawyers, and trade unions who do not happen to fit neatly and tidily into the pattern the Government want. It is the precedent which I think very disturbing.
I would readily accept any type of appeal, even one such as was mentioned by the noble and learned Lord, Lord Stow Hill, in which the onus of proof rests with the appellant. But it should involve somebody outside the Department. What is a Department, my Lords? It is an organisation run by a political officer who makes political decisions. Political decisions may be of two sorts. The true meaning of "political decision" is that

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it is in the general interest of the country, and that is a proper political decision, but there are other meanings. There are Party political decisions, and decisions personal to one's own political advantage, which, I regret to say, are not wholly unknown. We are handing over power to enable whoever holds this office virtually to move anyone out of employment, and to be able, in a month, to bring every insurance company to a standstill. This is an enormous power.
I think it a pity that in a Bill which has been so welcomed and accepted by the insurance companies as this Bill, this blemish should remain. I still ask that it should be removed and that we should not leave ourselves open to allowing what after all are informers—they may be honest or dishonest—to bring their information, true or untrue, misunderstood, falsely reported—what you will—to the Department of Trade and Industry. I hope that the Government will come a little further in this matter. I am indeed happy that we have a second Chamber. The late Lord Morrison of Lambeth said that if we had not had a House of Lords we should have had to invent it, and I feel happy that there is a second Chamber which can look at this matter further.
4.52 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I support what my noble friend has said. I still adhere to what I said originally. I have been in your Lordships' House for 16 or 17 years and during that time I have seen the power of the Executive increase continually. I am thankful to the noble and learned Lord the Lord Chancellor for coming some way to meet us. But in my view, and I think in the view of other noble Lords who have spoken, the noble and learned Lord has not come far enough to satisfy us all. The noble Lord, Lord Brown, said that the consumer must be protected, and of course he must. But can the noble Lord explain to me how the interests of the consumer would be harmed if a controller, manager, director, or whatever you call him, of an insurance company who was not approved of by the Secretary of State was given the right to answer charges? Is there going to be a great time lag between the time he could answer charges—
LORD BROWN: My Lords, may I interrupt the noble Viscount? He has asked me a question. The point is that if you give a right of appeal to the controller of an insurance company, those who could speak to his lack of capacity will not speak. If you do not make the law extremely rigorous you will get officials who would be advised by lawyers that" In this case we face the fact that the insurance given was on an uncertain financial basis, but we advise that the law cannot be used because it may lead to litigation"— and all the rest of it. You must, by the provisions in this Bill, give officials power to act with certainty before it is too late. We had a deplorable case where certain officials at the Board of Trade were pilloried for not acting earlier, and I know that uncertainty of the law was the main cause of them not acting earlier, but thousands of members of the public suffered as a result.
VISCOUNT MASSEREENE AND FERRARD: My Lords, it does not alter the fact that it is a dangerous precedent if we do not allow an appeal by someone accused to know the reasons why he is accused. I have always thought that the sanctity of the individual and justice to the individual were paramount. As I have said, I hope that the noble and learned Lord the Lord Chancellor can go further in this matter.
LORD HAWKE: My Lords, I cannot agree with my noble friends. I take the line taken by the noble Lord, Lord Brown. My experience is that the Executive is remarkably timid about taking any decision which may lead to unpleasantness if it comes out in the light of day. The Executive is certainly willing to put facts before a Minister, and then what he does becomes a political decision on the part of the Minister. If a Minister makes too many decisions which appear to the outside world to be wrong, he will eventually go. But I do not think the Department would move if the Amendment we appear to be talking about, Amendment No. 3—although I believe that we are still on Amendment No. 1—were accepted.
The chief trouble in the past has been that the Department has been much too timid to move. My informants tell me that some of these scandals could have been avoided if the Department had been

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a little quicker off the mark. For that reason I prefer the line taken by the Government to that of my noble friend.
LORD DIAMOND: My Lords, like all previous speakers, the first thing I want to do is to thank the noble and learned Lord the Lord Chancellor for coming a very long way to meet the general anxiety expressed in Committee on this issue. Not only do I express appreciation, but also a measure of surprise, and I will come to that in a moment. I want to preface my remarks by saying what I had intended to say, and what the remarks of the noble Lord, Lord Aldington, have reminded me that I must say; namely, without offering any criticism at all to the noble Earl, Lord Limerick, who has been most desirous of helping the House about delays which have taken place, and while fully acknowledging the special reasons affecting all of us regarding these delays, it is right to underline the fact that Amendments have appeared later than the noble Earl and all of us would have wished. So we are all in a particular difficulty. I mention that, not with a view to offering any criticism of anyone, but merely to indicate that in your Lordships' House we are fortunate in that we have a further stage in our deliberations; and in regard to what has happened it would be natural and right that we should take full advantage of that further stage to put right anything which the House as a whole, and the Government, wish to put right. That is the only reason why I make that preliminary comment.
Next, I want to tell my noble and learned friend Lord Stow Hill, who, with typical modesty, said on more than one occasion that he was speaking only for himself, that everything he has said has my unqualified support; and so far as I am able—obviously I am not able to do so with regard to every noble Lord who sits on the Opposition Benches—I would say that he has the support of all noble Lords on this side of the House. Where you are in a situation of asking for something further to be done, it is as well to ask for the minimum, and because I am going to ask only for one thing out of two I hope that no noble Lord will think that I should not welcome both, were they available. But I must go for what I think to be absolutely essential for your Lordships good name, and that is to have
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some method whereby justice will be seen to be done. I cannot conceive that it would be any credit to your Lordships' deliberations—this is where I come back to the measure of surprise that I was discourteous enough to express in relation to the noble and learned Lord the Lord Chancellor—that we should pass a Bill under which a degree of injustice should necessarily be inflicted. That is the greatest argument for it that has so far been put forward, and it was put forward by my noble friend Lord Brown.
My Lords, I think the parallel that has been quoted of the professional requirements is not adequate. What is happening here is much more serious than denying a young professional man the right to start on his own professional activity. What is happening on the first Amendment which we are now discussing, if I understand it aright, is the possibility of preventing an organisation from starting business. One does not know how many men will be involved or what capital will be involved; it may be quite a large organisation. That is going to be prevented from starting by a view taken by a Department which may be unfair, and which may be thought to be unfair, and about which there is going to be no means of demonstrating that it was fairly taken. I cannot conceive that that view of justice, which applies over all our activities (it is such a mistake to imagine that we are restricting that view to this particular issue: it applies to all our activities and underlines the whole of one's behaviour in the way in which members of the community react to one another), could possibly be regarded as satisfactory, especially as, with the greatest possible respect, there are many ways in which this difficulty can be overcome.
I recognise immediately that there is a measure of difficulty in giving a form of appeal to a normal court, because you would have to prove matters which, in the interests of the consumer, you should not be required to prove to the extent that a court would require them to be proved. I can see an area in which an understanding and appreciation of what has gone on and what has been unsatisfactory can be explained in terms which are less than the kind of proof a court would naturally require within the rules of evidence. But that can be easily satisfied by having some kind of body

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under which a man could be judged before his peers. I use that word deliberately. There is no difficulty, surely, in setting up a tribunal under which those who are concerned in this field would be able to judge whether the decision that had been taken had been taken not necessarily in accordance with the rules of evidence, but reasonably taken. That, I think, would give a sufficient measure of satisfaction. It would give the feeling that commercial justice was being done. I recognise that our first responsibility is to protect the consumer. But so it is of every noble Lord who has spoken on this issue—and the noble Lord, Lord Caccia, expressed it in so many words.
So I am bound to say that, although on the particular Amendment which is before us we repeat our gratitude to the noble and learned Lord the Lord Chancellor for having moved it, and for the Amendments that go with it, which excludes Amendment No. 3—and we have no alternative but to accept it—so far as I am concerned I hope that those who have spoken will share with me the view that we must insist on the Government's reconsidering their attitude to simple justice.
5.4 p.m.
THE LORD CHANCELLOR: My Lords, I should like to begin by thanking noble Lords who have taken part in this debate for their courteous words towards myself. I can assure them that I have given this matter, in conjunction with my right honourable friend, very careful consideration. I can also assure them, if this is any comfort to them, that I will carefully report to my right honourable friend what has been said, and see whether any further improvement can be devised which would meet the criticisms which have been made. I cannot offer any today for reasons which will be obvious to noble Lords who know how these things are done. But I must, at the same time, express great disappointment at the approach of noble Lords on both sides of the House to what is admittedly a difficult problem.
I do not accept for a moment that injustice is being, inflicted by this Bill, or will be. It is obvious that you have to balance here two divergent considerations. The first is the general principle
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that a man is free to engage in any lawful activity without any prior authority from anybody else. That is a quite general proposition. It is nothing to do with justice; it is part of the freedom of the individual that we all enjoy. The second is the protection of the public from both the charlatan and the rogue—the charlatan who thinks he has experience and skill and in fact has not, and the rogue who deliberately preys upon the public, or the reckless gambler who thinks he will undercut his opponents and thereby runs his company into liquidation. I agree to this extent with the noble Lord, Lord Brown: that experience has taught us that we cannot afford to disregard the interest of the public in this matter by allowing unsuitable people to engage in this particular business at all. That, I feel, is absolutely plain.
My noble friend Lord Onslow asked for figures. But I wonder whether he cannot recall the scandal which surrounded the name of Savundra and the name of the V. and G.; and whether he cannot imagine to himself the misery inflicted on people who were injured as a result of motor accidents (they might largely be covered, of course by the Motor Insurance Bureau), and on the unfortunate car driver who had taken out an insurance policy which he thought covered him and then found himself, owing to the jiggery-pokery which was indulged in by unsuitable people engaging in this industry, rendered liable to claims of £20,000 and £30,000 for an injury inflicted in an accident. I cannot believe it is responsible wholly to disregard that where experience has shown that greater care is necessary. That is the experience that we have had.
Noble Lords on the Cross Benches, and my noble friend Lord Selkirk, spoke about a precedent. But the whole point of this set of Amendments as I presented it in moving it is that this is no precedent. All I am seeking to do on the disputed point is to maintain the status quo as it was enacted by the Labour Government, of which the noble Lord, Lord Diamond, was such an ornament—such a shining ornament, if he will allow me to say so. It is, I think, remarkable that in the course of his speech, having expressed a certain amount of surprise about myself, he never once referred to the fact that what I was defending was the position

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held by the row of extinct volcanoes on the Opposition Bench.
LORD DIAMOND: My Lords, would the noble and learned Lord care to give the whole reference about extinct volcanoes—who said it, and about whom?
THE LORD CHANCELLOR: My Lords, so far as I remember, it was said by Disraeli about Mr. Gladstone. But I do not wish to indulge in historical disputes with the noble Lord, who may have a better reference than I have, in an impromptu speech. It is said by the noble and learned Lord, Lord Stow Hill, "The Government of which I was an ornament was guilty of a great mistake. The status quo of 1967 was utterly wrong".
LORD STOW HILL: My Lords, would the noble and learned Lord forgive me for intervening? I did not say, "The Government of which I was an ornament …".
THE LORD CHANCELLOR: My Lords, I said, "The Government of which he was an ornament", and he said that it was "a great mistake". The noble Lord then went on to say that the great principles of natural justice had been infringed by the Labour Administration and that we should undo the wrong which had been done. I wonder whether that is right. I wonder how far, on reflection, noble Lords opposite, at any rate, are being wise in casting so many aspersions upon their own record. The Act was enacted in 1967 and has been in force now for six years or thereabouts. Not a single noble Lord who has spoken from any quarter of the House has suggested that one piece of injustice has taken place under that Act from that day to this. There is no evidence of it at all. What we are being asked to do is to change the law backwards on a point of pure theology; and, personally, I prefer an ounce of practice and common sense to a heavy dose of theology in matters of this kind.
This particular provision which is in dispute was enacted in the wake of Savundra and the Bill we are now seeking to put before Parliament is being enacted in the wake of the V. and G. That is the background of the matter. What I was suggesting was simply this. Here is an occupation which people cannot be
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allowed to enter unless they can satisfy a competent authority that they are fit and proper persons—that is, fit and proper from the point of view of business associates, of skill in the insurance market, of experience and of integrity and reliability. I must say this quite plainly to the noble and learned Lord, Lord Stow Hill, and my noble friend Lord Aiding-ton, quite apart from any brief I may hold from the Department of Trade and Industry—and that is manifestly the Department on whose behalf I am able to speak—that I should have thought that any Lord Chancellor would be wholly unwilling to allow any member of the Judiciary to meddle with this business at all, whether by way of appeal or by way of originating jurisdiction. It is not the sort of thing that lawyers and judges are about. Judges are apt, and indeed skilful, to listen to evidence which is controlled in its entry to them by a most elaborate code of what is admissible or not admissible, and they have to judge on what is proved on matters in which they have no expertise.
The question which we are discussing is not a justiciable issue of any kind. It is precisely the kind of problem which goes before the Gaming Board—the case concerning which I cited in moving my Amendment—as to the reliability of individuals in which, if I may say so, I think perhaps harshly, the "Caesar's wife" criterion is the one applied by an experienced businessman and not a nice appreciation of the legal rules of evidence and judgments made on it. It is, as the noble Lord, Lord Brown, correctly stated, a subjective judgment made by an instructed person upon a question of experience. That is the kind of thing we are discussing; and it is for that reason that I, as Lord Chancellor, quite apart from the brief that I hold from the Department of Trade and Industry, would have been wholly unwilling to allow the Judiciary to enter into what is basically a function of the Administration or the Executive. That is not what the Judiciary are about and, if I may say so, speaking for a moment from my own seat in the Government, there is no surer way to undermine the respect in which the Judiciary is held than to try to give them administrative or executive functions.
Then it is said, "We want to have some kind of independent board of

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appeal." I wonder whether that is constitutionally an improvement on the status quo. The Secretary of State is of course responsible to Parliament. If he refuses his sanction under Section 61 of the principal Act people can ask him questions—but who can ask questions of an independent body of knowledgeable men, for whom my noble friend Lord Aldington is pleading? And who can be sure that they will be any wiser than the Secretary of State would be, and to whom are they responsible? They are responsible to nobody. They are simply there to put the Secretary of State right when he is wrong, and nobody will be able to hold them in question. And supposing they do let somebody through the net when the Secretary of State of the day has refused to do so, and supposing it turns out that that person is a Savundra and the public are then mulcted of millions of pounds because this person has been allowed to ply his trade against the will of the Department—who is to be blamed? Are you going to hold a judicial inquiry on V. and G. lines about this advisory board? On what principles are they to act?
The noble and learned Lord, Lord Stow Hill, says he would be quite content to see the burden of proof placed upon the applicant, but that of course is exactly the opposite of what we were asked to do by my noble friend Lord Massereene and Ferrard. A man is not accused of anything on those circumstances; he has to satisfy whatever body is entrusted with the task by Parliament of his suitability, and of course no reason can be given except the true one—"You have not satisfied me that you are good enough to enter into this trade." That is not the kind of reason which would for one moment live up to the criterion put forward by the noble Lord, Lord Caccia, or by my noble friend Lord Selkirk.
LORD CACCIA: My Lords, if I might ask the noble and learned Lord to give way for just one moment, I think that some of his argument is missing the point which I myself was trying to urge: namely, that the objective is to protect the consumer. The only problem is how best to do it. I am not arguing that the consumer should not be protected.
THE LORD CHANCELLOR: I think that is the point, my Lords. But the point I was making was that every speech to which we have listened of a critical character about Clause 2 attacking the status quo enacted by the Labour Government has insufficiently stressed the interests of the consumer in seeing to it that people who enter into this trade should satisfy an impartial body on the "Cæar's wife" criterion that they are fit to be trusted with other people's money to the tune of several million pounds. I do not know where I have been living these last forty years, but I hear noble Lords saying, "Anyone is allowed to start a bank". I suppose in theory that is true; but let them try and see what happens. The fact of the matter is that in any form of activity I know of, whether it is being a licensee of a public house or being a solicitor, a barrister, a banker or a member of the Stock Exchange, you have to satisfy somebody first that you are fit to engage in that particular activity before, in practice, you can start. All that is suggested by the Government here is that a system which has proved itself over six years—enacted by our predecessors, and which, if it has had any faults has had the faults enumerated by my noble friend Lord Hawke and the noble Lord, Lord Brown, that it has proved inadequate because it is not sufficiently flexible nor strong—should be allowed to continue. I must say, and say very bluntly to noble Lords who speak about it that the insurance business is one of the great glories of England. It is one of our great invisible exports; its integrity and reputation are among our most valuable assets. This is something that strikes me as being of super-eminent importance. The noble Lord, Lord Caccia, seemed to me to say, "Look! If we find that foreigners do not think much of our arrangements, we must bear it so that justice is done to the individual who wants to come in."
LORD CACCIA: My Lords, the noble and learned Lord is kind to give way again. I also said—speaking for myself—that I agreed entirely with the approach of the Government in this Bill; namely, that it is better to give the Department strong powers rather than have the Continental system. The only problem is

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whether it is necessary to give the Government quite the wide powers that he demands?
THE LORD CHANCELLOR: My Lords, I am not demanding anything more than a continuance of the power which has been given to the Government by the last Government, and has been used to everybody's satisfaction, so far as I know, for six years. The only criticism has been that it has been insufficiently used.
LORD ALDINGTON: My Lords, the noble and learned Lord, much to my surprise, keeps on saying that this power has been used so well in the past six years. Could be give the House one instance in which it has been used?
THE LORD CHANCELLOR: My Lords, every new company that has been started in the past six years has had to seek an authorisation from the Board of Trade (now the Department of Trade and Industry), and if it has not been authorised no reasons have had to be given, and not one single example of injustice has been produced. That is what I am saying. If it be that no company has applied, we are talking in fact about nothing.
THE EARL OF ONSLOW: My Lords, how many companies have been turned down?
THE LORD CHANCELLOR: My Lords, I cannot say. All I am saying is that this provision, which has caused so much alarm, has been on the Statute Book for six years and nobody has produced a single example of injustice resulting from it. There are reasons for saying that these are the minimum requirements that a Government should be allowed to have if we are to avoid the Continental system. I noted with satisfaction that the noble Lord, Lord Caccia, said frankly he would rather have wide powers given to the Executive than to have to indulge in the legal restrictions of the Continental system. I am saying to the noble Lord, Lord Caccia, that if he takes away from the Government the powers which they have hitherto exercised, the purpose of the Bill will have been largely frustrated, and we shall be on the high road to the Continental system.
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Having said that, I still say, as I said at the beginning, that although I have been deeply disappointed with the attitude of some of my noble friends, and with the attitude of the noble Lord, Lord Diamond, I will take back every word that has been uttered, both by way of support and criticism, on Clause 2 and I will consult again with my right honourable friend both as to the question of appeal and as to the question of giving grounds. Speaking for myself, noble Lords have not convinced me.
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 2:
Page 2, line 19, after ("a") insert ("managing").
The noble and learned Lord said: I beg to move Amendment No. 2, "Clause 2, page 2, line 19, after the word ("a") insert the word ("managing"). This is one of the same sequence of Amendments.
LORD DIAMOND: My Lords, I rise on the most minor point to ask whether the Amendment is correct. According, to my copy of the Bill the word "a" occurs twice. Ought this Amendment not to say, "after the first a'"? Is there any method in your Lordships' House whereby this is automatically dealt with?
THE LORD CHANCELLOR: My Lords, I read out what was on my copy. I do not know whether my noble friend would like to correct me if I made a mistake.
THE EARL OF LIMERICK: My Lords, "the first a'" is indeed right. If there is a procedure for correcting this then we should do it.
THE LORD CHANCELLOR: My Lords, I see now that my notes on the Amendments are different from my printed Marshalled List. I read out what was on my printed Marshalled List. I will now read out what is on my notes on Amendments:
"Clause 2, page 2, line 19, after the first ("a") insert the word ("managing").
I beg to move.
On Question, Amendment agreed to.
5.26 p.m.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 3:
Page 3, line 19, at end insert—
("(7) Any incorporated company to which subsection (1) is applied by the Secretary of State may ask the Secretary of State to give particulars of the grounds on which any controller or manager of that company appears to him not to a be a fit and proper person to be associated with that company; and when so asked the Secretary of State shall forthwith give those particulars.")
The noble Lord said: My Lords, I ber to move this Amendment. I hope that your Lordships will bear with me while for the first time I give the reasons for this Amendment. We have heard a great deal about the reasons against it. What I seek to do is to ensure that when the Secretary of State refuses to authorise a new company permission to come into the insurance industry he shall give particulars if he is so asked for them. I know that this was not in the 1967 Act—and we are now talking about the particulars—any more than the appeal. I have never before understood that what was done in 1967 in all respects is binding upon the present Lord Chancellor, or his present noble and right honourable colleagues. We should all be astounded if that proposition were put forward over a number of matters.
It has been said that the 1967 Act has worked for six years. Let us look at what is involved here. It is true that for six years—or perhaps for longer—the Secretary of State or his predecessor has had the power to decide whether a new company should beauthorised. I interrupted my noble and learned friend a few minutes ago to find out whether at any time, in exercising this power of authorisation, the Secretary of State had had to refuse an applicant company on the grounds that any controller, manager or director was not a fit and proper person; and if that was so done, whether the Secretary of State found it inconvenient to give the reasons why. Until I have been given some evidence on that point I do not think there is any question of common sense and practice in this argument. The noble and learned Lord the Lord Chancellor said that he preferred an ounce of practice and common sense to a pound of theology. I have to remark to my noble and learned friend that I have sometimes heard him use exactly the
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opposite argument where it suited him. On this occasion I must test him by his own remarks. It would be nice to know what ounce of practice and common sense there is to adduce against my simple proposition that a Secretary of State, using this power of refusing authorisation because someone is not a fit and proper person, should state the grounds on which he reaches that decision.
Looking back to the days when one had responsibility for these matters, I have tried to work out what harm would be done to one's effectiveness in ensuring that the rogues and charlatans did not come into the industry if one was bound by an Act of Parliament to answer a request for the particulars of the grounds for so reaching that decision. I cannot see any possibility of harm except in the event that I have gone wrong and have made a bad judgment and was either falsely informed or in some way prejudiced—which I hope I would not be, and I am quite certain that none of the members of the present Government or their predecessors were. What harm could be done to my effectiveness if I was acting rightly? It is supposed by some that to state baldly in a letter (which I suppose would be the means by which the grounds were given) that "Mr. X was not a fit and proper person because …." would so discourage the officials from bringing the matter up, because of the threat of libel actions or what-have-you, that the Secretary of State would not be effectively advised and would not therefore use his powers. But I do not think that that is the way things happen.
We are having bogeys thrown at us—not theological ones, if I may put it like that—implicit in the argument that those of us who are advocating the statement of grounds, and further (but I shall not go into it on this clause) that those of us who are advocating appeal, are seeking to weaken the Secretary of State's powers. It is no part of my aim in anything that I have suggested to your Lordships at any time to weaken the effectiveness of the Secretary of State's control. It is part of my aim to see that the Legislature of our country ensures that the powers given to the Secretary of State are the powers that he needs and, further, that the Secretary of State is forced to act in accordance with natural justice. That is what I have tried to maintain and I believe that

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noble Lords opposite and some of my noble friends here and on the Cross Benches have said over and over again that that is what we are seeking to do. The noble Lord, Lord Brown, always goes out of the Chamber when I make that remark so he has probably never heard me say that. Whenever he comes back, almost automatically, he will accuse me of wishing to weaken the Bill. But that is not my aim. My aim is to strengthen it by making it acceptable on those grounds.
Related to this point—because if one asks the Secretary of State to give reasons why ultimately one must suppose that the matter might reach a judge, though it it is a very indirect "might"—I must refer to the remarks which the noble and learned Lord the Lord Chancellor made to us about what is rightly justiciable and what is not justiciable. I do not suppose any of us who were advocating an appeal, whether after stated grounds or not, were assuming that the judge would direct himself subjectively to the question of whether somebody was a fit and proper person. I thought the point was that the judge should be allowed to decide whether the Secretary of State in reaching his decision had come to it in the proper way, observing natural justice, and so on. I may have been misled in all this in my early youth, but I should have though that it was the historical pride of the Judiciary of this country that they were able to see, and did see, that the Executive applied natural justice in their decisions. I thought that was what we were trying to provide for. If I have misunderstood the situation and have misled my noble and learned friend I apologise. I am quite prepared to be lectured by him on this point. He is the best person of all on what should be justiciable and what should not. But I should be sad if he misunderstood me on the main purpose I had in providing that a judge could look at this matter in the last resort. May I now return to the strict Amendment. I hope that your Lordships will support me in seeing that the Secretary of State is obligated to state the grounds on which he decides that a company will not receive authority to enter the insurance industry because there is a person associated with it who is not fit and proper. I beg to move.
5.36 p.m.
LORD STOW HILL: My Lords, may I add one point in support of the Amendment that your Lordships are now considering. Assume that Clause 2 stands in its present form and that the Secretary of State is under no obligation to give grounds. Assume then that as the years go by the power to refuse a certificate is from time to time exercised and that, as it is exercised, it is exercised in the case of controllers and managers who are quite hopeless; controllers or managers who clearly ought not to be associated with an insurance company. May I make that assumption and assume, therefore, that the Government's thinking is right that the Secretary of State in cases like that ought not to be compellable to give the grounds on which he thinks the individual is not a fit and proper person. But in the ordinary course of things the time may well arise when in the case of a given individual the Secretary of State intimates that he is not prepared to give a certificate under Clause 2. But the person who in his view is not a fit and proper person strongly disputes it, wishes to contest it, and wishes to make use of every means open to him to restore his reputation. In that case, should be not have the right—or, rather, the company on his behalf—to ask that the grounds should be stated?
THE LORD CHANCELLOR: My Lords, I am afraid my attention was distracted. Would the noble and learned Lord be kind enough to repeat his last two sentences?
LORD STOW HILL: My Lords, what I was saying was that this Amendment is a kind of half-way Amendment. I was assuming the situation in which over a period of years the Secretary of State refuses under Clause 2 to grant a certificate and he has ample grounds for so doing. The controller or manager in question is a person who obviously ought not to be associated with an insurance company and is, moreover, a person who almost certainly will not dispute it because he knows perfectly well that his chances of disputing it are hopeless, even if there was some method by which he could. That may happen for a number of years. I do not suppose that the power will often be exercised but from time to time it will. Then conies the

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case in which the Secretary of State exercises the power in relation to a controller or manager who is not of that type. The Secretary of State may have misunderstood the situation; there may be something to be said on behalf of that person. That person may be very anxious and determined to do everything that he possibly can to vindicate and restore his reputation. In that case this sort of Amendment would be operative. In that case, the case of the person who really feels he is under a grievance because he has been wholly misrepresented and his activities misunderstood, that person would perhaps stimulate the company concerned to ask for the grounds.
What the noble Lord, Lord Aldington, is proposing by this Amendment which he has put before your Lordships is that there should be an obligation to give the grounds if asked for. I would submit that that is an Amendment which has a great deal to commend it. It would go a good way towards seeing to it that when you come upon the person who really thinks that he has a case and that he is in a position to vindicate his reputation, that person at least shall have the power, by moving the company to make the request, to know what it is that is said against him. It is a half-way house Amendment and I submit that it has a great deal to commend it.
LORD CACCIA: My Lords, may I very briefly support this Amendment, and for the reasons given by both the noble Lord, Lord Aldington, and the noble and learned Lord, Lord Stow Hill. In doing so, may I say that I accept entirely the correction of the noble and learned Lord about the 1967 Act, and, of course I accept what he has to say about the proper character of justiciable affairs. But when he comes to answer this Amendment will he consider this: What we have been trying to urge is that a good Bill should be made better—this is the point—if that is possible; and whether it is possible is very largely a question of whether certain of the powers now asked do not go beyond what is absolutely necessary to protect the interest which he so eloquently pointed out to us, namely, the interest of the consumer. Does it not go beyond what is strictly necessary to achieve that goal? —because the object in the end is exactly
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as he said, the strengthening of the insurance industry in this country.
LORD HAWKE: My Lords, I wonder whether the noble and learned Lord in his reply will deal with a point that is worrying me. In these insurance matters one of the most fertile breeding grounds for rogues is across the Atlantic. I have no experience of intelligence in peace time. Would the Minister obtain the cooperation of the Federal Bureau of Investigation, for instance, in obtaining particulars about any newcomer, if they knew that their remarks about this man were liable to be disclosed and perhaps made public? Of course, the information might not only be from there; it may be from the Continent, the Sûreté, or from any such people. It seems to me that none of the police forces overseas will be at all willing to give the proper information about any person if that information is liable to be made public. To start with, much of it may not be certain. They might be able to say: "Mr. X is suspected of having dealings with the Mafia in San Francisco in 1900 and something", and have no proof at all, but very strong suspicions. Surely they will never give that sort of information to a Minister if it is liable to be produced? I do not know whether the man in question could sue them for false information. That is an aspect which gives me considerable trouble.
LORD ALDINGTON: My Lords, may I ask my noble friend one question. It certainly was not my intention, in drafting the Amendment, that the source of information should be stated. Does he really think that the words of the Amendment require that the informer's name and the source of the information should be quoted? That certainly was not my intention, and the Amendment could be re-drafted.
LORD HAWKE: My Lords, if I may answer my noble friend, I think it would be necessary to name him, because the reason would be that the person is suspected of having dealings with the Mafia in 1900 and something. That has to be given as the reason.
LORD ALDINGTON: That is different.
THE EARL OF ONSLOW: My Lords, I, too, support this Amendment. The

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noble and learned Lord the Lord Chancellor says that on occasions one should not get muddled up by theology—I think that was the word. But on occasions theology ought to be brought into account. I think on this occasion the theology of showing reasons for a person being barred is very important, because, if it is proved, the proof goes to show even more reason why this person should not be involved in an insurance company. I think everybody in this House has got at heart the interests of not only the consumer but also the British insurance industry, because in the long run those two are identical. Therefore, the more proof which is involved, and in some ways the more theology involved, I think the better it would be. As the noble Lord opposite said, it is a half-way Amendment which is going to produce this, and I therefore support it.
5.45 p.m.
THE LORD CHANCELLOR: My Lords, I cannot really add very much to what I said before, and I hope your Lordships will not think that I am discourteous in any way if I do not repeat a great deal of it. I of course accept from my noble friend Lord Aldington, and from the noble Lord, Lord Caccia, that it is not their intention to weaken the Bill; but the question is, not whether it is their intention to weaken the Bill, but whether by the Amendment they will succeed in weakening it. It is the considered view of the Government that it will weaken it almost irrevocably in one of its key features, because instead of making the Bill a progressive measure it will then become a retrogressive measure, and the law will be put back to where it was when Savundra got away with it. That is the affect of the Amendment, as I see it.
My noble friend Lord Onslow bravely says, let us have theology. If this were a moral issue, I would, I think, range myself by his side, just behind the Bishops' Bench. That, he did not seem to see, was quite inconsistent with the attitude taken up by my noble friend Lord Aldington and my noble friend Lord Caccia. Their attitude was that if it weakens the Bill it is a bad Amendment, theology or no theology. The noble Earl, Lord Onslow, says it is so important to protect a person who has not satisfied the Secretary of
916
State of his fitness to receive millions of pounds of the public's money that we must set practical experience at naught.
My noble friend Lord Aldington asked me for some further and better particulars. He said that he accepted my test of an ounce of practice being worth a pound of theory, and I think in this field it certainly is. I have not got very great particulars to give him, but what I can tell him—which I have hastily scratched up from the sources known to the House—is as follows. It deals with the five years between 1968 and 1972; that is to say, not the whole six years in question. There were, so far as I can make out, 462 applications of this kind, in which 365 authorisations were given and 97 were refused, for one reason or another, and in no case was any reason given for the refusal. Thus, I think it is fair to say that we have a considerable experience of the working of this clause. I still assert that no one has adduced any reason to believe that there was any injustice inflicted in the course of that time.
I am bound to say that, in my judgment, at any rate, it would seriously, perhaps fatally, damage the value of this Bill if the Secretary of State were driven to give reasons for refusing to allow new entrants into this particular trade. If I may just elaborate on this for a moment, of course it is true that natural justice must apply; and it is true, even without any appeal, that the courts would be able to disallow any actions of the Secretary of State which completely ignored the duty to be fair or broke the rules of natural justice. Natural justice does not involve an appeal. It does involve allowing a man to make a representation, and of course he has that opportunity when the application is made; and, obviously, if he is invited to give any further clarification, he will have a second opportunity to do so. But, equally obviously, if the Secretary of State acts ultra vires and acts contrary to the duty to be fair, which would be for that purpose ultra vires, the courts could enter into the matter.
The kind of problem which is raised by this type of Amendment is precisely that raised by my noble friend Lord Hawke. I do not think it proper for me to describe at length the case which I cited in which the Master of the Rolls gave a clear opinion about natural justice in matters of this kind, in relation

917
to the Gaming Board. I do not think it proper because I was one of the counsel in that case, but broadly speaking the kind of situation which can arise is this. Whether you are employed by a private employer or a public employer, there are certain occupations of trust which you cannot get simply on the citerion that a man is innocent unless he is proved guilty. A confidential person trusted with money has to satisfy the person who trusts him that he is fit to be entrusted with money of the kind of order that he will have in the course of that employment. That satisfaction would come just as much if my noble friend Lord Massereene and Ferrard was engaged as a confidential servant as if the public are looking through Parliament and through the Secretary of State to consider an application to be allowed to carry on the business of motor car insurance.
When that is so, it is a question partly of information and partly of subjective judgment as to whether you consider a particular person worthy—whether he has satisfied you that he is worthy. One of the problems is undoubtedly precisely that which my noble friend Lord Hawke adumbrated. In many cases, and one must suppose in relation to the Gaming Board or in relation to this matter, the Secretary of State will have information more or less sensitive in character and will not wish to disclose the source of his information, nor ought he to be compelled to do so.
Now my noble friend Lord Aldington, who really is sometimes a little naive about these matters in spite of the immensely greater business experience which he has acquired than I shall ever possess, does not seem to have appreciated that if, in fact, a piece of confidential information is disclosed it will automatically, in nine cases out of ten, disclose the source from which it was obtained—that is to say, if it is anything like being true. Suppose something did turn up about membership of the Mafia—obviously that could happen in relation to the Gaming Board. Supposing it is said, "He is supposed to be a member of the Mafia will you allow him to set up a gaming club in central London? "—are you going to disclose that or are you not? The Master of the Rolls said that that was precisely the sort of
918
thing that you did not have to disclose, even though it was not necessary to disclose the source of the information. It was also not necessary for him to disclose its content, partly of course because the content, as everybody knows, almost invariably compromises the source.
At the end of the day you are left with a subjective judgment, and the subjective judgment is broadly speaking that which the noble Lord, Lord Brown, spoke of earlier: "I do not think you are fit to handle large sums of money". It is a matter of judgment about the man. "You have not enough experience; I am not satisfied that your associations in the past have been altogether happy. You have sent me what particulars of your life you have. They do not seem to add up to very much and I do not know enough about you". That is not giving reasons, and the trouble is that if you once impose upon a public authority the obligation to state grounds for a subjective judgment you have in fact undermined their ability to withhold authorisation where grounds are either vague or based upon a confidential source which they dare not compromise.
Having said that, at the end of the day I still say to my noble friend, in spite of all that I have said critical of his remarks, that I will still take back everything he has said to my right honourable friend. If my noble friend does not press this point at this stage we will see whether there is any concession that can be made. Speaking for myself, I say that he has not yet convinced me that my right honourable friend or the Government are wrong. I will not, however, close the door if he does not press this issue to a Division.
LORD ALDINGTON: My Lords, may I interrupt the noble and learned Lord before he sits down. The arguments which he has adduced against my Amendment seem Ito me to be very solid arguments against two Amendments that his noble friend Lord Limerick is going to move, I think on Clauses 21 and 22, which provide for the Secretary of State to give particulars about persons who are already in the industry. The arguments which he has just put to the House seem to me to apply to them as much as to the new applicant. Could he be so good as to explain to your Lordships—I know he touched on this subject earlier

919
why there is something so very difficult about a man who is not yet in the insurance industry and who has been in the Mafia, as compared with a man who is in the insurance industry and has also been with the Mafia?
THE LORD CHANCELLOR: My Lords, I thought I had dealt with this matter at considerable length in my first speech, and it was for that reason that I did not speak on it. These are exercises in balance of judgment, a balance of argument one way or the other. You have to give some weight to divergent considerations, and what I said before and what I now repeat in response to my noble friend is that I think there is a difference between depriving a man of a lawful calling which he is already carrying on and stopping him from entering into a new calling. In spite of my noble friend's saying that this is no analogy, may I draw the analogy of entering a profession. If I am going to apply to be called to the Bar I have to satisfy the Benchers that I am a person of good character, but I cannot be disbarred unless reasons are given. It is, of course, true that the same kind of consideration can arise in relation to the latter case as in relation to the former, but in relation to the latter case it has been thought—and I think it is widely recognised—that there is a difference between a new entrant, a person seeking to carry on a calling which he is not yet carrying on, and a person against whom it is sought to deprive him of a calling he has been lawfully carrying on for some time.
If my noble friend denies that, I can only tell him two things. The first is that I think it is universally recognised in the profession, and the second is that the whole passage from the Master of the Rolls's judgment in the case of Benaim which I quoted in my earlier speech illustrates the fact that it is part of the law of the land.
LORD ALDINGTON: My Lords, with the leave of the House and on the understanding that my noble and learned friend is going to have a further word with his right honourable friend, I am only too happy to withdraw the Amendment, but on the understanding also that I may reproduce it if the result of that discus-
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sion is negative. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.59 p.m.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 4:
Leave out Clause 3.
The noble Lord said: My Lords, perhaps we could, with your Lordships' permission, deal with this Amendment very quickly, because the matter was fully discussed during the Committee stage and my noble friend said he would have a look at it. Various arguments were put to your Lordships, but the two which I consider the most important are these: first, that the clause as it is drawn at the moment seems to give some protection to existing, companies as against possible newcomers, and, secondly, that it seems to indicate a dislike by the Government of the composite company in insurance. Just at the time that we are going into Europe and discussing how together we can work out a basis of regulations to control insurance in the whole of Europe, it does not seem to me and to many of my noble friends, and I think to many on the other side of the House, that we should, in a Bill as important as this, have a clause which seems to cast doubt upon the propriety and goodness of composite insurance companies. I know I am right in saying that other clauses of the Bill provide the Secretary of State with all the powers necessary to ensure that composite companies keep their long-term business and their general business quite separate from each other. I beg to move.
LORD DIAMOND: My Lords, I think it only right to make it clear that the noble Lord, Lord Aldington, and I did not get into a huddle over this clause. The first time that either of us saw that our names were joined together in holy opposition to the Government, was when the Amendments appeared on the Marshalled List which is very recent indeed. This Amendment is a continuation of an Amendment which I put down at an earlier stage, and I was hoping that the Government would have something to say on it. As they have not, all I can do is to repeat what the noble Lord said, and what I said on an earlier occasion, that the clause is not really necessary at all.
THE EARL OF LIMERICK: My Lords, any form of opposition, be it holy or unholy, has to have something to fight. As I indicated during the Committee stage, this clause was simply intended to permit the Government to decide at some time in the future to cease issuing authorisations for new composites as a matter of consistent policy, if it were felt that the other provisions for the better protection of long-term policy holders were inadequate. I concede that this was perhaps an unduly cautious approach, and I am therefore prepared to accept the Amendment, thereby removing any suspicion about its implications.
LORD DIAMOND: My Lords, may I be allowed to thank the noble Earl?
Loan ALDINGTON: My Lords, may I say likewise?
On Question, Amendment agreed to.
Clause 5 [Deposit of documents with Secretary of State]:
6.2 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 5:
Page 4, line 20, at end insert—
("( ) The documents to which the said subsection (1) applies shall also include a statement, as at the close of the period to which the other documents deposited under that subsection relate, of the names and connection with the company of any persons who—

(a) are authorised by the company to issue any such invitation in relation to the company as is mentioned in subsection (1)(a) of section 39 below; and

(b) are connected with the company as provided by regulations under that section;

and any such statement shall be deposited at the same time as the other documents required to be deposited under the said subsection (1).")
The noble Earl said: My Lords, I think it would be convenient to consider Amendment No. 6 with this Amendment. This is a modified form of an Amendment moved in Committee by the noble Lord, Lord Jacques, which would have had the effect of requiring every insurance company to keep a register of its connections with intermediaries. That Amendment was withdrawn on my undertaking to consider the suggestion but, on the basis of publicity being given to this type of information, in a manner which we thought would be more convenient to the public. The Amendment now before your Lordships' House provides that details of "connections" of
922
this kind required by regulations under subsection (1) to be furnished to potential policy holders are to be given in the annual returns of the insurance companies concerned. As these returns are placed on the company's public file, potential policy holders, or, for that matter, their advisers, would have easier access to such information than if they had to go to the offices of the companies and ask to see the list. My Lords, I beg to move.
LORD JACQUES: My Lords, may I thank the Minister for the consideration given to the points which I raised, and may I say that his Amendment entirely meets them?
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, I beg to move Amendment No. 6.
Amendment moved—
Page 4, line 41, leave out ("as is mentioned in subsection (1)") and insert ("or statement as is mentioned in subsection (1) or ( )").— (The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 7 [Statements of transactions of prescribed class or description]:
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 7:
Page 5, line 26, after ("(1)") insert ("Classes or descriptions of agreements or arrangements appearing to the Secretary of State as likely to be undesirable in the interests of policy holders may be prescribed for the purposes of this section, and").
The noble Earl said: My Lords, in moving this Amendment, with which I should like to join Amendment No. 8, I may, if there is no objection from the noble Lord, Lord Diamond, refer to his Amendment No. 9. It is a little difficult to discuss them in isolation because, obviously, they cannot live together. Amendments Nos. 7 and 8 are intended to meet the criticism made in Committee of the absence of any limitation on the kinds of agreement or arrangement which might be prescribed under this clause, and the formula adopted is based on a suggestion made by the noble Lord, Lord Brown. We have considered the form which it might take, and we have come up with Amendment No. 7. If I may refer briefly to Amendment No. 9 by the noble Lord, Lord Diamond, we are driving at the same point here. There are two matters to consider. First, what criteria

923
are there to be? Secondly, should those criteria be objective or subjective? On reflection, having seen the noble Lord's Amendment, I still prefer my own, and if he has reservations this is a matter about which we could have further discussion. But I think there is so little between us that it might be convenient to the House if an Amendment were accepted in this form. My Lords, I beg to move.
LORD DIAMOND: My Lords, again I have pleasure in rising to thank the Minister for having met the essence of the argument which we adduced during the Committee stage. The reason why my Amendment is put down is that I had to indicate to the Government what I thought might be a suitable way of dealing with the difficulty, in advance of seeing what the Government themselves were proposing to say. The Amendment which has been moved by the noble Earl is a satisfactory alternative, and if I am asked whether I prefer an alternative supported by the Government or an alternative not supported by the Government, I must say that I regard myself as a very practical person. So I should like to thank the noble Earl, and of course I shall not move my Amendment when we reach it.
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, I beg to move Amendment No. 8.
Amendment moved—
Page 5, line 28, leave out ("prescribed for the purposes of this section") and insert ("so prescribed").—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 8 [Separation of assets and liabilities attributable to long term business]:
LORD DIAMOND LORD DIAMOND moved Amendment No. 10:
Page 6, line 15, at end insert—
("( ) Regulations made for the purposes of subsection (2) above may specify the records to be kept.")
The noble Lord said: My Lords, this is a very important issue which was dealt with at some length during the Committee stage, when I moved a very long and detailed Amendment. The proposed Amendment is much simpler and deals with the matter by way of regulations,
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rather than by setting out what has to be done. What we are seeking to do is to make effective subsection (2); that is to say, the Government's desire that an insurance company,
"… shall maintain such books of account and other records as are necessary for identifying—
(a) the assets representing the fund … maintained by the company under subsection (1)(b)";
in other words, the separation of long-term assets and long-term liabilities. There is a technical problem here relating to joint bank accounts, which composite companies would naturally wish to make use of. I do not know whether the noble Earl wishes me to deal with this matter at length. The view I have taken is that it is not easy to argue across the Table the details of accounting which are most appropriate to achieving the Government's objective. There is no difficulty between us. We are all agreed on what the appropriate objective is. Indeed, the noble Earl expressed himself on the last occasion as sympathetic to our point of view and our anxieties; and I believe the noble Lord, Lord Caccia, did also.
I take the view, therefore, that, as it is difficult to argue detailed provisions across the Table, and as the Government have made it clear what their objectives are, perhaps the better method would be to enable the Government to provide by regulation whatever they find in practice is necessary in order to achieve this separation, and to give them an opportunity to discuss with the industry itself, and with the various sections of the industry, some of which are composite companies, what detailed regulations ought to be made in order to achieve this objective. I hope the Government will therefore feel that this Amendment, although much reduced in size, is sufficient to enable them to achieve the objective which is described within Clause 8, for without it I fear the Government may have some difficulty in achieving their objective. I beg to move.
THE EARL OF LIMERICK: My Lords, this is a somewhat beguiling Amendment, but I suggest, with respect to the noble Lord, Lord Diamond, that he is not quite playing fair. I do not mean with me—I have no personal complaint at all—but in this sense. I think he recognises the difficulties of laying down rules as to the treatment of unidentified assets which

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would recognise these practical difficulties and yet not open the door to abuse. I thought the Amendment he put down at Committee stage, and the discussion we then had on it, demonstrated this difficulty. What he is now proposing to do is to leave it to the Department to solve this problem by way of regulations. That is perhaps flattering to us, but I am not sure that it is the most profitable use of our time.
If the noble Lord presses this matter—and I agree with him entirely that it is not something which is easily debated across the Floor—I cannot really see any effective statutory means of regulating the use of unidentified receipts other than prohibiting their application to any purpose other than those of long-term business so long as they remain unidentified. I doubt whether that solution would be a welcome one; it has many practical difficulties. The important thing is that at some point in a company's organisation there should be someone who is capable of identifying the receipts so that the necessary records can be created without unreasonable delay. I am sure that this condition is always fulfilled, and that to make regulations about it would be a hindrance rather than a help.
In this connection I might perhaps draw attention to Section 147 of the 1948 Companies Act, which requires:
"Every company shall cause to be kept proper books of account with respect to … all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; … "
Subsection (2) further provides that proper books of account are not deemed to be kept unless they give a true and fair view of the company's accounts and explain its transactions. Beyond that, it is the duty of the auditors to see that the directors' certificate in respect of such matters has been properly and reasonably given. For that reason, I think that regulations are probably not the right way to go about this. But I would leave it open to the noble Lord to convince me on this point, if he can, before the next stage of the Bill.
LORD CACCIA: My Lords, may I say that for my part I would welcome the proposal that the noble Earl has just made.
LORD DIAMOND: My Lords, I gather that what the noble Lord, Lord Caccia,
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is welcoming is that there should be discussions between now and a later stage, rather than that I should detain the House for the next hour and a half to explain the details of accountancy.
SEVERAL NOBLE LORDS: Hear, hear!
LORD DIAMOND: As it appears that I have understood the noble Lord, Lord Caccia, aright, then I would not seek at this stage to do more than remind the noble Earl that he was a good deal more sympathetic at the Committee stage than he appears to be now. He seemed to recognise that there was something which ought to be done. In fact, if I may quote from column 314 of the OFFICIAL REPORT for February 22 last, he said:
"I will gladly look at this matter again. Prima facie there is much to be said for the approach suggested by the noble Lord, Lord Caccia. Before the next stage, we should be able to reach some sensible proposal to meet this point".
I do not know that we seem to have made very much progress since that statement was made. In fact, the noble Earl's sympathies seem to have gone backwards a little. So I am bound to say to him that I am grateful for what he has said, and I shall certainly take advantage of it because I believe you cannot achieve the purposes of this Bill—that is, of protecting the assets of the long-term policy holder—unless you deal specifically with the problem of joint bank accounts. Once you accept that, then you realise that you have to deal also with the exceptions which are necessary for the sensible running of a business by a composite company such as the company of which the noble Lord, Lord Caccia, is such an adornment, which I gather is the phrase which is in common use at the moment.
LORD ALDINGTON: Ornament.
LORD DIAMOND: Ornament, my Lords. Therefore, I want to make it absolutely clear to the noble Earl that I am advised that the industry, or a large part of it, takes the view that something more ought to be done; but he has been good enough to say that he recognises that there is a further stage at which Amendments can properly be put down, and that there will be time in between to discuss this matter. In those circumstances, I seek your Lordships' permission to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 9 [Application of assets of company with long term business]:
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 11:
Page 6, line 41, after (" applies") insert ("or made in pursuance of a requirement imposed under section 17 below").
The noble Earl said: My Lords, I think it would be convenient to consider Amendment No. 15 together with this one. It relates to the same point. The purpose of these Amendments is to make it clear that where a special actuarial investigation has been required of a company under Clause 17, the results of such an investigation may serve, no less than those of the normal periodic investigation under Section 5 of the 1958 Act, as the basis for the company to distribute any surplus disclosed as permitted by Clause 9(2) and Clause 10(4). I beg to move.
On Question, Amendment agreed to.
6.18 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 12:
Page 7, line 14, at end insert—
("(6) Without prejudice to the generality of subsection (1) above, an insurance company to which the Act of 1958 applies shall not apply any part of the assets representing the fund or funds maintained in respect of its long term business directly or indirectly by way of payments to any person who is a controller of the company as defined in section 2(2)(c) but not as defined in sections 2(2)(a) or 2(2)(b), or to any body corporate of which that person is also a controller as so defined, in respect of services rendered to the insurance company unless such services are necessary for the proper operation of the long term business of the insurance company and the payments for these services are reasonable having regard to the services provided and the interests of the long term policy holders; and if such an insurance company does so apply any part of these assets it shall include in its annual accounts prepared in accordance with the Regulations made under section 4 of the Act of 1958 a statement of the amounts so applied and the nature and extent of the services rendered, and the auditors of the company shall include in their report made in accordance with these Regulations a report stating whether or not the provisions of this subsection have been complied with.")
The noble Lord said: My Lords, I beg to move Amendment No. 12, to insert the new subsection, which very shortly states that an insurance company shall not apply any of its assets by way of payments to a person who is a controller in respect of services rendered unless these payments are reasonable; and it adds that a report shall be made and the audi-
928
tors shall provide a certificate. As noble Lords who were good enough to be present at our Committee stage know, this is to prevent the repetition of a questionable practice which has in fact arisen. So it is not an academic question: it is something which needs to be dealt with. This Amendment does not deal with the matter by way of regulation because it is a fairly short point, and it attempts therefore to deal with it precisely. If the noble Earl says that the wording is in any way inadequate, then of course that can be put right later on, but I suggest that this deals with a matter which needs to be put right. We referred to the matter at the Committee stage, when, at column 321 (OFFICIAL REPORT, 22/2/73), the noble Earl said:
"Yes, we can certainly look again at the principle behind Amendment No. 8",
which was a very similar Amendment. I therefore hope that the noble Earl has something welcome to say now, and I beg to move.
LORD BROWN: My Lords, I should like to support my noble friend on this Amendment. It would not be a bad thing if this clause applied to every controller or managing director under the Companies Act without restricting it to insurance companies. But that is not a matter for debate here. One thinks of past events. There is a case under consideration at the moment. With that short comment I strongly support my noble friend's Amendment.
THE EARL OF LIMERICK: My Lords, I can come half-way to meet noble Lords who spoke to this Amendment. I believe this to be a case where we should go ahead by means of regulations. That is the course I would recommend. I can only, in substance, repeat my comments on the similar Amendment discussed in Committee. The principle is clearly established by Clause 9(1) that long-term funds should not be applied to purposes other than those of long-term business. Given that principle, we intend to require what the second part of the Amendment envisages by making the appropriate regulations. The existing regulations already go some way towards this end and we shall give them the necessary additional precision.
While on the subject of regulations it might be helpful if I expand on this point.

929
Regulation 6 of the Insurance Companies (Accounts and Forms) Regulations 1968 (Statutory Instrument 1408) provides that there shall be annexed to every long-term business revenue account a certificate signed by the secretary or the managing director and at least two directors, stating whether or not in the opinion of those who signed the certificates any part of the long-term business fund has been used directly or indirectly for any purpose for which it should not have been used having regard to the provisions of Section 3 of the 1958 Act and, where applicable, to the provisions of any instrument setting up the fund.
Furthermore, there are in Regulation 7, which relates to the auditor's report, words to the effect that whether or not in their opinion and according to the information and explanations they have received, the certificates annexed to the accounts in pursuance of Regulations 3, 4 and 6 have been properly prepared in accordance with the provisions of these Regulations, and whether or not in their opinion, and according to information and explanations which were received by them, it was reasonable for the persons giving those certificates to arrive at the opinion therein stated.
We shall be reviewing these regulations in the light of the changes made by the Bill. I have just been given to understand that this is the course which would be preferred by the B.I.A. I suggest that this might be the way to proceed on this matter. We accept fully that this is something that we want to do. I am suggesting an alternative method which does not involve amending the Bill.
LORD DIAMOND: My Lords, I am grateful to the noble Earl for his sympathetic understanding of the objectives that we are both trying to reach. We require two things. The first is prohibition and the second is certification. He spoke at length about certification and satisfied me about that. As to prohibition, do I understand him to say that Clause 9(1) effectively prohibits what we are seeking to prohibit? Clause 9(1) says that assets representing funds maintained by companies in respect of long-term business shall be applicable only for the purpose of that business. If that is an effective prohibition, as I read it to be—and I note that the noble Earl is nodding his head in
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assent—I think that the two points we essentially require are being met. I am grateful to the noble Earl and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 10 [Allocations to policy holders]:
6.24 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 13:
Page 7, line 29, leave out ("company has complied with the requirements of subsection (3) below") and insert ("requirements of subsection (3) below have been complied with").
The noble Earl said: My Lords, I think it would be convenient to take Amendment No. 14 with this one. The two are directly associated and have the same effect as Amendment No. 10 which was moved by the noble Lord, Lord Jacques, on the Committee stage. Their effect would be simply to delay any distribution to shareholders for a period of 56 days where there is increase of more than half of 1 per cent. in the proportion of profits of the long-term business which the company is proposing to allocate to them. The 56 days would start from the date, or the last date, on which the company had published their intention in accordance with the requirements of Clause 10(3) and would, for example, allow time for any dissenting party to make representations to the company before the increased allocation to shareholders was made. The Life Offices Association have been consulted and see no problem in this change to the Bill. I beg to move.
LORD JACQUES: My Lords, I thank the noble Earl for the consideration that has been given to the point I raised in Committee affecting Clauses 10 and 11. The Amendments entirely meet the point that I made.
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, I beg to move Amendment No. 14 formally.
Amendment moved—
Page 8, line 5, at end insert ("and that a period of not less than fifty-six days has elapsed since the date, or the last date, on which the company has published the statement mentioned in paragraph (b) above as required by or under that paragraph.").—(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, I beg to move Amendment No. 15. We considered this with Amendment No. 11.
Amendment moved—
Page 8, line 11, at end insert ("or made in pursuance of a requirement imposed under section 17 below.").—(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 16:
After Clause 10 insert the following new clause:
Avoidance of contracts for unlimited amounts
"Liabilities of unlimited amount
. A contract entered into after the coming into force of this section by an insurance company to which the Act of 1958 applies shall be void if—

(a) it is a contract under which the company undertakes a liability the amount, or maximum amount, of which is uncertain at the time when the contract is entered into; and

(b) it is not a contract of a class or description exempted by regulations from the operation of this section."

The noble Earl said: My Lords, I think it will be convenient to consider with this Amendment, Amendments Nos. 45 and 52 which relate to the same point. These Amendments relate to Clauses 36 and 47 respectively, following those which are concerned with special arrangements relating to long-term insurance assets. However, this new clause will apply to all insurance business. The effect of the new clause is to render void any contract for an unlimited amount. The clause is not retrospective. It can only come into force by the Amendment to Clause 47 when regulations specifying the types of contract exempted from the clause are brought into effect.
I would say a word as to why we think this is necessary. Paragraph 10 of Schedule 2 to the Insurance Companies Act, 1958, which is subsumed in Clause 36, allows the Department to exempt general business insurance companies from the solvency margin requirements if they are satisfied it is guaranteed or reinsured as to the whole of its liability to policy holders by another authorised insurance company or Lloyd's underwriter. Where this is done liabilities under the guarantee are taken into account in assessing the guarantor company's solvency. There is no corresponding control over insurance companies
932
undertaking to guarantee any other parties, such as an associated company which might be carrying on insurance or any other business. For example, a Life Office might, outside the arrangements permitted under Schedule 2, guarantee an ailing associate in motor insurance. This would be against the spirit but probably not against the letter of Clause 9(1) of this Bill, and the new clause plugs that gap. The clause prohibits contracts by which an undefined liability is accepted. It will be possible in valuation regulations made under Clause 31 to set out how liabilities are to be treated. The regulations will list as exceptions, naturally, contracts falling within the definitions which are of a kind normally undertaken in the course of insurance business. They will except, for instance, motor third party cover, and that will be done after consultation with the industry to determine how these categories can be defined. Other individual exemptions, if justified, could be made under Clause 36 on application by the company. I beg to move.
LORD CACCIA: My Lords, may I ask the Minister a question about this Amendment. It is not a matter of objecting to the object as there described, but the language used here is very wide. Under paragraph (b) a great deal, apparently, is left to regulations. For instance—this is an attempt to see whether we can get something more from the Minister about the intention of this part of the Bill—as drawn, might it not limit cost-plus building contracts, and might it not prohibit investment in an unlimited liability company? Could this Amendment be looked at again to make certain that these activities, which may in themselves be entirely in order and traditional, could not be debarred because of the wording being such that the regulations would have to follow?
LORD ALDINGTON: My Lords, as I understand this new clause, it refers to all insurance companies and not just long-term life insurance companies. Therefore, quite apart from the matters to which my noble friend Lord Caccia referred, it would catch the whole of motor-car insurance, quite a lot of fire insurance and accident insurance generally. I cannot believe that that is what is intended. I understand that there has been some difficulty, as was the case elsewhere in the Bill, in trying to catch what

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is wrong in every case, and therefore once again the Department have come down in favour of the all-embracing power which they are asking Parliament to give the Government. They leave it to the Secretary of State, albeit through regulations which we shall have to look at, to exempt from this new provision of the law. In certain cases one has been persuaded that has to be so, but it surprises me that the draftsmen cannot apply their pens so accurately as to be able to say in legal language what they require to hit and what they do not. If they do not require to hit motor-car insurance, why not say so? If they do not require to hit other forms of insurance, why not say so? If they do not require to hit the kind of thing my noble friend was talking about, why not say so? It is very perplexing to me.
THE EARL OF LIMERICK: My Lords, I think that my noble friend Lord Aldington and the noble Lord, Lord Caccia, are raising the same point. On reflection, I think they will consider that there is not much of a problem here. The reason that it is done in this way may be summed up in the one word "flexibility". I defined a case which I think everyone would recognise as being a case in which a liability for an unlimited amount should not be undertaken. It is easy to see that we could think of two or three more which we could write into the Statute. But it is possible that, by mistake, we could go a bit too far, and it is much more likely that we should fail to catch something that we should have caught. The noble Lord, Lord Caccia, asked for further consideration, and that is exactly what will happen when we come to draw up the regulations. We want industry to tell us the types of unlimited guarantee which are prima facie rather a strange thing for a company to do but which are nevertheless right and proper in the ordinary course of business. We will then examine them. The other reason for doing it in this way is that there are bound to be cases where something will come up about which we would say, "We never thought of that." By having it as a matter of regulation, we shall be able to deal with those cases. If we find that there is one company which stands out from the others, by having some requirement which is not of general application, an exemption can be made under Clause 32. I think that this is the right way to
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go about it. If we try to put it into the Bill we shall end up with something which is much too inflexible.
On Question, Amendment agreed to.
6.38 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 17:
After Clause 10 insert the following new clause:
Investment by company with long term business in associated companies
".—(1) An insurance company to which the Act of 1958 applies which carries on long term business shall not make an investment in an associated company—

(a) at a time when the value of the insurance company's long term assets which consist of investments in associated companies exceeds the prescribed percentage of the total amount standing to the credit of its long term funds; or

(b) at any other time if the value of those assets which consist of such investments as aforesaid would exceed that percentage if the investment were made.

(2) For the purposes of this section the value of any assets which consist of investments in associated companies shall be determined in accordance with any applicable valuation regulations.
(3) In this section—
"long term assets" and "long term funds", in relation to an insurance company, mean respectively assets representing the fund or funds maintained by the company in respect of its long term business and that fund or those funds;
"the prescribed percentage" means five per cent. or such other percentage as may from time to time be prescribed for the purposes of this section by regulations;
"investments in associated companies", in relation to an insurance company, includes money owed to that company by an associated company, and the reference to the making of an investment by an insurance company includes a reference to the entering by it into a transaction under which an associated company will owe it money;
"associated company", in relation to an insurance company, means a company which, to the knowledge of the insurance company, either controls that company or is itself controlled by another company which also controls the insurance company;
"company" includes any body corporate.
(4) For the purposes of this section a company controls another company if, either alone or with any associate or associates, it is entitled

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to exercise, or control the exercise of, one third or more of the voting power at any general meeting of the other company or of a company of which that other company is a subsidiary; and in this subsection "associate"in relation to a company, means—

(a) any subsidiary of that company; and

(b) any director or employee of that company or of a subsidiary of that company.

(5) This section shall not be construed as making any transaction unenforceable as between the parties thereto or as otherwise making unenforceable any rights or liabilities in respect of property."
The noble Earl said: My Lords, with this Amendment I think it would be convenient to consider Amendment No. 44 which is directly related. This new clause deals with the matter raised on Amendment No. 7 in Committee by the noble Lord, Lord Jacques. Its purpose is to protect the interests of long-term policy holders by limiting the investment of long-term funds in companies under the same control as the long-term insurer, but not investments in the insurer's own subsidiaries. The principle has the support of the Life Offices' Association. It is not denied that investments in associated companies may be good investments and perfectly suitable for the long-term funds. There is, however, the risk of a conflict of interest for persons who control both the long-term insurer and other companies which may be engaged in other forms of insurance or non-insurance business, as between the return upon the investments of the long-term funds, the bulk of which normally goes to the with profit policy holders, and the profitability of the associated companies in which the policy holders have no share.
The limitation proposed operates so as to prohibit further investment in an associate from the long-term funds if such investments already exceed 5 per cent. of the amount standing to the credit of the funds, or if the further investment would take the figure above that limit. This does not require the realisation of such investments which may at the date of the passing of this Bill exceed the 5 per cent. limit or if subsequently movements in the amount of the funds or the value of the investments should carry the proportion over the 5 per cent. limit. In such circumstances there will, however, be a standstill on further investment. Subsection (3) provides that the percentage
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may be changed by regulation, subject, as are all the matters to be prescribed under the Bill, to annulment when laid before Parliament. Such a change would similarly have no retrospective effect. Subsection (2) makes the value of the investments in associates one of the matters which may be prescribed under Clause 31.
The crucial definition is of course that of an "associated company" for this purpose. It is a company which controls the long-term insurer, either directly or through an intermediate holding company, also any other company which is under the same control. It does not include a company controlled by the long-term insurer. In this context "control" is substantially the same concept as in Clause 2(2)(c)(ii); that is to say, the right to control one-third or more of the voting power, either alone or in association with a subsidiary and any director or employee of the controlling company or its subsidiary. The final subsection provides that any transaction which transgresses the limit imposed by the clause shall not thereby be rendered unenforceable. This is to ensure that the investment shall be recoverable if, for example, the company in which it is made should go into liquidation. The Amendment to Clause 36 will enable the Secretary of State to make exceptions in special cases on the application of a long-term insurer. I beg to move.
LORD ALDINGTON: My Lords, I am in favour of the purpose of the Amendment as put forward by my noble friend, but it does not seem to me to achieve the purpose that he outlined to us, and the key to my belief lies in the definition of "associated company" and his remarks about it. An "associated company" in relation to an insurance company means a company which to the knowledge of the insurance company either controls that company or is itself controlled by another company which also controls the insurance company. It is a fact that the insurance industry has many grandparental and great-grandparental relationships, and it is a possibility that there are a number of subsidiaries of insurance corn-panics which by the Companies Act are subsidiaries of the principal holding company, which principal holding company controls the insurance company.

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I hope my noble friend has my point, but perhaps I may explain it a little further. Some insurance companies are organised so that there is a holding company which holds the life insurance company and the general insurance company. Under the life insurance company, there could be a subsidiary. I understand it, it is my noble friend's intention that this clause should not catch that subsidiary, but because, I think I am right in saying, by the Companies Act, that subsidiary and all the subsidiaries count also as a subsidiary of the holding company, the subsidiary is a subsidiary of a company which controls the insurance company. If my noble friend would be so good as to have that point examined again, I am sure I can fully support the clause on the understanding as given to us explicitly by my noble friend that the intention is not to catch companies established, as it were, deliberately for the purpose of the long-term insurance business by a long-term insurance company.
LORD CACCIA: My Lords, I should like to follow on and support what my noble friend Lord Aldington has said; namely, that this clause, as explained, is in principle well accepted by the insurance industry. But there is just the question whether in fact as at present drawn it has it absolutely right, and I hope that the Minister will be ready to have further discussions with the industry to see whether the sort of things my noble friend has mentioned are adequately met in the ultimate language.
THE EARL OF LIMERICK: My Lords, I readily give that undertaking. These relationships do get a bit complicated, and perhaps the borderline between what is proper and what is incestuous is not always immediately evident. Of course we can look at the situation which the two noble Lords who have spoken have in mind, and if we see that we have made a mistake, or caught something which we did not intend to catch, I shall not hesitate to bring forward an Amendment at a later stage.
On Question, Amendment agreed to.
Clause 11 [Grounds on which powers are exercisable]:
THE LORD CHANCELLOR: My Lords, I beg to move Amendment No. 18. I explained in my first remarks that this
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was to meet a criticism made in Committee.
Amendment moved—
Page 8, line 41, leave out ("expedient") and insert ("desirable").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 19:
Page 9, line 40, after ("19") insert ("(2) to (4)").
The noble Earl said: My Lords, following the debate in Committee on Clause 11(3), I reviewed the principle of inspecting companies which are not necessarily suspect, as to which views were expressed both in support and in opposition by noble Lords who commented on it. I have concluded that it is right to retain this random inspection power for the reasons stated in Committee, and with which, if I may venture to say so, the B.I.A. is in general agreement. We have, however, come to the conclusion, with which again the B.I.A. concur, that the arguments for such a power apply with considerably less force to the requirements for specified information which may have to be prepared specially, and may be demanded on a series of dates with which Clause 19(1) deals, than to the demands which may be made under Clause 19(2) for the production of existing books and papers on a particular occasion. Consequently, the Amendment limits the application of Clause 11(3) to subsection (2) and the two following ancillary subsections of Clause 19. I beg to move.
LORD ALDINGTON: My Lords, I think this is an improvement, but it does not go far enough. Nevertheless I welcome it, and I shall have some more to say on the next Amendment.
On Question, Amendment agreed to.
6.48 p.m.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 20:
Page 9, line 40, after ("exercisable") insert ("so far as is necessary to provide him with information about underwriting reserves").
The noble Lord said: My Lords, my noble friend has waved a red flag in front of my bull-like countenance by saying that the clause as it now stands, without my Amendment, is a clause that the B.I.A. would like. That of course is a red rag to me and to others of my noble friends who are unable to be present

939
to-day. In so far as it is a statement of truth—and I do not know whether it is or not, because I have not restudied the matter—I must say that it is not final proof that Insurance companies as a whole, after discussion with their boards of directors would come to the same conclusion. So I hope he will accept it from me that I do not feel bound by anything, that has been said. My noble friend may be interested to know that my Amendment has been drafted by official people who understand insurance, and I hope he will not think that this is a proposal that comes from an interfering, ignorant chairman of an insurance company. It is there for a very good reason, following the line of argument that I have put to your Lordships' House on so many occasions, that we should try to limit these powers to what is necessary.
I think it is common ground that the inspection of what are called good insurance companies is not by itself necessary. It only becomes necessary in order, as it were, to camouflage the essential inspection of bad companies. This was all set out by my noble friend Lord Limerick on February 22 at columns 433 and 434. He went on to say that, while the main reason was what I call the camouflage reason, the ability to inspect good companies would put the Department of Trade in possession of knowledge of how companies should be properly run in order to help them decide what were the right standards, and presumably in order to spread the good standards from the good companies into, the bad ones. I am sure that this happens in a competitive industry in one way or another, but it seems rather an odd function for a Department. Nevertheless, I accept—and in accepting I am trying to compromise here—the camouflage argument. If that is the main purpose of Clause 11(3), then it seems to me not unreasonable to try to state the area to be covered by the inspection, or the area to be covered by the power to demand books, papers and so on.
It would seem to me, after discussing this with a number of people, that the sensible area to pick for this purpose would be the sensitive area, and that is the area of decision about underwriting reserves. In fact, to anybody knowledgeable about the insurance industry, this is
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a difficult area and one in which mistakes, for good reasons as well as bad ones, have been made. Therefore, I am proposing here that the right of inspection of a good company—because that is what Clause 11(3) refers to—should be limited to the acquisition of information about underwriting reserves. That covers quite a big field, and it would certainly give the Department the camouflage they want for putting in inspectors. It would seem to me far more in accordance with the ordinary practice of legislation than that we should provide the Department with very wide powers to enable them to go into good companies and ask them for all kinds of information about every part of their considerable business, without having any reason for requiring that information. I beg to move.
6.52 p.m.
THE EARL OF LIMERICK: My Lords, it would be a foolish man indeed who waved a red flag before my noble friend Lord Aldington, and I was trying to avoid doing it. With great respect to my noble friend and the way in which he has moved his Amendment, I think the purpose which he seeks to achieve by it is a mistaken one, and one which might not in any case be achieved by the Amendment. In effect, it would exclude the random inspection of companies, good, bad or indifferent, and it would limit the purpose to what we have come to regard as "yardstick" investigations. These have an obvious value, and when we have had dealings with the big companies in the past they have been most freely forthcoming with information. These "yardstick" investigations establish the practice of reputable companies by which the less reputable ones can be tested. But if that were seen to be the purpose. and if the inspections were in fact to be so limited, we should not be achieving the camouflage purpose (which my noble friend accepted) for the avoidance of stigma for the weaker, but possibly quite sound, companies that we thought it prudent to inspect. If the power to seek information under Clause 19 were to be limited in the way it would be if this Amendment were accepted, then I think it is evident that the mere entry of an inspector into one of those companies would prove that it was for some purpose not going beyond this limit, and therefore the camouflage would be totally removed,

941
because nobody would think that the inspector was going in for any other purpose.
We might well, on that basis, attract stigma to some quite reputable companies which we inspected for "yardstick" purposes, because we would by definition be confining our attention to what is, to any insurance company—and this is the central argument—the most uncertain area in its accounts as defined by the Amendment. This is the area where inescapably estimation predominates and where it may be falsified by events; and the bigger the company the greater must be the possibility of error in absolute monetary terms. Many large and reputable companies have in fact had that experience in recent years and have freely admitted it. There was a sizeable example quite recently. For these reasons I believe this Amendment to be mistaken, and I would ask my noble friend not to press it.
LORD ALDINGTON: My Lords, I am afraid I find this situation somewhat surprising. I am taken by surprise, even though I expressed the hope that I would not be asking the House to divide. This seems to be a matter of great principle, to which I shall have to advert. There is no reason at all for putting the reputable part of the insurance industry (or the taxpayer) to the expense of employing an army of inspectors—whether random or not does not matter. There is no reason to state it in this Bill. In fact, Clause 11 goes so far as to state reasons why it should be done and then on top of that, for camouflage reasons, says that this inspection power can be used in other cases too.
As said on Committee stage, it seems to me wholly wrong and contrary to the relationships of Government, industry and commerce of this nation that wide inspection powers should be taken, enabling Government officials and inspectors to go into perfectly reputable offices without any accusation of things being wrong and without any limitation on their powers to inspect, to spy, to investigate or what-have-you. I think it would be absolutely wrong for this House to let the Bill go forward with the proposition for the first time, as I understand it in any activity carried on by private enterprise in this country, that
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there should be inspection without cause shown and with no purpose given.
What I have tried to do is to compromise with my noble friend by finding a small area which is meaningful, because it is an area where everybody wants more information, and to put that in this Bill to assist him in what he says is important to the rest of the Bill, that is, giving some camouflage to inspectors. If my noble friend could perhaps say to me that he would consider this further before Third Reading, I could rest once again on that; but I do feel, first of all, rather surprised that he cannot give anything at all on that point and, secondly, I would feel myself to be falling down on what I have said, and said fairly powerfully, as have some of my noble friends, if we just let this matter pass without any change at all. I am inclined to suggest that on Third Reading the House should abandon Clause 11(3) altogether. It would be better than leaving it as it is.
LORD CACCIA: My Lords, at this stage, I do not know whether my intervention will help or hinder and of course it is one of those good intentions with which the road to Hell is said to be paved. My difficulty here is in having great sympathy with the objective of this Amendment which the noble Lord, Lord Aldington, has put forward, and yet finding extreme difficulty in what he has done to try to be of assistance to the Government. If it were done in this way, I am not sure that I could go along with it; so I would rather hope that between now and Third Reading some further consideration might be given to the matter and that this particular form of Amendment would not be pressed.
LORD JACQUES: May I make our position on this side quite clear on this Amendment? We are grateful for Amendment No. 19. That goes as far as we think is necessary. If there were to be a Division on Amendment No. 20, or anything like it, we should advise noble Lords on this side of the House to vote with the Government.
THE EARL OF LIMERICK: My Lords, I do not know whether it would help if, with leave, I were to say that I will certainly listen to any other arguments

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that are put to me between now and the next stage. I must say that I am not convinced on this matter at all, and I think the principle is wrong. Nevertheless, I will listen to what is said. I would also say this. My noble friend referred to this as being the only example he knew of a random inspection. I do not think that that is the case. We have, for example, the Factories Acts.
LORD ALDINGTON: My Lords, my noble friend is misleading the House. The Factories Acts set out exactly why the factories are to be inspected, for exactly what purpose, and up to what standard. There is absolutely no sign of anything like that in this Bill, and it is wholly misleading to bring in the Factories Acts as a justification. There may be something wrong in my drafting, but it is certainly nothing to do with the Factories Acts.
THE EARL OF ONSLOW: My Lords, is it not true that if the insurance industry were prepared to police itself these inspection powers would not be needed? I should like to support any increase in inspection powers that are available, and the more random they are the better. As I said earlier, the benefit to the insuring public and the benefit to British insurers is in my view the same and always will be the same.
THE LORD CHANCELLOR: My Lords, is the noble Lord pressing his Amendment?
LORD ALDINGTON: My Lords, on the understanding set out by my noble friend Lord Limerick, I withdraw the Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: My Lords, I beg to move Amendment No. 21. This has been fully explained.
Amendment moved—
Page 9, line 41, leave out ("expedient") and insert ("desirable").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE EARL or LIMERICK THE EARL or LIMERICK had given Notice of intention to move Amendment No. 22:
Page 10, line 1, leave out subsection (4) and insert—
("( ) Any power conferred on the Secretary of State by sections 13 to 17, 19(1) and 20
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below shall also be exercisable whether or not any of the grounds specified in subsections (1) to (3) above exists, in relation to—

(a) any company, society or body with respect to which the Secretary of State has issued an authorisation under section 61 of the Act of 1967;

(b) any insurance company to which the Act of 1958 applies in the case of which there has been a change in the persons who are controllers of the company,

if that power is exercised before the expiration of the period of five years beginning with the date on which the authorisation was issued or the change took place, as the case may be; but no requirement imposed by virtue of this subsection shall continue in force after the expiration of the period of ten years beginning with that date.")
The noble Earl said: My Lords, the eagle eye of my noble friend Lord Aldington has spotted a possible defect in this Amendment. Rather than weary the House with a long and possibly contentious argument, I prefer to take it away for reconsideration and reversion at a later stage. In these circumstances I will not move the Amendment.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 24:
Page 10, line 14, leave out ("12") and insert ("13").
The noble Lord said: My Lords, I beg to move Amendment No. 24, and I should like to take with it the next Amendment. I suppose this might be thought to be impertinent of me, but this is an Amendment designed to achieve what I thought my noble and learned friend the Lord Chancellor was saying to us during the last occasion on which we discussed Clause 20. Much to the surprise of myself and some noble friends who studied this Bill carefully, my noble and learned friend was saying that Clause 20 was meant to provide the Secretary of State with powers not as drastic as those in Clause 12. I suggested. somewhat meekly, that that might well be the intention, but it did not seem to fit in with my understanding of the words then in subsection (5), which reads as follows:
The power conferred on the Secretary of State by section 20 below shall not be exercisable except in a case in which he considers that the purpose mentioned in that section cannot be sufficiently achieved by the exercise of the powers conferred by sections 12 to 19 below or by the exercise of those powers alone.

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What I am suggesting is that we should say this:
" … cannot be sufficiently achieved by the exercise of the powers conferred by Sections 13 to 19 below or by the exercise of those powers",
and then add:
"and he considers that it is not necessary to use the power in Section 12"
I put that down meekly, and I hope it will not be thought impertinent, because I thought that was exactly what my noble friend the Lord Chancellor was saying to us on the last occasion.
THE LORD CHANCELLOR: My Lords, I do not think that my noble friend is in the least impertinent; I think he is a bit of a tease. I am bound to say that I took this and the following Amendment as an attempt to tease me rather than as a serious intent to improve the Bill. I hope I am wrong, but I am afraid that that is the ugly thought which flitted across my mind. I will tell my noble friend why I did not take it as a great improvement on the Bill on the assumption which I make that everything he said on Committee, and everything I said on Committee, was seriously meant. Indeed, so far as I was concerned, it was.
These various powers are, as I indicated, designed to avoid if possible, the use of the lethal powers of Clause 12. One of the reasons why this is so is that after the V. and G. inquiry it became perfectly apparent that the Clause 12 powers which already exist under the existing legislation are so lethal that kindhearted civil servants hesitate to use them at all, or hesitate to use them before the horse has well been stolen and the stable door is wide open. My noble friend, taking the Lord Chancellor at his word, says, "We will leave out 12" and insert '13', so that Clause 12 does not enter into it, and we will insert the words, 'and he considers that it is not necessary to use the power in Section 12'". The reason why that is wrong, if one is to take the matter seriously, is that of course the powers under Clause 12, lethal as they are, would be perfectly sufficient to deal with the question if they were used. We do not want to use them, but they would deal with it. You can stop a man from having measles quite efficiently by cutting
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off his head; the difficulty is that it is rather a drastic remedy.
If your Lordships insert the words that are in Amendment No. 25, the only reason that the Secretary of State would consider that it is not necessary to use the powers in Clause 12 would be precisely because he had the powers which are given to him by this clause. The result is that my noble friend has involved himself in a circular argument. The only reason that the words could be correctly inserted would be if the power existed independently of the words. If it did not, I am afraid that they would preclude the use of the power altogether. I feel, therefore, that the tease, although I do not resent it in the least, is one which we should not pursue to the ultimate length of a Division. The noble Lord, having made his successful debating point against me in Committee and having provoked me into an embarrassed explanation on Report stage, has achieved everything he could possibly desire. I therefore hope that he will not press these particular Amendments.
LORD ALDINGTON: My Lords, before my noble and learned friend sits down, may I ask whether he is not saying that the first of my two Amendments is right but the second Amendment, for the dialectical reasons he mentioned, is wrong? If he is saying that, we should split the difference; he should support the first Amendment and then I will not move the second Amendment. I thought that was what his argument amounted to.
THE LORD CHANCELLOR: My Lords, I thought that I was saying that they were both wrong, although I was slightly amused that my noble friend should try to catch me on the hop.
LORD ALDINGTON: My Lords, I was not trying to catch my noble and learned friend on the hop; I am trying to see that the Bill makes sense to people outside your Lordships' House. In listening to my noble and learned friend on March 6, every one of us was somewhat surprised when he explained to us that Clause 20 was less draconian than Clause 12. That is a fact and I believe there was also surprise outside. Perhaps I may on this occasion quote the B.I.A. (which is frequently used against me) as there was some doubt there too. It would seem that however bad my words

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are, the words as they are now are worse; and that is what I believe the noble and learned Lord the Lord Chancellor was saying to us on March 6. And though he has had great fun in explaining that my words are not any good, perhaps he and his noble friend would once again have a look at the clause to see whether it is rightly drafted at present. If he can tell me that he will do that, I will of course withdraw my Amendment.
THE LORD CHANCELLOR: My Lords, I can speak again only by leave of the House. I certainly will ask my right honourable friend and his advisers to look into the drafting of this clause, but on reflection I think that my noble friend will see that the Amendment involved a circular argument and I managed to achieve exactly what I wanted to achieve by the Bill as drafted. Of course I shall look at it again if my noble friend has doubts.
LORD CACCIA: My Lords, may I thank the noble and learned Lord the Lord Chancellor for that, because I, too, have been somewhat bewildered. I read what he said the last time we discussed this matter and understood precisely that this was introduced in order that the Bill should not have to be as rigorous as the other provisions prescribed. I understand also, if one may say these things, that it seems to be what is currently said by the Department to the B.I.A. But when one looks at the words, it seems that they convey something else. Or is it that Amendment No. 20 and this one together would enable two things to take place: either a less drastic application of the sanction; or a sanction provided in a case which has not otherwise been thought of in the other provisions? It is a sort of "both/and" rather than "only"—a less severe rendering
THE LORD CHANCELLOR: My Lords, again I can speak only by leave of the House, but I meant exactly what I said on Committee, and still think that the clause as drafted achieves exactly that purpose. I do not think that we can do anything by prolonging this argument. I undertake, in response to the request made by my noble friend Lord Aldington, that the matter will be looked at again to see whether in any way the drafting can be improved. My own belief is that
948
it probably cannot, but if it can, then let it be improved.
LORD ALDINGTON: My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 12 [Restrictions on new business]
THE EARL OF SELKIRK THE EARL OF SELKIRK moved Amendment No. 26:
Page 10, line 29, after ("authorised") insert ("under section 61 of the Act of 1967").
The noble Earl said: My Lords, I beg to move. The word "authorise", I presume, means under Section 61 of the 1967 Act. It does not say so in the interpretation clause and the way the words appear leaves a possible suggestion that some insurance companies are acting in an unauthorised way. That would be unfortunate because it is quite untrue. Some definition of "authorised" would make it more straightforward. I beg to move.
THE EARL OF LIMERICK: My Lords, the Bill is drafted the way it is precisely to cater for the possibility that there may be companies who are carrying on insurance business and who are insurance companies which are unauthorised, and it is evident that if they are so carrying on it is all the more important that we should have these powers, although they are not authorised under the 1967 Act. It is the more important that we should be able to stop them quickly, and while of course they are required to discharge their existing obligations, there is another technical difficulty which arises in the identification of those companies which were automatically authorised by Section 61 of the 1967 Act when that became law. I hope that that explanation will explain why the Bill is as it stands.
THE EARL OF SELKIRK: My Lords, I am grateful to the noble Earl. He does not mean the word "authorised"; he means "authorised under the 1967 Act". It does and can mean that the insurance company is engaged in wholly unauthorised and possibly illegal activities. Is that right?
THE EARL OF LIMERICK: My Lords, with leave, yes, there could be a company carrying on insurance business that

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has not sought authorisation and it is all the more important that we should be able to deal with such a company.
THE EARL OF SELKIRK: My Lords, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 13 [Requirements about investments]:
7.17 p.m.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 27:
Page 10, line 30, at end insert (in relation to assets covering liabilities and solvency margin").
The noble Lord said: My Lords, this follows a point that was made by me during the discussion on the Question, That the clause shall stand part, to the effect that this gave the Secretary of State very wide powers indeed over the investment of insurance companies. I believe that it was my noble and learned friend who replied that the powers were not quite as wide as they looked because this clause is activated only by one of the reasons set out in Clause 11, and in this case it would be Clause 11(1). But one of the events in Clause 11(1) that activates all these powers is the change of a controller. Therefore, every seven or ten years when an insurance company changes its chief executive or managing director all these powers become usable. Therefore, it is important to see that the power of the Secretary of State over investments is limited to what is necessary. We all accept that some power is necessary. Certainly it is right that he should be allowed, where he thinks it is right, to find out about and give some directions about investments that cover liabilities and the solvency margin. But many insurance companies have investments that cover the surplus above all that.
I believe that this view has been conveyed to my noble friend by other persons than ignorant chairmen and directors of companies. On this occasion the experts themselves hold this view and perhaps I have some hope, as I am joined with their support, publicly known, that it will be accepted that it will be a good thing slightly to limit the Secretary of State's power so that his power over investments is, and is seen to be, related
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to assets covering liabilities and solvency margins. I beg to move.
THE EARL OF LIMERICK: My Lords, my noble friend's main concern centres upon the use of these powers on the change of a chief executive, and here perhaps I should say by way of opening comment that this point is not unconnected with the Amendment which I did not move earlier in the afternoon. The purpose of this Amendment was referred to in Committee by my noble friend and we have since given the matter a good deal of consideration. While I have some sympathy with the thought underlying the Amendment, I do not think it is well conceived and I should be most reluctant to see it form part of the Bill, for the following reasons. The amount of the liability is inevitably largely dependent on estimation and the solvency margin relating to the preceding year's premium income which may since have been greatly expanded, so we have an immediate arithmetical difficulty in deciding what we would mean by assets covering liabilities and solvency margins. These things change quickly and they are not easy to determine at the best of times. It therefore seems much more sensible to look at the assets rather than the liabilities and to decide whether in all the circumstances of the particular company their quality and diversity are reasonably adapted to the needs of the business.
I would also mention that the powers reformulated in this clause will permit a requirement to realise a proportion of the investments of a specific class, whereas the existing power from the earlier legislation leaves no option but to refer to the whole of the class. So we also have a gentler power to achieve what may be an objective reachable without requiring the realisation of all the assets in a certain class, and it is, as I believe my noble friend recognises, invocable only in relation to a particular company at a moment of time and only where grounds for concern as defined in Clause 11 exist. I have already promised to meet my noble friend and I should be glad to include further discussion on this matter with him if he so wishes.
LORD ALDINGTON: My Lords, my noble friend has made a very important statement. He said that Clause 11(1)

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only applies or only activates these powers in cases of concern. But Clause 11(1)(f) says:
"that it appears to him that there has been a change in the persons who are controllers of the company".
That, as the word "controller" is at present defined in this Bill, includes cases where there has been a change in the chief executive. There is no concern there. He does not have to have concern; it just is a fact.
THE EARL OF LIMERICK: My Lords, perhaps my opening words were a bit too oblique. This is one of the matters which we are looking at.
LORD ALDINGTON: Good. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 19 [Power to obtain information and require production of documents]:
THE EARL OF LIMERICK: My Lords, Amendment No. 28 was considered with Amendment No. 1. I beg to move.
Amendment moved—
Page 14, line 15, after ("past") insert ("director or").—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 21 [Notice of proposed exercise of power under s. 12]:
THE EARL OF SELKIRK THE EARL OF SELKIRK moved Amendment No. 29:
Page 14, line 34, leave out ("section 12") and insert ("sections 12 and 20").
The noble Earl said: My Lords, I beg leave to move Amendment No. 29. We now come to Clauses 21 and 22, which deal with the application of the powers under Clauses 12 to 20. In regard to one of the powers, called the lethal power, a period of notice of one month has to be given, and that is laid down in subsection (1) of Clause 21. We had a discussion on Clause 20, which clearly has a much wider bracket in both directions; it can be more gently used or more strongly used. It occurs to me that if it is necessary for the power under Clause 12 to be used that one month's notice should be given, it is only right and appropriate that action under Clause 20 should require one month's notice. I take it that the whole
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of Clause 21 refers only to Clause 12. Is there some reason why Clause 12 should be in a class all by itself?
Perhaps I may also ask what method of communication is going to be used for the remaining clauses, Clauses 12 to 20. Will it be by telephone conversation, in writing, or by personal interview? I think it is not unimportant that we should have some idea. I beg to move.
THE EARL OF LIMERICK: My Lords, there is indeed a good reason why Clause 21 refers only to Clause 12. Clause 12, as we have recognised in our discussions, is the "killer" clause; there is no other clause that approaches it in its severity. I will say a word in a moment about Clause 20. Therefore, it is, as has been recognised, right—and it was in the 1967 Act—that notice should be required before invoking Clause 12. If one examines what is brought about by the other clauses in this group, one can see that such notice would not be appropriate to their exercise. If we look, for instance, at Clauses 14 and 15, "Maintenance of assets in the United Kingdom", and "Custody of assets", these are the very powers that need to be invoked at extremely short notice in certain cases of difficulty. Again, Clause 16, "Limitation of premium income", is something far milder than saying that no new business can be undertaken. This may relate perhaps to doubts about the fitness of an individual manager in one company. Clause 17 is "Actuarial investigations"; and I think notice is not very relevant to that. The next two clauses are "Acceleration of information", and "Power to obtain information". So we come really to the question of Clause 20, which I believe was in my noble friend's mind.
I would explain it in this way. My noble friend is evidently, if I may put it this way, reluctant to believe that some fiendish ingenuity of bureaucrats would be unable to devise a use of Clause 20 which might be at least as draconian as the power of restriction under Clause 12. Even if he were right—and I cannot see how there can be anything more draconian than Clause 12—this Amendment would throw out the baby with the bathwater, in the sense that even the mildest use of Clause 20 would be subjected to a month or more of delay. This in a sense we might call the "stitch in

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time" clause. It is a way of doing perhaps rather a small thing quickly, to prevent a situation which is deteriorating from getting worse, without the necessity to invoke more severe powers.
I was at some pains in my Second Reading speech to stress the importance of the Department being able to act quickly and appropriately at the first sign of trouble. It is only because the power given in Clause 12 is so clearly capable of use to deadly effect that it is right to impose a delaying procedure in which the justification for such action may be challenged. I think Clause 12 is, therefore, clearly to be distinguished from the other clauses, particularly Clause 20, in the way I have described.
THE EARL OF SELKIRK: My Lords, I thank the noble Earl. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.28 p.m.
THE EARL OF SELKIRK THE EARL OF SELKIRK moved Amendment No. 30:
Page 15, line 1, at beginning insert ("The procedure under").
The noble Earl said: My Lords, I beg to move Amendment No. 30. Subsection (2) of Clause 21 begins by saying that subsection (1) "shall not apply". What I am asking is whether it will not apply in the sense that no notice will be given, or whether the manner in which the notice is given and the time will apply. In point of fact, the people to whom it will not apply are what I call non-executive directors. Non-executive directors are caught directly under the following clause, Clause 22, and the procedure under Clause 22 is almost exactly the same as under Clause 21. I am therefore, not quite clear why this says that it will not apply. What they are saying is only that the procedure will not apply? That is the first point.
There is a major point about which I should like to ask the noble Earl. If a non-executive director is to be removed, he can be removed under certain procedure preparatory to using powers under Clauses 12 to 20. But if a controller is to be removed, or rather if he is changed, or his quality is the reason for using Clause 12, he cannot be removed except under Clause 12. What is stated in subsections (2) and (3) of Clause 21 is that if
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Clause 11(1)(e)—that is to say, the unsatisfactory individual controller—is the reason for using Clause 12, then you will give particulars of the grounds on which the Secretary of State is considering exercising his power. If, however, the unsatisfactory controller is the reason for using any other clause—that is to say, Clauses 13 to 20—then there is no reason to give him any particulars whatsoever.
I am afraid this is a little outside the Amendment, but I draw attention to it because it seems to me that the structures of subsections (2) and (3) are peculiar as they stand at the present time. If it is a non-executive director and it is given as a reason for using any clause from 12 to 20, that is fully covered and, I may say, satisfactorily covered, by Clause 22. But in the case of the controller who is unsatisfactory and you wish to use a clause other than Clause 12, there is no reason to give particulars. I should like the noble Earl to look at that point. It seems to me contrary to what the Lord Chancellor was telling us earlier, that people in the industry would be given the reasons why they are being asked to leave, or the reasons why the clause should be brought into operation. I beg to move.
THE EARL OF LIMERICK: My Lords, I think I can answer fairly readily the first point raised by my noble friend Lord Selkirk. It is really a question of the drafting of Clause 21. If we consider that subsection (1) of Clause 21 is concerned solely with procedures, this makes the point clear. If the Amendment were accepted, it would raise a doubt, by referring to the procedures under subsection (1), as to whether subsection (1) did not also relate to something other than procedures, which it does not. Therefore the Bill as it stands I believe is clear; if the Amendment were imported it would become unclear. My noble friend raised also another point, though I think it is not directly covered by the Amendment. That is on changes of controllers. I wonder whether he has considered the effect of Amendment No. 31, which we shall be reaching in a moment, and which, by deleting some words, removes the exception to the necessity to give particulars in the case of the sitting

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tenant. I think this may perhaps meet his point when he comes to consider it.
THE EARL OF SELKIRK: My Lords, the noble Earl has already told us that Clause 21 referred exclusively to Section 12.
THE EARL OF LIMERICK: My Lords, if I have misled the House I shall of course apologise. The second half of subsection (2) deals with the proposed restrictions because of unfitness, and for this the procedure is different from that required where some other ground exists, but it is my understanding that we are talking here about the implication as it applies under Clause 12. But my noble friend has raised some doubt in my mind and I will certainly look again at that point. I think, however, it is not directly related to the wording of this Amendment.
THE EARL OF SELKIRK: My Lords, I must concede to the noble Earl that it is not directly related to the wording of the Amendment, and to this degree I apologise to him for raising it. But it seems to me to be at variance with the full statement we have received that anyone in the job will be given particulars before he is put out. So far as I can see this is not fulfilled in respect of controllers to whom objection is taken other than on the occasions when it is desired to use Clause 12. If the noble Earl will look at this point I shall be very grateful. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
THE EARL OF LIMERICK: My Lords, Amendment No. 31 was considered along with Amendment No. 2. I beg to move.
Amendment moved—
Pace 15. line 14, leave out from ("above") to end of line 16.—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 22 [Notice of proposed exercise of powers on ground manager's unfitness]:
THE EARL OF LIMERICK: My Lords, likewise Amendment No. 32 was considered with No. 2. I beg to move.
Amendment moved—
Page 15, line 28, after second ("is") insert ("a director, not being a controller, of the company or").—(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, Amendment No. 33 was also taken with No. 2. I beg to move.
Amendment moved—
Page 16, line 11, leave out from ("section") to end of line 14 and insert ("shall give particulars of the ground on which the Secretary of State is considering the exercise of the power or powers in question.")—(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, Amendment No. 34 again was considered with No. 2. I beg to move.
Amendment moved—
Page 16, line 24, after ("a") insert ("director or").—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 32 [Approval of person proposing to become controller of insurance company]:
7.35 p.m.
LORD ALDINGTON LORD ALDINGTON moved Amendment No. 36:
Page 25 line 6, after ("controller") insert ("within the meaning of section 2(2)(c) of this Act")
The noble Lord said: My Lords, it would be convenient, if my noble friend agrees, if we took all the Amendments Nos. 36 to 40 together because I think they all cover the same point. It would lead to an easier discussion. At the present time, this clause requires that no one shall be able to become a controller of an insurance company unless he has given notice to the Secretary of State and the Secretary of State has either approved or failed to disapprove within three months. That is a fairly firm power which it is thought necessary to have, and I do not quarrel with the Secretary of State having it in relation to people who are controllers of the company in the ordinary sense; namely, that they are able to control what the company does, but since we have earlier this afternoon passed a series of Amendments which, while improving the drafting of Clause 2 still leave "controller" in this Bill defined as including a managing director and a chief executive, I am wondering very much whether the wording of Clause 32 as it now stands is suitable. It really is not on his own initiative that anybody becomes a chief executive of an insurance company. He becomes

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chief executive because he is appointed to that office by the board of directors of the company.
A NOBLE LORD: Or by the Government.
LORD ALDINGTON: A noble Lord opposite says "or by the Government". I do not know of whom he is thinking or of what industry. Suppose for the moment we are considering the insurance industry in this country, which is wholly privately owned—and the Co-operative is also private in that sense—I think I am right in saying that no person becomes chief executive or a managing director unless he has been appointed as such by others. I should have thought that that drafting leads to problems if one imposes upon appointees this kind of statutory obligation. Therefore, I am proposing to your Lordships a series of Amendments which alter the existing subsection (1) in such a way that it is confined to controllers, as we understand that in the ordinary sense of the word, and that can best be seen by turning to subsection (2)(c). Subsection (1) would then remain in the form in which it is at present drafted, subject to this Amendment No. 36. Immediately after subsection (1) would then come another subsection which would refer to the appointment of managing directors or chief executives, and this would impose on the company, rather than the person, the duty of giving notice to the Secretary of State and the duty of waiting for a period which I have suggested in this case should be a period of one month and not three.
It would seem right that, in a Bill which is entitled the Insurance Companies Bill, we should have regard to Companies Act procedures generally, and the responsibility for choosing and then appointing the chief executive of a company is very much the responsibility of the board of directors of that company, and, in particular, of the chairman. That is why one has boards of directors in companies. It would seem to me a pity if we should now legislate under the heading of Insurance Companies on the basis that that was not the responsibility of the board of directors, but some individual responsibility coupled with the responsibility of the Secretary of State. Therefore, in order to get the matter
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right I have proposed these Amendments. I am sure, because this is what happens to everybody on Back-Benches in either House, that there are some drafting deficiencies—there always are. But, apart from the drafting deficiencies, I commend the alteration to the House; and I should like to say straight away that I really cannot be accused in this ease—1 do not think I should have been accused in any case—of trying to weaken the Bill. My Lords, I beg to move.
LORD GEORGE-BROWN: My Lords, may I ask whether the noble Lord is asserting that no controller, meaning controlling director, should be appointed by the Secretary of State? I may have misunderstood him. I thought his case was that it should have been arranged that the directors or the shareholders do this. If that is his case, is he not the wrong fellow to move the Amendment?
LORD ALDINGTON: My Lords, if I may just intervene, I think that the noble Lord is enjoying himself at my expense as a result of some announcement which was made earlier this afternoon. In fact, I do not think the appointment to which he referred—which does not relate to the insurance industry; it relates to another industry—was made by the Government. I understand it to have been made by others and announced by the Government.
LORD GEORGE-BROWN: I am sorry, my Lords. I do not think the noble Lord can get out of it like that, and I do not think he can get out of it by laughing. If he wants to impose this duty for insurance companies, is it not reasonable to ask him to live up to it for other companies? My understanding is that he has accepted the appointment of controller, if chairman means controller—
LORD ALDINGTON: No, my Lords; it does not under this Bill.
LORD GEORGE-BROWN: If it means just a nominal, non-controlling non-anything, why have it? I must say to your Lordships, if you will forgive me, that this is one of the things that make trade unionists, and chaps like me who are not militant, pretty fed up, because here is the noble Lord, who lives jolly well, has many chairmanships, deputy chairmanships and directorships, saying that in terms of the insurance companies

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appointments should be made properly, but does not himself mind accepting no end of appointments which, by the same standard, are not made properly. This Bill can go through, these Amendments can go through, but I must ask your Lordships please to accept that a lot of fellows much less moderate than I am see an enormous difference between the things that some of your Lordships say and the things that some of your Lordships do. If it is wrong to have a controller for insurance companies appointed in this way, is it right to have a controller for a nuclear power company appointed in this way? I am sorry, my Lords, but I am bound to ask the question, and I think your Lordships must recognise that chaps outside will observe a difference.
LORD ALDINGTON: My Lords, as the noble Lord has really impugned my good faith, I really think I must have a word—
THE LORD CHANCELLOR: My Lords, I am sure the House would not wish me to interrupt the noble Lord, but as this is the Report stage I think he must ask the House for leave to speak a third time.
LORD ALDINGTON: My Lords, I was going to ask for that, but it got stuck in my throat. I was going to ask whether, as the noble Lord has impugned my good faith, I may be allowed to speak again. I think the noble Lord knows that I have some difficulty in speaking at all. The noble Lord must accept from me that I have a good deal of affection for him. I think he has just got it quite wrong. There really is nothing inconsistent in what I am now saying and what has been done, and only slightly touched on to-day. I do not think that his friends in the trade union movement, who either know about these matters or understand me, will think that there is anything inconsistent in what I have now said. I would ask the noble Lord to take that from me, rather than flash it across the Floor of the House, which in earlier days I might have done. I content myself with that.
THE EARL OF LIMERICK: My Lords, my shopping list of matters to discuss with my noble friend Lord Aldington is growing and we might add this matter
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to it. I think we shall have to do that in any event because I have to confess that I am not entirely clear, despite his most painstaking explanation, what purpose would be achieved by this group of Amendments. I thought at first that it was to permit a company to "clear" a prospective managing director or chief executive without his prior knowledge, and if that is the case it would certainly have meant information prejudicial to the individual coming into the possession of his present or his prospective employers, without his first having an opportunity to explain it. But that view does not seem to be consistent with the requirement that the company should provide the prescribed particulars about the candidate; it is unlikely that the company would be in a position to provide these without inquiry of the person concerned.
Nevertheless, I think it would be wrong to take away from the individual concerned the opportunity given to him by the clause as it stands. This could happen in two ways: first, because the Department would apparently have no right to approach the person for supplementary information which is possibly of a routine nature, but may be very sensitive information, without routing the inquiry through the company; secondly, because any preliminary notice of objection would go simultaneously to the person and the company, without the person first having a chance to make representations which might remove the objection, without anyone else knowing. In both cases, his reputation with the company would have been avoidably damaged. Also, the time provided in the Amendment of one month is too short for the collection of information in some cases, particularly if it needs to come from overseas.
However, I am willing to look again at any proposal which is designed to meet a serious practical difficulty, without prejudice to the rights of the individual as set out in this clause, to which a great deal of attention has properly been given in the discussion of this Bill. But at the moment I am not entirely clear what the problem is. I am clear—and I hope I have explained it sufficiently lucidly—that the remedy proposed in this group of Amendments has some objectionable features and I could not for that reason advise the House to accept the Amendments as they stand. But if my noble

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friend would like to pursue the matter with me, adding it to the shopping list, I shall be happy to consider it further.
LORD CACCIA: My Lords, may I say that I was glad to hear the Minister say that he is ready to look at this point, because the noble Lord, Lord Aldington, was right in drawing our attention to the way in which a managing director or a chief executive is normally chosen for his job. It would therefore seem more natural, in those circumstances, for the approach to be made by the chairman of the company rather than by the man himself. If it is left to the man himself to do it I am not sure that much is avoided, because I should have thought it would be extremely difficult for the man himself not to say in confidence to the chairman, or make some communication to him, that he had been called upon to explain himself. But if this matter is going to be considered by the Minister with Lord Aldington, I am more than content.
THE EARL OF SELKIRK: My Lords, may I ask the noble Earl a question? Suppose a chief executive drops dead and there is no one else qualified to fill the office, surely someone has to carry on the business. But under this Bill nobody can do it.
THE EARL OF LIMERICK: My Lords, with the leave of the House, may I answer that point? I had a piece of paper which gave me the answer, but I am not sure that I can put my hand on it. This is a point about which we need have no concern. If somebody drops dead and there has to be reappointment, then notice would be given under Clause 33, and the expectation would be that the appointment would be made within a reasonable time. If, on the other hand, a man becomes incapacitated, is sick for a while, then there is nothing to stop somebody from acting in his place meanwhile. I think this point is well established.
LORD ALDINGTON: My Lords, I think I am allowed to rise once more with the leave of the House. In view of what my noble friend has said, I will certainly withdraw the proposal now, but will he please bear in mind that to turn down an appointment made by a board of directors is just as much a criticism of them as it is of the man himself? It most certainly is, because that is their chief
962
business in life—to see that they get the right people. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 33 [Duty to notify change of controller or manager]:
THE EARL OF LIMERICK: My Lords, this Amendment was considered with Amendment No. 1. I beg to move.
Amendment moved—
Page 26, line 2, after ("a") insert ("director,").—(The Earl of Limerick.)
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, this Amendment, again, was considered with Amendment No. 1. I beg to move.
Amendment moved—
Page 26, line 4, leave out from ("applies") to end of line 6.—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 35 [Treatment of certain business as or as not being ordinary long-term insurance business]:
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 43:
Page 27, line 19, leave out ("and 27(4) to (6)") and insert (", 27(4) to (6), 29 and 30").
The noble Earl said: My Lords, this is a small technical Amendment. As subsection (4) of Clause 35 stands, a small amount of short-term insurance business—for example, personal accident business—may be allowed, for the convenience of the company and where it would not be to the detriment of policy holders, to be treated in the same way as a larger volume of long-term personal accident business carried on by the company. Where such an arrangement has been approved, it would not make sense if it were to be reversed in the event of winding-up, and this Amendment avoids such an anomaly. I beg to move.
On Question, Amendment agreed to.
Clause 36 [Power to modify Acts in relation to particular companies]:
THE EARL OF LIMERICK: My Lords, this Amendment was considered with Amendment No. 17. I beg to move.
Amendment moved—
Page 27, line 37, after ("10") insert ("section (Investment by company with long term business in associated companies)").—(The Earl of Limerick.)
LORD DIAMOND: My Lords, if I may delay the House for a short moment, I want to raise an entirely different issue on this Amendment. This is a provision under which a hybrid Order may be made. As I read Clause 36(1) it says:
"The Secretary of State may, on the application or with the consent of an insurance company…direct that",
so and so,
"shall not apply to the company or shall apply to it with such modifications as may be specified in the order".
I am using the Amendment which is before your Lordships' House to draw attention to the fact that we have here the unusual circumstance in which this House is being asked to give power to a Minister to bring in an Order which will be a hybrid Order. The reason I am raising this matter is because it is one which happens to be under consideration by a Committee which your Lordships have created and of which it so happens I am a member. That Committee has not reported, and so I have no knowledge at all of what it might recommend. But we are in a situation where there are different procedures in the two Houses with regard to this very odd thing, the hybrid instrument. Therefore I think it would be right that when Parliament is giving a Minister powers of this kind it should be made aware what it is doing. I am carrying out that function now, to draw the attention of the House to the fact that it is giving a power to a Minister which will affect "an insurance company "—one single insurance company, one individual company; not a group, not a category, but one particular company, as I understand the clause. I hope, therefore, that when this matter reaches another place the Government will, of their own initiative, draw the attention of that other place to what is being done. Clearly, injustice might arise if a hybrid Order of this kind were made without the House being aware of it and having no opportunity, as indeed the other House has no opportunity, to deal with the Order once it was made. I am sorry to delay the House. This is a slightly technical point, but I do not think it is unimportant.
On Question, Amendment agreed to.
THE EARL OF LIMERICK: My Lords, this Amendment was considered with Amendment No. 16. I beg to move.
Amendment moved—
Page 27, line 37, after ("10") insert (",section (Avoidance of contracts for unlimited amounts)").—(The Earl of Limerick.)
THE LORD CHANCELLOR: My Lords, the noble Earl will notice that according to the Marshalled List the new Amendment is being put into the same place as the last one. I suppose he will have to tell the House where it ought to be put. I have a note somewhere here. I think it should be "after the section last inserted". Is that right?
THE EARL OF LIMERICK: Yes, my Lords, I believe that to be correct—"after the section last inserted."
On Question, Amendment agreed to.
7.59 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 46:
After Clause 37 insert the following new clause:
Application of Acts to organisations of workers or employers
". In section 1(5A)(a) of the Act of 1958 and section 60(1)(e) of the Act of 1967 (which respectively exempt from the Act of 1958 and authorisation requirements of the Act of 1967 a trade union or an employers' association within the meaning of the Industrial Relations Act 1971 whose insurance business is limited to the provision of certain benefits for its members) for the words "a trade union or an employers' association within the meaning of the Industrial Relations Act 1971" there shall be substituted the words "an organisation of workers within the meaning of the Industrial Relations Act 1971 (including an organisation for the time being entered in the special register maintained under section 84 of that Act) or an organisation of employers within the meaning of that Act"."
The noble Earl said: My Lords, this somewhat technical Amendment is designed to maintain the status quo in the treatment of the benefits that trade unions provide for their members. These were exempt from our supervision under the Insurance Companies Acts. In 1971 an amendment had to be made to those Acts to take account of the new definitions of trade unions and employers' associations, and the opportunity was then also taken to describe the benefits more precisely. The present exemption is therefore for provident benefits carried

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on as insurance and strike benefits provided by trade unions, employers' associations and organisations including those on the provisional register. It was expected that the organisations in question would register and there would be no change in practice. Registration, however, is voluntary and some organisations have decided to remove their names from the register. This means that if they are providing provident and strike benefits as insurance, they have brought themselves within the definition of insurance companies and therefore are or may be subject to the supervision requirements of the Insurance Companies Act. We do not know whether or to what extent these organisations are carrying on insurance business, but we believe it to be very limited; and if it were found that an organisation was carrying on an insurance business it would then come within our system of supervision.
We think the most practical solution to this uncertainty is to return to the intention of the earlier legislation and exempt provident and strike benefits of organisations of workers and employees from the supervision under the Insurance Companies Acts. This is what the Amendment does. It does not affect the position of registered unions or associations or organisations still on the provisional register. It means that the Department will not have to divert resources from its main task of supervising insurance companies to deal with incidental activities of unregistered organisations and that those responsible for those bodies will not have to comply with the requirements of this form of supervision.
Most of the members of the unregistered organisations, as policy holders, will not benefit from the supervision that the Act provides. These are members' benefits and the members have control of them under the rules of the organisation. It is open to them to seek further protection in other ways; such as registration under the Industrial Relations Act or registering their own friendly society. I beg to move.
LORD DIAMOND: My Lords, in view of the lateness of the hour I shall not dwell at length on this very awkward and difficult clause which re-opens old sores which are by no means healed.
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But I would want to deal with the narrow point that the noble Earl raised when he said that the policy of the Department in charge of the Bill was the return to the status quo ante. Am I not right in saying that prior to the Industrial Relations Act members of registered trade unions, organisations of workers, had the protection of the Registrar of Friendly Societies—not of the insurance companies, not of the Department, but of the general supervision of the Registrar of Friendly Societies?
Can the noble Earl indicate whether I am right or wrong in that? If I am wrong in that I do not propose to say anything more because we are then truly getting back to the position which existed previously, which is I think perhaps the right policy; but if I am right in that, then what is happening is, as in other respects, in order to achieve the same supervision and protection for their members that they had previously, unregistered trade unions will need to form their own friendly society. They will need to do this in order to get back to the position of having some protection which previously existed.
THE LORD CHANCELLOR: My Lords, perhaps it would be more convenient if I answered this point. Under the old laws existing before 1971 most of the organisations now unregistered were registered. As such, they would have come under the general supervision of the Registrar of Friendly Societies. If they are not registered now, they do not. All that this Amendment seeks to do, as I understand it, is to say that they do not come under the supervision or control of the Department of Trade and Industry for the purpose of any insurance business they may be carrying on. My impression is that very few of them are carrying on insurance business; but in so far as they are, they are free from that control. Obviously, this Amendment does not affect their position quoad the Registrar of Friendly Societies. This is dependent on the question of whether they are registered under the Act of 1971 or whether, not being so registered, they have registered as a friendly society which is registered under the Friendly Societies Act. It depends on that and not on this Amendment whether they have, as the noble Lord has said, the protection of the Registrar of Friendly Societies. As I

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understand my noble friend's Amendment, it is simply that for the purposes of the Insurance Companies Bill they are not under the supervision of the D.T.I. or within the provisions of the Bill that we are now discussing.
LORD DIAMOND: My Lords, if I may speak with the permission of the House, the point has been clarified and I am grateful to the noble and learned Lord for clarifying it. It confirms my anxiety. What we are doing at the moment is proposing to withdraw a form of protection; to wit, the protection of the Department where any insurance business is being carried on. This is the purpose of the Amendment: to withdraw that protection, that supervision, depending on how you look on it. In so far as it is difficult and inappropriate for the Department to give that kind of supervision, it is a wise thing to withdraw it. The purpose of my remarks is to draw attention to the fact that as a result of the Industrial Relations Act an unavoidable difficulty arises. Either you proceed as proposed under this Amendment, in which case members of unregistered unions are denied the general protection of the supervision of the Registrar of Friendly Societies in relation to such of those members' benefits as may be properly construed as insurance benefits or activities, or, if the Amendment is not made, an inappropriate form of excessive control is left under this Bill.
The only thing that would be satisfactory would be for the unregistered trade union to form its own friendly society, as one of the remedies which the noble Earl's Amendment suggested. It is because they are being put to this trouble that I draw attention to the fact that the evil of the Industrial Relations Act is continuing. That is all I have to say about the matter. I do not propose to resist the Amendment; it is better than leaving the Act as it is. But it does not solve the problem satisfactorily. No doubt there will be consultations and the matter will be dealt with further in another place.
THE EARL OF LIMERICK: My Lords, I should hesitate to make any comment in a field so well known to the noble Lord, Lord Diamond, but it may be helpful if I point out that we are withdrawing
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nothing from the bodies we are talking about. If they were carrying on insurance business (which is something we do not know) these bodies never were subjected to the supervision of the Department of Trade and Industry.
On Question, Amendment agreed to.
Clause 39 [Insurance brokers]:
LORD JACQUES LORD JACQUES had given Notice of his intention to move Amendment No. 47:
Page 29, line 28, after ("connection") insert ("and to other matters").
The noble Lord said: My Lords, I am quite happy to argue the case of Amendment No. 47 and later Amendment No. 49, but if the noble Earl feels that it would facilitate the business of the House to discuss this matter and if need be bring it up at the next stage of the Bill, I should be prepared to withdraw the Amendment now.
THE EARL OF LIMERICK: My Lords, I certainly have no objection to that course.
8.10 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 48:
After Clause 41 insert the following new clause:
Withdrawal of statutory deposits by collecting societies
". The repeal by the Act of 1967 of subsection (2) of section 20 of the Act of 1958 (withdrawal of statutory deposits by insurance companies which satisfy the Board of Trade as to paid up share capital or margin of solvency) shall be deemed not to have extended to that subsection in its application to collecting societies as defined in section 1 of the Industrial Assurance Act 1923; and in its application to such societies that subsection shall have effect and be deemed always to have had effect as if for the reference to the Board of Trade there were substituted a reference to the Industrial Assurance Commissioner."
The noble Earl said: My Lords, this again is a rather technical Amendment. Friendly societies which carry on industrial assurance business, which are known as collecting societies, are required to make a deposit in court. The Insurance Companies Act 1958 provides for the withdrawal of deposits made by insurance companies and, in certain circumstances, collecting companies. Because all insurance company deposits had by then been

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withdrawn, the Companies Act 1967 repealed the provision without qualification, thereby, by an oversight, removing the power of the collecting societies to withdraw their deposits when they attain the requisite statutory solvency margin. The Amendment restores the position vis-à-vis collecting societies to what it was before the 1967 Act was passed. I beg to move.
On Question, Amendment agreed to.
Clause 42 [Offences and penalties]:
THE EARL OF LIMERICK: My Lords, this Amendment was taken with Amendment No. 1. I beg to move Amendment No. 50.
Amendment moved—
Page 31, line 21, after ("a") insert ("director,").—(The Earl of Limerick.)
On Question, Amendment agreed to.
Clause 45 [Interpretation]:
LORD ALDINGTON: My Lords, this Amendment is consequential on the removal of Clause 3. I beg to move Amendment No. 51.
Amendment moved—
Page 34, line 1, leave out ("3").—(Lord Aldington.)
On Question, Amendment agreed to.
Clause 47 [Short title, citation and commencement]:
THE EARL OF LIMERICK: My Lords, this Amendment was taken with Amendment No. 16. I beg to move.
Amendment moved—
Page 34, line 17, at end insert—
("( ) Section (Avoidance of contracts for unlimited amounts) above shall not take effect until the first regulations made for the purposes of that section come into operation.").—(The Earl Of Limerick.)
On Question, Amendment agreed to.
Schedule 3 [Application to Northern Ireland]:
LORD ALDINGTON: My Lords, this Amendment also is consequential on the removal of Clause 3. I beg to move Amendment No. 53.
Amendment moved—
Page 39, leave out line 10.—(Lord Aldington.)
On Question, Amendment agreed to.

HOUSE OF LORDS OFFICES
Second Report from the Select Committee made and to be printed.
House adjourned at thirteen minutes past eight o'clock.