Sitting of 17 January 1974

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    £ Sterling (Value)
    Mr. Thomas Coxasked the Chancellor of the Exchequer what is the present value of the £ sterling compared with its value in June 1970.
    Mr. Greville Jannerasked the Chancellor of the Exchequer by how much the buying power of the £ sterling has diminished in the last 12 months for which records are available.
    Mr. Skinnerasked the Chancellor of the Exchequer what has been the fall in the real value of the £ sterling since June 1970.
    Mr. Carterasked the Chancellor of the Exchequer what is the value of the £ now compared to 18th June 1970, based on the General Index of Retail Prices.
    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 100p on 18th June 1970.
    The Minister of State, Treasury (Mr. John Nott): Taking the internal purchasing power of the £ sterling as 100p in June 1970, its value in November 1972 was 82½p and in November 1973, the latest date available, it was 75p.
    Mr. Cox: Is the Minister aware that he should hold his head in shame for that reply, because it will show the electors the total bankruptcy of the Chancellor's economic policies, which only a few weeks
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    ago were supposed to be the foundation for booming Britain? Is he further aware that the reason why workers have to take industrial action to safeguard their interests is the 45 per cent. increase in food prices, plus the 25p loss in the value of the £ since June 1970 when the Tories came to power and not the scare-mongering rumours that the Government are now making about trade unionists?
    Mr. Nott: The hon. Gentleman has listed a whole host of inaccurate charges against the Government. If the Labour Party's policies of penal taxation, massive additional public expenditure and widespread nationalisation were to be implemented, I think everybody would agree that this combination of policies would be unrealistic and incredible.
    Mr. Janner: Certainly it is accurate, is it not, that there has been a drop of 25 per cent. in the buying value of the £ over this period? Is the Minister aware of the grave concern that this causes to ordinary people who cannot be expected to hold their wages down when prices are going up in this way?
    Mr. Nott: During the past year, as every hon. Member knowns, inflation has been due predominantly to external factors. Domestically-generated inflation seems to have been less in the United Kingdom than in many other industrialised countries. I remind the hon. and learned Gentleman that nearly 4 million workers have now settled under stage 3, and it cannot be denied that, although prices have risen far too fast, pensions have increased by 55 per cent. and average earnings by 48 per cent. over the past three years.
    Sir Gilbert Longden: Do not the hon. Gentlemen who ask these questions appreciate that it is precisely because of this constant depreciation of our currency that the Government have been forced to seek to prevent incomes from outstripping productivity, which is one of the two domestic causes of inflation? Should they not therefore welcome and support the Government's policy?
    Mr. Nott: I entirely agree with my hon. Friend. Concerning inflation, I think the whole country would benefit from more support by Labour Members for the realistic and sensible policies that the Government are trying to follow.
    Mr. Skinner: Is the Minister aware that in view of the 20 per cent. devaluation of the £ on the foreign exchange markets yesterday, the possible £2,500 million deficit on our balance of payments and successive Governors of the Bank of England contradicting themselves and Ministers and the Prime Minister on successive days, it is high time that that crowd on the benches opposite got out and let Labour clean up the mess again?
    Mr. Nott: First, I am confident that if the Labour Party would assist the country by encouraging a settlement of the miners' dispute, for instance, sterling would respond quite dramatically. Secondly, on the balance of payments, my right hon. Friend will be answering a Question on that matter later.
    If, as I have said, the policies advocated in the Labour Party's recent so-called manifesto were ever to be implemented, they would mean total disaster for this country, and the country knows it.
    Mr. David Mitchell: Will my hon. Friend give an indication of the effect on living standards of the movement in the value of the £, to which he has referred, in the light of the movement of wages and pensions over the same period?
    Mr. Nott: With respect to my hon. Friend, I do not think it is helpful or, for that matter, very meaningful to compare a fall in the value of sterling, which is essentially an external matter although it has internal effects upon the cost of living, with the rise in wages and pensions. I have already given the figures. Average earnings have risen by 48 per cent. over the past three years.
    Mr. Carter: Do not the figures indicate the pathetic incompetence of the Government's economic policy and at the same time fully justify the comments of the Governor of the Bank of England that as a result of those policies the country will have to endure austerity until 1984? As the Conservatives when in opposition always supported the views of the Governor of the Bank of England, can we take it that they support him now?
    Mr. Nott: In his statement on 17th December, my right hon Friend the
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    Chancellor of the Exchequer, referring to the energy crisis——
    Mr. Carter: Answer the question.
    Mr. Nott: I am just about to answer it. My right hon. Friend made it absolutely clear that for the next year or so people in Britain faced a severe test, and that over that period we should not achieve the rise in living standards that we might otherwise have expected. However, the setback represented by the rise in energy prices—in oil prices—throughout the world will affect this country rather less than most of our industrial competitors, and in the medium term when we get North Sea oil the prospects for this country can be very bright.
    Mr. Bruce-Gardyne: Does my hon. Friend agree that the expression of confidence from the hon. Member for Bolsover (Mr. Skinner) in the abilities of the Opposition Front Bench can only confirm the opinion of the rest of the House about the total inadequacy of anything that could come from that quarter? With reference to the external value of the £, my right hon. Friend the Chancellor has frequently said that we would return to a fixed parity when the moment was opportune. Would it be too much to hope that the moment might be opportune fairly soon?
    Mr. Nott: If there were to be an announcement on the value of the £, it would not come from the Minister of State, Treasury.
    Mr. Kaufman: Is not the hon. Gentleman bitterly ashamed that in the past three and a half years the £ has been devalued abroad by more than 20 per cent. and at home by 25 per cent.? How dare this devalued Government go to the country on that record?
    Mr. Nott: As my right hon. Friend the Prime Minister said yesterday, we have a very strong competitive position and, if only we can rid ourselves of our self-inflicted wounds and the problems which arise from our industrial relations, the opportunities for our exports and higher production are undoubtedly enormous.
    Mr. Cormack: Can my hon. Friend tell us what would be the cost of the programme of the Labour Party?
    Mr. Nott: I do not know whether there is a sufficiently large computer to contain the amount of information which is embodied in the Labour Party manifesto and whether it could produce a sufficiently high figure. The cost of the Labour Party's proposals—its nationalisation proposals and public expenditure proposals—could clearly never be offset by the massive taxation which would be necessary under its programme. The figures are huge, and the country realises that perfectly well.
    Mr. Healey: In the light of what the hon. Gentleman has just told us, no one will be surprised if the Government decide to run for cover. As they betrayed their promises at the last election in a more flagrant and extreme manner than any Govern12/22/2005ment in recorded history, however, can the hon. Gentleman assure the House that he will fight the next election on the slogan "Another three years of the Tory Government and the £ will be worth only 50p"?
    Mr. Nott: I am sure that if the Labour Party were ever to fight an election on the basis of the right hon. Gentleman's taxation policies it could never win one again. If the Labour Party were to take away every penny earned by everyone earning more than £5,000 a year, that amount would be enough to provide one extra packet of cigarettes for each worker. The idea that the Labour Party could finance its programme without massive additional taxation from the ordinary people is absolutely absurd.

    Property Companies (Asset Values)
    Mr. Frank Allaunasked the Chancellor of the Exchequer if he will take steps to end the avoidance of capital gains and income tax by property companies which do not sell their properties but retain them in their accounts at the purchase price despite an increase of market value, by requiring periodic revaluation of such assets for tax purposes.
    The Chief Secretary to the Treasury (Mr. Tom Boardman): There is no question of tax avoidance in the circumstances described. However, the charge to tax on first letting which was announced on 17th December will ensure that the unrealised gains of property companies following
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    material development are largely brought into charge to tax.
    Mr. Allaun: Is the Minister aware that the net assets of Land Securities Investment Trust alone increased in a single year by £368 million, on which it paid £2 million corporation tax? Is it not a fact that since the Chancellor's announcement last month property shares have actually risen on the Stock Exchange and that vast capital gains of that kind on properties already let—vast capital gains at the expense of the community—will not be subject to tax in any way?
    Mr. Boardman: When the hon. Gentleman talks about shares in property companies, he should realise that a large proportion of them are held by small shareholders, pension trusts and the like. For example, £150 million of new money from pension trusts went into properties last year. When they are sold, the shares in those companies attract capital gains tax. The hon. Gentleman should also realise that taxation of unrealised capital gains would be a fundamental departure from the principle which successive Governments have followed. But my right hon. Friend the Chancellor has brought in unrealised gains to the extent of first letting.
    Mr. Clinton Davis: Is the Minister aware that in my constituency thousands of pensioners and widows are weeping because of what he has said? Is he not aware that in that part of industry the only real productivity drive is in the tax mitigation or avoidance business and that a lot of useless man-hours are spent in defrauding the Government of the revenue to which they are entitled?
    Mr. Boardman: The pensioners in the hon. Gentleman's constituency would no doubt be concerned about the consequences if the Labour Party returned to power, in view of the comparison of its pension record with that of the Conservative Government. As to tax avoidance, we are no less interested than the Opposition in stopping any form of tax fraud. We are all bent on the same endeavour. If there are cases of tax fraud of that kind, we shall certainly seek to stop them.

    Land and Property Development
    Mr. Horamasked the Chancellor of the Exchequer if he will now propose

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    fiscal measures to deal with the profits being made in land and property development.
    Mr. Tom Boardman: I would refer the hon. Member to my right hon. Friend's statement on 17th December 1973 and to the statement by my right hon. and learned Friend the Secretary of State for the Environment on 21st December.
    Mr. Horam: I repeat, will the Government now propose measures which deal properly with the vast profits which have been made in land and in property? When shall we have a tax on unrealisedgains? Every commentator on the Government's measures asked when we should have a tax which taxed property more than industry, instead of at the same level. When shall we have a tax which makes the property companies pay tax on the money they borrow from the banks? Even that would be something.
    Mr. Boardman: Property companies are taxed first in the ordinary way upon their dealings in property. They are taxed on their realised capital gains. My right hon. Friend the Chancellor has introduced an additional tax which can involve an increase in tax liability of up to 75 per cent. on individuals and a considerably bigger burden upon the shareholders of certain companies. Therefore, we have a system of taxation which catches the capital windfall gains which the hon. Gentleman no doubt finds offensive and which we, too, have found offensive.
    Mr. Joel Barnett: Is the Minister saying that he is not too worried about the effect upon pension funds of the other policies?
    Mr. Boardman: The question of pension funds arose on the question of the taxation of unrealised gains, which are not qualified as a disposal either by the sale of the asset or by the measure that my right hon. Friend has introduced of the disposal created by a first letting. The point that the hon. Gentleman should recognise is that the taxation of property, which seems to be the wish of Opposition Members, with the aim of catching everyone who invests in property, would catch very heavily a very large number of pension funds. The hon. Gentleman seems to be bent on the assumption that
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    properties are owned by one or two rich individuals. Property is an investment the benefits of which are shared over a very wide section of the community.

    Tax Evasion
    Mr. Meacherasked the Chancellor of the Exchequer what evidence he has of the extent of tax evasion in Great Britain.
    Mr. Milneasked the Chancellor of the Exchequer if he will outline Her Majesty's Government's policy in regard to prosecution arising from alleged fraudulent tax evasion ; and if he will make a statement.
    Mr. Nott: It is impossible to estimate the extent of tax evasion but details of under-assessments for the past 10 years are in Table 25 of the recently published report of the Commissioners of Inland Revenue.
    The decision whether to prosecute in any case is a matter for the Commissioners of the Revenue Departments, and Ministers do not intervene in these decisions.
    Mr. Meacher: Is the Minister aware that, according to the Inland Revenue, no fewer than 250 persons last year illegally evaded tax to the tune of over £10,000 in each case, yet only five of them were prosecuted and fewer still had to pay even a paltry fine? As the Government, in their Companies Bill, purport to believe in disclosure to prevent abuses, will the Minister say how many other cases there have been like that of Mr. Norman Fox-Andrews, QC, whose prosecution for fraudulent and extensive tax evasion was quashed by the Board of Inland Revenue after it had been recommended by the Solicitor's Branch?
    Mr. Nott: I do not think that the hon. Gentleman has any right to make that kind of statement. He has no right to say that about the gentleman in question, who I believe is now deceased. In any event, I am not able to discuss this matter because of the long-standing rules of confidentiality about individual taxpayers. On the first part of the hon. Gentleman's question, however, there are well-established procedures and penalties for correcting under-assessments of tax. Cases involving tax fraud are often complicated

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    and of a kind which is not easy to deploy before a jury. If the Inland Revenue was required to take more cases before the courts for criminal proscution, there is no doubt that there would be far fewer penalties paid for tax evasion than there are even now.
    Mr. Ralph Howell: May I draw my hon. Friend's attention to the £150 million repaid in tax refunds wrongfully merely because short-term benefits are not taxable? Will he give consideration to altering this principle?
    Mr. Nott: My hon. Friend has tabled Question No. 22 on this issue. He will shortly receive an answer to that Question. I hope that it will be an oral answer, but if not it will be a written answer. I hope that it will satisfy him.
    Mr. Milne: Is the Minister aware that he has revealed the tremendous weakness in our tax legislation that needs to be examined by his Department? Will he undertake to examine closely the article sent to him by the Inland Revenue Staff Federation exposing the scandal of tax evasion and to deal with it as promptly as possible? Is he aware that at present we are dealing with a situation in which social security payments and the supposed attitudes towards them are receiving a tremendous amount of publicity and we are, therefore, having one law for the rich and another for the poor? That situation must be ended immediately.
    Mr. Nott: I appreciate the point made by the hon. Gentleman. Clearly it is a matter of concern to all those who work in the Inland Revenue. I shall certainly draw the hon. Gentleman's comments to the attention of the Chairman of the Board of Inland Revenue. The hon. Gentleman knows that the Inland Revenue is never slow to suggest and recommend to Treasury Ministers additional powers to combat tax evasion. My view is that the Inland Revenue is extremeily vigilant in this area, as I am sure the hon. Gentleman will agree. In any event, whether there should be any additional rules is a matter for my right hon. Friend the Chancellor in the context of his Budget.
    Mr. William Hamilton: Does not the hon. Genteman agree that the number of prosecutions against poor people receiving social security is vastly in excess of the number of prosecutions against the
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    men referred to by my hon. Friend the Member for Oldham, West (Mr. Meacher)? Is there not a flagrant case of double standards here? The present Government won the 1970 General Election partly on the so-called scandal of scroungers. They should look at the scroungers at the top of the tree rather than those at the bottom.
    Mr. Nott: The latest report of the Inland Revenue showed that over £5 million was charged in penalties for tax underassessment and evasion. But although there are very few criminal prosecutions in the courts—[HON. MEMBERS: "Why not?"]—substantial monetary payments are made to the Inland Revenue for tax evasion. The answer to the question "Why not?" is that it is extremely difficult to convict before a jury in a criminal prosecution, and that is the reason I gave.

    Value Added Tax
    Mr. Sydney Chapmanasked the Chancellor of the Exchequer what changes he now proposes in the incidence of value added tax.
    The Financial Secretary to the Treasury (Mr. Terence Higgins): The incidence of value added tax is changed to a minor degree by four statutory instruments which were laid before the House on 20th December 1973. As regards any major changes, I cannot anticipate my right hon. Friend's Budget Statement.
    Mr. Chapman: I welcome generally the replacement of the arbitrary purchase tax and selective employment tax by the much more reasonable and lower-rated value added tax, but will my hon. Friend nevertheless look at some of the unfortunate minor consequences of this wide-ranging tax, particularly bearing in mind that in certain of its categories the administrative cost of collecting very little income is far too great?
    Mr. Higgins: I would not necessarily accept the last point in my hon. Friend's question, but if he has a particular case or example in mind I will gladly look at it.
    Mr. Loughlin: Without wishing to anticipate his right hon. Friend's Budget Statement, will the Minister give a categoric assurance that there will be no

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    application of value added tax to food items?
    Mr. Higgins: My right hon. Friend has no plans to alter the existing arrangements regarding zero-rated food. On the second point, the hon. Gentleman will recall that, as a result of the reform of indirect taxation which the present Government have carried out—the change from purchase tax and SET to value added tax—the tax falling on food is estimated for 1973–74 to be £255 million less than it would have been if it had continued as it was under the previous Government.
    Mrs. Knight: Bearing in mind the difficulties in which many small firms often find themselves with regard to the three-day working week, particularly regarding cash flow, will my hon. Friend look at the suggestion made by various chambers of commerce and trade that payment of VAT due at the end of January could possibly be deferred?
    Mr. Higgins: There is a later Question on the Order Paper on that subject. Indeed, a somewhat similar Question was answered yesterday. I refer my hon. Friend to those answers.
    Mr. Joel Barnett: Regarding the last part of the Financial Secetary's previous answer, may I ask whether he is prepared to say what is the price of food, including tax, today in comparison to what it was in June 1970?
    Mr. Higgins: That does not arise on this Question, but if the hon. Gentleman would like to table a Question on the matter we shall seek to provide an answer.
    Mr. Hardyasked the Chancellor of the Exchequer, if he will take steps to relieve all items of school uniform from VAT.
    Mr. Higgins: No, Sir. The relief applies only to articles of clothing and footwear for young children.
    Mr. Hardy: Is it not a silly little anomaly for school crests and badges to be liable for value added tax when they are sold separately? Does not the Minister realise that this reduces the benefit which is available if uniforms are sold so that parents can shop around and not
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    have to rely on expensive monopoly supply arrangements?
    Mr. Higgins: I wrote to the hon. Member about this in July. School blazers with a badge attached are regarded as a single article for tax purposes and if designed for a young child would be free of tax. A blazer for an older child would be taxable at the standard rate for the broad reason of the dividing line between the two.

    Balance of Payments
    Mr. Strangasked the Chancellor of the Exchequer if he will make a further statement on the steps he is taking to improve Great Britain's balance of payments.
    The Paymaster-General (Mr. Maurice Macmillan): I have nothing to add to my right hon. Friend's statement on the economic situation on 17th December. My right hon. Friend made it clear then that he would not hesitate to take any further action which may be required in the national interest.
    Mr. Strang: Do the Government dispute the statement made earlier this week by the Governor of the Bank of England, who said that prior to the increase in oil prices at the time of the Middle East War our balance of payments deficit was running at an annual rate of £2,500 million? Is it not abundantly clear that, no matter what international measures may be taken to obviate the difficulties created by the increased oil prices, Britain will be required to take specific further measures to correct our balance of payments?
    Mr. Macmillan: In making his statement to the House my right hon. Friend made it plain that there was a balance of payments problem before the oil situation developed. He said that there was a considerable deficit and added that there was at that time reason to believe that, as the effect of the depreciation of sterling worked through the balance of payments, the deficit would begin to improve. That was the case.
    Mr. Body: Will my right hon. Friend give the latest estimate of the deficit on our balance of trade with the rest of the Common Market?
    Mr. Macmillan: If my hon. Friend will put down a specific Question for those figures I shall give them to him, but I do not have them now. What the House and the country must accept is that, in common with the other countries of Europe, we are facing a major problem in the world where the cost of energy is high. The position of the United Kingdom, provided that the coal comes forward, is more favourable that that of other European countries.
    Mr. Healey: Will the right hon. Gentleman say what is the estimated cost to the country of the revised Basle agreements assuming the current dollar value of the pound? How does he propose to finance the enormous current balance of payments deficit during the coming year? Has the Chancellor approached the International Monetary Fund for a loan?
    Mr. Macmillan: My right hon. Friend the Chancellor made it clear some months ago that he might, if necessary, approach the International Monetary Fund. I think it was the occasion of his Mansion House speech. He also made clear in the course of his statement to the House in December that he would consider any methods which were necessary in the national interest to help finance the balance of payments. It is also clear that the oil-importing countries, including the United Kingdom, will have a massive problem of financing the balance of payments deficit to the Arab countries. The Basle figures will not be available until the end of the month.

    Holiday Villas
    Mr. Whiteheadasked the Chancellor of the Exchequer if he will take steps to curb the abuse of tax relief for the purchase and construction of holiday villas outside the United Kingdom, details of which have been sent him by the hon. Member for Derby, North.
    Mr. Nott: I am not aware of any abuse of tax relief for this purpose.
    Mr. Whitehead: The Minister has seen a copy of the letter which is being sent to my constituents in Derby by the firm of Slater Barwick. It is a blatant invitation to use public money granted in tax relief on mortgages or second mortgages for the purpose of constructing holiday villas abroad. What possible place is
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    there for parasitic firms of this kind in what is supposed to be a time of national crisis?
    Mr. Nott: The example sent to me by the hon. Member involved an individual extending his mortgage on the existing home. Interest on this mortgage would be allowable for tax and does not involve any abuse of the tax rules.

    European Union
    Mr. Moateasked the Chancellor of the Exchequer what is the current position on the proposals for moving towards economic and monetary union in the EEC ; and if he will make a statement.
    Mr. Maurice Macmillan: At the meeting of the Council of Ministers on 17th December, which I attended, agreement was reached on most of a resolution on the move to a second stage of economic and monetary union. Agreement on the references in the resolution to regional and energy policy has been deferred until the issues have been settled.
    Mr. Moate: Why do the Government continue to devote their time and energy to this charade of economic and monetary union, particularly since the proposals have never been endorsed either by this House or by the country? Will not even the provisions of the second stage be rendered meaningless if the Government have to introduce further monetary controls, as seems likely?
    Mr. Macmillan: I do not accept the implications of the latter part of that supplementary question. It is not a charade. There has been a great deal of discussion and agreement among European countries on a second stage going towards European monetary union. It is obviously a long-term process which has to be argued out between the countries concerned, and agreement has been reached with the exception of the part referring to regional and energy policy.
    Mr. Skinner: Is the Minister aware that when hon. Members and Members of the House of Lords travel to Europe to discuss the harmonisation of economic and monetary union they are warranted with £120 for each flight, that they travel by charter flight for £46 and that they pocket the difference? Will the right hon. Gentleman, in his rôle as Minister of State

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    within the chancellery, find out from the Inland Revenue what it has been doing in this matter and whether tax evasion is taking place on this massive scale and report to the House as quickly as possible?
    Mr. Macmillan: The hon. Member knows or should know what is known to every hon. Member: that no Minister has ever had the capacity to interfere or intervene in the individual tax matters of persons whether they are Members of Parliament or not. I hope that no member of any administration would seek to have political power over the legal authorities dealing with tax evasion.

    Economic Situation
    Mr. Deakinsasked the Chancellor of the Exchequer if, in view of the economic situation, he proposes to make use of Article 135 of the Treaty of Accession to the EEC.
    Mr. Maurice Macmillan: My right hon. Friend has already announced the measures considered necessary in present circumstances ; these do not entail recourse to Article 135.
    Mr. Deakins: Since we now face the worst balance of payments crisis in the history of any country, surely the time has come to tell the Common Market that we can no longer bear the burden of the taxes on imported food, the net cost of our payments to the Community budget and the intolerable burden of Common Market membership on our overall balance of payments position.
    Mr. Macmillan: It is not membership of the Common Market that has placed an intolerable burden on our balance of payments but the pressure of world prices and commodity prices, which has been enhanced by the increase in energy prices. This has presented the whole of Europe with a balance of payments problem vis-à-vis the exporting countries.
    Mr. Dykes: Has the Chancellor discussed recently with the Community the question of limiting imports of nonessential consumer durables from non-Community countries?
    Mr. Macmillan: My right hon. Friend has held a number of discussions with Ministers within the Community. In so
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    far as these are public, the results have been made known. It would not be right for me to say what my right hon. Friend might or might not be discussing in his present talks in Rome.

    Thermal Insulation
    Mr. Rostasked the Chancellor of the Exchequer whether he will now propose tax relief for suitably approved expenditure by householders on improved thermal insulation, in the interests of long-term savings of national energy resources.
    Mr. Redmondasked the Chancellor of the Exchequer if he will consider allowing tax incentives to encourage improved insulation of industrial and commercial premises with a view to fuel conservation.
    Mr. Higgins: I have noted my hon. Friends' suggestions.
    Mr. Rost: While that is at least an encouraging answer, may I ask the Treasury to bear in mind the deplorably poor insulation standards of our buildings which are costing hundreds of millions of pounds to the balance of payments? If the Government are serious about the conservation of energy and helping the balance of payments, may we have some co-operation between Government Departments to ensure that the proper incentives are provided to improve domestic thermal insulation standards?
    Mr. Higgins: I understand my hon. Friend's point, but there is, of course, co-ordination between Government Departments on such matters. It would be wrong to suppose that the tax system is necessarily the best way to achieve this objective. My hon. Friend will appreciate that as a means of encouraging domestic thermal insulation it would not help those who were below the tax threshold and similarly, unless a limit were imposed, the benefit would be greater depending on the rate of tax paid.
    Mr. George Cunningham: Will the Minister reject these suggestions because they would mean only a subsidy to wealthy people on undertaking this expenditure and very little or no subsidy to the less well-off?
    Mr. Higgins: As the hon. Gentleman appreciates, that would depend on the exact form in which the relief was given.
    Sir J. Rodgers: Is my hon. Friend aware that there is a motion on the Order Paper which suggests that thermal insulation should be made grant-allowable both for existing houses and to new houses in order to save fuel?
    Mr. Higgins: The question of grants is not for me but for my right hon. and learned Friend the Secretary of State for the Environment.

    Nationalised Industries (Investment)
    Mr. Goldingasked the Chancellor of the Exchequer what estimate he has made of the economic consequences to the country of the cuts in invstment in the nationalised industries.
    Mr. Stottasked the Chancellor of the Exchequer what estimate he has made of the economic consequences to the United Kingdom of the cuts in investment in the Post Office.
    Mr. Tom Boardman: My right hon. Friend made it clear that there was a need to reduce demand on scarce investment resources. It is right that the nationalised industries, excluding the energy industries, should make a contribution to this.
    Mr. Golding: Is the Minister aware that the cut of £140 million in investment next year in telecommunications will be disastrous for the telephone service? Is he further aware that for commerce and administration an efficient telecommunications service is as vital as energy to manufacturing industry? Does he understand that the disruption of the equipment manufacturing industry will bring a heavy increase in unemployment to the development areas?
    Mr. Boardman: Yes, I am aware that it creates problems within the Post Office. My right hon. Friend the Minister of Posts and Telecommunications is discussing this matter with the industries concerned. There has been no cut in the aid or support given to the regions. I invite the hon. Gentleman to compare the level of investment in the Post Office for the past three years with that which was approved
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    during the period of the previous administration.
    Mr. Stott: Is this a once-for-all cut with the obvious disastrous consequences which have already been outlined by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding)? Will the planned level of investment for subsequent years remain unchanged?
    Mr. Boardman: My right hon. Friend the Chancellor of the Exchequer has made it clear when talking about taking £1,200 million out of the 1974–75 expenditure that that will mean the deferment of a number of plans for the nationalised industries and for the public sector generally. These are areas in which it is vital that demand should be reduced so that essential resources may be conserved.
    Mr. Joel Burnett: Does not the Minister consider it outrageous that he should persist with cuts in the steel industry in view of the present state of the industry and the effect which such cuts will have on everything else? Will he advise his right hon. Friend to reverse the decisions which have been made regarding the steel industry?
    Mr. Boardman: The hon. Gentleman must be well aware of the massive investment programme approved for the steel industry of £3,000 million. I ask him to contrast that with the insignificant or very small investment which was approved by the previous administration. The cuts which are being made in the steel industry are such that they will not affect long-term strategy. The impact on the output of steel has, as the hon. Gentleman knows, nothing to do with investment but is related to other causes which are highly regrettable.

    Surtax Payments (Deferment)
    Mr. Hileyasked the Chancellor of the Exchequer what is the total amount of the surtax assessments (1972–73 of £150 and above) entitled to payment deferment, and not so entitled, respectively ; and how many assessments fall into each category.
    Mr. Nott: The estimated amount of surtax for 1972–73 for which deferment claims may be made is £45 million, and

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    the estimated amount not entitled to deferment claims £385 million. The corresponding number of assessments is about 110,000 and 300,000 respectively.
    Mr. Hiley: Am I right in assuming that those who are not entitled to deferment are those who live on investment income whereas those who enjoy the privilege live on earned income? Is this not further discrimination against people whom we should encourage to save?
    Mr. Nott: As my hon. Friend knows, the Government have introduced a level of £2,000 below which income is not treated as so-called unearned income. That has been a major benefit to retired and elderly people.

    Mortgages
    Mr. Sillarsasked the Chancellor of the Exchequer is he will now take further action to reduce the cost of mortgages for young married people.
    Mr. Maurice Macmillan: Discussions with the Building Societies Association on the deferred mortgage payments scheme to help first-time home buyers are well advanced. The scheme should provide a good deal of help to young married couples taking on a mortgage for the first time.
    Mr. Sillars: Is the right hon. Gentleman aware that few people continue to believe the Government on this matter? Does he recall the days when the Conservatives castigated the Labour Government when mortgage interest rates reached 8½ per cent.? How does he justify the present penal rates? In his reply, will he refrain from citing the miners as an excuse?
    Mr. Macmillan: Well over half the people of this country are now owner-occupiers. That is, on the whole, of great credit to the success of Tory policies. The building societies have recently made statements which indicate that they are not expecting any further increase in mortgage rates.

  PRIME MINISTER (OFFICIAL VISITS)
  Mr. Thomas Coxasked the Prime Minister if he will list the official visits he made during the Christmas Recess.
  The Prime Minister (Mr. Edward Heath): I refer the hon. Member to the reply which I gave to the hon. Member for Portsmouth, West (Mr. Judd) on 15th January, Sir.—[Vol. 867, c. 40.]
  Mr. Cox: Is the Prime Minister aware that many people were shocked when he did not visit Brussels on the first anniversary of Britain's membership of the Community to rekindle the full-hearted consent of the British people? Is he further aware that as taxes and levies are placed on our food, and as a result of the fiasco of the regional policy, more and more people join the millions of Britons who are totally opposed to our membership? Does the right hon. Gentleman appreciate that when the General Election takes place it will not be the miners with whom he will have problems but that his problem will be to try to defend to the electorate his sell-out of our interests to the Community?
  The Prime Minister: No.
  Mr. Cormack: Will my right hon. Friend tell us whether he has any plans to visit Sandringham in the near future?
  The Prime Minister: No.
  Mr. Concannon: If the Prime Minister says that it is due to the miners not working on Saturdays and Sundays that the country is in the state it is in today, and that the miners are to blame for everything, why did he not take the opportunity during the Christmas Recess of visiting a coal mine or going down a coal mine? When was the last time the Prime Minister visited a coal mine? If he will let me have a date when he is free, I will gladly accompany him down any coal mine which he wishes to visit.
  The Prime Minister: I appreciate the hon. Gentleman's offer. I think that the whole House recognises the conditions in which miners are working. That is not the point in dispute regarding the offer which has been made to the miners. A special offer has been made under stage 3 because of the conditions in which some miners work.

  NATIONAL ECONOMIC DEVELOPMENT COUNCIL
  Mr. Skinnerasked the Prime Minister when he next plans to attend a meeting of the NEDC.
  The Prime Minister: I took the chair of NEDC on 21st December, but my right hon. Friend the Chancellor of the Exchequer is chairman of the council and I have no immediate plans to attend a further meeting myself.
  Mr. Skinner: Before the Prime Minister attends the next NEDC meeting, and in view of the contradictory statements which have been made by past and present Governors of the Bank of England, will he tell us which bank manager is kept in the Downing Street wardrobe?
  The Prime Minister: I have no plans to attend the next NEDC meeting. In any event, I do not believe that that would be one of the topics of conversation.
  Mr. Molloy: Is the right hon. Gentleman aware that the reference to 1984 by the Governor of the Bank of England is not nearly as worrying as the activities of the Government, including statements by the Prime Minister that the problems which we are now suffering are problems of success. The Chancellor of the Exchequer says that devaluation of the pound by nearly 30 per cent. is a mark of our buoyancy. Is the Prime Minister aware that he has created so many bodies outside Parliament which are not answerable to this House that the sort of 1984 of which the nation will be afraid under a Tory Government is the Orwellian 1984 to which we are moving?
  The Prime Minister: I am sorry if the hon. Gentleman cannot join the corps of responsible observers who have always recognised that in an expanding economy we are bound to be importing very large stocks of fuel and machinery to enable the economy to have a new capacity. In the debates on this matter I have constantly emphasised that this is the problem which the country has faced for the past 25 years. No viable policies will ever be formed by the Opposition until they recognise that.

  TUC (MEETINGS)
  Mr. Horamasked the Prime Minister what future discussions he intends to have with the TUC on economic policy.
  The Prime Minister: I am always prepared to discuss economic policy with the TUC, Sir.
  Mr. Horam: Is it not clear from yesterday's meeting that the TUC is telling the Government that it regards the miners as a special case and that it will give only token support to other unions which may regard themselves as a special case? Is this not a remarkable piece of moderation in all the circumstances, showing concern for the national interest? If the Government do not accede to the initiative, will they not be showing that their motives in encouraging talks were dishonourable from the very beginning?
  The Prime Minister: I cannot accept the last part of the hon. Gentleman's statement. The Government have made it clear from the beginning that they regard the miners as a special case. The award which they have been offered by the NCB is better than almost any other group has been offered under stage 3. What is more, it puts them into a better position than they achieved directly after the Wilberforce inquiry. Furthermore, the same thing would not happen as happened after Wilberforce ; their position would not be eroded. They would maintain their position in relation to those engaged in manufacturing industry, whereas after Wilberforce their position was rapidly eroded.
  Mr. John Page: When my right hon. Friend is considering any undertaking that may be given by the TUC in present circumstances will he remember that when the Labour Government received a solemn and binding undertaking from the TUC the number of days lost by strikes in that year doubled when compared with the previous year and the rise in weekly base rates more than doubled?
  The Prime Minister: My hon. Friend is quite correct.
  Mr. Harold Wilson: Will the right hon. Gentleman confirm that that agreement was honoured and that as a result of one of the main parts of it, namely,

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  the action taken to deal with demarcation disputes—which account for a large proportion of days lost—this form of dispute was virtually ended? Will he also confirm that that has been a great help to the present Government as well as to the previous Government? In view of the right hon. Gentleman's statement on Tuesday, when he certainly gave the impression that as soon as the TUC conference of yesterday was over he would be taking early steps to meet the TUC, will he confirm that it is still his intention to meet representatives of the TUC?
  The Prime Minister: What I said was that I would consider this. My colleagues and I are now considering the outcome of yesterday's meeting with the TUC and in due course we shall decide whether it is appropriate to invite the TUC for another meeting. Of course I have by no means excluded this, and the TUC knows this.
  Mr. Wilson: If the right hon. Gentleman says that he has not excluded it, he is certainly resiling from what he said last Tuesday. Is he aware that he gave the strong impression then that he would meet the TUC? Is he to do so or not?
  The Prime Minister: I have made no arrangements yet to meet the TUC.
  Mr. William Hamilton: Why not?
  The Prime Minister: Because we are considering the results of the TUC meeting of yesterday. On previous occasions right hon. Gentlemen opposite have accused my colleagues and myself of an over-hasty reaction. Of course we have been in touch with the TUC, but we have not arranged a meeting.
  Mr. Thorpe: Will the right hon. Gentleman confirm that the Cabinet meeting continued until approximately 1.30 pm this afternoon? Surely the Prime Minister and the Cabinet must by now have deduced from yesterday's TUC meeting whether there were matters of significance to be considered. How much longer will it take the Government to decide whether they wish to continue on the path of conciliation or choose confrontation instead?
  The Prime Minister: It was a perfectly normal Cabinet meeting today and it did not go on until 1.30 p.m. As to the question of trying to find a solution to this industrial dispute, the Government are perfectly entitled to give the matter full consideration, which they are doing.
  Mr. Strangasked the Prime Minister how many times he has met representatives of the TUC.
  The Prime Minister: I have had 27 bilateral meetings with representatives of the TUC and its committees and the Scottish TUC. In addition I have had 17 tripartite meetings at which representatives of the CBI were also present, including six meetings of NEDC. I have also had numerous meetings with individual members of the TUC on both formal and informal occasions.
  Mr. Strang: Do the Government still take the view that last week's initiative by the TUC might form a basis for resolving the miners' dispute?
  The Prime Minister: There are many aspects of this initiative and problem. What happened yesterday, we understand, was a confirmation of the TUC's position that it would give an assurance that the special circumstances of the miners would not be quoted in any other negotiation or claim. But what the TUC again has not bean able to say, as we so far understand, is that others, seeing that militant action was able to produce something outside stage 3, would not then take similar action. So it is very important to examine the nature of the assurance given and what it means from the point of view of inflation in this country and our counter-inflation policy.
  Mr. Winterton: In the many meetings that the Prime Minister has had with the TUC and its representatives, has mention been made of British agriculture and the serious plight facing many farmers? Does not my right hon. Friend agree that our agricultural workers are just as essential as the miners—perhaps more essential—to the country? Will he consider looking at the level of wages in the agricultural industry as well as treating the miners as a special case?
  The Prime Minister: Agriculture has not recently been discussed. It was discussed a year ago because of the problems that then arose over the agricultural wages award. Those problems, fortunately, were sorted out and settled, and the matter has not since been raised.
  Mr. John Mendelson: In view of the decisions taken yesterday by the TUC, is not this an appropriate time, if the Government wish to improve the atmosphere and background against which wage negotiations are to take place, to return to the proposals of the TUC to introduce food subsidies—it has been widely predicted that in the next nine months there will be a large increase in food prices—and to take other social measures that the TUC has put to him in those discussions? Would not this also help to get negotiations going between the National Coal Board and the NUM on an agreed target by which they can resolve the present industrial dispute?
  The Prime Minister: From the point of view of improving the climate of discussion, there are the points which the hon. Gentleman raises on which there are differences between the two sides of the House as to the policies which should be followed. We have always made plain that food subsidies were not a matter of principle or dogma. We are at this moment subsidising some foodstuffs. For example, we are subsidising milk very heavily.
  The Government have done more than any Government to try to create a climate of negotiation for the miners by the commitment of £1,100 million of public money made to the industry at the beginning of last year and by the special and improved arrangements made for redundancy and the treatment of disease, and so on. In addition to stage 3, the miners have been told both by me and by the Secretary of State that we are fully prepared to discuss with them and to help on questions which affect the health of all those who are engaged in the industry, the position of pensions in the industry and, after the settlement of stage 3, the whole of the future pay structure, manning and investment in the coal industry. It is difficult to think of more actions that should be taken by a Government for a specific industry to create a climate in which successful negotiations can take place.
  Dame Irene Ward: Will my right hon. Friend accept that the country as a whole is extremely grateful to him for the care he has taken to examine all these problems in a way which is just to all people in the country? Will he also accept that on all these matters we have never had such a first-class Prime Minister?
  The Prime Minister: I am grateful to my hon. Friend. I thank the House for the support which her remarks have received.
  Mr. Jay: In view of the constructive attitude taken yesterday by the TUC at its conference, will the Prime Minister today invite the TUC to meet him again?
  The Prime Minister: I have already dealt with that question in reply to the Leader of the Opposition.

ENERGY SUPPLIES
Mr. Judd4. Mr. Judd asked the Prime Minister if he is satisfied with the co-ordination between the Ministry of Defence and the Department of Trade and Industry on research into new sources of energy for defence requirements.
The Prime Minister: Yes, Sir, but this is now primarily a matter for co-ordination between the Ministry of Defence and the Department of Energy.
Mr. Judd: Does not the Prime Minister agree that the long-term world energy crisis poses a serious threat to world stability? In view of the vast public investment on research facilities in the Ministry of Defence, would it not make sense in the present situation to use those facilities in a crash programme of research into alternative sources of energy and into less energy-intensive means of production?
The Prime Minister: It is not only a question of defence affairs. It is a question of the whole country having to consider the development of its energy in the most economic form. When the hon. Gentleman tabled this Question I considered the matter very carefully. This matter was considered some years ago. I considered carefully whether there were aspects of energy which were particular and peculiar to defence and on

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which there ought to be a special programme. I have come to the conclusion that we ought not to separate this from the general work being carried out in an endeavour to find the most economical use of our own resources and energy.
Mr. Wilkinson: Would not my right hon. Friend agree that it is even more important in the short term to our foreign and trading policies to make sure of the vital supplies of fuel and other commodities which the Armed Forces so badly need?
The Prime Minister: Of course that is the case. What is also the case today is that we must find the most economical resources from the point of view of pricing and that we should develop those resources which put least burden on our balance of payments.
Mr. DalyellQ5. Mr. Dalyell asked the Prime Minister if he will discuss at his next meeting with President Nixon Dr. Kissinger's plan for a world energy plan.
The Prime Minister: The Government are accepting President Nixon's invitation to attend the conference opening in Washington on 11th February. I have no definite plans for a meeting with President Nixon at present.
Mr. Dalyell: Does not the Prime Minister despair, along with many other hon. Members on both sides of the House, at the spectacle of individual nations in Western Europe and the Americans running in a rat-race to Riyadh for the purpose of selling sophisticated armaments without consulting our European partners? Does this fit in with the right hon. Gentleman's concept of what Europe is about? Is there not great urgency for something like the Kissinger plan?
The Prime Minister: We accepted the Kissinger plan directly it was proposed and said that it was a good thing to have a meeting of this kind of the consumer countries. Our view is that it is a prelude to a meeting between consumer and producer countries. This matter was discussed at the Copenhagen Heads of Government summit where it was agreed to establish Community machinery for dealing with precisely these problems. As for bilateral arrangements, for many years there have been bilateral arrangements
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between particular countries, sometimes direct and sometimes between a Government and a company. What we are doing, and have been doing for a long time, is to have arrangements which will secure as much as possible of our oil supplies. I do not think that the hon. Gentleman is justified, as far as we are concerned, in his accusation that this is a question of arms.
Mr. Donald Stewart: Would the Prime Minister accept, in the context of the energy crisis, that the attempt by the oil companies to raise the price of petrol by 6p a gallon should be repelled by the Price Board? Is he aware that the increase attributable to the Arabs amounts to 7p and that since the crisis began, including this extra 6p, the oil companies will have demanded 12p, which would make the Arabs look like philanthropists?
The Prime Minister: This is a matter on which the company will have to produce its costings which can be examined by the Price Board.

BUSINESS OF THE HOUSE
Mr. Harold Wilson: Will the Leader of the House indicate to the House the present state of his prognostications about next week's business?
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, 21ST JANUARY—Supply (9th Allotted Day). Debate on an Opposition motion on The Divided Nation.
Remaining stages of the Statutory Corporations (Financial Provisions) Bill.
Motions on the Sea Fish Industry Act 1970 (Relaxation of Time Limits) Order and on the Fishing Vessels (Grants) Scheme.
TUESDAY, 22ND JANUARY—Second Reading of the Solicitors (Amendment) Bill, until about seven o'clock.
Afterwards, progress on the remaining stages of the Local Government Bill.
WEDNESDAY, 23RD JANUARY—Completion of the remaining stages of the Local Government Bill.
THURSDAY, 24TH JANUARY—Debate on a motion to take note of the Second

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Report from the Select Committee on European Community Secondary Legislation in Session 1972–73.
Consideration of the Slaughterhouses Bill (Lords), which is a Consolidation Measure.
FRIDAY, 25TH JANUARY—Private Members' Bills.
MONDAY, 28TH JANUARY—Supply (10th Allotted Day). Debate on a subject to be announced.
Mr. Wilson: In view of the increasingly grave situation of the economy at home and abroad, sterling, the investment and industrial position and particularly of the uncertainty in industry and trade, will the right hon. Gentleman undertake that the Prime Minister will make a very early statement to remove some of these uncertainties and to tell the House and the country—the nation, above all, wants to know—how he intends to get Britain back to work?
Mr. Prior: My right hon. Friend will have heard the right hon. Gentleman's wishes and no doubt arrangements could be made.
Mr. Marten: What form will the debate on EEC secondary legislation take on Thursday? Will the Government put forward proposals for the House to agree—or what? Secondly, should there be an election, what arrangements are being made for ex-Members of Parliament to watch the legislation that might be churned out from Brussels in the meantime?
Mr. Prior: The second part of my hon. Friend's supplementary question is hypothetical at the moment. In reply to the first part, the Government's intention is to table a motion setting up the sifting committee. Otherwise, the motion before the House would be a "take note" motion.
Mr. Maclennan: In the event of the dissolution of Parliament, what arrangements will be made for the renewal, if necessary, of the emergency powers legislation?
Mr. Prior: These matters are at the moment entirely hypothetical.
Miss Quennell: In connection with Thursday's business, which appears to include two major debates, will my right
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hon. Friend say whether there will be any time limit on the debate on the report from the Select Committee?
Mr. Prior: It is thought that the report from the Select Committee will take all day but, provided the House agrees, we shall ask at the same time for a motion to be approved setting up the sifting committee.
Mr. Driberg: Will the right hon. Gentleman arrange for an early statement by the Minister for Energy, in view of yesterday's statement by the Chairman of the Central Electricity Generating Board entirely contradicting the Minister's statements and saying that the public have responded satisfactorily to the appeals for economy and that there is no need for the sterner measures foreshadowed by the Minister?
Mr. Prior: I note what the hon. Member for Barking (Mr. Driberg) says. In the last few days the public have responded very well to the requests made by my right hon. Friend the Secretary of State for Trade and Industry and my right hon. Friend the Secretary of State for Energy. As a result, the figures to be published today will show that the stock position is more satisfactory.
Mr. Bruce-Gardyne: Immediately before Christmas my right hon. Friend the Leader of the House said that he expected to stage the first day of a debate on the public expenditure White Paper in the second week after we returned from the Christmas Recess. Assuming that there is no interruption of our sittings, what are his present intentions on this matter?
Mr. Prior: I hope that this matter will be dealt with in next week's business statement. As my hon. Friend recognises, there have been one or two other matters which have prevented the debate on the public expenditure White Paper from coming forward, but I hope that it will take place soon.
Mr. Wallace: Has the Leader of the House seen Early Day Motion No. 133, signed by myself and several of my hon. Friends?
[That this House calls upon Her Majesty's Government to remove immediately the anomaly in payment of unemployment benefit during the working

919
of a three-day week whereby workers employed during Thursday, Friday and Saturday receive three days' benefit and those working Monday, Tuesday and Wednesday receive only two days' benefit.]
If he has seen the motion, will he urgently consult the Prime Minister and any other Minister concerned in seeking to remove this ridiculous and grossly unfair anomaly in the present situation? It is causing great hardship, and, if it continues, it will not help to alleviate the problems of the three-day week.
Mr. Prior: I have looked at Early Day Motion No. 133. Subject to the views of the Chair, I believe that it will be in order to debate the matter on Monday.
Dame Irene Ward: Since we seem to have a little more time left to us, may I ask my right hon. Friend please to take action to lay the appropriate order on the Kielder dam? After all the help he is seeking to give to the North—which unfortunately does not seem to have made any impression on the Secretary of State for the Environment—may I ask him to ensure that the order is laid without further delay? The Secretary of State for the Environment has had plenty of time to take action, and I should like him to get his skates on so that we may get on with this business.
Mr. Prior: I know that my hon. Friend the Member for Tynemouth (Dame Irene Ward) has already conveyed her views to my right hon. Friend the Secretary of State for the Environment, but I cannot add to the reply given to my hon. Friend yesterday, except to say that I shall continue to do my best.
Dame Irene Ward: Thank you.
Mr. Alexander W. Lyon: In view of the massive drain on reserves and the present speculation about an election, and its effects on the level of parity of our currency, to remove this uncertainty is it not essential that there should be a statement on an election either today or tomorrow?
Mr. Prior: This is essentially a matter for my right hon. Friend the Prime Minister.
Mr. Sillars: What problems is the Leader of the House finding in the setting up of a Select Committee on Scottish affairs? Is he aware that there is much concern because we have already lost a great deal of valuable investigatory time?
Mr. Prior: I personally have no problem about the setting up of this Committee, and I gave an undertaking that it would be set up. As far as I know, the only problem is to decide who will sit on the Committee.
Mr. Blenkinsop: In view of the serious situation of local authority finances, will the right hon. Gentleman say when the House will have before it the rate support grant orders and the White Paper connected with them?
Mr. Prior: My right hon. Friend the Minister for Local Government and Development said in a Written Answer yesterday that the White Paper setting out the details of rate support grant will be published shortly. I hope to arrange for my right hon. Friend to make a statement early next week.
Mr. William Hamilton: When does the Leader of the House intend to publish the Bill on equal opportunitiese for men and women? Furthermore, will he give an assurance, following the question put to him by my hon. Friend the Member for York (Mr. Alexander W. Lyon), that the Prime Minister will make a definitive statement this weekend on when or whether we shall have a General Election?
Mr. Prior: In answer to the second part of the hon. Gentleman's question, I have nothing to add to what I have already said. In answer to the first part of his question, I do not expect the Bill to be published for a period of some weeks.
Mr. David Stoddart: In view of the conflicting views in statements and in answer to questions on the current situation in terms of coal stocks and supplies and also of oil stocks and supplies, since there seems to be some discrepancy in answers given by Ministers to various Questions, could the Leader of the House provide time next week for a debate on the fuel situation and the necessity for a continuance of the three-day week?
Mr. Prior: There may have been some doubts in some people's minds about the figures, but everyone is agreed that the figures the hon. Gentleman tried to put forward were wrong.
Mr. Pavitt: Since the right hon. Gentleman seems unable to give a positive reply, could he give a negative reply: will there be time next week for Parliament to be prorogued? If so, will he say, "Not next week?
Mr. Prior: There is always time for these things if they are required but, as I have said, it is a totally hypothetical question.

BILL PRESENTED
  TIMING OF GENERAL ELECTIONS
  Mr. Edward Lyons, supported by Mr. W. W. Hamilton, Mr. Kevin McNamara, Mr. Dick Leonard, Mr. Arthur Davidson, and Mr. Phillip Whitehead, presented a Bill to restrict the holding of General Elections within three months before the expiry of a current electoral register: and the same was read the First time ; and ordered to be read a Second time upon Friday 25th January and to be printed. [Bill 68.]

QUESTIONS TO MINISTERS
Mr. Spearing: On a point of order, Mr. Speaker. My point of order relates to your statement yesterday concerning the obligation on Ministers to answer Questions due to be answered but, in fact, remaining unanswered before any dissolution of this House. I submit that this is not a hypothetical matter, nor has it ever been hypothetical, since dissolution of this House at some future date cannot be hypothetical.
I appreciate as you mentioned yesterday, Sir, that Departments do their best to clear any backlog of outstanding Questions. The same would be true where notice of intent to dissolve the House were given well before any dissolution. However, where the interval is short and
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no comparable opportunity exists because the Member concerned ceases to be a Member, there is no immediate opportunity, as in a sessional prorogation, to raise the matter in the House within a few days.
I submit that this is a matter of great significance to the powers and privileges of this House and the accountability of the executive as I understand that at present none of Her Majesty's Ministers has an obligation to make any response to a Written Question at any time. Thus, if at the time of a dissolution at short notice there is an unanswered Question that is highly relevant to the issues of the day, such as is my Question No. 259—not Question 279, as I stated yesterday—tabled for answer on 15th January about calculations on the rundown of coal stocks, there is at the moment no obligation on the Minister concerned to answer it. I submit that there should be an obligation on the executive to be answerable to the House as guardian of the rights and privileges of hon. Members and of the people they represent. I ask you so to rule.
Mr. Speaker: The hon. Member for Acton (Mr. Spearing) has put his point very clearly. I am afraid that it is not one on which I can satisfy him. As matters stand at present, I cannot insist on a Minister giving an answer and there is no Standing Order governing the answering of ordinary Written Questions. I cannot direct a Minister to answer. I believe that there is a point involved here, and the Committee on Procedure might consider it.

CONSOLIDATED FUND BILL
Considered in Committee ; reported, without Amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 93 (Consolidated Fund Bills), and agreed to.
Bill accordingly read the Third time and passed.

COMPANIES BILL
Order for Second Reading read.
3.50 p.m.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker): I beg to move. That the Bill be now read a Second time.
As this is the first occasion that the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) has made a major speech from the Opposition Front Bench since his illness, may I say how pleased we are to see him back? As both a Minister and a Shadow Minister he has always been a very popular Member of this House and has always made interesting and constructive contributions to our debates. We are delighted to have him back with us.
I ought perhaps to put this Bill in the general context of the Government's objectives in terms of the reform of the free enterprise system in general. This is one of the component parts of the strategy which we have tried to pursue towards the free enterprise system. It was some 12 or 15 months ago that I announced on behalf of my Department that we were endeavouring to arrange reforms to try to transform the relationship of people in our society towards the free enterprise position.
The first of the major measures of reform was a series developed and steered through this House mainly by my right hon. and learned Friend the Minister for Trade and Consumer Affairs giving a completely different rôle and position to the consumer. The Fair Trading Act is more radical than anything previously conceived. The reform of consumer credit, which is going through its stages at present, affects almost all forms of credit provision to the consumer. Finally, there is a measure which I believe has yet to register in the minds of most people. It is rather inelegantly called the Supply of Goods (Implied Terms) Act, and it radically alters the relationship between buyer and seller. These reforms have over a period of 12 months transformed the power and influence and the potential power of the consumer.
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Our second sphere of reform upon which we embark today is the reform of company law. I believe that our proposals will make British capitalism the most open in the Western world and will ensure that employees, consumers and the public at large as well as shareholders can judge both the economic and the social performances of corporations. We want this new capitalism to be socially responsible and accountable to public opinion at large.
We are going on to develop proposals to make sure that employees have a proper opportunity to affect decisions of the companies for which they work and in which their interests are entwined. My right hon. Friend the Secretary of State for Employment will be producing a Green Paper on this topic after the many discussions and deliberations in which he has been involved.
There is a long history of company law reform in this country. The last major reform took place in 1967. I say in no sense of criticism on a party political basis that it was sad, perhaps for pressing parliamentary reasons at the time, that many of the proposals contained in the Jenkins Report of 1962 about which most informed and sensible people were agreed did not find a place in the 1967 Act.
The 1967 Act made some very important steps forward on disclosure. One interesting factor is that many of the fears expressed about the 1967 Act on disclosure have proved to be unfounded. I hope that the House will bear this in mind when, as a result of this Bill becoming an Act, Secretaries of State take advantage of the powers contained in it. The fears about disclosure in past measures have tended to be overstated and in practice the powers have been useful in being able to provide people with a better judgment as to the effectiveness of various corporations.
In November 1972 I first announced that it was the Government's intention to provide a major company law reform. This was long before certain events like Lonrho took place. Before that I considered, not on grounds of curing certain abuses which existed, but because many provisions in the Jenkins Report which were correct had not been implemented although 10 years had passed with Governments of both parties, that as part of

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the changing position of the free enterprise system it was important to bring about a situation where much further disclosure was available.
If I were asked what I considered to be the most important potential element in this Bill I should reply that it was the power which will give future Secretaries of State, as time passes and the public consider new elements which are of great importance to their judgment, to move regulations which will enable disclosure in various forms to be available and to be provided swiftly.
The objectives of the Bill are first to see that the system itself is made more open, secondly to remove some undesirable practices which have evolved or emerged over past years, and thirdly to see that the Government's management of the corporate position is better administered and much more effective than it has been under previous Governments of all complexions.
There has been a tendency on the part of the Press and the observers to highlight matters such as inside dealing and those other matters which are to be made criminal offences under this legislation. It is right that attention should be drawn to this. But it is important to recognise that these practices which we shall endeavour to remove by this legislation are not practices which are either widespread or the general practice in the transaction of business in this country.
I think that both sides of the House will agree that the City of London plays a massive part in the effectiveness of the British economy and is one of our greatest overseas earners. One of the great benefits of the City of London as a worldwide financial centre is the quality and standard of integrity which it enjoys. It enables business in London to be done more effectively and speedily than in almost any other centre in the world. It tends to be a financial centre which has the enormous advantage that, basically, for the majority of decisions taken in the City the judgment is whether they are correct and are decisions of integrity, whereas in other financial centres the judgment is whether they comply with the law—if a clever lawyer can get round the law, it is fair play, and that is the basis upon which business is done. I much prefer the basis in the City of London.
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The Bill contains 120 clauses and 11 schedules. It is a major piece of legislation. There are various other aspects of company reform which I have no doubt hon. Members will mention during the debate as being candidates for inclusion and which they are disappointed have not been included. But, as the Labour administration discovered, when introducing legislation of this type on an evolving position like company law there is a limit in legislative terms to the scale of reform possible.
The Bill is divided into 10 parts, and it is very much an evolving reform. If I may deal with its various parts, the first provides for the classification of companies and makes certain changes in their powers.
The first two clauses are designed to make clear, and not blurred as it has been since the suppression of the exempt private company in 1967, the distinction in status between public and private companies. This is desirable in itself, but it also has the advantage that different measures—for instance, different applications of the disclosure requirements—can be applied to companies of differing status. There will, therefore, be a distinct separation between the bodies of law applied to the two kinds of company, even though they are incorporated in one measure.
Of some importance in Part I is Clause 7, which reverses the controversial judgment in Parke v. Daily News. In future a company which ceases business and wishes to make generous provision for its ex-employees will not be at risk of successful litigation by shareholders who claim that all the proceeds should return to them. I think that this will be welcomed on both sides of the House.
Mr. J. Bruce-Gardyne: I understood my right hon. Friend to say that the definition in Part I of the different classes of company would apply to the requirements about disclosure. I understood that in Clause 69 the definition of the different categories for purposes of disclosure would be left for subsequent decision by my right hon. Friend by order. Is that correct?
Mr. Walker: It is correct. But in coming to a decision among other categories about disclosure there will be the category of the private as opposed to the

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public company. There will be a different element of disclosure for major private companies as opposed to minor private companies which operate on a small scale. There will be various grades of disclosure on which future Secretaries of State will be free to decide.
Part II of the Bill is concerned with the question of share capital and the issue of securities and dealing therein. Clause 8 covers the question of minimum paid-up capital. As we have said in the White Paper, we intend to impose a minimum paid-up capital. We have suggested in the White Paper levels of £1,000 for the private company and £10,000 for the public company, and I see no reason why those figures should not be adopted.
The other parts of Part II deal with the question of insider dealing, which has received much publicity. The object of the provisions is clear—that nobody, by reason of his position in a company or his relationship with it, should be able to use inside information which he has thereby acquired in order to line his own pocket by dealing in the relevant securities. Fears have been expressed that a general provision of this kind will severely inhibit the ability of directors or senior employees to deal in the securities of their companies. I think that these fears are exaggerated.
There must be many occasions during the year when the information held even by the most senior insider is not likely to be significant in relation to the market price of the securities. But it is impossible to take effective steps against improper dealing by insiders without importing some inhibition on the freedom to deal hitherto enjoyed by insiders. That is inescapable, and, in my judgment, a price which it is right to pay in the interests of stopping an undesirable activity.
Further problems are set by the major institutional shareholder and professional investment adviser, such as a stockbroker or accountant. Such people have the best opportunities of finding out any insider information they consider relevant to their functions, and if they were to deal in the relevant securities while having that knowledge it would be a classic example of undesirable insider dealing. However, institutional investors must be
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able to take a close interest in the management of the companies in which they invest without being totally inhibited from buying or selling those companies' securities. Professional advisers must be able to continue to give impartial professional advice without feeling that by so doing they are preventing themselves from properly managing the funds of other investment clients.
The Bill therefore provides that, although such people may have inside information, they will be able to deal unimpeded provided they can show that the inside information held by one part of their business did not "leak" sideways into the management-investment side.
There is a general problem of deciding how far the ripple effect should be allowed to go—at what point, in the widening circles of relationship or acquaintanceship, does a person cease to be an insider for these purposes? The Bill therefore provides that it will be an offence to tip off anybody if the tipper has an arrangement that the tippee will then deal or if he has good reason to believe that he will deal. But the man who receives the tip will be committing an offence only if he has some business association or some informal understanding about dealing with the man who passes on information.
Some commentators have claimed that the provisions of the Bill reverse the normal burden of proof and assume that an insider who deals is guilty until he proves himself innocent. That is a misunderstanding. No question of insider dealing can arise unless the defendant has been shown by the prosecution to be connected with the relevant company, to be in possession of price-sensitive information not generally available, and to have dealt in the securities. If the prosecution can prove those three circumstances, it is entirely conformable with the normal provisions of the law that a prima facie case should thereby be established and that the defendant should then have to show that, despite those circumstances, his activities were innocent.
Mr. Tam Dalyell: How is it to be proved that "tippery" has taken place? I wonder whether the Secretary of State, without going into detail, would say something about the advice

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which he has had from the departmental lawyers on identifying whether the information has been given.
Mr. Walker: There is considerable difficulty in obtaining evidence and proof in such circumstances. I do not deny that. However, the difficulty of obtaining evidence about a process which is considered to be undesirable should not prevent us from making it an illegal act. I concede that it is difficult to obtain such evidence. But to say that a certain process is an illegal act, a criminal offence, is to put the hallmark of the law on it, and it is not something which the majority of people would practise.
Sir Robert Cary: Take the example of an extremely large company—I have two such companies in mind—in which there are vast family holdings spread among many relatives and in-laws. Are those people to be constantly under suspicion if there is any change in their holdings?
Mr. Walker: If there are large family holdings there is an obligation to endeavour to show that people do not deal on insider information. I realise that there are perfectly innocent and respectable practices which will have to be changed, but I am now dealing with an undesirable practice. The majority of firms with family holdings do not deal in the shares constantly. If they are not dealing in the shares, no suspicion or problem arises.
Mr. Brian Harrison: Will my right hon. Friend explain how this can be done without nominee holdings being completely open?
Mr. Walker: I shall deal with the question of nominee holdings later.
Provision is made in Clause 14 whereby a defendant would have to show that his purpose in entering into the transaction was, for instance, to meet an unexpectedly large bill. Someone may enter into a transaction because he has to make substantial house repairs, and in some cases there will be no alternative but to realise shares. If that could be shown, it would be a potential defence.
An important provision of this part of the Bill relates to nominee shareholders and what is commonly known as "warehousing". Shareholders are already required by the 1967 Act to disclose to
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the company when their holding reaches 10 per cent. or more of the share capital of the company. We now propose to reduce the figure to 5 per cent. and to shorten substantially—from 28 days to three days—the period within which notification must be given ; namely, notification to the Stock Exchange which will be put on the Stock Exchange board and become public knowledge. There is also provision to reduce the 5 per cent. still further if experience shows that to be desirable. Therefore, any future Secretary of State, if he found that undesirable practices were continuing, could reduce the 5 per cent. by regulation.
The Bill also provides that any company which suspects that it may be the potential victim of a warehousing operation may require to know who are the beneficial owners of its shares. It has been suggested that nominee shareholdings should be banned altogether as being secretive and out of date. I can perfectly well see the arguments for that case, but I ask the House to realise that there are considerable arguments again the case. One of the major arguments is that many of our financial institutions act as investment advisers to large numbers of people. For example, one of the joint stock banks might have people with small and medium sized portfolios and might purchase a bulk of securities which they may perhaps put in Barclays Bank nominees and distribute internally amongst these people.
If in every transaction it was necessary to put a name on each individual allocation it would impose considerable extra bureaucracy so far as the operation of these financial centres is concerned. I can see the desirability of people not using nominee holdings in order to gain a position in the company without its being made public. That is why I have given this particular, wide power so that a company can demand disclosure of who is behind the nominees, if it is in any way suspected that it is being used for a major take-over. Take the position of Barclays Bank nominees. A holding may be built up in that nominee, or in another. One may go to the nominee and say "We want to know who is behind it". Barclays Bank may say that it comprises 830 of its portfolio's clients and, therefore, there would be no objection. Certainly the majority of people concerned would accept that undertaking without their positions being

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disclosed. If, on the other hand, there was a purpose relating to a take-over it would have to be disclosed and we would know exactly who was behind the nominee concerned.
There is also the question of giving investors, particularly small investors, some degree of privacy. A person may have £1,000 worth of shares in ICI and may not want his relatives, or local people, to know. It is perfectly reasonable that the privacy should be respected if the person is holding shares as a nominee for no other reason than privacy. If, however, he is holding the shares as a nominee in order to be involved in a major transaction or take-over, there are powers in the Bill to deal with this.
Part II of the Bill makes provisions regarding directors' dealings. Holdings of over 5 per cent. and any dealings which directors have in the shares of their companies will have to be notified within three days to the Stock Exchange, instead of the usual 28 days. As the White Paper promised, this part of the Bin contains provisions preventing the further issue of non-voting shares or shares with limited voting rights. We have provided that listed companies may not create any more shares with limited voting rights. Any existing private company which wishes to turn itself into a public company or acquire a listing, or any unlimited public company which wishes to be listed, must first enfranchise any non-voting shares which may exist and must ensure that any new issue carries unqualified voting rights.
Clauses 26 and 27 are designed to improve the position of minority shareholders who do not consent to a successful take-over, and who are then bought out by the successful bidder, and improve the rights of a minority of the shareholders to have their shares bought up by a company which has successfully acquired nine-tenths of the relevant shares. The main effect of these provisions is to ensure that the minority, where the bid has been made on alternative terms—that is, the offer has consisted of either cash or paper—can rely on getting as good terms as those available to the majority. These important modifications are part of a general policy of improving the protection given by the law to minority shareholders. Other
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examples of the same principle will be found in Clause 20, which makes it more difficult for the directors of private companies to refuse to register a transfer of shares, and in Clause 70, to which I shall come later.
Part III of the Bill contains what is perhaps the most radical improvement to company legislation. The first clauses in this part extend the power of the courts to disqualify persons from acting as directors of companies. The main effects are, first, that a person convicted of any offence which necessarily involves the finding of fraud or dishonest behaviour may be disqualified by the court, even though the offence was not directly concerned with the management of a company. Secondly, a person may be disqualified if he is found guilty of reckless conduct in managing a company. Thirdly, a disqualification order may be made if a person has been persistently in breach of the obligation under the Companies Acts, which is defined to mean three or more offences within any period of five years. Fourthly, a disqualification order may begin to run after any period of imprisonment which may be involved, instead of being concurrent with it.
Finally, a disqualification order sought on the ground that a person has been convicted of an offence or offences involving fraud or dishonesty may be made not just at the time of conviction but at any time thereafter. It will be observed that we have followed what was said in the White Paper by not providing that disqualification shall be possible when a person has been shown to be incompetent, as opposed to being guilty of fraud, dishonesty or recklessness. We take the view that being incompetent is not a quality of which an individual ought to be self-aware—
Mr. Harold Lever: It is very fortunate for the Government.
Mr. Walker:—and which ought to lead him to efface himself from commercial society. If the shareholders elect an incompetent person to the board, provided that he does his honest best, however poor it may be, we do not think that it is right to ask the court—as opposed to the shareholders and his

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fellow men—whether he is too incompetent to be allowed to be a director.
Clause 45 contains probably the most Draconian provision in the Bill. Briefly, it provides that no director of a company, or any member of his family, may hold shares in another company controlled by that first one. There are reasonably generous transitional arrangements to allow for the orderly unwinding of the existing position. I have no doubt that this provision will cause considerable dismay in some entirely respectable quarters, and that there will be a feeling that there should be some specific exemption provided for respectable situations. [An HON. MEMBER: "Hear, hear."] I note the "Hear, hears" of my hon. Friend, but I find it impossible to agree with this suggestion.
The situation described is one where a perfectly clear conflict of interests can all too easily arise, and the temptation to use one's position in one company in order to better the other company in which one has a personal interest—at the expense of the proper rights of the shareholders in the first company—is so clear that in my view the situation must be stopped. Most situations are entirely respectable and have been constructed for respectable reasons, but it is impossible to establish any distinguishing mark of respectability by which exemption might be given. Recognising the difficulties which may be caused for the genuinely respectable, I have, none the less, decided that the potential evil, and in particular cases the observed and actual evil, is so potent that the only proper course is a statutory bar.
Mr. David Mitchell: Does my right hon. Friend intend it to apply to private businesses and family companies where there are perfectly legitimate arrangements between father and son, and to other similar cases?
Mr. Walker: It will apply to all companies which possess an interest in other companies. There are transitional arrangements where it has been done for perfectly sound and respectable reasons. There is a period of time in which the transition can take place. We have discussed this at full length with professional advisers, and we are satisfied that in those cases in which this has been done for perfectly legitimate and reasonable
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reasons, the companies can make other arrangements to continue their activities in a well-organised way. But in future there will not be this potential conflict of interest between one group of shareholders and another.
Clause 52 says specifically what is now implicit in statutes and in case law, that a director has the duty of utmost good faith to his company. This is not new law but a wholly desirable clarification. Clause 53 makes it clear that directors are entitled to have proper regard to the interests of the company's employees in the decisions they take. It would be a poor board if it did not do this, and any reasonably active union or staff association would soon bring to its attention the negligence involved.
But since it may happen that boards feel inhibited from benefiting the employees in ways which might be represented to shareholders as not directly in the shareholders' interests, we think that it is desirable to make it clear that a director who genuinely decides on measures which benefit the employees would have a complete defence against any claim that he was acting ultra vires. This is an important basic statutory provision to obtain before any legislation is begun on the basis of the Green Paper which the Secretary of State for Employment will be introducing in a few weeks time.
Turning to Part IV of the Bill
Mr. A. P. Costain: Before my right hon. Friend leaves Part III, would he say something about Clause 45? I have had some letters about this from constituents and I know something about it personally. There is concern about trustees holding shares and about whether they could be directors. Has my right hon. Friend paid due regard to the fact that in a subsidiary company which was wholly owned there could be a conflict?
Mr. Walker: Could I leave it to my right hon. and learned Friend the Minister for Trade and Consumer Affairs to deal with the point about trustees when he winds up?
Part IV is concerned largely with a matter which in recent years has reached the proportions of a scandal—the late filing of company accounts at Companies

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House and the difficulties that the Registrar has in pursuing offenders. There have been many more prosecutions in recent years in this sphere. The number of prosecutions in 1973 were quadruple the number in 1970.
The problem was explained in the White Paper, and the solution which we have evolved is as follows. For the first time, there is created a specific obligation to file annual accounts within a fixed period from the end of the financial year, and the method of determining the financial year is fixed. Failure to observe the requirement will make each director of the company guilty of an offence and liable to a substantial fine—£400 plus £40 for each day of default. Further, the company will incur a civil penalty, mounting at an increasing rate during the period of default, up to a maximum of £450. By enacting these provisions, Parliament will make it clear that failure to file annual accounts on time is a serious offence. It is not a technicality. Limited liability is a privilege, and those dealing with people enjoying that privilege are entitled to prompt and accurate information about their financial state. These provisions will enable my Department to identify defaulting companies immediately default starts, to pursue them actively and thus rapidly to eliminate the backlog which now exists and to keep up to date in future.
There has been controversy about the Government's decision that part of the work previously done by Companies House will in future take place in Cardiff. This is a very important element in these provisions of the Bill. The existing buildings in London could not possibly cope with the situation beyond a further two years, and we have decided that it is correct that the main examination and bulky paper storage should be moved out of London for a number of reasons—partly the question of accommodation and the availability of suitable accommodation within that two years, and very much a question of staff.
In London over the last three years we have increased the staff at Companies House from 600 to 900. The obtaining of clerical staff in London is very difficult, and frequently Government Departments, including this one, are way under establishment. About 25 per cent. of
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the recruitment of clerical staff in my Department is currently involved in recruitment for Companies House.
We have decided that the use of microfilm, the appropriate application of computer techniques, the fact that this Bill will assist with the penalties involved and the fact that the increased paid-up capital provisions will assist in removing from the register a range of companies which have not been used or active for many years will enable us to improve the position.
But the staff problem relates to the time scale, and the overall efficiency demands the provision of a major new office within those two years. The Department consulted the main users of the companies registration facilities before deciding on the move.
Companies House in London will remain the principal public search facility, served by a microfiche system. There will be a fiche envelope for each company on the register, which we propose should include the incorporation documents, subsequent amended memoranda and articles of association, any documents in relation to capital structure of the company, for example, conversions, reconstructions, orders of court, agreements, contracts, increases of capital, returns and repayments, appointments of liquidator or receiver, reduction of capital, the situation of the registered office and any changes in the last seven years, appointments of directors and any changes in the last seven years, annual returns including accounts, directors' reports and shareholders' particulars for the last three years filed. If further returns are filed in later years, these will be added to give a maximum of six or seven years, depending on the length.
The envelope will also include the complete mortgage register of documents relating to mortgages and charges, and for large companies with bulky lists of shareholders a microfilm copy of the register will be made available, with special readers. Where lists are shorter, they will be included with the annual returns and annexed documents in the fiche.
This means that all documents received will be micro-filmed and available both in London and in Cardiff. The only people who require to consult

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original files in Cardiff will be those requiring information other than that retained permanently on film. These arrangements will provide all the information needed by the great majority of users of Companies House. Consultations with our financial institutions and others continue on points about which there is still concern.
One point is the importance of providing facilities in London for the lodging, examination and acceptance of all documents relating to prospectuses, other types of public issues, snares or other securities, associated reconstructions of capital, orders of court or take-overs. These representations are being carefully considered.
There are considerable advantages in the new system. One serious drawback in the present system is that only one copy of each company file is available. Therefore, if, as commonly happens, several agents, journalists or members of the public want to see the same file on the same day, their demands cannot be met. At present, users may present a list of files to Companies House in the morning and find that only perhaps half are available, so that they have to go back day after day until the file they want is free.
When the information is on microfilm, unlimited copies can be provided, so that a number of people can examine the same document at the same time, and people will be able to take away copies of information on the microfiche to examine in their offices. For major users, a contract service will be introduced, under which copies of the required information will be supplied direct to their offices and can be read there.
The Department has had a series of meetings with interested bodies to discuss their complaints and examine ways in which the new arrangements can be adapted if those complaints prove to be soundly based. But there can be no going back on the decision to move out of London. There is no other way in which an adequate service to users can continue to be provided beyond the next two years.
Dr. John Gilbert: If eventually it is intended to have seven years' accounts in London, why can we not start with seven years instead of three
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years? The Minister will agree that one of the most important things for purposes of comparison is several years' consecutive statements.
Mr. Walker: This is the time scale of ensuring that all these documents are filmed. If they are to be filmed in two years' time, which is essential for the whole of the arrangement, three years' operations presents a huge task. Most inquiries would be dealt with straight away by what is now available. There will be plenty of organisations and ways by which, during the period when we build up the seven years' position, information can be obtained from Cardiff.
I should point out to critics of the situation that the alternative of staying in London in some ways would be far more incompetent and inefficient for a much longer period than what we have decided. Our decision was taken very much upon the desire of both the previous and the present Governments. Successive Governments have always failed to keep the situation up to date. I believe that the action that we are taking will mean, in the shortest possible period, that we have a good system speedily used by those who wish to use it.
The provisions relating to auditors are, I think, largely self-explanatory. The general strengthening of the position of the auditor is designed to further the general purpose of the Bill, which is to encourage the maximum degree of disclosure by companies and of informed comment upon them. The same is true of the provisions relating to the contents of accounts, directors' and auditors' reports and annual returns.
The actual contents of regulations which would be made under these powers must be decided upon in the light of what is said in the debate. I said at the beginning of my speech that I considered the whole question of disclosure was perhaps the most important provision in this legislation. It gives considerable flexibility to future Secretaries of State. The regulations that we would move, after the Bill became an Act of Parliament, would be very much affected by what is said in the debate and by representations that have already been and will be made in the months before the legislation is finally passed. I should not propose to use any such

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powers without the fullest consultation with all concerned. However, it may be helpful to the House if I give a brief indication of how I propose to approach the subject.
Perhaps the most important list of provisions in this context is shown in Schedule 1. Hon. Members will see that a very wide range of activities and topics is covered in that schedule. For example, paragraph 12 states:
"The conduct of relations between the company and its subsidiaries and persons employed by them ; personnel and employment policies of the company and its subsidiaries ; arrangements for protecting the safety and health of employees of the company and its subsidiaries.
(13) Arrangements for protecting the safety and health of the public."
The list will also include information on the environmental policies of the company involved. That is the type of information that should be made readily available to employees, the public and local authorities involved in the area where the company is active.
This is a very wide list, and, subject to consultation about its application, my general intention would be that public companies and the largest private companies would be required to disclose on all those matters.
The smaller private companies—I have in mind particularly the specific recommendations and the general philosophy of the Bolton Report—are not under the same general obligations of wide public interest and concern. I assure hon. Members on both sides who have expressed anxiety on this topic that it would be appropriate to require a far less degree of disclosure by such companies.
At the smallest level of activity—the two-man or three-man private company—I should expect the degree of disclosure required to be minimal. I shall be particularly interested to hear the course of debate on this subject, and, in the light of the views expresed by the House, I will then undertake consultations with the interested parties before making any regulations.
I referred previously to various clauses designed to improve the protection of minorities. Clause 70 significantly eases the access to the courts of an oppressed minority shareholder. Improvements will also be found in, for instance, Clauses
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73, 75 and 76, in addition to those clauses to which I have previously referred.
The subject of investigations by my Department is obviously one which arouses a great deal of interest and, I must reluctantly say, quite a bit of ill-informed criticism. But let me make the position clear.
The existing Acts and the Bill do not give the Department of Trade and Industry any right or duty to interfere in the internal affairs of companies. The power of investigation arises, in my view rightly, where there is reason to believe that there has been fraud, misfeasance, or some other impropriety. I believe this limitation to be right.
Admittedly, it is not always easy to judge in particular cases whether an investigation ought to be undertaken or whether there are other more suitable courses to be pursued, but some such judgment has to be made. Otherwise, the Department would virtually be committed to an investigation every time there was a complaint. I assure the House, having occupied my present position for 14 months, that it is a sad fact that many complaints made to the Department are based on either misunderstandings or wrong information, and sometimes malice.
Clause 71, particularly subsection (3), is of importance. It significantly widens the grounds on which inspectors may be appointed. Subsections (4) and (5) increase the powers of inspectors to demand books, papers, and other relevant information, and subsection (7) widens the provisions of the 1967 Act relating to investigations into share dealings.
I ought next to draw attention to two provisions in Part VII, Clauses 93 and 94. These clauses create a new category of pre-preferential debt in a winding-up or bankruptcy and provide that the payment of the final week's salary and wages, subject to a maximum of £50 for each individual, shall take precedence even over other preferential debts which themselves include wages and holiday payments.
The next group of subjects, contained in Part VIII, does not call for specific discussion now. It brings the statutory control over overseas companies operating here more closely into line with the obligations imposed by the Companies Acts on domestic companies, subject to

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such modifications as are required by the very fact of their being overseas companies.
Nor do I need to do more at present than just mention one or two points in Part IX. Clause 102 gives power to extend the operations of the Acts to unregistered companies, because in principle it is clearly desirable that all companies should be governed by the same body of law.
Clause 103—I am sorry that not many Welsh Members are here to examine it—enables a company to have its registered office in Wales instead of either Scotland or England and Wales.
I should finally mention Clause 120, the last in the Bill. Subsection (3) gives power for the Bill to be brought into effect at a suitable future date and, if necessary, by sections rather than all together. This is a slightly unusual provision which has two main objects.
First, the operation of parts of the Bill depends on the issue of regulations. I shall refer to the question of regulations generally in a moment. Obviously, we need to be sure that any regulations are properly considered and do not have to be rushed simply because the Bill is about to receive Royal Assent.
Secondly, parts of the Bill—notably those referring to the filing of accounts—will put additional burdens on departmental administration, and it will be important not to impose those burdens simultaneously and before the necessary administrative arrangements can be made for them.
Before I conclude, I should draw attention to two general matters which affect many individual parts of the Bill.
The first is the question of penalties, which, in the existing Acts, are distinctly heterogeneous. The House will know that the existing Companies Acts contain a very wide range of penalties. The Bill introduces a number of new offences. The more significant new offences include, for instance, insider dealing, for which conviction carries a liability to imprisonment for up to seven years ; a company commencing business without the required minimum paid-up capital, for which the penalties, on indictment, are an unlimited fine and, on summary, conviction a fine not exceeding £40 for each
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day of contravention ; acting as a director while owning shares in a subsidiary, which carries a penalty of up to two years' imprisonment ; and acting as an auditor when disqualified, for which the penalties, again on indictment, are an unlimited fine and, on summary convictions, a fine of up to £40 a day.
The whole range of penalties, existing and proposed, has been reviewed and updated in the last few months, and they are now categorised in Schedule 7. The penalties for the most serious offences are significantly increased, and the fines for a wide range of offences are raised substantially. It will be seen that the penalties fall into four broad categories. Within these categories there is special provision for those offences which are continuing offences as opposed, so to speak, to the one-off offence.
The second general matter of which I should make particular mention is that, as the House will have noticed, the Bill substantially increases the range of matters over which it is proposed to seek powers to make regulations. The House is always, I suggest rightly, suspicious about the granting of such powers. Our experience will have convinced hon. Members, just as it has convinced responsible Ministers, that there are many matters, not themselves of basic significance for the structure of the Acts or for their general philosophy, which require updating from time to time, and modification in the light of experience and current knowledge. It is undesirable that such matters, which are primarily of an administrative kind, should take up the full legislative time of Parliament. A general power to make regulations on these matters is the most appropriate way of securing that the application of the Acts is kept reasonably up to date. The kind of matters which I have in mind, on which the existing Acts have clearly fallen behind the times, include the various fees payable to the Registrar of Companies, to which Clause 113 is relevant, and the contents of the directors' report, on which Clause 69 will operate.
It may help the House to point out that in every case where a regulation would increase any existing burden the relevant order would be subject to the affirmative resolution procedure. I am sure that the House will agree that it is right to reserve

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the ultimate decision, even in these quasi-administrative matters, to Parliament. It may also help the House if I give an assurance that, save in those cases where the nature of the subject matter makes it impossible—and here I obviously have in mind the fees chargeable at Companies House as an example—it will be my intention to make regulations only after the fullest consultation with the interested parties.
I have probably illustrated to the House the far-reaching nature of the Bill. It reforms and brings up to date in a wide range of matters the provisions of the existing Companies Acts in ways which I feel sure are bound to be welcomed by all who wish to see the management of companies and public knowledge of company affairs improved and made more efficient. It also introduces a number of radical reforms into the existing system, some of which I recognise will involve hindrance and difficulty to the normal practice of honest and innocent individuals. However, after the most careful consideration, I believe that the price, heavy though it may be for innocent people, is worth paying for the greater good of eliminating abuse.
I believe that the Bill will succeed in making British capitalism the most open, certainly in Western Europe and I believe also in the world. It will mean social responsibility in the economic activities of corporations, which in total means that the activities of a great part of our national life will be improved when the Bill becomes an Act.
4.43 p.m.
Mr. Harold Lever: May I first say how touched I am at the great kindness shown me by both sides of the House on my return from an absence which would have passed unremarked a few years ago, without any extenuating circumstances of illness. My recent reincarnation as a more serious attender has caused some concern over that absence.
I speak as one whose affections have never managed to keep themselves confined within the boundaries of party political orthodoxy. I should have liked to be able to heap encomiums on the Secretary of State and his colleagues for their Bill, which is not immediately political
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in content. I wish I could have kinder things to say, but the right hon. Gentleman will know that none of the remarks I make is activiated by any personal ill-feeling, malice or lack of appreciation of his own kindness and that of his colleagues to me.
However, I do not want it to be thought that the only kindness extended to me is from the other side of the House. I am glad to see that my dear friends, my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and my hon. Friend the Member for Salford, West (Mr. Orme) are not in their places, because now and again they appear to haunt me, more in sorrow than in anger, as spiritual reminders, as they rise in the middle of my speeches when my footsteps are deviating from their conception of the ideological straight and narrow. However, enough of this: I must turn to the important matter before the House.
The right hon. Gentleman has given us, necessarily, a rather hasty preview of the Committee stage of the Bill rather than a Second Reading speech about the general philosophy that activated bringing in the Bill. It was not clear until 3.30 this afternoon that there was to be a Second Reading, because if a General Election supervened the debate would probably not have occurred. However, if before we reached the Committee stage it was clear that there would be a General Election I assume that the Bill would be left over to the succeeding Government and Parliament.
That possibility gives the right hon. Gentleman the air of a man bursting with good intentions which are destined never to be fulfilled where the Bill is concerned. It is a pity, because the right hon. Gentleman, unlike many Ministers who when they come into office tend to have the occupational disease of hardening of the conscience, seems to find his soul in whatever Ministry he arrives at. It may be added that the right hon. Gentleman appears to find circumstances which lead one to suppose that he has it in mind that this discovery could be usefully incorporated in his party's next election manifesto. That reflects itself in some aspects of the Bill.
As for company law, we must bear in mind that, despite the Secretary of State's approach, this is not an arid exercise of

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a legalistic character. What we are discussing is the whole legal framework which governs the operation of pretty well all our private enterprise—commerce, industry and finance. One has to see what is one's attitude to private enterprise in this day and age before one can describe the philosophy governing our reform of the legal framework within which it operates.
I should state at once that I come from a constituency in which the Royal Exchange, the Cathedral and the Manchester Guardian are all in close proximity. I have mentioned this to the House once before. The result of this close proximity is that there are few businessmen who have not some ethical imprint of spirituality and, alas, it may be that there are few clerics who have not some commercial instinct. Supervising them all is the Manchester Guardian, whose great name and instructive leading articles are there to realign the morality of either category who may have strayed in the course of their commercial or professional lives.
The fact that I am the son of a scholar-merchant leads me to say that I do not see anything inherently wicked in private enterprise, but merely that it must adapt itself to the ethics and social obligations of the period in which we live. This is where the two parties might legitimately have a different political approach to company reform.
I should also acknowledge that there are people who for one reason or another think that private enterprise should be abolished instantly and completely. I respect that point of view, but I do not share it. It is not the point of view of the Labour Party. [An HON. MEMBER: "Are you sure?"] Yes, I am entirely sure that my party takes the view that what we require is reputable private enterprise for as long a period ahead as anyone can reasonably foresee, and that it must conform to its social obligations.
In any event, those who think that the instantaneous abolition of all aspects of private enterprise is correct can hardly hope to contribute effectively to the reform of company law. One cannot espouse a passionate case for immediate and general atheism and hope to have great credibility as an enthusiast for the repair of cathedral roofs.
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However, I make it quite clear that, althugh there are fundamentally different approaches, because of the complex ethical nature of the subject I am not concerned with either political mileage or image creation. If this is placed at the forefront of company law reform I fear that the result will be unworthy. I am not innocent of a desire for political gain, but such gain must be the by-product of an honest and earnest attempt to bring the company law up to date, and these attempts must be made on their merits.
What is the general philosophy and motivation of the Bill? Like the Secretary of State, I have to make some Committee points, but he did not refer to the philosophy that is, or should be, behind the Bill. In the past company law was virtually exclusively concerned with the protection of creditors and shareholders. What the Secretary of State has indicated today is that he is operating from the same rather narrow ideological base as his Victorian predecessors had in mind.
Mr. T. H. H. Skeet: No.
Mr. Lever: We shall come to the variants on that theme in a moment.
It seems to me that this ideological base in today's conditions is quite unsatisfactory, because it does not take into account the immense change of thinking by people at all levels as to the ethics of modern industrial, financial or commercial effort. If we are to keep our democracy functioning, there must be a continuous process of aligning the laws that we seek to enforce, governing criminal matters and civil obligations, with the ethics and standards of the majority of our people.
That is my first and most central complaint about the Bill, that it concerns itself virtually solely with narrow areas of traditional company law ; namely, the protection of creditors and shareholders. Is that the most important aspect of company law at the present time? One must evaluate whether one thinks that, for example, 10 years' incompetence in the management of a great industry is less important than a couple of small-time nefarious deals by a director. To those who think that the latter is more important, the structure of the Bill will appeal.
But the truth of the matter is that what modern company law requires in a

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modern society is the regulation of the relationship between private rights of ownership on the one hand and the public interest and worker interest on the other. The Bill wholly evades the all-important aspects of that requirement. I know that there are odd bits in the Bill and the White Paper that preceded it about the social and moral responsibilities of companies, evaluation of customer complaints, health of employees and so on. Those references, while not enough to be important or significant, are enough to concede my point, that the Secretary of State cannot say with Victorian primness "These are not proper matters for a Companies Bill."
The answer to that defence is that the argument is both circular and pedantic. Why are they not proper matters for a Companies Bill? Answer: wholly because, as I have said, traditionally they were not proper matters. It is circular to give me that answer. It is also pedantic, because I do not care whether such a measure is called the Companies Bill, the Workers' Protection Bill, or the Industrial Efficiency Bill. I want to see it on the statute book. The answer is that the Government do not want to introduce such legislation at all.
It is not as if the Secretary of State can say: "The right hon. Member for Manchester, Cheetham wants these things incorporated in the Companies Act, which is aesthetically unattractive. We have already put it in other measures." He has not put them in other measures, and does not seem likely to do so, even if the extension of his franchise is more optimistically estimated than I would be prepared to estimate it.
The right hon. Gentleman talks a little about future legislation in the area of workers' control and so on. On the question of protection of workers and worker participation, the right hon. Gentleman reminds me of Sam Goldwyn. He has given us a definite "Maybe", and that is as far as he has gone.
Sir R. Cary: In saying what he has just said, has not the right hon. Gentleman overlooked the great social gesture made by Pilkington in Lancashire in 1938 when it was the first
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business to introduce family allowances, which Governments were later to copy?
Mr. Lever: Everybody knows the quality and character of Lancashire, which has always led in terms of morality as well as commercial enterprise. The Pilkington family certainly showed on that occasion a very farsighted vision. One of the Government's shortcomings is that they fail to realise that they have a duty to legislate, after a suitable pause in time, to ensure that the best practices of a minority are the compelled practices of the whole of business enterprise. That is how in a society such as ours we hope to make advances. I should like to have seen a Bill which did not have a vague talk about the evaluation of consumer complaints and so on. I should like the Secretary of State, who is earnest and serious about social responsibility, to have focused some of the Bill on the means whereby we might secure the public supervision of the capital expenditure, the capital programmes, of some of our great companies in particular, and how we might maintain efficiency. I see that he has a very tolerant attitude on the question of efficiency and a very rigid attitude on the question of honesty, perhaps partly because honesty is, as he realises, very difficult to enforce, and efficiency can more readily be appraised.
Mr. Nicholas Ridley: Does the right hon. Gentleman feel that public supervision of investment in the public sector has hitherto given us great encouragement as to the efficiency of the industrial investment that that process produced?
Mr. Lever: I do not think that the hon. Gentleman will feel he has made a very telling point, until he suggests to the House that we should abandon the scrutiny of the capital programmes of public enterprises. He does not say "It's all a waste of time. Let's not do it". He dare not say it. [An hon. Member: "He does."] Then he is even more separated from the majority of his colleagues on both sides of the House than I had imagined, because I do not think that many hon. Members take the view that the Public Accounts Committee and the Select Committee on Expenditure are wrong in scrutinising the capital expenditure of the Steel Board—and not only the Public Accounts Committee but the

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Treasury and the Government. We make all these elaborate provisions for the scrutiny of capital programmes and expenditures of publicly-owned industry, but it is equally important to have some accountablity of the capital expenditure and economic planning of our great private enterprises, some of which are even more important in the economy than are those public companies.
I do not want to use the Opposition Front Bench as a platform to say anything unfair about particular companies. I will not name them, but I invite the hon. Member who said "Look at the results" to look at the results that must be within his knowledge, because they were common gossip in the City, when great companies, on which the livelihood of thousands of workers depended, were being handled by mediocrities and incompetents who allowed them to stagnate and languish. We all knew about it, but there was not a great deal we could do.
One of the reasons is that there is no social accountability in the case of private enterprise, although it seems altogether reasonable and essential in the case of public enterprise. I am not arguing for a sort of Aunt Matilda type of pecking at people on details in private enterprise, in small companies and the like. But the capital programmes of our vast enterprises in private hands affect the livelihood and future of their thousands of employees. Their export programmes and planning affect the fortunes and prospects of our country as a whole, because the greater part of our exporting is undertaken by those companies, much to their honour and credit. But, that being the case, we must have some form of supervision. We could argue very readily about the nature of the institution that would provide that supervision. We could argue profitably as to whether we should do it in a way which would discourage the directors or hamper them in their work. But in 1974 we cannot argue that there ought not to be supervision of that kind.
Mr. Bruce-Gardyne: When I intervened rudely from a sedentary position during the right hon. Gentleman's remarks to say "Look at the results", I was not in any sense suggesting that in every case the management of private
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companies was above criticism. All that I was seeking to suggest was that the consequences of that sort of public scrutiny applied, for instance, to the capital spending projects of the nationalised industries in recent years have not been very encouraging from that point of view. If the right hon. Gentleman considers the consequences for the steel industry of the intervention of public scrutiny in the last few years and considers the reports of the Public Accounts Committee on that, surely this suggests that public scrutiny to date has not been very satisfactory in that respect.
Mr. Lever: If the hon. Gentleman will forgive me for saying so, that argument is as cogent as saying that we have seen a child who has been hampered by the continuous surveillance of his parents in childhood ; but that is hardly an argument for the abandonment of surveillance of children during their childhood. With great respect to the hon. Gentleman, there are many other cases, such as the gas industry and in electricity generation in which there has been very real achievement in the capital programmes of industries.
In any event, however, I do not want to turn this into a debate on the nationalised industries. If hon. Members think that the present Government, who have been in office for a number of years, are badly managing their tasks in relation to public industry, very few of us would cavil at that suggestion, certainly for the recent years. Do the Government think that there is no obligation to plan or to supervise publicly-owned industries, or do they merely say—as I gather them to be saying today—that it is being done badly at present? I am ready to give a party "Amen" to the second proposition, but not the first, which seems the only one that is relevant to the argument that I am advancing.
The problem, therefore, is that the Bill is content with the traditional rôle of seeking to achieve honesty concerning creditors and shareholders, and practically not at all with its true rôle of trying to harness the capital assets of this country efficiently in the way, broadly, that we do with publicly-owned companies. It does nothing concerning working people in the industries, although we have a vague promise about that.

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May I tell the right hon. Gentleman the Secretary of State that I am not posturing here as a revolutionary figure who desires to see workers' councils running our great private enterprises. What I do say, however, is that in 1974 anyone who has a care for the health of our private enterprise and the welfare of our political institutions ought to realise that the time is long overdue when working people should have a say at their place of work in their own economic destiny. They should have that say not merely by exercising a vote at five-year intervals at parliamentary elections or yearly intervals at municipal elections.
I shall not be dogmatic in the way in which this could be achieved. But people need to have some say in the control of their economic destiny in the modern world. This matter involves their way of life in many cases. Their way of life is often abruptly, rudely and brutally interrupted, sometimes for what is an overall economic advantage and sometimes for a much less attractive or justifiable cause.
In any event, however, the kind of control that I urge in the way of protection of workpeople's rights can be achieved only—as with the other matters about which I have been talking—if we make an institutional advance. That means the setting up of some kind of extra-departmental body—not a Government Department—to undertake the kind of duties that I have in mind. I do not want to go into further detail on that matter, because this is an area in which neither party has finished its thinking. The only difference between us is that the Conservative Party introduces this Bill with its thinking in an unfinished state, whereas the Labour Party is not at present in Government.
Mr. Ridley: The right hon. Gentleman may or may not be aware that his right hon. Friend the Member for Bristol, South-East (Mr. Benn) and other members of the National Executive of the Labour Party have introduced a firm policy, saying that members of the boards of nationalised industries and other supervisors of industry in the public sector should be appointed if they are known and active Socialists, and that known and active Socialists should be brought into the management
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of industry. Is the right hon. Gentleman suggesting that that should apply also to the private sector? Is he happy with that as an idea for the public sector?
Mr. Lever: Far from suggesting it for the private sector, the only suggestion that I can make to the hon. Gentleman, as he has done my colleagues the honour of reading their conclusions, is that he should read them correctly. If he is unable to do that, he might seek the assistance of those whose bias does not carry them to the point of total distortion which his, alas, has carried him.
Although I do not want to make Committee points—there may not be a Committee—I cannot resist the temptation to put down a few markers, especially as these will, perhaps, stimulate some hon. Members on both sides of the House to interesting disagreement with my point of view.
Although there is a definite difference—not in moral claims on either side—a difference in the party political approach to company law and private enterprise, there is also an area of company law which is as little party-political as the question whether we drive on the right-hand side of the road or the left—although I believe that there was once a three-line whip in the Oxford City Council on that very issue regarding roads. Therefore, I hope that my hon. Friends and my critics on the Government side of the House will forgive me when I am sometimes expressing personal views rather than claiming to speak as the official voice of my party. Although in my general remarks I am speaking as the official voice of the Labour Party on this issue, some of the detailed points are areas in which there can be legitimate differences of opinion, within even the Labour Party. I do not hesitate to say that I am sure that differences of opinion on the issues with which I shall deal will appear within the Conservative Party. They will certainly appear among many of its members outside the House who do not necessarily speak in the same language as Conservative Members of Parliament.
I hope that I am not being deviant in saying this, but I must confess that I am sometimes bewildered by the modern world. The bishops have taken to making

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political essays, and politicians, in perhaps an unwise riposte, have taken to sermonising. This has spread to a point where so many of our company chairmen tend to maintain a sustained note of sepulchral but intendedly edifying comment rather than a concern for the actualities of their business enterprise. I make no complaint, but it is part of a vogue. They are very good at doing it. When I am faced with these sustained oratorical efforts of our company chairmen, I often applaud them but I rarely find that my appetite for investing in their company's shares has been sharpened.
I come to some Committee points. On the question of insider trading, may I say that I joined the Labour Party and bought my first shares on the Stock Exchange at the same tender year—16 years of age—in Manchester. So I have had some experience, not altogether unrewarding at times, of the stock market, and I am bound to say that I regard the comments about the evil of insider trading as being greatly exaggerated. No one must misunderstand me. I am as much against sin as any Member of this House and I deplore very much anybody taking advantage of inside information on share trading. Most of the people who do, lose money on it. Many of the comments are due to an inadequate knowledge of the subject and the belief that all that is needed is a secret tip from one of the directors and a man can make himself rich for life on a credit purchase on the account. Alas, the mechanics of the Stock Exchange are much more sophisticated than that, and the realities of share estimation are much more sophisticated, too. So half of the tips are merely the road to losing money, and the good half get nipped in the bud at a negligible point by an alert jobber who sees that odd buying is going on.
I do not want to go into technical matters but I record my view that this evil has been exaggerated in its impact. The Stock Exchange Council in a mad moment when the jobber members of it were somewhat more excited than is wise actually supported the proposal and wanted a change in the criminal law to deal with this mischief. That, of course, was the Stock Exchange Council before it thought about the matter and investigated it. After thinking about it and investigating it—and I prefer to think and
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investigate before recommending action—it has, I believe, a somewhat different view of the proportions of this evil and the possibilities of a statutory reduction in such evil as does exist.
However little it may make me popular on either side of the House to say it, I am more frightened of the doctor than of the malady of insider trading. As I read section after section of almost incomprehensible criminal law enacted into the company law I am still very puzzled. I shall certainly vigorously examine it in Committee, if there is one. I am still not clear from the Bill who is an insider or what is insider trading.
I wish the Secretary of State's Conservative voters had heard the cavalier way in which he dismissed these anxieties in his opening today. He says that it is quite simple. Once a man has been shown to own shares and to have inside information—it is not proof of moral delinquency to have information about a company ; it is proof of moral delinquency if one does not have it as a director of the company—the Secretary of State thinks this is a good start for a prima facie charge at the Old Bailey. First, he proves that the man has shares ; then he proves that he sells the shares and then he proves that he has inside information. What could be more reasonable than that he goes to jail unless the man can satisfy the jury that he did not carry out the transaction to make a profit or avert a loss—whatever that strange confection of words may mean.
Many lawyers—and I used to practise at the bar—used to say that there is only one thing that is not much worse than being convicted and that is being acquitted. Quite a number of business people do not look forward to the notion that they can be acquitted at the Old Bailey if they are able to demonstrate that they have not entered into the transaction with any of the motives of which the Secretary of State disapproves.
I come from Lancashire by birth as well as by constituency. It is said that in Liverpool seafarers passing the Liver Building remark that the stone birds on top of it have been seen to flap their wings whenever a lady of untarnished virtue passes. We could probably erect similar birds over many areas, not necessarily only the Stock Exchange, and say that the wings would flap just as frequently in the presence of

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so much untarnished virtue, most of which exists only in the oratory of the Secretary of State. I am not at all in favour of underhand dealings but it is a total impossibility for a man to search his conscience as a director and say "If I buy or sell shares, what will an Old Bailey jury say."
Mr. Peter Walker: The right hon. Gentleman has given the impression that the Stock Exchange Council has changed its mind on this. It is fair to say that it has not. It still believes with its considerable knowledge of the matter that it should be made a criminal offence. To summarise the right hon. Gentleman, is he saying that he is against taking any action on insider dealings?
Mr. Lever: Oh, no. I am saying that I want a decent, honest approach to a marginal mischief, not a public relations exercise which blows it up out of all proportion and hence injects into the Bill utterly indefensible criminal provisions. Since the right hon. Gentleman has had the courage to intervene, I tell him frankly that I believe that the proposal is intended not in good faith as a careful and serious attempt to mitigate a very difficult mischief but as a public relations exercise.
Until now the commerce of Britain and its stock exchanges have staggered along under this evil without it being either a civil or a criminal offence. Suddenly the right hon. Gentleman arrives on the scene and all is different. There is no careful modification of this fairly easygoing position. Instead a punishment of seven years' penal servitude, an unlimited fine and unlimited civil liability is suddenly thrust upon us as one of the necessities for honesty in British commercial life.
What an absurdity it is to suggest that what has never even been the basis of a civil claim should now be punishable in the context of the Bill with sentences falling not far short of the common penalty for killing a fellow citizen. The thing is an imposture upon our credulity. The right hon. Gentleman has produced verbiage which when examined by lawyers is even more shocking, but I will deal with that when we come to the Committee stage, if we have one. I doubt whether the proposal was intended to be brought into force in its present form. So unsatisfactory
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are the efforts of the Government to mitigate this mischief that I cannot recommend the betting council to adopt parallel action before the next Derby day in relation to the punting on that interesting event.
I come to another problem where I may encounter opposition as to my personal views, and that is on the question of non-voting shares. Here again, what I considered to be a characteristic piece of demagogery has been injected into the Bill. Why should we not have nonvoting shares? Obviously, the immediate impact on minds not used to the Stock Exchange, shares or commerce is that this is a slightly undemocratic procedure, that surely everyone should have a vote. That happens in politics, so why not in business? This kind of equation between company structure and a Greek city State should not be incorporated into the Bill. The only valid reason for abolishing the non-voting share should be to protect the minority shareholding or to protect the public interest. With a view to protecting minorities, a vote does nothing to give that protection if the law is in other respects unsatisfactory. A majority shareholder will make the vote of a minority shareholder valueless. If the idea is to make a gesture to the modern concept of democracy, the gesture must be that everyone has the same number of votes.
Mr. John Roper: Like a co-operative society.
Mr. Lever: There is a case for saying that all members should be democratically equipped with a vote, but do not let us pretend that that has any relevance when I hold one share and I am given one vote and some else happens to hold 10,000 shares. If that person is given 10,000 times my vote, the gesture is an absurdity. That does not protect the minority shareholder. If we wanted to protect him we must consider other matters.
We do not need to have any kind of argument about nominee holdings. I know that that may be against the trend. The trend is to do everything in public. I hate bringing in matters which do not seem relevant to the Bill. There is now a trend even for the display of pubic copulation. It seems that everything must be done in public. I do not wish my share

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holdings to be known publicly. If I decide to invest in a company I do not want such matters to be open to public scrutiny unless that scrutiny is related to some sort of nefarious or semi-nefarious attempt to take over control of a company.
For example, a Member may have had a splendid career on the Front Bench in this House. He may have saved a little money. If he is forced to have all his share dealings recorded, the next thing which will happen is that hon. Members will be jeered on either side if they have mis-timed their equity purchases. The desire for privacy in what are essentially private matters is not proof of moral obloquy or inadequate moral sensitivity. Of course, we must let in the light of day in anything concerning public interest. However, if I buy a lot of shares, as long as I am not engaged in any nefarious activity or take-over, the matter is my own business. I do not see why that should be otherwise.
Pride is also involved. In the early stages of a person's operations he may be less skilful than later on. For example, I would not want to be discouraged by the jeers of hon. Members and hon. Friends who may find such information interesting for reasons which remain obscure to me.
I have dealt with the major points which will be put forward in Committee, a stage which we may or may not have. We have before us a half-baked Bill regarding social responsibility, although it contains many other valuable matters. They are matters of a non-party political nature—for example, matters which mop up Jenkins' points and the like. I shall deal with those matters in Committee.
The Labour Party adopts a sober position. We think that there needs to be a good deal of thinking about the reconciliation of public interest, worker interest, consumer interest and private ownership relating to companies. There has been a good deal of oratory, and rightly so, on the subject. Both parties are capable of that, but the thinking, the hardening and the defining is missing.
It is the Labour Party's view that we need a Royal Commission to study the matter and to come to firm conclusions. I have dealt with the kind of conclusions which we would have expected from the Government. We regret very much that
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they have failed to take this opportunity to advance thinking on company law and to extend responsibilities beyond what was regarded as adequate in Victorian times but is no longer acceptable.
I feel that I should not conclude without a few impartial comments on certain political aspects. The Government have not only missed an opportunity but have shown an unhappy propensity to deal in scape-goatery and public relations. Although the Labour Party is critical of much that goes on in our society, it has never looked for individual scape-goats with the enthusiasm which the Conservative Party is now displaying. However uninhibited that scape-goatery may be, and whether it concerns Mr. Harry Hyams, a former member of the Conservative Cabinet with a record of considerable public service or the miners or the postmen, we are not supporters of Governments which seek scape-goats. We are supporters of Governments which grapple with society's problems and earnestly seek remedies. We always find that the attempt to find scape-goats signifies a retreat from the obligations of Government.
If that approach has been adopted when considering industrial relations, it explains why we are facing our present problems. The contrast between the last Labour Government and the present Government is that, whatever the faults of the Labour Government, they handed over to the present Government, after a normal election, a going parliamentary democracy. The contrast between that and the present situation is lamentable.
We are getting gimmicky action in all areas from the present Government. We have a pound which is wrecked by hasty gimmicks and so-called floating. Our relations with the United States are on the point of ruin. Industrial relations are in total disarray and a General Election may be held at any time on the issue of whether democracy is to continue. What an unhappy contrast, even with the lamentable result of the last General Election, that makes with the time when we left office.
I am sorry that I shall not be here to reply to the Minister for Trade and Consumer Affairs. It is safe to suppose—and I say this with no personal animosity—that the right hon. and learned Gentleman will seek to apply in company law

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that relentless legal pedantry which has so manifestly had its results in industrial relations.
In spite of many useful pedestrian matters which are contained in the Bill, with which we shall deal at a later stage, I cannot commend the Secretary of State or his right hon. and learned Friend for the Bill which they have produced. I will not advise my right hon. and hon. Friends to vote against it because there is so much useful mechanical matter in it which needs to be discussed and enacted.
5.29 p.m.
Mr. Michael Shaw: It is a pleasure to hear once again the voice of the right hon. Member for Manchester, Cheetham (Mr. Harold Lever). It makes us much more reconciled to today's lack of news. The lack of that news has enabled us to be ensured of listening to him once again.
I cannot say that I agree with the right hon. Gentleman's main contention that the Bill is bad because it lacks a considerable amount of philosophy. Unlike the Bill which was introduced by the last Labour Government, this Bill has one particular virtue—namely, that it sets out to do a job and, as far as I can see, it does it. It does not set out, nor was it intended to do so, to go into the problems of wider areas which are not disclosed in the Jenkins Report. It deals only with practical matters, and other matters have been promised at a later date, particularly those to be contained in the publishing of a Green Paper. It is, I agree, concerned mainly with a series of Committee matters.
I shall not speak for long in giving the Bill my wholehearted support because I feel that the time for longer and more detailed speeches will be in Committee.
We are accused of introducing a Bill without having finished our thinking on company law. I feel that that accusation could have been levelled against the 1967 Act, which was first introduced in 1964, and then in 1966, having gone through another place, and then went into Committee in February 1967, where it remained until 15th June. It stayed there because it became quite clear that the Labour Government had not done their homework. They were undecided about
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what they wanted, particularly with regard to the insurance provisions, and so we had a very long Bill indeed.
It ended by going back to another place with hundreds of amendments to be taken more or less within 24 hours. This is a precedent which we must avoid at all costs. We are right to confine our attention to the matters set out in the Bill. It is certainly high time that such a Bill came forward. It was promised by the last Government. In spite of the long Committee stage, time and again proposals, which were put forward, were turned down because we were assured by the right hon. Members for Battersea, North (Mr. Jay) and Sheffield, Hillsborough (Mr. Darling) that another Bill was coming along. I do not blame the two right hon. Gentleman, because they soon left their positions, but we never did get that additional Bill. In the meantime there were many aspects of Jenkins and other matters that were developing and needed to be put right. I am glad that this Bill will enact many of the things recommended by Jenkins.
I want to deal with what I regard, and what I think my right hon. Friend regards, as probably the most important aspect of the Bill—that dealing with disclosure. Clause 1 spells out the differentiation between the private and public company. It is right to have that classification because it certainly helps when we come to discuss the details of disclosure.
Private companies have certain characteristics which it is right to distinguish. They tend to be smaller. They do not offer shares to the public. The shares are usually held by a few shareholders who are probably intimately connected with the operations of the company. Finally, the transfer of shares is usually restricted, quite apart from their not being available to the public. We believed in 1967, and we believe it still, that it is right that the smaller private company—and here I draw a distinction between the smaller private company and the larger private company—should have less onerous disclosure requirements laid upon it than those laid upon other companies.
I welcome the flexibility given to the Minister in Clause 69 and Schedule 1, whereby he can control the contents of the accounts and also the contents of the directors' report for different types of

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company. Incidentally, I am glad that the Bill gives the Secretary of State more flexibility than was given in the 1967 Act. At the moment, although the Secretary of State has some discretionary powers, he has no such powers to amend, dispense with or to adapt the requirements dealing with directors' reports. I hope that under this legislation this shortcoming will be put right.
Clause 69 and Schedule I are in my view valuable only if we know what my right hon. Friend's intentions are. He has gone some way to disclose his intentions: in particular, what changes he contemplates, the amount of detail he proposes to insert, what he intends to exempt for different classes of company and how speedily he intends introducing orders to implement his intentions.
I would like to know what are the limits of size envisaged in the term, "the smaller private company" used in Command Paper 5391. I hope that in dealing with smaller companies my right hon. Friend will remember that there is a lot of work not directly related to the production of goods and services produced by the company. We should do everything in our power to see that no unnecessary records and details have to be produced by those companies always bearing in mind that we must ensure that there is sufficient detail for the shareholders and the creditors.
As the company gets bigger, other interests must come into being, the interests of the work-people, the general public and so on. The smaller company is often very exposed. It cannot disguise any detail. It is probably a one-product firm and is therefore much more exposed to a take-over than many other types of companies. I hope that the Minister can tell us what he has in mind with regard to the items to be included in the accounts and directors' reports and how far he feels he can go towards furthering the exemption of disclosure to the smaller private companies.
I want to say a word about insider dealings. The right hon. Member for Cheetham poured great scorn on insider dealings and the mischief arising there from. To some extent I entirely agree with him. On the other hand, it would be wrong if we did not accept the fact that we all know of certain peculiar cases where there have been large profits made
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through insider dealings and where injustices have been done. I mention that only to show that there is a problem. I doubt whether we have the final answer. I do not think there ever will be a final answer, but it is right that we should try to do something about it.
Mr. Harold Lever: The hon. Gentleman knows that I made it clear that there are these mischiefs. Is it not the case that the large dealings he is talking about are almost invariably connected with things like take-over bids? These circumstances could have been clearly defined in the Bill if the Government had been intent upon dealing with such mischiefs in a proper way. The circumstances could have been defined carefully but this has not been done.
Mr. Shaw: That is one approach, and it may be the best one, but I am not entirely happy that that is the only circumstance that should be considered. Doubtless, we shall have a fairly long argument about it in Committee, and it is right that we should, because it is an involved subject and I have yet to hear the perfect answer to the problem of insider dealings.
I should like to mention two details on Clause 17. I welcome the speeding up of the process of the giving of information by the director to the company and, where necessary, to the Stock Exchange. The speed with which information is disclosed not only to the board but to the public at large is perhaps the most important point in considering insider dealings. If the giving of information could be speeded up sufficiently other restrictions might become unnecessary. I am surprised that that provision has not been given more publicity.
I am pleased that Clause 17 provides for disclosure of information on insider dealings to the Stock Exchange and I hope that the provision is taken full advantage of by the Stock Exchange. A regular bulletin issued by the Stock Exchange giving that information would be not only compulsory but compulsive reading for many people. A close watch will be kept on the bulletin, and that of itself will go far towards curing malpractice. Although someone may get away with something, his quick discovery will be a lesson that will not lightly be

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forgotten by others who might be tempted along those paths.
Another part of the clause may well prove to be the biggest check to malpractice in the new legislation. So far as minority interests go, it is agreed by everyone that the old law is not satisfactory and that people still get away with too much. Section 210 has proved ineffective, and I am glad to see that the recommendations of the Jenkins Committee in that respect have been followed.
I still believe that the need to reappoint auditors every year—which is mentioned in the Jenkins Report and in the Bill—is rather pedantic, but legal advisers tell me that there is substance in it, so I accept it. I welcome the provision that auditors may resign during their year of office with the safeguard that they give a proper explanation to the interested parties. At times auditors have been in an embarrassing situation.
In conclusion, I welcome the Bill. It sets out in a practical manner to legislate on matters which were discussed and recommended by the Jenkins Committee a long time ago. It is a pity that this has not been dealt with before, but none the less I welcome the Department's initiative in consulting so many people, with the result that the Bill has a wide measure of approval. I hope that it will have a friendly reception throughout its progress through the House, and I wish it well.
5.45 p.m.
Mr. Emlyn Hooson: I agree with the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) in what he said about the requirements of disclosure by small private companies. It would be churlish for me not to echo what he said about the delight experienced by the House in listening to the speech made by the right hon. Member for Manchester, Cheetham (Mr. Harold Lever). It was a pleasure to hear his speech, which gave delight and illumination to the whole House, with the possible exception of the right hon. Member for Bristol, South-East (Mr. Benn), who did not appear to know how to take it. It was refreshing to hear a contribution from the Front Bench which ignored pedantic party positions and expressed what the speaker thought on many of the
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issues contained in the Bill. I very much agree with the general philosophy which the right hon. Member for Cheetham expressed at the commencement of his remarks. If more people in his party accepted the views which he expressed today, my party would be in difficulty in maintaining its present position.
The philosophical approach to the Bill is an important matter. The debate has been clouded by the idea that the public limited company is limited in scope to companies which are of the greatest concern to the stock market and the financial interests of the country. Of course, that is of great concern because the stock market is the means whereby investors and large institutions are enabled to invest and to change their investments in large public stock companies, but we tend to forget that the main function of a public company is to run much of our large-scale industry. There is far greater social and economic concern with that other aspect of the company, the people who work in it and the purpose for which it exists ; namely, to serve not only the shareholders but the State.
The right hon. Member for Cheetham described the Secretary of State as a person who found his soul in the various Departments to which he moved. My impression is that the Bill is brought in by a poacher turned gamekeeper whose gamekeeping provisions rather belie his success in the former capacity.
The Bill, briefly, does three things. First, it deals lengthily with the outstanding Jenkins proposals, with which there is little to cavil. Secondly, in a short portion it deals with insider trading. Thirdly, it attempts, largely unsuccessfully, to deal with nominee shareholding ; that is, to counter "warehousing". The Government have failed to take the opportunity of dealing with much larger public company issues that concern the public at large. Although the Bill goes to great lengths in tinkering with shareholder protection, it ignores most of the all-important social and employee interests and contains no radical proposals to make management of companies more democratic. Yet these interests and proposals could alter totally our approach to the structure of the company in a modern society. In other words, why tinker with the ship's

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decorations when the hull needs replacing?
Concern is felt in this House at the lack of time in which to bring about reform of company law. We have to wait many years between each piece of company legislation, and many people feel that there should be more basic and radical changes in company law. They believe that this Bill will be an excuse for delaying further reform for another lengthy period.
We should start by considering the position and responsibility of directors in present company law. The rôle of the directors of a company deserves careful consideration in the light of actual and potential changes in the operation of companies in the complex socioeconomic structure of the present and reasonably foreseeable future. Broadly, there is a separately identifiable managerial function which must be undertaken by managers, however a company is constituted, and by the board of directors as at present constituted with its separate, and potentially conflicting, responsibilities to shareholders who obviously demand a fair return, to creditors in safeguarding their claims, and to employees. There are also other social responsibilities involved—for example, consumer protection. These matters have an ill-defined function in modern company law.
I submit that it should be possible in some way to isolate the managerial function, and then to make it operate within an external framework of non-managerial factors. It is only against this background that we must consider supervisory boards and non-executive directors, the requirements of the EEC in this context, and also the relationship of the company to its employees.
I should like to deal with the question of the safeguarding of interests of employees. Clause 53 provides that directors should have regard to employees' interests, but that provision, as it stands, will add nothing to the present situation. I regard it simply as a public relations exercise. Directors are now entitled to promote the interests of the company by promoting the loyalty of staff, but in the final analysis directors are answerable to their shareholders, who alone can remove them. The clause establishes no balance of fiduciary duty
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between shareholders and employees and may prove to be a source of friction in future labour relations.
Clause 53 should be amended—if the Bill ever reaches Committee—to provide for workers' councils. These councils will form a recognised body which can be consulted and which by its influence can make consultation effective. Last night on the television news I saw Mr. Campbell Adamson being interviewed on the effects of the three-day working week. Surprisingly, he said that industrial production had not fallen as expected. He estimated that production was running at between 70 and 80 per cent. of the normal production figure. When asked to account for this he said "Everybody has got together". In other words, it has needed the present crisis to make management and employees get together to use their ingenuity to overcome the present difficulties. We should have machinery to enable people to get together on a much larger scale in our public companies.
The works councils could have certain rights which cannot conveniently be extended to all employees of a large organisation. Report and accounts and all documents sent to members could be given to works councils. Works councils could have the right to attend, or appoint representatives to attend, general meetings, and should be entitled to receive all documents relating to bids for their company at the same time as do members. These councils should have the right, under Clause 70 of the Bill, to present a petition if the affairs of the company are being managed in a manner prejudicial to employees. Why should the clause be limited only to shareholders? Clause 70, which relates to prejudicial management, will be effective only if the court can as an alternative wind up the company ; otherwise the court may have to supervise management or give a minority permanent control. These are not practical courses.
It is a matter of regret that the White Paper did not include a discussion of a two-tier board—on the lines of those that exist in West Germany—as a method of joining both sides of industry in formulating policy without involving employees in day-to-day management. The Secretary of State for Trade and Industry claimed in his speech that if this Bill were passed

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it would mean that our company law would be the most open in Europe, if not in the world. I do not think that he is factually correct, for there are many other countries, including West Germany, which have better company law provisions than our own.
I should like now to deal with the question of transfers. The Bill should provide for the issue of reply-paid proxy cards to be issued by public companies for all meetings. At present these are issued when the board wants the support of shareholders, but not on other occasions when the members may be more concerned, such as upon resolutions for appointing directors or ratifying contracts.
Clause 20 obliges directors to give reasons for refusing to register transfers. This is an improvement on the present position, but to be made fully effective the court must be given power to consider the reasons and, in its discretion, to override them.
Clause 55 requires the company in general meeting to approve the issue of shares, but, as this approval can be given generally, it is likely to be a meaningless formality. The clause should be amended to ensure that specific approval is required for issues which together with issues since the last approval would increase the capital as a whole or any class by 15 per cent. in nominal value.
I do not pretend to be an authority on insider trading, and I rather agree with the point made by the right hon. Member for Cheetham that this is probably an overestimated evil. Nevertheless, it is an important matter which needs to be dealt with. The right hon. and learned Gentleman the Minister for Trade and Consumer Affairs, who is now sitting on the Government Front Bench, knows that I am not an expert on company law, but the lawyers whom I have consulted on these provisions, expert in company law, tend to laugh at the provisions in the Bill which seek to deal with insider trading. It would appear that there is a good deal of the public relations exercise in those provisions. Nevertheless, something must be done on this score.
There is widespread feeling in the community that when malpractices take place in the City they are difficult to discover. People generally feel that the treatment
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of those who commit malpractices compares badly with the treatment of other malpractices in our society. A degree of public relations enters into the matter, although there is great scope for defining much more closely and basically the conditions under which insider trading should be absolutely forbidden. It should not be left, as it is at present, to be dealt with by rather cumbersome provisions through which lawyers who deal with company law can drive a coach and horses.
I want now to say a word or two about a matter to which I adverted earlier. I refer to the provisions for disclosure for small private companies. I have had a number of representations made to me about them by people concerned with small private companies in my constituency. As the Secretary of State invited views on the matter, perhaps I might quote from a letter which I received from one of them:
"Our particular concern is the question of disclosure, i.e. the filing of the annual return with accounts. From our experience, competitors, suppliers and customers can use the information to the disadvantage of the company and its employees. This year, two large public companies have made takeover approaches to us, principally on assessments made on filed accounts."
The letter goes on to suggest the great importance of distinguishing sharply between the interests of the very large public company or the large private company and those of small private companies in that kind of situation. This matter needs to be considered very carefully.
I want finally to re-emphasise that in my view the Government have missed a great opportunity in this Bill. The Bill should have been delayed so that the Green Paper might have been published first. Then it should have been considered in detail. There would have been the chance of a major Companies Bill to deal with aspects of company law which even five and 10 years ago caused little concern to the public at large but today are exercising the minds of people who have great experience and knowledge of these matters and are causing concern to all those who have the public interest at heart.
There should have been a new charter introduced to make employees members of their companies, for example, and to

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regulate in the future the relationship of employees to directors so as to provide for a greater say in employee participation in the running of their companies. It could have been a major industrial charter. As it is, the Government have embarked upon what is largely a tidying-up operation. They are mopping up on the old Jenkins proposals which have not so far been implemented and they are otherwise indulging in what will turn out to be largely a public relations exercise.
6.2 p.m.
Mr. David Mitchell: I join other right hon. and hon. Members in welcoming the return to the House of the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) and common sense.
I also welcome the Bill, which modernises company law and stamps out certain unacceptable practices. It will prevent the making of fortunes on the Stock Exchange by people with inside information. I agree with hon. Members who have expressed the view that this practice is not as frequent as some people imagine. However, like Caesar's wife, the people involved should not only be beyond reproach. They should also be seen to be beyond reproach.
Secondly, the Bill will prevent the underhand accumulation of secret shareholdings in preparation for a take-over bid.
Thirdly, the Bill will ensure that directors have no secret interest in their companies' contracts. As an aside, I hope we shall be told that this provision will also apply to the nationalised industries in view of certain past events.
There are certain provisions in the Bill which I feel should not be there. On the other hand, there are certain provisions not in the Bill which I feel ought to be there. I want first to consider a couple of provisions which are not there and which I feel should be included.
We live in a society in which the great need is to prevent division in order to help create a unified nation. Efforts to this end are set back by those who seek to create envy, to fan the flames of envy and even to base a political creed on envy.
One fruitful source of envy and misunderstanding lies in the way in which
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company accounts and dividends are stated. Profits are often substantially overstated because the accounts do not take any account of inflation. I hope that the Government will consider carefully whether Clause 72 can be extended to provide for the implementation of the proposals of the Institute of Chartered Accountants contained in the "exposure draft" on inflation accounting.
There are many big and small companies which substantially overstate their profits as matters now stand. This leads to a reduction in the real capital being employed in the business. First, they pay tax on profits which do not really exist. Secondly, they often pay a dividend which in effect is paid out of capital. Thirdly, they give a hostage to misrepresentation and to envy. The rumour goes round that a company's profits are £X thousand and that the company has refused to pay a wage increase of £Y a week. The view is taken that this is desperately unfair. Yet people fail to recognise that the figure of profit which has been thrown up by the traditional old-fashioned accounting method, which fails completely to take account of inflation, is a "phoney" rate of profit and that, in any event, most of the money is needed to plough back into the business.
Secondly, I regret that the Bill has not introduced no-par-value shares, basically for the same reason. If a company started with a capital of £1,000 in the 1930s and it declares a dividend of £2,000, people say that that is a 200 per cent. dividend, that there must be enormous profiteering and how grossly unfair it is. The reality probably is that the company has something in excess of £100,000 employed in the business, and the £2,000 dividend is no more than 2 per cent. When that is expressed in the reality of the situation and not in the original format of the shareholding, one sees how much smaller it is. Here again there was an opportunity to do something which would have destroyed one of the bases of wholly erroneous envy and misunderstanding about the operations of our capitalist system.
I turn thirdly to the matters which are included in the Bill and which cause me some concern. I deal first with disclosure, and I want to look at it on grounds of principle. What the private

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citizen does as an individual is his own affair. He is entitled to privacy. He is entitled to privacy about his income and how he earns it, whether he sells newspapers on a street corner or works in a factory and does car cleaning in the evenings and Saturday mornings for extra cash, or whether he runs a couple of shops. I have to declare an interest in that connection.
There is no public benefit and no public right involved in the disclosure of the income of that individual simply because he happens to be a limited company running a couple of shops, a petrol station or whatever it may be. Under Clause 58 of the Bill all limited companies have to file their accounts. But exactly the same activity can be conducted as a non-limited company and accounts do not have to be filed. What is the sense in making the one disclose and the other not? In the case of small businesses, what is the sense of making them disclose in either case? We have had no word from the Government to suggest any thinking or explanation on that.
I go even further. The Government have inferred to this House that if a company has limited liability, this is some tremendous privilege conferred on it by a generous Government and, having got this great privilege, the company has a duty to disclose for all these various reasons. That is nonsense. It is not a privilege. The fact is that a limited liability company
"provides the framework through which the savings of individual citizens are channelled.…It enables capital to be accumulated and invested in risk-taking enterprises, which create economic expansion, provide jobs and produce goods and services."
In saying that I quote from the Government's White Paper. They are not words that I have plucked out of the air. The reality is that the Government have failed to make a case for treating the small limited company in the way they propose.
I suggest that those who invest in any company are entitled to full information from the directors. The directors' report and the annual general meeting should disclose to investors all the information available.
With any company quoted on the Stock Exchange in which the public are invited
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to invest, the public are entitled to full disclosure. With any company, whether quoted or not, which is so large or of such a key nature that the nation or national economy is affected by its activities, the nation is entitled to disclosure. For the small business or private individual who carries on his business activities with limited liability, however, there is no case for the filing of accounts and the disclosure of information to the public which does not use that information.
What is more, there is an immense amount of unnecessary work involved in logging, controlling and chasing up the filing of accounts or the failure to file.
Mr. Harold Lever: Not only is there no benefit or justification in disclosure for its own sake, but harm can be done to a business man if information is made available to his rivals which is to their advantage in competition and has no other consequence from a public point of view.
Mr. Mitchell: I am grateful to the right hon. Gentleman. There is not only the question of privacy but the question of competition. What the right hon. Gentleman has said is profoundly true of the one-product business whose competitors are anxious to know its profit mark-up, its raw material costs and a host of other information. They are particularly interested in knowing whether the business is expanding in export markets.
We are now members of the European Economic Community. It would be grossly unfair to put British business men in such a position that they had to disclose to their continental competitors more than their continental competitors disclose to them. That is what the Bill provides, and I hope that the Government will seriously consider delaying any disclosure of that nature until other countries in the Common Market do the same.
Must we have another lawyers' paradise in this Bill? Even on page 1 of it we are referred back to the Companies Act 1948 for definitions. It would make much easier the work not only of hon. Members but of people who must interpret the law if these matters could be spelled out in one Act. [Interruption.] My hon. and learned Friend the Member for Dover (Mr. Peter Rees), a member

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of the legal profession, says that it will reduce lawyers' fees.
Mr. Peter Rees: I said nothing of the sort. My hon. Friend has referred to the Bill being a lawyers' paradise. Lawyers must construe Acts as a professional duty and we dislike referential legislation as much as my hon. Friend does. Incidentally, I do not practise in company law.
Mr. Mitchell: I suspect that if Acts could speak, their first complaint would be against legislators for the form in which they have drafted them.
I turn to Clauses 21 to 25. These will not permit the quotation on the Stock Exchange of a company with non-voting shares or weighted voting shares. This is yet another blockage to companies seeking to expand by quotation on the Stock Exchange and raising additional funds for expansion. Many family businesses are reaching the stage at which they need extra finance in order to expand, and seeking a Stock Exchange quotation is the way to do it, but they would be blocked from doing that because they are not prepared to lose a system of non-voting shares entrenched in the busines probably in order to ensure that members of the family not involved in the running of it do not have voting shares.
I ask the Minister to guide us on Clause 45. Does it apply to unquoted companies? It will cause absolutely chaos if it does. Many perfectly proper company relationships will become illegal as a result of the Bill. My right hon. Friend the Secretary of State said that there would be a transition period of two years during which people could get themselves out of illegal arrangements. I wonder whether he has considered the diabolical effect on such people through having to pay capital gains tax in order to get themselves into a position to trade legally. The costs will be absolutely ruinous in a considerable number of reasonable and genuine cases.
If the son of a man with an antique trading company starts a subsidiary company in porcelain, it will be illegal for the father to put money into his son's business, which is a normal, rational, reasonable way in which people conduct their business affairs. It will be illegal for a farmer to set up a farming company to tenant his farm and a subsidiary timber
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company in which he shares. It is the economics of the madhouse for the Government to interfere in this detailed way in ordinary trading relationships.
Enormous penalties may fall on the head of a director—£400 plus £40 a day—for delay in filing the annual return of the company beyond 10 months after the end of the company's year. In some small businesses in the country areas where the auditors are well behind with their work it takes eight months for the accounts to come through, let alone their readiness for filing. In many small companies, not considered important in terms of the national economy, the company secretary is the wife of the director, who is selling or travelling abroad most of the time. Is she to be fined £400 and £40 a day because he is a month or two months late in filing the annual return?
That brings home the one major point of principle about the proposals which I want to make to the Government. What is here proposed may be right, proper and feasible for protecting the shareholder and the public in the big quoted international and national companies of this country, I do not quibble with that. But to apply it to the small family business, the shopkeeper, the farmer and the one-man business represents a degree of detailed interference in the business life of many small companies which is wholly uncalled for.
6.18 p.m.
Mr. Ben Ford: It gives me much delight again to listen to the style of oratory of my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), his wit and guile.
I am one of those who, with the hon. Member for Scarborough and Whitby (Mr. Michael Shaw), served on the Standing Committee which considered the Companies Bill in 1967. I agree with the hon. Gentleman that it is about time that the rest of the Bill which we were promised was introduced.
Apart from the general ethical support which I give to the principle of improving company law, I should mention that I have an indirect interest in these matters both as a Member sponsored by the Amalgamated Union of Engineering Workers and through a connection with

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the Association of International Accountants.
Speaking as a trade unionist, I think the Bill represents little advancement in disclosure of information for the purposes in which I would be interested. It goes hardly any way to meeting the demands put forward by the TUC. It appears to be a Tory attempt to correct some of the worst abuses of gambling on the Stock Exchange. These provisions are perhaps akin to the horse-racing fraternity banning the nobbling of horses or possibly an association of poker dealers banning marked cards. The need for a clean-up of the gambling rules in the city is an admission that perhaps undesirable practices have been taking place on an increasing scale.
I am pleased to note the provision in the. Bill under which directors who buy and sell shares in their own companies will have to notify the Stock Exchange of their dealings within three days instead of 14. This goes a long way to meeting the point made by the hon. Member for Scarborough and Whitby that swiftness of information will help in these matters. This provision may give shareholders a slightly better chance to run a salvage operation, as they will sec directors departing at an earlier stage than might otherwise be the case. Details of directors' management contracts will have to be filed at Companies House. Thus we should find out more about top-hat pension arrangements and top-hat profit sharing schemes which boost a directors' meagre pay and give him a disproportionate advantage over most members of management and employees. Mr. Fred Pontin of Pontins holiday camp company has a service agreement which netted him £98,251 in the year to 31st March 1973. In view of phase 3 he made a sacrifice, giving up that figure and settling for £26,507 as company chairman, plus £42,000 in dividends on the shares he owned in the company, in these days of crisis this is an example of belt-tightening which is a model to the community.
One proposal which may tend to reveal interesting irregularities in companies is that auditors will have to give reasons for their resignations. This has been a matter of concern for years and I welcome
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the new provision. No one imagines that the new rules will completely clean up the financial world of capitalism. Rather are they perhaps an indication of some of the sharp practices which lead to economic inequality and, consequently, to social injustice.
There are three improvements in the Bill which, if enforced, will eventually help employees. The first is to make it much more expensive to set up limited companies. At present, ready-made limited companies can be bought for as little as £40, and the purchase of these is of great help to "lump" operators. Being a limited company is equivalent to having a passport to a tax exemption certificate. The Minister will now have power drastically to increase the fee. I hope he will do so and thus make the position more expensive for the "lump" operators.
Secondly, there is the proposal on the speed with which companies will have to file annual returns at Companies House. At present, through careful arrangements of dates of meetings and financial year endings, there can be delay in filing accounts for about three years, making the financial information worthless for negotiation purposes by the time it becomes available.
Companies which are not so careful ignore the law, and estimates put the number at 250,000 of the 604,000 companies registered. In 1972 the Department of Trade and Industry prosecuted 731 companies for failing to file annual returns and accounts and 448 of the prosecutions were successful. The Department of Trade and Industry argued that persuasion was better, and in any case the fines were derisory.
The new rule regarding filing of reports and accounts will be much clearer and is to be welcomed. Under the provisions of the Bill public companies, generally those quoted on the Stock Exchange, will have to file accounts within seven months of the end of their financial year, and private companies will have to do so within 10 months. The period can be extended by three months in each case if the companies have overseas interests. There are to be heavy fines for non-compliance. Directors can be fined £400 plus £40 per day for each day of non-compliance, and companies can be fined. This is to be welcomed. If the Department of Trade and Industry now starts a blitz on

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defaulters, with larger penalties in the offing, many may be deterred from defiance of the existing company law.
At 21st November 1973 the following BLMC subsidiaries had not filed accounts for the year to 30th September 1972: British Leyland Trucks and Bus Division ; Beans Industries ; Aveling-Barford ; and West Yorkshire Foundries. I hope that this matter will be corrected. Under the Bill Lord Stokes, who is a director of two of the companies I have mentioned, could be fined £9,840 and the companies could be made to pay penalties.
Thirdly, there is the provision that public companies quoted on the Stock Exchange will have to use the suffix PLC, meaning public limited company, after their title, leaving the word "limited" to be used by other limited companies. Companies will be able to register as Welsh companies and use the suffix CCC for public limited companies and the suffix CYF for ordinary limited companies. Perhaps this change in favour of Wales is to match the transfer of Companies House to Cardiff.
Demands that employees are given the same access to financial information as shareholders and details of order books and expansion plans are all shelved to a future Green Paper, promised in the CIR Report No. 31 "Disclosure of Information", published in October 1972.
There is no indication that financial information should be provided on a factory basis, which is most essential for local negotiations, instead of as at present on a company basis with the company possibly embracing many disparate factories. The hon. and learned Member for Montgomery (Mr. Hooson) put forward what would appear to be tidy formulae for involving workers in the running of industry. I spent some years on the shop floor in industry, as a senior shop steward, or convener as such people are sometimes known. I made my own efforts in that direction and discovered that in many cases the workers were not terribly interested in being involved. In particular they were not interested in being involved in decision-making processes in industry.
The hon. and learned Gentleman is right however in one aspect. In a crisis situation workers have got together with
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managements to make the best of the existing conditions. But I have discovered through the years that in non-crisis conditions it is extremely difficult to persuade employees to involve themselves.
I experienced a particular instance of this when I had negotiated a merit-rating scheme as well as the opportunity for worker representatives to be involved in the assessment of the scheme. The opportunity was not taken up. One must have regard to historical principles in these matters. After many years of conflict in industry, there are still echoes of conflict abounding and it will take further years of effort on all sides to persuade people that it is necessary for them to become involved, and in certain cases to accept responsibility.
The Explanatory and Financial Memorandum of the Bill states:
"Clause 64 makes certain changes in the requirements relating to qualifications of auditors and makes it an offence for an unqualified person to act as auditor. Authorisation of individuals on the basis of adequate knowledge and experience will cease within a given period."
This means that more pressure will be applied to existing qualified auditors and accountants. It places upon the Secretary of State the most compelling responsibility to secure the maximum accountant capacity available consistent with proper professional standards. Even at the moment, and for many years past, there has been an absolute shortage of accountant capacity in this country and it has been very difficult for many smaller companies and firms to secure adequate professional services.
This is why, in Committee, I shall seek to add the name of the Association of International Accountants to Clause 64(1). This organisation, perhaps by default, was not named in Section 161 of the Companies Act 1948. Since that time it has sought recognition unsuccessfully. It has seemed at times as though a conspiracy existed within the Board of Trade, as it then was, to thwart the association's efforts to gain recognition.
The association is a substantial organisation, consisting of responsible individuals, many of whom are senior partners in firms employing members of the recognised bodies. This seems a rather Gilbertian situation. For some years the association has employed an

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eminent education adviser to ensure that its examination structure and syllabus is constantly updated to provide graduates of a status likely to do credit to the profession. The association is now the only body examining for public practice that is not recognised under Section 161 of the 1948 Act. It should be noted that it is tutoring many thousands of students throughout the world. As developing countries take on more responsibilities and their investment increases, more accountants are of course needed.
Of these students, many thousands are under a disability because of the non-recognition of the association. During the last year 7,000 were examined, of whom about 1,000 were in the United Kingdom. Although the examination requirements are stringent, the association still supplies an opportunity for O-level entrants, taking the view that the end product is more important, as against the recognised bodies, who are moving towards degree entrance requirements, thus preventing many school leavers who may not be graduates from aspiring to the accountancy profession.
As things stand, I would seek in Committee to remove subsection (4) of Clause 64, which removes the old method by which members of non-recognised bodies may qualify to audit limited companies. It means that there would be an absolute monopoly of the recognised bodies, which are in an unregulated profession. Therefore the Secretary of State must in all equity seriously consider applications for recognition under Section 161 of the 1948 Act so as not to deprive a number of honourable citizens of opportunities in their profession which they deserve as a result of experience and proven good working.
I welcome Clause 65 governing the appointment of auditors. As I said, it provides safeguards which have been long required.
Over the years I have become more and more concerned at the fact that many decisions may be taken by departmental sections for which the Minister takes ultimate responsibility but from which there is no appeal. I would wish to see included in the Bill a provision giving a right of appeal to an independent judicial tribunal or to the High Court on decisions
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made under the Companies Acts. Like my right hon. Friend the Member for Cheetham, I hope that we may be able to press these points in Committee. Otherwise, I am glad to give a general welcome to the intention of the Bill.
I would say to the Minister that if I am not here for his winding-up speech no discourtesty is intended. It is necessary for me to proceed to Yorkshire at a weary 50 miles an hour later tonight.
6.36 p.m.
Mr. Nicholas Ridley: The hon. Member for Bradford, North (Mr. Ford) is well known for his concern on behalf of the body of accountants which he has expressed eloquently today. Indeed, I think I remember seeing him two or three times in a different capacity on that subject. I am sure that the Committee will want to look with care at his point about Clause 64.
I must express a certain parental interest in some parts of the Bill, because I had something to do with the early stages of its preparation. It is, therefore, not surprising that I welcome nearly all of it and believe that it is a good Bill which the House should support.
I am particularly glad that at last included is that material which is universally described as "the rest of Jenkins". No one knows what that consists of ; it is 50 pages or so. This is something that we should have done years ago, but we are doing it now, so all is well. But we do not talk about that.
I am also glad that the provisions for penalties for delay in the laying of accounts are much tightened up. The fact that information could be delayed for so long was one of the most debilitating weaknesses in the pursuit of company fraud and the policing activities of the Department of Trade and Industry when I was in that Department. Non-publication of accounts could allow so much time to elapse before alarms were raised. The hon. Member for West Ham, North (Mr. Arthur Lewis), who is diligent if not accurate in these matters, will, I think, be gratified that the loopholes are being stopped. I believe that that should command the universal support of the House.
That is the only point on which I disagreed with my hon. Friend the Member for Basingstoke (Mr. David Mitchell), who believed that to have to comply with

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the regulations about the laying of accounts was onerous for small companies. It may be, but it is one of the duties which we should not waive for any company, of whatever size.
I am also glad that the powers of the auditor are increased, particularly when he resigns or, as has happened, is asked to leave his position because he discovers irregularities. This also will be a great help in tightening up the pursuit of fraudulent activities under company law.
I can give a complete welcome to the Bill where I was not able to give a complete welcome to the White Paper. It is, therefore, a good thing that the PR operation, as I call it—the White Paper—with its slightly contentious paragraphs at the end, 55–64, has given way to a very workmanlike Bill.
There are some exceptions, to which I will refer—notably the provisions relating to insider dealing and disclosure. Otherwise the Bill seems to be as good as the White Paper was dubious.
This brings me to all those difficult matters raised by the hon. and learned Member for Montgomery (Mr. Hooson) and to some extent by other hon. Gentlemen opposite on whether they can subvert the limited liability company, which has been the foundation of our prosperity, to become an agent for the expression of their political will.
This side of the White Paper worries me. To say that a company has social obligations that it must perform in the interests of the workpeople and that it must take account of exports or of the desire to create employment in a particularly difficult area, is acceptable politically and absolutely correct, but it is not the duty of the limited liability company to do those things. If we as politicians want them done, we must seek to get them done through policies external to company law—regional policies, subsidies, aid to exports or whatever it may be—that apply to all companies. To lay upon directors duties where the efficiency of the company conflicts with the social obligations that we place upon them does not seem the right way forward.
All this has been comprised by my right hon. and hon. Friends in something that is described as the new or the democratic capitalism.
Mr. Anthony Wedgwood Benn: Will the hon. Gentleman give way?
Mr. Ridley: I will when I have finished this point. The Opposition go much further. They believe that the point of a manufacturing company is to provide jobs and other things that they find politically desirable. My right hon. Friends have tried to find a slightly middle position from which to get the best of both worlds.
Mr. Benn: I am listening attentively to the hon. Gentleman. I hope that before he finishes this section of his speech on the particular rôle of workers he will take the opportunity of withdrawing what he said to my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) about the attitude of the Labour Party towards the matter of workers' representation on the boards of companies, because he implied that there was to be found, which there is not, reference on the part of the Opposition to the idea that the boards of companies should be filled by nominees who are politically sympathetic to the Labour Party. The hon. Gentleman knows that we have not completed our consideration of this matter, any more than the TUC or the Government have done. At no time have we said anything of that kind, though we have argued that workers might have the right—I shall be dealing with this point in my speech later—to elect people to the boards of companies. Perhaps the hon. Gentleman will take the opportunity of withdrawing what he said.
Mr. Ridley: The right hon. Gentleman has not raised a point that is relevant to what I am saying. However, as he has raised it, I must respond. I seem to remember something called the National Enterprise Board and a document which suggested that many industries were to be taken into public ownership, and that the people who were to be put on the boards would not be so much efficient industrial managers as Socialists whose main purpose was the creation of Socialism. If the right hon. Gentleman denies that. I will endeavour to find the reference before he makes his wind-up speech and quote it to him at that stage
Mr. Benn: If the hon. Gentleman is prepared to lay his information before the House, so much the better. Of course, his recollection is wholly false. However, if he is prepared to lay that information before the House before the end of the debate, it will be very helpful.
Mr. Ridley: Perhaps I might now continue with the point I was trying to make. I was referring to the new capitalism that my right hon. Friends have brought forward in the White Paper, though happily not in the Bill.
First, there is the difficult problem of propriety. In effect, Clause 45 provides that a director must not have a double trading relationship. Again, the insider dealing provisions mean that a director must not take advantage of inside knowledge to make unfair gains.
Hitherto directors have been placed on their honour not to abuse their position in these matters. Now, by seeking to legislate upon them, we say that anybody who is scrupulously honest with the law will not do these things, but anyone who is not absolutely clear about his obligations to the law will be able to do these things and only run the risk of being caught.
I do not like this change. I preferred the time when, as a director of a company, a man was bound to behave in a certain way, and if he did not it was at the risk of his personal reputation rather than being brought before the court. If that situation must be changed, I will accept it. I merely express the view that it is a pity that we should legislate on what amounts to moral questions in the exercise of a director's responsibility.
I wonder whether insider dealing, which we shall examine in Committee, is such an abuse as is supposed by many right hon. and hon. Gentlemen. It could have some beneficial effects. If a company were to continue to conceal some catastrophe which has overtaken its affairs, or some great turn-up for the books made it a great deal of money, and this news was suddenly released, the change in the share price would be dramatic. But if there is some half knowledge of this event and buying and selling takes place, the change in the value of the shares will be moderate,
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with possibly beneficial consequences. I do not put that forward as a strong argument, but it could be used for saying that a little knowledge of the affairs of companies leaking out is a good thing.
That brings me to the question of disclosure. I am a little worried about three items in Schedule 1, Paragraphs 10, 12 and 13, relating to the average number of persons employed, the conduct of relations between a company and its subsidiaries, and arrangements for protecting the safety and health of the public.
Any good director knows that he must have first-class relationships with his employers and customers and that he must follow the national interest as far as it is in his ability to do so if his company is to prosper. Anyone who says "Let us grind the workers into the dirt, let us swindle our customers, let us pour chemicals into the river" may make a short term profit out of this activity, but he will have strikes, customer resistance, criticism and publicity of the worst kind which will damage his business.
If it is necessary to start listing and legislating on all matters that are in the interest of companies, we shall have to pass laws on the best way for technical development, research or market exploitation to be carried out by firms. These are matters which directors who are worth their salt take into account. To require statutory obligations of that kind seems to miss the point. The point is that good management will do all these things. It will make such declarations and disclosures as are helpful, while bad management will not be improved by being forced to do things which it would not otherwise have done. That seems to be going in the wrong direction.
Of course I accept the idea of worker involvement or participation. I am a great admirer of the works councils, and it is important to have them, but it does not solve the problem by legislating that we must have them or that managements must declare information of the sort I have mentioned, which in no sense improves management.
This brings me to the reform of board structure. In our debates we have often confused the two issues of worker participation and the two-tier board. I have

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given my view. I think that it is in the interests of companies to involve as many workpeople in their management as possible.
The other question I should like to say something about is whether the structure of the board is right in this country. It is a single-tier structure, and there are no rules as to the number of executive or non-executive directors who may or should serve upon it. It is not perhaps the time to put such rules in the Bill, but it seems to me to be by far the most important matter concerning the whole of the future of the joint stock question, because that is where we can provide opportunities for good management to get into the saddle and for bad management to be got out of the saddle.
We can do it by the two-tier board structure, the theory of which is that the top board appoints or dismisses members of the managerial board. Alternatively it can be done by having requirements about a majority of non-executive directors on the board, whereby the managers, who are in the minority, are not able to perpetuate their existence when they are not doing well, because they do not have a majority.
That is the way in which we should direct our thinking about the future because, whatever the rules about disclosure, whatever duties are placed upon directors, however far we go to try to subvert companies to pursue the interests of politicians rather than efficient manufacture, the only way in which we shall improve the efficiency of our industrial performance is through better industrial management. That is why I hope we shall soon have a Bill on the Government's proposals about the reform of board structure and why, although I understand why it is not in the Bill, I believe that it must follow closely upon it. I intend entirely to support the Bill.
6.53 p.m.
Mr. Michael Meacher: The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) modestly claimed some parentage of the Bill, and rightly drew attention to the fact that in the important respect of social responsibility the Bill is a great deal weaker than the White Paper might have led innocent readers to expect.
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But in introducing the Bill the Secretary of State certainly presented it as a fundamental review of the institution of the limited liability company, when in fact it is only a series of highly specific and technical attempts to check some of the more unsavory City practices which have been well publicised recently, plus a batch of overdue technical changes gleaned from the fairly cautious Jenkins Committee's report of 1962, plus certain gestures to the Government's European aspirations. But over the whole range of topics the Bill has the unmistakable flavour that action is being taken because it is expedient at this time for the Government to be seen to be taking some action at least.
What the Bill is certainly not, however, is a thought-out attempt to escape from the archaic and now, I believe, ill-advised corporate structure of Victorian times. The effort to forge a brand new social contract between companies and their employees and the community at large has certainly been virtually abandoned pending yet another Green Paper. Even taking the Bill at its limited face value, one has little confidence that it will effectively check those abuses which it is apparently designed to control.
First, the new insider trading regulations are greatly weakened by the unwillingness to ban anonymous nominee holdings. What the Secretary of State does not seem to realise is that it is often in the interests of companies themselves to conceal the identity of owners, as for example in the notorious case of the ownership of Midland Cold Storage, by the international Vestey empire, at the time of the recent picketing. One is obliged to ask again, despite the Secretary of State's rather weak defence of the refusal to open up nominee shareholdings, why all holders of the equity should not be forced to identify themselves, whether the company makes such a request or not. Moreover, I still believe that the information ought to be made available centrally, which means being made available at Companies House in London—not in Cardiff, and certainly not at company headquarters, probably far distant.
Without these changes, I believe the provisions to try to check warehousing, which is widely agreed to be an unacceptable practice, are likely to be gravely weakened. The insider checks are also

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greatly weakened by the fact that any investigation would have to be carried out through the Stock Exchange. At present the Stock Exchange carries out about 20 or 30 investigations a year. It has no power now to question non-members. It does not normally publish its results in full, and it is still waiting for a legal ruling to make sure that it would have qualified privilege against libel if it were to publish some of its reports. The Stock Exchange is clearly a body that may well be suited to applying cosmetics to the "ugly and unaccptable face", but it is not a body capable of carrying out much plastic surgery.
A third weakness is that the Bill requires that all contracts that directors have with their companies must be notified to the Companies Registrar. But this is flawed by the fact that a contract which goes through a foreign subsidiary can still, under the Bill, go undisclosed. The information need not appear on any balance sheet. Even if this part of the Bill were to be breached, the fine is only of £400 on summary conviction, which happens to be precisely the fine to which companies are now liable if they should burn too many electric lights.
The new provision is clearly aimed at stopping abuses, as we saw so plentifully during the Lonrho affair, but it is unlikely to have much effect on the smokescreen manœuvres such as those put up in that affair by the establishment by Rowland's company, Yeoman Investments, in the Bahamas, of Borma, named after the three initial letters of Ball, Ogilvy and Rowland, and registered in the well-known tax haven of Switzerland, with its sole investment in HCC Investments in South Africa, which had interests in certain Rhodesian copper and other mining companies. When confronted with that kind of corporate manœuvre, this attempt to prevent contracts by directors going undisclosed is likely to be very unsuccessful. One fears that that was perhaps half the intention.
But the central defects of the Bill lie in the extremely limited framework within which it has been conceived regarding community and employee interests and rights in private assets. Partly, the structure of supervision is lamentably inadequate because it is so traditional. Amazingly, the Government
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seem to think that the new laws on insider trading and nominees are likely to be self-policing, or certainly that those problems might be dealt with by the police.
Little action is required by the Department. Recently its investigation department had a staff of 15, at a time when there were more than 100 investigations on hand. The Bill proposes an increase in manpower of about 55 persons, and hardly any monitoring is to be undertaken by the Department. Even within the Department, responsibilities are notoriously disseminated. That has always been the main argument in favour of an American-type of SEC—I do not say precisely its form of organisation. It certainly does not replace the law, but it can take civil proceedings on its own initiative and can act via injunctions and consent decrees to stop undesirable activities before the money has left the country. It is a major omission of the Bill that there is no mention of a separate companies commission, armed with such powers, which can regulate corporate activities quickly and flexibly without requiring, as has been the case since the war, a new law virtually every decade.
Another important area where responsibilities show little sign of being properly enforced is the activities of multinational companies. Why should disclosure be any less rigorous than it is for wholly United Kingdom-owned companies? Yet there is no requirement in the Bill that the subsidiaries of foreign parent companies in the United Kingdom should be obliged to lodge the accounts of the parent company with the Company Registrar, in accordance with United Kingdom accounting conventions, nor is it expressly required that all transactions with affiliates in other countries, whether on revenue or capital account, should be separately set out in the annual accounts. It is not even required that all companies should set out in their accounts their global employment, country by country.
Without those requirements, how will the exploitation of the British taxpayer and consumer be prevented, exploitation such as was recently revealed by the Monopolies Commission? I quote one case, though I am very conscious that there might have been many more, the case of Hoffmann-La Roche, the international drugs firm, which sold ingredients to its English subsidiary for

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sale as National Health Service tranquillizers at a price 40 times higher than their cost in Italy.
Nor will the Bill require disclosure of the payment of sub-poverty wages by British multi-nationals, as has been so well revealed by my hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers) in his chairmanship of the Trade and Industry Sub-Committee of the Expenditure Committee. It was only a recent strike by Turkish chemical workers that revealed that its Turkish employees were paid by Hoffmann-La Roche at only a third of the rate at which it paid its Swiss employees, and only one-ninth the rate at which it paid its American employees. One wonders how many such practices could be found among British multi-nationals operating abroad in such places as Hong Kong. As a result of the Bill we are likely to find out very little about international corporate behaviour in an economy which is increasingly and relentlessly becoming more international.
While the Bill seeks to be strong in dealing with abuse, it is undeniably weak on responsibilities. It is at its weakest on responsibilities to employees. Clause 53, which has been mentioned in this regard, bears all the signs, for anyone who looks at it in the context of the Bill, of being a mere appendage of convenience. It contains three and a half lines out of a Bill 152 pages long, and is about as weak and ineffective as they come. It simply says that directors are entitled to have regard to the interests of their employees in the exercise of their powers. That is feeble in the extreme, and is no doubt intended to be. Otherwise, I cannot believe that the draftsmanship could have been so weak.
The only other relevant part of the Bill in this regard is Schedule 1, which indicates that company accounts may in future have to contain information on such non-financial matters as safety, health, consumer protection and employee relations. Again, compared with the large parts of the Bill concerned with regulation in respect of shareholders' rights, the schedule is unspecific and undetailed.
It is clearly not intended or expected to be a source of detailed probing on such crucial questions of corporate social responsibility
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as possible racial discrimination in employment, accident rates at each and every plant of the company, exposure to harmful processes and products, expenditure at each plant on training programmes, the number of consumer complaints received, their nature and how they were dealt with, the levels of pollutant emissions from each plant into the neighbourhood, and a mass of other similar precise environmental and welfare details. None of that is found in the Bill.
What we are offered is not a social audit, and certainly not an inventory of community responsibilities. It is merely a facade. To take one important recent example, how will the Bill stop, or assist in obtaining redress from, Shell, which deceived Parliament over the Anglesey Marine Terminal Bill in order to unload oil from huge tankers at single-buoy moorings, by insisting to Parliament that there had never been a pollution incident since the buoys first went into service about 10 years ago? It later emerged that there had been no fewer than 150 oil spillages from Shell single-buoy moorings, and some of them, particularly those at Durban in South Africa, were disastrous.
What redress was available to inhabitants living on the coast of North Wales? More important, what redress would be available to them now under the Bill if it were passed? I believe that it is fair to ask the Minister who is to wind up to answer that question if he is serious about companies' social responsibilities.
But the supreme weakness of the Bill is that it is still rooted in the Victorian class structure and contains no glimmer apart from the passing, patronising reference in Clause 53, to the essential need for experiments in power sharing. There is no safeguard of employee interests against undesired take-overs, no mention of any development of the worker-director concept, and no suggestion of a trade union-appointed auditor to look after employees' interests in that respect. There is no vision of industrial democracy.
This is a little Bill that is concerned with mitigating certain abuses within the existing system while retaining that system although it is increasingly discredited. One thing that is certain about the Bill is its early replacement by a far more wide-ranging and visionary measure.
7.10 p.m.
Mr. T. H. H. Skeet: The hon. Member for Oldham, West (Mr. Meacher) and the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) have made a basic mistake in suggesting that there is no philosophy behind this legislation.
The hon. Member for Oldham, West referred rather disparagingly to Clause 53. It may be assumed by many that one has to have 10 lines of print in order to get a point across. But reading the terminology of the clause, which states:
"their powers shall include the interests of the company's employees generally as well as the interests of its members"
I find that it is very concise. It will be through this that the document likely to be published towards the end of the year on employee participation will be able to be brought in in full force, and radical innovations in the future will be able to be introduced through the heading of this clause. I should have thought that the clause is rather significant and that, if it is taken in conjunction with Clauses 7 and 93, quite a substantial revolution has been made.
It is naturally assumed by hon. Members of the Opposition that this is a piece of Victorian architecture which goes on, from the 1948 Act to the 1957 Act—which, apparently, was Victorian, too, and no changes were made—and again in the Bill. But I do not see it like that. There are three factors: ownership, public responsibility and the position of employees. Ownership is catered for by all three Acts. Public responsibility has been significantly covered by Clauses 5, 12 to 14, 69, and many more. I have dealt with the question of the employee.
But we are now members of the Community. We shall be called upon very shortly to take active responsibilities for the Fifth Directive. The Fifth Directive will probably apply to the multi-national company much more than to other companies in domestic spheres. If that is so, and unless we have a constructive approach to all this, I should have thought that the supervisory and management boards will be extending, through the multi-national companies in the first instance, probably to all of Europe, and that ultimately it will form a precedent for public companies in the United Kingdom.
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Therefore, steps are being taken in the right direction.
I should have thought that this is consistent, too, with the Government's general philosophy. It has been mentioned this evening that we have looked carefully at consumers in the Fair Trading Act and in the Consumer Credit Bill, the Unit Pricing Bill, and so on. We have also looked at policy-holders in the Insurance Companies (Amendment) Act 1973. We have had a look at tenants and now at employees and at major matters which are affecting companies.
May I support those hon. Members who have spoken in the hope that an attempt will be made fairly shortly—I hope within the next five years—at the consolidation of this legislation, which is already extremely complicated. It is not much good trying to find one's way through three Bills. Has my right hon. and learned Friend the Minister agreed this measure with Europe, only in the sense that it has been referred to? Has he found out whether it is in conformity with European thinking? We all like to consider ourselves British and proud of being British. But we recognise that we have certain responsibilities to Europe, and this point should be borne in mind.
Regarding Clause 93, in Section 319 of the 1948 Act the limit of preferential debts in a winding up was £200. How is it that this figure has been pared down for employees to £50? It would seem that the banks are in a position to advance less. This may have unfortunate repercussions on the workers involved. The Minister may have some particular argument for that. I should like to hear what he has to say about it.
Regarding Clause 45, apparently the Secretary of State indicated that there will be a complete ban on a director having a directorship in a holding company and in the parent company. This is a well known and established practice. It has been customary in the evolution of family businesses. It is well known in France and Italy, where one has numerous interlocking companies. Apparently, it will cease to have any effect from now on in the United Kingdom. The concept will have limited application to foreign subsidiaries. What is the reason for this change?
Obviously, if one brings together family groupings it is probably better if the

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person who is put on the main board retains a certain participation in the lower company, because if he has a participation there he will probably strive to make it more successful. A case in point is Furness Withy, which took a controlling interest in Manchester Liners. It has over 50 per cent. interest. Its director was lifted on to the board. I believe that he continues to hold a fair stake in Manchester Liners. Under this legislation he will have to give up his shares.
When considering the insider trading rules, because of the difficulties there we find an exemption clause has been provided under Clause 14. Accordingly I should have thought that where one has interlocking directorships under Clause 45 one should make a similar provision for exemptions if it proved a bona fide commercial transaction. That is the right way of handling the matter.
The other way of considering the matter is that Sir Arnold Weinstock rose right through a number of smaller companies to become the head of GEC. If it is possible that directors cannot have any shareholdings in the lower companies in a structure, it may be that men such as Weinstock will never rise to be captains of British industry. That is particularly discouraging. In order for the director to put himself in the right, if the legislation is passed in its present form, he would have to divest himself of the shares. If it was a small company, the parent company probably, through shortage of liquidity, would have to sell them to an outsider.
Further, the person who will derive a profit from the transaction would come up against Section 460 of the Income and Corporation Taxes Act 1970. That is a cancellation of the tax advantage. He would have to pay not merely capital gains tax, which he did not invite, but substantial money back to the Inland Revenue because under the Companies Bill he is put in an unfortunate position.
I should like to give a parallel case. If I own a portion of land and the local authority says that it wants to acquire it compulsorily, I may not want to sell it but I have to pay heavy tax for the privilege of someone taking it over. Here, a director in a lower company and also on the parent board will find that he has to give up the lower board in order to
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remain on the owner company board. According to Clause 45 he would have to liquidate that interest and his profits would be chargeable to very substantial taxation under Section 460. I should have thought that this was grossly unfair. I hope that some steps will be taken in Committee to bring about some modifications.
Regarding Clause 69, this is rather important in the matter of disclosure, if it comes. The shipbuilding industry obtained concessions under the 1957 Act. That was realistic, and I hope that the industry will have those continued. When one reads in conjunction with Clause 69, paragraph 10 of Schedule 1, where companies are being invited to indicate the turnover of personnel, I cannot see that the result will be very realistic. I should have thought that certain matters in shipping could be confidential and if handed over to competitors would be rather injurious to the companies concerned. I hope that the Minister will bear that point in mind, along with the various factors that have already been put forward this evening affecting small companies.
On the question of insider dealings, while I have no time for this form of abuse, I feel that the Bill will catch very few. Although the recommendations have been put forward that a civil liability will lie, will it follow that there will be a civil liability even though a person has not been caught by a criminal charge? Would it not be better to have a fund against which outsiders could apply. If it is intended to spot the man who may be liable for having taken excessive profits, I would have thought that the years will pass without a single prosecution. My right hon. Friend has indicated that nominee shareholdings are not to go completely because they cannot be outlawed. However, there is a good reason for keeping some of them. On the other hand, if it is possible to have nominee shareholdings in Switzerland and elsewhere it may be that people will be able to carry on their nefarious transactions by utilising such nominees abroad.
On the civil liabilities side the Bill is likely to prove impractical, and on the criminal side I am amazed at the severity of the sentences. Fortunately, Clause 14

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exists and the courts must act to see that people are not convicted unless the case is taken well beyond reasonable doubt. Will my right hon. Friend cover the point about employees' shares? Obviously if an employee is in the company he will know a great deal about it. Will he be able to sell his shares at a profit, or will he have to await publication of the annual accounts before getting rid of them? Obviously he is informed, he is in the company and he has the shares. He qualifies all along the line, and he could be in difficulties. The director of a pensions fund may also be in some other enterprise. Is he covered by Clause 14(2)(e)? There may be circumstances in which he would not escape liability either.
I turn to the particulars of directors provided for in Clause 56. These must now appear on the notepaper. The old arrangement was for an exemption which is now to be removed. Every time there is a change of director a typist will have to get to work and put in the new name. Alternatively, the old notepaper will have to be scrapped and a new issue printed. As there will now be a new system with Bush House operating in London and a companies office in Cardiff anyone who wants to find out who the directors are and where they are has an obvious remedy. It is the reputation of the company, not of those who are in it, that matters.
In Clause 34 there is provision for the conversion of shares into stock, and I think there will be a lot of difficulty here and that modifications could be made to ease it through, particularly to cover existing stocks. I have a final point concerning the acquisition of minority interests following take-over in Clause 26. We have been successful in the past in getting about 99½5 per cent. of the total shares. The last 0½5 per cent. have caused the principal difficulty. If there is any way in which my right hon. Friend can deal with that final 0½5 per cent. it would substantially assist companies.
May I mention the rectification of the register? This was attempted on 15th June 1957 when the previous Bill was in Committee. The proposal was turned down. The procedure which must be adopted on this occasion is to take it to court, and I should have thought that a
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simple amendment in Committee could lead to an easier solution.
This is a good Bill which will have to be taken in conjunction with legislation which may possibly come towards the end of the year. We may have supervisory and management boards in companies, or there may be some variations of the European theme. I do not know what they will be but they are steps to be taken which will indicate that the Government have been sensitive to change. It will show they have been prepared to move away from the archaic Victorian methods with which they have been taunted by the Opposition, and to say that as people are educated they are entitled to take a responsibility in the companies in which they work. I call that true democracy, and I hope to see these changes brought about shortly.
We have to protect the shareholders because they own the concern ; we have to protect the worker and give him participation because he is in the enterprise and spends most of his life there and is entitled to some say ; we have to protect the public because they are dealing with these companies. In this sense, therefore, all companies have three dimensions. The Bill makes a start in that direction, and for that reason I welcome it and hope it gets a Second Reading.
7.26 p.m.
Mr. William Rodgers: There are two ways of looking at this unreal occasion—and I call it unreal because of the preoccupation of hon. Members with events elsewhere. There are at the moment 11 or 12 hon. Members in the Chamber, which even for the House of Commons is a small number for 7.25 in the evening. Either we are debating, almost in a bipartisan manner—though I would exempt the speech of my hon. Friend the Member for Oldham, West (Mr. Meacher)—the details of a long overdue reform in company law, or we are considering the rôle and future of an important sector of public activity against the wider economic and social background.
Here I feel a dangerous radical in the atmosphere this evening, for I am far from happy about the Bill, as I shall show. The speech of the Secretary of State was hugely complacent, and I particularly regret that my right hon. Friends

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have decided not to divide the House on questions of broader principle. If I could find from among my hon. Friends—and this would be almost impossible—one other person who was prepared to act as a Teller I would rejoice in what would perhaps be the last Division of this Parliament.
I say only that this harsh tone is modified into a mood of forgiveness by the pleasure and delight I have in seeing my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) back here with us. The danger with my right hon. Friend is that when one disagrees with him it is so difficult to say so, and I am now screwing myself up to make a few comments which are perhaps out of tune with his remarks today.
The fact is that the excesses and exclusiveness of much of what goes on in and around what is loosely called "the City" is offensive to a good many ordinary people. It can contribute dangerously towards the social divisions in this country that lie at the heart of our problems. Over 10 years I have remained a consistent believer in a prices and incomes policy, conceding the need from time to time for statutory powers. I have not always been popular with my hon. Friends for such consistency, and, like my right hon. Friend the Member for Cheetham, I do not regard private enterprise as an evil, though his generosity in this, as in other things, has a far larger quality than mine.
However, there is no chance of rational decisions being made about the future of our society, about a prices and incomes policy, for example, as long as the style and performance of an important sector of commercial life is so remote from the experience and understanding of the vast majority of men and women. I feel strongly about this, and I only wish that more of my hon. Friends were here perhaps to express that view as well. When I speak of "the City" I mean mainly those who live perfectly legitimately by making money out of money. This includes the clearing banks, the merchant banks, the finance houses, the discount houses, the money brokers, the large institutional investors who manage pension funds, unit and investment trusts and those involved regularly at some level in share dealing.
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The City identifies itself not only through those who make a virtue of saying that they work there but by a corporate morality, well-established conventions and distinct coolness towards outsiders. It comprises those who believe that after the Queen the Governor of the Bank of England counts for most.
There is great talent in the City. There is also high integrity. There are men of principle, and some of them are positively anxious for change. I pay special tribute to the former Governor, Lord O'Brien as he now is, who is a man with special qualities. I believe that his successor, Mr. Gordon Richardson, can make an unusual contribution to his task. To endorse the quality of them both in one speech may be unfashionable. The fact remains that in and around the City there are too many people whose lives appear to be marked more by conspicuous consumption than conspicuous achievement.
It is still the case—I was trying to seek an analogy—that, ever since Parliament ceased to vote large gratuities to indifferent generals for obscure victories in unnecessary wars, it has been easier for a reasonably stupid man to get rich quick in the City than anywhere else.
In discussing the Bill and the wider context in which it should be seen, we cannot be indifferent to how matters will look from outside. To almost all the constituents of every hon. Member it is incredible that on, for example, a Monday an investor can sell 10,000 shares which he did not own, being able to pay for them with money which he need not show, and end up, perhaps, with a profit of several thousands pounds.
The obvious analogy can be taken. A person selling shares in that manner can, as a result of two telephone calls, make more money than the best paid miner will earn in a year. My right hon. Friend the Member for Cheetham might say that the answer to many of these problems lies in taxation. I do not wish to see a proliferation of administrative bureaucracy. The answer is that regulations should be more effective.
The Bill should be part of a much wider social strategy. That is not the case. It genuflects towards reform. It is a public relations exercise, as my right hon. Friend the Member for Cheetham said, or, to use

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the words of others of my hon. Friends, a clean-up operation. The Bill has no social philosophy, however much Ministers may dress it up.
Apart from sharing a general scepticism, I was interested in the remarks of the hon. Member for Bedford (Mr. Skeet) about the effectiveness of the insider dealing provisions. I lean more to feeling that they are abuses that should be stopped than towards the generosity, well informed though it is, of my right hon. Friend. I do not understand why Clause 14 leaves a pension fund manager free to make a lot of money for his fund from insider dealing. Either we do not want such dealings or the clause should be relaxed.
Mr. Harold Lever: I thought at one stage that my hon. Friend's hatred at disagreeing with me would be completely effective, because with one exception I agree with everything he has said. However, when he says that I was generous to insider dealing, he misunderstood my argument. I object to lashing about under the guise of stopping insider dealing and abandoning the correct legal and moral principles which should guide us when remedying mischief, especially by the criminal courts. I join with my hon. Friend and anybody else who favours effective and just measures to tighten up such dealings. There was no generosity on my part towards insider dealings.
Mr. Rodgers: My right hon. Friend is more fastidious than I am. Sometimes we must take the rough with the smooth. Society can never be perfect. In this instance the balance should be pushed slightly the other way. In Clause 18 I do not like the figure of 5 per cent. relating to warehousing, especially when paragraph 23 of the White Paper led us to believe that the Bill would reduce the notification figure
"to at most that level".
It appears that as a result of their preoccupations elsewhere the Minister for Trade and Consumer Affairs and the Secretary of State for Trade and Industry have not found it possible to be here during the greater part of the debate. They have a continuing duty to the House until the debate comes to an end. It is a form of neglect which should earn the contempt of those who remain. I am particularly
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surprised that the Minister for Trade and Consumer Affairs, for whom I have great respect, should on this occasion be so extraordinarily cavalier in his behaviour.
The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): That is less than generous. Having been a Minister, the hon. Gentleman will realise the pressures that are on Ministers. My right hon. and learned Friend has been here for a substantial part of the debate. I am here to assist him. I have listened carefully to what the hon. Gentleman has said. I shall be participating in the debates in Committee. I think that the hon. Gentleman is being unfair.
Mr. Rodgers: I do not wish to be unfair to the right hon. and learned Gentleman, but not only is he absent now but he was absent for a considerable time earlier in the evening. On one occasion the Parliamentary Private Secretary to the Prime Minister came behind the Chair and summoned the Secretary of State for Trade and Industry out of the Chamber. Ministers must decide where their duties lie. Their duty still lies to the House and not in the shenanigans of a divided Cabinet. We all know of the huge split which exists.
Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. I do not think that this is strictly germane to the Second Reading of the Companies Bill.
Mr. Rodgers: I was saying, Mr. Deputy Speaker, that there is a huge split in the Cabinet which makes it doubtful whether we shall reach the Committee stage. I understand that the Prime Minister would prefer not to reach that stage by going to the country now, while the Secretary of State for Employment and the Secretary of State for Home Affairs would welcome a Committee stage by postponing the dissolution of Parliament.
It is fair to say that there has been neglect of duty of a severe kind by the absence of the right hon. and learned Gentleman. I assume, in view of what the Under-Secretary of State has said, that the points I make which are related to the Bill will have a full and exhaustive answer from his right hon. and learned Friend when the time comes. If I do not receive such an answer, I shall have reason to complain again.

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Clause 19 of the Bill seems to be full of loopholes. I do not understand the significance of the wording in sub-section 1(b).
'to indicate so far as he can".
I am unhappy about buying from abroad. I am puzzled by the reference in Clause 19(7) to frivolous or vexatious requirements. I shall expect a fully reply on those matters.
I was interested in the Secretary of State's explanation of Clause 53. However, I share the views of my hon. Friend the Member for Oldham, West (Mr. Meacher) rather than the views of the Secretary of State or the hon. Member for Bedford. I am far from sure that the list in Schedule I which is attached to Clause 69 is comprehensive. I agree with my hon. Friend the Member for Oldham, West that it is not specific enough. It also seems to allow great scope for latitude.
The Secretary of State referred favourably to paragraph 12 of the schedule. I have turned my attention to it and I have drafted what might be required in an annual report using only as many words as the paragraph uses. My draft reads:
"The directors of your company maintain the most harmonious relations with their employees at home and abroad, marked by generous remuneration and benefits, including provision for health and safety, and by the loyal service which has long characterised our work force."
If more than that is required by Clause 12, I should like to know what it is. On the face of it, it is platitudes precisely on those lines which a large part of Schedule I requires.
I am not clear that Clauses 73 to 77 which relate to company meetings significantly advance matters. As we all know, many company meetings are called at 11.30 a.m. in the determination that they will be over in good time for lunch. They are controlled by a chairman who makes Mr. Speaker's treatment of points of order in this House look positively gentle. I could go on. These are not just Committee points. They are major matters. They leave me far from happy and would be sufficient reason for my voting against the Bill if I could find someone else to act as Teller for me.
I revert to the wider issue of strategy I mentioned earlier. Can we be content
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with the tinkering with aspects of the system which makes up the Bill? It may be that the City—I defined it earlier. I hope, in terms which the City would find satisfactory—can reform and regulate itself. Maybe it should. Unless there is an effective spur from outside, it is doubtful whether it will.
The Government must accept a wider responsibility. The City has a way of embracing all that it impeccable and of claiming that moral turpitude is itself an indication that the error is outside its gates. This is much too easy. Of course it may seem unfair that the sort of rough house which we have witnessed in Lonrho or Pergamon should be laid at the doors of the City. The City would prefer to wash its hands of such vulgarity. But this policy of aloofness is unrealistic.
Neither the banks nor the institutional investors can be indifferent to the public face and standards of behaviour of those from whom they happily collect their fees or dividends. If the small investor comes unstuck with London and County or Cedar Holdings, he can reasonably complain if he has followed where the respectable and experienced have led. The City has a fairly appalling record of not seeing through "con" men. It should do far more to identify and expose the bucket shops and the buccaneers. If it will not do so, the rôle of the Government is plain.
One area in need of closer regulation is secondary banking. Despite the rôle of the institutions and the extent to which they have led others into paths which they should not follow, I confess that I am not too bothered on behalf of depositors who are prepared to acknowledge that they are taking high risks to get high interest rates. But it is still much too easy to set up as a bank. Existing rules relating to liquidity are inadequate in both their scope and the manner in which they are enforced. It seems wrong that loans of four or five years' duration should be financed out of money borrowed for perhaps only a week.
There is much to be said for the publication of the loan portfolio of secondary banks and of information relating to the length of deposits. I hope that the Governor—this is an important point which will be significant to those who have experience of many operations

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in the City—will look into the functioning of the Discount Office of the Bank of England and ask whether it is adequate for its tasks. I ask my right hon. Friend the Member for Cheetham to pay attention to this.
Then there is the Takeover Panel. Often this seems like a bad joke. I have no doubt that it has some influence but it is least effective where it matters most, among those who pay only lip service to the moral community of which they claim to be part.
One of the doubtful pleasures of life is to see how the City columns in the newspapers bring the whole exciting game to our breakfast tables. Let me take an example from the Sunday Telegraph which caught my eye, on my birthday as it happens, 28th October. The breathless headline reads:
"What a week for Grendon."
It said:
"What a week it has been for everybody concerned with Grendon Trust shares! Last Sunday I asked: ' Will Mr. Selmes have to raise his bid? ' By 11 a.m. he was assuring me that I was wrong (one of these days I'll go ex-directory like so many of the people I try to ring, like, come to think of it, Mr. Selmes himself). Fortunately by Tuesday night he had raised his bid by 315p. Oh, dear, had I cost Mr. Selmes another £1 million? It rather looks as if I did."
So it goes on, in a style half way between July Cooper and Marjorie Proops.
Let me make it clear that some financial journalists have become watchdogs of the public interest, and this I totally commend. There are others who are not so critical and some who are bought by the City. The story, and this is the point I am trying to make, vividly tells of the sort of course of events which is not reassuring to the public and least of all to those faced with rising prices and having to manage on a three-day week. When the Takeover Panel finally reports everyone escapes, not only with his money but with his character unscathed. We all think of the Duke of St. Albans. It seems to be a hideous charade.
The City and much of what revolves round it must be looked at in three ways. The first is in terms of safeguards against abuse such as are dealt with, however inadequately, in the Bill. The second is in the light of the social impact, of ostentatious money-making and the failure of
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self-regulation. I emphasise again that this must be considered not in isolation but to the extent to which it contributes to the social climate of our times and a divided nation. Thirdly, the issue must be looked at in terms simply of efficiency. The defence offered in the first two cases is sometimes that we must pay the price for being the financial centre of the world.
Is the City half as efficient as it makes out? In some areas, and we all remember the collapse of Rolls-Royce and how it caught companies, bankers and professional advisers unaware, it palpably is not. There is a great deal in the Cabinet Office report, too little referred to by the Inter-Bank Research Organisation, that deserves further examination and debate.
I am sceptical about Royal Commissions. They take such a long time. They are usually made up of the worthy and the distinguished and the old, and very little do they change the course of events. There is a strong case for a Select Committee inquiry into the City. I should like to see a Minister much more closely involved in City affairs. The Chancellor's rôle is quite inappropriate as a means to reform and I should add that the Secretary of State for Trade and Industry, who is still known in the City as the biggest inside dealer of them all, would be inappropriate in his personal capacity.
The City has lived much too long by secrecy. I welcome the Bill in so far as it puts a new emphasis on openness. Where there is abuse it should be ended. Where the City has a case it should be prepared to state it clearly and undergo proper scrutiny. If the Bill dies very shortly, as I think we all expect it will, I hope that a future Government will seek a far more radical approach to this area of national affairs. If a future Government produces a Bill like this, I will certainly take the opportunity on the next occasion to vote against it.
7.49 p.m.
Mr. Peter Rees: In contrast to the hon. Member for Stockton-on-Tees (Mr. William Rodgers), I congratulate my right hon. and right hon. and learned Friends on the substantial measure of company reform embodied in the Bill.

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it is not, as the hon. Member for Oldham, West (Mr. Meacher) described it, a small Bill ; it is a substantial Bill, as anyone who is privileged to take part in the Committee stage will soon discover. It will repay close study and scrutiny. Whether it will get that remains to be seen.
I was sorry to hear the contribution of the hon. Member for Stockton-on-Tees, who usually brings a great intelligence to bear on our debates. On this occasion he criticised the style and performance of the City. His style and performance in this debate were not worthy of him, and I can only assume that he has been so infected by the election fever that he affects to detect on the Government side of the House that he has fallen far below his normal standards.
The hon. Gentleman made a crude attack upon my right hon. and right hon. and learned Friends who are noted for their assiduity in this sphere. From his own ministeral experence he must recognise that there are occasions when a Minister has to leave the Front Bench. I also regret his crude attack on the City. It shows a total lack of understanding of the function which the City performs. I can only conclude that his considerable intellect is in this field clouded by prejudice.
I contrast the speech made by the hon. Member for Stockton-on-Tees with the witty, refreshing and understanding speech made by the right hon. Member for Manchester, Cheetham (Mr. Harold Lever). Although I am a relative newcomer to the House, I welcome his return to it. He spoke with real understanding and experience. I regret his peroration, but these are difficult times. The body of his speech made a worthwhile contribution and advanced the debate, by contrast with the contribution made by the hon. Member for Stockton-on-Tees.
I will follow the lead given by the right hon. Member for Cheetham and philosophise for a moment on company law. I agree with his analysis that company law is the framework within which private enterprise must operate. I prefer to put it another way. We are here attempting to strike a balance between the claims of five—not necessarily conflicting—groups—the entrepreneur or management, the investor, the creditor, the employee and the public at large.
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Over the years, the entrepreneur may well have had the best of the deal. That was the Victorian philosophy. But there are few sops for him in the Bill. It may be found with the advantage of hindsight that the balance has swung away from him. It is right that the investor should be protected. On that basis I welcome Clause 70, although it will be necessary to see how it works in practice. It would be wrong to give every dissident investor the opportunity of bringing the company in which he invests to a grinding halt. It will be necessary to look at that more closely in Committee and probably later with the advantage of such cases as are thrown up in the years to come. The more rigorous conditions for the filing and production of accounts should strengthen the creditor's position. The duties imposed by Schedule 1 on directors in the compilation of their reports adequately discharge the debt due to the public at large.
I am glad that my right hon. Friend has had second thoughts on the proposals embodied in the White Paper for a code of conduct. It would have been so woolly as to have been meaningless or might have provided an alibi for directors who are incapable of managing their companies efficiently.
The position of employees is a crucial and fundamental question which we are bound to have to explore at length—not necessarily under the Bill. Clause 51 makes a major affirmation of principle, and it will be interesting to see to what practical situations it can be applied. My right hon. Friend said that it overturned one decision of the Government and it may have wider effects than that. This is an area which we must explore far more profoundly. My right hon. Friend said that we are to expect a Green Paper on employee participation, which I hope will provide a real step forward in this direction. The sophisticated working force commanded by industry and commerce must be taken far more into the confidence of management, and their interests must be recognised. If their interests are to be recognised—I say this advisedly—they too, must recognise their responsibilities and be prepared to accept slightly more of the risk than they do at present.
I appreciate that when a company is liquidated employees may find themselves

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in an extremely difficult position. They cannot expect to be in the same position as debenture holders, having a secured wage and a secured share of the company's profits. If they are to be partners they too, must carry rather more of the risk than they do at present.
I move from the philosophic plane to some of the individual provisions. Inevitably, we must look at a Bill of this kind in a certain amount of detail. We all applaud the general principle behind the provisions covering insider dealing. It will be necessary to scrutinise those provisions in Committee and to study the definitions to see who will be found to be an insider and how far he may legitimately operate. I suspect that the definitions may have been drawn a little too tightly, and that that might inhibit genuine investment. It might also inhibit people from associating themselves too closely with the management of companies. I am thinking particularly of institutions, which are being encouraged to take a closer look at the affairs of the companies in which they invest.
The right hon. Member for Cheetham has demolished fairly effectively the principle underlying Clause 19. I go a stage further because he, perhaps, made an exception for nefarious take-over bids. It is too easy to describe a take-over bid which one is attempting to resist as nefarious and unattractive, but if one believes in the discipline of the market one must accept that there will be take-over bids and there must be people on the prowl.
Mr. Harold Lever: I am sorry if the informal discursiveness of my comments should have led the hon. and learned Gentleman to believe that I thought that all take-over bids were nefarious. What I said was that one should avoid nefarious take-over bids ; that is to say, those where secret and semi-conspiratorial manoeuvres precede the bid. A take-over bid is an offer by somebody to buy something. If that is done honourably and openly it is no more to be criticised than an offer by me to buy the hon. and learned Gentleman's spectacles if they happen to be of appropriate focus for my failing eyesight.
Mr. Rees: Which I doubt. I am glad to have given the right hon. Gentleman
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the opportunity to clarify that. It is easy to describe a take-over bid as nefarious because conspiratorial tactics are involved, but if on occasions conspiratorial tactics have to be employed that is possibly because the prey is so difficult to stalk that it cannot be approached in any other way. Although that method of approach may not be unduly appreciated in the City, it may have its commercial uses. I would not be too hasty, therefore to condemn the conspiratorial approach. In any event I do not fundamentally disagree with the right hon. Gentleman in his demolition of the principle underlying the clause.
I go on to ask two further questions. Will the clause work in practice? It is not for me to suggest detailed ways by which it could be circumvented. I can see a take-over bidder entering into an option with a man of straw who will buy shares for him. I am certain that in practice the provision will be found to be ineffective. If it were to be found effective, I would regard prosecutions under it as unattractive. This is not an area with which the criminal courts should unduly concern themselves ; it is essentially a domestic area. I prophesy that Department of Trade and Industry will be reluctant to prosecute. It may find itself being asked to prosecute, for example, a take-over bidder when he is in the saddle of the company which he has taken over. The clause could be jettisoned on those three grounds.
I welcome Clause 38 in regard to the disclosures of directors who have proved themselves manifestly incapable of managing other people's money. I wonder whether this should be limited to cases where palpable offences have been committed and to cases that arise on a winding-up. The Pergamon case—I am reluctant to mention individual cases but this one comes to mind—demonstrates that there may be cases outside these narrow bounds where a person might be declared unfit, as the inspectors did on that occasion, of managing a public or indeed a private company.
I shall leave the detailed provisions of the Bill because I hope that there will be time to scrutinise them in Committee.
I turn to one major omission from the Bill. In the last decade we have been over-concerned with amalgamations and

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the formation of larger and larger groups. It has never been self-evident to me that these larger groups necessarily perform more efficiently. The problem to which we should address our minds is whether we have made it easy enough to break up large groups, to hive-off profitable and unprofitable sectors of these leviathans.
This is a legacy of the tenure of ministerial office by the right hon. Member for Bristol, South-East (Mr. Benn). I mention this matter because I see the right hon. Gentleman present on the Opposition Front Bench. This has meant that there are now in existence a number of unwieldy leviathans labouring in difficult waters which are quite unassailable in the national market. They may be taken over by multi-national companies, but I am sure that that would not be welcome to the right hon. Gentleman or to his right hon. Friends. I should like to see the Government consider closely whether fiscal and other company measures could be devised to enable people to hive-off part of their businesses, and to enable take-over bidders to make bids, for example, not for the whole of BMC but for part of it. This would create a more healthy atmosphere. However, I regret that I find none of this philosophy embodied in the Bill, but this is a small criticism of what I regard as a worthwhile measure.
I wish to make one general observation in my concluding remarks. There is another side to the ugly and unacceptable face of capitalism. I regret to use that phrase, and, indeed, I congratulate other contributors to the debate for having eschewed it so far. The other side of that face is some of the less attractive features of trade unionism. I concede that the one may have been the product of the other. What is noticeable is that whereas since the war we have now had three essays at company reform, we have had only one substantial attempt to the reform of industrial relations. I believe the reform of both should proceed hand in hand. I hope that this Bill will be a prelude not only to measures to increase employee participation but to a further reform of industrial relations in the light of the experience we have gained in the three years since the Industrial Relations Act became law.
8.5 p.m.
Mr. Tam Dalyell: Thousands of my constituents who work for British Leyland at Bathgate would be interested to hear the hon. and learned Member for Dover (Mr. Peter Rees) say that there should be take-over bids for half of the British Leyland motor holdings. That may be a view held in financial circles but it makes industrial nonsense. Part of the divide we have to contend with lies between managements in manufacturing industry and those who produce things. The day-to-day decisions that are taken in the weird and arcane world of finance lead to people talking, as did the hon. and learned Gentleman, about taking over half of British Leyland. In terms of day-to-day relations with the motor industry that statement is meaningless.
Mr. Peter Rees: The hon. Gentleman clearly did not follow the tenor of my remarks. I merely cited that company as one of the largest, and, therefore, probably unassailable, companies in our domestic capital market. I said that there might be a case for somebody making a bid for one particular part of it. I did not say half ; I did not specify any particular part. I cited it as an example of a very large company which is indigestible to the normal operator in the capital market.
Mr. Dalyell: I understood the tenor of the hon. and learned Gentleman's remarks only too clearly. This was a City view.
Mr. Rees: I speak for myself.
Mr. Dalyell: The hon. and learned Gentleman was speaking for himself and financial circles.
Mr. Rees: No, I repeat that I speak for myself.
Mr. Dalyell: Very well, the hon. and learned Gentleman speaks for himself, but what he said was that a substantial proportion of British Leyland should be taken over. When seen on the ground at Bathgate or elsewhere, this proposal is meaningless.
There is one matter on which I agree with the hon. and learned Gentleman. I believe that there should be generous provisions for ex-employees, and, therefore, I welcome Clause 7.

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I wish to concentrate particularly on the question of insider trading. It is all very well to say that this is exaggerated. I enjoyed listening to the speech made by my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), who is always interesting and entertaining. It is a great pleasure to have him back in the House. I enjoyed his marvellous description of this evening as an evening of "definite maybe"—a phrase borrowed from Sam Goldwyn. We must seek to understand not only the importance of insider trading but how matters look from outside.
My hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Ewing) and I recently went down the Kinneil Colliery. Surprisingly perhaps to some people, we were questioned about the goings on in the London art market. One might think that this was not an appropriate question to be asked at the coal face. But what must be understood is that this is regarded as a live issue. When the miners and others see enormous wealth in certain areas and pictures, which may have not a great deal of artistic merit, changing hands for £300,000, when they see the land speculators of the sort we have in this country, this creates an atmosphere in which it is impossible to get the sort of industrial co-operation that is needed. This is what several Conservative Members fail to understand.
Mr. Piers Dixon: The hon. Member for West Lothian (Mr. Dalyell) mentioned the international art market and implied that the whole question derived from activities of citizens in this country. The art market and London is an international market, and surely the implication of what he said was that we should bring these activities to an end. But if Sotheby's and Christie's were instructed to go out of business, the equivalent value of business would go to Parke-Bernet in New York, or to Paris.
Mr. Dalyell: All I am saying is that the discrepancies of wealth are such—and this is particularly reflected in the art world—and are so obvious that it is difficult to operate any kind of policy, and this is quite understandable.
The provisions in the Bill on insider trading require further explanation. Part
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of the package on insider trading is mostly ineffective. Perhaps the only question is whether the Government believe sincerely that their insider trading measures are effective, in which case perhaps the charge is one of naivety, or whether they know as well as many hon. Members on the back benches how ludicrously inadequate and incomplete are the insider trading provisions, in which case the charge is at best that of being party to a somewhat simple form of electoral window dressing.
One has to ask who is an insider? I agree that it is not necessarily proof of moral delinquency to possess inside knowledge. But the definitions in the Bill are very loose. Throughout the relevant provisions on insider trading there seems to lie the assumption that the root of the trouble is that an employee or a professional adviser of a company makes use of confidential information for his own ends or those of family, friends and clients. This has happened. It does happen. Doubtless it will happen in the future. But a scenario which is both more common and more difficult to do anything about is altogether less simple.
Supposing that Mr. Smith is a broker and Mr. Brown is one of his favoured clients. The client Brown phones the broker Smith and says "I see in today's financial Press that the price of Company X is moving upwards. This is rather interesting since it is against the trend of the market."Then the conversation might go along lines such as" You act for company X, don't you? Give me the low-down, old boy."I give a specific example because it is the best way of illustrating a somewhat complex argument.
The broker Smith is put into an awkward position. Either he can play the high and mighty prude with a favoured client and be what the poet Burns called "unca guid" or, more likely he will act like many brokers and reply "Yes, I have a pretty good idea that a bid may come. I cannot say any more. But I consider that you would not be far out if you thought that the shares justified the price of, let us say, 80p."
The client Brown takes the hint and acts accordingly, issuing instructions on the basis of this kind of phone call. The House should know that the instructions

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may be given to a broker other than Smith who conveyed the vital information.
It can hardly be said that confidential information has been exchanged in such a case. Moreover, in such a case it would be very difficult to get a jury in a court of law to reach a verdict of guilty on this kind of exchange between two people, especially in an epoch when so much is done on the telephone and goes unrecorded. The verification of information passed between parties would surely be extraordinarily difficult.
This was the point on which I interrupted the Secretary of State. I thought that his reply was partially fair but inadequate. He said that the hallmark of the law in this country would matter and would be effective. I am not sure that the hallmark of the law in this kind of case, which is very near reality, would be effective.
With a certain modicum of good will towards the Bill I do not see that it is any more successful in achieving the objectives that most people want than the investigations by the Stock Exchange or the Take-over Panel. For that reason I ask what it is in the Bill which will be more effective than the various investigations of the Stock Exchange and the Take-over Panel. Such cases as are brought will linger round the courts for years and provide a lawyers' paradise. Dickens' circumlocution office in Dombey and Son would be a model of expedition compared with some of the possible cases created by the Bill.
The Minister argued that the definitions had been widely drawn. So they have—families, friends, outsiders with privileged information. Uncle Tom Cobley and all could conceivably be considered insiders. But my difficulty is that given the way that information gets round as opposed to how it gets round theoretically—over the telephone, at the seventeenth tee, in a restaurant, or simply when two people travel together in an aircraft—and given the human propensity to gossip, I beg leave to doubt whether all this stuff on insider trading makes very much difference.
The interesting question is whether the Government genuinely believe in their proposed action on insider trading or whether they put it forward somewhat
1014
cynically as a piece of short-term electoral window dressing to persuade a public who find difficulty in fully comprehending such complexities that they are doing something about what they know that people instinctively dislike.
I have a dark suspicion that the Government know as well as I do that the clauses on insider trading are, to use a picturesque but accurate term, so much window dressing. I shall listen to what the Minister has to say in winding up to see whether I can be persuaded that my detailed suspicions are groundless, the point being that the operation of law, whatever the good will or the motives may be, is likely to be ineffectual and will be a lawyers' paradise.
Instinctively I do not like the idea of prison sentences, especially for first offences. In terms of the Criminal Justice Act the Minister will know that there have been a number of pioneering schemes in South-East England for service instead of prison. Rather than talking about sending offenders to prison, at any rate on the first occasion, would not it be better to think in terms of the kind of service which has been developed as a result of certain sections of the Criminal Justice Act?
In any event, on the detailed and important issue of insider trading, I look forward to hearing the reflections of the Minister.
8.18 p.m.
Mr. J. Bruce-Gardyne: I have some sympathy with the anxieties of the hon. Member for West Lothian (Mr. Dalyell) about the effectiveness of the provisions relating to insider trading. I cannot help feeling that the real answer to the case of his friends, Messrs. Smith and Brown, was provided by the right hon. Member for Manchester, Cheetham (Mr. Harold Lever), who pointed out that very often the sort of information which Mr. Brown received from his broker was likely to turn out to be false, with the end result that Mr. Brown acted upon what he believed to be inside information and actually made a loss. In any event I have considerable reservations about the insider trading provisions, to which I shall return in a moment.
Before doing so, perhaps I might say a word or two about the philosophy behind the Bill. I am delighted that we

1015
have at long last seen the Bill. Before the last election the reform of company law was placed fairly high in our priorities. It seems to be the fate of company legislation, because it tends to lack political sex appeal, to be pushed further and further back down the legislative pipeline. There are pieces of legislation for which the Department of Trade and Industry has been responsible in this Parliament which I believe should have been given considerably lower priority. I have in mind measures like the Industry Act, for example. However, I am delighted that we have the Bill. I hope and pray that nothing will supervene to prevent its going on to the statute book. In general I extend a very enthusiastic welcome to the Bill.
In the matter of philosophy, the essential purpose of reforming company legislation is to ensure the efficient working of the capitalist system by protecting the rights and interests of the small investor in particular. The right hon. Member for Cheetham, in his typically charming and enjoyable speech—and I join in the expressions of delight on his return to our counsels—said, in effect, that it was no good being an atheist and trying to reform cathedral rituals. Nobody would dream of accusing the right hon. Gentleman of being an atheist.
I thought that the right hon. Member for Bristol, South-East (Mr. Benn) would open the debate. If he is not an atheist in this connection, one might describe him as a very pronounced agnostic. We shall be fascinated to observe the contrast between the speech with which the right hon. Member for Cheetham opened the debate and the speech with which the right hon. Member for Bristol, South-East will conclude it. I could not help feeling, although I could not see his face, that there must have been several sections of the speech of the right hon. Member for Cheetham which the right hon. Member for Bristol, South-East welcomed with less than his usual exuberant enthusiasm.
Mr. Harold Lever: I am grateful not only for the hon. Gentleman's kind words about me but for his kind references to my party, emphasising that we are a party of rich contrasts and stimulating differences of emphasis.
Mr. Bruce-Gardyne: I entirely accept the right hon. Gentleman's point in the spirit in which it is offered.
Also on the aspect of the philosophy behind the Bill, it is right and proper—this goes very much along the lines of the speech of the right hon. Member for Cheetham—that a Government, in introducing legislation to reform company law, should seek to give the evolution of the corporate structure a certain bias of its own necessarily political choosing.
Like other hon. Members, I clearly recall the attitude which we, in opposition, adopted to the Labour Government's Companies Bill in 1967. Our posture very broadly was that the provisions for disclosure in particular which were imposed by the Bill on publicly-quoted companies did not go nearly far enough, particularly the failure to implement many parts of the Jenkins Report. On the other hand, we took the view that the provisions about disclosure as applied to the unquoted private company went much too far. I thought at the time that that was precisely the right and sensible posture.
It has always seemed to me that there is an essential difference between the company whose shares are quoted on the Stock Exchange and which seeks the investment of the small investor in emotive terms—the widows and children—and the unquoted company which by definition cannot do that and which is essentially reliant on equity investment by participators drawn from a very narrow circle, usually either relatives of the descandants of the founding families of the company or institutions which took an active part in the supervision of the management.
It is evident that in drafting the Bill we have not drawn the dividing lines according to requirements for disclosure along those lines. Indeed we have not drawn them at all, because in Clause 69 we leave it to the Secretary of State subsequently to decide where the dividing lines should fall. We have not done anything to reverse the additional burden of disclosure imposed on the unquoted company by the 1967 Act. I accept that perhaps, as my right hon. Friend the Secretary of State said, some of the fears about additional disclosure expressed at the time of the passing of

1017
the 1967 Act have not been borne out in practice, but perhaps we underestimate the additional and quite unnecessary administrative burden imposed particularly on the small companies by some of the provisions of the 1967 Act. I wish that we had been able to do something about that matter.
However, the more important question is the way in which my right hon. Friend the Secretary of State has decided to reserve judgment about where, under Clause 69, the line of demarcation for disclosure should be placed. My right hon. Friend indicated that he would be inclined to differentiate between, on the one hand, the publicly-quoted company and the large unquoted company and, on the other hand, the rest of the unquoted sector.
The trouble about that is, first, that the one clear point at which we can draw a demarcation is at the point of quotation, and the position of publicly-quoted and unquoted companies is different. But, secondly, whatever dividing lines one marks within the unquoted sector will inevitably be eroded by inflation, which, judged on the present rate, will be very fast, so that all the time we shall be moving the marginal point down. We need to think carefully about that matter before we approve the discretionary powers given to the Secretary of State in Clause 69.
I turn to the aspect of the Bill dealing with the rights of existing management. There is a contradiction in our attitudes. On the one hand we lower the point at which it is obligatory for the ownership of an equity share in a company to be disclosed and make" it possible for the management of a company to ascertain where the ownership of packets of equity lies, and on the other hand we decide that the future issue of limited voting shares or no-voting-rights shares by publicly-quoted companies should be banned. The second matter—the issue of limited or no-voting-rights shares—is an important way of safeguarding the identity between the ownership and management of companies.
I make no bones about the view that closer identity of ownership and management is often conducive to the more effective operation of the capitalist system. It is no coincidence that many of the outstanding company performances in
1018
recent years have been by such companies as Marks and Spencer, Inchcape and Collins, the publishers, where there is a close identification between management and ownership. In so far as the existence of non-voting shares and limited value shares helps to offer a degree of protection to the owner and managers of a company which may have been driven into the public sector by the fiscal system, I welcome it.
Although there are substantial objections in some quarters to non-voting shares and limited voting shares, it is worth recalling that the Jenkins Committee, by a very large majority, recommended that they should be retained. We need a clear explanation why the Government decided to override this. I welcome the arrangements which have been made to tackle such trendy problems of the take-over situation as warehousing and concert parties. Almost the only point on which I was in some disagreement with the right hon. Gentleman was when he seemed to think that these provisions were designed to find out about his own investment performance. There is nothing in the Bill which goes nearly as far as that. Broadly speaking, these provisions are to be welcomed.
I hope that in our general approach to the Bill my right hon. Friends will recognise that the cult of bigness, which was so much in vogue in the days when the right hon. Member for Bristol, South-East dealt with these affairs, has receded into the background and that we now have these matters more in proportion.
It is becoming more and more evident that the entrepreneurial company, where ownership and management are broadly combined, has advantages of management enthusiasm, personnel relations, consumer choice and perhaps above all, if I dare say it, freedom to tell Whitehall to go to hell, which the large institutionalised company does not have. Therefore, we should be careful about any changes in our company law which erode the position of these companies.
I turn briefly to the provisions regarding the power and answerability of directors. I particularly welcome Clause 55, which seems to be designed to put a limit on the propensity of boards of directors, particularly in institutionalised companies, to go empire-building with company paper. I share the anxieties of my

1019
hon. Friend the Member for Basingstoke (Mr. David Mitchell) about the impact of the new rules governing the risk that some irresponsible, ill-disposed directors may funnel business from public companies to private companies under their control. But these rules are, broadly speaking, a move in the right direction.
I am not quite as certain as my right hon. Friend appears to be that we were right to reject the suggestion of the Jenkins Committee that incompetence should be a ground for disqualification. I realise that incompetence is extremely difficult to define, as perhaps is "insider". The unacceptable face of capitalism, to use the well-worn phrase, is more obvious in the personality of someone with the record of a Sir Denning Pearson than in the record of a Mr. "Tiny" Rowland. There is much more to be said for top management of a company which seeks to maximise the profitability of the concern than there is for top management which bankrupts the shareholders of the company in pursuit of some imagined project of prestige.
Mr. Dalyell: Surely this is the difference between us, that some of us think that British industry has to be managed by engineering excellence, such as that of Sir Denning Pearson. He did many things of great initiative and was applauded by this country. The fact that one of those things went wrong should not lead to a complete judgment of him.
Mr. Bruce-Gardyne: In its declining years the old Rolls-Royce company was a model of how a company should not be run. I am not suggesting that the entire responsibility should rest on the board of directors, because the right hon. Member for Bristol, South-East had a lot to answer for in that respect. We have dismissed the concept of incompetence suggested by the Jenkins Committee and I am not sure what the concept of recklessness, which we have included instead, is designed to cover.
The subject of insider dealings has attracted a good deal of attention. I have a great deal of sympathy with the view of the right hon. Member for Cheetham. It has always seemed to me that the most effective way of dealing with this problem is by publication. I still believe that we should achieve much more by requiring
1020
the Stock Exchange, for example, to publish the sort of monthly report on dealings, not only by the directors as required by Clause 14 but also by the officers of public companies, that is published by the Securities and Exchange Commission in the United States.
I can assure my right hon. Friend, from the investigations that we made at the time of the last Companies Act, that that is not a complex or onerous procedure. I hope that it will be carefully reconsidered. I have exchanged correspondence with my right hon. Friend on the matter and I am not entirely convinced by the answers I have received.
What alarms me most about the insider trading provisions of the Bill is that it seems inevitable that they will positively discourage institutional involvement in improving the management of public companies. We have all too often seen how the institutions are inclined to vote with their feet to leave the management of public companies in which they have invested severely alone until things get into such a mess that they get out and leave the small private shareholders to "carry the baby". Under the insider trading provisions of the Bill, it seems that they will have no other choice than to do that. This is a retrograde step and it is this more than any other aspect of the provisions that concerns me.
Perhaps inevitably one tends to mention one's reservations about the Bill, but I should like to make it clear in conclusion that I wholeheartedly welcome it. It will go a considerable way towards further improving the climate in which capitalism operates in this country. If that were the only reason—I can think of others—I hope and pray that the good progress of the Bill will not now be interrupted by other matters of wider concern.
8.38 p.m.
Mr. Edward Milne: I should like first to apologise for not having followed the debate as closely as I should have liked. I was fortunate enough to hear the two opening speeches, particularly that of my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), whom we are glad to see is almost back to his old lively self. His command of the English language and the clarity with which he conveys his views helped me to understand the

1021
Bill much more clearly than I had done after a good deal of reading on the matter.
The hon. Member for South Angus (Mr. Bruce-Gardyne) talked about cleaning up the unacceptable face of capitalism. Although I do not share his hopes for the Bill, I look upon it as a document—if it ever reaches its final stages in this Parliament—which, though not bad, would certainly not be good for dealing with our present situation. I have always believed—I was brought up in that way—that the wealth of this nation is produced not within the square mile of the City of London but by the application of human labour power to land and raw materials. All the other machinations in the City and similar institutions are possible only against the background of that method of wealth production.
Two aspects of the Bill can be of decided advantage if its provisions are applied as I have understood them. There is the question of amendments to the law of bankruptcy and the question of winding up and insolvency. In these matters we run up against possibly the widest evasions of responsibility to the public by a considerable number of firms.
As the House will know, I have over a number of years been asking in the House for the registration of the travel trade and for closer examination of the tour operating industry. Although I am pleased to say that in recent years there have been improvements, too often in the past we have been faced with a situation, not confined to the tourist industry or to tour operators, of fly-by-night firms winding up and being declared insolvent and going through the bankruptcy procedures, and yet cropping up again under other names and guises and appearing to flourish just as before. It may be said that one is a little unfair in singling out this trade because one could give illustrations from so many others.
Much has been made of Jenkins and of how much of the Jenkins Report has found its way into this Bill. The real test will come in Committee on the Bill and at its subsequent stages.
The basic weakness of the Bill is its almost complete failure—I would like to hear the Minister on this matter when he winds up—to deal with take-over bids, mergers and amalgamations, monopolies,
1022
combines and trusts. The Bill at the moment appears to be ill equipped to deal with the jungle of the international and multi-national combines, interlocking companies of great size. We have only to look at the experience of other countries to see how these companies operate.
Take America as an example. There is a multi-national company affecting not only decisions taken in that country but major decisions taken within Britain. Anthony Sampson, in his excellent book "The Sovereign State", showed the broad ramifications of the International Telegraph and Telecommunications Company, an international business, and a business with which this Bill appears to be singularly ill equipped to deal.
From my own experience, of dealing with matters in my constituency, I can well recollect the circumstances some six months ago when miners there embarked on a claim for higher wages ; they did so along with the National Union of Mineworkers. At that time, when phase 3 and so many other factors were being quoted to them, we were greeted by the front pages of the national Press carrying photographs of jubilant members of the Stock Exchange rushing through the Exchange, papers in their hands, celebrating the fact that there had been an upward turn for the £. In the present economic position of the country there have not been all that many occasions for them to do that.
We come back to the point that the real wealth of this country is produced by the brains, skill and muscle of its working people at all levels of activity, but that too much of it is creamed off by the City buccaneers who move around the companies that they possess and control like pawns in a game and often make in one afternoon more than one of my mining constituents could possibly hope to achieve in a lifetime.
If the Bill is to be given strong application, we ought to look more closely at the insider dealing clauses and at the procedures relating to take-over bids.
Public companies are obliged to advise the Stock Exchange Council of significant events concerning them, such as bids and deals, profits, the appointment of new directors, and so on. The business columns of the national dailies keep us well informed of those matters. A great deal of Press advertising in this country

1023
springs from the publication of the annual returns and reports of the great companies that dominate our economy. Within the framework of the information that we receive as a result of that background, the newspapers, in dealing with the future of the economy and industry, are naturally sympathetic to that situation. Public relations and many other matters fall within their scope.
On two occasions in this House, I have referred to major take-over bids which I think still need examination. This matter is possibly outside the scope of the Bill, but I am sure it could be brought within its framework.
The first of the take-over bids to which I drew attention concerned Beecham, Glaxo and Boots. The matter was referred to the Monopolies Commission, which decided that the merger should not go ahead. This is not the time to go into detail on that aspect.
A similar situation arose affecting firms in my constituency and members of my union within the distributive trade. I refer to the Boots, Harrods and House of Fraser tie-up.
If the Bill is to be the instrument that we want and that the Minister described it as likely to be, we must look at some of these examples—certainly at the latest one that I have quoted—to see precisely how the interests not only of the workers within those industries but of certain firms can be protected from the activities of each other in the take-over jungle that prevails in the national and international business set-up. It is not only the British people who are complaining about the jungle that we have briefly described, but many leading firms themselves have expressed concern and their opposition to the methods adopted by some of their less scrupulous competitors or associates in the battle for power that goes on within British industry.
As to public companies being obliged to report matters to the Stock Exchange Council, the Bill could well deal with the advisability of their reporting to an outside rather than an inside body, one that could deal with the Stock Exchange much more impartially.
I turn to the methods adopted in the proposed Boots-House of Fraser deal. Many clauses in the Bill could well have
1024
applied to it. There is no doubt that some papers knew about the proposal before others. Some were obviously alerted by telephone, and later in the evening of that day received a formal statement. Then there was the question of what one paper described as a mass of House of Fraser share buying from Scotland the afternoon before the deal was announced. One can read much into the situation, but it is obvious that there has to be a considerable tightening-up before we can say that we are even moving a short step forward towards the City putting its own house in order.
One City financial information company wrote to the Minister about the handling of the announcement. I hope that he may be able to touch on that matter tonight. There were strong protests from newspapers in my area in the north-east of England at the handling of the Boots-House of Fraser bid and the methods used in its announcement to the Press.
From the evidence at our disposal it is clear that certain newspapers were given preferential treatment over the telephone several hours before a general announcement was made, and that many people in the journalistic world felt strongly about what was described as the complete and apparently intentional mishandling of the announcement. How can we commend the Bill to the House on the strength of the impact it can make on such a situation, unless we have assurances that the proposed legislation will be used to the maximum extent?
I do not expect that the Minister or the Secretary of State will join me in the hope that out of our present crisis a new order of society may emerge so that we move into a saner economic, commercial and financial system. The Government have taken the first lame, halting steps in that direction. The Bill does not go far enough. We can accept it as it stands, but it can only be a foundation for much stronger and more stringent legislation in the months ahead.
8.55 p.m.
Mr. Piers Dixon: I should declare an interest as a member of the London Stock Exchange, or possibly as a City buccaneer, which seems to be the fashionable phrase.

1025
I am happy with the Bill, although I have one or two reservations. I am slightly concerned that it gives a little too much discretion to the Secretary of State to act by way of statutory instrument under certain clauses. In the White Paper there were lower limits of £1,000 and £10,000 on private companies. I do not see why they should not be written into the Bill. I do not see why it is necessary for the Secretary of State to have that discretion.
With regard to Clause 31, on prospectuses, and Clause 69, on accounts, in my experience the Stock Exchange and the Take-over Panel demand precisely the sort of information which is required to make sure that the City operates fairly and judiciously. The problem in the City has been not so much that they have not demanded the right information as that when they discover malpractices—being in the City, I am the first to acknowledge that there have been malpractices—there is little they can say. They are not covered by privilege. I should like the Bill to contain a provision allowing the Stock Exchange and the Take-over Panel to name people when wrong-doings take place, without the danger of their being subject to action in the civil courts.
I am also somewhat concerned about the position of directors. It seems to me that it will now be virtually impossible for a director ever to deal within any period in the shares of his own company. Might not it be possible to have a period such as 28 days after the publication of interim accounts and 28 days after the publication of the final accounts when directors could deal in their own shares without the burden of proof being on them to show that they were doing it only for certain specific reasons? During those periods a director should feel that the burden of proof was on the authorities to show that he had acted improperly.
I believe that the position of the jobbers in the London Stock Exchange will be artificially and unnecessarily restricted by the requirements of Clause 18 on the disclosure of interests in shares. In practice jobbers are not used for warehousing purposes, and it is unrealistic to think that they are. They must be able to conduct their business with confidentiality. I have every reason to believe that the Stock Exchange and its jobbing members would be happy if jobbers were required
1026
to reveal to the Take-over Panel a holding of more than 5 per cent. What would completely ruin not only the confidentiality but also the effectiveness of their business, however, would be if they had constantly to reveal to the dealing public that they had such-and-such a holding and, indeed, had to divulge every change which took place in the book on a particular day.
Finally, the provision affecting directors who have connections with subsidiaries are a little harsh, particularly for the family company which we are trying to encourage in Britain. As long as the information is disclosed and everyone knows perfectly well that someone is the director of a company which controls a subsidiary, and as long as the shareholdings in subsidiaries are all subject to public knowledge, that should more than adequately cover the point.
9.0 p.m.
Mr. Anthony Wedgwood Benn: I am sure that I shall carry the whole House with me—if on nothing else—in welcoming back my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) to speak on behalf of the Opposition in dealing with the Bill. My right hon. Friend's return was widely welcomed on both sides of the Chamber. If I could retain my views and enjoy his popularity, I should be a very happy man. But at any rate, I have had the good fortune to work closely with my right hon. Friend. We were both Cabinet Ministers in the same Department—double banked like the two right hon. Members on the Government Front Bench. If they are as happy together as my right hon. Friend and I were, theirs must be a very happy Department.
When we come to discuss the Companies Bill, there is a slight air of unreality because today's announcement—which I understand is being made at present by Lord Carrington in another place, and not in this place—of a return to full fuel supplies for the steel industry for a full five-day week, with the prospect of a four-day week and, perhaps, more for the rest of industry, means an awful lot more to companies large and small in Britain, to workers, to the community and to all those interests with which we are concerned, allegedly,

1027
in the Bill than the provision of the Bill itself.
My right hon. Friend the Leader of the Opposition will be tabling a Private Notice Question tomorrow to find out why this extraordinary confirmation of all that the Opposition have been saying about the three-day week was not made in the Chamber of the House of Commons, where we have electoral responsibility to our constituents. It certainly confirms the suspicion which we expressed that the three-day week was never necessary and was only part of a poltical stategy that remains concealed while the Prime Minister broods at his Camp David over his next attempt to get out of his difficulties.
Mr. A. P. Costain: What have the right hon. Gentlemans remarks to do with the Companies Bill?
Mr. Benn: If the hon. Gentleman had listened to me he would have heard me say that the measures that the Government have taken have done more damage to companies, to workers and to the community than any good that could be done by the Bill. I said that the whole debate had an air of unreality when the real action was taking place in another place.
As to the Bill, as my right hon. Friend the Member for Cheetham said, we shall not vote against it because it implements some technical improvements recommended by the Jenkins Committee. But we reject the idea that the Bill goes anything like far enough. We are seeking a new framework for industry, and not just a public relations facelift for capitalism.
In introducing the Bill the Secretary of State produced his phrase, which we have read about in the Press release, "the new capitalism". The plain truth is that, apart from the long-term pressure from the Department of Trade and Industry to get the Jenkins Committee recommendations implemented, the Government have had to move, and move quite quickly, because of the many aspects of business and City practice which have been brought to light over the last year or so and have been acutely embarrassing to those hon. Members on the Government side of the House who have espoused with ideological fervour the moral cause of capitalism.
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Lonrho was a very embarrassing situation. It was embarrassing because it brought to light practices and remuneration of a kind that made clear to the public what happened at that end of the business scale ; and it was embarrassing to the Government because, compared with what the miners are asking for, some of those involved in the Lonrho case were getting rewards out of all proportion to any contribution they might have made.
Distillers and the thalidomide case brought to light another aspect of business practice, and there were other events which I shall not go into in detail—Sime Darby, Sir Denys Lowson's case, London and County, Hoffmann-La Roche and the drug prices, and the treatment of the workers at Triumph Motor Cycles at Meriden, who later managed to develop their own enterprise of a kind.
Every constituency Member will have cases as I have. Take the case of Breckman, Dolman and Rodgers, which I raised in the House in an Adjournment debate. The company has been taken over twice, its assets have been stripped and its workers sacked. That type of episode has been particularly embarrassing for the Government. The harm that is done to workers and to the community by the abuse of business power is now getting home to a wider public and is seen by people to have a bearing on the prices they pay in the shops, the rent they pay for their accommodation and the cost of their housing generally. This is a much greater threat to democracy in Britain than the alleged threat from the trade unions.
Mr. Bruce-Gardyne: The right hon. Member for Manchester, Cheetham (Mr. Harold Lever) in his opening remarks said it was no part of the Opposition's strategy to pillory individuals in discussing matters of this kind. In the light of what the right hon. Gentleman has said, will he explain exactly what is the posture of the Labour Party in this respect?
Mr. Benn: I hope the hon. Member for South Angus (Mr. Bruce-Gardyne) is not trying to drive a wedge between myself and my right hon. Friend—[HON. MEMBERS: "Wedgie Benn."]—because we are of two minds on this matter and the Labour Party has been broad enough to contain, as I think my right hon. Friend said, a considerable debate within

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the party about the nature of these problems. Nothing I have said has sought to blame individuals, only to draw attention to the state of the law and practice which alerted the people to the consequences of the present situation.
Far from this anxiety being confined to workers, as large a number of managers in industry are quite as alarmed about take-overs and asset stripping as manual or skilled workers. One of the most remarkable things about the events of the past five years is that when a firm is taken over, and its assets are sold and the men declared redundant ; and when deputations come to meet the local MP, the managers are always on the side of the workers because their interests are affected. I have here from the Investor's Review of 12th January last year what is called the Slater Walker calendar for 1972. It points out that in the year 1972 Slater Walker made 29 acquisitions. Those who think that fear among managers of public enterprise is anything like as great as the fear of acquisition in circumstances such as we have seen in the past misunderstand the nature of that feeling.
There is another aspect of business power which in the present political situation we ought perhaps to devote more attention to—the political power of business. This has a considerable bearing on our posture or approach—and here I answer the hon. Member for South Angus. There is not necessarily as wide a divergence between both sides of the House over the political power of business as may appear from an elementary study of current political argument. The power of Henry Ford and the Ford empire, or IBM or, notably, of the oil companies, or even ITT threatens the independence of a nation State, including the United Kingdom. [Interruption.] I intend to draw a parallel between the power of business and the power of the trade unions if the hon. Member will allow me to continue.
The decisions which these companies take, the movement of their funds and their investment decisions can endanger a British Government's position regardless of which party is in power. Henry Ford makes his £60 million profit at Dagenham and then takes it to Spain, where trade unions are illegal, to undercut
1030
the Dagenham workers by producing cars in Spain where wages are lower. Henry Ford, of course, spends as much money——
Mr. Skeet: That is more efficient.
Mr. Benn: If I may say so, that confirms exactly my assessment of the hon. Gentleman's position—namely, that if it is possible to produce cars more cheaply in Spain, where trade unions are illegal so that the Dagenham workers can be undercut, that would meet the hon. Gentleman's feeling.
Sir John Rodgers: It is wrong to draw the parallel of Spain and low wages. In vast industrial countries such as Germany, wages are higher than in Britain. If we continue with our present attitudes transfers will be made to such places. It is not low wages but the right hon. Gentleman's policies that cause such transfers.
Mr. Benn: The hon. Gentleman is completely wrong. There were examples of multi-national companies, which, when the last Labour Government were struggling, like the present Government, to maintain and develop exports, were running, through internal transfer payments, a balance of payments deficit within their own companies. The extent to which the oil companies control the movement of oil, apart from the movement of funds, is an example of the point which I am making. Such actions bear upon national sovereignty as well as everything else.
I now turn to the use of business money for political purposes, and to the revelations which have now emerged about President Nixon's election campaign. The inquiries now being conducted by the Senate committee demonstrate that substantial sums were paid by business companies to support President Nixon's election campaign.
Mr. Skeet: How does that apply to Britain?
Mr. Benn: I will return to Britain in a moment. Substantial sums of money were paid to the Committee for the Reelection of the President, to finance the "dirty tricks" that we read of, and now the charge is seriously being sustained in

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the United States that President Nixon's energy policy is being affected by the contributions which have been made to his campaign by the oil companies. That is a corrupt element in American politics. As Aims of Industry now begins its own campaign we see the same sinister forces at work. Aims of Industry—[Interruption.] Of course, Conservative hon. Members do not like it. It is their secret weapon. "Aims of Industry" has announced that it is its intention to spend £500,000 on a campaign against the Labour Party in 1974. It began with the publication of a fraudulent journal called the Labour Advertiser, which was issued at the party conferences and contained photographs of people with false names purporting to be officials responsible for public ownership under a future Government. Aims of Industry has now begun a big campaign about free enterprise and its desire to protect it.
If the political democratic process in Britain falls into the hands of that type of campaigning, as it has done in America, it will undermine parliamentary democracy. There is a contrast to be drawn with the trades unions. Every trades unionist is in a position to contract out from paying his political levy, whereas Aims of Industry raises its money without consulting the shareholders, the workers or the consumers. This money is raised by a little group of people running the company. They put this money into a political campaign. Why? Because investment by big business in the Conservative Party gives to that firm a lower rate of corporate taxation. [Interruption.] This should be in the Bill. This is the point we are dealing with. It puts its money into the Conservative Party. The Conservative Party obligingly cuts corporate taxation, allows big business to raise its prices, introduces legislation that keeps the wages of the workers down and then the companies get back a bigger return for their investment. When this subject is brought to light the reply is given that anyone who criticises Aims of Industry is a militant, an extremist or a Communist.
Mr. Costain: On a point of order, Mr. Deputy Speaker. If we are to debate Aims of Industry, would it be possible to
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have an extra hours extension so that we may be able to deal with it properly?
Mr. Deputy Speaker (Mr. E. L. Mallalieu): Nothing that has been said so far has been out of order, and plainly what the right hon. Gentleman is saying is of interest to the House. The trouble is that it is a little difficult to hear.
Mr. Benn: I am not surprised that the hon. Member for Folkestone and Hythe (Mr. Costain) rose to his feet earlier and then sat down again. I am not surprised that he does not want to discuss Aims of Industry, because it is acutely embarrassing to him. He rose as if about to address the Chair, to preserve a place for another hon. Member temporarily out of the Chamber. I can understand his embarrassment.
I turn now to the actual framework of free enterprise which the Bill is supposed to preserve. No Government in British history have controlled capitalism more tightly than the present one. There has been the Industry Act, Rolls-Royce nationalisation, the Industrial Relations Act, the Fuel and Electricity Control Act, the Insurance Companies (Amendment) Act, the Counter-Inflation Act, the Price Commission, the Pay Board, the emergency powers. All of these have given Ministers greater powers over business decisions at every level and of every kind than they have ever had, even in war time. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has been known to utter words not very dissimilar from those. The control exercised by Ministers over the British economy is very great indeed.
There are many Committee points which we will raise if the Committee stage is held—which only a few Members believe will be the case. When we come to nominee holdings, insider dealings and the rights of workers, there will be a substantial number of amendments moved. What we are saying is that in our view the philosophical concept, the framework, within which the Bill has been placed, is, as my right hon. Friend the Member for Manchester, Cheetham said, totally unsatisfactory because it is still based, and I quoted his telling phrase, on Victorian concepts of the rôle of industry.

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One of the things which are becoming increasingly apparent, and this is why I spoke as I did earlier, is that the political and economic power of business now far exceeds that ever dreamed of by Adam Smith when he first wrote down his economic theories. Workers are realising that shareholders can move their money much more easily than the worker can transfer his skill. A far different framework is required if we are to make real progress.
In opening the debate my right hon. Friend advocated further consideration of the regulatory procedure. There is certainly a strong argument for an examination of the idea of a Companies and City Commission which might have some parallel with the SEC in the United States, and better staffed than the Department of Trade and Industry, which has been notably inadequate, maybe under all Governments, in dealing with this subject, at any rate to supervise the self-regulating bodies which must no doubt continue but which have not shown themselves to be capable of dealing with abuse. We want to explore that aspect in Committee.
I come now to the rôle of the worker in industry, of which there has been some discussion, although not much. The Government hinted that they would come forward with proposals and they are under a requirement to respond to the fifth directive of the EEC. Anyone who has followed this extremely important debate will have seen the various proposals that have come forward. One of the earliest was the Labour Party proposal of 1968 for single-channel bargaining, under which wage bargaining and consultation would be brought into the same ambit. That would in effect drive back the area of management prerogative. That was as far as we went at that time.
The Liberals have been in favour of workers' councils elected on an assembly basis separate from the trade unions. That, we believe, would be inadequate, because the trade unions represent an important part of existing worker power and to separate the one from the other would have no meaning. Others have advocated the presence of a worker on the board, but that is widely seen to be a piece of window-dressing. Others find the answer in co-ownership, but that has some dangers. If a worker invests his money in
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the firm in which he works and the firm goes bust, he can lose his pension, his savings and his job all at the same time.
The TUC has come out with a proposal for 50 per cent. worker representation on a supervisory board, which goes beyond co-determination on the German model. That is being discussed in the trade union movement. The Opposition are examining this problem and we shall come out with our own conclusions.
To speak of involvement or participation in the language of a good industrial relations officer who says "I want to involve my men, I want participation, I want consultation" is, in our judgment, simply not enough. In the twentieth century we are discussing nothing less than industrial enfranchisement with which a parallel can be drawn with nineteenth century political enfranchisement. The Opposition are discussing this not only with trade union leaders but also with shop stewards, who are an important part of the representative process in industry. We are asking them for their views and we are anxious to come forward with proposals that achieve a fundamental shift in power in the workshop.
Sir J. Rodgers Sir J. Rodgers rose——
Mr. Benn: I will not give way again to the hon. Gentleman because his last intervention was inconsequential. When I gave way before, the whole House regretted it.
Sir J. Rodgers: Which clause is the right hon. Gentleman talking about?
Mr. Benn: The hon. Gentleman has been in the House as long as I have, if not longer. He knows as well as I do that according to Erskine May it is in order, in a Second Reading debate, to say what should be in the Bill.
Without some such change there will, among other things, be no satisfactory solution to the industrial relations problem. It is no use hon. Members and editors saying that they want responsibility in industry if power is not shared with the workers upon whose skill that industry depends. Even seen from a management point of view—which is not the viewpoint which primarily motivates everyone in this discussion—if we are to see an end to trench warfare in industry

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there must be an extension of the franchise in industry on the basis of a considerable reduction in management's rôle and a corresponding increase in the workers' rôle. That is the spirit in which we shall approach the problem.
If we look at the reality of the transfer of power, it is not by any means only the question of workers on the board that raises the whole question of disclosure. The House will recall that in both the temporary and the permanent legislation on counter-inflation we tabled amendments calling for massive disclosure by industry to its own workers. This related to labour turnover, manpower plans, details of absenteeism, sickness, accidents, accident-prevention plans, training schemes, recruitment, promotion, redundancy, distribution, sales, administration and production costs. We called for more details about profits, Government allowances, grants, unit costs, output per man, return on capital employed, and also more details concerning the worth of a company, the state of order books, trend of orders, proposed changes in location, work and labour requirements, trading plans, investment, research and purchasing policy.
In our view, one of the things that could be and must be done—and this would be more effective in rapidly changing the balance of power—would be a greater disclosure to workers and the public, but notably to workers.
Mr. Ridley: The right hon. Gentleman asked me to come back and justify my assertion about Socialist intentions for filling posts in public industry. I should like to quote from" The National Enterprise Board. Labour's Holding Company. Report of a Labour Party Study Group":
"An additional advantage of a full-blooded pursuit of industrial democracy is that it meets the need to ensure key influence to socialists who believe in the job that NEB is trying to do, and avoids total reliance on an existing managerial structure—a mistake made in the first excursions into nationalisation."
That is the text, and I should be grateful if the right hon. Gentleman would defend it.
Mr. Benn: The hon. Gentleman provides me with that text, and I was on the committee that drafted it. In reading it he will notice that it wholly repudiates
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the point which he made earlier—namely, that the object of the exercise was for the Labour Government to place in power people who shared their view. [Interruption.] I hope that the House will allow me to make my point. I have been asked a fair question. We take the view that if the worker has greater power to decide about his own management, he will be more likely to get people who have an interest with him to join in the success of that management. That is what we said, and it is right.
I conclude by inviting the House to take a broader look at the industrial system so that we can set against it the provisions of the Bill. Some hon. Members have referred to the degree of concentration which has taken place in industry. The hon. and learned Member for Dover (Mr. Peter Rees), who is not now in the Chamber, referred to mergers and the tendency to monopoly. He rebuked the Labour Government for the part we played in some of these mergers. It is true that in Britain and elsewhere there is a tendency to a much more rapid concentration of industrial power. In 1900 the top 100 companies produced 15 per cent. of our output and by 1950 the figure had increased to 20 per cent., now, in 1974, the figure is 50 per cent. in terms of the top 100 companies, and by 1980 the figure will be 66 per cent.
Sir J. Rodgers: It is a world movement.
Mr. Benn: It is a world movement which directly threatens the democratic process because the powers exercised by these companies are so great as to undermine the authority of Government. For this reason, among others, we have put forward proposals in our programme for powers under an Industry Act. Not one power in our legislation cannot find its parentage in legislation enacted by the present Conservative Government.
When I said earlier that the powers taken by the present Government provided a precedent for us, I meant that every one of the powers in the Industry Bill which we shall introduce come from, or can be connected convincingly and properly to, the legislation introduced by the present Government. We shall also introduce a system of planning agreements to acquire for the Government the knowledge of the corporate strategy of

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those companies, and we shall extend public ownership through the National Enterprise Board.
In talking about the top 100 companies of many hundreds of thousands, it leaves in a mixed economy a provision for an enormous majority—99 per cent. or more of the total number of companies—which would be remaining within the private sector. For these companies we want proper companies legislation which gives to the workers in those firms and to the community legitimate rights which are not guaranteed by this Bill. Therefore, though we shall not oppose it on Second Reading, we shall examine the Bill criticially, if this Parliament lasts more than another few days, and the incoming Labour Government will introduce legislation to deal with it properly.
9.31 p.m.
The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)rose——
Mr. Milne: On a point of order, Mr. Deputy Speaker. I am sorry to delay the Minister, but in another place about 15 minutes ago the Minister responsible for the energy industries made a statement which greatly affects the people of this country. Cannot we have the same statement made in this House by the appropriate Minister?
Mr. Deputy Speaker: That is not a point of order for me. I cannot tell Ministers what statements to make.
Mr. William Rodgers: Further to that point of order, Mr. Deputy Speaker. Perhaps my hon. Friend the Member for Blyth (Mr. Milne) will tell the House what the issue is. That will enable us to known how to pursue it.
Mr. Deputy Speaker: Order. I said that it was not a point of order.
Sir G. Howe: I join all those hon. Members who have welcomed back the right hon. Member for Manchester, Cheetham (Mr. Harold Lever). I was touched, almost moved, by what the right hon. Member for Bristol, South-East (Mr. Benn) said about the domestic harmony and tranquillity which used to reign between them——
Mr. Benn: It still reigns.
Sir G. Howe:—when they worked together in the Ministry of Technology. I
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can assure the right hon. Gentleman that my right hon. Friends and I share a comparable harmony, but that it still reigns between us.
One of the more candid and interesting observations in the debate came in the speech of the right hon. Member for Cheetham, who said that the House would have noticed that there can be differences of opinion even within the Labour Party. I thought that the word "even" was a graceful addition to the proposition.
The right hon. Member for Bristol, South-East then urged one of my hon. Friends not to drive a wedge between himself and the right hon. Member for Cheetham——
Mr. Benn: Not to seek to drive a wedge because we were of two minds.
Sir G. Howe: The only explanation of the right hon. Gentleman's anxiety is that there is no wedge in the world wide enough to fit between the two of them.
The right hon. Member for Cheetham said that from his point of view there was nothing inherently wrong with private enterprise. In that approach he was supported by the hon. Member for Stockton-on-Tees (Mr. William Rodgers)——
Mr. William Rodgers: If the right hon. and learned Gentleman refers to my speech, he will find that I was highly critical of the Bill and expressed the view that the Opposition ought to divide the House against it.
Sir G. Howe: I appreciate that. But the fact remains that the hon. Member for Stockton-on-Tees joined the right hon. Member for Cheetham in accepting that private enterprise had a valuable rôle to play.
Let us contrast that approach with that of the right hon. Member for Bristol, South-East. Last autumn a document emerged from a group of authors in Bristol who were encouraged in their task by the right hon. Gentleman. It was entitled "A New Approach to Public Ownership". The Western Daily Press on 27th September last year reported that
"Mr. Benn told a Bristol Press conference yesterday that the plan was the most important idea to come out of the city in years."
Considering the ideas that the right hon. Gentleman has generated from that

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hapless city, plainly it must be a remarkable document. Perhaps I might quote one paragraph from a summary of the text of it given in the Press:
"The idea would be to run the aircraft industry on the basic lines of a local authority."
The short summary of the text of "A New Approach to Public Ownership" states:
"We reject Private Ownership—we reject the existing system of nationalisation—we reject the TUC proposals for the Public Sector. We reject Worker Directors, the essence of our system is that management is hired by the workers to run the industry".
We now see why the biggest wedge in the world is needed between the two right hon. Members.
Mr. Benn: I am glad that the Minister has read the document because, as I said in the Western Daily Press, it is one of the most important to come out of Bristol for many years. However, he must acquit me of responsibility for it, because I did not attend the meetings at which it was drafted. The idea that the people hire and fire their management is the principle on which this House is founded. Even if there was a failure in 1970, it does not shake our confidence in the desirability of those with power being elected by those to whom they are responsible.
Sir G. Howe: The right hon. Gentleman's attitude to the document is curious. He started by disclaiming responsibility for authorship of it and ended by claiming credit for the ideas. His face shines out bright and clear from the Bristol evening newspapers, together with the authors, and he there appears to be accepting some responsibility for it.
There is a contrast between the one wing of the Labour Party which takes a benevolent, sensible view of private enterprise and the other wing which takes the view, which the right hon. Member for Bristol, South-East takes, aptly described in a different context by my right hon. Friend on Monday as being more absurd every day. One tries to analyse the thought processes which bring the right hon. Gentleman to this situation. His approach to the debate for the first half was almost paranoid. He looked and saw this
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American corporation—Ford, IBM, the oil companies and all organisations which apparently he would seek to drive away. Is he suffering from some sort of paranoia or perhaps from a different mental ailment?
In another passage in his speech, the right hon. Gentleman suggested that we were dominated by the sinister forces—the "Aims of Industry"—dedicated to extreme capitalism, and in the next breath he said that we were operating the most Socialist dirigiste administration which the country had seen. Which way does he want to face on that?
Mr. Dalyell: As we are being cosy and candid and talking about wings, on whose wing was the right hon. and learned Gentleman this morning—the Prime Minister's or Willie's?
Sir G. Howe: The hon. Gentleman must reserve his inquiries about that matter for another occasion.
The right hon. Member for Bristol, South-East suggested that managers in industry were more worried even than the workers about the way in which modern capitalism was working. There are many more managers in industry—many more workers, too—who lay awake more restlessly at night at the thought of being stalked by the right hon. Gentleman than by any number of take-over bids. We now have an insight into what makes the right hon. Gentleman tick. He is becoming increasingly restless at the thought that he may be stalked electorally in the not far distant future by a representative of the Democratic Labour Party in a seat which we are told is becoming increasingly insecure. We see at once an explanation for his somewhat frenzied approach tonight.
Mr. Bernard Weatherill: His last appearance.
Sir G. Howe: It may well be so.
We must contrast with that the clear philosophy——
Mr. Benn: Say a word about the Bill.
Sir G. Howe: Hark who is talking !
Sir J. Rodgers: The right hon. Gentleman never said a word about it.
Sir G. Howe: Contrast the right hon. Gentleman's approach to the subject with

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ours—a coherent, philosophic approach outlined by my right hon. Friend the Secretary of State, founded on the central proposition that capitalism is and has been the best engine for prosperity for the people of this country, and that the limited liability company, for all its Victorian origins, is and has been an essential feature of, and the key to, the success of that system. It has fired the process of economic growth not only in this country but around the world. It is still as effective an agency now as it ever was.
It is part of the belief of our party, however, that that institution, like any other, needs continuous modernisation and improvement. That is what the Bill is about. It amounts in no sense, as was suggested by the hon. Member for Bradford, North (Mr. Ford), to an admission of guilt. For heaven's sake, if everything which the Labour Party held dear and sought to reform was suddenly to be tainted with guilt because the Labour Party had some ideas about it, we should be living in a strange society.
No more is it a Bill designed to give a superficial face-wash to capitalism. It is designed to make purposive and important reforms to that institution. It is part one of the programme for the reform of the agencies of capitalism, which has been welcomed by almost all hon. Members who have spoken, from both sides, and certainly by my hon. Friends. It has been described by my hon. Friends the Members for Bedford (Mr. Skeet) and for Basingstoke (Mr. David Mitchell) as an important piece of consolidation on these central institutions. Part of it has been aptly described by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) as "the rest of Jenkins." Much of it owes, as my hon. Friend said, a lot to his own paternity, and he is a good legislative father for an instrument of this kind. It contains, as well as the rest of Jenkins, major improvements in the administration of the machine which supervises companies. It improves our arrangements for returns and it raises penalties. It contains proposals for dealing with specific situations and specific abuses.
The Bill will help to make our capitalist system the most open in the Western world. Several hon. Members have spoken about the case for more fundamental reforms in the institutions
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of capitalism. The hon. and learned Member for Montgomery (Mr. Hooson) and others spoke of reforms which might be undertaken, regarding the relationship between employers and employees, in the context of company law. My hon. Friend the Member for Cirencester and Tewkesbury spoke of reforms which might be undertaken in relation to improving the management efficiency of companies. A number of my hon. Friends referred to the approaches which we might be making to the rôle of a two-tier board and the rôle of non-executive directors, and drew attention to the fact that those were not necessarily instruments for employee participation, although they have almost the same importance.
It is with all those that the Green Paper promised for later in the year will seek to deal. As my hon. and learned Friend the Member for Dover (Mr. Peter Rees) suggested, it could do much to improve the foundations of industrial relations in the wider sense.
One matter on which the debate has centred has been the subject of disclosure. The extent of the matters to be covered in that way are set out in Schedule 1. I cannot agree with my hon. Friend the Member for Cirencester and Tewkesbury that the proposals that are capable of being made under that schedule go too far for the largest corporate organisations in this country. Nor would I agree with the hon. Member for Oldham, West (Mr. Meacher) that the disclosure provisions of company law should seek to cover all the responsibilities—social, criminal and everything else—of corporate organisations. The scope which is provided for in the Bill is about right. It would not be sensible to accept the invitation of the hon. Member for Oldham, West, to go much further in pursuit of the multinational giants with which he is so concerned.
Paragraph 14 of the White Paper set out our reasons for believing that legislative provisions in relation to international enterprises should march reasonably hand in hand with comparable changes in other countries and set out how we were trying
"to secure improvements in both the quality and the comparability of information available in all member countries of the EEC and of the OECD about the activities of international enterprises."

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But to go further in some wild Socialistic impulse would only be to threaten the continued presence of these companies in our country.
A number of my hon. Friends suggested that the disclosure provisions might go too far for the smaller companies. They invited me to say where the line would be drawn, both as to the size of the small and large organisations and as to what would have to be disclosed. It would be wrong at this stage to be too precise either about what might be included in the disclosure regulations—we want to consult widely and reflect on what hon. Members say today and in Committee—and it would equally be wrong to be too precise and take a decision now on the criteria by which one would distinguish the large from the small—whether one rested primarily on number of employees or on turnover or on some other feature. But we shall be listening to the views expressed by hon. Members now and hereafter, both on what should be disclosed and by whom.
I hope that my hon. Friend will be comforted to know that we are most conscious of the need not to place unduly heavy burdens on the small private company. The closing sentence of paragraph 12 of the White Paper said:
"For smaller private companies the same levels of disclosure are not appropriate because there is no element of investment by the general public and the public interest is not involved to the same extent. For such companies also the burden of disclosure is greater and the commercial dangers may be greater."
We certainly have very much in mind the points that my hon. Friends have made about that.
My hon. Friend the Member for Bedford asked whether there would be any change in the exemption for shipping companies and others with special problems. We are having discussions with interests of that kind and we are considering proposals. We recognise the special international character of shipping companies' operations and will certainly take that into account.
I hope, having made those important observations about our recognition of the points made by my hon. Friends, that they will agree that it would not be right to exempt the small private company from disclosure obligations altogether. After
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all, creditors, apart from anyone else, are interested in them. There are about 8,000 windings-up a year and about 3,000 companies find themselves unable to meet their liabilities in full.
Although I certainly recognise the value of the small company—as my hon. Friend the Member for Croydon, North-East (Mr. Weatherill) pointed out in a book some years back, called, if I remember correctly, "Acorns Into Oaks"—we must recognise that it enjoys a real privilege in the concept of limited liability.
Mr. David Mitchell: Is my right hon. and learned Friend really suggesting that, where a small company's accounts are filed perhaps 10 months after the end of the financial year, this has any reference at all to its financial ability to satisfy its creditors?
Sir G. Howe: The provisions placed upon small private companies are of value not only to creditors but to those who have to supervise and deal with them. Sad though it might be, one must recognise that small private companies are sometimes the seed beds not only of success but of failure and worse. That is why it would be wrong to exempt them altogether from provisions like this. However, I appreciate the force of my hon. Friend's point.
I also appreciate but cannot agree with my hon. Friend's point about the penalties being too severe for non-compliance with the account-filing obligations. I was grateful for the support of my hon. Friend the Member for Cirencester and Tewkesbury when he said that that was right. In the present situation, about half the companies on the register are out of compliance, partly because the law has not been clear. The Bill will now make the law clear. It is important to have those provisions and the law properly respected and to have the obligations regarded as serious ; that is what the Bill intends to make clear.
Of course I appreciate that directors will need to defend themselves in legitimate circumstances. I remind my hon. Friend that Clause 60 gives a defence for directors who have taken all reasonable steps to secure compliance, so it is intended to reach a balance of obligations.
My hon. Friend also mentioned inflation accounting. My right hon. Friend not

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long ago appointed a committee under the chairmanship of Mr. Francis Sandilands to look at that important question, and it will be proceeding urgently.
My hon. Friend also protested at the omission of no-par-value shares. We considered whether or not any provisions about them should be made, but it appears that public demand for that change is now much less than it was. It would involve complex provisions, and, even so, would not prevent the manipulation of deceptive percentages by reference to the issue price of no-par-value shares.
A number of hon. Members spoke about our posture in relation to nonvoting shares. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) and the right hon. Member for Manchester, Cheetham took the same view and tended to think that they were all right and should not be—[Interruption.] Jenkins was divided about it. We took the view that we should not lightly interfere in share structure, but we concluded that when one is dealing with companies proposing to make fresh issues a compromise made sense and that listed companies should not be able to issue new non-voting shares but existing ones should remain and that unlisted companies would have to enfranchise non-voting shareholders before they issued prospectuses inviting subscriptions from the public. That seems a reasonable compromise.
Another area which has caused a lot of discussion this evening has been in relation to insiders. The right hon. Member for Manchester, Cheetham tended not to like the proposals in relation to that ; he thought there might be an element of public relations about them. The hon. Member for West Lothian (Mr. Dalyell) and the hon. Member for Oldham, West and the right hon. Member for Bristol, South-East, I think, suggested they were too weak and did not go far enough. Some of my hon. Friends had anxieties about their going too far. We believe that in responding to the recommendations of many outside bodies, as we have done, we have reached about a right judgment. The Take-over Panel, the Stock Exchange and the City of London solicitors also thought so. Jenkins recommended a civil liability only, but that was some time ago.
Mr. Harold Lever: Would the right hon. and learned Gentleman tell me, in applauding his line of demarcation in this matter, whether he thinks seven years' penal servitude is a proper sentence or liability for any known case in this country of insider trading which has emerged so far?
Sir G. Howe: Who are the Victorians now? Penal servitude went out quite a long time ago. The penalty is a maximum penalty. The offence is also summarily triable and can only be brought before the court with the consent of the Secretary of State or the Director of Public Prosecutions. By way of parallel, obtaining property by deception, which can be a very modest offence, but is comparable to insider dealings, carries a maximum penalty of 10 years. So it is not out of the way, and it demonstrates our determination to deal with some of the people it has been thought we should deal with.
My hon. Friend the Member for Bedford asked whether employees' shares would be caught by this. The anwer is that employees will be so caught only if they fall within all the provisions ; they must have had inside knowledge and have used it in breach of the statute. He also asked if a civil claim could be brought even if no conviction were registered. The answer is "Yes", if the facts can be proved.
The hon. Member for Oldham, West suggested that the provisions were weak because they involved reliance on the Stock Exchange. That is not the position. Clause 15(5) allows us to appoint inspectors to inquire into cases of this kind, and Clause 71 gives the inspectors power to require anybody to produce papers before any such inquiry.
The hon. Member for Stockton-on-Tees asked a question about pension fund managers. A pension fund manager is exempt only if he deals bona fide for purposes of the pension fund, and there is no general loophole there.
The hon. Member for Oldham, West suggested that the nominee shareholding provisions could frustrate them, but I would contrast his views with that of the right hon. Member for Cheetham who thought that there was a good deal to be said for nominee shareholders and found

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himself in a somewhat odd agreement with my hon. and learned Friend the Member for Dover whose general support I welcomed. Once again we have the contrast between the two right hon. Members on the Opposition Front Bench.
A number of my hon. Friends particularly will welcome our provisions in relation to directors' interests. They recognise that they have to be very carefully considered. My hon. Friend the Member for South Angus gave these provisions a particular welcome, but a number of hon. Members drew attention to the extent to which they might go further than was ultimately necessary. I agree that these provisions need to be carefully considered.
My right hon. Friend the Secretary of State justified Clause 45, but, clearly, we shall be prepared to consider whether any kind of exemption for legitimate transactions of the kind mentioned by my hon. Friend the Member for Bedford can be devised. It might not be easy. We shall also consider the point about capital gains tax that was made by my hon. Friend the Member for Basingstoke.
My hon. Friend the Member for Bedford referred to giving particulars of directors on business notepaper. The new position will not be any more onerous than the present one. Almost all the exemptions now granted are for subsidiaries or companies formed for useful objects licensed and allowed to omit "limited" from their names or companies formed for charitable purposes. Under Clause 56(2) they will secure automatic exemption, with less administration, which is an important point.
The hon. Member for Bradford, North (Mr. Ford) referred to a matter that he has raised on previous occasions, about the Association of International Accountants. We believe that it is important to have highly qualified people for the tasks to which he referred. There is no lack of qualified auditors who are members of the bodies listed in Clause 64. We have power to add to those bodies by order.
I hope that I have dealt with most, if not all, of the points of detail that have been raised in the debate. I now come back to more general points.
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First, there is the suggestion by hon. Gentlemen opposite that we should have something in the nature of a Securities and Exchange Commission to supervise corporate activity in this country. Advocates of that approach have not shown how a totally different system would diminish the ingenuity of the fraudsmen whom we are hoping to catch. The present liberal and open system, supported by substantial powers, is likely to be more effective and in keeping with the British tradition than the establishment of a costly independent enforcement agency. If we tried to set up an SEC, its powers would need to be closely defined. They might not be as effective or flexible as those of the City and would, therefore, weaken the feeling of responsibility which the City and the professions have for their own institutions as well as perhaps weakening the responsibility of Ministers in such matters.
I turn now to the wider suggestion, following the proposals made by the right hon. Members for Cheetham and Bristol, South-East, for a National Enterprise Board. I cannot believe that that would represent a solution to this problem. Looking at the problems that all Governments have faced with the power of supervising the public sector, and having witnessed the difficulty of supervising even the investment plans of the small number of industries in public ownership in line with plain statutory provisions using public money, one shrinks with horror from the idea of a comparable organisation being set up to undertake detailed supervisory activity over the whole of the private sector. The Bill makes the changes that are necessary to secure the health of that sector.
The affairs of the overwhelming majority of companies are run honestly, conscientiously and effectively. Those companies perform a vital and irreplaceable rôle in our commercial and social fabric. The Bill will enable them to continue to do so and to be seen to do so.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

COMPANIES [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present Session to amend the law relating to companies and to dealing in securities and, in connection therewith, to amend the law of bankruptcy and the law relating to the registration of business names, it is expedient to authorise the payment out of moneys provided by Parliament of any administrative expenses incurred by the Secretary of State by virtue of that Act.—[Mr. Hicks.]

WAYS AND MEANS

  COMPANIES
  Resolved,
  That any Act of the present Session to amend the law relating to companies may—

  (1) require the payment of fees to the registrar of companies in respect of matters specified by regulations made under that Act ;

  (2) provide for the payment into the Consolidated Fund of fees payable to the registrar of companies in pursuance of that Act.—

  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—

INDUSTRIAL FISHING (SCOTLAND)
9.59 p.m.
Mr. Robert Maclennan: In the summer of 1970 the White Fish Authority carried out an experiment into the potential fishing of Norway pout. It gave rise at the time to protests from fishermen in the port of Wick in Caithness and from a number of fishermen throughout the northern ports in Scotland, who feared——
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hicks.]
Mr. Maclennan:—that the effect of widespread industrial fishing for Norway pout would seriously interfere with the catches for human consumption. The results of that experiment demonstrated that in the total catches landed only 44 per cent. of the catch consisted of pout, the rest consisting of fish for human consumption, including largely haddock and whiting, both mature and immature. In other words, the experiment demonstrated that the fears the fishermen expressed at the time were largely justified in respect to fishing industrially for Norway pout.
After that the Scottish Trawlers Federation prepared a memorandum which I believe was submitted to the Minister. It put in the strongest terms the view that the development of industrial fishing presented serious problems, both immediate and long-term, for the conventional human consumption industry, that it should be discouraged and that, so far as possible, within our own coastal waters should be stopped altogether. The federation took the view that absolute priority should be given to meeting the demand for human consumption protein food.
In preparing the memorandum, the federation approached a number of other
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interested bodies in Scotland and abroad and obtained their support for its views. Among the bodies which expressed support for the view that industrial fishing should cease were the Scottish Inshore White Fish Producers' Association, the Clyde Fishermen's Association, the Mallaig and North-West Fishermen's Association, the Shetland Fishermen's Association, the Fisheries Organisations Society, the Netherlands National Fisheries Organisation, the Belgian Trawler Federation and the Union of French Shipowners. There has been widespread support for the views put forward by the Scottish Trawlers Federation well over a year ago.
I am glad to have the opportunity to initiate this debate to enable the Minister to explain the Government's attitude to the points of view so strongly expressed by the fishing industry in Scotland. He will remember that I started to raise the question with him again last autumn, in both letters and a series of parliamentary Questions designed to elicit information about industrial fishing landings in Scotland and about the possibility of control and inspection.
Tonight I want to take the examination a stage further. First, I wish to put at rest one or two myths which seem to have grown up in other industries about the importance of industrial fishing to this country. Some of these myths are most widely believed, perhaps, in certain sections of the agriculture industry, where it may be thought that fish meal constitutes a major part of animal feeding-stuffs. This has to be seen in perspective. The latest figures that I have been able to obtain show that for the year 1971–72 the consumption of fish meal on farms in this country totalled 424,000 tons, of which only 86,000 tons was home produced. Domestic production met only 20 per cent. of the home market. But this was largely not the product of industrial fishing but was produced from fish offal and sometimes from catches which were unfit for human consumption.
The whole problem became more acute in the summer of 1973, when the prices for fish meal soared in the United Kingdom. That was partly due to the failure of Peruvian anchovy supplies in 1972 and 1973, combined with a shortage of soya beans, at the same time, imported

1053
from the United States. A peak of £325 per ton was reached for fish meal last August. Although that figure fell to £230 per ton in October, it was still £100 per ton higher than it was in the previous October. That was largely due to the fall in the price of soya beans after the rather more successful harvest in the United States and the anticipated resumption, on a restricted basis, of anchovy fishing off Peru this month.
However, the point that should be noted is that in both pig and poultry rations fish meal and soya bean meal can be substituted for each other to a considerable extent, according to the price and availability. Thus, a decline in the average proportion of fish meal in a compound feedstuff mix from 3 per cent. to 2 per cent., such as occurred between the first and second halves of 1972 for some kinds of feed, represents a one-third cut in the consumption of fish meal for that particular purpose. Hence compounders could significantly reduce our use of fish meal whilst still producing nutritionally adequate feed-stuffs. That is the background that we have to bear in mind in considering whether industrial fishing should be encouraged in this country to promote a greater availability of suitable feedstuffs.
The greatest anxiety does not stem so much from the activities of our own fishermen who might be tempted to pursue industrial fishing, because the profitability of industrial fishing in this country is unlikely to be very attractive to fishermen as long as the price of fish for human consumption remains as high as it is now and so long as adequate stocks for human consumption remain available. The small saving in costs which they may expect to result from the need for less careful handling and storage in industrial fishing does not normally offset the higher prices received for fish for human consumption.
But the position of foreign fishermen, who have exhausted or seriously diminished their stocks for human consumption of, for example, herring off West Norway and off Iceland, and, in particular, the activities of the Danish fishermen, is quite different. The risk here is that the foreign industrial fishermen may interfere with the feeding cycle of the stocks of fish suitable for human consumption,
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cause a deterioration of those stocks and, in turn, drive our fishermen to rely on industrial fishing of these damaged stocks to obtain a living.
I have been informed that in waters around the Shetlands in the course of the last year in particular there have been perhaps between 200 and 300 foreign trawlers at one time, all of which carry fishing nets of less than 50 millimetre mesh and are, therefore, presumably engaged in industrial fishing. I understand that the regulation size of nets for protected species is 70 millimetres in this sector. In Wick and Caithness, where there have been good landings of cod, investigation has shown the fish to be full of sand eels, and the widespread view of the fishermen is that the haddock and cod feed extensively upon that fish which is being industrially fished to such a great extent by foreign fishermen.
The question is whether or not we can adequately control this fishing by means of inspection or domestic regulation. There are acute difficulties in effective inspection and checking. It is hard to tell the difference between a Norway pout and an immature haddock. Foreign vessels tend to fish by themselves and not in fleets, and it is, therefore, difficult to follow up their activities. I believe that when he was in Shetland the Minister saw how the Danes store their industrial species in large tanks with some sort of formaldehyde preservative. The fish become a soupy, unrecognisable liquid which is then pumped out into the processing plant back at the home base. This clearly demonstrates the sheer impracticability of carrying out inspections to see what sorts of fish are being caught by these industrial processes.
May I mention only in passing because of the lack of time that we may have to consider carefully in future the effect on stocks of purse netters, such a large proportion of whose catch tends to be rendered unfit for human consumption and fit only for processing by the techniques of catching and storing. However, that may be a matter for another debate.
I turn now to the stocks of industrial fish which are currently being considered. The first is the blue whiting, which has received a great deal of publicity as being potentially suitable for human consumption. These fish appear to exist in greatest numbers in a region west of Rockall at

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a depth of between about 160 and 270 fathoms. They can, therefore, be fished only by large seaworthy vessels, for example, from our Greenland and Iceland distant-water fleet. Nonetheless these fish are attracting the attention of Norwegians, who, I understand, intend to take a million tons out of the area in the course of the coming season.
Stocks are variously estimated to be between 100 million tons and 800 million tons and it must be questionable whether the Norwegians are contemplating a desirable activity. If there is a potential here for human consumption it would be most unfortunate for the fish to be taken for industrial purposes. The White Fish Authority is, I know, interested in these possibilities. It seems that before the stocks are exhausted or interfered with seriously for industrial purposes further experimentation should be carried out on the human consumption possibilities of the blue whiting.
Sand eels are greatly concentrated upon by the Danes and by a number of smaller Grimsby vessels. The fishermen say that they do not catch very many. However, sand eels are part of the food chain of the other edible fish. Uncontrolled interference with that food chain could be highly dangerous. The experiment to which I referred at the beginning of my remarks concerning the Norway pout has demonstrated that it is rarely caught except with a mixture of other fish such as herring, haddock and whiting. Depending upon the season, they can be mature enough, but they may be very immature fish.
It seems that those are the principal industrial species which are being considered. The argument of the British Government appears to be that nothing very much can be done about industrial fishing for these species because we cannot make a great deal of progress internationally. Without international cooperation there is no point in putting our fishermen at any disadvantage. It must be acknowledged that at the moment the disadvantage to our fishermen is in seeking to control this activity. To ban it would be a disadvantage which would be far outweighed by the long-term benefits to the stocks of edible fish.
I know that the Herring Industry Board has put forward the view that we
1056
should extend our limits to 200 miles to ensure that our restrictions can be enforced not only for our own fishemen but for all others in a much wider coastal area. That is a matter on which the Government will doubtless have to deal fairly soon in the light of the forthcoming Law of the Sea Conference. That is a view which is gaining widespread support in the absence of measures taken internationally, and particularly by the North East Atlantic Fisheries Commission, to control fishing and conserve stocks.
In the meantime the Government must decide that all British fishing vessels should carry only the regulation large mesh nets. Licences could be issued sparingly and for brief periods for the sand eel fishing off the Humber. Encouragement could be given to distant water vessels to fish for the stocks of blue whiting on the Rockall Banks and on the Rosemary Bank with a view to seeing whether they can be used for the frying trade and other edible purposes. Mini-mesh fishing in inshore and shallow waters should, I believe—and most fishermen would argue most strongly in support of my view—be stopped forthwith.
I wish to leave the Minister time to express the Government's view on the problem and to say something about the progress which is being made in the all too slow discussions which are being held by the North East Atlantic Fisheries Commission. It is disappointing that there was no mention of this subject during the special meeting of the Fisheries Commission in London in December. I understand that the subject is due for consideration when the commission next meets in May. Perhaps the Minister can enlighten the industry and give a progress report.
10.20 p.m.
The Under-Secretary of State for Home Affairs and Agriculture (Scottish Office) (Mr. Alick Buchanan-Smith): May I first express my thanks to the hon. Member for Caithness and Sutherland (Mr. Maclennan) for raising this important question of industrial fishing around our shores, particularly in the international waters round our shores. We are caused particular concern and some problems in seeking to control this form of fishing. It is a topic which causes considerable concern to our fisheries department and

1057
to our scientists who are watching it closely.
The hon. Member said that the attitude of the Government appeared to be that not very much could be done. I would refute that at once. Within the powers we have and the opportunities that arise we have shown ourselves thoroughly alive to the problem and prepared to take action where possible.
I have seen, on visits to Shetland and elsewhere, the catches of some of these industrial fishing vessels. I saw the catch of a Dutch vessel, and the results were not exactly pretty. This causes us considerable concern. Anxiety has been expressed on a number of occasions by the Scottish Trawlers Federation and the Herring Industry Board. I assure the lion. Gentleman that these representations have been very much borne in mind by us.
Basically the hon. Gentleman has expressed two main fears. One is the perfectly straightforward fear that the removal of industrial fish from the sea could deprive human consumption species of a major part of their food supply, which in turn could lead to a drop in stocks. This is a danger but we ought not to exaggerate it. We take careful advice on this from our scientists.
The hon. Gentleman quoted the instance of sand eels and the fact that they are part of the diet of other species. Our scientific evidence is that they constitute only about 7 per cent. of the food chain of cod. While this is obviously important, it is something that we do not want to exaggerate. Turning to the hon. Member's point about the Norway pout, we do not have any evidence that the fishing for Norway pout in the Minches is doing any particular damage on its present scale. In certain instances, where industrial species do not constitute a large part of the diet of other edible species, it may be possible, by removing them from the sea, to reduce the competition for other forms of food with the edible species.
The scientists are following this up, and I do not want to elaborate it further now. The examination which the scientists have carried out of the feeding habits of these other species show that industrial fish do not constitute a very
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high proportion of their diet. This finding is borne out by the fact that over a period of considerable expansion in industrial fishing the growth rate of the commercial species has not suffered although the total size of each year's brood varies considerably for quite different reasons. Industrial species form a resource which can, in certain circumstances, quite properly be utilised if they can be caught without taking edible fish. This is the burden of the hon. Gentleman's argument.
The fear expressed by the hon. Gentleman—and I am sympathetic to it—is that the small-mesh nets used in industrial fishing may have as a by-catch too high a proportion of fish of the protected species, such as cod and haddock. This is a matter of particular concern, especially internationally.
The recommendation of the North East Atlantic Fisheries Commission permits industrial fishermen to take a by-catch of only 10 per cent. by weight of undersized protected species. Inspections are carried out at our ports by my Department to ensure proper observance of this order by boats landing fish in the United Kingdom. Fishermen who contravene the order are warned that they will be compelled to dump their entire catch or be prosecuted if they do not conform. In our enforcement experience we have found this control by and large to be effective, if only because our own fishermen have a sense of responsibility for edible fish stocks and do not deliberately seek to destroy the young stock.
I have so far mentioned our control over industrial fishing, and this applies particularly within our own waters, over which we have direct control, and to landing in our own ports, where again we have direct control. But the real concern is in the fact that our control is limited to fishermen in our own waters. Where the danger occurs and where industrial fishing is carried out on a significant scale is in international waters over which we have no power to act unilaterally simply because it occurs in international waters. The only direct control we have occurs when a foreign vessel which has fished in international waters seeks to land at one of our home ports. This is where the question arises whether enforcement is equally effective in other countries.

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We wonder whether the 10 per cent. maximum figure is sufficient. Perhaps we should consider a lower percentage and also whether the figure should apply to all sizes of the protected species and not just the juveniles. We in the United Kingdom felt that the time had come for a thorough review on an international basis. I am glad to say that as a result the North East Atlantic Fisheries Commission has agreed to a review, at its June meeting, of the 10 per cent. rule. This is a step forward.
Other ideas which can be considered include definition of the main nursery areas of edible species, and this should not be impossible, although there are difficulties involved. We might then seek agreement to prohibit the use of small-mesh nets in these areas. We must remember that in international spheres action can only be by agreement. It is no good trying to insist on a regulation which other countries will not accept. A complete ban on industrial fishing would stand little hope of acceptance.
We are also concerned about the industrial fishing of herring. Herring is a species for which it is not practicable to prescribe a minimum mesh size. What concerns us is the deliberate fishing for immature herring by the fleets of some countries in the North Sea. We took up this matter in the appropriate forum, the
1060
North East Atlantic Fisheries Commission, at a special meeting in December. Frankly, the progress we made at that meeting was disappointing, but we got agreement to a framework for a catch limitation scheme in March.
I hope that I have demonstrated that we are desperately concerned about this subject and are taking action, but this is a matter which can only be controlled internationally. We are taking considerable initiative. Our scientists are heavily involved in background work on the implications of industrial fishing, nursery stocks and protected species. Most of the species which are fished for industrial purposes are edible and could be caught for human consumption if the market existed and if the technology for using them for human consumption were more widely adopted. This is true of the large resources of blue whiting off our Western coasts which are not mixed with other species and which could be taken and used for fish meal or for human consumption, depending on the prices obtained. If other fish became scarcer—
The Question having been proposed at Ten o'clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock.

NATIONAL FINANCE
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  Economic Situation (TUC Proposals)
  Obscene Books and Films
  Obscene Books and Films
  War Widows' Pensions
  War Widows' Pensions
  Small Businesses
  Small Businesses
  Thermal Insulation (Credit Facilities)
  Thermal Insulation (Credit Facilities)
  Regional Employment Premium
  Regional Employment Premium
HOME DEPARTMENT
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  Animals (Experiments)
NORTHERN IRELAND
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AGRICULTURE, FISHERIES AND FOOD
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TRADE AND INDUSTRY
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ENERGY
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EDUCATION AND SCIENCE
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EMPLOYMENT
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ENVIRONMENT
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POSTS AND TELECOMMUNICATIONS
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SCOTLAND
  Oil Rigs (Production)
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SOCIAL SERVICES
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  Departmental Correspondence
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WALES
  Compulsory Purchase Order (Swansea)
  Compulsory Purchase Order (Swansea)
  Public Expenditure
  Public Expenditure

Preamble
The House met at three of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Saint Edmundsbury and Ipswich.

VIETNAM: IMPLEMENTATION OF CEASE-FIRE AGREEMENT
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, as a signatory to the Paris Agreement for a cease-fire in Vietnam, they will take the initiative in recalling the Governments and parties concerned with a view to securing the implementation of the Agreement.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, the Paris Agreement on ending the war and restoring peace in Vietnam was signed by the United Stales and the Vietnamese parties to the war. Her Majesty's Government attended the subsequent International Conference. There is no evidence that other Governments concerned think it would be useful to recall the International Conference at this time.
LORD BROCKWAY: My Lords, while thanking the noble Baroness for that reply, may I ask her whether she would not agree that there is a grave danger that this may become the forgotten war? There is continued fighting on both sides, with an estimated 50,000 killed during the last year; and thousands of prisoners, who are due to be exchanged next Wednesday, are still kept in confinement. Cannot Her Majesty's Government take some initiative to bring this to an end?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the International Conference has of course no power to enforce its views, and it is above all for
1056
the four parties who signed the Paris Agreement to make the Agreement work. So far as prisoners are concerned, I understand that agreement has been reached in principle for the resumption of the exchange of prisoners this month. It is only the mechanics of operating this exchange that are now causing difficulty.
LORD BROCKWAY: My Lords, while again thanking the noble Baroness, may I ask her whether Her Majesty's Government could not exert some influence on, or attempt some persuasion of, the Government of the United States of America, which is escalating its arms supplies to Saigon, including 71 new F.S.E. fighter bombers? It is estimated that its arms supplies to Saigon and Laos in the present year, July, 1973, to June, 1974, is costing 1,800 million dollars; and when arms are being poured in in this way, what hope is there of bringing an end to this war?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the United States Government has carried out its obligations under the Paris Agreement, withdrawing all troops and refraining from any military intervention in Vietnam; and it has recently sent a Note to the North Vietnamese denying violating the Agreement. As I said earlier, there is provisioin for this Conference to be reconvened, but this is not our responsibility.
LORD BOURNE: My Lords, does the noble Baroness realise that if it were not for the heavy supply of arms which the noble Lord, Lord Brockway, has mentioned going into Saigon, there would be a Communist Government in Saigon now?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, it is true that there have been violations of the cease-fire on all sides, but nevertheless the parties who signed the Agreement continue to proclaim their support for it.
LORD SEGAL: My Lords, apart from the appalling military losses on both sides, is the noble Baroness aware that the civilian population continues to suffer and to endure enormous hardships? Could the British Government renew their offer of voluntary aid in some form to the civilian population?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we have given relief aid to the Saigon Government, to the Save The Children Fund and to the Indo-China Operations Group of the International Red Cross. We have no plans at the moment to step up this aid.
LORD DAVIES OF LEEK: My Lords, may I ask the noble Baroness whether there is now any reality at all in our position as co-Chairman under the 1954 'Geneva Agreements by which we were designated co-Chairman with Russia under the Agreement worked out by the then Prime Minister or the then Foreign Secretary, Anthony Eden?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, much has happened since 1954. We have, of course, the Paris Agreement of 1973, and we have the International Conference which succeeded that.
LORD DAVIES OF LEEK: My Lords, does the noble Baroness imply, then, that there is no reality now about our situation as co-Chairman, as there was in those days?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I think the reality lies in the Paris Agreement; and, of course, the Conference can be reconvened upon a joint request by the Government of the United States of America and the Government of the Democratic Republic of Vietnam on behalf of the parties signatory to the Agreement.

OIL SUPPLIES TO POWER STATIONS
3.11 p.m.
LORD BESWICK: 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 to what extent it was found possible to increase the use of oil to fire the electricity generating stations during the 1972 mining dispute, and to what extent a similar policy has been followed during the current energy crisis.
THE SECRETARY OF STATE FOR ENERGY (LORD CARRINGTON): My Lords, during the 1972 mining dispute
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oil was plentiful. Oil-fired power stations were operated to the maximum, and burnt about 10 per cent. more oil than had been planned earlier. Conditions are different now. Oil is in short supply, and the Board are making the fullest possible use of the quantities allocated to them. The Government have taken special steps to increase the supply of fuel oil to the power stations to the maximum practicable extent.
LORD BESWICK: My Lords, I am obliged to the noble Lord for that Answer. While accepting the fact that there are of course differences between oil supplies in 1972 and those now, may I ask him whether it is not a fact that the C.E.G.B. could burn more oil if it were made available to them; and is it not a fact that at the present time they are getting only 75 per cent. of the oil which they had in January of last year, whereas in fact they could burn 112 per cent. of what was made available to them last year? While the noble Lord may still say that that additional amount has to be found, could it not be found by reducing the amount now made available to the private motorist?
LORD CARRINGTON: My Lords, it is not really quite as simple as that. Because of the plan made by the C.E.G.B. for this year, because of the agreement reached about coal and the extra coal to be burnt at power stations, the C.E.G.B. had planned to use, in 1973–74, 30 per cent. less oil than in 1972–73; and so we were faced not only with a shortage of oil but also with the fact that there had been no plan to bring in oil on any basis other than a 30 per cent. lower burn in the C.E.G.B. oilfired power stations. Consequently, what we have tried to do is allocate them more oil and at the present time we have managed to supply them with 87 per cent. of the amount of oil that they burned last year. If one tried to do more it would be at the expense of somebody else, and it would really be robbing Peter to pay Paul. Although it is possible to a certain extent to alter the mix in the refineries, it does not add more than a few per cent., and one has to take account of the economies and the use to which the other products are put.
LORD BESWICK: My Lords, I am aware of the plans which, in a sense, the noble Lord has inherited. But does it

1059
not still remain the case that even though, as the noble Lord now tells us, the allocation has gone up from 75 to 87 per cent., the C.E.G.B. could within a day or two, if required, burn 112 per cent. of what they were burning in January of last year? Although I accept what the the noble Lord says: that the oil has to be found from somewhere, may I again put to him the question why is it not taken from the amount now allocated to the private motorist?
LORD CARRINGTON: My Lords, power stations do not burn petrol; they burn fuel oil: and there is a mix that comes from the refineries. The position is that there is not enough fuel oil in this country, however the capacity of the refineries is varied, to give the oil-fired power stations enough oil for them to use the capacity that they have. The Government have to make a judgment as to how far they allocate the oil available in the country between power stations and industry.
LORD BESWICK: My Lords, may I ask the noble Lord to accept that I know what is burned in the generating stations? Would he not also say that the C.E.G.B. could, if they were so required, so adjust their jets that they could burn lighter oil—although, of course, not high octane motor fuel? Is it not the fact that the oil companies, if so required, could produce more heavy fuel oil and less of the high octane motor fuel? If either of these two courses were adopted, could we not make more fuel oil or more burnable oil, available to the power stations, and thus make it unnecessary to have the present rate of cuts?
LORD CARRINGTON: My Lords, to a very small extent that is true; the mix can be altered to a small extent. But one has to take into account the general economy of the country and the general proportion of the fuel that you get from your refineries.
LORD DERWENT: My Lords, can my noble friend explain to the noble Lord, Lord Beswick, exactly what is petrol for private motorists? Is a car used for essential business purposes a private motor, or a business motor?
THE EARL OF LAUDERDALE: My Lords, is it not the case that from a given barrel of crude a massive amount of fuel
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oil could be obtained; and that also there is an inevitable balance of middle distillates, and that you cannot raise the one and get rid of the other at a stroke?
LORD CARRINGTON: My Lords, that is the point. You can adjust it up to a point, but you cannot adjust it all that much. This is a decision which the Government have to take.
LORD HALE: My Lords, can the noble Lord, Lord Carrington, say whether we were exporting very large quantities of crude and fuel oil in October and November, 1973, mainly because of the Esso Company's policy, and that there was a very great shortfall in deliveries by Esso to the C.E.G.B. in December, 1973? And can he say whether or not that was due to the domination over Esso policy by the American principal company?
LORD CARRINGTON: My Lords, that is rather outside the Question which has been asked. If I may seek to answer the noble Lord's supplementary question in very general terms, it is, as I have discovered in the last ten days, extremely difficult to get to the bottom of all oil figures. I am seeking at the present time to see the chairmen of the big oil companies of this country and to get to the bottom of what is happening.
LORD POPPLEWELL: My Lords, will the noble Lord, Lord Carrington, pass any comment on the observation which appears on the front page of the Daily Telegraph this morning, where it, says that members of the Electricity Council state categorically that there are sufficient supplies of raw materials to keep electricity going until the end of April? How does this compare with what his junior colleague has said—that we should brush our teeth in the dark? Is there not some need to make clear what is the true position?
LORD CARRINGTON: My Lords, that is going a very great deal wider than the terms of the Question on the Order Paper. If the noble Lord, Lord Popplewell, would put down a Question, I will willingly answer it.
LORD SHEPHERD: My Lords, is the noble Lord aware that we should contemplate going into March or April under the present difficulties? We recognise that

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the noble Lord has just taken over a new and heavy responsibility and that he is to have consultations with the leaders of the petroleum and oil groups in this country. Would he also look at what the Dutch are doing? As no doubt he will find, they are adjusting the refinery processes to ensure that the heavy oils are available for the generating stations, even though this is at the expense of lighter fuels, which means rationing for car owners?
LORD CARRINGTON: My Lords, of course I will do that. One must get one's priorities right.
LORD SHINWELL: My Lords, is the noble Lord aware that the C.E.G.B. have been "spoon-fed" for years on a certain category of coal? Would he make inquiries as to whether the Board could use other coal which is now available and being stocked at the pithead in various parts of the country? Would the noble Lord look into that question?
LORD CARRINGTON: My Lords, the noble Lord did not know about it. Now that the noble Lord, Lord Shinwell, has told me, I will look into it at once.
LORD BALOGH: My Lords, does the noble Lord realise that the difference between this country and America in the pattern of refinery is up to 20 per cent., and would he call 20 per cent. a very low figure?
LORD CARRINGTON: My Lords, would the noble Lord be kind enough to repeat that question? I am afraid I did not hear it.
LORD BALOGH: My Lords, I quite see that. I merely wanted to ask whether the noble Lord realises that the American pattern of refinery output and our own pattern differ by about 20 per cent.? Does the noble Lord call 20 per cent. a negligible figure?
LORD CARRINGTON: My Lords, it depends on what the refinery output is. I should like to look at the figures.
LORD SLATER: My Lords, could the noble Lord say how many of the dual-fired power stations in this country are running with a short supply of our own indigenous fuel, as against oil? Further, following the supplementary question of my noble friend Lord Shinwell, is the
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noble Lord satisfied with the figures that have been given to him as to the amount of coal lying on the ground at the moment waiting to be used? Can he say what is being done about it?
LORD CARRINGTON: My Lords, I am afraid I really could not answer the first part of that question without notice. The answer to the second part is, "Yes".
LORD BESWICK: My Lords, I ask the noble Lord to accept that I personally have very great faith that he will get to the bottom of these things. Might I ask him whether he is satisfied that the question of priorities was settled correctly in November of last year when the advice of the civil servants was that we should ration motor spirit and allocate additional fuel oils to the generating stations? Would he accept that the Government then made a serious misjudgment?
LORD CARRINGTON: My Lords, I really do not think that the noble Lord has any reason to suppose that he knows what the advice of the Civil Service was.
LORD DAVIES OF LEEK: My Lords, is the noble Lord aware that among the great mass of the public is a blind groping for the truth? We are grateful to the noble Lord for his statement that he will do his best to get to the bottom of these things. The public needs to be informed. May I ask the noble Lord whether he will ultimately be able to confirm that to convert an oil-burning power station to coal takes two months and, consequently, in this transition period whether to say that they are short of oil or coal is really an answer to the question?
LORD CARRINGTON: My Lords, I will of course look at all these things, but perhaps I might suggest to your Lordships that you should look at the Question which was asked on the Order Paper and ask yourselves—perhaps I might ask you myself with the greatest possible deference—whether or not one is not getting rather wide of the Question and entering into a debate on fuel and power.
LORD SHEPHERD: My Lords, may I ask the noble Lord to accept that we are now privileged to have the Minister for Energy in your Lordships' House? We are allowed only four Questions a

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day and no doubt other noble Lords take up other subjects. Therefore I would hope that the noble Lord will understand why, having got the Minister for Energy in this House, we do tend to go a little wider.

OIL SUPPLIES FROM SAUDI ARABIA
3.24 p.m.
LORD BESWICK: 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 to what extent the Saudi Arabian assurances to maintain oil supplies to the United Kingdom on the same basis as between January and September of last year have been fulfilled by actual deliveries to this country.
LORD CARRINGTON: Here we go, my Lords! Imports of crude oil from Saudi Arabia have been continuing at or above the average level of the period from January to September, 1973.
LORD BESWICK: My Lords, if that is the case may I ask why it is that the Esso Company are unable to supply more heavy fuel oil to the generating stations?
LORD CARRINGTON: Because, my Lords, we were expecting 35 per cent. more oil than in the 1972 period.
LORD BESWICK: My Lords, the noble Lord really cannot ride away on that. I am asking: if the Esso Company are supplying us with the same amount of oil as in the comparable period last year, why are they not able to make available to the C.E.G.B. the same amount of oil as they did then?
LORD CARRINGTON: My Lords, I think I ought to explain to the noble Lord—and I am sorry if this means I shall take a moment or two longer to do so—the increase in the amount of fuel oil used in the last year has been quite marked and we were expecting a very large increase in production. It is no use the noble Lord shaking his head; it is true. We were expecting a very large increase in the output from Saudi Arabia: 35 per cent. As it was, the
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figures were cut back initially to the average taken between January and September, 1973. This meant we were getting only an average of what we had got in a period of the year when oil is not used very extensively in industry: it is the light period of the year. At present we are in the heavy period of the year. Consequently, the monthly average we were receiving in November, December and January is very much less than we would be having and needing in the winter months this year and, together with the increased demand of other industries for oil, there was a need for rationing or a national cut-back of 10 per cent. so that there could be fair shares all round.
LORD BOOTHBY: My Lords, might I ask the Minister whether he could possibly give us comparable figures for imports received over a similar period from Kuwait, and whether we are getting as much as we expected from Kuwait?
LORD CARRINGTON: My Lords, I think possibly not quite as much, but probably not very far off.
LORD TANLAW: My Lords, would the Minister explain why, as the Government last year were predicting a 6 per cent. growth rate, no allowance was made for an increase in demand for all fuel oil from all industries at that period in time? If such allowance had been made and as the growth rate was not anything like 6 per cent., there should be a surplus of oil in this country at the present time.
LORD CARRINGTON: My Lords, before the recent Emergency there was no question of planning for oil. All that happened was that you expected to get the oil you wanted.
LORD SHEPHERD: My Lords, would the noble Lord deal with one point which has been well reported in the newspapers? —indeed, it may be the reason for my noble friend having asked a question about Esso. It was reported that Esso were short by 25 per cent. of their promised allocation to this country as a consequence of sending non-Arab oil to other parts of Europe. Would the noble Lord confirm whether Esso are or are not maintaining their allocated supply to this country?
LORD CARRINGTON: My Lords, the Esso Company have said quite specifically that they have been giving us all the crude they have—they themselves are short of crude. These are, as I said earlier, the sorts of questions I must obviously go into with the people concerned.
LORD BESWICK: My Lords, is the noble Lord aware that the Saudi Arabian promise was taken from their declaration in November of last year, and since then Sheikh Yamani has gone rather further and has said that Britain can have more oil if she wants it? Is that promise being fulfilled by the deliveries of the Esso Company?
LORD CARRINGTON: My Lords, it is too early to say whether that is happening because the oil would not in any event be landed in this country until next month, but we are actively exploring the point wth the Saudi Arabian Government and with Esso.
LORD MAYBRAY-KING: My Lords, can the noble Lord confirm that our trading relations with the Iranian Government have meant that our good friends in Iran are providing more petrol as a result of this agreement?
LORD CARRINGTON: My Lords, if I may answer that question—which is not on the Order Paper—the agreement with Iran is not yet signed but is still under negotiation.

WEST LONDON AIR TERMINAL CHECK-IN FACILITIES
3.30 p.m.
BARONESS BURTON OF COVENTRY: 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, in view of the decision taken by this House on December 20 last, they will make a Statement on the position of the check-in facilities at the West London Air Terminal.
THE LORD PRIVY SEAL (LORD WINDLESHAM): My Lords, as a result of the debate in your Lordships' House on December 20, I met my Ministerial col-
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leagues the following day to discuss as a matter of urgency the conclusion reached by the House. My honourable friend the Minister for Aerospace and Shipping wrote to the British Airways Board on December 21, to request them to consider the views of the House. The Minister's letter was considered at a meeting of the Board on December 28, when the Board decided that there was a compelling case for implementing their decision to withdraw the check-in facilities at West London Air Terminal on January 1, 1974. I have already made the terms of the Minister's letter and of the Board's reply known to a number of noble Lords and, with the Leave of the House, I will arrange for the correspondence to be published in the OFFICIAL REPORT.
Following is the correspondence referred to:
Letter from the Minister for Aerospace and Shipping to the British Airways Board.
21st December, 1973.
Dear Henry,
You will, of course, have seen the outcome of yesterday's debate in the House of Lords about the proposed withdrawal of check-in facilities from the West London Air Terminal. Their Lordships approved by a majority of 82 to 28 a motion in the following terms:
To move to resolve, That this House deplores the declared intention of the British Airways Board to withdraw the check-in facilities at the West London Air Terminal on 1st January next; and calls upon Her Majesty's Government in the national interest to direct, if it is in their power to do so, or otherwise to request the Board to defer the proposed withdrawal until such time as—

(a) the effects of the present fuel crisis on the drastically revised flight schedules and the future pattern of access to Heathrow can be fully assessed; and

(b) a Select Committee of this House has enquired into and reported on the merits of the proposal, the Government have commented thereon, and Parliament has been given the opportunity of expressing an opinion on both.

We have, of course, discussed this subject on a number of occasions in the past. I understand very well the reasoning behind your Board's decision. Together with my colleagues in the House of Lords I have explained and defended your decision to Parliament. We have also made it clear in both Houses that I have no power to direct your Board to take a different view.
These arguments were, no doubt, considered by members of the House of Lords before they gave their approval to the motion I have quoted. In view of the terms of that motion,

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I am sure you will understand why I must now ask the Board of British Airways to give earnest and urgent consideration to the request that the proposed withdrawal of the service should be deferred until their Lordships' conditions have been fulfilled.
Yours sincerely,
Michael Heseltine.
BRITISH AIRWAYS BOARD
31st December, 1973.
M. R. D. Heseltine, Esq., M.P.,
Minister for Aerospace and Shipping,
Department of Trade and Industry,
1 Victoria Street,
London, S.W.1.
Dear Minister,
WEST LONDON AIR TERMINAL
Thank you for your letter addressed to Henry Marking following the debate in the House of Lords on 20 December. You asked my Board to give earnest and urgent consideration to the request that the proposed withdrawal of check-in facilities should be deferred until their Lordship's conditions had been fulfilled. I at once arranged for the decision to withdraw check-in facilities to be reviewed at a Board meeting held last Friday. The results of our deliberations are as follows.
It will be recalled that ever since 1946 BEA has checked-in passengers at the Air Terminal and this practice continued when WLAT was opened about 15 years ago. Check-in involves going to the desk, presenting one's ticket, having one's baggage taken into the custody of the airline, and being accepted for the particular flight on which one is hooked. It has also been the BEA practice that, once one has been accepted and has boarded the coach allotted for the particular flight, one's connection with that flight is guaranteed and the flight does not leave until passengers from the connecting coach have boarded.
I should, however, make the point that although I refer in this letter to a "guaranteed connection" there is in fact no legal entitlement under international conditions of carriage to a connection or, indeed, for a passenger to be carried on any particular flight.
Two years ago BEA felt it right to follow the general international practice of providing only a coach service from January 1974. The matter was considered several times by the BEA Board before a final decision was taken because the Board wanted to be assured that the new arrangement would be satisfactory for passengers. Other European airlines using WLAT have already withdrawn check-in at the Terminal and from 1 October last have provided a coach service only.
Under the new arrangements coaches will leave the Terminal and the Airport in each direction at 10 minute intervals with additional coaches whenever traffic warrants.
Measures decided upon to ensure that the interests of the public travelling on our European Division's services using WLAT are safeguarded include:
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(a) With tickets sold in the U.K. we shall make plain in writing the time by which we advise passengers to catch their coach if they are to be reasonably sure of catching their flights.

(b) We shall arrange for a uniformed supervisor to be permanently stationed at the coach arrival point at No. 1 Terminal Heathrow to make sure that the unloading of passengers' baggage from the trailers towed behind coaches is satisfactorily done, that porters are available to help passengers, and that there are adequate luggage trolleys available. It will, of course, be one of the supervisor's primary duties to be on the alert to help passengers who may be anxious because they had arrived at the last moment. The BAA are providing a lift to make it easier for passengers at Terminal 1, and we are making sure that there will be sufficient check-in desks at Terminal 1 to avoid unreasonable queues even at times of peak demand.

(c) We shall undertake that if any passenger should miss his flight as a result of exceptional delay—in spite of having followed our advice as mentioned in paragraph (a) above—in the arrival of the coach from West London Air Terminal he will be looked after as regards meals and accommodation at the expense of British Airways, and arrangements will be made for him without financial penalty to travel on the next flight on which accommodation in his class of travel is available.

We estimate that the new arrangements will produce a substantial net annual saving of cost to the European Division This largely arises through reducing the staff at WLAT to 260 in the first year and by reducing the number of coaches used. Furthermore to abandon or delay the project at this stage would involve further capital expenditure which could not possibly be justified in view of the short period of time before the London Transport rail link to Heathrow becomes operational.
These then are the facts. At its meeting on Friday, 28 December the Board reached the conclusion that on commercial grounds—and this phrase covers both the financial aspects and the obligation of the Board as a public transport operator to have proper regard to the public interest—there is a compelling case for implementing the decision on 1 January as originally intended. We believe that the new arrangements will enable us to provide a better service to the average passenger which is a most important consideration in the competitive environment within which we operate. In accordance with the principles referred to in paragraphs 8 to 12 of our First Report on Organisation, my Board has the fundamental responsibility to act in accordance with its commercial judgment and, having taken the view of the facts referred to above, it is our clear duty to continue with this project as planned.
We have noted with close attention the criticisms of our proposals that have been voiced in the House of Lords. My Board readily accepts that criticisms and anxieties voiced in the debate reflect a serious concern

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and this is something my Board has taken most seriously into consideration. We believe, however, that their fears will prove to have been exaggerated and that in practice the new arrangements will find acceptance by the public we noted particularly the experience over the last three months of foreign airlines using similar arrangements as a result of which there has been, so the foreign airlines tell us, no adverse reaction at all, and also so far as they know no passenger has missed his flight following withdrawal of the guaranteed flight connection between the airport coach and a particular flight.
I have referred above to the various measures we have already decided upon in order to meet as far as possible the anxieties that have been expressed. Moreover, we offered to afford the Airline Users Committee an opportunity to participate with us in monitoring the working of the new system after its introduction on I January, and I am glad to be able to tell you that this offer has now been accepted. I now propose—and we shall be writing to the Chairman of the Airline Users Committee—that after the initial six months of working of the new arrangements there should be a meeting between British Airways and the Airline Users Committee when experience then gained can be reviewed and improvements in the new arrangements, if any are thought to be necessary, can be discussed.
I hope the Airline Users Committee will also accept this further proposal as a constructive initiative to work in concert with them to ensure that the interests of the travelling public are fully considered and that proper attention is paid to those interests.
Yours sincerely,
HENRY MARKING,
for David L. Nicolson, Chairman.
BARONESS BURTON OF COVENTRY: My Lords, while thanking the noble Lord, the Lord Privy Seal, for answering this Question, may I ask him something as the Leader of the House? Does his reply mean that when one of the Houses of Parliament, in this case our own, records a decision by an overwhelming majority the Government are powerless in its implementation even if they wish to see the policy carried out?
LORD WINDLESHAM: My Lords, I willingly answer that question in my capacity as Leader of the House because have been concerned with this topic. At the end of the debate on this matter I was asked by the noble Lord the Leader of the Opposition what action the Government would take. I said I would consult urgently with my Ministerial colleagues who were responsible, and I did so. The letter sent by the Minister for Aerospace and Shipping which, with the leave of
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the House, will appear in Hansard tomorrow, stated:
"…I must now ask the Board of British Airways to give earnest and urgent consideration to the request that the proposed withdrawal of the service should be deferred until their Lordships' conditions have been fulfilled."
That was the request put to the Board by the Minister. It has been made clear on a number of occasions that the final decision rests with the Board but that also it was most important that the views of your Lordships were taken fully into account; and that, I believe, has happened.
LORD GREENWOOD OF ROSSENDALE: My Lords, will the noble Lord accept the fact that your Lordships' House will have heard with regret that the Airways Board treat the Government with the same arrogant contempt as they treated this noble House?
LORD WINDLESHAM: My Lords, I regret the use of those words. I know that the Group Managing Director of the British Airways Board has taken a great deal of care and thought over this matter. He has written to most, if not all, noble Lords who took part in the debate to try to answer, on behalf of the Board, the points they raised. It will also be seen in Hansard tomorrow that the reply from the British Airways Board is an extremely long, considered and reasoned one. I do not think that the comments which the noble Lord has just made will be upheld by the House when noble Lords have seen the correspondence to which I have referred.
BARONESS EMMET OF AMBERLEY: My Lords, may I ask my noble friend whether we are likely to have a report (shall we say?) within a month or two months as to how the new arrangement is working?
LORD WINDLESHAM: My Lords, I understand that the British Airways Board have agreed to co-operate with the Airline Users' Committee in monitoring and reviewing these arrangements in order to see how they work out.
BARONESS EMMET OF AMBERLEY: My Lords, shall we have a report in your Lordships' House?
LORD WINDLESHAM: My Lords, I ought to give consideration to that point.
LORD MAYBRAY-KING: My Lords, is the noble Lord aware that our quarrel is not with the Leader of the House but that the British Airways Board seem to have treated with contempt the wishes of this House, as expresed in December by an overwhelming majority, and that the Board's letter in January to noble Lords concerned merely adds insult to injury? Will he ask the B.A.B. to consider that hurting a million customers is bad business?
LORD WINDLESHAM: My Lords, the Board have disagreed with the House. They have the responsibility to take this decision and they have reached a different decision—we must be frank about it—from that which a majority of your Lordships reached. That is not the same thing as "treating with contempt". I think that is really going too far.
LORD NUGENT OF GUILDFORD: My Lords, is my noble friend aware that there is a conflict of obligations here? First there is the obligation of the Board to respond to the wishes of this House, but is my noble friend also aware that there is a responsibility on Parliament to support the constitutional independence of this national corporation for the day-to-day management of its affairs? In this difficult conflict would it not be right now to allow the Board the independence of management of its affairs which Parliament has given it? May I ask, that, as my noble friend has suggested, we should have a report, say in six or twelve months' time, as to how this arrangement is working to ensure that the interests of the customers, which the noble Baroness has so ably expressed, are being catered for properly, and so that we can then judge the situation again.
LORD WINDLESHAM: My Lords, my noble friend has touched upon the matter of principle. The proper relationship between Parliament and the nationalised corporations is laid down by Statute. It is clear where the responsibility lies, although sometimes criticism arises where a House of Parliament disagrees with a corporation. However, I am sure the advice we have just heard from my noble friend, who speaks with such experience, is wise and it will be helpful in the review of the new arrangements to see what the outcome is in practice.
LORD POPPLEWELL: My Lords, would the noble Lord agree that the Minister concerned has power to give a directive to the Board concerned? Is it in the opinion of the Government that the wishes of this House, expressed in the way they were on an earlier occasion, are not sufficient for the Minister to exercise his powers?
LORD WINDLESHAM: My Lords, this matter has been gone into with the greatest care by the Treasury Solicitor and the solicitors advising the Department of Trade and Industry. They have satisfied the Ministers concerned, and me, that the power in Section 40 of the Civil Aviation Act 1971 does not apply to circumstances of this kind.
LORD SHINWELL: My Lords, as a matter of constitutional principle has been raised, is the noble Lord aware that the British Airways Board are not bound to accept a decision of your Lordships' House, or even the other place, but where it is a matter of public interest, not a matter of day-to-day administration, the Minister can direct the Airways Board under the Act itself? This power applies not only to civil aviation but to coal, electricity and transport. I had something to do with the preparation of the legislation and piloted it though the House of Commons. Is the noble Lord aware that if the Minister decides that this is a matter of public interest and takes note of what the decision of your Lordships' House was, and perhaps an expression of views from another place, he is bound to direct the Airways Board? That is the constitutional position.
LORD WINDLESHAM: My Lords, that is not quite so. I do not want to go too much into the detail of this matter because it has been discussed so often before. The situation is that the Minister has a power to give directions of a general character as to the performance of the Board's functions in relation to any matter appearing to the Secretary of State to affect the national interest. But, as I said in reply to the last question, the considered legal advice the Government have had is that it would not have been a direction of a general character for the Government to tell the British Airways Board to keep check-in facilities at an air terminal.
LORD ROBBINS: My Lords, would the noble Lord agree therefore that the point at issue is the definition of what is a matter of day-to-day administration?
LORD WINDLESHAM: My Lords, it is a matter within the commercial judgment of the Board. The Minister has a power to give a general instruction on a matter of public interest. The legal opinion is as I stated in reply to an earlier question.
BARONESS ELLIOT OF HARWOOD: My Lords, may we know whether, after this lamentable event has taken place and when we have the report in three months' time, it would be possible, supposing the Board is considered by your Lordships' House to be unfavourable to the consumer, to the public, it will be possible for us to do anything about it; or are we simply at the mercy of British Airways Board?
LORD WINDLESHAM: My Lords, the British Airways Board of course will want to work closely with the Airline Users' Committee which has been set up, and I think that the noble Baroness, Lady Burton of Coventry, can take some credit for the setting up of that Committee. This is something positive, good and constructive which has come out from her campaign. I am sure the Airways Board will want to pay the closest possible attention to what the Committee advise them to do.
BARONESS BURTON OF COVENTRY: My Lords, I wonder whether I may ask the Minister something which I think is very fundamental and of which this is merely an example. What is the value of consumer councils to nationalised industry if their recommendations are to be disregarded, even when supported by votes in Parliament and by the consumer body concerned?
LORD WINDLESHAM: My Lords, this is a new Committee, and this must be one of the first matters that the Committee considered. As it happened, the Airways Board, in their commercial judgment—and it is their job to take this decision—disagreed with the advice both of the Committee and of this House. Let us hope that on other matters there will be no disagreement; that the Board and the Committee will work closely
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together and that a mutually advantageous relationship will be built up in the future.
LORD NUGENT OF GUILDFORD: My Lords, is my noble friend aware that, if the report in 6 or 12 months' time after review was unfavourable, it might very well have moved this issue into an area on which it was a matter of public policy for the Minister to give a direction?
LORD CHORLEY: My Lords, would the noble Lord the Leader of the House agree that this is really a question of law, and that in the end it will, if necessary, have to be resolved by a reference to the Supreme Court?
LORD WINDLESHAM: My Lords, we are going rather wide of the Question now. I notice that it is 35 minutes since Question Time began. I do not complain of that because, as the Deputy Leader of the Opposition said, this is the first time that there has been an opportunity to question the Secretary of State for Energy on his new responsibilities. We all know how very strongly the noble Baroness, Lady Burton of Coventry, feels on this issue of the West London Air Terminal. I felt that it was right to give a full report on what had happened since our last debate. But if we could now move on to our next business, I think it would be more in accordance with our normal procedure.

FUTURE BUSINESS
LORD SHACKLETON: My Lords, not only is it the first time, but it may indeed be the last time that we have an opportunity of questioning the noble Lord. May I ask the noble Lord the Leader of the House, since we are all—I will not use the word "agog", but as the situation is desperate, what is going to happen with regard to future business? We understand that in another place the Prime Minister has said that further consideration is being given to the very remarkable offer and undertaking by the T.U.C. It would not be fair to ask the Leader of the House, who may not know what the Prime Minister has been up to in another place, to comment on this. But it would be helpful if, in the course of to-day's debate, he could give any indication to the House, in view of the deep seriousness of the situation and the fear that

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many of us have, as we work through Committee stages of Bills, that the effort will be wasted when more serious things are afoot.
LORD WINDLESHAM: My Lords, I do not know whether that arises on the question of the West London Air Terminal—
LORD SHACKLETON: My Lords, it arises from the noble Lord's last statement.
LORD WINDLESHAM: My Lords, the next business is the business on the Order Paper. If I can help the House in any way, naturally I shall want to do so. When formal Statements are made by the Prime Minister in another place, it is normal that I repeat them here. But what is said in answer to a Question to the Prime Minister of course is not raised here, unless the same Question is put down, or unless there is some relevant opportunity to raise it. We have the Committee stage of a Bill this afternoon, and I really do not think it would deal with the current economic or energy situation.
LORD SHACKLETON: My Lords, if I may say to the noble Lord, we do not often harass him on business, nor do we know—nor apparently does he know—what the Prime Minister is likely to say. We depend on him, and he has been very good at getting us information in this House. All I am asking is that if anything emerges which bears on future business he will be willing to interrupt proceedings and let us know. That is all I am asking. And knowing?his willingness to serve the House, I am sure that he would be prepared to do so. If I may say so, if the Leader of the House is getting bad advice from the Government Chief Whip, I would point out that it is perfectly normal to ask questions on business at any time in this House.
LORD WINDLESHAM: My Lords, I was getting excellent advice from the Government Chief Whip, who was saying that he thought there was no reason why I should not do what the Leader of the Opposition said.

ZETLAND COUNTY COUNCIL BILL
Read 2a, and committed to a Select Committee.

HORTICULTURE (SPECIAL PAYMENTS) BILL
3.45 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL FERRERS): My Lords, I beg to move that this Bill be now read a second time. The Horticulture (Special Payments) Bill, which we are considering to-day, received all-Party support in another place as being of potential importance to the horticulture industry. I stress the words "potential importance" because the Government are much encouraged by the confidence in the future which has been shown by horticulturists in all sectors of the industry, and we shall be delighted if the powers which we seek in this Bill are little used.
Our entry to the European Economic Community involved some changes for our horticultural industry, particularly in our traditional system of support through market protection. The Government have always acknowledged that this might result in problems to some sectors of the industry. We are meeting this with the Bill before us which enables Ministers to make schemes to help growers in specific circumstances. The various sectors of the horticulture industry which may prove to be particularly adversely affected following our entry into the European Economic Community could be helped under this Bill. Climatic conditions vary widely within the Community; some areas have conditions which are more favourable than ours to the production of certain varieties of fruits and vegetables. The relaxation of our protective measures against other Member States will increasingly expose growers in the United Kingdom to competition from producers in other parts of the Community. Weather conditions are not, of course, the only consideration, and some United Kingdom growers have got advantages. For some horticultural crops, for example, the costs of transporting produce from other parts of the Community could prove to be a disincentive to imports.
British growers are producing goods of high quality and we are confident that the great majority will be able to compete efficiently. Indeed, some sectors foresee

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increased export opportunities as a result of our entry into the Community. But, my Lords, we are concerned in the Bill with a minority of growers who may find it difficult to produce profitably in the changing conditions of competition. For example, growers of dessert and culinary apples and pears have for a long time been regarded as being at a disadvantage compared with the French and Italian growers who have the climatic advantages to which I have referred.
Following our entry, the import quotas on apples and pears, which used to form part of our protection, have in fact been replaced by compensatory amounts which are being gradually phased out. This will increase the competition for our own growers. We have therefore already introduced, under the authority of the Appropriation Act, a scheme of special payments to compensate apple and pear growers who feel, during the period for adjustment which is provided by the phasing out of protection, that they cannot compete in the gradually changing conditions. If the legislation before us is enacted, the earliest opportunity will be taken to make a scheme, under the powers in this Bill, to put the present apple and pear scheme on to a proper footing. My Lords, it is our view that at present there is no other sector of horticulture which is likely to be affected to the same extent. Other cases may, however, emerge in the passage of time, and if they do this Bill will give us the power to take some action.
The main aim of the Bill, which is an enabling Bill, is to provide powers to make schemes under which financial assistance may be given to growers to stop growing specified horticultural produce. This assistance may include a contribution towards the cost of operations necessary to make the land available for other agricultural use. The powers will enable Agricultural Ministers to determine those categories of horticultural produce whose producers face special difficulties, the level of payment to be offered, and the conditions of payment, including the restrictions on the future use of any land which may be released from a particular production. Schemes made under this Bill would be made by Statutory Instrument and would be subject to Affirmative Resolution in each House. My Lords, I hope that I
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have said enough for your Lordships to consider that this Bill merits support. I should be pleased personally if it turns out that in the end little use needs to be made of its powers, but I think it right that this provision should be made. I beg to move.
Moved, That the Bill be now read 2a.—(Earl Ferrers.)
3.52 p.m.
LORD HOY: My Lords, we are grateful to the noble Earl for explaining the contents of this Bill. It may well be that I shall have to leave before this debate concludes. As the noble Earl knows, I am expected in Edinburgh later in the evening—or, if he does not know, may I tell him that I am? This is a most unusual Bill because Clause 1 makes a provision which I have never seen before. It says, in effect, "We are going to make financial provisions to an industry provided it does not work." I do not think anybody in your Lordships' House can ever remember a Bill being introduced to compensate people for not working, but this is in fact what Clause 1 of this Bill does. It deals with certain decisions reached in Europe which will make it rather uneconomic for parts of our horticultural industry to produce in their own right, and as a consequence of that they will be compensated for not doing it. But part of the compensation, as I understand it, will have to be paid so that they may go on and produce something else. I think that that is putting the situation in a nutshell, but it is a little difficult to understand.
Secondly, do not let us misunderstand what this Bill is all about. In Europe they are in fact saying that they can produce these commodities at a cheaper and better rate than we can in this country; as a consequence this money must be provided to compensate the industry. But I then looked at Clause 2 of the Bill, which I also found a little difficult to understand. It says that, having reached this decision, we had better give the Minister power to take the money back again. As I say, I find this procedure difficult to understand. It is said that the appropriate Minister is given power to revoke payment, an Order having been made. I assume, I hope correctly, that what the Minister is saying through this Bill is that somebody may have given evidence in support of

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his case which turns out not to be quite correct. The Government are saying to the Minister, "We are going to give you the right to take the money back again." I think that that is all that this provision means. Thirdly, under Clause 3, as I see it, what the Minister is saying is that there may well be people in the horticulture industry who supply information which is not correct, and as a consequence of that they may be fined up to £400 for so doing.
Clause 4 is very simple but it is a provision which caused great trouble not so many years ago when the Government at that time were taking powers to allow Government servants to enter either horticultural or agricultural establishments to make sure that what the occupier was doing and the information he was giving were absolutely correct. There used to be a great cry about this, about "snoopers" and so on who apparently appeared under a Labour Government. But I notice that the present Government are taking power to do exactly the same thing. I am not objecting: I think it is the correct thing to do. But I hope that in future, when others have to make Orders of this kind, this criticism will not materialise. On the whole, I would not object to this Bill, because I should not like to see people lose their livelihood by order of Government, without being compensated for it.
3.56 p.m.
THE EARL OF SELBORNE: My Lords, I hope that I may be excused if I intervene for a very short period in this debate. I should immediately declare that I am a horticulturist, and as a grower of apples and pears I take a close interest in this Bill. Perhaps the opportunity might be taken to assure your Lordships that apple growers and pear growers in this country do not consider themselves to have lost their future. I think that when we entered the Common Market those of us involved in this branch of horticulture were well aware that for a number of years—about 10 years, or even 15 years—there had been chronic structural surpluses of apples in France and pears in Italy arising from irresponsible planning of these commodities in these two countries. It is for this reason, I would suggest, and not because of the climatic conditions—which, if anything
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thing, for apples and pears lie to our advantage—and because surpluses still obtain on the Continent, that the prices within the Common Market have been deplorably low.
Of course, these measures will afford some support to growers in this country who may be of only marginal significance in the industry. My noble friend Lord Ferrers indicated that he will be well satisfied if the allowance in this Bill is not fully taken up. This may well be the case because there is great optimism within the industry that so far as apples are concerned we can grow a commodity which is second to none, both of the dessert variety, such as Cox, and the culinary variety, such as Bramley, which those on the Continent know nothing about at all. I would therefore assure your Lordships that there is nothing to worry about, in that the apple and pear industry will be able to provide what the housewife wishes at a price that will be competitive.
Therefore, while welcoming the provisions of this Bill I would say that they go some way, perhaps, to redressing the damage done by the French and Italian growers some 10 years ago in planting irresponsibly, well beyond the requirements of their own markets. The longterm solution lies not in our powers but in the hands of the French Government and the Italian Government to try to bring their own production some way into line with their own consumption.
3.58 p.m.
EARL FERRERS: My Lords, I am most grateful to the noble Lords who have spoken. I believe that the noble Lord, Lord Hoy, really welcomed this Bill but found it difficult to understand because it was unusual. I suppose it can be said to be unusual, in so far as it is dealing with an unusual set of circumstances, but one which was always recognised to exist. When we were considering going into the Common Market one of the sectors which gave rise to concern was the sector of the horticulturists; and it has always been considered, for the reasons I gave in my opening remarks, that some parts of the industry could be subject to such competition as to make their present livelihood very difficult. That is the reason why this Bill has been brought forward.

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The noble Lord said he had difficulty in understanding Clause 2, because Clause 1 enabled the Minister to pay money out while Clause 2 permitted him to take it back again. If the noble Lord reads the provisions carefully he will see that they are not quite so stupid as that. Clause 2 says that if at any time the appropriate Minister has approved any proposals under the scheme and it appears to him,
"that any condition subject to which the approval was given or any payment has been made has not been complied with",
he may then take back any money which he has given to the person who made the application and who then did not carry out the terms of the application. That is really the only point about Clause 2.
I am grateful to my noble friend Lord Selborne for what he said. It is perfectly true that large sectors of the horticulture industry, and indeed of the apple growers and pear growers, will do perfectly well in the present circumstances. It is only certain people, those who happen to grow certain varieties, who may come unstuck. My noble friend said that the Cox and Bramley are particularly good varieties which will have a great future. I would confirm that. Indeed, to give my noble friend evidence of that, I would tell him that my honourable friend the Parliamentary Secretary to the Ministry in another place only yesterday went down and officially planted a Cox, to show at least her conviction that Coxes will have a reasonable future. I am quite sure that that Cox, at any rate, will not be one that is grubbed up under the Apple and Pear Scheme. My Lords, I am grateful to both the noble Lord, Lord Hoy, and my noble friend Lord Selborne. I ask your Lordships to give this Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

PROTECTION OF THE ENVIRONMENT BILL [H.L.]
4.0 p.m.
EARL FERRERS: My Lords, on behalf of my noble friend Lady Young, I beg to move that this House do again resolve itself into Committee.
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Moved, That the House do again resolve itself into Committee.—(Earl Ferrers.)
On Question, Motion agreed to.
House again in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 4 [Licences to dispose of Waste]:
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 34:
Page 6, line 20, leave out second ("and") and insert ("a collection authority or")
The noble Lord said: In moving Amendment No. 34 I should like to speak at the same time to Amendment No. 36 which is consequential. Clause 4 enables a waste disposal authority—in England of course the county council—to issue licences to dispose of waste to other disposal authorities or to the producers of waste or to private operators—a mixed bag. Subsection (2) of the clause deals with the matter of planning permission and that brings in the district council—which is also, it is as well to remind ourselves, the collection authority—as planning authority. I mention that because I appreciate that there can be no question of using the site licensing system as a way of getting a second crack at the planning aspects of a planning application. Nevertheless we need to bear in mind that
"… provision may be made by regulations for an application for a disposal licence to be considered while an application for any relevant planning permission is pending and for any proceedings connected with either application to be conducted concurrently with any proceedings connected with the other application."
I think that quotation is relevant. Subsection (4) lays down—
"Where a disposal authority proposes to issue a disposal licence, it shall be the duty of the authority before it does so—
(a) to refer the proposal to the water authority and any collection authority of which the area includes any of the relevant land …"
I think your Lordships will appreciate that while the district councils should not, as I have already said, have two bites at the planning cherry they ought to enjoy at least the same rights as the water authority as to the conditions to be specified in the licence. The clause provides as follows:
"and if the disposal authority and a water authority disagree as to the conditions to be

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specified in the licence either of them may refer the matter to the Secretary of State and the licence shall not be issued except in accordance with his decision."
Amendment No. 34 would make that sentence read—
"and if the disposal authority, a collection authority or a water authority …"
The collection authority, as I have said, is the district council, and as such is concerned with the totality of the environmental aspects and influences which will extend beyond planning—considerations of the manner in which a site may be operated and all the issues raised in subsection (7) of this clause.
I would stress that the object of the Amendment is to ensure that should a dispute arise between the district council and the county council in their roles as collection and disposal authorities, the district council should have the same opportunity as a water authority to require that the dispute be referred to the Secretary of State. The same position arises in regard to variation of licensing conditions; that where there is a dispute in regard to variation of conditions that dispute also should be settled by the Secretary of State. I think I am voicing here the views of the Association of Municipal Corporations and the District Councils Association at the same time. They feel quite strongly on the matter, and I think the Government would do well to appreciate that there is genuine concern that the district councils should have rights equivalent to those being conferred on water authorities. In fact when listening to the noble Lord, Lord Henley, the other day, when he was pleading the case of water authorities, I thought that perhaps when we came to this Amendment he would appreciate that if we are going to have balance in the matter this Amendment is desirable. If I may say so, Amendments Nos. 65 and 66 cover much the same point in regard to sites occupied by a disposal authority on which that authority proposes to carry out disposal operations. I mention this now to avoid repetition of the argument when we come to those Amendments. I beg to move.
4.6 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (BARONESS YOUNG): I can well understand the feelings of the noble Lord,
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Lord Garnsworthy, when he is putting very strongly the case of the district councils in this matter of consultation with the disposal authority on the question of site licensing. He has asked in these Amendments that the same right of consultation and, if necessary, the ultimate taking of a dispute to the Secretary of State which is granted to water authorities, shall be given to district councils. He has said very clearly that it is the view of the Association of Municipal Corporations and of the urban districts that they should be treated in a similar way to that in which water authorities are being treated. It might therefore be helpful to explain why we believe that there is, or could be, a difference between the relationship between the water authority and the disposal authority in this matter, and that between the collection authority and the disposal authority.
The major issue which could arise with the water authority over the question of site licensing would be the extremely important one of risks of water pollution and the consequent safeguards that would be required. Obviously, it is essential that the water authority must be satisfied that nothing that the disposal authority is prepared to allow could in any way endanger the purity of water; and equally clearly, the disposal authority must be satisfied that it has met the requirements of the water authority. Therefore, should there be a dispute, this could be a very important matter with regard to public health. That is the kind of issue we see as being ultimately determined by the Secretary of State.
Having said that, I do not wish to suggest that I think there could be no disagreement between the disposal authority and the collection authority on the question of site licensing, but the kind of issues that are likely to arise are those which should be resolved at local level. For instance, the kind of issue could involve the routes which lorries might take to a site which would all be part of the licensing, or the number of deliveries of refuse to a site or matters regarding environmental health; matters of litter, perhaps insects, flies on the site or something like this. There would be many other matters as well but we do not think that they would be of the same kind as a major pollution

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risk that could be caused by pollution to water. Because of this, we feel it is only right that where there are disagreements between the collection and the disposal authorities these should be resolved at local level and are not matters in which the Secretary of State should intervene.
LORD BRAYE: I am not quite sure whether I understood the noble Baroness to say that the district councils would now have a say in the running of the water boards, or that they would not.
BARONESS YOUNG: This is a quite separate matter. The water authorities to be consulted are those established by the Water Act. They include local authority representatives but not necessarily representatives of every district council.
BARONESS WHITE: I should like to raise a small drafting point. Reference is made here to disagreements on conditions. But supposing the water authority was opposed in total and did not wish to have any permission given at all? This is purely a drafting matter, but I think it is possibly worth looking at.
BARONESS YOUNG: I do not like to give an off-the-cuff answer to this question on a matter of drafting, but I will certainly look at it and will write to the noble Baroness, Lady White, if there is something which should be put right in this respect. I imagine that if the water authority gave categorical advice that some condition of the site licence was such that water would be polluted, the disposal authority would, without question, review the whole matter. I take the point and I will write to the noble Baroness about it.
LORD GARNSWORTHY: I thank the noble Baroness for her reply, but I cannot understand the reluctance of the Government to concede this. Under the Bill, collection authorities are to be consulted by the disposal authority. When it comes to the final stages with regard to conditions, water authorities, which enjoy the right to be consulted at the outset, are given the opportunity (in the event of failure to resolve at local level) to have the matter referred to the Secretary of State. Of course we all hope that these matters will be settled at local level, but this, surely, is the time to provide
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that where they cannot be so resolved the collection authority—the district council—should enjoy exactly the same rights as the disposal authority in being able to take the matter for decision by the Secretary of State.
If I recollect something of the argument put by the noble Baroness when I was moving a somewhat similar Amendment, she suggested that if it was written into the Bill it would encourage district councils to develop disputes. I hope I am being fair to the noble Baroness in quoting what she said. Perhaps she put it another way: that what the Government wanted to do was to discourage as much as possible disputes being carried on between district councils and county councils. But there is no provision in the Bill for dealing with a situation where disputes cannot be resolved at local level. I believe that in the overwhelming majority of cases district councils and county councils will want to settle things locally, but what harm is there in accepting this Amendment?
I press the matter, because I know that the associations feel quite strongly on this, and I think that by accepting the principle of this Amendment the Government could do a great deal to make the associations feel much more content about the whole situation. Of course, the noble Baroness knows that there has been considerable feeling with regard to the division of responsibility. I do not want to press her to consider too many things before the Report stage, but I ask her whether she will not cause another serious look to be taken at this matter. I really do not think we ought to let it go without the Department giving perhaps a little more thought than it has done to the position of the district councils. It is terribly important to secure maximum good will and I believe that the way to get it is to move in the direction of the Amendment.
BARONESS YOUNG: I would not want there to be any feeling in the Committee, or indeed any misunderstanding, that somehow the Department, or I were not considering very carefully the role of the district councils in respect of waste disposal plans. We have considered this very carefully, and indeed those of us who took part in the debate on the Local Government Act will be well aware of the extensive discussions that there

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have been between the two authorities in the waste disposal field.
I can only say that in the interests of local government independence and strength we feel that as many matters as can be left to local government to decide should be so left, and in this context we feel that the kind of issues which could arise between the disposal authority and the collection authority over the issuing of a disposal licence are those matters which they should resolve and that it would not be in the best interests of local government for the Secretary of State to be asked to intervene in these disputes.
LORD GARNSWORTHY: In view of what the noble Baroness has said, I shall not attempt to press her any further, and I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.18 p.m.
LORD HENLEY LORD HENLEY moved Amendment No. 35:
Page 6, line 20, at end insert ("whether a disposal licence should be issued or as to").
The noble Lord said: This Amendment tries to put right something which may have been overlooked. As the Bill reads at the moment, it says:
"… if the disposal authority and a water authority disagree as to the conditions to be specified in the licence …"
then either of them may put it before the Secretary of State. My Amendment adds:
"whether a disposal licence should be issued or as to".
the conditions to be specified in the licence. This means that the clause as drafted provides only for disagreements to be referred to the Secretary of State when they refer to the conditions to be specified in the licence and not where the water authority is opposed to the grant of a licence at all. I think that must be wrong. Obviously, one hopes that the number of objections will be minimal and that they will be resolved as they arise, but there may occasionally be a fundamental objection and it seems to me that it would be absurd if the water authority could not refer that fundamental objection to the Secretary of State but could only refer a disagreement about the conditions of the grant of the licence.
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It seems to me that this is a point that might have been overlooked when drafting the Bill and that it would be reasonable to insert these words. I beg to move.
BARONESS WHITE: I should perhaps apologise to the noble Lord, Lord Henley, because he is making the same point in a substantive way that I made earlier on.
LORD MERRIVALE: My understanding of this Amendment is slightly different from the noble Lord's. As I see this Amendment, it would allow a water authority to veto the decision of the disposal authority that a disposal licence should be granted. The water authority is already empowered to disagree with the conditions attached to a licence and to refer the matter for determination to the Secretary of State. I imagine the noble Lord would agree with this. Therefore, it has not been necessary to prevent the disposal authority issuing the licence in the first place. As the disposal authority will be responsible for all the wastes arising in and imported into its area, I think it is only right that it should retain the ultimate responsibility for issuing a disposal licence. So I hope that, in effect, the noble Baroness will agree to this point of view. If I am wrong, then the noble Lord may be right.
LORD HENLEY: I should not have thought that the noble Lord, Lord Merrivale, was right. There is no veto on either side. I am suggesting that under certain circumstances where there may be a fundamental objection, the water authority may put it before the Secretary of State. At present, where there is a fundamental objection, the water authority cannot put it before the Secretary of State. All it can do as things now stand is to put disagreement as to the conditions of the licence before the Secretary of State. It would be absurd if they could do only that, and not refer a fundamental disagreement itself.
BARONESS YOUNG: I think the noble Lord, Lord Henley has a real point. The noble Baroness, Lady White, is right; it is the same question that she asked, and it is something we should consider, and we shall be glad to do so. I would have interpreted the Amendment of the noble Lord, Lord Henley, as expressing concern that there should be a right of appeal to the Secretary of State where there is a

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fundamental disagreement between the water authority and the disposal authority. I think this is the interpretation we will give to it.
LORD HENLEY: I am much obliged to the noble Baroness, Lady Young. I hope that by looking at the matter and in asking leave to withdraw this Amendment, that also satisfies the noble Baroness, Lady White. That being so, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.24 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR DEFENCE FOR THE ROYAL AIR FORCE (LORD STRATHCONA AND MOUNT ROYAL)THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR DEFENCE FOR THE ROYAL AIR FORCE (LORD STRATHCONA AND MOUNT ROYAL) moved Amendment No. 37:
Page 7, line 8, leave out from beginning to end of line 12 and insert ("as to the conditions specified in a disposal licence which shall be disregarded for the purposes of sections 3(1) and 23(2)(a) of this Act.
(7) Subject to regulations made in pursuance of the preceding subsection, a disposal licence may include such conditions as the disposal authority which issues it sees fit to specify in the licence; and without prejudice to the generality of the preceding provisions of this").
The noble Lord said: On behalf of my noble friend Lady Young, I beg to move this Amendment. It may be for the convenience of the House if at the same time I speak to Amendments Nos. 43, 53 and 97. These are on a quite important but slightly technical point. For the sake of brevity, perhaps I should confine myself, unless any noble Lords wish me to take this further, to saying that this separates the serious offence of tipping in an improper place—which I believe is known in the trade as "fly-tipping"—from the more technical and minor offence of failing to operate a tip according to the proper conditions. At the moment, perhaps I can confine myself to that.
LORD STOW HILL: I should like to explore a little further with the noble Lord who moved this Amendment the language which is embodied in it. I respectfully submit that it is not quite as clear as it might be. I approach the matter in this way. When one looks at subsection (6) of Clause 4, to which this is an Amendment, one finds it begins by saying that:
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"Provision may be made by regulations as to the conditions which are or are not to be specified in a disposal licence …".
That in its ordinary connotation, I suppose, means that when one is preparing a disposal licence, there are some conditions one must specify. Equally, there are some conditions which one is not allowed to specify, and not allowed to have them there at all, so one starts off with a licence in which one has specified certain conditions.
Then one looks at Amendment No. 37, and finds that it is designed to omit lines 8 to 12 and to substitute language which includes the following:
"('as to the conditions specified in a disposal licence which shall be disregarded for the purposes of sections 3(1) and 23(2)(a) of this Act.)"
For the sake of brevity, I leave out the reference to Clause 23(2)(a) and confine myself to Clause 3, subsection (1). I would submit to the Committee that it is very important to make sure that the language is simple and easily intelligible to the subject, when one bears in mind that the effect of Amendment 43, to which the noble Lord also spoke, is that the holder of a disposal licence who, without reasonable excuse, contravenes a condition of the licence which is to be disregarded for the purposes of Clause 3(1), commits a criminal offence which may be visited on him with a very heavy penalty, a fine not exceeding £400. I am sure the Committee will agree that in those circumstances it is essential one should know what is the offence which the subject is not to commit, which he has to beware of committing. I am sure there is a simple explanation, but when one sees in Amendment 37, the language:
"… conditions specified in a disposal licence which shall be disregarded for the purposes of sections 3(1) …",
one is led to ask oneself, what are those conditions? Where does one find them referred to? What is contemplated by conditions which—and this is mandatory—must be disregarded for the purpose of Clause 3(1)?
If one goes back to Clause 3(1), one finds it is followed by subsection (2) which equally creates a very serious offence, carrying with it serious penalties, which I suppose is constituted by the act (a) of depositing waste without a licence; or (b) depositing waste in contravention of the provision of a licence.

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I suppose that is the effect of it. So one has a two-fold approach. If one commits the offence that I have described, one is severely punished. If one commits the offence of disregarding the condition in a licence which is to be disregarded for the purpose of Clause 3(1), equally one commits an offence. Where is the unfortunate subject left? I should have hoped that somewhere—and I have searched for it but may have missed it—I should find in Clause 3 a provision which indicates, whatever the language means, that one may disregard certain conditions in the licence for the purpose of Clause 3(1). I would not understand what that language meant even if I found it, but I did not find it. I do not know how one is to go about the mental exercise of saying to oneself: "Here is a condition in a licence. I know that if I contravene it I shall be fined up to £400, but at the same time I am told by Amendment 35 that it has to be disregarded for the purposes of Clause 3(1)."
I hope I am not just wasting the time of the Committee by cavilling on a drafting point. I venture to ask the Committee to deal with it because we are here dealing with a criminal offence. We have always been extremely sensitive in our legislation, and quite rightly so (and I am sure all noble Lords are quite convinced that this is right), to frame our legislation in the clearest possible terms so that persons know what the law allows and what it forbids in a criminal sense. All I am asking the noble Lord to do is to give consideration to the points that I have made, and to indicate to the Committee, not that he will try to re-draft standing on his feet (that would be very difficult to do), but that he will be so minded as to bear in mind the criticism which I venture to suggest, and take the language back and look at it again with his advisers, to see whether it might be susceptible to some alteration. I always hesitate to advance criticisms of this sort. I know that when they are preparing these very complicated schemes learned Parliamentary Counsel burn the midnight oil. Perhaps that is an expression I should not use in the present context. They very carefully think them out and no doubt they have given intense thought to this matter. But I would ask the noble Lord to look at this language again to see whether it cannot be made clearer to the
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subject what he may and what he must not do.
LORD STRATHCONA AND MOUNT ROYAL: I am sure that the Committee is extremely grateful to the noble Lord. On this kind of issue his contributions are certainly not a waste of the Committee's time. I have to confess that I am mightily relieved that he does not expect me to redraft on my feet, or indeed in any other position, because I really do not believe I could do that. May I make one general comment which might be helpful. The purpose of these Amendments would be to enable the Secretary of State by regulations to specify certain conditions or types of conditions breach of which would not constitute the main offence under Clause 3. A breach of these conditions would be the subject of the lesser penalty of £400 on summary conviction rather than the higher penalties specified in Clause 3(2). I quite accept that that does not answer the noble Lord's main point. I think if we let the Amendment go through we certainly ought to agree, and we are grateful to the noble Lord for his help.
On Question, Amendment agreed to.
4.32 p.m.
LORD STRATHCONA AND MOUNT ROYAL LORD STRATHCONA AND MOUNT ROYAL moved Amendment No. 39:
Page 7, line 23, at end insert—
("(dd) the steps to be taken with a view to facilitating compliance with any conditions of such planning permission as is mentioned in subsection (2) of this section;")
The noble Lord said: On behalf of my noble friend Lady Young, I beg to move Amendment No. 39. The noble Lord, Lord Henley, will recall the Committee's discussion on his proposed Amendment No. 8 to Clause 2, where his proposal was to ensure that disposal authorities included information in their plans as to the after-treatment of disposal sites. This Amendment is intended to clarify that point. I think my noble friend at that time explained that the Government did not consider that it would be appropriate to include in waste disposal plans provisions governing the management of individual disposal sites. We did, however, say that we would be bringing forward an Amendment to Clause 4 to relate the operation of disposal sites to the planning permission in force so that

1093
suitable controls could be applied to ensure the restoration of the site after it had been used as a waste deposit. I therefore propose this Amendment to Clause 4.
Its addition to the topics which may be covered by conditions attached to the site licence is intended to clarify the relationship between the planning control and the site licensing for waste disposal operations. Planning permission will in all cases come first, or at least simultaneously, and will settle the basic question of whether the disposal operations ought to be permitted on the site in question. It may also lay down conditions about, for instance, the landscaping or the screening of the site or the access to it. In the case of tipping operations it may also specify the eventual end use for the site after tipping is completed. The site licence will then lay down more detailed operating conditions within the general framework established by the planning permission. Generally these site licence conditions will not be concerned with the after-use of the site, but in the case of tipping it may be useful and indeed appropriate for detailed conditions to be imposed while tipping continues, designed to procure the progressive restoration of the land to its eventual after-use in accordance with the planning permission. The proposed Amendment indicates the links there will need to be between planning permission, the basic decision, and the detailed planning application of the site licence. I beg to move.
LORD HENLEY: May I thank the noble Baroness for having looked at my Amendment in the first place and come back with this Amendment put down by the Government. When I first read it I am bound to say that it did not seem to me to cover all that I understood by after-treatment of the site. Having heard the noble Lord, I am inclined to believe that it does and that it does so fairly effectively. I should be quite interested to hear what other noble Lords have to say, because, as I say, my first impression was that it would not do what I wanted. I do not know what the noble Baroness, Lady White, may have to say, but I shall be very glad to have some confirmation that the noble Lord's explanation of what this Amendment does will in fact be effective.
BARONESS WHITE: As I have been asked for an opinion, so far as I can see it will; but I must say that I shall read carefully in Hansard exactly what the noble Lord said. If we find that it does not, then we shall have an opportunity to come back to it.
LORD MERRIVALE: May I seek clarification of the Government's Amendment? Planning conditions are required to be drafted so as to be enforceable, and there are enforceable conditions in the planning laws. If it should be the case that they do not work, I cannot see how the duplication of enforcement procedures in this Bill, by means of conditions of consent under this clause, will achieve any more. Moreover, I understand that in 1968 there was a revision of the planning law and there was then introduced the concept of stop notices, which means that where there is a breach of condition, operations can be halted almost at once. If there is in fact any duplication of enforcement by the introduction of this Amendment, as I believe there is, would not stop notices, which were introduced in 1968, be effective? If so, is this Amendment absolutely necessary?
BARONESS YOUNG: I should like to thank the noble Lord, Lord Henley, who I think has accepted that this Amendment meets the point he made earlier about planning permissions which would, in effect, both restore and enhance wherever there was to be a disposal site.
The noble Lord, Lord Merrivale, I think is concerned that very strict planning conditions are going to be put on to some private operator as a result of which he will suddenly be required, if he does not comply with all the conditions, to stop operations. I must say I have not read the Amendment in this sense at all. These would be the kind of conditions which the planning authority would require, say, of a private operator who was, for example, going to tip in some place; the planning authority would lay down the kind of conditions as to the look of the tip, the restoration of the land, perhaps the relation of the tip to houses, the way in which it was tipped—the kind of conditions which are of general environmental value and on which I am sure everyone would be agreed.
On Question, Amendment agreed to.
4.40 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 40:
Page 7, line 29, at end insert—
("(g) the routing of traffic to and from the land to which the licence relates").
The noble Lord said: The noble Lord, Lord Strathcona and Mount Royal—and indeed most of the discussion on the last Amendment—covered the question of conditions, and what I am seeking to do is to add to those that are set out in subsection (7). Paragraph (e) deals with the hours during which waste may be dealt with in pursuance of the licence. On an Amendment not long ago the noble Baroness, Lady Young, raised the question of the route that traffic may be expected to take. It is highly desirable that the issue of the hours of tipping should be a matter of condition, and it is equally desirable that the route to be used by the licensed operator in transporting waste to the licensed site should be included in the matters listed.
The noble Baroness and, I understand, the noble Lord indicated concern about protection of the environment. Of course that is what this Bill is all about, and we ought to recognise that unless there is some control where it can be effectively exercised, the environment may be damaged quite considerably by over-use of what may appear to the licensee to be the most convenient route. Anyone with any experience of this kind of traffic will know what an annoyance it can be. While the route used does not come too close to where I live, I happen to live in a district used by a contractor for transporting waste through that district. The kind of vehicle that is used adds nothing to the amenities of the district, and when there is heavy use such vehicles are indeed a confounded nuisance.
Some of your Lordships may also have had experience of contractors conveying road fill. I appreciate that we are not concerned with that in this Bill, but if your Lordships have any such experience you will know how much damage can be done by frequent use of heavy vehicles—and they will be something of the same type, unsightly and huge. Wherever we can ensure that the disposal authority has some right to say what routes shall be used, I am certain that it will be to the public advantage. There will be occasions when no alternative route is
1096
available. In such cases, of course, the issue solves itself. But where alternative routes are available, and with a view to minimising public inconvenience and maintaining district amenity, I venture to suggest that this Amendment would improve this subsection. I beg to move.
VISCOUNT AMORY: It is often said that your Lordships' House can produce somebody with expert knowledge on every single piece of business that comes before us. Who would have suspected that the noble Lord, Lord Garnsworthy, had personal direct experience of this, and has investigated and has studied very carefully the problem of routes to disposal sites? It is as impressive as when the noble Baroness, Lady White, told us yesterday that she had spent the Christmas Recess exploring refuse disposal in Devon. This Amendment seems to me to be a sensible proposal. The route to a disposal site is important, and I imagine could reflect a lot of environmental damage. This is a point which would not be covered by ordinary traffic regulations or by planning powers, and therefore I shall be interested to hear whether my noble friend thinks, as I do, that this is a sensible Amendment.
LORD MERRIVALE: I hesitate to disagree with my noble friend Lord Amory, and I hesitate to query the noble Lord, Lord Garnsworthy, with his vast experience of these matters, but I should have thought that this was really a planning matter best left to the planning authority. Surely when Part I of this Bill is enacted the disposal authorities will have sufficient duties and functions to carry out without the additional task of routing traffic. I should have thought that this question of routing traffic is best left to those who already have experience in these matters. Therefore should it not be left to the planning authorities?
4.46 p.m.
BARONESS YOUNG: I am afraid that I have not had all the experience that the noble Lord, Lord Garnsworthy, has had in these matters, but I agree that the routing of lorries is a serious matter. I recognise that if a large number of them are going through a residential area they can be of great inconvenience to residents. The difficulty about this Amendment is that it is difficult to attach such a condition as this either to the planning

1097
permission (which of course is concerned with land use, planning, and the erection of the buildings and the appearance of the site) or, as this Amendment suggests, to the licence itself, for the kind of reasons that the noble Lord, Lord Merrivale, has given. If, for example, the disposal licence had been given to a private operator who had an incinerator, some of the lorries going to his incinerator might come from the collection authorities themselves and some from industry, and the actual licensee would not necessarily know where they came from. It would therefore be exceedingly difficult for him to comply with a condition that the lorries should go on particular routes. In the Government's view, one should not put into the Bill provision for a condition which could not be complied with.
Having said that, I recognise that there is a problem here. As the noble Lord, Lord Garnsworthy, rightly said, I raised this question in connection with his previous Amendment about consultation with the districts. This is very much a matter for consultation and, one hopes, agreement with the districts. It would be the kind of local authority matter that they could resolve to the benefit of the residents throughout the disposal authority's area.
LORD GARNSWORTHY: I am grateful to the noble Baroness for what she has said. If I understood her correctly, she suggested that this was a matter that might better be dealt with by planning.
BARONESS YOUNG: No. I wanted to make the point that I do not think that it is a suitable condition to attach to either a planning permission or a site licence.
LORD GARNSWORTHY: I am sorry to have misunderstood the noble Baroness, because I was going to say that it would be as easy to control the matter by way of conditions as by way of planning. The noble Viscount indicated that he thought that it was not a matter to be dealt with by planning. No attempt has been made to deal with the issue of routing. I should be very surprised if a local authority engaging a contractor to deal with waste disposal was not in a position to lay down in the agreement it reached with him the route that he should use to transport the waste when he was taking it to the point
1098
where it was going to be dealt with. I should not have thought there were many licensees with incinerators, and it should not be a very difficult matter to control the routing, having regard to the place from where the waste was going to be brought. I appreciate that in many instances there can be no possibility at all of saying, "You will take this route rather than that route" because often there is only one possible route. This Amendment applies only where alternative routes exist.
I am grateful to the noble Baroness for the manner in which she spoke. I am a little disappointed that since her heart seems to be with the Amendment she is so unwilling to allow her head to dwell on the possibility of introducing this as a condition. I would not have been surprised if she had suggested that Clause 7 was drafted in such a way that indeed the question of routing could be dealt with. I was only trying to include in the clause, with the other matters dealt with, including hours during which the site could be used, the matter of routes. I do not know whether the Department would be prepared to have another look at this point, because I do not think it has been sufficiently recognised that this is a particular type of traffic. It can be obnoxious. We are not dealing only with household waste; we are dealing with all kinds of waste. I do not think the Department have thought this one through, if their advice or briefing to the noble Baroness is to reject this Amendment. I should be a great deal happier if I thought there was a willingness to have another go at this one so far as the Department is concerned. If the noble Baroness resists it, well, that is that, but I wonder if there is any point in asking her whether she will have another look at this point.
LORD HUGHES: Subsection (7) lists in paragraphs (a) to (f) conditions which may be made a part of the licence. There is no obligation on the authority to put in one or all of them. The subsection starts by saying, in the usual way of these provisions, "Without prejudice to the generality …" Would it be within the generality which is not to be prejudiced for the local authority to impose a condition which is not listed in paragraphs (a) to (f); and might such a condition in particular circumstances refer to routing?
BARONESS YOUNG: The noble Lord, Lord Garnsworthy, is quite right in saying that I recognise the routing of these lorries as being a very serious matter. I said so at the beginning, and I am sure that this is the view taken by my Department. I perhaps should have said that it is possible to attach to a planning permission conditions concerning the particular entry and exit to a site. This is a quite specific thing that one can do. I tried to explain the difficulties about attaching generally conditions about the routes to these sites. I gave the example of an incinerator; but take another example—a place that is being tipped with refuse. Lorries may come from a great many directions. One can lay down the position of the entry and exit. Then, of course, the tip is complete, so the whole system moves on to another tip. Of course, the roads again will be quite different. It would be a very complex matter to oblige whoever was responsible for tipping this land to see to that in each case. Progressively over some years, the lorries might keep to the roads.
I hope it will be accepted that we are not just being rather obstinate about this and refusing to put something in, but there really are great practical difficulties in attaching such conditions to a site licence.
The noble Lord, Lord Hughes, raised a quite specific point about whether or not it would be possible to attach conditions of this kind. I suspect that it would be very difficult, for the reason I have given, to attach these conditions to a specific site, because it is difficult to attach a condition which the site licensee cannot necessarily enforce. What I think the site licensee could be asked to do is to say to his drivers, "Look; it is obviously convenient for everybody if you go on road A, rather than road B". Furthermore, I think the disposal and collection authorities can draw up some scheme, which they have it within their power to do, to make lorries go down certain roads and not others. That is a completely reasonable way to proceed, but it is different from attaching a condition to a licence. I hope that I have made this difference clear.
LORD GARNSWORTHY: I do not wish to take up too much of the Committee's time, but may I say that the noble Viscount, Lord Amory, does me too
1100
much credit, and I do not want too much credit for being an authority on anything. I usually know where to go, even with my waste when I want to get rid of it. Some years ago the district council where I live proposed to acquire 60 acres of land in the village where I reside. With a number of my neighbours I opposed it as vigorously as I could. That site was acquired and is slowly being developed by the district council. If anybody thinks that there is any virtue in having a controlled tip within the curtilage of a village, or very close to it, then he needs to have one to appreciate what an inconvenience it can be. I speak with some feeling in regard to the use of routes by large lorries transporting this waste. We are dealing here with a situation where it is not only household waste that is being moved: it can be any type of waste. We know the traffic conditions on some of our main routes already. We know the way in which some private vehicles are using private roads. We are getting juggernauts down country lanes and residential roads. The noble Baroness will say that district councils will have to use their ingenuity somehow or other to get over it. If she is not saying that, then what she is saying is that they will be powerless to do anything about it, apart from making suggestions. Wherever any provision can be made to ensure that amenities are not unduly threatened by licensed operators, wherever there is a possibility of taking action, it ought to be taken.
I wonder whether the noble Baroness would have another look at this point. I am grateful to the noble Lords who have given support to the Amendment. The noble Baroness will appreciate that it is not just one Member of your Lordships' House who is pressing this Amendment. Despite the opposition of the noble Lord, Lord Merrivale, I have the strong feeling that the Committee generally are sympathetic to the idea I am trying to put across.
On Question, Amendment negatived.
5.0 p.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 41:
Page 7, line 31, leave out ("or the doing of any other thing whatsoever")
The noble and learned Lord said: This and the next Amendment which goes with it are, quite frankly, drafting, and no more

1101
than drafting. I must be brief. They relate to lines 30 to 34 on page 7 which contain the provision that,
"… it is hereby declared that a condition may require the carrying out of works"
So far so good. I have no complaint about that, although, in parenthesis, I doubt whether it is necessary to include that declaration. But then words follow which I submit are much too wide:
"… or the doing of any other thing whatsoever notwithstanding that the licence holder is not entitled … to carry out the works or do the thing".
If I were an applicant for a disposal licence, my wildest ambitions would be exceeded if I thought I was in that territory, or my hopes might be dashed to despair. Surely that language is much too wide, and language more appropiate to provide the result which is sought to be achieved could be found by Parliamentary counsel. If Ministers would be so kind as to tell me that they will have one more look at that language with their advisers, I should be more than content and would ask the permission of the Committee to withdraw the Amendment. So I hope Ministers will at least be able to say that they will look at that language, which I submit is wildly extravagant. I beg to move.
BARONESS YOUNG: I always feel very considerable hesitation in discussing legal points with the noble and learned Lord, Lord Stow Hill. It might be helpful if I explained the kind of situation which these words are intended to cover. Subsection (7) lays down certain things which conditions attached to disposal licences may cover. The conditions may specify works or things to be done, but it is possible that a licence holder will not always be in a position to carry them out. For example, the conditions may require works to be done on neighbouring land or may require tree planting on land of which the licence holder is only the lessee or not the owner of the site, and the conditions may require him to do things which require the owner's consent.
This subsection makes clear that the authority can validly impose conditions of this kind. It will then be up to the prospective licence holder to secure the agreement of the neighbouring owners or the landlord or owner of his own site to the implementation of any conditions. Not
1102
everything which is covered by a condition under this provision will necessarily be "works". For example, the licence holder may have to survey the land for which the licence will operate or neighbouring land and take measurements or samples. If these two phrases were left out, such activities would be made more difficult. I hope that with that explanation the noble and learned Lord will feel that these words should remain in the Bill.
BARONESS WHITE: I should hate to prevent the noble Baroness from "doing her thing", but she will surely agree that the words as they stand are of such a nature that we cannot intelligently be asked to accept them. The words as they stand are "the doing of any other thing whatsoever". As my noble and learned friend said this is surely the most extravagant language. Can the noble Baroness at least ask her legal advisers in their wisdom whether they can knock out the word "whatsoever", and perhaps say "the doing of any other relevant thing"? That would at least circumscribe the subsection somewhat. I can think of so many things which might be required, which would be very interesting and entertaining but would not be in the least relevant. To use the phrase "any other thing whatsoever" is surely not the way to draft legislation. Quite seriously, I suggest that this is not a phrase which should be included in its absolute form in any Bill, because it is nonsense. I respect the noble Baroness, but I will respect her even more if she will accept that these words really are nonsense and that the word "whatsoever" at least should be taken out. I suggest that perhaps the words "relevant thing" might be substituted.
BARONESS YOUNG: The noble Baroness, Lady White, should know that I am much too conservative a character to feel that I need to use the phrase "do my own thing". I can only say that, when I discussed this Amendment with those who advise me on legal matters, I was given to understand that these words were necessary to cover situations of the kind that I have tried to indicate. Although some Members of the Committee may regard them as unnecessarily wide, licences may have to be given for differ-

1103
ent kinds of sites and different kinds of operations in the disposal field.
LORD STOW HILL: I am grateful to the noble Baroness. I shall not pretend to say that I think she has fully answered the points that my noble friend Lady White and I have made. I suppose that "any other thing whatsoever" might permit me to draw a cheque for £1 million on the Bank of England, though I do not have a penny in an account there. I feel almost inclined to try it. I shall not take up more time on this Amendment. If the noble Baroness feels that the matter is satisfactory as it is—
SEVERAL NOBLE LORDS: No!
LORD STOW HILL: I hear cries of dissent. Therefore I think I should resume my seat, having said that I am very sorry.
LORD HAWKE: I hope my noble friend will have a look at these words, because I cannot possibly vote for the rejection of this Amendment unless she qualifies this unlimited licence to break
the law in any direction, by making the subsection apply only to the running of sites or something of that kind. The words may be necessary in the context of this Bill, but there is nothing to stop a person murdering his neighbour or running a disorderly house if it is authorised by this subsection.
BARONESS WHITE BARONESS WHITE: Amendment No. 42 is consequential on our having passed Amendment No. 41. It will be easy at a later stage for the noble Baroness, Lady Young, to extricate herself from her present situation, but to be logical I should now move Amendment No. 42. I beg to move.
Amendment moved—
Page 7, line 33, leave out ("or do the thing").—(Baroness White.)
5.8 p.m.
On Question, Whether the said Amendment (No. 42) shall be agreed to?
Their Lordships divided: Contents, 61; Not-Contents, 63.

CONTENTS

Amherst of Hackney, L.

Greenwood of Rossendale, L.

Orr-Ewing, L.

Amory, V.

Hanworth, V.

Peddie, L.

Amulree, L.

Hawke, L.

Raglan, L.

Ardwick, L.

Henley, L.

Rea, L.

Arwyn, L.

Hughes, L.

St. Davids, V.

Bernstein, L.

Hyton-Foster, B.

Segal, L.

Beswick, L.

Jacques, L. [Teller.]

Shackleton, L.

Birk, B.

Janner, L.

Shannon, E.

Brockway, L.

Jessel, L.

Shinwell, L.

Caccia, L.

Killearn, L.

Snow, L.

Champion, L.

Lauderdale, E.

Somers, L.

Chorley, L.

Leatherland, L.

Stamp, L.

Clifford of Chudleigh, L.

Llewelyn-Davies of Hastoe, B.

Stonehaven, V.

Davies of Leek, L.

Lloyd of Kilgerran, L.

Stow Hill, L.

de Clifford, L.

Mais, L.

Summerskill, B.

Diamond, L.

Maybray-King, L.

Teviot, L.

Douglass of Cleveland, L.

Melchett, L.

Trevelyan, L.

Emmet of Amberley, B.

Milner of Leeds, L.

White, B.

Gainford, L.

Norwich, V.

Willis, L.

Garnsworthy, L. [Teller.]

Ogmore, L.

Winterbottom, L.

George-Brown, L.

NOT-CONTENTS

Aberdare, L.

Craigavon, V.

Grenfell, L.

Alexander of Tunis, E.

Craighton, L.

Grimston of Westbury, L.

Alport, L.

Daventry, V.

Hailes, L.

Atholl, D.

Denham, L. [Teller.]

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

Auckland, L.

Drumalbyn, L.

Belhaven and Stenton, L.

Dundonald, E.

Harvey of Prestbury, L.

Berkeley, B.

Ebbisham, L.

Ironside, L.

Bledisloe, V.

Eccles, V.

Limerick, E.

Brooke of Cumnor, L.

Elton, L.

Long, V.

Brooke of Ystradfellte, B.

Falkland, V.

Lucas of Chilworth, L.

Cottesloe, L.

Fortescue, E.

Lyell, L.

Courtown, E.

Goschen, V.

McFadzean, L.

Cowley, E.

Gowrie, E.

Mancroft, L.

Massereene and Ferrard, V.

St. Aldwyn, E. [Teller.]

Tenby, V.

Merrivale, L.

St. Helens, L.

Thomas, L.

Milverton, L.

Sandford, L.

Trefgarne, L.

Molson, L.

Sandys, L.

Tweedsmuir, L.

Mowbray and Stourton, L.

Selkirk, E.

Vivian, L.

Northchurch, B.

Sempill, Ly.

Waldegrave, E.

Nugent of Guildford, L.

Strathcona and Mount Royal, L.

Ward of Witley, V.

Onslow, E.

Young, B.

Pender, L.

Strathspey, L.

On Question, Amendment agreed to.

5.17 p.m.
LORD STRATHCONA AND MOUNT ROYAL: We have already dealt with this Amendment under Amendment No. 37. I therefore beg to move.
Amendment moved—
Page 7, line 33, at end insert—
("(7A) The holder of a disposal licence who without reasonable excuse contravenes a condition of the licence which in pursuance of regulations made by virtue of subsection (6) of this section is to be disregarded for the purposes mentioned in that subsection shall be guilty of an offence and liable on summary conviction to a fine not exceeding £400; but no proceedings for such an offer shall be brought in England and Wales except by or with the consent of the Director of Public Prosecutions or by the disposal authority which issued the licence.")—(Lord Strathcona and Mount Royal.)
LORD CRAIGTON LORD CRAIGTON moved Amendment No. 44:
Page 8, line 8, leave out ("rejected") and insert ("accepted").
The noble Lord said: This Amendment is rather like the one on which your Lordships' Committee has just divided. I do not understand the position. I hope noble Lords will understand it better than I do. As I read it, if I apply for a disposal licence and the disposal authority do not like it, they can ignore it; or if something goes wrong my application can be dropped into the wastepaper basket. I hear nothing for two months, so I apply again; and the second time all the disposal authority have to do is to ignore my application. This could go on indefinitely, and I seem to have no rights or recourse. Surely my noble friend will provide for the authority, at some juncture, at least, to send me a postcard notifying me that my application has been rejected. That is the only point, and I beg to move.
LORD MERRIVALE: I, too, hope that my interpretation of this Amendment is
1106
correct because I should like to support it. As I understand it, this Amendment has the merit of providing for a reasonably rapid determination of an application for a disposal licence, and it should satisfy the applicant that his application is being responsibly considered. As I understand it, as the Bill stands at the moment, a licensing authority will be allowed to refuse a licence just by default. This would surely be unfair to the applicant, as well as undermining co-operation between the two parties. If this is right, and the noble Lord is right, too, we hope that this Amendment will be accepted.
5.20 p.m.
BARONESS YOUNG: The purpose of the clause as drafted is that when an applicant applies for a disposal licence the same general principles will apply as apply in respect of an application for planning consent. As the Committee will be aware the provision for deemed refusal of a planning consent comes after two months. If this Amendment were agreed, and an applicant applied simultaneously for planning permission and for a site licence—which is a possibility—with the law as it stands, under the planning procedures if he had not heard anything after two months it would be deemed a refusal; under the licensing procedure it would be deemed an acceptance. This would make for a very confused situation. It is simply in order that the licensing procedure should be in line with the planning procedure that the clause is drafted in this way.
BARONESS WHITE: I finally understand that, but is the planning procedure a good one? Anyone who applies for anything of consequence, such as this, surely should at least receive a postcard acknowledging the application. It seems to me that instead of improving the planning procedure we shall be allowing the licensing procedure to go the same bad way. I think that the noble Lord, Lord Craigton, is on a perfectly sensible point. At the very least one ought to have some com-

1107
munication. It is very rude not to reply to someone who has put in an application for something which, as I say, is in this case something of consequence. It does not necessarily have to be a very lengthy reply, but at least some acknowledgement should be made of the fact that an application of this kind is either to be accepted or rejected or a longer period could be agreed in order to give it adequate consideration. That is another matter. But should one simply, without any sort of protest, accept a procedure which I think that any of us in our business or private lives would regard as wholly objectionable?
BARONESS YOUNG: I think this argument is based on a mis-reading of this part of the clause. I do not think there is any indication suggesting that if someone applies for a site licence he will not receive an answer to his application, or that the application would go through on the nod if the Amendment was accepted. I should have thought that the ordinary or common courtesies, or the normal procedures on an application, would apply; that is, that there is this statutory limitation under planning permission. It does not mean to say that a person applying does not expect to get a reply.
LORD CRAIGTON: I am still not very clear about this. If it could be ensured that on receipt of his application the applicant would be told, "Unless you hear from us within two months, the licence may be deemed to be refused", that is all right. I do not know whether all the applicants will understand that from the way in which the clause is drafted. It is a most peculiar provision. I agree with the noble Baroness, Lady White. Would not my noble friend look at this again to see whether a courteous acknowledgement could be made of the application, or the applicant to be told later, "We are sorry, but your application is refused"?
BARONESS YOUNG: I think this a rather theoretical argument. I do not think one could read into this clause the suggestion that people will apply for site licences and will not get replies, and then that there would be just a refusal with the suggestion that the application had got lost in the post or gone into
1108
somebody's in-tray and never been removed. After all, one could not just have deemed consent without anything in writing to indicate that the disposal authority had given consent. I think it is quite clear that the disposal authorities would adopt the practice of issuing a refusal with an explanatory letter as a holding operation if they had been unable to reach a decision at the expiry of the time allowed. In any case, an applicant would not want to spend substantial sums of money on a site and get everything prepared unless he had definitely in writing that his application for a licence would be accepted. Therefore in practical terms I do not think that you could have a deemed consent, because I do not think any licensee would act on it. I think, as I say, that the disposal authority would feel that they would have to attach model conditions which would be automatically applicable, but might have to be altered in the particular circumstances. I think there would be a number of difficulties. That is the reality of the situation and not the way that some Members of the Committee have seen it.
LORD CRAIGTON: Perhaps I can give the noble Baroness a way out. I am not asking for deemed consent but a postcard notifying the objection; that, and no more. Under this clause that is not required. I am asking just for the courtesy of a postcard.
LORD HAWKE: I am on the side of the noble Baroness, Lady Young. Could not she substitute something to the effect that the authority must make a decision within two months unless they approach the applicant and arrange some longer period?
BARONESS YOUNG: When we were discussing the clauses concerned with how the licensing procedure would work, we had various debates about the water authority being consulted, and the collection authority, and so on. All this would take a certain amount of time. What the Bill says in effect is that if someone applies for a licence and does not hear definitely within the two months that he has got the licence—which is the period within which we would hope that he would hear something—he can assume that it will be refused. But otherwise he will get a letter saying that it will be accepted. The fact is that I cannot look

1109
at this Amendment as it stands because, in effect, it does not say what the noble Lord, Lord Craigton, is asking. It is saying that at the end of two months the person applying for a licence must get it without actually having that in writing. I think that is something which we could not accept. If the noble Lord, Lord Craigton, is saying, "Well, of course, the applicant ought to hear", that is a matter for the disposal authority. Surely one would not write into the Bill that the disposal authority must acknowledge the receipt of an application for a licence.
LORD GARNSWORTHY: Why not?
LORD CRAIGTON: Why not acknowledge the receipt of the application and say, "We are sorry, but we are rejecting your application."?
LORD HAWKE: What I object to is having either a deemed acceptance or refusal after a period of time. We all know that the Post Office is not quite so efficient as it used to be when I was young, and it may well be that something has gone astray in the post. There may be a postal strike. It seems wrong that anyone should have to assume that his application has been accepted or rejected at the end of two months when in reality the position may be the exact opposite but the applicant has not received a communication.
BARONESS YOUNG: In the provisions of this Bill we cannot be responsible for the vagaries of the Post Office, or whether or not things arrive. I can only say to the Committee that I am unable to accept this Amendment. I will give an undertaking to read carefully everything that has been said, and if there is something which we feel is not clear we will have a look at it. However these words may sound, the system has worked very well so far as planning applications are concerned, and they have been going on now for a considerable length of time. The question of the two months applies because within the timetable laid down this is when the authority expect to give an answer, and if it does not it is a deemed refusal.
LORD HUGHES: Having undertaken to have a look at this, will the noble Baroness, Lady Young, consider redrafting it altogether so that there is no reference to a period of two months; thus
1110
laying down that when the authority have made a decision on the matter they shall inform the applicant whether his application has been accepted or refused? The period of two months does not seem to have any meaning. If they have not decided the matter at the end of the two months, it is to be taken that it has been rejected, when in fact the matter may take three months and at the end of that time the authority may decide to accept the application. I think that a complete redrafting is needed.
LORD CRAIGTON: I am grateful to the noble Baroness for the explanation. The same point arises on Clause 37 and perhaps we may then consider this matter further. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 4, as amended, agreed to.
Clause 5 [Variation of conditions and revocation of licences]:
5.31 p.m.
LORD HENLEY LORD HENLEY moved Amendment No. 45:
Page 8, line 32, leave out from ("which") to ("will") in line 33.
The noble Lord said: My Amendment would cut out the words, "which, in the opinion of the disposal authority". In the Bill as it stands, Clause 5 deals with the variation of conditions and the revocation of licences, and the disposal authority may disregard any other authority for the purpose of the provisions of this subsection in relation to a modification "which, in the opinion of the disposal authority", will not affect any other authority. It seems to me that this is going too far and gives virtually complete discretion to a disposal authority to ignore the wishes of the water authority. In arguing an earlier Amendment, I stressed how very important it seemed to me that the water authority should have the last say. This view has not been accepted by the noble Baroness. I think it is generally agreed that the question of pollution is so important to the water authorities that at every point there must be the fullest co-operation, consideration and agreement. The wording in the Bill is altogether too strong and I should like to see it come out. I do not think it should be left to the discretion of the disposal authority as to whether in fact

1111
a matter does or does not affect another authority. I believe that this discretion should rest with the water authority, and I beg to move.
BARONESS YOUNG: The noble Lord, Lord Henley, feels that this particular part of Clause 5 has the effect of giving too much power to the disposal authority which can decide when to consult and when not to consult about proposed modifications. The clause as worded gives the disposal authority the right not to consult on what is a relatively small matter. One must assume that a statutory body such as a waste disposal authority will act with responsibility and that there will be some matters concerning the licence which will be of such insignificance that it would be overburdening the water authority to consult them. The provision must be read in conjunction with the need to consult the water authority and the collection authority about the disposal licence; and, of course, to consider any modifications that the water authority may propose when the licence is originally issued. It really comes down to whether one feels that the disposal authority will act with responsibility in this matter. I also think that, having consulted the water authority on the issue of the licence and the modification to it, this right of the water authority to take the matter to the Secretary of State is written in simply so that if it is a minor matter that is in question it can be dealt with without further consultation.
LORD GARNSWORTHY: It seems to me that the noble Baroness ought to say something, so that we may have it on the Record, about how one decides what is a relatively minor matter. I do not think it is good enough that a disposal authority should be able to determine this for itself. Could the noble Baroness say anything to clarify the position?
BARONESS YOUNG: I do not think I can accept that last statement of the noble Lord, Lord Garnsworthy. After all, the disposal authority—which will be the county council—must be a responsible body, advised by responsible officers. Perhaps the condition might be, for instance, about some variation of the matter we have referred to on tree planting, or the appearance of the site. Or it might be concerned with some varia-
1112
tion over the way tipping is being done—whether from North to South or from South to North. This might be a matter for variation in the licence which the disposal authority, having consulted the water authority originally as to whether or not the site should be tipped, could deal with itself. I have no doubt that, if I set my mind to it, I could think of many other instances; but I believe it is reasonable to assume these would be small matters, the basic principles having been decided. Therefore, I think one should leave them to a responsible authority.
LORD HENLEY: This is very much the answer that I expected to receive from the noble Baroness when I put down my Amendment. I have another Amendment later and perhaps I might consider whether it is worth while wasting your Lordships' time in putting forward that Amendment. I do not know whether the noble Baroness is afraid that cutting out these words would leave it open for disputes to go to litigation. I should rather doubt this. I agree that the matters with which they would mostly be concerned would be minor matters and there would be no question about their relevance in regard to the water and disposal authorities. Nevertheless, I do not very much like these words. They put into the hands of the disposal authority a weapon which could be a little awkward for a water authority. Although I accept many of the arguments put forward by the noble Baroness, I cannot see what objection, other than her possible fear of litigation (and as I have said, I think this is unlikely), there can be to taking out these words. I am disappointed, and before I ask leave to withdraw this Amendment I would ask the noble Lord, Lord Garnsworthy, whether he wishes to add anything.
LORD GARNSWORTHY: No; I think not.
VISCOUNT AMORY: After listening to the arguments which have been put forward, I think I must come down in favour of the clause as it stands. Somebody has to decide a matter like this and it is by definition a matter which would affect the disposal authority alone, if it interpreted the matter aright. In a case like this I should have thought we could safely leave it to a responsible

1113
body to make its decision responsibly. I agree with some of the arguments put forward by the noble Lord, Lord Henley, but I think that in the end I must come down personally in favour of leaving the clause as it stands.
LORD HENLEY: The point I really wanted to make is that the interest of the water authorities in this kind of matter is paramount. It is more important than anything else. If that goes wrong, as I tried to point out earlier, and if underground sources of water once become polluted, they may never become unpolluted. This is why I feel so strongly that in every case the whip hand should rest with the water authority. Nevertheless, I do not think there is much more I can say, except that I should like to make it quite apparent that I believe the interests of the water authority ought to be paramount. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
5.39 p.m.
LORD MERRIVALE LORD MERRIVALE moved Amendment No. 46:
Page 9, line 2, after ("time") insert ("which shall not be less than 2 years from the date of the notice").
The noble Lord said: I beg leave to move this Amendment and I should also like to speak to Amendments Nos. 54A and 59A, because there is a common theme linking the three. This Amendment is concerned with giving the licence-holder sufficient time to enable him both to make effective forward plans and also to justify his investment. I am sure my noble friend would agree that before disposal of waste can take place the licence holder will need to prepare the site and, in many cases, to prepare the waste itself. This procedure around the world could, in a number of cases, involve a fairly considerable capital expenditure. I am advised it could reach a figure as high as several hundred thousand pounds. Regarding the preparation of the waste, some of it may require chemical treatment; acid waste has to be neutralised; certain wastes require de-watering; wet, oily waste cannot be incinerated direct, and so forth. There is a fair amount of preparation involved.
To come to the question of incineration, such equipment is very expensive, and, when it is required, the pre-treatment and disposal can also be quite an expensive business. I hope that the Minister will consider this Amendment to be reasonable, for it seeks also to bring disposal into line with that which exists on water pollution control. Section 60(2) of the Public Health Act 1961 states:
"No direction shall be given under subsection (1) of this section within two years from the date of the consent or, where a previous direction has been given under that subsection, within two years from the date on which notice was given of that direction, but this subsection shall not prevent a direction being given before that time with the written consent of the owner and occupier of the trade premises, and any direction given with such consent shall not affect the time at which any subsequent direction may be given."
That quotation is relevant to what we are considering now and as the period of two years was mentioned in the 1961 Act and it seems reasonable, so I would have thought it could be reasonable in this Bill.
As I am also speaking to Amendments Nos. 54A and 59A I should like to refer to the ways in which mineral operators could be affected should my Amendments not be accepted. Mineral operators more often than not have a liability under their planning consents to restore with a condition requiring in-filling with available wastes. They may well as an alternative have a separate consent for tipping where the mineral working consent is not specific on the point. Mineral working and restoration is often progressively interlinked; they are very relevant to each other. Therefore, any revocation or modification of a licence to tip can result in substantial losses to the mineral operating company. To quote examples, these losses could include direct loss of tipping revenue and direct loss of quarrying and associated revenue as a result of not being allowed to win and work the minerals, and loss of the residual value of the land. Society as a whole could also lose the benefit of a proper and full after-use of the site. Also the revocation or modification of a tipping licence could result in effectively nullifying planning consent, and various matters with reference to this, without the authority having to pay compensation, as provided for in the

1115
planning Acts, for revocation or modification of a planning consent.
Regarding Amendment No. 46, it is essential that a time limit, two years, be specified in the Bill as only then can the licence holder make forward plans with the knowledge that they can be implemented. For forward planning to be effective and efficient a minimum period of two years within which the conditions of a licence should not be modified, or the licence revoked, is generally required. Of course my noble friend Lady Young might say that a period of two years is too long, should an emergency situation arise. In this case I would agree with her: but if an emergency situation should arise then in such a case, as in Part II of this Bill under Clause 38(1), a small clause or subsection could be inserted into Part I of this Bill, to the effect that an authority may give such a direction within the period mentioned—in other words two years—if the authority considers it necessary to do so in order to provide proper protection for persons likely to be affected. I sincerely hope that my noble friend will consider this Amendment very favourably and also think it is reasonable and logical.
5.48 p.m.
LORD GARNSWORTHY: When I read the Amendment tabled by the noble Lord, Lord Merrivale, I did not feel I could have much sympathy with it. Having listened to him I am left with the feeling that he is asking for a great deal. I feel he is probably over-concerned with the financial consequences to the licensee. I would have thought that, looking at subsection (3) of the clause, which says:
"Where a disposal licence issued by a disposal authority is in force and it appears to the authority—

(a) that the continuation of activities to which the licence relates would cause pollution of water or danger to public health or would be so seriously detrimental to the amenities of the locality affected by the activities that the continuation of them ought not to be permitted; and

(b) that the pollution, danger or detriment cannot be avoided by modifying the conditions specified in the licence,

it shall be the duty of the authority by a notice served on the holder of the licence to revoke the licence."'
what the noble Lord wants is the licensee to have authority to continue for a period
1116
up to two years. If I am wrong, I am doing the noble Lord a service in raising the query.
LORD MERRIVALE: As I understand the noble Lord, Lord Garnsworthy, he is referring specifically to the position should an emergency situation arise. I am asking that a time limit should be specified in the Bill. At the moment there is no time limit. It has been specified under the Water Pollution Act and therefore, while agreeing totally that if an emergency situation arises immediate action should be able to be taken, if there is not an emergency it is only fair and reasonable, apart from financial considerations, that the licence holder should have the specific time that he knows he can have to prepare the site, the waste, and so forth. It is not just a financial question. I agree with the noble Lord, Lord Garnsworthy, that if an emergency situation arises it is quite different.
LORD GARNSWORTHY: I am grateful to the noble Lord for what he has just said, but I should have thought that from what is set out in subsection (3) all of it is of an emergency nature. When I am moving Amendments, I am being continually told, and I agree, that the disposal authorities will be responsible bodies, responsible people serving on them, staffed by responsible officers. I should have thought that what is provided in subsection (4) is adequate; namely,
"A notice served in pursuance of this section shall state the time at which the modification or revocation in question is to take effect."
I want to make it quite clear that we on this side of the Committee can have, not merely a little, but no sympathy at all with the Amendment that is being moved.
LORD HAWKE: When I saw my noble friend's Amendment, as a confirmed water-drinker it filled me with very considerable alarm. But in the course of the debate it appears that there seems to be some saving clause or long-stop for the pollution of water, and that is not going to be permitted to be carried on for two years while the contractor pulls out of the site. On public health, I suppose there is probably something in the Public Health Act which would allow them to close the thing down quickly. But is there any legislation

1117
which would permit closure in under the two years, in the case of the tipping being seriously detrimental to the amenities of the locality? I can well imagine that if somebody is alarmed about the possible or the actual effects of what is happening on the locality, to allow it to go on for another two years might be quite disastrous. I think that my noble friend Lady Young will probably reject this Amendment out of hand.
LORD MERRIVALE: If I may just answer the point made by the noble Lord, Lord Garnsworthy, I think he is making rather heavy weather of my Amendment. Subsection (4) of Clause 5 of the Bill as it stands at the moment says:
"A notice served in pursuance of this section shall state the time at which the modification or revocation in question is to take effect."
All I am asking is that a period should be stated. The time will have to be mentioned. All I am saying is "Put in a date, or put in a number of months or years". The Bill already says that the time will have to be stated; so I cannot see that there is anything wrong in stating a specific time limit.
LORD GARNSWORTHY: I can only say in reply to the noble Lord that he pleads that all he is saying is what his Amendment sets out. Words would fail me if his appetite were greater.
5.54 p.m.
BARONESS YOUNG: The noble Lord, Lord Merrivale, has indicated that he is speaking to three Amendments; and they all have, I believe, as an underlying objective that licence holders should have reasonable security against any sudden variation in the conditions of their licence. The first one, Amendment No. 46, to which he has been speaking quite particularly, says that a licence condition by a disposal authority could not take effect for two years so that the operator would have at least that period of security of operation. As I understand Amendment No. 54A, disposal authorities would be prevented from making a variation of conditions to take immediate effect before there was an appeal. Under Amendment No. 59A an operator would be given a right to compensation.
1118
These, as I say, all have an underlying objective giving the licence holder a degree of security against any kind of sudden change in the conditions of the site licence. I should like to say at the outset that I recognise that the noble Lord has a very real point here and that the Government are sympathetic to this particular need. The licence holders will be performing a task of great importance to the community, whether they are local authority undertakers or private operators. Obviously, we do not want to put any unnecessary obstacle in their way. The fact is that problems of waste disposal will involve increasingly sophisticated technical methods; they will increasingly involve quite substantial investment. The days when someone involved in disposal indulged in casual tipping, and tipping generally, will be increasingly restricted. In these circumstances, firms which undertake this necessary work must have a reasonable degree of security so that they can plan ahead and do precisely the kind of things, with the kind of benefits to the community as a whole, that we want them to do. They must be able to make their investments with a reasonable degree of confidence.
We do not want unnecessarily to increase the risks of operators, and we want to give them some security where this is right. I think the noble Lord, Lord Merrivale, indicated particularly mineral workings and restoration and the loss which could come if these were abruptly changed. On the other hand, of course, as other noble Lords have indicated, if conditions are unsatisfactory on a disposal site, it is an essential prerequisite of the Bill that the disposal authorities should be able to step in and ask for immediate improvements. It would therefore be really most unsatisfactory to have to wait two years before any improvement could be made. I do not think we could contemplate paying compensation for requiring operators to operate without causing pollution or danger to the public. Clearly in any kind of emergency we must step in and deal with the situation, as of course the noble Lord, Lord Merrivale, has quite rightly recognised. It is for these reasons that I cannot accept this Amendment as it stands.
However, as I said, we are sympathetic to the general objective that lies behind

1119
it and we propose to consider whether any greater security can be given to an operator once he has a licence, by laying down explicitly in the Bill that once a licence has been issued it shall not be unreasonably varied or shall only be varied where there is good reason to do so in order to secure satisfactory standards of operation. This is the kind of security which we hope will meet the fears of the licence holders and the operators in the disposal field. I hope that with that assurance the noble Lord, Lord Merrivale, will feel able to withdraw his Amendment.
LORD HUGHES: May I ask the noble Baroness whether, in giving that assurance, she will also give the assurance that none of the words in Clause 5(3) will be taken out of the Bill?
BARONESS YOUNG: We do not intend in any sense to weaken the provisions which are, as noble Lords have quite rightly indicated, crucial on pollution of water and danger to public health. The material words are "seriously detrimental to the amenities of the locality." These are basic principles. We do not intend to detract from them at all.
LORD MERRIVALE: I should like to thank my noble friend for her considered reply. I am sorry that she does not feel able to accept the Amendment as it stands at the moment. I am very glad indeed that she has some sympathy for it and also feels that the licence holders need some security of tenure. The point I should like to ask her now is this. She said that there should be a condition, which would be put in, about a licence: that this licence would not be unreasonably varied within a period of time. Why is it that subsection (4) of Clause 5 says:
"A notice served in pursuance of this section shall state the time at which the modification or revocation in question is to take effect"
if one cannot get some idea of what is meant by "the time"? I had hoped that those words could have been qualified by the words of my Amendment:
"which shall not be less than 2 years from the date of the notice".
If noble Lords think that two years is too long, there should nevertheless be some mention in the Bill as to what would be considered a reasonable period of time.
1120
A licence would not be unreasonably varied, but there is no mention in this assurance of any time limit, while on the other hand the question of time is mentioned in the subsection. I would ask my noble friend whether she could give some kind of assurance, or clarify what is meant as regards the question of time.
BARONESS YOUNG: My understanding of this subsection is that the reason why a particular time is not specified is that conditions could vary, and whereas it might be possible to state that one condition should be fulfilled, say, within three months, it might well be that a certain practice would have to stop immediately, or some other condition would take a year to comply with. Therefore, it would be difficult to put in a time. Perhaps to indicate my consistency of view in this matter I might say that one must accept that the disposal authority will act responsibly. Furthermore, one must accept that the disposal authority, too, will want to ensure that those licensed to dispose of waste will be acting efficiently. So it, too, will have an interest in ensuring that those organisations, whether its own or private operators, have the opportunity to act as efficiently as they can. Therefore, it will not wish to vary a site licence in some way so as to prevent it from acting in that manner.
LORD MERRIVALE: I am not entirely happy, but am grateful to my noble friend for the extra clarification. With these few words, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Transfer and relinquishment of licences]:
6.3 p.m.
LORD STRATHCONA AND MOUNT ROYAL LORD STRATHCONA AND MOUNT ROYAL moved Amendment No. 47:
Page 9, line 4, leave out from ("may") to end of line 7 and insert (", after giving notice to the authority which issued the licence that he proposes to transfer it on a day specified in the notice to a person whose name and address are so specified, transfer the licence to that person; but a licence in respect of which such a notice is given shall cease to have effect on the expiration of the period of two months beginning with the date on which the authority receives the notice unless during that period the authority gives notice to the transferee that it accepts him as the holder of the licence.")
The noble Lord said: On behalf of my noble friend Lady Young I beg to move Amendments Nos. 47 and 48, and I should like to speak to them together. These are really legal and technical Amendments intended to clarify the arrangement for the transfer of licences. The general intention of Clause 6 is to ensure that if a new owner or a new occupier takes over a disposal operation he has either to obtain a new licence or secure the agreement of the authority to carrying on the old one. A new operator may run the business in a very different way. It is therefore thought right to give the authority this opportunity to vary the conditions if that should happen. However, the new operator is to have a two months' period of grace in which to re-apply. These two Amendments to this clause make this intention clearer. We are distinguishing here between the case of the assignment of a licence—that is to say, on the sale or the conveyance of a site—and the transfer by the operation of law; for example, on the death or the bankruptcy of the licence holder. I beg to move.
LORD CRAIGTON: My noble friend referred to a two months' period during which the operator could re-apply. I am a little worried. I have not understood the meaning of the words "on a day specified" in the third line of the Amendment. As I see it, there are alternatives. The holder tells the disposal authority that he proposes to transfer the licence forthwith, in one case. He does it and for two months there is silence, during which the new holder operates the licence, and then the disposal authority tells the new holder whether or not he is accepted. That is possible if the day specified is the day of the transfer. Or on the other hand—and I think this is probably more likely—is it intended that the day specified for transfer should be at least two months later than the date of the notice given to the authority, in which case the day specified perhaps ought to refer to one two months after the date of the notice? I do not necessarily expect my noble friend to reply now.
LORD STRATHCONA AND MOUNT ROYAL: We are here going into a technical drafting question. Perhaps we
1122
might write to the noble Lord after we have had another look at this point.
LORD HENLEY: I hope that in having this Amendment accepted the Government will bear in mind that it needs qualifying by the kind of provision that I have put in the Amendment which is to follow, No. 49, which is to try to prevent the unloading of responsibilities which might happen under a transfer. Have the Government that point in mind?
LORD STRATHCONA AND MOUNT ROYAL: We are in a slight difficulty now as to whether we are speaking to Amendment No. 49 at the same time as No. 48. I do not want to give the same answer twice over to a single point. Would it be acceptable to the noble Lord if we left this matter until we took Amendment No. 49?
BARONESS WHITE: It would be for the convenience of the Committee to discuss these Amendments together. Whether or not the Government are proposing to accept the Amendment of the noble Lord, Lord Henley, affects our attitude to the Government Amendments.
LORD HENLEY: Would it be convenient if I spoke now to my Amendment, which has a considerable effect upon the Government Amendment? The position at the moment is that Clause 6(4) gives a licence holder a straightforward power to cancel his licence. If he does that, there is a danger that a man in a difficult situation—and that difficult situation might be caused by reason of breaches of condition, or by the need to spend money on complying with conditions when the disposal licence is no longer economically viable—will unload his responsibilities. My Amendment prevents that from happening by saying that such a cancellation shall not prejudice or affect anything. I rather expect that the Government accept that point, and that they are willing, if not to accept my Amendment, at any rate to draft one of their own to cover this gap. It is important that their own Amendment, No. 47, dealing with transfer, should also be qualified by the same provisions as are in my Amendment, No. 49. I am speaking to the Amendment, but would the noble Lord like to say now what he feels about that?
LORD STOW HILL: Could the noble Lord say just one word about the question of transfer by operation of law; that is to say, the matter dealt with by Amendment No. 48? If the licence holder dies, I suppose the effect of subsection (2) of Clause 6 is that the licence vests in his personal representatives. I suppose that in due course his estate is administered and the beneficiaries who will inherit, either under a will or on an intestacy, will become entitled to his land, that being land to which the licence relates. I do not quite understand the mechanism with regard to the two months in that case. I am not suggesting that it does not work properly but I think we ought to know how it works. The licence holder dies; automatically the licence goes to his personal representative and in due course the estate is administered. If that should take place it is unlikely to take place within two months. If it does take place within the two months then I suppose the licence goes to the person who inherits the land in question. If it takes place after two months, what happens? Does the licence lapse at the end of two months? How does the whole thing work? I should be grateful if the Minister would expatiate on that a little more fully so that one knows the result of the vesting by operation of law.
6.12 p.m.
LORD STRATHCONA AND MOUNT ROYAL: As so often happens, the noble Lord, Lord Stow Hill, has raised a point which I think it would be unwise for me to answer immediately. This is my immediate reaction. I think he is raising a point about the case where for some reason or other the inheritor of a site has been unable to apply within the two months' period. My immediate reaction is that probably it would have to be the subject of a new application starting from scratch. I think that if one could do the two months' transfer that would be a more convenient arrangement. However, I think we should take advice on this point and I will let the noble Lord know if I have got it wrong, as there is certainly a chance that I have.
LORD STOW HILL: I am very grateful to the noble Lord.
LORD STRATHCONA AND MOUNT ROYAL: As regards the point raised by the noble Lord, Lord Henley, I would say right away that we are very sympa-
1124
thetic to the underlying purpose behind his Amendment, No. 49, but in general it is thought that the Amendment as it stands is unnecessary, though there can be no question that what he seeks to do is something which the Government are determined must happen. I am advised that the fears underlying this Amendment are possibly over-stated. There is no doubt that the liability to prosecution, if offences have been committed before the licence is given up, will survive the cancellation of the licence. In a sense that is possibly the short answer to the point which I think the noble Lord is making. I can go further than that if he wishes, but perhaps I may leave it at that for the moment.
LORD HENLEY: If the noble Lord can assure me that without my Amendment there is no possibility of somebody wriggling out of his responsibility in this very important matter I shall be quite happy to accept that. But of course I should want to look at it more closely and should need to be advised where the legal provisions are, either inside the Bill or outside it, to enable this to be absolutely secure. If it is secure I am entirely happy, but I do not know what anybody else feels about it.
LORD STRATHCONA AND MOUNT ROYAL: First of all, I am advised that this is believed to be the situation, and of course the Government will check that that is indeed the case. There is, however, a further point. It is just possible that we might need to create powers to ensure that conditions are actually complied with before cancellation, but that is certainly not something that can be achieved by this Amendment. That is another point that the Government have in mind to look at further.
LORD HENLEY: I am much obliged to the noble Lord.
LORD STRATHCONA AND MOUNT ROYAL: I beg to move Amendment No. 48.
Amendment moved—
Page 9, line 8, after ("If") insert ("by operation of law").—(Lord Strathcona and Mount Royal.)
Clause 6, as amended, agreed to.
Clause 7 [Supervision of licensed activities]:
6.16 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 50:
Page 9, line 23, leave out from ("or") to ("health") in line 24.
The noble Lord said: In moving this Amendment I do not in any way wish to detract from the protection which Clause 7 seeks to give to the public by requiring the appropriate authorities to ensure that water is not polluted, that danger is not caused to public health or that there is no detriment to the amenities of the locality by reason of licence activities. On the contrary, the Amendment is intended to remove what appears to be something of a muddle, which apparently arises because of the confusion of functions between the responsible authorities. There is an area of sensitivity here which I suppose was inevitable once it was decided to divide functions in regard to this matter of waste collection and disposal.
Under the Public Health Acts it will be the statutory duty of the district councils to cause their districts to be inspected for conditions which are a nuisance or prejudicial to health, and to take appropriate action. It therefore seems both unnecessary and potentially confusing to put a similar duty upon the disposal authority, the county council, by this clause, since it could well be that each authority will expect the other to act and, in the event, effective action may not be taken. This Amendment therefore seeks to focus attention on the point by eliminating from the duty on the disposal authority the element which is the responsibility of the public health authority.
There is some concern about the likely effect of this Bill on the public service in regard to manpower which is under very heavy pressure, and it is desirable, as I think everybody will agree, that unnecessary duplication and waste of resources should be avoided. Many district councils feel that as the responsible authority for dealing with public health matters, and in order to avoid wasteful duplication, they ought to be used by the waste disposal authorities under agency arrangements. It can do no
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possible harm if district councils, who are the public health authority and who have the necessary staff, do this work on behalf of the disposal authorities. I beg to move.
BARONESS YOUNG: The noble Lord, Lord Garnsworthy, in the course of the Committee stage of this Bill, has on many occasions argued most forcefully for the responsibilities of the district councils, and I appreciate that they do have a very responsible role to play in local government. I think the difficulty about this Amendment is that if it were agreed to it would mean that waste disposal authorities would not have a duty of ensuring that licensed disposal operations did not cause a danger to public health. We have had a great deal of discussion about the kind of things to which a disposal authority must have regard, and I think it has been agreed that the pollution of water, the danger to public health and activities which would be detrimental to the amenities of the area are three basic principles that run through Part I of the Bill.
If we took this particular part of this clause out of the Bill at this stage I think it would weaken the effectiveness of the disposal authorities. We are most anxious to ensure that a public authority has a continuing duty to ensure that the standards of operations are satisfactory and that there is no danger to public health. The statutory nuisance code, which is of value, can only be used where a nuisance is actual or is apprehended. What we really want is a continual overseeing of the site to make quite sure that the standards which we regard as appropriate for to-day are maintained. I hope that with that explanation the noble Lord will feel able to withdraw his Amendment.
VISCOUNT AMORY: It occurs to me that this Amendment might have rather the opposite effect to that which the noble Lord, Lord Garnsworthy, hoped it would have by giving to two statutory authorities an interest in the same site. I think if that were to happen it might derogate somewhat from the fairly clear responsibility which at present lies on the disposal authority, and which I think properly should lie on the disposal authority.
LORD GARNSWORTHY: I am most grateful to the noble Baroness, Lady Young, for what she has said. I also appreciate very much the point made by the noble Viscount. Lord Amory. I think

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it was necessary at some stage during the consideration of the Bill that this matter should be raised and discussed. If there is no hope of this Amendment being accepted by the Government there will be no point in moving Amendments Nos. 51 and 60. The noble Baroness has made it quite clear that the Government are firm on this matter, and I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.21 p.m.
LORD CRAIGTON LORD CRAIGTON moved Amendment No. 52:
Page 9, line 35, at end insert ("and shall notify the holder of the disposal licence").
The noble Lord said: Subsection (2) of Clause 7 is a quite proper provision for carrying out emergency work, but as drafted there is no obligation at all to notify the holder of the licence, from whom, after all, the cost of the work has to be collected later. I beg to move.
LORD STRATHCONA AND MOUNT ROYAL: The Committee will recall that this was mentioned when we discussed Amendment No. 26 which was moved, I think, by the noble Lord, Lord Garnsworthy. The view of the Government is that this is a sensible suggestion, but there is the question of harmonising the actual detail of the wording between this Amendment and Amendment No. 26, which works the opposite way round. If the noble Lord, Lord Craigton, will withdraw this Amendment we will certainly undertake to bring in Amendments to deal with these two points and to make sure that they work well together.
LORD CRAIGTON: I am grateful to my noble friend and ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
BARONESS YOUNG: I beg to move Amendment No. 53.
Amendment moved—
Page 10, line 4, after ("3") insert ("or 4(7A)").—(Baroness Young.)
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 54:
Page 10, line 12, at end insert—
("(5) Without prejudice to subsection (1) of this section, where it appears to a disposal
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authority that by reason of a condition specified in a disposal licence not being complied with that a danger to public health or serious detriment to the amenities of the locality is thereby occasioned the authority may serve on the licence holder a notice prohibiting him from carrying out or continuing any specified activities.").
The noble Lord said: In moving this Amendment I should like at the same time to speak to Amendments Nos. 55 and 56. The purpose of this Amendment is to plug what appears to be a gap in the Bill. Under Clause 7(1) the disposal authority may take emergency action to safeguard public health and the amenities of a locality. It can go in and do work and put matters right. But there may be an emergency where, because of a breach of operating conditions, the proper thing to do is to shut down the site or to forbid certain operations without first going through the procedure envisaged in Clause 7(4), by serving a notice on the licence holder requiring the remedying of the breach in a stipulated time. The Amendment accordingly enables the authority to serve a "stop" notice. However, where it could be shown that the authority had acted unreasonably there would be justification for the payment of compensation and the Amendment provides for this by adapting Clause 8. I beg to move.
LORD MERRIVALE: Is this Amendment absolutely necessary? Is not the point already covered by Clause 7(4), as mentioned by the noble Lord, Lord Garnsworthy? In this Amendment he refers to the question of "serious detriment to the amenities". My understanding was that on a previous occasion we agreed that Committee considerations should be dealt with at the planning stage and not under site licensing. In effect, as I understood, the noble Baroness, Lady Young, said last Tuesday that the two purposes of planning permission and site licensing should not be confused. She went on to say:
"Planning decisions, of course, take into account the amenities of the locality."
Further on, she went on to say:
"once planning permission has been given it is not imagined that site licensing would be refused, except on grounds of public health or some kind of danger of pollution in this context. Therefore it would be very unfair to take away a site licence on grounds which in effect are not appropriate to the licensing provision at all."—(OFFICIAL REPORT; 15/1/74, col. 941.)

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So I should have thought that, on the one hand, the point that the noble Lord is trying to make is achieved by Clause 7(4), and, on the other hand, the question of amenity was decided otherwise on a previous occasion by the Committee of this House.
BARONESS YOUNG: I must begin by saying that again I feel sympathy with the intention behind this Amendment. The noble Lord, Lord Garnsworthy, is in effect, as he said, adding a "stop" notice to the other provisions which are to regulate the conditions of site licences. However I hope I can show him that we have met the conditions that he wishes to see laid down. There are a number of powers in the Bill: for example, the disposal authority may modify the licence conditions—that is Clause 5(1); or it may serve a notice to secure compliance with an existing condition—that is the provision quoted by the noble Lord, Lord Merrivale, which is Clause 7(4)(a). If neither of the powers in fact achieves the desired improvements in standards, the authority can go further and can revoke the licence. In the first case, where modification is not effective enough to avoid danger to public health, water pollution or serious detriment to the amenities of the area, the authority may revoke the licence under Clause 5(3). In the second case, where there is continuing non-compliance with a licence condition, the licence can be revoked under Clause 7(4)(b). I hope in the case of an emergency situation this condition would apply, but it does mean the situation can be dealt with immediately. I hope therefore that the noble Lord will feel that these other provisions cover the point he is trying to make. It is a real point.
LORD GARNSWORTHY: I am grateful to the noble Baroness. I had a feeling that she would speak in the sense she has done to the Committee; I think it was important to get that on the Record. With regard to subsection 4(a) and (b), there is no question there, I would have thought, of immediate emergency action because paragraphs (a) and (b) both refer to the giving of notices. However, I have no wish to pursue the matter.
Just on a personal point, I ought not to have referred to Amendment No. 57 because I realise I spoke to it when I
1130
moved Amendment 51. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 7, as amended, agreed to.
Clause 8 [Appeals to Secretary of State from decisions with respect to licences]:
LORD STRATHCONA AND MOUNT ROYAL LORD STRATHCONA AND MOUNT ROYAL moved Amendment No. 58:
Page 11, line 2, after ("recover") insert ("compensation").
The noble Lord said: On behalf of my noble friend Lady Young I beg to move Amendment 58 and I shall speak to Amendment 59. These are really technical drafting Amendments which ensure that disputes as to liability for compensation in the circumstances specified, as well as to the amount, may be referred to arbitration, otherwise liability might fall to be settled in the county court or the High Court, and compensation would be subject to arbitration, which would be a piece of double litigation. I beg to move.
BARONESS YOUNG BARONESS YOUNG: I beg to move Amendment No. 59.
Amendment moved—
Page 11, line 4, leave out from ("statement") to ("be") in line 6 and insert ("and any dispute as to a person's entitlement to compensation in pursuance of paragraph (b) of this subsection or as to the amount of the compensation shall").—(Baroness Young.)
Clause 8, as amended, agreed to.
Clause 9 [Special provisions for land occupied by disposal authorities]:
6.35 p.m.
LORD CRAIGTON LORD CRAIGTON moved Amendment No. 63:
Page 12, line 6, leave out ("twenty-one") and insert ("twenty-eight").
The noble Lord said: We had a discussion on this point on Amendments 32 and 33, where I wanted to insert "twenty-eight" and the noble Lord, Lord Henley, who I am sorry is not here, put in an alternative form of words which the noble Baroness accepted on the understanding that I would withdraw my Amendment 32. May I ask the noble Baroness if she would afford me the same courtesy, that

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I withdraw this Amendment on her undertaking to look at a similar form of words as that given by the noble Lord, Lord Henley, on Amendment No. 33? I beg to move.
BARONESS YOUNG: Yes, I am glad to give that undertaking.
LORD CRAIGTON: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
BARONESS WHITE BARONESS WHITE moved Amendment No. 67:
Page 13, line 32, leave out paragraph (c).
The noble Baroness said: The only purpose of drawing attention to Amendment 67 is, as has been mentioned on a number of occasions, that one is a little concerned that an authority is judging its own cause. Paragraph (c) says:
"the disposal authority may disregard any water authority or collection authority or, as the case may be, any river purification authority"—
that should be North of the Border—
"or general planning authority for the purposes of the preceding provisions … in relation to a resolution which, in the opinion of the disposal authority will not affect the other authority."
This means that it is left entirely and exclusively to the disposal authority, if I have understood it aright, to decide whether or not it affects the other authority, and the other authority might disagree. So it does affect us, but the other authority appears to have no recourse to any procedure whereby it might make felt its own opinions. I do not want to labour the point unduly, but would like to know how the Government view this. I beg to move.
LORD STRATHCONA AND MOUNT ROYAL: As the noble Baroness, Lady White, has said, this is really much the same point as we have discussed once or twice before. May I say that what the noble Baroness has said as to how the situation stands is unquestionably right: we are setting up the authorities and giving them powers. I think it was the noble Lord, Lord Hughes, who said they are going to be responsible and respectable authorities and we should trust them. I really do not believe that I have a great deal to add to what we have said on this a number of times already. I hope that this will satisfy
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the noble Baroness. One has to accept that her point is perfectly valid. On the other hand, we have come to accept that we now have the balance about right.
LORD HUGHES: I do not remember saying that, but I would have said it if it had occurred to me.
LORD STRATHCONA AND MOUNT ROYAL: We will have to study the Record to-morrow.
BARONESS WHITE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD STRATHCONA AND MOUNT ROYAL: This is purely a drafting Amendment to simplify the sentence. I beg to move.
Amendment moved—
Page 13, line 32, leave out from ("any") to end of line 34 and insert ("other").—(Lord Strathcona and Mount Royal.)
LORD STRATHCONA AND MOUNT ROYAL LORD STRATHCONA AND MOUNT ROYAL: Amendment No. 70 is also a drafting Amendment. It brings the wording of subsection (8)(b) into line with Clause 5(3)(b) which is a parallel provision in the licensing code. I beg to move.
Amendment moved—
Page 14, line 2, leave out ("altering") and insert ("modifying").—(Lord Strathcona and Mount Royal.)
LORD STOW HILL: May I ask the noble Lord whether it is really worth while going to the trouble of changing the word "altering" into the word "modifying"; and, if it is, will he explain what is the difference between the two words? If the word "modifying" conveys the precise connotation which the Government wish why was it not put in before? If the word "altering" conveys that connotation why was not the word "altering" put in the other clause to which the noble Lord referred? There are a number of these changes, and I respectfully submit to the Government that it is hardly justifiable to take the time of the Committee and incur the expense of printing and all the rest of it to make this sort of change, which should not be necessary.
VISCOUNT STONEHAVEN: May I ask whether Her Majesty's Government have altered their mind or modified it?
LORD STRATHCONA AND MOUNT ROYAL: I think the justification for wanting to alter it at all is really to get the same word in both cases. My difficulty, noble Lords will not be surprised to hear, is that I did not draft the Bill, and I think that is just as well; otherwise a great many more modifications or alterations would have been required. I do not think I can go further than to say that I agree it is regrettable and we should try to see that it happens as rarely as possible.
BARONESS WHITE: We entirely sympathise with the noble Lord, but this does rather emphasise the point I made at the very outset, that, no doubt for adequate Departmental reasons, there are a great many Government Amendments to this Bill. I mention this only because we are taking a great deal of time in Committee and there may be grumbles from some of our colleagues that we are doing so. But when we have (I think it is now) about 100 Government Amendments at this stage of a Bill, it does mean, as my noble friend has said, that we are having to spend a lot of time on things which one would normally have expected to be sorted out earlier.
On Question, whether Clause 9, as amended, shall stand part of the Bill?
LORD STOW HILL: Again I do not want to take time on what may appear to be a drafting point, but this is a little more than drafting. If your Lordships look at this clause, at the bottom of page 11 you find the words:
"a condition which … is required to be included in or excluded from a disposal licence".
Then if you look on page 13, line 16, you find the same words:
"a condition which by virtue of section 4(6) of this Act is required to be included in or excluded from a disposal licence".
If you do in fact do what you are asked to do, and look at subsection (6) of Clause 4, you find, as we have already had brought to notice, that the wording there is not "included or excluded"; it is "specified or not specified". If the Government are so keen on using analo-
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gous language in particular parts of the Bill, why do they not follow their own precedent in that particular case as well?
Subsection (6) and subsection (7) of Clause 4 have already been the subject of extensive Amendments which we have considered earlier, and as to which I ventured to direct some criticism with regard to the language chosen; and Ministers were good enough to say that they would like to reconsider that language. Here again we are starting with the words "specified or not specified"; then they become "excluded or not excluded". What is the difference? Why do the Government not use the same language if they really want to use the same language. It is a little more than just a drafting matter because in my submission the difference in wording makes for obscurity and makes it difficult to understand precisely what is in the Government's mind. This Bill is, after all, one that is likely to affect very large numbers of citizens in all sorts of positions, and it is desirable not to pose more puzzles than can be avoided in the framing of legislation. I hope that Ministers will once again, with their advisers, look at this particular part of the clause that we are asked to pass.
BARONESS YOUNG: I have of course listened with great care, as I always do on these matters, to what the noble Lord, Lord Stow Hill, has said, and as he has drawn our attention to another point I will certainly have a look at it. Unlike the noble Lord, Lord Stow Hill, and the noble Baroness, Lady White, I have never been a Member of another place, so I have never sat in on a Committee stage of a Bill introduced for the first time in another place and I do not know the proportion of Government Amendments that one has to introduce in that position. I had understood that it was very much the wish of your Lordships' House that major pieces of legislation should be introduced first into this House and the Government have acceded to that request, not only to secure a better balance between the two Houses, but because this is very much the kind of Bill on which this House has a great number of experts to bring to bear to meet the very real points that arise. It may well be that because the Bill has been introduced here first there are a number of Amendments to be made. Of course, one

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wants to keep them down as much as possible, but this is the right time to do it. It is very necessary to get the Bill right. It will possibly mean yet another Government Amendment, but I certainly undertake to look at the point the noble Lord has raised.
Clause 9, as amended, agreed to.
Clause 10 [Collection of Waste]:
6.50 p.m.
BARONESS WHITE BARONESS WHITE moved Amendment No. 70A:
Page 14, line 26, leave out ("household waste") and insert ("house refuse")
The noble Baroness said: I have been asked on behalf of my noble friend Lord Energlyn to move this Amendment and to apologise to the Committee for his inability to be here. I think it would be for the general convenience if with this Amendment we took also Nos. 74A, 80A, 96A and 129A, which all refer to the same point. It may appear to be just a matter of choice of words or of phrase, but I am advised that it is really something of substance.
The term "house refuse" is used in the Public Health Act 1936, whereas in this Bill the term "household waste" is used. The term "house refuse" was apparently defined in a case as recently as October 19, 1973, in the Queen's Bench Division. It was defined in terms of the nature of the waste rather than the place of origin, whereas in this Bill the definition is by place of origin rather than the nature of the waste. This being so, it has been pointed out to us that there could be some difficulties.
In the definition clause, Clause 22, subsection (3) says:
"household waste consists of waste from a private dwelling or residential home or premises forming part of a university or school or other educational establishment or forming part of a hospital, nursing home, museum or art gallery;"
There is an Amendment down to extend that definition to include boarding houses, and such like. From all these establishments some of the waste, and perhaps the greater part of it, would be what has hitherto been referred to as "house refuse". It is quite possible that from any one of these establishments other kinds of waste might emanate. For ex-
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ample, a house might be used as a dwelling but also as an office. There might be considerable quantities of waste paper which would be quite abnormal from a household, and it would be a commercial establishment. This would not be "household waste" in the normal sense of the term.
More serious is the position of universities, or certain other educational establishments with laboratories which might have highly toxic waste. Of course, from hospitals there might be highly toxic chemical waste or surgical dressings to be disposed of. Normally, one would expect them to be disposed of on the premises, but circumstances might arise in which the authority might be expected to collect them. Therefore we are somewhat concerned about this new definition of "household waste" which, I repeat, defines it by its place of origin and not by its nature. As the nature of "house-refuse" has been so recently determined in the courts, it seemed right to my noble friend to draw the attention of your Lordships' House to this fact, and to find out why the Government have decided to change the basis of the definition, particularly as there are serious apprehensions regarding the position in relation to hospitals and non-commercial laboratories, and the like.
I am advised that trade refuse has not been defined in the courts, and therefore the expressions used in this Bill of "commercial waste" and "industrial waste" respectively are not open to the same objection that is held against the term "household waste". It is for these reasons that my noble friend thought it would be advisable for the Committee at least to consider reverting to the expression used in the Public Health Act 1936 and reinforced by a recent court decision, and that "house refuse" should be referred to rather than "household waste". I beg to move.
6.54 p.m.
LORD HAWKE: My interest in this clause of the Bill is to try to see that waste is collected by the local authorities and is not left lying about the countryside. When cutting a ditch that runs along my road frontage the other day I came upon a nice new little dump behind the fence of what appeared to be some building waste. In my wandering around the countryside, I find that a good deal

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of the dumping in my part of the world consists of this type of waste. I assume that it is the product of do-it-yourself activities in the home, and that the local authority will not take the stuff in the ordinary collection of the dustbins. From the definitions in the definition clause, I cannot see that that is "industrial waste" because it does not come from a premises used for a factory. It is not "commercial waste" because it does not come from premises used wholly or mainly for the purposes of a trade, so it can only be "household waste".
I hope that this will therefore mean that the local authorities will be forced to accept these empty paint tins and odd bits of pipe and wallpaper, et cetera, which so disfigure our Sussex country lanes. If this Amendment is accepted, I rather doubt whether "house refuse" would cover these particular things. It may well be that "household waste" would not cover them either, but I have greater hope for "household waste" than I have for "house refuse". Therefore I hope that the noble Baroness may be able, when she replies, to elucidate this rather important point for the dwellers of rural Sussex.
LORD GARNSWORTHY: It may be convenient if, instead of speaking to Amendments Nos. 72 and 73 after this Amendment has been disposed of, I intervene here, because listening to my noble friend Lady White and the noble Lord, Lord Hawke, I feel that we need some enlightenment. My noble friend Lady White drew attention to the definition in Clause 22 of private dwellings and waste. It is clear from what the noble Lord, Lord Hawke, has said that there is confusion, or at least lack of clarity, as to what is intended. One has a great deal of sympathy with him in the predicament that he has described where somebody has dumped builders' waste on his property. However, I do not think that we ought to regard builders' waste as being covered by his experience. It can, and I think often does, produce much larger quantities than he probably has had to deal with. We therefore need a statement making clear the Government's intentions, not only in regard to builders' waste but in regard to organic garden refuse, which in the overwhelming
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majority of cases could quite clearly be dealt with by way of compost heaps.
If the collection authority is to be required to take builders' waste, there is a point at which I think they ought to be free to refuse to do so because there will be occasions when the builder, or who-ever is responsible for producing it, could deal with that situation himself. As and where they collect builders' waste, and indeed organic garden refuse, surely we ought to be considering whether they should be allowed to charge for so collecting it.
LORD HAWKE: I think that we are talking of two different things here. Genuine builders' waste is the stuff that the builder carts away and takes to his yard. Of course there are proper arrangements for that, and I presume that it would count as "industrial waste" under the definition clause. My observations lead me to believe that an enormous amount of the dumping is of small quantities of stuff, probably dumped by the householder himself after doing small jobs around the house, or perhaps by a hired craftsman coming in in the evening, or something like that.
LORD GARNSWORTHY: I take the noble Lord's point. I am not at all sure that builders' waste will always come under the heading of "industrial waste". It will be interesting to see what the Government have to say on that point. It would be helpful if we could be told exactly what prescribed cases are likely to be, and whether, in point of fact, the matters which have been raised in this discussion would be included under that heading.
VISCOUNT AMORY: I am sure the whole Committee will wish to sympathise with my noble friend Lord Hawke. I had always imagined that my noble friend lived in the most beautiful property, situated in a most delightful part of the country. But on Tuesday he spoke movingly of a sewer on the beach above the high water mark; and then he wrung our hearts with the desciption of a moving river of broiler manure which crossed the land before going into a stream. Now we hear that behind every bush there is refuse from a builder. I feel sure that our hearts bleed for my noble friend.
7.2. p.m.
LORD STRATHCONA AND MOUNT ROYAL: Even if our hearts are being made to bleed, as Lord Amory has said, Lord Hawke is quite right: we do want to make local authorities collect do-it-yourself builders' materials for a charge. This is a point which my noble friend Lady Young will be dealing with in a moment. I will also, if I may, leave her to deal with Lord Garnsworthy's Amendments Nos. 72 and 73, because Lady White and Lord Energlyn, as one might reasonably suppose, have picked up a quite thorny problem here.
May I first call in aid the fact that the Institute of Public Cleansing has recently seen fit to alter its name to the "Institute of Solid Waste Management". This is not a totally frivolous comment, because the expression "waste" was quite deliberately used in this Bill. There has been a gradual change, I understand, in the terminology which has been used. "Refuse" has been the traditional term, and "waste" is now used as the more embracing term. This point was also touched upon in the Browne Report. The Browne Report suggested that the best way to distinguish the different sorts of waste was to attach the types of premises from which they came. I think this is the general concept underlying the attempts at definition but it has to be admitted that in this Bill we had not hoped to define these terms too exhaustively. It may be said that this is an unwise thing to do. There is no getting away from the fact that there are intricate problems in the definition and classification of waste, and these are very hard to get absolutely right.
We quite accept that we may need to modify the definition—I am using that word again, but I hope I shall get away with it—in Clause 22 in the light of the discussion here and comment from outside. There is already one Amendment which will be necessary to make clear that mine and quarry wastes are excluded from the definition of industrial as well as commercial waste. That is one example. Regulations under Clause 22(4) may well be needed to sort out some of the finer details here as well. We may then need to make some Amendment to clarify the distinction between waste for the purposes of Part I and the effluents or discharges for the purposes of Part II. I would rather suspect that
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the noble Lord, Lord Hawke's, river of broiler manure might come in either of these categories. I do not know that anybody had really contemplated that we were talking about quite that sort of river.
Finally, we may need also to adjust Clause 22(5). I realise I am not giving an altogether satisfactory answer to the noble Baroness, but I would say that the decision was quite deliberately taken with the very best of intentions. I dare say that in whatever we do we shall not get it 100 per cent. right, because it appears that the definitions are, to a certain extent, unclear; furthermore, they appear to be changing. So far as this particular group of Amendments is concerned, we should like to retain the words we have used in the Bill at the present time.
BARONESS WHITE: I am most grateful to the noble Lord. Could he tell me whether the Government propose to amend the Public Health Act, 1936? It may be mentioned in this Bill and I may have missed it. It would lead to great confusion if one had a Public Health Act with one definition and a Protection of the Environment Act with a different definition. I am just not sure. I am not asking for an off-the-cuff answer, but perhaps we could be saved a little trouble later on if we were to be told whether we are trying to amend that particular section of the Public Health Act. I do not have the precise reference here. I am sure the noble Lord takes the point that if one has two definitions in two cognate Acts, the result can be awkward. I would suppose that the best thing for me to do on behalf of my noble friend Lord Energlyn is to seek leave to withdraw this Amendment, but to hope that when we reach the end of Part I—although it does not look as though we are going to get there to-night as I had hoped we were—we might have a little more information on the definition clause, when the Government have had time to give further thought to this. It is exactly this kind of thing that can lead to so much friction, bother and disputation in a locality.
Noble Lords will realise that according to the definition of the type of waste the local authority may charge or not charge, as the case may be. Although there is a considerable discretion left to

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the local authority, if something is defined as household waste then, as I understand it, the local authority, cannot charge. There are certain types of waste for which, as my noble friend Lord Garnsworthy pointed out, they would wish to charge and they thought a charge was justified; and yet, as the definition now stands, if such type of waste emanated from a household they would not be able to charge. In other circumstances, for other types of waste, they have a discretion whether to charge or not. But for household waste, as I understand it, they do not have this discretion; it falls within the actual definition of household waste.
From the point of view of the administration of this Part of the Act, which will be a very close domestic matter to many people, we have a duty to try to be as clear as possible. I fully take the point of my noble Lord that this is difficult, that the situation is changing. The technical people are changing in their point of view as to how best to define it, and so on. We are not in the least unsympathetic about it. It is just that in matters of this sort it is our duty to try to get the legislation as clear as we can, and as free as we can from possible misunderstanding. At this point of time, I wish to seek leave to withdraw the Amendment.
LORD STRATHCONA AND MOUNT ROYAL: Before the noble Baroness withdraws the Amendment, may I take the opportunity to confirm that the Public Health Act will indeed be repealed. I think it says that on the front page of the Bill.
BARONESS WHITE: I beg the noble Lord's pardon.
LORD STRATHCONA AND MOUNT ROYAL: I can confirm that that is the intention. We are most grateful to the noble Baroness and to the noble Lord, Lord Energlyn, for their efforts to give us help. Obviously we shall need all the help we can get. I believe that during the course of these discussions we may learn something which will enable us in the end to get the thing nearly right.
Amendment, by leave, withdrawn.
7.10 p.m.
VISCOUNT MASSEREENE AND FERRARD VISCOUNT MASSEREENE AND FERRARD moved Amendment No. 71:
Page 14, line 28, after ("place") insert ("(other than a location used as a caravan site)").
The noble Viscount said: I am afraid that in putting down this Amendment I have left out one word, and in speaking about the Amendment I hope the noble Baroness, Lady Young, will understand that I meant to include that word, although I realise that because of its omission the Amendment cannot be accepted. The word which I want to include is "licensed", so that the Amendment should read:
"other than a location used as a licensed caravan site".
When I put down this Amendment I was thinking, in particular, of remote areas in the Scottish Highlands where there are caravan sites at present and where, in future, there will probably be a lot more. Though I am not, on the whole, worried by Clause 10(1)(a)(i) which states:
"(i) which is situated at a place which in the opinion of the authority is so isolated",
I am worried about the word "isolated". A caravan has to be pulled to its site by a car, so a lorry can also go to collect waste. Therefore, although I am not worried about inaccessibility, how are we to interpret the word "isolated"? Does it mean so many miles from a town or a village, or so many miles from a main road, a secondary road, a council road or a private road? The word "isolated" could be interpreted in different ways by various collection authorities. If the noble Baroness cannot give me very good reasons why the collection authorities cannot be made to collect refuse from all licensed caravan sites, I shall put down an Amendment on Report which includes the word "licensed". I beg to move.
BARONESS YOUNG: I am very glad that the noble Viscount, Lord Massereene and Ferrard, has put this all-important word into his Amendment, because I can now tell him that his Amendment is met by the Bill. In subsection (1) of Clause 22, the definition clause, a private dwelling is defined as a hereditament under the General Rate Act 1967 and is, roughly speaking, a house or building or something used as a home, or a caravan situated on a caravan site under the Caravan

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Sites and Control of Development Act 1960.
The noble Viscount made a separate point about collecting waste from isolated caravans. The difficulty is that the clause as drafted provides that collection authorities need not collect waste from outlying premises if they are so isolated or inaccessible that the cost of collection would be unreasonably high, provided they are satisfied that satisfactory alternative arrangements can be made. What we wish to prevent is a local authority deciding that it will not collect from any of these places, so the Bill provides that an authority cannot use the escape provision to provide a reduced service or no service at all for household waste, unless the authority is
"… satisfied that adequate arrangements for its disposal have been or can reasonably be expected to be made"
by the householders themselves. In our view, the provisions of Clause 10(1)(a) taken together give reasonable consideration to people who live in inaccessible places, whether in houses or in caravans. I have explained this point at some length because the noble Viscount raised it on Second Reading and, as I said, the purpose of his Amendment is met by the Bill.
BARONESS WHITE: May we have an assurance from the noble Baroness that there will be some sort of guidance given to local authorities? I live in a fairly remote district and I think I am at the end of the line for refuse collection. What worries me is the larger items which normal households cannot be expected to dispose of, such as worn-out bedsteads, prams and so on. Even things like refrigerators wear out, and even people in fairly remote areas have them. But the ghastly dumps of indestructible rubbish pose a problem for rural authorities and they are extremely reluctant to collect objects of that kind.
If proper arrangements were made—I do not mean weekly or even monthly collections, but, let us say, collections in the first week of each quarter—and if local authorities were notified that they had a duty to arrange for rubbish to be collected, we should not have these ghastly dumps by the sides of streams, in quarries and in depressions in the ground, which may
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not be seen by very many people but which are quite horrifying when one comes across them. I regret to say that there are some in the area in which I live and they are horribly unsightly, yet one very often has great sympathy with the people concerned. However, I have no sympathy with a man who leaves a car to rot—and I have one not very far from my home—because one assumes that he should have been able to leave it to rot somewhere else, where it might be more easily taken away. There are items of household equipment which are very difficult to get rid of and if people do not have adequate transport, such as estate cars, it is difficult to dispose of them. I wonder whether the noble Baroness can give us some sort of assurance on this point, which is not quite the same as the point raised by the noble Viscount.
VISCOUNT STONEHAVEN: Before the noble Baroness replies, can she answer one other point? Does this provision cover a mobile home, which consists of two caravans stuck together and which, to all intents and purposes, is a permanent structure with proper drainage? Quite a number of these hybrid affairs are being used in Scotland as emergency measures, and I have never discovered how they are defined.
LORD CRAIGTON: I am not quite clear about the Amendment of my noble friend Lord Massereene and Ferrard. Paragraph (ii) of subsection (1)(a) states:
"… as to which the authority is satisfied that adequate arrangements for its disposal have been or am reasonably be expected to be made by a person who controls the waste".
The person who controls the waste is the owner of the licensed site. The people who use the caravans come and go week by week; so is there any sanction against the owner of the caravan site if the site is left dirty? What guarantee has the user of the caravan that the owner is going to do the work expected of him; and, if he does not do it, what happens to the owner then? I can see no provision for a fine, or anything like that, in the Bill.
BARONESS YOUNG: Perhaps I may deal first with the points which the noble Baroness, Lady White, raised, because I think they are the points which in fact come up on the later Amendments of the noble Lord, Lord Garnsworthy—Amendments Nos. 72 and 73. It is certainly our intention that the collection

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authorities should be able to collect these large items which every household seems to produce and needs to get rid of at intervals—the organic garden refuse, the builders' rubble, the remains of the do-it-yourself materials and so on. Clause 10(3), which deals with charges for the collection of waste, includes provisions for regulations to be made about charges for certain types of household waste, and they would be charges for these substantial items. The difference arises in this way. A collection authority would collect free household waste provided it could go into something like a dustbin, but the difficulty arises when there are things which will not go into a dustbin. Here, provision would be made for the collection authority to take those things away and to make a charge for that service. The same provisions would apply whether the collection authority was collecting in a town or in the country; and the level of its charges would, of course, be a matter for it to decide. But the intention is that it would be responsible for removing such items. I hope that that gives the noble Baroness the assurance she was seeking.
I was asked a question about mobile homes. My understanding is that the answer is: Yes, the collection authority would collect from a mobile home if that home is on a site and is rated as a home. That is to say, it brings it into line with the position of a caravan on a licensed site; and, therefore, it is covered. If it is not so situated but is somewhere else, then we should have to make provision for collections from it by regulations. I am extremely sorry, but I have not a note of what the noble Lord, Lord Craigton, asked me. Would he be kind enough to repeat his question?
LORD CRAIGTON: It was that, under the Bill,
"It shall be the duty of each collection authority … to arrange for the collection of all household waste in its area except waste—
"… as to which the authority is satisfied that adequate arrangements for its disposal have been or can reasonably be expected to be made by a person who controls the waste".
In the case of a licensed caravan site, the person who controls the waste is presumably the proprietor of the site, because the persons using the licensed caravan site would come and go each week. So presumably we would look to the proprietor
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of the site. But if he does not do what is expected of him by the collection authority, what sanction has the collection authority over him?
BARONESS YOUNG: I think the noble Lord, Lord Craigton, has raised a very difficult point. The object of this clause is that a local authority shall collect from isolated places, whether they are caravans, homes or mobile homes, but perhaps not as regularly as they would collect from homes in a town. However, there are instances, of which we can all think, of isolated caravans, where the owner of the site cannot always be held responsible for the refuse that is left behind. As I am sure the noble Lord, Lord Craigton, is only too well aware, this is a problem which arises frequently in, for example, gypsy encampments, and it is not really an easy matter to resolve. I can only say that this is a matter to which we have given a great deal of thought, and I wish I could provide an easy solution to it; but I think it would be very rash of me to attempt to do so on this occasion.
LORD HAWKE: The noble Baroness has given certain assurances (though they did not apply to this particular Amendment), but I am afraid that her assurance was only to the effect that the present bad old system is to go on; in other words, people are going to be charged for the collection of anything that will not go into a dustbin. So long as people are charged for the collection of any form of household refuse they will much prefer to go out on a dark night—they have all got motor cars these days—and dump it over a fence.
LORD GARNSWORTHY: I thank the noble Baroness for what she had to say about organic waste and about builders' waste. When I intervened just now, I was hoping to save the time of the Committee, but I trust she will forgive me if I press her a little on this, because she indicated that if organic waste or builders' waste was placed in a bin then that was all right. I should like to inquire whether there is any notion of the maximum number of bins that might be used, because quite clearly the person who wants u use the public collection service could acquire ten or a dozen bins, and really could abuse the privilege of having his refuse collected. I do not know whether

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any thought has been given to it, but it seems to me that it is a point worthy of consideration. Perhaps I may say that in the light of what she has said I shall not be moving Amendments Nos. 72 or 73.
BARONESS YOUNG: On this point, I think that if one looks at the definition of household waste in the definition clause one sees that the whole point of it is that it is tied to the premises, and not to the type of waste. When I drew this distinction I was assuming dustbins in a house. I suppose that there is nothing in law to prevent anybody from having 25 dustbins if they want them, but the point is that the frequency of the occasions on which there are large things to be disposed of is not every week, as is the case with the normal household collection. Therefore, what we are talking about is the special collection. It may well be that this is a possible abuse which should be looked at, but I should have thought it was certainly not a matter which we would need to incorporate in the Bill. This would be something very much for the collection authority itself; and I cannot see it being indulged in on the kind of scale the noble Lord is talking about, because otherwise we would be talking about industrial premises.
VISCOUNT MASSEREENE AND FERRARD: I thank the noble Baroness for the very full explanation she has given regarding this great problem of caravan waste. I think I am right in saying that I can add in the word "licensed", even if I do not at present have it in my Amendment. I think I am correct in saying that; so I hope the noble Baroness will take it that my Amendment should have read:
"other than a location used as a licensed caravan site".
I hope the Government will take this question of caravan waste very seriously (and from the noble Baroness's speech I think they will) because, as I said, it is a growing—perhaps "menace" is not the right word, but caravanning is a growing custom. I come across this particularly in the Highlands, and although I myself do not have a caravan site I have a great number of caravans on my land. I do not charge them anything, and I do not like to turn caravans away; but we do get this great trouble of waste, and at the moment I have to collect it and dispose of it. So
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I hope the noble Baroness will do all she can to see that this question of caravan waste is fully covered. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.30 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 75:
Page 15, line 7, leave out from ("and") to end of line 8 and insert—

("(a) in the case of industrial waste, it shall be the duty of that authority to recover the charge, and

(b) in the case of commercial waste, it shall be the duty of that authority to recover the charge unless the authority considers it inappropriate to do so").

The noble Lord said: This Amendment is to Clause 10(3), which deals with charges for collecting waste other than household waste except in certain prescribed cases, which we have been discussing. The collection and disposal authorities will, for the first time, have a clear power to collect industrial waste. The clause provides also that reasonable charges should be made for the collection of industrial and commercial waste. My Amendment seeks to differentiate between industrial and commercial waste. In respect of industrial waste it would ensure that a charge would be made. I think that this is reasonable since most industrial waste is disposed of either by the firm which produces it or by private contractors. What remains will have little or no value other than an acute nuisance value. All the valuable waste will be handled privately and it is reasonable that a charge should be made for handling what I would term the non-lucrative waste that remains. So far as commercial waste is concerned the Amendment would give the collection and the disposal authority discretion, as is proposed in the clause. I beg to move.
VISCOUNT AMORY: What the noble Lord, Lord Garnsworthy, has said would seem reasonable at first sight. I find it difficult to think of a case involving industrial waste where it would not be fair to make some charge, and I shall be interested to hear what my noble friend has to say.
LORD MERRIVALE: I feel that this Amendment is inequitable. If it were accepted an authority would be under a fixed obligation to recover reasonable

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charges for the collection and disposal of industrial waste, but would not have the same obligation in respect of commercial waste, a point which was made by the noble Lord, Lord Garnsworthy. But it seems to me inequitable and unfair. There could be occasions when an authority might deem it inappropriate to recover the charge; for instance, in an area where it might be highly desirable to attract industry. Similar conditions could apply in respect of trade. It seems to me, therefore, that this Amendment is unfair and discriminatory, and I hope that my noble friend will not accept it.
LORD STRATHCONA AND MOUNT ROYAL: The Government accept the spirit of the Amendment. As is so often the case in these matters, it is a little more complex than might first appear. The Amendment would impose a duty without qualification to recover a reasonable charge in respect of industrial waste. It is true to say that it is unlikely that there would be many cases where the authority would have grounds for exempting any industrial waste from the payment. In that sense the Amendment clarifies the Government's intention.
There is something in what was said by my noble friend Lord Merrivale. I think that I should perhaps go on to say a general word about charging policy. It sets out a difficulty in which we all find ourselves. When discussing this Amendment we are talking about commercial and industrial users. There are conflicting pressures on the Government, and therefore on the Committee, when thinking about this clause. On the one hand, industry urges us that waste collection and disposal facilities should be provided as cheaply as possible so that their costs may be limited. Indeed, the noble Lord, Lord Merrivale, suggested this might be a way to induce industry to come to some areas. As against that, the private waste disposal industry will say that it is very important that waste disposal authorities should cover their costs fully and charge commercial rates for their disposal service so that they do not undercut the private operators. The third view is that of the local authorities who are keen to have reasonable discretion to determine appropriate charges for themselves without
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having the straitjacket of too many statutory formulae of the kind which is, perhaps, suggested in the Amendment.
We believe that all these objectives are quite admirable, but unfortunately they tend to move in the opposite direction to each other. We have therefore proposed a rather broad working of the clause, requiring the authorities to make a reasonable charge except in special circumstances where they consider that it would be inappropriate. What is reasonable will have to be worked out in the light of local circumstances. In the view of the Government, there is no doubt that it would be right and reasonable that the authorities should charge a price for waste disposal services which would cover the cost and the overheads of the services provided. They should compete on fair terms with the private sector which is providing similar services. But we do not rule out the possibility that in exceptional circumstances a higher or a lower charge might be appropriate to deal with a particular problem. We would hope that this would be covered by the words, "reasonable charge", and therefore we feel that this Amendment is not appropriate.
LORD GARNSWORTHY: I am grateful to the noble Lord, Lord Strathcona and Mount Royal, for the attention that he has given to the Amendment. Probably he took the steam out of a great deal of what was said by the noble Lord, Lord Merrivale, when he drew attention to the possibility of a local authority undercutting a private contractor. I am grateful to the noble Lord for indicating that he sees a great deal in what I am aiming at. I do not know whether it would be worth looking at this during the next stage in the progress of the Bill. I do not accept that industry will be attracted to an area by the inducement of a free collection of waste. A great deal of industrial waste has value, and as time goes on it may well have a greater value. Many people in industry will be alive to what they can get from the disposal of valuable waste and local authorities ought not to be left with the residue. But I appreciate what has been said, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.40 p.m.
LORD STOW HILL LORD STOW HILL moved Amendment No. 76:
Page 15, line 14, leave out paragraph (b).
The noble and learned Lord said: I would say right away that the object of this Amendment is purely probing. Those with whom noble Lords on this side of the Committee have been in touch, and who kindly offered us advice about matters which seemed to them to require further probing, feel some concern about the practical implications of this paragraph. They are anxious to know, and would be grateful if Ministers would state, what, roughly speaking, is the measure of the obligation which could be put on a collection authority by the paragraph which relates to cesspools. I cannot claim any great expertise in that field, and in putting the questions which I wish to put I am relying very much on the advice I have received.
The clause puts the absolute obligation on the collection authority, if requested by a person who controls a cesspool, to take the steps described in the paragraph; that is to say—
"… to remove such of the contents of the cesspool as the authority considers appropriate on payment if the authority so requires of a reasonable charge;".
The phrase "as the authority considers appropriate", would obviously require a very nice and careful exercise of judgment. The cesspool in question is described as one—
"… serving only one or more private dwellings …"
in the area of the collection authority, and in order to try to measure the extent of the obligation imposed by that paragraph one has to look at the definition of a private dwelling in Clause 22. One finds there that a private dwelling is described as "lands and heritages used wholly or mainly for the purposes of a private dwelling or private dwellings." A caravan is defined in the 1960 Act and I quote—
"… which usually and for the time being is situated on a caravan site within the meaning of that Act;".
Those, in the ordinary sense are private dwellings or a caravan.
When the Committee was considering the Amendment standing in the name of the noble Viscount, Lord Massereene and Ferrard, we touched on this question to
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some extent, but here we are dealing with the cesspool itself. The questions that have occurred to those who have advised us can be put in this way: when one speaks of "one or more private dwellings", could it be said that those words would have the effect of making it necessary and obligatory in the case of a collection authority to remove the contents of a cesspool which supplied the whole of, say, an estate? One would have thought on the language that the answer to that question would be "yes", if, as a fact, there are cesspools which serve all the dwellings on an estate. I should have thought that Ministers would have said the answer to that first question which those with whom we are in contact desire to put here would be "Yes"; but I should be grateful if the Minister would tell me in terms whether I am right or wrong.
Then there is the question of caravans. The question it is suggested I should put there is: would the cesspool in question be a cesspool serving a number of caravans on the site—is that what is envisaged?—or would it be the cesspool which served the ablutions block on the site on which the caravans were situated? Those questions may seem a little abstruse but they are, so I am advised, questions which have very practical implications for those on whom the obligations described in this paragraph will descend. Any further comments that Ministers would feel it proper to make as to the scope of this obligation would be very much appreciated. I have just instanced two or three practical problems which seem to arise in the language which is used in the paragraph, and any information that Ministers can give on the scope of paragraph (b) will be greatly appreciated. I beg to move.
BARONESS YOUNG: The noble and learned Lord, Lord Stow Hill, has indicated that what he would like is an indication of the meaning of this part of the clause and of its scope. I will do my best to answer him. The background to the clause is the fact that the Public Health Act of 1936 gives local authorities a discretionary power to undertake the cleaning of privies and cesspools, subject to direction by the Secretary of State. We believe—and this has emerged from subsequent reports—that this is an unsatisfactory situation because there is not

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a general duty on authorities to do this work. We feel this should be put right now in the Bill.
The particular portion of the clause to which the noble and learned Lord, Lord Stow Hill, has drawn our attention is that concerned with cesspools, and these are usually applied to dwellings, often cottages, which obviously have inadequate and unhygienic forms of sanitation in rural areas, where it is impossible to provide main drainage or where the cost of doing so would be prohibitive. Sometimes, of course, there is no mains water supply and there is insufficient land attached to the cottage. What happens is, first, in the case of a privy, that there should be a free emptying service by the local authority, which is the best that can be done. The words include the following—
"… as the authority considers appropriate",
and it is intended to give authorities discretion as to the frequency of emptying privies and to relieve householders of the necessity of asking for this service. It is considered right that it should be provided free of charge, since the people still without sanitation are often elderly or of limited means.
In the case of a cesspool, this is defined as
"… a settlement tank or other tank for the reception or disposal of foul matter from buildings".
Subsection (4) places a duty on the collection authority in England and Wales to remove on request such contents of the cesspool as the authority considers appropriate. This is because in some cases it would be impractical and unnecessary to require the complete emptying of a cesspool. The duty applies only to cesspools serving dwellings, although authorities are also given a discretionary power to clean any other cesspool and to make a charge. This is intended to include cesspools serving commercial or industrial premises, and I should think that, in the context of the examples given by the noble Lord of a housing estate, a caravan or the ablutions block on a caravan site, what we are saying is that where this service is provided reasonable charges may be made. The fact is that it is a duty to provide a service, but the decision as
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to how it is done and how a charge shall be made is at the discretion of the authority.
LORD STOW HILL: I should like to thank the noble Baroness very sincerely for that answer, which I am sure will be greatly valued. It gives a great deal of information to those who are concerned. I am most grateful to her, and shall be glad if the Committee will allow me to withdraw the Amendment.
LORD HUGHES: Before the Amendment is withdrawn, may I ask why, in a later part of the clause, it is provided that this particular part we have been discussing shall not apply in Scotland? Is it because there is no intention of doing anything at all about cesspools in Scotland, or is it that there are already arrangements for dealing with them without charge?
BARONESS YOUNG: I always feel very hesitant about speaking on Scottish matters. The noble Lord is quite right in saying that the reference in subsection (4) to cesspools shall not apply to Scotland. I understand that the cleansing of cesspools is already covered by Section 10 of the Sewerage (Scotland) Act 1968, which provides that a local authority—after local government reorganisation the region or islands council—may resolve to empty all septic tanks in its area or any specified part of it. If the council's resolution is approved by the Secretary of State the authority is under a duty to empty at reasonable intervals septic tanks except those receiving trade effluent or tanks which are public sewage treatment works. It seems to me that Scotland is covered, and I hope that meets the point.
LORD HUGHES: I am grateful to the noble Baroness.
Amendment, by leave, withdrawn.
LORD GARNSWORTHY: Having regard to what the noble Baroness said in reply to my noble and learned friend Lord Stow Hill, I shall not be moving my Amendment No. 77.
7.53 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 78:
Page 15, line 26, at end insert—
("(4A) It shall be the duty of each collection authority to consult the relevant disposal authority before introducing any change in its collection arrangements which would be likely

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to have a material effect on the disposal operations of that authority and which in particular relates to—

(a) a material increase or decrease in the amount of, or a change in the character of, waste collected by it;

(b) a decision to collect or stop collecting any kind of controlled waste or any other kind of waste which it delivers to a disposal authority;

(c) a decision to stop, increase or reduce paper salvage collection;

(d) a change in the frequency of waste collections; or

(e) a change in the type of collection vehicle used by it.")

The noble Lord said: I beg to move Amendment No. 78. Provision is made in the Bill for disposal authorities to consult with other authorities on many of their activities, for instance in the preparation and modification of waste disposal plans under Clause 2 of the Bill. It would make for greater efficiency if collection authorities were likewise to be under a duty to consult with disposal authorities in circumstances where the collection authorities were altering their arrangements in such a way as materially to affect the operation of the disposal authorities. The particular circumstances listed in the Amendment, as set out in paragraphs (a) to (e), would all be potentially of vital importance to disposal authorities. I am certain that advantage would follow from the consultation that the Amendment seeks to provide.
BARONESS YOUNG: As the noble Lord, Lord Garnsworthy, has quite rightly said, the disposal authorities are under an obligation to consult the collection authorities when they draw up their plans, and to consult them at later stages when they make amendments to them. What this Amendment is asking for is that collection authorities should be under an obligation to consult disposal authorities when they decide to change their arrangements. I sympathise on this point of principle that has been raised, but this again is a case where, if the relationship between the disposal and collection authority is such that suddenly the collection authority decides to change all its arrangements and does not tell the disposal authority, the entire disposal plan will break down because the disposal authority will not be able to alter its arrangements to meet the changed circumstances. What I hope will happen is that there will be consultation at regular intervals over all matters
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affecting both the disposal and collection authorities, so that they may always inform one another when they choose either to change the disposal plan or the collection arrangements. I have listened carefully to what the noble Lord has said, and this is the kind of thing we might well consider in some detail when drawing up a circular for guidance to local authorities.
LORD GARNSWORTHY: I am grateful for that reply. The indication that it is a matter that is likely to be dealt with by guidelines in circular letters will go a long way, if not completely, to meet the point I had in mind. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD STOW HILL LORD STOW HILL moved Amendment No. 79:
Page 15, line 39, at end insert ("but the disposal authority or collection authority as the case may be, shall before exercising any of the powers conferred by Part VI of the said Schedule consult any undertaker or other person or persons who in the opinion of the authority will or may be affected by the exercise by the authority of such powers.")
The noble and learned Lord said: This Amendment follows fairly closely, in spirit at any rate, the previous Amendment which my noble friend Lord Garnsworthy has moved in that it relates again to the question of consultation. I am sure that Ministers will agree with me that, for the general scheme as set out in this Bill to work properly and satisfactorily, it is desirable that people should know what others concerned in a similar area are doing. Ministers have been very careful in framing the Bill, and in dealing with suggestions in the course of this debate, to provide adequately and on a practical basis that there should be consultation between the various authorities concerned. The Amendment which I venture to move relates to subsection (5) of Clause 10 and, in particular, to paragraph (a) under the terms of which, in England, a disposal or collection authority for the purpose of collecting waste in pursuance of Clause 10 is to have power to,
"construct, lay and maintain, within or without its areas, pipes for the purpose of collecting waste.…"
Then one finds that there is an ensuing part of the paragraph which applies, for the purpose of laying those pipes, the provisions of Part VI of the Third Schedule

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to the Water Act 1945. That is an elaborate and rather lengthy Schedule. It sets out in detail (with which I will not trouble the Committee) the various powers which are vested in water undertakers under the provisions of the 1945 Water Act enabling them to break up streets in order to lay down pipes for the purpose of discharging their functions under the 1945 Act. The Amendment which I move is designed to provide that in the exercise of those powers disposal authorities and collection authorities shall, when they exercise them, have in mind the necessity of consultation with the statutory water undertakers and also any other persons who may be affected, in the sense that they too are concerned with pipes laid down in the particular street in which the disposal authority or collection authority proposes to lay its pipes.
The broad thought behind the Amendment is that there may be a street, and, indeed, probably not infrequently will be, in which the statutory water undertakers and others have laid down pipes and periodically gone to inspect them, repair them and service them. In the same street the disposal authority and the collection authority for the purposes of their duties under Clause 10 will also want to lay pipes and exercise the same powers for the purpose of breaking up streets. Probably in any event a disposal authority and a collection authority, before they embark upon an enterprise of that sort, will take the trouble to get in contact with the water undertaking which may have laid its pipes in that same street in order to ensure that there is no overlapping, no conflict in the execution of the work, and to find out exactly where the pipes are which the statutory water undertaking has laid down. I imagine therefore that consultation will take place.
But it is desirable, in pursuance of the general thinking of the Government, as indicated by Ministers on this aspect of the matter, to lay down precisely that such consultations shall take place. Ministers may say that if one studies closely the provisions of Part VI of Schedule 3 to the 1945 Act, which contains certain provisions relating to consultation, by adapting them with the necessary modifications to subsection (5) of this clause one automatically brings about the result for which I am contending, in that the consultation
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provisions will be applied with suitable modifications to the disposal and collection authorities. If that is so, then my Amendment is not necessary. But, if I may say so, I should have thought it rather doubtful whether the consultation provisions do so apply, and that there is sufficient doubt as to whether they do to make it desirable to spell out, in the terms of the subsection, a specific obligation to consult the water undertakers and any other persons who may be concerned. The point is one which, in principle, Ministers accept as they have accepted similar proposals in other parts of this Bill. I move the Amendment not in any spirit of controversy, but merely, I hope, to complete one aspect of the scheme envisaged by the Government, which is extremely necessary and which everyone hopes will function thoroughly satisfactorily and in accordance with the Government's intentions. I beg to move.
BARONESS YOUNG: It may be helpful to the Committee if I explain generally the purpose of subsection (5) of Clause 10. It is, in effect, a forward-looking provision giving the relevant local authorities power to construct, lay and maintain, within or outside their area, pipes for the purpose of collection of waste, and it enables them to contribute towards the costs incurred by another person in this respect—for example, an estate developer. This is put in because my Department's Standing Committee on Research into Refuse Collection, Storage and Disposal has reported on a number of experimental projects in this field.
Now, the noble Lord, Lord Stow Hill, has quite rightly made the point about consultation. My understanding is that the point he wants to make is met where undertakers' apparatus is concerned. The powers to lay these pipelines will be subject to the Public Utilities Street Works Act 1950, Section 26 of which already provides for such consultations. So this would apply to the local authority. There are, I believe, exceptions to these consultations. For example, undertakers are not required to carry out consultations or submit plans for work relating to service pipelines; that is to say, pipelines connecting premises with the mains in relation to gas, electricity, sewerage and telegraph services. At present, the requirements of the Public Utilities

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Street Works Act 1950 would apply to all waste pipelines. There is, we believe, no reason at all why waste pipelines should in any circumstances be treated differently from sewage or gas pipelines or these other public utilities. If there is any point which we feel is perhaps not covered by these Acts in this matter of consultation, we would ourselves bring in an Amendment to meet it. We think that it is all right. But if there is another point to be met, we will do that. I hope that will meet the point raised by the noble Lord, Lord Stow Hill.
LORD STOW HILL: I thank the noble Baroness for that answer. It completely meets my point. I should like to thank the Minister, and ask the permission of the Committee to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.4 p.m.
LORD STRATHCONA AND MOUNT ROYAL LORD STRATHCONA AND MOUNT ROYAL moved Amendment No. 80:
Page 16, line 2, leave out from ("4") to ("shall") in line 3 and insert ("and words from "(b) if" to "aforesaid" and the definition of "cesspool" ").
The noble Lord said: I beg to move this Amendment on behalf of my noble friend. This point has really already been dealt with in my noble friend's answer to Lord Hughes. It is purely a tidying-up Amendment because this particular point is already covered in previous Scottish legislation. I beg to move.
On Question, Whether Clause 10, as amended, shall stand part of the Bill?
LORD HENLEY: On Clause 10 I have a small point which is not the subject of an Amendment, but it does raise some of the difficulties of definition. Under Clause 10 it is the duty of a collecting authority, if required, to collect commercial waste. Agriculture is excluded because the definition of commercial waste does not include agriculture. It seems to me that with the problems of containers of toxic waste (they are increasingly a problem in the minds of the local authorities, for whom I speak on this Amendment) that possibly it would be helpful both from the point of view of the local authority and
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indeed, I would have thought, from the point of view of the farmers, if this waste could be collected. Perhaps the Government would let me know whether the powers that are available either under Clause 16 or possibly under just Clause 22(4) could be used? For instance, Clause 22(4) on page 28 says,
"Regulations may provide that waste of a prescribed description shall be treated …",
et cetera. Would it be possible, in those circumstances, for agricultural wastes to be prescribed in this way so that the collecting authority is required to collect it?
BARONESS YOUNG: The question of agricultural waste was, I believe, raised last time, when I said that it is excluded from the waste provisions of this Bill. But Lord Henley is asking whether it can be excluded as a prescribed waste. It is, of course, possible for the Secretary of State to bring other classes of waste within controlled waste by Regulation subject to Affirmative Resolution in both Houses. It allows collection authorities to undertake the collection of waste outside the controlled waste category on the same terms as they may collect industrial waste, and to provide appropriate receptacles. Minor adjustments of the categories of waste could be dealt with by Regulations under Clause 22(4). The intention would be to reserve the Clause 16 procedure for major extensions. In particular, farm wastes and mining wastes are excluded under Clause 22(3) for the initial category of controlled wastes. I hope that this answers the noble Lord's question. If any further detailed information becomes available, I should be very happy to write to the noble Lord.
LORD HENLEY: I am very much obliged.
Clause 10, as amended, agreed to.
Clause 11 [Dustbins, etc.]:
8.9 p.m.
LORD LEATHERLAND LORD LEATHERLAND moved Amendment No. 81:
Page 16, line 18, after ("waste") insert ("and, on request, a separate receptacle for the collection of waste paper,").
The noble Lord said: On behalf of my noble friends I beg leave to move Amendment No. 81. I understand that

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it has been arranged that in conjunction with it we should take Amendments Nos. 89A and 89B, which stand in my name, and also Amendments Nos. 92, 93 and 94.
So far as Amendment No. 81 is concerned, the appropriate passage in the Bill says this, at Clause 11:
"Each collection authority may, by agreement with the occupier of any premises … provide receptacles for the waste either free of charge or on payment of a reasonable charge."
Amendment No. 81 seeks to expand that provision by inserting the words:
"and on request a separate receptacle for the collection of waste paper,".
All these Amendments which are within the purview of the Committee at the moment deal with waste paper. I hardly think it necessary to say anything more about Amendment No. 81 because if we are to pay more attention to the collection and salvage of waste paper, then quite obviously it seems sensible that the authorities should provide a separate receptacle for it. That might be a bin or it might be a sack.
If I may turn to Amendment No. 89A, one of the Amendments standing in my name, that also urges upon the Government the necessity for a more vigorous and enthusiastic salvage of waste paper. We throw away 5 million tons of waste paper every year. It has been calculated that it takes 17 trees to produce 1 ton of paper. So we are throwing away each year 85 million trees, at a time when many of the accessible forests of the world are being very heavily denuded. Moreover, much of this waste paper could be sold and remade. Yet we are causing our ratepayers to pay for the cartage, tipping and burning of this paper when we could sell it to the paper mills and receive revenue which would be to the benefit of the ratepayers. We are the biggest importer in the world of paper pulp. We import £120 million worth of it every year and that is on top of £200 million worth of paper and board. The quantity of the import is going up year by year and the price of both the pulp and the paper is going up year by year, and this involves a heavy burden on our very unhealthy balance of payments. So it seems to me that we should pay more attention than we do at the moment to the salvage of waste paper.
Apart from the waste paper which is supplied by the privately owned waste paper industry—and it is a substantial industry—the mills are calling out for 200,000 tons a year extra and are looking to the local authorities to provide this, because the private part of the waste paper industry is already committed right up to the viable limit. There is no more that they feel they can collect on a profitable basis.
The average amount of refuse which is put into the dustbin of the ordinary house of this country is 28 lb. a week—10 lb. in weight of this is paper, which constitutes also 60 per cent. of the volume. What happens to this paper when it is put into the dustbin? It is tipped into the dustcart along with the baked bean tins and potato peelings—that is, by two-thirds of the councils in this country—and then it is taken away and either burnt or tipped, in either case involving an expense to the ratepaper, instead of its being sold and thus yielding a revenue to the ratepaper. Thirty per cent. in weight and 60 per cent. in volume of this refuse which could be sold is now being burnt or tipped, and the ratepayers are having to find the money with which to do it. So my Amendment No. 89A suggests that far more attention should be given to the salvage of waste paper. Only 450 authorities in the country are now taking this matter seriously. Yet all the authorities in the country, or the majority of them, could cut out the cost of tipping and burning this paper and instead could be receiving revenue from the paper mills if they organised the collection and the sale of this paper.
It will be said, quite properly, that sorting and baling this waste paper will cost money. But it will not cost so much money as the saving which would accrue to the local council from not having to burn or tip this paper—plus the sum of money which the authorities receive from the paper mills. There are many authorities in this country which are making quite handsome profits from the salvage of their waste paper, and that is quite apart from the very valuable service that they are rendering to the nation. I do not conceal the fact that the main base upon which I build my argument is that of the balance of payments, which needs to be helped in every possible way.
It is true of course that there are some authorities which have discontinued salvage of waste paper because they say it is not worth the cost. Perhaps they have taken into account only the money they receive from the mills, and have not taken into account the saving which accrues to them for not having to burn or tip the paper. There are some which have discontinued it because at a certain time the paper mills have said, "We are unable to take any more at present", but that has happened in only two periods during the last ten years. So those explanations do not suffice at this particular moment. The paper mills have made a long-term offer to local authorities to take a specified tonnage of waste paper at a guaranteed price, and they need this paper urgently. A few months ago their usual six weeks' stock at the mills went down to something like three weeks' stock. It is all kinds of paper and cardboard that they need: empty boxes, wrapping paper, newspapers. The newspapers have recently become more valuable and useful than ever to the mills because of a de-inking process which one of them has established and is now operating, and because another firm is similarly installing one of these de-inking plants. The value of this de-inking process can be gathered from the fact that the first firm I mentioned used to incorporate 27 per cent. of recycled paper in their newsprint output; they now include 40 per cent. They are offering the local authorities £15 to £16 a ton for old newspapers.
In April of this year we are going to see a reorganisation of local government and that may open opportunities for paper salvage to quite a number of these authorities. There are perhaps two or three small authorities, who have been too small to organise paper salvage in the past, who are going to be merged; and perhaps they will be in a better position to undertake this work in the future. There are other groups which are going to be brought together where perhaps one authority undertook paper salvage and another did not; perhaps the paper saver will be able to convert the other. But the fact will still remain that there will be some authorities too small, too scattered, too remote, to organise a proper paper salvage system. My Amendment makes it quite clear that in cases of that
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kind the Minister will be able to grant exemption.
The other Amendment in my name, No. 89B, I think explains itself. It is simply this. Where the collecting authority, the district council, sends its refuse to the disposal authority, the county council, for the county council to dispose of, it will not be sending, say, 1,000 tons of refuse a week if it keeps back its paper; it will be sending only 700 tons a week to the county council to dispose of. So the county council will be relieved of the cost of disposing, by either burning or tipping, of that 300 tons. My Amendment suggests that the county council should then compensate the district council for the saving which the county council will be able to make on not having to burn or tip those 300 tons.
It may be thought rather troublesome that long negotiations will have to take place between the district councils and the county councils about the amount per ton which the county councils should pay by way of compensation to the district councils, and therefore I have included in the Amendment a suggestion that the Minister once a year shall specify a notional sum at which the compensation transfers should be carried out. It may occur to some of your Lordships that districts vary; some districts pay different wages to their refuse collectors; some have longer distances for their transport to travel, and therefore it would be preferable for individual negotiations to take place. If there was objection to the Minister specifying a notional sum, I should be only too willing to omit that part at the next stage of our consideration of the Bill.
It is a fact that the Greater London Council, which has had a scheme running with the borough councils in London, has hitherto paid on an almost fixed figure basis, but from April of this year it is going to transfer to the individual negotiating basis and settle a figure with each of the borough councils. Be that as it may, I feel that this question of paper salvage is very important indeed, especially as our balance of trade is in such a sickly state. I do not feel that it is only a question of local government departmental administration. I feel that it is a national problem and that the Government should lay down a national policy. I beg to move Amendment 89A. I am

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not quite sure what is happening to the remaining three.
LORD CRAIGTON: I entirely agree with the noble Lord, Lord Leatherland, and I am only sorry that we have such a thin House. It will have been drawn to his attention that I have put down Amendment No. 84, and although there is nothing wrong with his Amendment I feel that it does not go far enough. It refers only to council waste and to receptacles on request. I should like to see the collection authority given much more teeth to carry out what has to be done in this country, so while I support his Amendment I hope that he will in due course support me when I come to move mine.
8.23 p.m.
BARONESS YOUNG: I am sure we have all listened with great interest to what the noble Lord, Lord Leatherland, has had to say on the question of collection of waste paper. He said that he regarded this as a national problem which required a national policy, and I should like to assure him that, as I said when we had our debate at an earlier stage in the Committee on the general issue of recycling, we intend to bring forward an Amendment on this subject which will be all-inclusive of these matters. We regard this as an important matter to be looked at and shall be bringing forward an Amendment in that context.
The noble Lord said that he was speaking to Amendment No. 89A, but he wished his other Amendment to be included at the same time. If I may take the more specific points about how he thinks this national policy would work out, can I first refer to laying certain duties on local authorities, in particular the collection authorities. As he knows, already about 400 local authorities collect waste paper separately. This represents about one-third of the collection authorities in England and Wales. There have at times been more than this, but one of the difficulties which arise is that the demand for waste paper fluctuates and it is much easier for some authorities than for others to find a firm which will use the paper when it is collected. For this reason, we believe that it is much better to give a discretionary power to collection authorities. There is nothing to prevent any of them from collecting waste paper separately and the means by which
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they do it is a matter for their own discretion.
The next practical difficulty that arises after they have collected the waste paper is the question of what would be done by authorities who could not find an organisation to take it. I take the point that we should be looking to new methods of finding a use for waste paper, and indeed there is an organisation. The Department of Trade and Industry offers very favourable grant terms through the Paper Industries Research Association for approved research projects concerning the re-use of waste paper. The Government, in their forward policies, are considering further uses for it, but, as I said, a great deal of local authority waste paper is not the kind of paper which is in greatest demand.
The other point which the noble Lord made I think in a sense he answered himself. He suggested that a sum should be fixed by the Department of the Environment each year which a disposal authority would pay to the collection authority, but, as I think he himself said, it would be difficult for the Department to be drawn into discussions of this kind. Once again the situation would vary from authority to authority and it would be very difficult to settle a sum nationally which could be regarded as fair by all the local authorities concerned.
I can give the Committee an assurance that my Department and the Department of Trade and Industry are continuing to keep the waste paper situation under review, and so far as my Department are concerned we shall be looking to see whether the actions of local authorities after local government reorganisation achieve any increase in supplies for which there seems to be a long-term demand. The Joint Waste Paper Advisory Council has already sent a circular letter to the Chief Executives of the new counties drawing their attention to the way in which, as refuse disposal authorities, they can benefit by having less refuse to dispose of if they give financial encouragement to waste paper schemes in their areas. We will undertake to consider whether anything further needs to be done—whether, for example, we should refer to waste paper salvage in any circular we send to the new local authorities. I think we must recognise that any advice which we give to local authorities must take

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account of responsibilities to their ratepayers and the need to have satisfactory contacts with industry. I hope, therefore, that I have said enough to indicate that we are broadly in sympathy with the intention of all these Amendments that have been put down, but we shall be putting down an Amendment ourselves on the question of re-cycling. We believe we should give advice to local authorities but that they must have freedom to decide whether or not they will collect the waste paper separately.
VISCOUNT AMORY: I think we will all be in entire agreement with the principle which has led the noble Lord, Lord Leatherland, to bring forward these Amendments. I believe we must be grossly extravagant in regard to waste paper. On the other hand, I find myself wholly in agreement with the points made by my noble friend. I believe that an Amendment as mandatory as the one which the noble Lord, Lord Leatherland, has put forward would not be appropriate in the present circumstances. For the reasons which my noble friend has mentioned I do not think that it takes enough practical account of the varying economic values of waste paper in different parts of the country. As to the financial payment by the disposal authorities for what they will have saved by not having to handle this waste paper I also think that would be very difficult to settle centrally, because expenses would vary. I do not myself know much about refuse disposal, but I imagine that there may be cases where a disposal authority, if paper was eliminated from its waste, would find the rest of the waste more expensive to dispose of. That is the sort of factor that would have to be taken into consideration in the financial payment.
So while wholly sympathising with the objective of the noble Lord, Lord Leatherland, as my noble friend says I think we should be wrongly advised if we were to incorporate the Amendment in this present Bill.
BARONESS WHITE: I am sorry, but I do not think this is really good enough. I believe the whole country feels that we have reached a point in our industrial and commercial development when we must take recycling and the re-use of materials far more seriously than we have
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in the past. Every noble Lord must have read on the front page of his newspaper that because of the world shortage of newsprint one would have to place firm orders, and so on. My noble friend Lord Leatherland was also right to draw attention to the fact that if one does not re-cycle one has to cut down trees, and this matters to some of us. We believe that this is a civic responsibility, not merely a commercial operation.
I believe that the Government would find that they have lost a great deal of sympathy, particularly among the younger generation, if they did not indicate, at least by taking the waste paper side of re-cycling seriously, that they were in earnest over this. Paper is the easiest of materials to handle, in the household and in the office and at the processing end. There are much greater difficulties with certain other substances, but there are no real technical difficulties in regard to paper; and the very least I had expected the noble Baroness to do was to accept the first Amendment moved by my noble friend, because this simply asked that on request a collection authority should provide a separate receptacle for waste paper, either free of charge or on payment of a reasonable charge. If the area was one which was not going to be able to dispose of the paper it could charge a considerable amount for the receptacle, and therefore very few persons would insist on having such a receptacle But in most areas—and I include the City of Westminster, where I live, and where there is no separate arrangement for private households—it should be perfectly possible to make an arrangement. I had hoped that the noble Baroness would accept the first Amendment, even if she finds some problems in regard to the remaining ones. I hope that she may still do so, because I am afraid that we are really not satisfied with the Government's attitude here, as we are not satisfied with their attitude on other matters.
BARONESS YOUNG: I should like to assure the Committee that we take the question of the recycling of waste paper very seriously. I hope I have said enough to indicate that we are going to table an Amendment of our own. I think there is a real point in regard to putting a separate receptacle for the collection of waste paper. This would be a matter for the discretion of the local authority if it

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chose to do this, but the position would be very complicated if certain householders decided that they would ask the local authority to provide such a receptacle, even if they were prepared to pay for it, and I cannot think that this would necessarily help in the collection of refuse by the collection authority.
BARONESS WHITE: In all the circumstances I do not propose to divide the Committee because I see that we have other matters to be discussed, but I warn the noble Baroness that we are not happy about this matter and that we shall raise the matter again.
LORD LEATHERLAND: I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
EARL ST. ALDWYN: I beg to move that the House do now resume.
On Question, Motion agreed to, and House resumed accordingly.

CONSOLIDATED FUND BILL
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill, within the meaning of the Parliament Act 1911, and read 1a.

STATEMENT TO PRESS BY SECRETARY OF STATE FOR ENERGY
8.35 p.m.
LORD SHACKLETON: My Lords, I beg to move that this House do adjourn during pleasure in order to enable the Secretary of State for Energy to make a statement as to how it was that he came to make a statement to the Press instead of arranging for it to be made in Parliament—a statement of the very greatest importance to this country.
My Lords, the noble Lord, Lord Carrington, is aware that in this House we have congratulated him on his appointment, even though we know that in another place great concern has been expressed about an appointment in your Lordships' House as a result of which it might be thought that another place was denied the opportunity to cross-examine and discuss the performance of a Minister in a most crucial role in the
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present Government. This afternoon we quizzed the noble Lord at some length on questions with regard to fuel supplies, and earlier in the day we had thought it likely that there would be a Statement on the subject of the energy position—all the more so since Questions have been raised, both in your Lordships' House and in another place, as to whether the Government had shown competence in assessing the position with regard to fuel supplies; as to whether it was necessary in fact to have a three-day week and whether the country was going to have to face, as was apparent to us all, a situation of such gravity that in the event of an Election the successor Government would be faced with a situation in which industry in this country was, to put it mildly, broken-backed. The noble Lord answered the questions with his usual skill and I think he will agree that they were put with courtesy—and we assumed that nothing further was likely to be said to-day.
The noble Lord, Lord Windlesham, will recall that I raised the possibility of a further Statement, not bearing directly on this point but with regard to the possibility of Government action with regard to elections. At any rate we accepted that there was nothing more to be said, and in fact, although the noble Lord, Lord Carrington, was subjected to a good deal of questioning, there was no indication that there would be later—a mere couple of hours later—a statement of the very greatest importance to the people of this country. What I gather was said (it is alleged that it was said at a cocktail party, but I rather gather that this was an opportunity that the noble Lord, Lord Carrington, was taking to meet industrial correspondents) was that there would in fact be an immediate increase; that full electricity supplies are to be restored immediately to steel production. My Lords, one of the greatest threats to this country has been the possibility of a decline in the production of steel, and this has been emphasised both in your Lordships' House and in another place.
Furthermore, according to the "tape" the noble Lord, Lord Carrington, said that there were a number of factors which had resulted in the improved position. He referred to the weather—and we are all well aware that the weather has been stormy but unusually mild, as he

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apparently said; and again he called for no worsening of the situation—the pressure that we have seen continually brought upon the miners and on the trade unions—and he said that the Government have decided, in the light of the improved situation at power stations, to restore full electricity supplies to steel production. He further indicated that he is asking representatives of the C.B.I., the T.U.C. and chambers of commerce to see him early next week to talk about a further relaxation for industry and to discuss how it was best to proceed, and that this could mean a four-clay week for industry in about seven days' time, but it depended on the wishes of industry. I should like to ask the noble Lord whether in fact he said that.
My Lords, these are things that ought to have been said in Parliament. They ought to have been said in your Lordships' House; they ought to have been said in another place, where the noble Lord has in Mr. Patrick Jenkins a very competent deputy who could have dealt with all this. I am bound to say that in my Parliamentary experience it is an outrage that a statement of this importance should not have been made in Parliament, and I hope that the noble Lord, in his own interests and in the interests of the good faith of Government towards Parliament, will give some sort of explanation as to how it was this statement was not made in Parliament.
Moved, That the House do adjourn during pleasure.—(Lord Shackleton.)
8.41 p.m.
LORD CARRINGTON: My Lords, have been a Member of your Lordships' House for certainly longer than anyone else present in this Chamber, and I think all your Lordships will know that the last thing I would wish to do is to be discourteous to your Lordships' House. I hope that that will be understood straightaway. I think one must acknowledge that there always is a difficulty in deciding whether or not one makes Statement in the House. Obviously, one does not want to make too many Statements about things; it interferes in the business of your Lordships' House. I think that Statements should be made only on important matters.
My Lords, if I may explain, on this particular occasion I thought it right that
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as soon as possible after taking office as Secretary of State for Energy I should see the industrial correspondents, who would wish to question me about my new job, about how my Ministerial colleagues and I looked at affairs, and that we might be able to explain the way we intended to work. It seemed to me that a good opportunity to do this was on the occasion of the publication of the weekly figures of fuel stocks, which are published weekly and about which there is never any announcement to Parliament. I thought this was a good opportunity because it would enable the industrial correspondents to look at the fuel stocks and to see with me the situation we had reached.
The only decision—and this is a matter of judgment—which I made clear to the audience I was addressing (it was not a cocktail party, but a conference of industrial correspondents) was that I thought that, in the light of the coal stocks position it would be possible forthwith to relax restrictions on the electricity supplies to steel. Steel is a continuous supply process and is already getting 65 per cent. This relaxation would really only mean, broadly speaking, that the electric are furnaces would be able to operate, because even now in the steel industry the coking coal situation is such that there cannot be full production. So this is a comparatively minor adjustment, although I think an important one. On reflection and consideration, I do not think that this particular announcement was something that was worthy of a Statement to your Lordships' House.
My Lords, subsequently I said to the industrial correspondents that the situation with regard to coal stocks, which was much better than one had anticipated, led me to suppose that it might be possible to relax restrictions further in the near future, and that I had to take another look at the stocks before I made a decision on that, and before the Government made a decision on that; but in anticipation of that decision I intended to see the T.U.C., the C.B.I. and the chambers of commerce and so on, in order to discuss with them, if it was possible, what sort of relaxation would best suit them: because, if your Lordships remember, on the occasion when the three-day working week was introduced,

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there was some criticism that there had not been consultation. So I told them this. Of course, if it becomes possible to relax in some way—for instance, by going on a four-day working week or some other variant which may be more practical or desirable to those most interested—the first thing I would do, and I assure your Lordships of this, is to come to your Lordships' House and make a Statement about it.
My Lords, that is what happened. It seems to me that it would not have been right to make a Statement to your Lordships purely about the situation on electricity. That was the decision I came to. It must be for the judgment of your Lordships' House whether I was right or wrong. But on one thing I do assure your Lordships: the last thing I wish to do is to offend the House, or any of your Lordships in it.
8.48 p.m.
LORD SHEPHERD: My Lords, the noble Lord will be the judge of his actions to-day. I have been in this House, not as long as the noble Lord, but sufficiently long, and perhaps a good deal longer than most of your Lordships present here this evening, to be able to respect the integrity of the noble Lord, Lord Carrington. I am prepared to say that what he has done to-day was a question of ill-judgment—ill-judgment, because what we have to understand is that there are two Houses of Parliament. If the Secretary of State is in the House of Commons, your Lordships' House largely depends on the good relations, but if a Statement is made in another place by a Secretary of State, it is repeated in your Lordships' House. That is what we should all require, irrespective of which Party is in Opposition. Therefore, if, in his judgment, a Secretary of State in the House of Lords decides not to make a Statement, lie not only denies this House, but denies the elected representatives in the House of Commons.
My Lords, the noble Lord said that he thought it was a question of interference of important business, but this is an important statement. It is something infinitely more than just the coal stocks. Steel is now to be put on to full time; there is the possible relaxation. This is a major statement. I would acquit the noble Lord of contempt of Parliament if he had, as
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he said, decided to brief the Press, as all Secretaries of State are entitled to do, as it is part of their duty so to do. It would then have been for the Press to use it for general information. But the Secretary of State has been speaking to the nation, on television this evening, has he not? To me, that is the greatest contempt of Parliament, because what the noble Lord has done is to circumvent the two Houses of Parliament, not only in briefing the Press, but in speaking through television on a basis on which he could not be questioned.
I have always thought that one of the fundamental principles of democracy is that Ministers are answerable to Parliament; that they make their Statements, answer questions and defend their position. What the noble Lord has done to-day is to deny Parliament its right to question a Secretary of State on a major principle of policy. I would acquit the noble Lord if it were merely a briefing of the Press, as he said, but to go on television—that, my Lords, I regard as the highest contempt of Parliament.
8.49 p.m.
LORD DAVIES OF LEEK: My Lords, I read the tape, and what I regret is the lack of understanding in this statement. It was a good statement from the Government and one that will give cheer to Ebbw Vale and some of the other Welsh steel producing areas, and to such places in Scotland. It will give cheer, but it will also mean something of a social difference to rents, mortgages and food prices. But being made as it was made, and being made on television, Parliament must watch. Even when the Labour Government was in office, sometimes I criticised this use of the trivialisation of politics. This was the trivialisation of a vital piece of information at this moment when we might go into an Election on February 14. Therefore I have a feeling that this is "jumping the gun" a little to create a feeling of satisfaction in the country, that things are improving. I believe this House and the other place are where this statement should have been made.
I have the utmost confidence in the noble Lord; I think he is a gentleman of great integrity. Consequently, I hope he will not think I am trying to make a cheap personal attack on him. It may have been a mistake, but who am I to

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judge? We have all made mistakes, sometimes stupid mistakes. I have in my lifetime. This was a mistake made because of the withering away of Parliament imposed by the trivial media to-day, which asks for immediate decisions. You have little men and women appearing on television making immediate decisions over mighty problems. We must learn to look at these things in depth, and Parliament on this occasion failed to have the cut and thrust of debate on a good standard.
8.52 p.m.
LORD MERRIVALE: My Lords, I should like heartily to support my noble friend the Secretary of State for Energy, because I do feel that the Opposition have really exaggerated. The noble Lord, Lord Shackleton, has used the word "outrage", and the noble Lord, Lord Shepherd, said that his action was in contempt of Parliament. I must say I find that absolutely fantastic. For a number of hours now we have been debating the protection of the environment; perhaps we should be protected from fallacious Motions rather than the environment. For a number of hours we have been discussing the Protection of the Environment Bill in Committee; and neither the noble Lord the Leader of the Opposition, nor the Deputy Leader have been here. The Chief Whip of the Opposition has not been here for a number of hours. Suddenly, out of the blue, when the House is about to rise, they come forward with this trumped up excuse for criticising my noble friend. I think it is disgraceful. I think it is much more important that my noble friend should talk to the nation through the medium of television when addressing a few million people, rather than try to influence seven noble Lords who support the Leader of the Opposition.
LORD DAVIES OF LEEK: My Lords, does not the noble Lord realise that this is giving way to the diktat of one person through the use of the media? This was the first place, or the other place was, where such a discussion should be established.
VISCOUNT AMORY: My Lords, noble Lords opposite in venting their criticism have acknowledged—as those of us who
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have been long in one or other House know—that it is always a nice matter of judgment when to make a satement or not. Furthermore, I believe noble Lords opposite would agree that there is no single Member of your Lordships' House who would be less likely to wish to be contemptuous of the rights of this House than my noble friend Lord Carrington. Having acknowledged that it is a nice matter of judgment, it seems to me a little anomalous that the Government should have been criticised by noble Lords opposite, and certainly by those in another place, for not having passed out enough information about this emergency, and occasionally for not having passed it out quickly enough. It seems anomalous that, when the noble Lord has done that as quickly as possible, noble Lords should be taking him to task in the way they have. Although this principle that Ministers are responsible to Parliament is an immensely important one, there is a risk occasionally that we are a little too touchy and sensitive in this matter. Personally, I entirely exonerate my noble friend from any wish or intention whatever to treat this House with contempt. I am sure that will be the feeling of the majority of the Members of this House.
THE EARL OF ONSLOW: My Lords, may I, as possibly the junior Member of the House present, as opposed to the senior Member, Lord Carrington, congratulate him on telling the nation that in fact we can increase our production. This seems to me very much more important than the susceptibilities of various people opposite.
LORD LLOYD OF KILGERRAN: My Lords, I do not want to enter into competition with the noble Earl as to who is the most junior Member of the House, but I think that I qualify for that. I am also at this disadvantage, that I have not seen the subject matter of this dispute about which so much energy is being dissipated this evening. I have listened to the energetic way in which the noble Lord, Lord Shepherd, and the noble Lord, Lord Shackleton, have pressed this matter, and I have listened to the energetic way in which the Minister of Energy has made his statement. I think that possibly at this late hour it would be a solution of this matter if I were to say on behalf of myself (to quote

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a statement by the Secretary of State for Energy in an earlier exchange) that having heard the statements from both sides of the House, "That is that."
LORD CARRINGTON: My Lords, I do not know whether or not I am in the situation of having to wind up, but I should like just to say one more thing, if I may. First of all, I would thank my noble friends who have supported me. But I would say at the same time to those noble Lords who have criticised me that I bear not the slightest ill-will: I know that the three noble Lords opposite are staunch upholders of Parliament and therefore I make no criticism of that at all. I only come back to what I said at the beginning. I think it is a matter of judgment as to whether or not I should on this occasion have made a Statement to your Lordships' House. I came to the conclusion that I should not. I must tell your Lordships that in point of fact I still think that I was right; but I may be totally wrong. I would, in conclusion, if I may, just reiterate once again that I hope, whether noble Lords think I am right or wrong, that your Lordships will acquit me of any discourtesy to your Lordships or to this House.
LORD SHACKLETON: My Lords, the noble Lord's statement was more acceptable than the ludicrous remarks of his noble friend Lord Merrivale, who clearly has no understanding of Parliamentary custom. I never really think it is worth bothering with the noble Lord, so I will leave him there. But I do take more seriously the remarks of the noble Viscount, Lord Amory. I realise that it is always a matter of difficulty to judge these matters. The noble Lord, Lord Carrington, defended his action; he in fact indicated that it was a matter of judgment, and that he had formed the judgment, which he still inclines to, that he was right. I am bound to say with all seriousness to him that his judgment has been wrong in this matter. This is very much a Parliamentary matter; it is a matter of concern to us in the House of Lords, and particularly in our relations with another place.
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The noble Lord, Lord Carrington, said that he had been criticised, or the Government had been criticised, for not having sufficient consultation. Whether telling the Press what ought to have been told to Parliament ranks as consultation is somewhat dubious. But the fact remains that the Press have attached the greatest importance to this statement. The Press Association political correspondent talks about Lord Carrington's surprise packages, and says that this will be used by the Government to pressurise the miners into settling their dispute with the Coal Board. I can only say that I wish the noble Lord was not in fact the Leader of the Conservative Party at this moment. He knows we do not criticise his integrity. But here is a statement which reveals among other things that, so far from stocks running down, in certain areas stocks have actually risen. I must say to him that he has committed an error of judgment and, as a result, though he may have not intended it, has committed a discourtesy to Parliament.
I think we shall have to leave the matter, until noble Lords have read the tape and seen the really rather strikingly high figures of stocks. Then perhaps we can discuss this matter next week. We have to-day, for the first time, had a chance to cross-examine and talk to the noble Lord, Lord Carrington, on actual facts and figures that he has given. When he says that he thought it was right to give an opportunity to the industrial correspondents, I can only say that it would have been better if he had given this opportunity to us, with the information which he did not give to us this afternoon. I think that an error of judgment was committed. I think that the noble Lord has done a real disservice. He knows that the Opposition leadership, while I have been leading it, and my other noble friends, have not indulged in unnecessary, captious debating in this House, and we are deadly serious in our criticism. However, I beg leave to withdraw my Motion that the House do adjourn during pleasure.
Motion, by leave, withdrawn.

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