Sitting of 1 July 1974

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    GREATER LONDON COUNCIL (MONEY) BILL
    Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    Public Investment
    Mr. Rookerasked the Secretary of State for Industry what is his latest estimate of the amount of public funds being directed into private manufacturing industry in the United Kingdom.
    The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): About £700 million, net of repayments, in 1974–75.
    Mr. Rooker: Will my right hon. Friend press this policy of opening up the books of British industry with the utmost vigour and not be put off by the
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    more mediocre sections of British management, as typified by the Chairman of Dorman Smith Holdings, who has probably taken from the State everything he thinks he is entitled to, anyway?
    Mr. Benn: I share my hon. Friend's feeling. The Trade and Industry Sub-Committee recommended that the Government should be open in publishing the figures, and that I intend to be.
    Mr. Tom Boardman: Will the right hon. Gentleman also give the converse—the amount of public funds provided by private manufacturing industry in the form of taxation, direct and indirect, and so on?
    Mr. Benn: I share the right hon. Gentleman's view that the wealth of the community is created by working people and not solely by the boards of private companies in manufacturing industry. The wealth is created by those who work in industry, and those people must know the facts.
    Mr. Skinner: Does my right hon. Friend not find the argument about companies paying tax and being subsidised, as put by the right hon. Member for Leicester, South (Mr. Boardman), more than a little cock-eyed? Surely most working people have to pay tax, and it is part of their tax which goes to help these private companies. Where is the right hon. Gentleman's argument, therefore?
    Mr. Benn: My hon. Friend is right. We shall make sense of these industrial decisions only if more light is thrown on the extent to which we are interdependent, and that is what I intend to do.
    Mr. Eldon Griffiths: I appreciate that the right hon. Gentleman is anxious, for ideological reasons, to pursue this vendetta against private industry. Is it not a fact, however, that during the past five years public sector industries have received £5·3 billion by way of aid from the State? We do not need to begrudge that, but would not the right hon. Gentleman do more for national unity if he refrained from a vendetta against one sector of industry and concentrated on making both the private and the public sectors more confident about the future?
    Mr. Benn: The hon. Gentleman knows that one of the arguments I have already used is that the decision by the previous Government to force the public sector to run at a loss was yet another form of subsidy for private manufacturing industry. The hon. Member would do better to admit candidly that there are figures which should be published, because the public are entitled to them. He should accept that as the basis of the recommendation of the Trade and Industry Sub-Committee, and he should not pretend that this constitutes a statement of Government policy about the firms concerned, which he knows quite well is not the case.

    Companies (Government Proposals)
    Mr. Peter Reesasked the Secretary of State for Industry when he expects to complete his study of proposals to designate 100 top companies which should be subject to planning agreements.
    Mr. Moonmanasked the Secretary of State for Industry when he expects to complete his proposals relating to the planning agreements.
    The Minister of State, Department of Industry (Mr. Eric Heffer): The Government will be announcing their proposals in due course.
    Mr. Rees: In view of the statement by the Chancellor of the Duchy of Lancaster that the Government do not want to engineer a confrontation with the private sector of British industry, will the Minister confirm that should his consultations
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    with industry and the top 100 firms show implacable hostility to his proposals he will, perhaps, abandon his ideas of extending public control over the private sector.
    Mr. Heffer: The proposals will not be my proposals or my right hon. Friend's. They will be the Government's proposals and they will be based upon the manifesto upon which the Labour Party fought the last election. Of course, the 100 top companies were categorised by the Conservative Government in their counter-inflation policy.
    Mr. Roy Hughes: Will the Minister assure the House that he will continue to enlighten the British people about the true situation, since, according to reliable economic forecasts, all they have to look forward to is a level of unemployment exceeding 800,000 in the near future, very low levels of investment for British industry, and a huge trade deficit? That is what the Tories are trying to defend.
    Mr. Heffer: My hon. Friend is correct. The Government intend to enlighten the British people about the present economic situation, and we also intend to deal with the situation by using new methods and new ideas to solve our problems in a positive and rational way.
    Sir J. Eden: Are these to be Government proposals, or are they proposals of the Labour Party? What consultations has the hon. Gentleman had with the chairmen and shareholders of the companies?
    Mr. Heffer: I assume that the right hon. Gentleman is aware that Members on the Government side of the House happen to be members of the Labour Party. They also fought the election on the basis of a manifesto drawn up by the Labour Party. We have made it absolutely clear that full consultations will take place once the proposals are announced.

    Motor Cars
    Mr. Madelasked the Secretary of State for Industry if he will estimate the level of motor car production for the remainder of 1974.
    Mr. Hal Millerasked the Secretary of State for Industry what forecast he has of demand for new cars in 1974 and 1975: and what is his estimate of the

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    implications of that forecast for profitability and future investment in the motor industry.
    The Under-Secretary of State for Industry (Mr. Michael Meacher): Demand for motor cars is sensitive to a number of home and overseas influences and the forecasts are not sufficiently precise to justify publication. Changes in demand are only one of a number of factors influencing production, profitability and investment.
    Mr. Madel: Does the Minister agree that unless there is a much higher level of activity in the motor industry employment in that industry will be at risk? In view of the need to develop engines which use less fuel, which is expensive in development costs, will the hon. Gentleman urge upon the Chancellor of the Exchequer the need to reduce the present level of taxes on the motor industry if we are to guarantee full employment in it?
    Mr. Meacher: The level of activity is very important, but it is a matter for the industry itself, of which it should be expected, according to the level of demand, to be able to take account. We are prepared to consider any assistance requested under the Industry Act, but any relaxation in hire-purchase charges or credit controls, or changes of tax, such as the hon. Gentleman requested, is a matter for my right hon. Friend the Chancellor of the Exchequer. I shall make sure that he is informed of what the hon. Gentleman has said.
    Mr. Ronald Atkins: Is my hon. Friend aware that the motor car industry's production is suffering throughout the world—in Germany, Japan and elsewhere—and that that is not due everywhere to British taxation?
    Mr. Meacher: My hon. Friend is entirely correct to say that a major problem for the car industry is the depressed state of the economies around the non-Communist world. The May 1974 registrations in Japan were down by 45 per cent. The European car market is expected to decline considerably next year. What was a significant disadvantage for the British motor car industry was the three-day working week. The loss of output of both motor cars and commercial vehicles in the first quarter of this year compared with the third
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    quarter of 1973 was no less than 20 per cent.
    Mr. Miller: May I help the Minister with the estimates of the motor car industry itself for production and demand? Its latest estimate, in June, of the demand in the home market—[HON. MEMBERS: "Question."] Is the Minister aware that the motor industry's latest estimate, in June this year, of demand in the home market shows a drop of 27 per cent. compared with last year, and that the estimate for production, although showing a drop of only 6 per cent. depends on the export market and also means that a large number of cars will be going into stock? In view of the cost of money at present, will the hon. Gentleman take steps to ensure an increase in demand in the domestic market for the motor industry?
    Mr. Meacher: I am well aware of the facts to which the hon. Gentleman draws attention, but I draw his attention to the fact that the then DTI investment intentions inquiry undertaken at the end of last year indicated a 13 per cent. rise in manufacturing investment this year, but that as a result of the three-day working week it collapsed almost to zero, although I am glad to say that it has now significantly improved.
    Mr. Heseltine: Will the hon. Gentleman tell the House why the figures to which he refers were collected after the end of the three-day working week?
    Mr. Meacher: The figures to which I referred were collected before the three-day working week, immediatly after, and most recently, some time after it ended. They showed the pattern to which I referred.
    Mr. Heseltine: Does the Minister realise that I have here the document on which he relies, which clearly states that the contributors were asked early in April and that the replies were received in April and May?
    Mr. Meacher: I have already referred to those figures, but I have drawn attention to figures which come after those to which the hon. Gentleman has referred.

    Nickel (Exports)
    Mr. Patrick McNair-Wilsonasked the Secretary of State for Industry if he

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    will take action to limit the export of wrought nickel, in view of the present shortage facing industry; and if he will make a statement.
    Mr. Meacher: No, Sir. Although there is a tight supply position in nickel products there is no evidence that export controls would be warranted.
    Mr. McNair-Wilson: Is not the Minister aware that as a result of the steep increase in the exports of nickel British manufacturers are having to pay a surcharge of between 12 per cent. and 15 per cent. to import the same product, and that this will necessarily be reflected in the cost of their products to consumers in this country? Will he take action to make sure that this international conspiracy in the nickel market is brought to an end?
    Mr. Meacher: The export position of nickel has historically been one in which Britain has been a net exporter. I do not believe that there is a special problem at present, inasmuch as neither producers nor consumers have told us that they have serious difficulties. We have received no complaints or representations about supply. As to the question of an international conspiracy, I draw the hon. Gentleman's attention to the fact that it is as a result of the action of his Government that we can no longer take unilateral action under the regulations of the EEC to impose an export ban.
    Mr. Bruce-Gardyne: Will the Minister examine the role that the Price Commission plays in all this? May we take it that, as usual, it is exacerbating the problems of the customers for wrought nickel and also the balance of payments by pumping wrought nickel out of this country to find more attractive and desirable markets abroad, when it is needed here?
    Mr. Meacher: I seem to recall that the Price Commission did not originate on the Labour side of the House, but I am glad to be able to inform the hon. Gentleman that the Price Code is to be reviewed this summer.

    Investment Intentions (Inquiry)
    Mr. Pardoeasked the Secretary of State for Industry on what date his Department intends to publish the results
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    of its next inquiry into investment intentions.
    Mr. Benn: On 7th October 1974.
    Mr. Pardoe: I am most grateful to the right hon. Gentleman for that reply. Is he aware that the last survey of investment intentions carried out by his Department was done before the Budget results had sunk fully into the consciousness of industrialists, and that therefore they have not had sufficient time to take account of them? If the new survey shows a pessimism corresponding to that of the last one, what steps will the right hon. Gentleman take to encourage new investment? In particular, how does he intend to distinguish between what will be profitable and what will be unprofitable investment?
    Mr. Benn: The hon. Gentleman will no doubt have seen the Financial Times survey of business opinion, published today, which shows that three times as many businessmen are optimistic about the future today as there were in the first three months of this year, when the previous Government left office. He will also know that there has been a general increase in confidence since the previous Government left office, and that during the period of the last Government there was a collapse of investment, in marked contrast to the substantial increase that occurred under the previous Labour Government. He will also well know that the Government's policies for industry will be designed to achieve, and will achieve, an increase in investment.
    Mr. Eldon Griffiths: If the right hon. Gentleman thinks that there has been an increase in confidence he simply does not understand what the English language means. May I ask him two questions? First, in the June survey of industrial investment intentions there is what is described by his own Department as a substantial weakening of investment intentions. What will he do about that? Secondly, will he give an assurance now that the next survey of investment intentions, which is due in early September, will be published on its due date and will not be postponed or suppressed for electoral reasons?
    Mr. Benn: The hon. Gentleman should not assume that we shall do what his

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    Government did in delaying the publication of key figures. If he disagrees with the Financial Times survey, perhaps he will sort that out with the Financial Times. I have quoted the Financial Times survey. I remind the hon. Gentleman that investment rose by 18 per cent. under the last Labour Government and dropped by 15 per cent. under his Government. That is the actual investment performance. I hope that the hon. Gentleman will remember that some of the reasons for the collapse of investment intentions during the last few months of the last Government were, first, the collapse of the boom, second, the oil situation, third, the cuts made by the last Chancellor of the Exchequer in December and, fourth, the disastrous three-day working week, for which the hon. Gentleman shares responsibility.

    Regional Employment Premium
    Mr. Radiceasked the Secretary of State for Industry whether he will now increase the regional employment premium.
    Mr. Heffer: As my right hon. Friend the Chancellor of the Exchequer said in his Budget Statement, we intend to continue the existing rates of payment beyond September 1974 while considering further possibilities for the future.
    Mr. Radice: Does my hon. Friend agree that the REP has been seriously eroded by inflation? Further, does he accept that restoring the REP to its original value would help the regions to provide effective protection against the high level of unemployment that is forecast for 1975?
    Mr. Heffer: I think that my hon. Friend is aware that the determination of the REP is not within the scope of my Department. The Department of Industry, of course, has a view on this matter. We are all concerned about inflation and we feel that steps must be taken to deal with it.
    Mrs. Kellett-Bowman: Will the Minister and his right hon. and hon. Friends bear well in mind that the regional employment premium is extremely damaging to intermediate areas such as the ones that I represent, in Lancaster? Therefore, will the Minister do nothing to increase the
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    premium, and will he try to persuade his right hon. and hon. Friends to abolish it?
    Mr. Heffer: That may be the view of the hon. Lady but it is not the view of the CBI or the TUC. They favour very much the continuation of the REP and they have expressed opinions that it might be increased. Surely the hon. Lady is aware that if the REP had not been introduced the level of unemployment would have probably been greater in the under-developed areas.
    Mr. Wigley: Is the Minister aware that whatever the position may be in intermediate areas, development areas or special development areas, there will be a great welcome for any extention of the REP? Further, does the hon. Gentleman agree that there is a requirement for certainty as to the length of time that the premium will exist for industry's investment plans in such areas?
    Does the Minister appreciate the need for financial incentives for industry to be introduced apart from REP, to overcome, in particular, deficiencies in industrial infrastructure in development areas, such as roads and railways? Such matters are often the greatest hindrance to getting companies to set up in development areas. Will the hon. Gentleman put pressure on the appropriate Ministry?
    Mr. Heffer: The hon. Gentleman will be aware that the Government made clear that the REP would be continued beyond the date that it was due to be phased out and that this has meant reassurance to industry in development areas. He will also be aware that we are very concerned about building up industry in development areas. That is why we shall be bringing proposals before the House to help in that direction. They will be proposals that have not been welcomed by both sides of the House.

    Companies (Public Ownership)
    Mr. Stanleyasked the Secretary of State for Industry if he will publish the list of industries in which the National Enterprise Board will not be making investments.
    Mr. Dixonasked the Secretary of State for Industry whether he will make a further statement about his plans for nationalisation of industry.
    Mr. Giles Shawasked the Secretary of State for Industry how many companies in the food manufacturing industry are likely to be affected by the Government's proposals for nationalisation.
    Mr. Tim Rentonasked the Secretary of State for Industry whether he will undertake not to propose nationalising any of the British metal mining companies.
    Mr. Benn: I must asked the hon. Members to await the Government's proposals for the extension of public ownership, which will be published as soon as possible.
    Mr. Stanley: When considering how far the right hon. Gentleman wishes to expand the activities of the National Enterprise Board, will he give careful consideration to the figures that were given to me by his right hon. Friend the Chancellor of the Exchequer last Thursday, which showed that in the financial year 1972–73—the last year for which complete figures are available—there was a net inflow from private industry to the Exchequer, after taking subsidies into account, of £2,151 million? That is the equivalent of a net inflow of £6 million per day in comparison with a net outflow from the public sector of industry, during the same year, of £1 million per day. Will the right hon. Gentleman take this opportunity to acknowledge that there is a net inflow from the private sector of industry of approximately £6 million per day and that the suggestions that he has made repeatedly that private industry is a net drain on the Exchequer are totally inaccurate and grossly misleading to the House and to the country?
    Mr. Benn: In summary, the hon. Gentleman has said that private industry pays more money to the Government than is received in the support schemes. That has never been in dispute—[HON. MEMBERS: "Oh."] I have never disputed that. The problem that the Conservative Party must face is that despite substantial payments by the taxpayer to private manufacturing industry by all parties since the war we have not succeeded in removing the unfair disparity in regional job opportunities or in attracting enough investment in private manufacturing industry. It has remained difficult even to deal with the non-oil deficit. Those are
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    the problems to which the National Enterprise Board and planning agreements will be directed.
    Mr. Gwilym Roberts: Does my right hon. Friend accept that many of his hon. Friends believe that a rapid extension of public ownership is vital for the future of the British economy and that they would be very concerned if there were any curtailment of the activities of the National Enterprise Board? Does my right hon. Friend accept that our concern is not whether there should be an extension of public ownership but merely what form that extension should take and how democratic it will be?
    Mr. Benn: I share my hon. Friend's view, and I can assure him that we shall bring forward, in the form of a Government statement, what we said in our manifesto. I am glad that my hon. Friend referred to democracy. The element of democratic control will be the new and important dimension.
    Mr. Dixon: When the right hon. Gentleman is contemplating acquiring shares on behalf of the Government, I assume that he will be aware that under the Industry Act he, the Secretary of State, is required to dispose of shares or stock as soon as, in his opinion, it is reasonably practicable to do so? Some of my hon. Friends and I understand that some of the right hon. Gentleman's hon. Friends are under the impression that it will never be—
    Mr. Speaker: Order. The hon. Gentleman must make his point in the form of a question.
    Mr. Dixon: Will the right hon. Gentleman confirm that he would be acting illegally if, in his opinion, the shares could never be returned to private ownership?
    Mr. Benn: I am grateful to the hon. Gentleman and to his right hon. and hon. Friends for giving me legislation that allows me to do certain things. I am well aware of the limitations that that legislation imposes. The hon. Gentleman will no doubt await with keener interest the improvements to his legislation that we have in mind.
    Mr. Thin: As private investors are apparently reluctant to invest their money in private industry to the extent that is

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    currently needed, will my right hon. Friend tell me why the Opposition should be so reluctant for the taxpayer, whose money, apparently, is to be used, to have the same rights of ownership as a private shareholder would expect for his money?
    Mr. Benn: I agree with that. The problem that the House must confront is not that this Government have no confidence in capitalism, but that capitalism in Britain appears to have no confidence in itself.
    Mr. Shaw: Does the right hon. Gentleman agree that his statement today has done nothing to restore confidence and that at present confidence is one of the biggest factors which is weakening British industry? Does the right hon. Gentleman agree that in the food manufacturing industry the problems of primary producers on the one hand and of restrictions on margins in retailing on the other are combining to produce the lowest level of profitability in the industry for many years?
    Mr. Benn: The general problem to which the hon. Gentleman referred in the latter part of his question is a real one. I put it to him that to define confidence solely in terms of what the City of London thinks and not to take into account the confidence of working people as a whole explains exactly why the Conservative Government collapsed in the biggest failure of public confidence that we have had since the war.
    Mr. Cryer: Does my right hon. Friend not accept that the National Enterprise Board is of vital importance to British industry because the owners of capital have been loyally and patriotically exporting it at the rate of £1,100 million a year to countries like South Africa, where people can be exploited to much greater advantage?
    Mr. Benn: My hon. Friend has identified another important failure, namely, that there has been a system in operation under which it was more profitable to put money into empty office blocks or invest it abroad than to put it into the means by which the British people must ultimately earn their living.
    Mr. Renton: The Prime Minister said yesterday that a clear frontier must be defined between private and public in-
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    dustry. Will he tell us where that frontier lies, as there appears to be considerable confusion in the Labour Government and more importantly within the minds of the British public, on this issue? Is the right hon. Gentleman aware that nothing he has said today helps clear up the confusion?
    Mr. Benn: The hon. Gentleman ought to examine the record of his own party. He will find that legislation was introduced which represented an enormous blurring of the frontiers between the public and private sector through the support given by the taxpayer to private manufacturing industry. Of course I share the view of the Prime Minister that in extending public ownership we shall be drawing new and clearer frontiers.
    Mr. Jay: Will my right hon. Friend give us an assurance that when the Government advance public money to private firms some share security or other security will be accepted in return?
    Mr. Benn: Yes. That is our manifesto commitment.
    Mr. Heseltine: Will the—[Interruption]—I must make it clear to hon. Members opposite that the entire country is suffering from a state of total lack of industrial confidence—
    Mr. Speaker: Order. There may be a time and place for doing that. This is Question Time.
    Mr. Heseltine: Will the right hon. Gentleman explain to his colleagues that I will not be shouted down on this matter, here or anywhere else? Will he make them understand that, for the first time that I can remember, four Members of the Government have been put up within a week to try to disclaim the policies of the Secretary of State for Industry—the Prime Minister, the Paymaster-General, the Secretary of State for Energy, and the Home Secretary's PPS? Has that ever happened under any Government before? Will the right hon. Gentleman now explain why the great dialogue of consultation that was to go on, leading to a Green Paper on industrial proposals, has now been superseded by a White Paper? Will he tell the House, following the efforts of his colleagues to tell industry that there is nothing to be worried about, whether he is still pursuing his inquiries

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    into the affairs of 4,000 subsidiary companies in this country? Will he under-stand—
    Mr. Raphael Tuck: "Twenty Questions."
    Mr. Heseltine:—that the crucial difference between our use of the Industry Act, which we passed, and the use he seeks to make of it is that we did not back it up with the bludgeon effect of nationalisation.
    Mr. Bean: There will be consultations on the basis of the White Paper. The uncertainty of which the hon. Gentleman complains has been deliberately created by the hon. Member for Bury St. Edmunds (Mr. Griffiths) and himself, who, being informed that the 20 largest companies were to be asked how much taxpayers' money they had received, converted that into a claim that they had discovered a secret list of companies intended for public ownership. They then went to a published book and discovered the names of the 4,000 subsidiaries owned by those 20 companies and pretended that they had discovered Government policy. Is it not a fact that the two hon. Gentlemen have made absolute fools of themselves?
    Mr. Tebbitasked the Secretary of State for Industry if he will list those companies with which he has discussed his policy of nationalisation.
    Mr. Norman Lamontasked the Secretary of State for Industry whether he will make a statement about his discussions with interested parties about his intentions both about nationalisation and planning agreements with industry.
    Mr. Biffenasked the Secretary of State for Industry if he will list the bodies with whom he has recently discussed the formulation of planning agreements in respect of major companies operating in the United Kingdom.
    Mr. Benn: I have had general and informal discussions with the TUC, the CBI and others about our policy thinking. But, as I have already made clear, detailed consultation must await the publication of the Government's proposals.
    Mr. Tebbit: Will the right hon. Gentleman do us two favours when he comes
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    to that point? First, will he give those concerned more than the 20 minutes he recently gave the CBI to reply to his proposals? Secondly, when he does go to see these companies, will he share the official car with the Chancellor of the Duchy of Lancaster and the Parliamentary Private Secretary to the Home Secretary, so that they do not have to follow him, at additional expense, to try to undo the damage that he has done?
    Mr. Benn: I should always be glad to get a lift from my right hon. Friend the Chancellor of the Duchy of Lancaster, and therefore I take that point. All I would say about the first point raised by the hon. Gentleman—the case of the Court Line—is that, to the best of my knowledge, the Conservative Government did not consult either the CBI or the TUC, and the TUC certainly found that it was able to say that it hoped, whatever the solution, that the jobs in the development areas could be saved. I am not complaining that the CBI felt unable to give a detailed answer, but it is important that those who have general policy views to push upon the Government should also recognise that Governments themselves face very difficult problems at short notice, and that Ministers often do not have a great deal of time to reach their own conclusions.
    Mr. William Hamilton: In view of the serious state of the National Health Service, will my right hon. Friend give an assurance that he will take steps to take over parts of the pharmaceutical industry—which we included in the manifesto—and also, through the proposed National Enterprise Board, establish a public purchasing agency to enable the NHS to make considerable savings by purchasing its equipment through a public board of that kind?
    Mr. Benn: I suspect that my hon. Friend is anticipating a Question which he put down to me and which was to have been transferred to another Minister but could not be so transferred because of an industrial dispute on HANSARD. I understand what he has said, however, and the reasons for it.
    Mr. Biffen: Inasmuch as these discussions will touch on the private sector of the steel industry, does the right hon. Gentleman intend to discuss them, or has

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    he already discussed them with the European Community? Will he indicate whether he has any plans which will touch upon the investment plans of the private steel sector, and whether the Press reports which have appeared concerning his talks with the European Commission are broadly accurate?
    Mr. Benn: I have made no proposal with respect to the private sector, but the hon. Gentleman will recognise that the terms of the Treaty of Paris, which govern the Coal and Steel Community, have, in effect, removed control over the steel industry, both public and private, from national Governments and conferred it upon the Commission. Indeed, when the Conservative Government, in the Counter-Inflation Act, sought to take control of steel prices, albeit temporarily, they fell foul of the Commission. These general problems of the steel industry were discussed by me in the context of what was a purely fact-finding visit to Brussels last week.

    Departmental Work Programme (Trade Union Adviser)
    Mr. Eldon Griffithsasked the Secretary of State for Industry if he will define the functions and give the salary of the trade union adviser whose appointment was made known in his note on the current work programme of his Department.
    Mr. Benn: Mr. K. J. Griffin was appointed to advise me on all aspects of the work of my Department as they affect trade unions. As to salary, I refer the hon. Member to the reply which my right hon. Friend the Prime Minister gave to the hon. Member for Fife, Central (Mr. Hamilton) on 2nd May.
    Mr. Griffiths: Is this paid adviser of the right hon. Gentleman's a candidate for Parliament? If he becomes a candidate, will the right hon. Gentleman cause him to resign?
    Mr. Benn: The hon. Gentleman should do his homework. Mr. Griffin served throughout the whole of the four-year period of the Conservative Government. He was invited by Ministers in the Departments of Trade and Industry to stay on. I have confirmed his appointment to advise on trade union matters, and there is no question of his being a candidate for Parliament.

    Post Office (Investment)
    Mr. Bruce-Gardyneasked the Secretary of State for Industry what is now his estimate of the savings on the Post Office investment programme during the current financial year resulting from the December 1973 public expenditure statement; how this compares with the original estimate; which specific items he has introduced into the programme; and how these additions will be financed.
    Mr. Benn: In accordance with the statement made on 17th December 1973 by the then Chancellor, the Post Office programme for 1974–75, as recorded in the last White Paper on Public Expenditure (Cmnd. 5519), was cut by 20 per cent. For telecommunications, the cut was subsequently reduced by 14 per cent. for the first half of the year, and we have recently reduced it to 12 per cent. so that the cut for this year as a whole will be 13 per cent. Its application is a matter for the Post Office. The partly restored programme will be financed in the same way as the original one.
    Mr. Bruce-Gardyne: Will the right hon. Gentleman confirm, particularly in the light of his spineless incapacity to prevent the Price Commission cutting the revenue to the Post Office by £60 million, that the reinstated programme which he has introduced will further swell the Government's net borrowing requirement and thus fly in the face of the Chancellor's budgetary objectives?
    Mr. Benn: The true position—the hon. Member knows it better than most—is that we have undone some of the damage done by the previous Chancellor to the Post Office investment programme. We are doing what we can to deal with the accumulated deficit relating to telecommunications never made public under the previous Government.
    Mr. Stott: Is my right hon. Friend aware that the reduction of the former Chancellor's capital cuts in the telecommunications industry will be welcomed throughout the whole of that industry? Is he further aware that it will put right a programme which would have set the industry back for at least a decade? Does he appreciate that the membership of my union, the Post Office Engineering Union, welcomes this step?
    Mr. Benn: I am grateful for my hon. Friend's comments. I might add, since there are so many pleas that there should be greater confidence in industry about future prospects for investment, that the partial restoration of the damaging cuts by the previous Government will greatly help confidence in the telecommunications industry and save jobs in the development areas.
    Mr. Peyton: When the right hon. Gentleman refers, as he constantly does, to the difficulty of securing adequate investment in industry, will he undertake to consult—and that means listening to the opinions of other people, as well as voicing his own—those responsible for the difficult task of running industry? Will he pay attention to such people? Does he realise that unless he does so he is in danger of going down in history as a kind of music-hall comedy Mussolini?
    Mr. Benn: I should be happy to have my record compared with the right hon. Gentleman's in history but, beyond that, I think he will agree that in partly restoring the damaging cuts in telecommunications investment the Government enjoyed the full support of the telecommunications manufacturing industry, which would have been worst hit had the last Government's programme of cuts gone forward in full.

    National Enterprise Board
    Mr. Ridleyasked the Secretary of State for Industry what estimate he has made of the cost of the operations of the proposed National Enterprise Board in terms of compensation for assets acquired.
    Mr. Heffer: I must ask the hon. Member to await the announcement of the Government's proposals.
    Mr. Ridley: Is the hon. Gentleman aware that time is running out for the British economy and that every pound of lousy printed money he gives in compensation will bring closer the demise of the economy? Is he further aware that this is not the time for boy scout Fabianism of the sort that the Government are undertaking?
    Mr. Heffer: I did not know that I was a boy scout Fabian, but I do know that I am a Minister of Her Majesty's Government and that that means that once the proposals are totally formulated
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    they will be placed before the House. The hon. Gentleman and his right hon. and hon. Friends should not exaggerate the situation and cause the precise lack of confidence about which they are complaining.
    Mr. Skinner: When the Government draw up their proposals, will they take into account the resolution of the National Union of Mineworkers this week, dealing with the takeover by the National Coal Board of all the manufacturing of mining equipment, especially in view of the massive amounts of money which have been milked out of the NCB and from the ribs of the miners by the roof support manufacturers, as evidenced in the Select Committee report last week? If there is any question of compensation, would it not be a good idea to use the £74 million which it is suggested has been made in excessive profits by the roof support manufacturing firms out of the NCB?
    Mr. Heffer: I am sure that my right hon. Friend the Secretary of State for Energy will take note of the decisions of the NUM, both on this and other points. We have not yet put to the House our proposals about compensation, and I ask all hon. Members to await those proposals before they make all sorts of statements, exaggerated or otherwise.
    Mr. Viggers: Is the hon. Gentleman aware of the value to this country of investment by foreign companies? Is he aware of the massive amount of damage which is being done to the confidence of foreign companies which may be contemplating investment here?
    Mr. Heffer: On a number of occasions Ministers have met representatives of foreign companies which wish to come to this country, and I can assure the hon. Gentleman that they have not been discouraged from investing here. In relation to this matter the present Government are pursuing much the same policy as the last Government did. Hon. Members may shake their heads, but that is the situation. The hon. Member for Gosport (Mr. Viggers) should understand that we also wish to rely on our own efforts in this country to deal with our own problems, and the way to do that is to come forward with our proposals, such as the establishment of a National

    21
    Enterprise Board and planning agreements.

    Concorde
    Mr. Adleyasked the Secretary of State for Industry what further steps he intends to take to aid the entry into service of Concorde, following the recent transatlantic flights.
    Mr. Martenasked the Secretary of State for Industry if he will make a statement on Concorde.
    Mr. Benn: As I said in reply to the hon. Member for South Angus (Mr. Bruce-Gardyne) on 24th June, the Government are pressing ahead with their review of the project. In the meantime, work is continuing on the existing programme with the objective of ensuring that Concorde can be put into service at the earliest practicable date.
    Mr. Adley: In view of the right hon. Gentleman's enthusiasm for manufacturing industry, does he not agree that the low-import high-labour content of Concorde should fit in very nicely with the general thesis that he has been propounding this afternoon? Does he not agree that new orders from airlines for the aircraft are most unlikely to come forward in large numbers until British Airways and Air France have it in service? Will he continue his efforts to ease off the fence as many of his colleagues as possible?
    Mr. Benn: The hon. Gentleman follows this matter carefully and will know that these points have been put forward powerfully to Ministers in the review. He will also have read in the papers that the prospects of possible orders from Iran Air have now come about. [HON. MEMBERS: "No."] If hon. Members would stop booing a moment and listen, they will find that I used the word "possible". HANSARD will confirm it. Prospects of possible orders from Iran Air have come in, and no doubt the whole world will have noted the Atlantic trip of Concorde to Rio de Janeiro and back, demonstrating the superb technical capability of the aircraft.
    Mr. James Lamond: In making this review, will my right hon. Friend bear in mind that British Airways must continue to buy the Boeing 747, with con-
    22
    siderable adverse effect on our balance of payments position, amounting probably to £320 million between now and 1976? Might it not be better to buy fewer Boeings and more Concordes?
    Mr. Benn: The responsibility for British Airways lies with my right hon. Friend the Secretary of State for Trade. Anyone who followed the British Airways figures which were published recently will have drawn from them the clear conclusion that British Airways believes that there will be a creaming-off from subsonic aircraft into supersonic aircraft. At the same time, the figures estimated the effect of this on British Airways' profitability.
    Mr. Marten: Will the Minister persuade the British Aircraft Corporation to fill up a Concorde aircraft with hon. Members who oppose Concorde and flip them across to New York for lunch and back in the evening for the 10 o'clock Division? What is the total cost of Concorde so far, what would be the cost of cancellation, and how many jobs would be at risk?
    Mr. Benn: In reply to the latter part of the supplementary question, I published the figures in March and I am afraid that I cannot, off-hand, give an updated account of the ultimate costs, because they would need to be accurately worked out. I agree with the hon. Gentleman that those who have observed the transatlantic flights would have no doubt whatsoever of the superb technical achievement that Concorde represents.

  JURISDICTION (WORKING PARTY INQUIRY)
  Mr. Loveridgeasked the Attorney-General when he expects the working party of the Law Commission and the Scottish Law Commission set up in May 1972 to consider the basis of jurisdiction of courts in the British Isles to make custody and wardship orders and the question of the recognition and enforcement of such orders in other parts of the British Isles to complete their task.
  The Attorney-General (Mr. S. C. Silkin): The working party is also considering the recognition and enforcement of custody orders made overseas. The

  23
  subject has wide international implications and I regret that I cannot at present say how long the working party will need to complete its task.
  Mr. Loveridge: Is the right hon. and learned Gentleman aware of the sad case in my constituency, where a mother, relying on a custody order from a court in England, allowed her son to visit Scotland, only to find that she lost the custody of her son because of the action of a Scottish court? She found that the English court order had no legal force in Scotland and that she had not even an enforceable right of access to her son while he remained in Scotland. In view of this domestic sorrow, will the right hon. and learned Gentleman, with his colleagues, take steps to speed up the review of jurisdiction between courts of England and of Scotland?
  The Attorney-General: I am well aware that there are problems of the kind referred to by the hon. Gentleman. The hon. Gentleman will also be aware, from some notorious cases that have occurred, that there are similar difficulties between this country and countries abroad. It is important—and it is the view of the Law Commissions—that the whole of these matters should be looked at together and not the one in isolation from the international aspect.
  Mr. Ancram: Will the right hon. and learned Gentleman make clear that his answer in no way implies criticism of the Scottish courts and the way in which they handle questions of custody, as there are people in Scotland who believe that the Scottish courts' view of custody is as good as if not better than that taken by courts in England?
  The Attorney-General: What I said was certainly not intended as a criticism of anyone, or of any procedure. This is a matter which should be considered in depth.
  Mr. Dalyell: Is there a timetable for this consideration, because it is an important matter?
  The Attorney-General: There cannot, unfortunately, be a timetable, because it is a matter which has wide repercussions. I assure my hon. Friend that the Law Commissions are regarding it as a matter of importance and urgency, as it obviously
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  is. It is much more important that we should get it right than that we should produce an answer quickly which may be wrong. My hon. Friend must bear in mind that the law of other countries is involved, in addition to that of our own.

  Trade Directories
  Mr. Ronald Atkinsasked the Attorney-General what is his policy with regard to references to the Director of Public Prosecutions with particular reference to the prosecution of directory firms seeking payment for directory entries which have not been sought under the Unsolicited Goods and Services Act.
  The Attorney-General: The dishonest practice to which my hon. Friend refers has been the subject of a number of successful prosecutions brought by local police and prosecutors. Where there is cause for complaint the public should bring it to the notice of the police, who will normally refer to the Director cases of unusual difficulty which require his advice. My policy is to ensure that the Director's limited staff is deployed to the best advantage.
  Mr. Atkins: Does not my right hon. and learned Friend agree that his Department has a special responsibility here, in that the law is of little value unless it is enforced and, if necessary, tested in the courts? Does he not also agree that there is urgent need to deal with the illegal activities of directory firms, which have been rife in my constituency?
  The Attorney-General: I entirely agree. I said that this was a dishonest practice, and it should be stopped. At the moment I am not satisfied that the local police and prosecutors are unable to deal satisfactorily with the offences, but, as I said, the Director of Public Prosecutions is always available in case of particular difficulty, and he will certainly use his staff to the best advantage to deal with this and other important matters that come before him.
  Mr. Rost: As the bogus trade directory racket is flourishing more than ever, does not the Attorney-General agree that the law, even when enforced, does not provide a deterrent? Will he please consult his colleagues on the Front Bench to see whether legislation can be introduced?
  The Attorney-General: I agree with the hon. Gentleman that there are borderline cases, and it is right to keep the matter under review. I shall see that my right hon. Friend is aware of the point which the hon. Gentleman made.
  Mr. Bidwell: Has my right hon. and learned Friend's attention been drawn to a company that is operating from Hong Kong in an attempt to evade this law?
  The Attorney-General: I understand that that company may be an invisible export from this country, and I have heard of it.
  Sir John Hall: Is the Attorney-General aware that, despite prosecutions, the activities of these unscrupulous firms have not ceased? They overcome the problem by inserting in small print words to the effect that "this statement is not to be regarded as an invoice", which apparently places them within the law. Can nothing be done to stop the practice?
  The Attorney-General: I entirely agree that there are borderline difficulties. When the statute has been in operation sufficiently long—and that stage may already have arrived—it will be right to look at it again to see to what extent it allows matters that should not slip through the net to do so. I shall ensure that my right hon. Friend is made aware of the view which has been expressed on both sides of the House.

  SEDITION
  Mr. Sedgemoreasked the Attorney-General how many prosecutions for sedition have been brought during the past 12 months.
  The Attorney-General: The Director of Public Prosecutions has brought none, nor, so far as I am aware, has anybody else.
  Mr. Sedgemore: Has my right hon. and learned Friend read the speech that was made about two weeks ago by a leading Conservative politician, in which he likened miners and engineers to knifemen, garotters, blackmailers and thugs? Do not such statements, which are designed to stir up emnity and hatred between citizens, constitute sedition? In
  26
  making those statements does not Lord Hailsham bring dishonour to the office which he once held?
  The Attorney-General: I understand that the noble Lord was referring to the offence of treason in certain remarks he made a little while ago. He is entitled to his view, whether the matters to which he referred were or were not concerned with treason. I am not sure that I agree that they went so far.
  Mr. Biggs-Davison: Is it not sedition or treason for members and supporters of terrorist movements and armies against us to parade and provoke in the streets of our cities?
  Mr. Silkin: I do not think that I am qualified to give an answer to that question at short notice, particularly as it touches an area of extraordinary difficulty. I am sure that the hon. Gentleman will get an answer if he consults his hon. and learned Friend the Member for Wimbledon (Sir M. Havers), who is now seated on the Opposition Front Bench.
  Mr. Lawrence: Will the Attorney-General say why offences which in the ordinary way would fall to be dealt with under the Treason Act are not so indicted? Who takes the decision not to indict them, and what criteria are involved in taking that decision?
  Mr. Silkin: That is a general question, which depends on an assumption the accuracy of which I am not aware. If the hon. Gentleman cares to send me details of any case that he has in mind I shall look into it.
  Sir D. Walker-Smith: Is the Attorney-General aware that the speech by Lord Hailsham to which reference is made was an extensive survey of the problems facing the country today and, taken in its proper context and as a whole, was a reasoned defence of the importance of the rule of law and the sanctity of contract as a way of life in this country?
  Mr. Silkin: I am sure that the House will be reassured by what the right hon. and learned Gentleman said. For my part, unfortunately, I have not had the opportunity of reading the speech as a whole, and these days I get very little time to read the newspapers at all.

  COURT LINE LIMITED
  Mr. Bruce-Gardyne: On a point of order, Mr. Speaker. It may not have escaped your notice from reports in this morning's Press that the Secretary of State for Industry was to make a further statement about Court Line Ltd. Would it be possible to seek through you, Mr. Speaker, an assurance that, since no statement is being made on this subject, the right hon. Gentleman will not seek to shelter behind a written answer to my Written Question No. 7 which is on today's Order Paper and by dealing with the matter in that way avoid the opportunity of being cross-questioned by the House?
  Mr. Speaker: The hon. Gentleman knows that that is not a matter for the Chair, but no doubt what he said will be noted.

LONDON WEIGHTING
The Secretary of State for Employment (Mr. Michael Foot): With permission. Mr. Speaker, I should like to make a statement about the Pay Board's report on London weighting.
The Government have today laid before the House and published the report of the Pay Board on London weighting.
The report was commissioned by the previous administration as an independent examination to advise what changes are required in the basis and operation of the London weighting formula, which was generally adopted on the recommendation of the National Board for Prices and Incomes in 1967. On taking office, the Government decided that it was desirable for this review to be completed and have urged all those concerned to await its outcome.
The Pay Board has taken evidence from many groups and has undertaken detailed surveys. It has concluded—as did the NBPI—that the proper purpose of London weighting is to take account of the different costs of working in London from elsewhere in the country, and that it is applicable only to those in London who have national rates of pay and not to those who adjust their rates of pay to the London labour market. London weighting is, therefore, a solution for a largely
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public sector problem and should not be paid to those in the private sector who are not in exactly the same position.
With this in mind the board recommends that London weighting should be made as comprehensive as possible to deal with the measurable differences in the costs of working as between London and the rest of the country. It should take account of housing, travel to work and certain other quantifiable costs, for all of which the board suggests what it regards as valid measures. It also sets a value on certain intangibles, such as relative standards of housing. On this basis it suggests that the level of weighting should be raised to £400 for inner London and to £200 for outer London.
By "inner London" the board means an area within four miles of Charing Cross and for the limit of "outer London" it takes the Greater London Council boundary. It would, however, be left to negotiators to decide whether or not to alter these boundaries to suit their circumstances. If they do so, the board envisages that it would distribute the same total sum of money which the Pay Board's boundaries would have produced for the employees concerned.
The levels of weighting suggested by the board are based on information relating to last April, and the board makes no recommendation on the question of retrospection. Looking forward, the board suggests that there should be a simple annual up-dating operative from 1st July each year and relating to costs in the preceding April as published by my Department. There would be a major review of the whole operation of the scheme after three or five years.
The board says that London weighting cannot be designed to help the first-time house purchaser. It sees this as a major but separate problem with which each employer must deal in whatever way the situation merits. Assistance for first-time house purchasers would raise issues for the public sector which the Government will have to consider in the light of the report. There is little doubt, however, that housing is at least as important as pay in many of the labour supply problems of London.
The Government appreciate the clarity and thoroughness of the report's analysis. The board's examination was set in train when statutory pay controls were in full

29
operation, but the recommendations are entirely applicable to a voluntary situation. These recommendations provide a common set of principles by which substantial improvements can be negotiated in the existing rates of London weighting and by which negotiators can arrange for their objective adjustment in the future. The Government regard the report as a most useful contribution to the resolution of this particular problem and believe that the principles proposed should be applied in negotiations on London weighting both in the public sector and by private sector negotiators who are in the same position.
As I have earlier made clear, it is the Government's intention that employers and unions should be free to negotiate on this matter; and the Government are glad to endorse the report as affording guidance by which negotiations on London weighting can now sensibly proceed. If these negotiations lead to settlements before the statutory pay controls are ended, the Government consider that the report provides the exceptional circumstances to enable me to enter into consultation with the Pay Board with a view to using my consent powers to enable implementation.
Although action on London weighting should help to ease labour shortages in the services affected as between London and the rest of the country, I recognise that it is not a complete answer to the special problem of London Transport, on which a strong case was put to me some time ago jointly by the employer and unions. Action on that special situation will need to be taken in the light of the outcome of the current arbitration on London Transport pay.
Mr. Prior: The right hon. Gentleman will be aware that the report was produced in response to a request from the Conservative Government. I think that hon. Members, and particularly London Members, recognise the hardship and extreme difficulties with which public service employees have had to contend over the past year or two.
Will the right hon. Gentleman comment on the question of pensions and the Government's attitude to suggestions made in the report? Secondly, are the figures grossed up for tax purposes, as suggested in paragraph 157, because that does not seem to be clear from reading
30
the report? Thirdly, is he aware that it seems extraordinary that the figures for inner and outer London should be so clearly defined as £400 and £200? It is difficult to understand how on earth those figures could have been arrived at with that degree of definiteness. Lastly, will he comment on one matter which is always a difficult matter for the House of Commons but is an important point. I refer to the fact that the figures of £400 and £200 have appeared to be fairly common knowledge over the weekend and were on the BBC one o'clock news programme today. What efforts will he take within his Department to find out where the leak occurred and to make sure that it does not happen again?
Mr. Foot: If I may take the right hon. Gentleman's points in the reverse order, let me deal first with the matter of others having anticipated what I have said today. I have read some reports which have guessed right and some which have guessed wrong, but, in view of the ones that guessed right, I agree that I shall need to make some investigations into the matter and see how it may have occurred. The right hon. Gentleman is well aware that this is not a unique development.
As to why there should be such a sharp distinction between inner London and outer London, with £400 recommended for one and £200 for the other, I can understand that this may be thought to be a very sharp distinction, but I invite hon. Members to read the whole report. It is to this conclusion that a lot of the Pay Board's evidence pointed. It will be found in the report and the discussion of these matters how this has arisen.
I think that we are bound to take account of the way in which the board has tried to examine these matters. However, it should be emphasised that the board itself has anticipated the criticism in that it has said that where different boundaries or different divisions might cause difficulty it is open to the negotiators to alter the arrangements and to have a kind of "kitty" system whereby the total amount proposed to be shared amongst the people concerned could be divided in a slightly different way. But that is underwritten by what the Government have said and what I have said in my discussions, that the report is a guideline to what should happen, and that the

31
matter is to be dealt with by free negotiation.
As to whether these figures are grossed up for tax purposes, that is the situation as proposed in the report. It is not an entirely novel principle. It was partly taken into account in the 1967 report, which acted partly on that principle. But perhaps the board on this occasion has acted more deliberately on that principle and is applying its own method of cost comparison, which is the basis of the report itself.
As for pensions, that is a matter which will also be partly open for negotiation, as is indicated in the report.
Mr. Guy Barnett: Is my right hon. Friend aware that there are factors affecting public service workers in London, outside transport and housing, which makes it peculiarly unattractive for people to seek employment there? I have in mind particularly the police and teaching. Does the report take into account these factors in assessing the London allowance to make it more attractive?
Mr. Foot: The police stand to benefit from the report on the same basis as anyone else to whom London weighting applies. The report makes it clear that specific labour supply problems have to be dealt with by employers and unions and their remedies tailored to different cases. A main strand running through the report is the emphasis that the board is not seeking to apply it to remedy labour shortages. That is a different matter which has to be dealt with in different ways. If the board tried to apply the principle of London weighting to deal with labour shortages, it would get into hopeless difficulties, as would anyone seeking to apply it on that basis.
Mr. Pardoe: Is the Secretary of State aware that the problem is largely created by over-centralised wage bargaining and that part of the answer would be for these nationalised industries in the public sector to go over to local or plant bargaining? Can he confirm that it is still the Government's policy to reverse the trend of people and jobs to the South-East, especially to Greater London? Does he think that this report will help reverse that trend or encourage it?
Mr. Foot: This report will be no disadvantage to regional policy. I think that it will merely make the situation clear. The matters which the hon. Gentleman raises were taken into account by the board when it made its decision. Representations along those lines were put to it, although, for the reasons which it gives, it generally rejects them.
As for the hon. Gentleman's suggestion that national rates of pay should be abandoned generally as a solution to the problem, that raises far wider questions. I think that London would be furious if we held up these proposals for London weighting in order to secure the strange remedy which the hon. Gentleman proposes. This report seeks to deal with the immediate injustices which occur for many people working in London, and I think that most people in London will welcome it on that account.
Mr. Raphael Tuck: Can my right hon. Friend explain why the standardisation of boundaries is regarded by the report as being impracticable? Does he realise that he is using a star instead of a circle so that places just outside the trough of the star may be outside whereas places inside the peak of the star may be inside, with the result that people living 30 miles from London are getting the allowance and others living 25 miles from London are not getting it? Why, for example, does Watford borough come outside the allowance whereas Watford rural, which is further away, comes inside?
Mr. Foot: If I could explain that last point immediately, I should be even wiser than I may appear to be at the moment. I cannot explain that problem. But I can say that the whole question of whether the boundaries should be standardised was considered carefully in the report. I believe that one of the reasons why the board did not do it is that, if it had done it, it would have given rise to even greater anomalies. The board has tried to take account of some of the situations which have prevailed in the past—for example, about the inner London boroughs—in making its recommendations. It has also safeguarded the situation by this "kitty" principle which I have mentioned as being one which should be a guide to spread the money wider or in different ways if that is thought desirable by the negotiators. As I have stressed, we believe

33
that negotiators will have to settle some of these questions. That is why we have been so eager that the matter should be restored to a system of free negotiation.
Mr. Grylls: Can the Secretary of State elaborate a little on his reply to the hon. Member for Watford (Mr. Tuck)? It is a matter for concern to those living in the inner Home Counties that the border with the GLC is artificial. The costs of housing and other services for such people as teachers, policemen, firemen and others in the public sector are just as severe as for those living in London.
Mr. Foot: I appreciate the feelings of hon. Members who represent areas just beyond the GLC boundary or other boundaries not affected by this report. There is a large stretch of the rest of the country which is not affected by the report. That is one of the matters into which the Pay Board was asked to inquire, not merely how to distinguish between what should be done in the GLC area and the neighbouring areas but also how it could make proposals which would be fair to London and to the rest of the country. So these matters have to be taken into account. On the specific matter raised by the hon. Gentleman, the board examined it and came down as I have described, for the reasons which he will see in the report.
Mr. Wellbeloved: Is my right hon. Friend aware that there will be widespread disquiet in London at the embodiment of the principle of continuing discrimination against those public servants working in inner London and in outer London? Can my right hon. Friend confirm that it is now open to employers and trade unions freely to negotiate agreements without taking account of that unacceptable discrimination?
Mr. Foot: I answer my hon. Friend directly. As I have said two or three times already, it is open to negotiators to vary the proposition along the lines that I have suggested. They need not necessarily be governed by those boundaries. But that would mean that those in inner London might get somewhat less and those in outer London somewhat more.
Mr. Atkinson: That is not on.
Mr. Foot: The question that is on is negotiation on the basis of these general
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proposals. I said to all those who came to see me on delegations beforehand that we would act immediately the report came out. I think that we have acted swiftly in making these arrangements on the very day that the report is announced. Negotiations will now take place. Those negotiations are to ascertain how best the report can provide a way to proceed. Both in the report and in what I have said, there is considerable flexibility in the way that the matter can be applied.
Mr. Berry: Will the right hon. Gentleman tell us more about the difference between outer and inner London? I do not begrudge the £400 for inner London. The right hon. Gentleman said that one of the criteria was travel to work. He must be aware that it is not half the fare to travel from outer London. Since people in outer London travel long distances, may I ask him to have another look at the matter and consider bringing the £200 much nearer to the £400?
Mr. Foot: This is an independent report. The board examined the question posed by the hon. Gentleman. Obviously, it would not have proposed different figures if it had not examined these facts. I suggest that he and other hon. Members should look at the report and study the reasons for these proposals. I repeat that, to guard against some of those difficulties, the board has suggested how the matter can be made more flexible within roughly the same figures. The Government have said that the matter is now for negotiation. We will not for many more weeks be governed by the statutory system, and that will assist the situation. I believe that the report can be used as a valuable guide for settling the matter, taking into account that the sums proposed are to be fair to London and to the rest of the country. London Members must take that into account as well as the rest of the proposals.
Mr. Atkinson: Does my right hon. Friend agree that the report bristles with the very anomalies that he assured hon. Members he would do everything possible to avoid? Does he accept that it comes as some disappointment to many hon. Members on this side of the House that he has accepted a report which will perpetuate the differentials in London which are clearly unfair, especially when the whole basis of the report is upon postal

35
districts? Is he aware that he adds to that disappointment if he now says that within a global figure of £289 million, or thereabouts, negotiators can, for instance, shift teachers from one postal district to another to conclude agreements that may possibly iron out these anomalies? Therefore, will he assure the House that whoever negotiates—Burham or the London boroughs themselves—it will be possible for teachers who are working and living in areas like Tottenham to get the same amount as those living further from the centre in, for example, Hampstead when it comes to the final negotiations?
Mr. Foot: All those questions can be taken into account in the negotiations. I do not agree that we have accepted all the anomalies and rigidities of the situation. I am sure that my hon. Friend will agree, when he reads the full report, that it overcomes many of those rigidities and anomalies that existed and that the proposals are of a more general character. In the next few weeks we shall be doing away with the statutory controls altogether, and that will greatly ease the situation.
The general figure is not absolutely laid down. However, I think that it ought to be a guide. A London weighting system must be fair to people not only in London but outside London, and that must be taken into account. That consideration figures most prominently in the report.
Mr. McCrindle: Does the Secretary of State agree that his acceptance of the report will create additional consternation in the areas just outside Greater London boundaries? Does he recognise that, even on the present differentials, areas such as Brentwood and Ongar are losing teachers, postmen and the like to Greater London? I wonder whether in those circumstances he would suggest that a further inquiry be set up to consider whether an intermediate area should be created between the Greater London boundary and other parts of the country.
Mr. Foot: It is impossible to deal with the situation by suggesting that there should be a series of intermediate areas outside the London area. The more that suggestion is advanced, the more it indi
36
cates the problems that would arise for the rest of the country if that were so.
The hon. Gentleman said that there were labour shortage problems in the area just beyond the GLC fringe. Labour shortage problems exist in many other parts of the country, particularly in some of the other big cities. The report is not designed to deal with specific labour shortage problems, as hon. Members will discover when they read it carefully. Indeed, they need not read it carefully; a cursory reading will be sufficient. That is not the principle upon which the report is based. Labour shortage problems must be looked at in a different way, as I indicated in the latter part of my remarks. I invite the House to read the report carefully before judging it. No doubt we shall have a debate on the matter. I am certainly eager that we should do so. When we debate the matter, London Members will be able to put their views and hon. Members representing the rest of the country will be able to put their views as well.
Mr. George Cunningham: Does my right hon. Friend accept that the higher the London allowance is placed, the more useful it will be to have two zones, an inner and an outer, to reduce the harshness of the distinction between those in the outer boundary and those completely outside London? Does he also accept that the inner London area proposed by the board is so small compared with the whole of the GLC area that if it were to be spread over the whole of the GLC area the figure that came out would be very close to the lower figure of £200 and very far away from the higher figure of £400?
Mr. Foot: I think that my hon. Friend should study the report before he jumps to all those conclusions. The report, in paragraph 129, states:
"As far as Inner London is concerned we accept that the eight Inner London boroughs should be regarded as broadly equivalent to the 4-mile area."
It then goes on to describe how it should be done. Therefore, the House would be well advised to read the report before passing a verdict upon it.
When said bluntly, as I and the board have to say it bluntly, the distinction between inner and outer London appears very sharp and, in a sense, crude. But I believe that hon. Members, when they

37
have read the whole report, seen the safeguards that are proposed for dealing with the situation, and understand the further safeguards which the Government have proposed for dealing with it, will appreciate that the report offers a great advantage to Londoners and that the vast bulk of them will welcome what is proposed.
Sir B. Rhys Williams: This decision will make it easier for people living in inner London to meet their rents, which we welcome, though not, it seems, the first-time home buyer. How do the Government propose to make corresponding increases in the supply of accommodation to rent, particularly in the private sector?
Mr. Foot: That is a different question which should be put to a different Minister. The hon. Gentleman will understand that the report refers to first-time home buyers roughly in the terms in which I mentioned them in my remarks. Although the board's statement is more elaborate, it makes suggestions which will have to be taken into account by the Government.
Mr. Hayhoe: If the "kitty" principle is applied to the teachers and one figure is set for the whole of the London area, may I ask whether the right hon. Gentleman would indicate or estimate what that would come out at? Does it come out at about £260? It would be helpful if he could give an indication.
Secondly, if teachers and others on the boundary negotiated for a single London allowance for the whole area, it would create the absurdity that a teacher working in Hounslow and living in Spelthorne would be paid the allowance, whereas a teacher who lived in my constituency but taught in Spelthorne would not. These difficulties at the margin may create great dissatisfaction, particularly when the allowance has been raised.
Mr. Foot: Not being a mathematician or anything of that order, I shall not try to guess the figure, but what the hon. Gentleman said underlines the Government's wisdom in proposing the abolition of statutory control. It means that the negotiations about these matters can take
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place and be implemented under a system where statutory controls no longer exist.
That is why, right from the first day when delegations of teachers and others—but teachers were prominent—came to see me I asked them to await the publication of the report and said that they would not be bound by the details of it. We hoped that by the time the report was published we would have reached the situation that statutory controls no longer existed. These controls are to be removed within two or three weeks' time, and I look forward to the enthusiastic support of the Opposition in removing them.

GRANGEMOUTH DOCKS (EXPLOSION)
Mr. Speaker: I call the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) to raise a point of order.
Mr. Harry Ewing: I apologise, Mr. Speaker, for not giving more notice of my point of order.
There has been a serious development in my constituency today as a result of an explosion at Grangemouth docks which has resulted in one man being killed and several seriously injured, and even now the whole area is still sealed off. There have been further explosions, the electricity supply has been cut off and the situation is extremely serious.
The purpose of my point of order is to ask whether you have had a request for a statement to be made by a Minister who has responsibility for events such as I have described and, if not, whether, if such a request is made to you, facilities will be granted to enable a statement to be made.
Mr. Speaker: I have not received any request for such a statement, but I am sure that what the hon. Member said will be noted.

GRANGEMOUTH DOCKS (EXPLOSION)

  BUSINESS OF THE HOUSE
  Ordered,
  That at this day's Sitting, Mr. Speaker shall put any Question necessary to dispose of Proceedings on the Social Security Amendment Bill not later than Seven o'clock.—[Mr. Golding.]

ORDERS OF THE DAY

  SOCIAL SECURITY AMENDMENT BILL
  Order for Second Reading read.
  4.3 p.m.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): I beg to move, That the Bill be now read a Second time.
  I begin by congratulating the hon. Member for Rushcliffe (Mr. Clarke) and the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) on what I think is their first appearance at the Dispatch Box. We have never faced each other across the Floor of the House from the Front Benches but we have met on television on at least one occasion. I congratulate both hon. Members on their elevation, if that is the right word, to the Front Bench and express the hope that for a long time to come they will fulfil to the satisfaction of the Conservative Party their rôle as Opposition spokesmen.
  As from April 1975, the majority of men and women in employment will pay reduced national insurance contributions. That is the principal significance of the Bill to employees. In addition, retirement pensioners will welcome the Bill since it will bring enough money into the National Insurance Fund after April 1975 to pay for the new higher levels of retirement pensions—that is £16 and £10—and widowhood and other benefits which came into operation on 22nd July of this year and the further increases in line with national average earnings envisaged in the legislation. These increases were not envisaged in the Conservative Social Security Act 1973, and that is why we have brought forward this Bill.
  Clause 2 is clearly the most important clause of the Bill, and it is to that that I turn first. The House will note that the contributions of employees, that is Class I contributors, are to be at 5·5 per cent. of reckonable earnings, as my right hon. Friend the Secretary of State announced on 7th May, instead of at 5·25 per cent. as set out in the Social Security Act 1973.
  The implication of this change, which will make possible the payment of the substantially increased pensions brought
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  in by the present Government, is that as from April 1975, compared with contributions that will be payable before that date, employed men who are currently not contracted out of the scheme will make a reduced contribution up to the level of income of £62 a week.
  A man on £11 a week will pay 25p less, a man on £46 will pay 27p less, and even the man on £62 will pay 24p less. Only at the ceiling of £69 reckonable earnings will male employees not contracted out of the current scheme have to pay an increase—13p as from April 1975. The broad picture is that male employees not contracted out of the full graduated payments into the State scheme will have substantial reductions in their contributions as from 6th April next year.
  There will be a similar result for men who are contracted out of the existing arrangements. For those at the bottom on £11 a week, the contribution will drop by 28p, and even the man on £62 a week will pay only 2p more in contributions. The man at the ceiling on £69 a week will pay 39p more than he will be paying immediately before 6th April. The purpose of this is to pay for the increased pensions brought in by the present Government. That figure of 39p represents an increase of 17p over what would have been paid under the Social Security Act 1973 had that been left in operation.
  The situation is similar for women. For non-contracted-out women on between £11 and £62 a week—and that includes the vast majority of women in employment who are not contracted out—the contribution will decrease by between 12 and 14p a week, but again there will be an increase at the ceiling. For women who are contracted out, at the bottom end there will be a reduction of 11p a week, although throughout the rest of the range there will be some increase. However, that increase will not be substantially different from the increase that was inherent in the earnings-related formula upon which both sides of the House agreed during the proceedings on the 1973 Social Security Bill.
  The Bill leaves the share of the burden between employers and other contributors in very nearly the same ratio as it will be from August 1974. The House will

  41
  recollect that on 7th May my right hon. Friend said that she estimated that an employer's contribution of about 8·75 per cent. would be required. The House will notice that the contribution rate in the Bill is not 8·75 per cent. but 8·5 per cent., but there will still be sufficient income coming into the fund.
  The broad pattern of employer contributions will be that for male workers there will be reductions, and often substantial reductions for lower-paid workers, although there will be increases, and in some cases quite large increases, for employees at the ceiling. A similar pattern emerges for women employees.
  Employers' contributions are between 12p and 69p higher a week than would have been levied under the terms of the Social Security Act 1973. When the Government's decision on the £10 and £16 pensions was discussed in the uprating Bill—it is now the National Insurance Act 1974—there were no objections from either side at the increases in contributions which were necessary to pay higher pensions.
  Part of the increases by both employers and employees at the top of the scale—that is at £69 a week—is an inevitable concomitant of using the pattern of earnings-related contributions in a range between a quarter and one and a half times national average earnings, on which both sides have agreed in the past, and which was specifically referred to in the White Paper "Strategy for Pensions", and was translated later into the Social Security Act 1973. The House will have noted that Clause 2(1)(a) brings the upper and lower earnings limits from £8 and £48, as set down in the previous Act, to £11 and £69. This represents the average movement in earnings since the Act was introduced. The £8 and £48 figures were the current figures during the period 1971–72. The House will wish to know that although the earnings floor is £11, those earnings below £11, although paying no contributions, will remain covered for industrial injury purposes.
  Clause 2(2) brings a small measure of relief to retirement pensioners with some employment, to those over pensionable age who are not retired but who cannot meet the contribution conditions for a category A pension on retirement, and also to women over pensionable age who
  42
  are not retired and are subject to the half test under Section 24(2) of the Social Security Act 1973. I spell that out in some detail because I realise that Clause 2(2) is at first sight difficult to understand. Under the terms of the Social Security Act 1973 the contribution of those categories of persons to the National Insurance Scheme was set at 0·6 per cent. As from April 1975 there will be no liability at all for contributions.
  The reasons for this are twofold. First, the House will have noticed that the contribution rate exercised under the married woman's option is raised in the Bill from 0·6 per cent. to 2 per cent. I strongly took the view—indeed the Government did—that it would be wrong to levy two rates of contribution, that is 2 per cent. for one group and 0·6 per cent. for other groups; nor did I feel that it would have been right to levy 2 per cent. on those categories of elderly people who are often among the poorer section of the community and who sometimes feel particularly aggrieved at the operation of the National Insurance Scheme. I refer to the operation of the half test which has been the subject sometimes of protracted debates in Committee on successive up-rating Bills.
  Clause 2(2) brings relief, albeit small, to those three categories of national insurance contributors and will represent a saving to those groups as a whole of something less than £1 million a year. Married women and widows who exercise the option would have been paying 0·6 per cent. under the Social Security Act 1973 and the Bill proposes that this figure should move to 2 per cent.
  I wish to refer to a Press report of what was said by the principal Opposition spokesman on this subject, the right hon. and learned Member for Surrey, East (Sir G. Howe). Judging from the report, I think that he has been under some misapprehension about the results of this upward movement from 0·6 per cent. to 2 per cent. I am not speaking harshly of him or blaming him for this because I think the national insurance system as it exists is. as the right hon. Member for Leeds, North-East (Sir K. Joseph) has said, a "vast Gothic edifice" and it is easy to get things wrong and to make mistakes on the different operations and interactions of the system. Comments by the right hon. and learned Member for

  43
  Surrey, East are reported in the Daily Telegraph of 17th June:
  "Three out of four working wives"—
  judging from a later part of the article that is a reference to working wives who exercise the married woman's option—
  "are in for a ' nasty shock ' by way of a sharp increase in the national insurance deduction from their pay, according to Sir Geoffrey Howe, Conservative Front Bench spokesman on social services."
  Later in the report an example is given of a woman on £40 a week paying £21 extra per year.
  "For one who earns £3,500 the annual deduction will increase by more than £40."
  The situation is that the vast majority of married women paying at the reduced rate will pay less, in most cases substantially less, than previously. If we look first at the total collection of revenue during the first full year of a contribution at 2 per cent., the yield to the national insurance fund will be £30 million a year less than previously.
  I wish to give an example in this connection. The right hon. and learned Gentleman estimated that a woman on £40 a week would pay an extra £21 a year as from 6th April 1975. The position is, however, that she would pay not £21 a year more but £50 a year less if she has been contracted into the State scheme and £30 a year less if she has been contracted out. I appreciate—and the right hon. and learned Gentleman has obviously misunderstood the proposals—that I am not asking him to withdraw anything at the moment, but I know that he will bear in mind what I have said and acknowledge the facts of the situation.
  I shall give the reasons for our decision to raise the figure from 0·6 per cent. to 2 per cent. We are asking employers and better-off employees to pay sometimes substantially higher contributions in order to be able to finance better pensions. The working population is at present growing at a much smaller rate than the pensioner population, and this will continue for the rest of this decade. In 1948, for example, for every one pensioner there were 5½ people, in statistical terms, working. But now the ratio is down to just over one in three. In those circumstances it seemed wrong to ask employers, employees and single women with reasonable incomes to pay
  44
  increased contributions to finance the better pensions which we all want to pay and at the same time for a married woman in the work force—they are in the work force in increasing numbers and have been for the last decade—to pay vastly reduced contributions.
  I wish to give some examples of what will happen under the arrangements we are proposing. The non-contracted-out woman at the earnings ceiling will pay £1·57—that is with the 2 per cent. contribution—a week less next April than she will pay from 6th August 1974. At £62 earnings the figure will be £1·71 less, at £46 earnings £1·18 less and at £23 earnings 38p less. The picture is similar to that throughout the higher ranges, if currently they are contracted out of the existing arrangements.
  So, even at 2 per cent. they will pay substantially reduced contributions in most cases. The question which the House has fairly to face is whether, when we are asking employers and the rest of the work force—that is, males, both married and single, and single women—to pay for these increased pensions, it is not appropriate, even within the contributory system, to ask married women in employment to make a little bigger contribution than would have been the case under the 1973 Act for the present generation of retirement pensioners.
  Mr. A. P. Costain: Could the Minister give us a little more detail? If a married woman is working part time, what option will she have under this scheme?
  Mr. O'Malley: First of all, if a married woman who works part time earns under £11 a week after 6th April 1975, she will not be required to contribute to the scheme at all. If she earns over £11 the situation remains as it is now, and married women and widows generally will have the right to exercise the married women's option. Under the Social Security Act 1973, the level of contribution payable under that option was set at 0·6 per cent. The Bill is setting it at 2 per cent.
  The difference in the two—there is no question of changing the categories here—is that, at 0·6 per cent., they would have had substantial reductions in the contributions that they would have had to pay as from April 1975. At 2 per cent. they have reductions—they are quite

  45
  big reductions, of over £1 at the top—but they are not quite as big as they would have been at 0·6 per cent. I have explained frankly why we decided to adopt that course.
  The self-employed will be paying, with the implementation of the basic scheme set out in the 1973 Act, Class 2 contributions plus the new Class 4 contributions which were first provided for in that Act. The Class 2 contributions remain at £2·41—the figure set as from 5th August 1974. If we had raised those flat-rate contributions in line with the change in Class 1 contributions—that is, both the employers' contributions and the employees' contributions—it would have been necessary to raise that figure to about £2·70. In order to help to ease the burden for the self-employed on lower incomes we decided not to raise it.
  Sir Brandon Rhys Williams: Would it not help the situation even more to introduce graduated contributions for the self-employed?
  Mr. O'Malley: The hon. Member and I have discussed this matter in previous debates and we know that no party political point is involved. He knows the difficulties at present in having fully graduated contributions for the self-employed, involving the Inland Revenue and so on. At the moment we are in the position arrived at by his administration with the Class 2 and Class 4 arrangements. It seemed sensible to keep those flat-rate contributions at £2·41 instead of raising them to £2·70, which, with Treasury supplement, would have brought in about £25 million a year.
  The Inland Revenue estimates that, of 1·9 million people with some income falling within Cases I and II of Schedule D, about 1 million—over 50 per cent. of those who will be paying self-employed contributions—had profits or gains below £1,600 a year. So, for that 50 per cent. and particularly for the people at the bottom, it is helpful that the flat-rate Class 2 contribution has not been raised.
  However, in equity to other classes of contributors, it was decided that while moving up the scale of income on which payments under Class 4 had to be made from £1,150 to £2,500, as set down in the 1974 Act, to £1,600 to £3,500, instead of a 5 per cent. levy there should be an 8 per cent. levy. That would bring in pre
  46
  cisely the amount of money which has been lost to the National Insurance Fund—about £25 million—through not raising the £2·41 rate. It seemed to the Government that this was an equitable way of distributing the load on the self-employed, rather than raising the flat rate once again.
  We all know the arguments, which have been accepted on both sides of the House, about the inequities of the flat rate system and about how the flat rate, once it is pushed up too high, becomes an intolerable burden for lower-paid earners, whether self-employed or Class 1 contributors.
  The Secretary of State, who has power under the Social Security Act to prescribe lower Class 2 rates for self-employed women for a transitional period rather than putting them up in one jump, has decided to use those powers to prescribe a rate of £2·10 for the year 1975–76.
  Apart from these changes, the voluntary contribution, the Class 3 contribution, remains at £1·90, or about 80 per cent. of the Class 2 contribution. The small earnings exemption is raised to £675. The National Health Service contribution from Class 4 remains at about 8 per cent. of the total contributions under that category.
  The remainder of the Bill is confined to bringing existing legislation into line with the 1973 Social Security Act and to minor or technical amendments to the basic scheme, which are adjustments that have been thought necessary in the course of preparation. Clause 1 and the Schedule ensure that the benefit provisions of the 1974 National Insurance Act can continue to apply with the repeal of the 1965 Act and that the earnings rule easements can continue.
  This is a short Bill but an important one. There is a short time left before April 1975 to continue preparations for an earnings-related contributory system. It is vital that it starts efficiently and smoothly. The Bill contains the main outstanding information needed. Naturally, details will need to be discussed in Committee, but I hope that we can press ahead quickly now.
  We shall be making arrangements to ensure that the staff in local and regional offices will visit as many employers as possible to help them with advice and to reply to any queries. I hope that

  47
  employers will get in touch if they are in any difficulty. A full and detailed Employers' Guide to the new arrangements will be published in the autumn and distributed to all employers to supplement the leaflets of guidance already given.
  4.28 p.m.
  Mr. Kenneth Clarke: I should like to thank the Minister for the pleasant way in which he welcomed me to the Front Bench. I have, of course, been in touch with him on this subject for two years or so in my then silent capacity as a Government Whip who followed these matters. I hope that the fact that I have now refound my voice will not damage our relationship, and that we shall remain reasonable and reasoned antagonists.
  I should like to start with one conciliatory gesture. It is not our intention to force an official division on the Bill. We accept that these proposals are necessary to prevent the National Insurance Fund from going into the red after the recent uprating of benefits announced by the Government.
  But we certainly wish to draw attention to the fact that the Bill will substantially increase the financial cost of paying the national insurance benefits for significant sections of the population. I marvelled at the Minister's ability to weave his way through the Bill and persuade the House that on the whole it constituted a great reduction of the burden of national insurance for what seemed an even wider section of the population. The national insurance system may be a Gothic edifice, but the hon. Gentleman certainly should not hide behind the corners in that sort of way. If he intends to sell the Bill along those lines to, for instance, married women in employment and the self-employed, he will find that they regard it as not, on the whole, the most straightforward form of salesmanship.
  I would hesitate to call in the Secretary of State for Prices and Consumer Protection or the Director General of Fair Trading, but there were some assumptions lying behind the figures which the hon. Gentleman used which made the way in which he put matters somewhat misleading—although "misleading" is too
  48
  strong a word. Certainly, however, the hon. Gentleman was putting a very favourable gloss on the effects of his proposals.
  For instance, the hon. Gentleman was taking as his base, as I understand it, the August level of national insurance contributions, which no one is yet paying, and which is an increase introduced by his administration, and he was not making a comparison with the level of contributions as we left it. But, even more important, he was claiming that people would be paying reduced contributions by making comparisons with the contributions paid at present by those who are not contracted out of the Boyd-Carpenter scheme. It is true that, as the Boyd-Carpenter scheme is being wound up next year, people will not be paying Boyd-Carpenter-type graduated contributions. But that is hardly amazing. If a commodity is being withdrawn from the market, one does not expect customers to carry on paying for it after next April. One does not take that saving which they have, on the one hand, as some argument for making them happier about the fact that they are paying a very increased contribution for other benefits.
  Mr. O'Malley: If the hon. Gentleman wants comparisons between present contributions and contributions as they will be from April 1975, may I tell him that it is also true, for example, that for the majority of male employees there will be reductions in contributions next April, compared with the contributions which are currently being paid.
  Mr. Clarke: That is taking part of the third point that I was about to acknowledge that the hon. Gentleman had used.
  In structure this scheme is basically the scheme introduced by the previous Government in the 1973 Act. The then Government were able to anticipate increased benefits without increasing the burden significantly on the lower paid. Therefore, it is possible that the majority of working men are not too badly dealt with. But for those who are paying the new graduated contributions, when they would not have been paying even the Conservative level until April next year, the hon. Gentleman is putting up the bill before it has even been presented to them.

  49
  From April next year, certain groups—particularly married women who exercise the option not to pay national insurance contributions at present, and the self-employed with any reasonable level of earnings from their professions—will be heavily penalised. The House should be informed of that fact, should be aware of it and should judge this measure bearing in mind also that the Government, putting up another post-election bill in this way, have also increased the levels of personal taxation and are in the process of increasing the basic national insurance contributions from August this year.
  Before I come to the very difficult position in which it places the majority of married women and the self-employed, perhaps I should begin with a little of the good news contained in the Bill. The Opposition are amazed, but rather delighted, to see that the Labour Party, now that it is in Government, has at last entirely accepted the structure of the basic National Insurance Scheme which the previous Government introduced in Part I of the 1973 Act. For instance, there has been an extremely welcome conversion to the whole principle of graduated contributions for flat-rate benefits, which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) introduced, faced with strong Labour opposition, in the Act of 1973. This is essential, in our opinion, if one is to have a solvent and successful National Insurance Scheme for the future.
  For some peculiar reason, the Labour Party has always been fiercely opposed to the principle of graduated contributions for flat-rate benefits. We found ourselves urging upon the Labour Party the redistributive effects of this form of contribution for the basic pension scheme. At long last the light has dawned; but perhaps there will be later legislation in which the light will be extinguished again. For the time being, however, that part of the structure of the 1973 Act is being accepted. It gets the scheme away from the basic difficulty faced in the past that it could not be adequately financed out of flat-rate contributions because of the grave embarrassment that that caused to the lower paid when one wanted to raise the contribution revenue.
  As the Government Actuary's report shows, this important change in structure, which the previous Government intro
  50
  duced, gives more buoyancy to the scheme and offers a prospect for the future of increases in the National Insurance Fund, which the actuary says could mean a reduction in contributions, which I am sure we all hope will mean better and perhaps new benefits, if lobbies will only wait until the fund is in a condition to allow that to happen.
  If the Government have been converted to the principle of graduated contributions for flat-rate benefits does this also mean that they have given up at last their constant pressure when in Opposition, that the Exchequer contribution should be raised from the 18 per cent. level, where they appear to be leaving it? It would be somewhat irresponsible, with the inflationary dangers which face the country, to start raising the Exchequer contribution to the National Insurance Fund. The Government urged us to do this when we were in Government and discussing the basic Act. I trust that we are now at last to be told that they have seen the folly off their ways when in Opposition and accept that as well.
  If that is so, we welcome the total conversion to the structure of the 1973 Act. The basic National Insurance Scheme, a very valuable Conservative reform, has been adopted by the present Government, and offers some hope for the future.
  I wish that I could say the same for the Government's attitude towards Part II of the 1973 Act, which relates to the funded second pension that we were about to introduce. But that is the subject of the second debate today, in which we shall deal with the disgraceful way in which the Government have suspended that while they think of something else to put in its place.
  As I have said, there are details of the practice in the Bill which show considerable prejudice on the part of the Government in their treatment of some groups in raising the new higher level of contributions, particularly married women in work and the self-employed, who are disgracefully singled out to pay more than their fair share of increase, above the Conservative proposed levels, in graduated contributions that the Minister is now introducing.
  The cost of Socialism, as my right hon. Friend said in the article to which the

  51
  Minister referred, will be particularly heavy for those groups. Dealing first, with married women in employment—
  Mr. O'Malley: In view of what the hon. Gentleman has said, is he, or is his right hon. and learned Friend, prepared now to admit that he was wrong in what he has said, as his right hon. and learned Friend is reported in the article? If the right hon. and learned Gentleman is not prepared to withdraw something which is blatantly untrue, I hope that the hon. Gentleman will have the decency to do so.
  Mr. Clarke: It is not untrue, as the Minister is inferring. The things that were said are untrue only if one takes the basis of comparison which the hon. Gentleman ingeniously took in his speech. In particular, he must not compare the difference between contributions of those contracted out—
  Mr. O'Malley: I understand that.
  Mr. Clarke: I think that the Minister understands what I am saying. But he drew just that comparison in his speech. He cannot draw any comparison which, in the case of married women, means that a change from 0·6 per cent. of earnings, under our proposals, to 2 per cent. of earnings under the Government's proposals, entitles one to precisely the same limited national insurance benefits, and say that that is not a swingeing increase. The hon. Gentleman is more than trebling the contribution which married women in employment will have to make. In the comparisons that the hon. Gentleman made between married women and, for instance, single or married men and others contributing to the fund, he missed out the fact that other contributors have a whole range of benefits and pension entitlement which they are getting in return. The married woman, whose contributions the hon. Gentleman is more than trebling compared with our proposals, will continue to receive simply the benefits of the National Health Service and industrial injury benefits in return for her contributions. The hon. Gentleman is more than trebling the bill, or the price of the same commodity as was being offered. In the light of that, how can he expect my right hon. and learned Friend to withdraw the suggestions that he made in the article in the Daily Telegraph?
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  We all know that there is more to this than just the finance, because the Labour Party has been committed to the total abolition of the married women's option. By exercising this option married women have, for a very long time, paid a very reduced level of national insurance contribution for reduced benefits. The reality in the Bill is, as the hon. Gentleman knows, that, although the Government have not had the nerve to abolish that option, they are seeking to move towards it by making it very much more unattractive for women who opt.
  I want to examine just what lies behind the Labour Party's desire to make the option that much less attractive and to move in this way. The matter was not wholly argued by the hon. Gentleman today. He did not get on to all the arguments that we had in the past about the married women's option; nor did we hear what lies behind his and the Secretary of State's thinking today. We accept that they are committed to the emancipation of women and to equality of treatment, as I hope that they accept that we are. However, we believe that their views on the married women's option show that their views on equality of treatment would be improved if they were combined with some common sense and regard for the realities of the position of the bulk of married women in employment.
  The position is that in the real world of employment and national insurance three out of four married women in employment—that is, 4 million married women in all—opt to pay a very reduced rate of national insurance contribution and, in return, receive a very reduced level of benefit. That is a choice which they have. It is a choice which the Minister disapproves of. It is a choice lie is seeking to make much more expensive in the Bill.
  Women at work in factories, manning machines and doing assembly work, make this choice for very practical and common sense financial reasons. Many married women who do industrial work take the job for immediate additional cash to supplement the family income when the family is in difficulties. They may be in and out of employment during their working lives and be in no position to acquire any pensions entitlement on a contributions record.

  53
  Often, women in employment work for only the first few years of marriage so as to save some money before having a family. Those women are, for practical reasons, content to rely on their husband's contribution to give them their pension benefits in later life. Indeed, it would be a very bad bargain for most married women in employment if they chose to pay the full level of national insurance contribution.
  There are only limited categories of married women whom it would pay. Women who are substantially older than their husbands, for instance, would get their pension rights much earlier if they had their own contribution records. Most women have practical, commonsense reasons for opting out of paying the full contribution and relying on their husband's contribution to provide for their retirement and other things, and this position will continue. It is not an old-fashioned notion of dependence on their part. It is practical common sense, bearing in mind the finances of their husbands.
  The trend amongst married women in work is not to cease exercising this option. A Written Answer by the Under-Secretary on 20th June showed that over the 10 years 1963 to 1972 the proportion varied by not more than 3 per cent.—from 73 per cent. to 76 per cent.—and in 1972 it was 74 per cent., 1 per cent. more than it had been 10 years earlier.
  Those women will find that, instead of paying what they now pay or would pay—4p a week if they were opted out of the national insurance system, plus the 0·6 per cent. that we were proposing—the graduated contributions they will have to pay will be more than trebled to 2 per cent. I accept that my mathematics are certainly fallible compared with those of the Department and those of my hon. Friends, but they are not fallible when it comes to working out that increasing 0·6 per cent. to 2 per cent. is more than treble the contribution.
  Certainly better-paid women will find a very great difference. If they earn £40 a week, 64p a week more will be paid by women compared with what they would have paid under our Conservative proposals, which is the proper comparison to make—that is, increasing the 0·6 per cent. to 2 per cent. will result in their paying £21 a year more. If they earn £3,500 a year—this illustrates the kind
  54
  of leap—they will be paying £1·16 a week, or £40 a year more, than under the Conservative proposals. That is the effect of more than trebling the graduated contribution from 0·6 per cent to 2 per cent.
  Even if the Minister feels that a change should be made at all, it is unfair to make a change of such dimensions so quickly in the financial contribution made by any group. We on this side believe that if ever there was a case for changing the position of the married women's option, there is no case for making it on this scale in the present hyper-inflationary times. The Minister will damage the budget of some households where both partners go out to work when this increase comes in in April next year.
  That takes me on to the other category which, for reasons best known to the Minister but of which he has not yet persuaded me, is singled out for heavy adverse treatment in the Bill. I refer to the self-employed. Again, the figures in the Bill speak for themselves. The graduated contribution to be paid by the self-employed is raised by an amount greater than for any category of employed persons—from 5 per cent. to 8 per cent. of their graduated earnings—and the upper limit of the earnings on which that is paid is being raised as well.
  The maximum extra graduated contribution which someone at the top of the scale could pay—again on my mathematics—has been raised from about £70 to £158. That is for someone who is earning an adequate amount from his self-employed occupation. That is more than doubling the maximum liability for graduated contributions under this Bill compared with the position that would have prevailed had our Bill been allowed to go forward unamended. It is not an increase which is in line with that paid by other employed persons. The self-employed have been singled out, together with married women exercising the option, to pay much more than their fair share of the extra burden of paying for increased benefits next year.
  We on this side would like to know why the self-employed are singled out for this especially punitive treatment. We suspect that their independence is envied by some hon. Members opposite. We realise that they are more vulnerable than most because, by definition, the self-employed do not belong to a trade union

  55
  and so find no special place in the favour of this Government.
  We can find no possible justification for deciding, in a Bill amending the 1973 Act, that the penalty to be placed on the self-employed should be so great and that their share of the increased burden of paying for higher benefits should be raised so substantially.
  Mr. O'Malley: If the hon. Member accepts, as he has implicitly accepted in his speech, that there must be equity between one section of contributors and another, is he saying that we should have brought the Class 2 contribution up in line with the movement of the Class 1 contribution—both employer and employee? Would he have preferred to put the Class 2 contribution up to £2·70 and left the Class 4 contribution at 5 per cent? Is he saying that he has so little regard for about 1 million self-employed people with incomes under £1,600 a year that he would have preferred the £2·70 figure?
  Mr. Clarke: Again, my understanding was that in his speech the Minister constantly used his own increased August figure as the basis for the self-employed contribution. It is going up to £2·41 as a result of what he has already done. There is no great reduction there for anybody. What he has done is to have a fresh look at the self-employed position compared with our Bill.
  It is true that, this line having been adopted, those at the very lower level of self-employed incomes were not adversely affected across the great range of incomes envisaged in the Bill. However, one does not go very far up the scale to find that the increase is substantial. It is very substantial, so that at the top of the scale which the Minister now proposes he has more than doubled the bill to be paid by the self-employed man. That self-employed man is not earning a king's ransom; he is earning £3,600. A punitive increase in contribution is being paid at that level.
  The self-employed will find a sudden and dramatic leap in the contributions they have to make. It is not only that. If the House disregards, as it should, the fact that people are not going to have to pay for a commodity that they will no longer receive—that is, the Boyd-Carpen
  56
  ter benefit—a wide range of the population will notice a material difference next April when the new contributions come into effect.
  The House should bear in mind when considering the effects of this what the Government have already done to the categories of people we are talking about—married women in employment, the self-employed and some of those in the professions towards the higher range of earnings who are paying graduated contributions.
  The raising of personal taxation in the Budget and the increase in national insurance contributions which will come into effect in one month's time will reduce the take-home pay of significant groups of the population. The combination of the Budget and the August increase will reduce the take-home pay of every man who earns more than £19·50 per week. That same combination of factors will reduce the take-home pay of every childless married couple earning £35 or more per week; it will reduce the take-home pay of every married couple with two children who earn £54 or more per week. Now, lurking beyond an election and hidden away are possible increases in electricity and gas charges and in other matters which the Government would like to postpone payment of for the moment. Next April there will be a further stiff increase in the graduated contributions of national insurance by most sections of the population, and a particularly swingeing increase for two groups unfairly singled out—the married women and the self-employed.
  It is no good the Government saying that there are some categories who are still quite well treated. The whole structure of the Conservative Bill was designed to take account of the lower paid, and they have gained advantage from what we did in the 1973 Bill, but for some sizeable sections of the population the increase next April will be dramatic, especially taken with all the other increases the Government have introduced, and that will happen after a highly inflationary winter. It is no good the House legislating so that some months from now the public will be hit unawares. Most people are unaware that national insurance stamps will go next April and that graduated contributions will be collected with PAYE. They will sud

  57
  denly become aware that they face large increases in some cases, and the anger that will be felt by some of the worst affected groups might mean a repetition of what happened with the increase in rates, which many of those in the know knew was coming but which most of the public did not wake up to until the bill came in.
  Many of the adverse effects are stored up in the Bill, and these people will not be persuaded by the Minister's assurance that there are limited categories of people who are not so adversely affected lower down the income scale. Those who are hard-pressed would not want a modification in pensions and benefits to relieve them of their particular obligations. They are entitled to want a much fairer spread of the burden to pay for those pensions and benefits, however. The House must realise that simply passing an apparently innocuous-sounding Bill, when it makes such marked increases in some contributions for some sections of the population, is not enough. It must be considered against the background of the increase in personal taxation, made to provide hundreds of millions of pounds to finance useless food subsidies, to abolish prescription charges and, presumably, at some stage to pay for the nationalisation of some sections of industry.
  We must bear in mind the effect all this will have on white collar and blue collar and the middle income groups, and the better-off individual who is already facing problems and will be hard hit over the next year. These people feel that, however much they appreciate the increase in pensions and benefits, they will be hard pressed to find this sort of money at the end of a highly inflationary period.
  In that sense we are critical of the Bill and we shall be pressing the Government strongly on its detail in Committee. I hope that the House is aware that the Government have singled out some categories of people for very unfair treatment and that hon. Members will express their views on the matter in the course of the debate.
  4.55 p.m.
  Mr. William Hamilton: If that is the kind of opposition we are to get between now and the election we do not have to be afraid of what the election result will be. We are discussing this
  58
  afternoon substantial increases—across the board almost—in benefits. We are now arguing how we should pay.
  The hon. Member for Rushcliffe (Mr. Clarke) has sought to create discontent among certain sections of the community, notably the middle classes and the married women who are at work. I propose to say a word about each of those. The hon. Member and his party have a nerve talking about this Government postponing increased charges for gas, electricity and other things until after the election. The Tories left enormous deficts in those same nationalised industries and we have had to pick up the bills. The British public are not stupid. They know very well that the bills they will have to pay, whether for gas, electricity or the post, are the fault of the Conservative Government of 1970–74, not of this Government.
  That, however, has little to do with the Bill. The hon. Member spoke about the self-employed being heavily penalised. Certainly they will pay substantially higher contributions, but I guess that given the other side of the coin, given that people are deriving benefit from the Bill, and that those people are far more deserving than most other sections of the community, and knowing, as they do, that it is a form of redistribution of the national wealth, very few of these self-employed would be reluctant to pay.
  I suppose that Members of Parliament will be paying substantially more. I do not object. On the contrary, I take the point of the hon. Member for Rushcliffe, and I have criticised my Government for their view about the sanctity of the Exchequer contribution. I have never accepted that there is anything sacred about 18 per cent. I do not know how the figure was originally arrived at, but there has been a good case for gradually increasing the Exchequer contribution over the years. With a progressive system of taxation, it is a form of wealth redistribution, and that is one of the primary purposes, if not the primary one, of social security. The best way of redistributing wealth from those who are reasonably well off and comfortable to those who are less well off and less fortunate is by a progressive form of taxation and an increase in the Exchequer contribution. That is not, apparently, the view of my party or of the Conservatives.

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  I think that the Liberal Party has long advocated the complete abolition of contributions and stamps and so on, and the introduction of a social security tax. There may be something in that, although it would have to be a fairly colossal tax. But we are talking of fairly colossal weekly contributions. The British public must be educated to understand that if we are to give fair shares, reasonable pensions and allowances to widows and other people in those categories, the rest of us will have to pay much more.
  It is an idle exercise, a bad exercise, for the hon. Gentleman to single out the middle-class self-employed or the married women at work and to say that those two categories are being unfairly penalised. I do not accept that as regards the self-employed, and I am not sure that I accept it as regards the working married women. We are talking about contributions from April 1975. The Equal Pay Act should be operative by about that date, and married women should then be in a much stronger position to pay the increased contributions. However, there are ominous signs that the intentions of the Act are being thwarted, and that married women are not catching up with their male counterparts in industry. I am not sure whether that is the employers' fault or the trade unions' fault, or whether it is a conspiracy of both. I suspect that it is a conspiracy of both.
  The hon. Gentleman made an absurd charge that the Government were trying to penalise—he did not use the word, but that was the implication—the self-employed, because the Government were envious. He said that it was a combination of envy and the fact that, by definition, the self-employed were not in trade unions. The hon. Gentleman must know that that is a complete nonsense. No one on this side of the House is inspired by that kind of consideration. Envy does not enter into it. If we are to give increased benefits to all the groups we are now considering, we must decide how those increases are to be paid for. I have made my position clear. I believe that an increased contribution must be paid by those with high incomes, and particularly through the taxation system rather than through contributions in the existing National Insurance Scheme.
  Mr. R. A. McCrindle: In talking about the self-employed, does not the hon. Gentleman also fall into something of a trap? He and his party continue to imply that the average self-employed man is infinitely capable of continuing to pay the increases. Is it not a fact that there are a whole host of self-employed men, including, I suspect, many in the hon. Gentleman's constituency, who run small shops and the like and who should not be the milch cow which his party keeps tending to make them?
  Mr. Hamilton: My party does not believe that, but we all know that there are men running small businesses who are self-employed and who do not have big incomes—indeed, they have much less than many of the miners in my constituency—and from that point of view the criticism is valid.
  I am not very much concerned with the fellow earning more than £5,000 a year who is called upon to pay the increased contributions. That strengthens my argument, that the benefits should be financed increasingly from the Exchequer, and that we should take more from the £5,000-plus man in the form of taxation rather than through the National Insurance Scheme. That is the whole point.
  I was just criticising the arguments of the hon. Member for Rushcliffe, that we were inspired in our treatment of the self-employed by envy and the fact that they do not belong to trade unions. We are not the prisoners of trade unions. We certainly work in co-operation with them, which is more than the Tory Party can ever say. It will never get the co-operation of the trade unions. It does not deserve it; it does not represent them. The Tory Party has always been the enemy of trade unions, and therefore has no right to expect co-operation from the trade union movement. But we get that co-operation.
  The trade unions are far from being our masters. They are certainly not my masters. I say what I like to the trade unions, and I hope that they say what they like about me and about us.
  We accept in the Bill that, if we are to achieve a better deal for the under-paid and the under-privileged, the better-off and the more highly privileged must pay. How the burdens are shared is a matter

  61
  for political decision. Subject to the reservations I have made, I wholeheartedly support what the Government are doing.
  5.6 p.m.
  Mr. Nick Budgen: I support what my hon. Friend the Member for Rushcliffe (Mr. Clarke) said about the position of the self-employed under the Bill. In doing so, I have to declare an interest since, as a barrister, I am self-employed.
  The Bill makes a considerable attack upon the position of the self-employed person, particularly the self-employed person earning about £3,600 per year. I suspect that the reason for that attack is that it is another part of the large price that the country and all of us are having to pay for the social contract.
  It is obvious why the unions so hate the self-employed. It is because the self-employed obtain their increases in earnings, and find better ways of earning their wages or earnings, by individual bargaining and not by collective bargaining. Moreover, they do it in a way that damages the nation less than the unions do by their collective and monopolistic bargaining, and the self-employed are far less inclined to be party to restrictive practices. That is why a swipe at those who are self-employed is extremely attractive to those who pay and govern the Labour Party.
  I believe that there is only one legitimate criticism of those who are self-employed. It is that in certain instances they use their self-employed status to avoid and evade tax. But that can easily be dealt with by stopping the loopholes, by proper administrative action to make sure that people—on "the lump", for example—do not avoid or evade tax.
  Mr. William Hamilton: Does the hon. Gentleman recall that the Labour Government had a Bill to deal with "the lump", but the Tory Party jettisoned it? That is why we still have "the lump".
  Mr. Budgen: I am not defending the excesses of "the lump". I believe that in certain instances it is right to examine the way in which some people avoid or evade tax, but the Bill tries to put at risk the very existence of the self-employed.
  I suspect that another reason for the attack is the realisation that many self-
  62
  employed people have a great strength in relation to the State, for they are independent of the State, of the unions and of the vast corporations. I believe that this status of self-employment has an important role in preserving the liberty of the individual in a free society. It may be for that very reason that the Government look with such disfavour on the self-employed in our society.
  The self-employed person is also ingenious and responsive to market forces. The man who is self-employed is the living denial of the customary and fashionable view in Whitehall that bigger is better. Throughout the past decade, and during the white heat of the technological revolution, with the theory that there could be growth at any price, there has been far too much encouragement given to the big corporations. It is the little man, the self-employed man, who stands alone. It is he who wishes to work out his own destiny, who is able to respond to the vagaries of the market and who is able to take his opportunity when a new situation arises. It is he who is so disliked by so many of the mandarins in Whitehall and by so many hon. Members—
  Mr. George Cunningham: What a lot of nonsense.
  Mr. Budgen:—on the Government benches.
  I give an example of the ingenuity of those who are self-employed. On Saturday night in Wolverhampton I met a hairdresser in a pub. As I fingered my rather long and greasy locks, which would have been such an affront to my sergeant major 15 years ago, I said to the hairdresser "I expect you are having a difficult time." I imagined that he would be reporting to the Neddy for hairdressers and that hairdressers would be asking it to work out a system of redundancy for hairdressers. I thought that it would be reporting to the Minister or junior Minister, that we would be hearing that there was going to be grave trouble in the hairdressing industry and that there was a need for a massive Government subsidy. I thought "Oh Lord, here is another good Tory who is saying that he dislikes subsidies in general but that he would like a subsidy for his industry."

  63
  Not a bit of it. My hairdresser friend assured me that, although most people do not have their hair cut more than once or twice in the course of a winter, he had responded to the market in that he had found a great new market for toupes. He had to lay off one hairdresser but he had the good fortune to lay on another five men who were making toupees at great profit to himself and to the tremendous satisfaction of the public.
  Mr. William Hamilton: Take off yours now.
  Mr. Budgen: I though that my hairdresser friend was a fine example of the ingenuity and responsiveness of the self-employed man, but I suspect that the Government will not be responsive to the argument that the self-employed show independence and ingenuity in responding to the market economy.
  Is this the right moment to take a doctrinaire swipe at the self-employed? Let us consider for a moment the typical self-employed person. Let us recognise that he is middle class and that in the past he has perhaps supported the Tory Party. He has in the past perhaps demonstrated the qualities of independence and integrity which are so offensive to some people in our society. That person is being hit today as he has never been hit before both by hyper-inflation and by the risk of considerable unemployment in the course of next winter. We see that person being hit by increased taxes, higher prices and, most of all, increased rates.
  The present rate situation is a lesson from which all of us should learn. We all talk about the social discontent which is an inevitable consequence of a high rate of inflation. We are seeing that discontent in respect of the rates and we are seeing it come to light in the most unexpected directions. For example, the sort of person who is in the Tory Party, the retired bank manager or the retired Army officer, is now saying what none of us ever believed he would be saying. Many of my hon. Friends have been embarrassed by the enthusiasm with which people of that sort have spoken of law and order. Many of us have believed that in speaking about law and order they have been overkeen on the punishment side. What do we find now?
  64
  Those same people are now saying that they will break the law. They are threatening not to pay their rates. They have been driven into a desperate corner by the inflation over which the present Government are presiding.
  More and worse is yet to come for the people to whom I have referred, because next winter we can anticipate a great increase in the rate of unemployment. I accept that in the 1930s and in other periods it has been the working class, on the whole, which has had to bear the terrible burden of a high level of unemployment. But let us make no mistake that next winter, when we have a 25 per cent. rate of inflation and perhaps 1½ million unemployed, it will not be the working class alone which will have to bear the weight of unemployment. It will be the middle class, which does not have the support of the unions, which will tend to bear the weight of unemployment just as much as those who historically belong to the working class.
  There may be just one safety valve or escape route for the middle class. It may possibly be able to escape into self-employment. It may be able to retain some sort of dignity. It may, by its ingenuity and responsiveness to market forces, be able to join the great body of the new service industries. It may therefore cease to be a charge upon the State. That escape route is perhaps not being closed but it is being narrowed by the Bill.
  I say to the Government that the people to whom I have referred—they represent a surprising body in our society—will be more and more frustrated as the weeks go by until April 1975. If their escape route is blocked by the Bill, by the time April 1975 comes along the middle class and self-employed will feel so frightened and so frustrated that the one thing that all of us in the House fear may come about—namely, they may be the breeding ground for a Right-wing Fascist dictatorship which some have predicted as we have seen the rate of inflation continuing apace.
  5.18 p.m.
  Dr. Michael Winstanley: I should like to respond to the invitation of the hon. Member for Fife, Central (Mr. Hamilton) and comment on a number of points he made with which I agree. In the interest of brevity, I shall not do so

  65
  save to confirm that the Liberal Party looks forward to a time when we can abolish "the stamp" and substitute a social services tax. My party would like to look at pensions not so much as something that somebody purchases but as a right. It looks forward to the time when those who are now working accept that they are paying the pensions of those who have retired. We must see to it that those pensions relate not to what they earned in the past but to what we earn now. I agree with the hon. Gentleman on general principle.
  It seems that we are embarked upon a curious course. We shall have a Second Reading debate until seven o'clock. That debate will then be followed by a motion on precisely the same topic until ten o'clock. We shall thus be discussing exactly the same topic from half-past three until ten o'clock. At that stage the proceedings will be arbitrarily interrupted for a vote, which will be a virtual formality. As a result, it seems that we shall be entertained to eight Front Bench speeches instead of the more usual four. Whether that proves to be an advantage, time alone will show.
  I said that the vote will be a formality because the Bill deals only with the basic pension and the increases in contributions and benefits which come into effect later this month. To that extent the Bill is non-controversial and I am sure that we shall not oppose its Second Reading.
  There is, however, scope for comment on two fronts. First, what does the Bill say and does it go far enough? Second, what is left out of the Bill in relation to the 1973 Act and occupational pensions? The Bill contains the increased basic pension rates, which are, of course, crucial. The Government have made a vague commitment to ensure that basic pensions keep pace not with increases in the cost of living as the Conservatives sought to achieve, but with increases in average earnings.
  That means an increase of anything between 8 per cent. and 15 per cent. annually, or half that every six months on the basis of the biannual review to which the Government have committed themselves. But this would only maintain the level of the single pension at 22·6 per cent. of average earnings and the married couple's pension at 36·2 per cent., as at present.
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  The Government have talked blandly about targets for the basic pension but they have still to fix them. We in the Liberal Party favour targets of 33⅓ per cent. and 50 per cent. of average earnings respectively for single persons and married couples. If that were implemented at once, it would mean pensions of £14·66 for a single person and £22 for a married couple, assuming that average earnings reach £44 this year. This would cost about £1,000 million, or £1,500 million if supplementary benefits were increased proportionately. If we look at the target for the next 10 years, it would require a 1 per cent. addition each year on top of the increase required to keep pace with the increase in average earnings.
  I turn now to the question of the earnings rule relating to men under the age of 70 and women under the age of 65. The right hon. Lady is raising the exemption limit from £9·50 to £13. We would like to see the rule completely abolished. The argument has been advanced that it would cost too much, but there is a good deal of misunderstanding about the cost and, indeed, about the rule, not only among pensioners but among hon. Members. When we say "You can earn so much without deduction", people often think that we mean without deduction of tax when we mean without deduction from pension. This causes misunderstanding. To do the sums properly, we should look at the complete picture, in terms not only of the cost of the pensions but of what we would gain in additional tax derived from the additional income. We also have to look at the additional total contribution to our economy made by elderly people remaining in work.
  If it is not possible fully to abolish the earnings rule now, we should at least raise the exemption level to a more reasonable figure, perhaps even two-thirds of average earnings. We should not go on discouraging elderly people from continuing in work or from retiring gradually, as it were. We are too fond of regarding retirement as a sudden, sharp shock rather than as a gradual process, as it would be for many people if there were more incentive, or less disincentive, to remain in work part time.
  What does the Bill omit? One of the right hon. Lady's major criticisms of the 1973 Act was that it discriminated in

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  occupational pension arrangements against women. What is her attitude towards the discrimination contained in the different retirement ages for men and women? Although it might not be possible to reduce the retirement age for men now, it might well be possible to follow the example of Jersey and raise the retirement age for women on an optional basis with a raised pension level, while ultimately reducing the retirement ages of men and women concurrently in stages until it is 60 in both cases.
  The right hon. Lady announced her commitment to scrapping those parts of the 1973 Act dealing with occupational pensions and introducing her own scheme. This volte-face is the third change of policy in seven years. First we had the late Mr. Richard Crossman's proposals, then we had the years of the right hon. Member for Leeds, North-East (Sir K. Joseph) and now we have the right hon. Lady's reign. This latest change of policy will cause the utmost confusion and uncertainty in occupational pension schemes. Indeed, it has caused confusion and uncertainty and has done great damage already.
  Many firms will be pressing on with their recommended pension schemes, evolved as a result of the 1973 Act but which may end in further confusion when the proposals in the White Paper are published, when they may find that they have pressed on to no purpose. The right hon. Lady says that many firms were apathetic to the previous scheme and that not one recognition certificate had been applied for. That does not match the information we have been getting from pensions firms. The industry believes that a massive impetus was building up following the heavy advertising campaign earlier this year. In any case, approval did not have to be sought until much later, and there is already considerable evidence of many of these schemes coming into being.
  There is no indication of what is to be the rôle of occupational pension schemes. Is the first priority to be an adequate State pension with occupational schemes as a fall-back? If not, how much pressure is to be exerted on employers to institute their own schemes rather than fall back on the State reserve scheme?
  Mr. Timothy Raison: The hon. Gentleman said that he could not
  68
  understand why we were having two separate debates today. We are talking about two quite separate things. The first debate is about the need to up-rate the present scheme and about various matters concerned with Part 1 of the Social Security Act. The second debate is to be about Parts 2 and 3 of the Act. These are quite separate subjects. The hon. Gentleman is making strong points on the second subject, which has nothing to do with the matter now in hand.
  Dr. Winstanley: I know what this debate and the next are about. They are on the same subject. The motion to be debated later and this Second Reading debate deal precisely with the situation we are in. Presently the Bill will get its Second Reading and then we shall debate the motion, which is nothing but posturing and will achieve nothing. All we can do is wait for the White Paper, although some of us in the Liberal Party feel that we might be better employed with my hon. Friend the Member for Rochdale (Mr. Smith) travelling on a coach around the country. Everything that can be said on the motion to be debated later could be said in this debate.
  Would it not be useful to arrange tax concessions to companies which institute their own approved schemes? Could we not do something to encourage such schemes? Our position is clear. We are in favour of adequate basic pensions without the need to apply for supplementary benefits by those who have no other source of income. That is the first priority. We are in favour of the abolition of the earnings rule as an interim measure before our basic pension targets are reached. We support the equalisation of the retirement age for men and women and a gradual reduction in the age to 60.
  Once the basic pension is adequate the case for a compulsory occupational pension is weakened, but we favour the encouragement of occupational schemes plus the opportunity for employees who wish to contribute but whose firms do not run such schemes to join a central account, supervised but not run by the Government and funded jointly by the employers and the firms without schemes of their own.
  Mr. O'Malley: The hon. Gentleman has said that the Liberal Party

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  is in favour of occupational pension schemes. The Government are in favour of the continuance and development of good occupational pension schemes. However, the Government have decided that they are not in favour of, and find inadequate, the reserve pension scheme for a number of reasons which we shall deploy later. In the Liberal Party manifesto a similar attitude was taken. That manifesto thought it wrong that people should be compelled to join a reserve scheme. Is that still the attitude of the Liberal Party?
  Dr. Winstanley: We accept what the Government have said about the inadequacy of the previous State reserve scheme. We nevertheless also accept that there is great merit in occupational schemes and we believe that where possible they should be encouraged, given the current basic pension rates and the chaos in the occupational pension sphere—caused by successive changes of policy and also perhaps in the hope of achieving what is referred to in the motion on the Order Paper, an all-party kind of attitude,
  "an agreed foundation for pension policy."
  Might it not be better to accept the idea of compulsory and universal commitments to occupational schemes and some kind of State-run reserve scheme? That is a possibility. We have expressed our preference.
  We shall examine in Committee such points as that and the anomalous position of the self-employed. For the moment we are content to give the Bill a Second Reading. To save the House from having to listen to any further Liberal speeches later in the evening, may I say a word about the subsequent motion? We will support the motion because it asserts that the 1973 Act should not have been jettisoned. We will reject the Government amendment which claims that it would have been impossible to retain those provisions and build on them. The Government have never produced any evidence to that effect whatever.
  Mrs. Elaine Kellett-Bowman: On a point of order, Mr. Deputy Speaker.
  Mr. Deputy Speaker (Mr. Oscar Murton): Order. I was about to interrupt the hon. Gentleman. It is perfectly in
  70
  order for him to relate matters dealing with the Second Reading of the Bill to certain matters referred to in the motion. He should not, however refer to the motion as such.
  Dr. Winstanley: If you would prefer us to seek to catch your eye later, Mr. Deputy Speaker, so that we may indicate how we will vote, we will do that. Since the subject matter is the same I thought that we would follow the customary practice during a Second Reading debate and that the rules of order would be given a fairly wide interpretation.
  Mr. Deputy Speaker: Order. It is perfectly true that the Chair allows a fairly wide-ranging debate on Second Reading. Although there may be some similarity between the motion and the Bill, it would not be proper to refer specifically to the motion.
  Dr. Winstanley: I am grateful, Mr. Deputy Speaker, and I shall try to tread a little more carefully so as to incur neither your displeasure nor that of the hon. Member for Lancaster (Mrs. Kellett-Bowman).
  The Secretary of State has said that we have lost nothing by abandoning the State reserve scheme set out in the 1973 Social Security Act. She says that because she believes that the scheme was no good anyway. But have we lost nothing? Have we not, by abandoning that scheme, deprived many workers of a better scheme? I say "workers" advisedly because we are not here dealing with managerial people in the main. Those people already have occupational schemes. We are referring to those lower down in the occupational strata, who would have had occupational schemes if the previous provisions had not been abandoned.
  Have we not also deprived many widows of any scheme at all, women not now provided for, who would have benefited from occupational schemes? I accept that we are not talking about huge numbers.
  Many firms will continue with these schemes because they have passed the point of no return. They have entered into agreements with the unions. We should have no quarrel with that. There is no doubt that improved pension provisions can possibly be used as a way of withstanding potentially inflationary wage

  71
  claims. We should encourage that. There is, however, evidence that some firms which were about to introduce schemes are drawing back because they do not need to do so.
  Many workers will suffer as a result. Many widows will suffer because they will not get the kind of protection that those occupational schemes would have given them. What will occur later tonight in the debate on the motion will be a sterile kind of exercise because by then the Second Reading will have finished and we will have to wait for the White Paper. Then we can argue again about what is to happen.
  Perhaps I can make it clear that my hon. Friends and I will vote for the Opposition motion and against the Government amendment because the Government claim that it would be impossible to retain the State-reserve scheme as it was under the 1973 Act and build on that. We have been given no evidence to justify that view. We maintain that we could have avoided all the confusion and uncertainty by carrying on with the other Act, inadequate though it was, and building on it. Since no evidence has been produced to convince us that this would have been impossible, we cannot support the Government's attitude.
  5.36 p.m.
  Mr. Robert Boscawen: The hon. Member for Hazel Grove (Dr. Winstanley) has betrayed how incredibly ill-thought-out are the policies of the Liberal Party with respect to occupational pensions and the State basic scheme. If he thinks that he could have a State basic scheme for everyone which would eliminate the need for supplementary benefit, which would allow a retirement pension on the State basic scheme of something of the order of one-third or even one-half of the national average wage, and if at the same time he imagines that there could be a thriving occupational pensions industry, he needs to have his head examined. The contributions for the basic scheme would be enormous. I do not think that the hon. Member has thought this out at all.
  Dr. Winstanley rose—
  Mr. Boscawen: The hon. Gentleman has had his opportunity to have his say. I will continue.
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  The Minister of State opened the debate in his customary, polite, charming and innocent way, as we have come to expect. He sought to hide, with his usual skill, just what the Bill is all about. I thought it was incredibly skilful of him never to mention that the change-over in the contributions payable by employed married women and widows will yield another £47 million for the National Insurance Fund. Yet he sought at the beginning of the debate to persuade us that there would be very little change, and for most people a considerable reduction, in what they would have to contribute next year.
  Mr. O'Malley: I quoted a figure. I thought the hon. Gentleman had heard it. I said that under the terms proposed the rate of contributions into the National Insurance Fund for the married women's and widows' options would bring in about £30 million per year less than under current arrangements.
  Mr. Boscawen: I am quoting from the Government Actuary's report, which says that the extra contributions will total £47 million. The hon. Gentleman sought to persuade the House that this could be done painlessly.
  I am the first to accept that the Bill contains some useful points. I am glad to see the continuation of a relaxation in the earnings rule. I am glad that there are small groups of people who will get more relief on their contributions. I think that the hon. Member is trying to get away with murder in the Bill, as I know he can do.
  There are certain groups of people who will face a substantial increase in their contributions as from next April. These include married women at work who exercise the married women's option and who have above-average earnings. They will find themselves facing a considerable extra impost for which they will get nothing more than they would have received under the Social Security Act 1973. I believe that they will be very angry about this. As the hon. Member for Fife, Central (Mr. Hamilton) has said, this is a redistributive form of tax which will affect these women.
  The main argument against allowing the married women's option to continue was that it failed to treat women on an equal

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  basis with men. It treated them as second-class citizens. It provided lower unemployment, sickness and other short-term benefits. Therefore, so the argument goes, it should come to an end. Under the Bill, however, although married women are paying more, they will not get better benefits.
  The basic scheme is now so expensive to the National Insurance Fund that we can no longer afford to exempt those married women from paying a higher rate. The Government should say so and make clear that they are increasing the contributions for married women whose earnings are above a certain level, so that married women will know in advance what is being done and the reason for it.
  Mr. O'Malley: Of course we admit it; it is in the Bill. We are putting up the level of contributions from 0·6 per cent. to 2 per cent. for the reasons I gave. The hon. Gentleman is wrong. As a result of the Bill, next April married women, whether or not contracted out of the existing system, will overwhelmingly be paying less and in significant numbers much less than at present.
  The hon. Gentleman referred to married women at the top of the earnings scale. Next April a married woman will pay 1·57p a week less if she is not contracted out and 1·19p less if she is contracted out than she paid on 5th August 1974, or, on the present position, 91p and 53p less respectively. Married women under the option will be paying less next April than they are at present and less than they will be paying from the beginning of August.
  Mr. Boscawen: With respect, they will be paying more and will not be getting correspondingly increased benefits. I return to the Government Actuary's report, which states that there will be a yield of £47 million more from that group of people. Someone will be paying more to yield that amount of money.
  Mr. O'Malley: There will be a £30 million decrease compared with the pre-April 1975 position. The £47 million increase is compared with the 1973 Social Security Act figures—that is the change from 0·6 per cent. to 2 per cent.
  Mr. Boscawen: That is exactly what I am saying. I have not misunderstood
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  that. Next April people will have to pay considerably more.
  Married women go out to work not because they want to but because they need to increase the family income. That is made necessary in most cases by the increase in mortgage interest rates. If married women did not go out to work, a mortgage would probably be out of the reach of many hundreds of families. Married women's ability to help to pay off the mortgage will be reduced by the Bill, and that is deplorable.
  Matters may be different as we move towards equal pay, but we have not yet gone far along that road. Conditions do not yet obtain throughout the country for achieving equal pay. That married women get good cover from their husbands' insurance contributions is demonstrated by the fact that three out of four married women in work opt for that method.
  A well-loved late Member of the House, Mr. Tom Price, who probably knew as much about national insurance as anyone in the House, said in one of his last speeches—if not his last speech—that a large proportion of women's contributions never achieved the purpose for which they were made, before these women married. Only one-third of the contributions made by married women are repaid to them in benefits. In other words, the contributions of married women are a bonanza to the National Insurance Fund. That is no reason for putting an impost on married women, however high their earnings. I am completely against married women with above average earnings being treated in this way. I hope that in Committee we shall vote to throw out this proposal. Married women who go out to work want their independence and they should be allowed to choose to opt out and to get benefit under the 1973 Act.
  Again, £25 million is to be taken from the self-employed in increased contributions. I do not know how many are involved—it might be 100,000 or 150,000—but they are to be milked of £25 million in Class 4 contributions. The self-employed have been hit all round the clock by the Government for increased rates and increased taxes. They have been hit far harder than anyone else and, naturally, they are beginning to object. Larger shopkeepers, professional

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  people and farmers in my constituency who are self-employed will be angry next April at the swingeing increase that is being made in their contributions.
  One reason why those people will be so angry is that the increase comes all at once, not gradually. The increase at the highest rate—a figure of £82 a year extra on an income of £3,500—is an enormous impost all at once, whereas if it had been spread over a number of years it would not have affected the individual quite as much. Exactly the same happened in respect of some rates increases which rose 100 per cent. in one year. That is why people are so angry, because the impost has not been phased over a number of years and they have been unable to adjust to such a large jump all at once.
  When all these things are added together, it will be found that more and more people in these middle-income groups have become disillusioned with the aims and purposes of the Labour Government. Those people will be right to come to the conclusion that the Labour Government aim at ending the independent spirit which is so manifest in those who undertake self-employment.
  Lastly, I wish to return to my normal theme when taking part in debates on social security matters. I refer to the absence yet again of any mention in the Bill of death grant. Labour Members may laugh about this and say that this is the wrong legislation in which to introduce these matters, but I wish to quote from a social security debate in Standing Committee two years ago:
  "There is an argument for saying that the Bill is not appropriate for insisting on this point. … We do not accept that; but I should accept the argument of urgency, namely, that the Government do not want to wait until 1975 before they take steps to make the death grant far more realistic than it is now. If the Government had asked us to withdraw our amendment on the argument of urgency, we might have been prepared to listen, but instead we have had the exact opposite."—[OFFICIAL REPORT, Standing Committee E, 6th February 1973; c. 381.]
  That was a quotation from remarks made nearly two years ago by the right hon. Lady who is now Secretary of State for Social Services. She then, when in opposition, regarded this as a matter of extreme urgency and in order to introduce a death grant was prepared to vote against
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  the Conservative Government. Two years later she is now sitting in the hot seat as Secretary of State and has done absolutely nothing about death grant.
  I hope in Committee to introduce an amendment on this matter, and perhaps on that occasion I shall have the help of Labour Members as well as my hon. Friends. We might take advantage of this minority Government and win a vote to get the death grant increased. I very much hope that that happens, because it is long overdue.
  5.54 p.m.
  Mr. D. E. Thomas: My main reaction to this Bill is that as it stands it represents a missed opportunity in terms of social security reform. I want to talk not so much about contributions—I shall not attempt to follow some Conservative Members into a middle-class revolution—but about the vexed question of the adequacy of levels of benefits to be made available through this legislation.
  I received some figures from the Department on 18th June which show that in the last 10 years there has been no real increase in the value of pensions and supplementary benefit scales—that is to say, when the social security benefits are expressed as a percentage of the average full-time male manual weekly earnings. If the Minister would give the relevant figure for the other social security benefits which we are discussing in this debate, I have no doubt that the result would be the same. The so-called safety net of supplementary benefit is the lifeline for recipients of other benefits which are inadequate to meet their needs. Although successive Ministers have paid lip service to the principle of lessening the dependence on supplementary benefits, I do not see in the Bill any evidence of positive action in this area. Indeed, the evidence appears to be in the other direction.
  By the levels of benefit proposed in the Bill, and because of the way in which the eligibility of benefits is governed by the Social Security Act 1973 and previous legislation, substantial numbers of the groups to be covered by these benefits will have to revert to supplementary benefit. I already have the figures showing the number of retirement pensioners and widows in Wales who receive

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  supplementary pension. These figures regularly over the last five years have stood at about one-third of all recipients of pension. Again, if we had similar figures for the benefits which we are discussing in the Bill I have no doubt that the position would be similar.
  I should like to discuss the individual benefits covered by the Bill and to refer to the eligibility regulations under the 1973 legislation and the effect of those regulations on the level of benefit, and also to the gaps which exist in the existing benefit net.
  I refer first to unemployment benefit. For the first 28 weeks of payment, sickness benefit and unemployment benefit are paid under similar criteria. However, after 28 weeks the unemployed person can receive no flat-rate benefit and the earnings related supplement comes to an end. There is no equivalent of the invalidity allowance paid to a sick person which can be paid to the long-term unemployed. Can the Minister say in what way the financial needs of a family whose male breadwinner has been out of work for six months are different from the needs of a family in which the male breadwinner has been off sick for six months? Indeed, one could argue that the financial needs of the long-term unemployed are greater than those of the long-term sick since the unemployed person will not have had the benefit of an employer's sick pay scheme.
  The fact that unemployment benefit can be claimed only for 52 six-day weeks and that no claim can then be made for 13 weeks again forces the long-term unemployed person to have recourse to supplementary benefit. In addition, the eligibility criteria can mean a disqualification from unemployment benefit for six weeks if the unemployed person left his last job voluntarily, or with what is described as a just cause, or if he was dismissed or, alternatively, if he refused a reasonable offer of work. These eligibility regulations are backed up by an effective form of punishment without trial whereby the insurance officer can suspend payment of unemployment benefit pending an investigation. If these matters are not to be covered by the Bill, I hope that we can be given a clear idea of the Government's intention to implement these other necessary amendments flowing from the 1973 Act.
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  I am concerned about the operation of the regulations governing the payment of unemployment benefit under the 1973 Act. I come from a country where the unemployment rate is regularly twice the United Kingdom average, where the major town in my constituency has an unemployment rate which is never far below 12 per cent. of the male population and where a large percentage of its people consist of the long-term unemployed of whom I have been speaking. These men are as much casualties of our economic system as are the physically sick. They are casualties of an undiversified local economy over which they have no control. Yet they are subjected to regulations designed to prevent them being "work-shy"—as if they had any real choice of employment available to them. I believe that we should look again at the position of the long-term unemployed and the present eligibility regulations.
  I turn to the question of invalidity benefits, in terms of both pensions and allowances. The invalidity pension is set at the same level as is the retirement pension in the recently-enacted National Insurance Act. The reservations I have expressed about supplementary benefits in respect of widows and retirement pensioners apply equally to the invalidity pension. I am also concerned about the position of the single person who is in receipt of invalidity pension and who under the present level of benefits is totally dependent on relatives for income support as well as for any other physical and welfare support he may need. Although the level of rates for dependants is increased under the provisions of the Bill, in a family where the father is in receipt of invalidity benefit the mother will still have to go out to work in order to supplement the family income.
  I am concerned also with the position, under the 1973 Act and the Bill, of the invalidity allowance—the higher rate, the medium rate and the lower rate increased under the Bill. I fail to understand why no invalidity allowance was paid to people within five years of retirement under the 1973 Act and why the anomaly is not being put right in this Bill, so that anyone becoming long-term sick within five years of retirement might receive invalidity allowance.

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  I shall also be interested to hear whether the Government plan to look at a further aspect of eligibility for invalidity benefit. Since these benefits replaced sickness benefit after 28 weeks, eligibility under the 1973 Act was related to contributions. In these contribution conditions, no invalidity benefit is paid to those who are not able to work and pay contributions. I have in mind disabled persons who have been incapacitated from an early age. For those who do not qualify for an attendance allowance—and they are the less severely disabled—again there is only supplementary benefit. This Bill brings us no nearer closing the gap for the disabled between the attendance allowance and supplementary benefit, and no nearer a disablement income, which we feel strongly should be introduced as soon as possible. Neither the sickness benefit nor the invalidity benefit provides cover for additional expenses resulting from disablement, and I look forward to either an extension of the attendance allowance or the introduction of a disablement allowance to ensure an adequate level of income for disabled people.
  There is also the fact that invalidity benefits are payable only to those who are long-term sick and, by definition incapable of work. This discourages both social and physical rehabilitation procedures, a gradual return to work or even the taking up of part-time work.
  I am concerned too about the relationship between invalidity benefits and supplementary benefit. If an attendance allowance is awarded to a disabled person receiving supplementary benefit, an equivalent amount is added to the supplementary benefit scale when the person's needs are assessed. This does not happen with invalidity benefits. I should like an explanation of the position.
  I shall be interested to hear why the provisions in Part I of the schedule do not include any reference to an increased level of maternity grant. I am especially concerned about the contributory basis of the grant and about the need for it to be reviewed. A substantial number of young unmarried mothers who have not been able to work and so qualify for the required number of contributions have to fall back on the exceptional needs grants of the Supplementry Benefits Commission. They are receiving those
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  grants in lieu of maternity grants, yet the level of exceptional needs grants is always far below even the £25 level of maternity grant.
  I hope that some of these matters will be considered when the Bill goes into Committee. Amendments along the lines that I suggest are essential to the more equitable working of the 1973 Act. If they cannot be incorporated in the Bill, I hope we shall have some assurance from the Government that proposals of this kind will be embodied in further amendments to the Act.
  6.4 p.m.
  Mr. Bob Cryer: I want first to give a general welcome to the Bill since it embodies many of the promises contained in the Labour Party's election manifesto. It is worth emphasising to the world outside that the increase in the earnings rule is another instance where the Labour Government have carried out an election pledge. At the moment there are many voices calling upon the Labour Government to abandon their election pledges—for example, not to hold a referendum on the Common Market—but I am pleased to see in this Bill that the Government are adhering to the programme put before the electorate.
  Although I welcome the increase from £9·50 to £13 to men under 70 and to women under 65, I hope that the final stage will be the abolition of the earnings rule. This has been mentioned once or twice already. We hope that the Government will move rapidly towards that end. However, we recognise the difficult economic circumstances inherited by my right hon. and hon. Friends and that we must move slowly. Nevertheless, there are a number of anomalies to which I wish to draw attention.
  I understand, for example, that councillors who are pensioners are subject to the earnings rule and, as a result, find that their pensions are cut by the extent to which they claim an earnings allowance. Although this is a matter which naturally concerns my right hon. Friend the Secretary of State for the Environment, I suggest that my hon. Friend the Minister of State, Department of Health and Social Security might approach his right hon. Friend to suggest that this anomaly can be eradicated if, instead of an actual payment being made

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  to a councillor in this position, we introduce a system whereby earnings are made up with employers. In this way, the effect of the earnings rule in creating a separate class of councillors, who serve the country as well as any person earning wages, can be eradicated. I look forward to an assurance from my hon. Friend that this possibility will be investigated. This anomaly has been brought to my attention by a constituent of mine, who, incidentally, does not share my political allegiance. He points out to me that it results in a certain number of absurdities.
  A considerable amount of capital has been made about the increase in contributions from the self-employed—the Class 2 contribution from £1·68 to £2·41 and the Class 4 contribution from a levy of 5 per cent. to one of 8 per cent. A number of hon. Members opposite have talked about the sturdy independence of those who are self-employed. These marginal increases in contributions will not affect stable businesses which are well organised and which are serving the public, such as small shops. But if the increase in charges has the effect of putting out of business those who are working on "the lump" it is to be welcomed.
  We have heard from Opposition supporters eulogies suggesting that self-employed people working on "the lump" system show a spirit of initiative. However, in the opinion of my right hon. and hon. Friends, they show an avarice which results in an enormous loss of life and limb on the building sites where many many of them are engaged.
  I wish to make it emphatically clear from the Government benches that my right hon. and hon. Friends and I do not support "the lump". We intend to put an end to it and all that it means in terms of shoddy work, long hours, a lack of safety regulations and the atavistic jungle which "self-employed" generally means. If these increases in charges help to do that, so much the better. They might offset some of the tax avoidance for which those working on "the lump" are well known.
  One Opposition supporter suggested in a somewhat bizarre contribution that if self-employed people find these increases enormously burdensome many of them may slide into Fascism. It does not say much for their political attitudes if that
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  is likely to happen as a result of increased insurance contributions.
  There are one or two other matters affecting the invalidity allowance on which I should like to touch. There are some anomalies. The general increase in allowances is to be welcomed. However, there are people in receipt of invalidity allowances who, though not retired, are in virtually the same category as pensioners who receive the increased allowances from 22nd July but do not get the £10 Christmas bonus. They feel that they are in an identical position but are unable to receive the extra bonus at Christmas. I realise that this is not within the scope of the Bill. However, I ask my right hon. Friend to review the £10 Christmas bonus so that those who receive only the invalidity allowance may be considered eligible for that bonus.
  In general, I welcome the Bill. I ask my right hon. Friend to examine the earnings rule to see whether anomalies in certain situations where local government money is involved can be eradicated. I welcome the general increase in the level of benefits. I re-emphasise that these are election promises being carried out by a Labour Government looking carefully at the election manifesto drawn up by the rank and file of the Labour Party. I recognise the characteristic criticisms made by hon. Gentlemen opposite about those working on "the lump". They seek to support the kind of activity which we wish to diminish. I give the Bill that qualified welcome.
  6.12 p.m.
  Mrs. Elaine Kellett-Bowman: The hon. Member for Fife, Central (Mr. Hamilton), who is no longer in his place, accused my hon. Friend the Member for Rushcliffe (Mr. Clarke) of trying to create discontent among working married women. If the hon. Gentleman were here I could assure him that the Bill will create among working married women not discontent, but sheer unabated fury because they will be the most serious casualties of its provisions. They will be paying another £47 million and getting nothing whatever extra for it. In case the Minister does not believe me, I suggest that he reads the reference to the Government Actuary's report on page iii of the Bill.

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  At present a married woman can opt to be covered by her husband's contributions and pay only at the Class 2 rate. As three out of every four women opt to do that, it shows how highly they regard this option. They do not want to build up a contribution record. They want cash in their hands now when their families are expensive to bring up. With children staying on longer at school and younger children just beginning school, they go out to earn money for extra school uniforms, food or the treats that they want for them. They do not want to build up contributions for 20 or 30 years on. They will bitterly resent having to pay treble the contributions that they now pay under the reduced rate.
  There is one aspect, to which no one so far has alluded, which I regard as infinitely more insidious than anything else. My hon. Friend the Member for Rushcliffe pointed out that the trebling of the married woman's contribution under Class 2 would make the married woman's option more unattractive. In addition, the Bill contains the seeds of the Government's ability to abolish the married woman's option altogether.
  Mr. George Cunningham: Hear, hear.
  Mrs. Kellett-Bowman: That is contained in Clause 2(4)(a). Section 42(2) of the Social Security Act 1973 states:
  "Regulations under this section shall provide for enabling a married woman or widow to elect".
  That is, to pay at the reduced rate. If the amendment contained in Clause 2 were made, the subsection would read:
  "Regulations under this section shall provide, subject to any prescribed conditions and exceptions, for enabling a married woman or widow to elect".
  That means that the Minister could bring in such "prescribed conditions and exceptions" as would abolish the married woman's option altogether. For example, to carry the matter to absurdity, the Minister could say that this would apply to all women earning over £5,000, £6,000 or £7,000 a year. I believe that women want to retain this option. If I have the honour to serve on the Committee I shall strive to see that the option is retained.
  The Bill is not all bad. I welcome the relaxation of the earnings rule, for which
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  I and some of my hon. Friends have been working for some time, when the Conservative Government were in office, and on which we had made some progress.
  But I regard as absolutely crucial the married woman's option. I should like an assurance from the Minister in winding up that the Government have no intention of using this small and apparently innocuous amendment to destroy an option which is greatly valued by the women of this country.
  6.15 p.m.
  Mrs. Jill Knight: The Minister of State in opening the debate in a gracious and charming way sprayed my hon. Friend the Member for Rushcliffe (Mr. Clarke) and me with some extremely kind words. It would be churlish of me not to follow his example.
  The hon. Gentleman said that he hoped that my hon. Friend and I would continue to speak from the Opposition Front Bench. Having listened to his speech, I should like to see him at the Palladium, because he has undoubtedly missed his vocation. I see him as the Tommy Cooper of Rotherham. I should like to see him do the three-card trick. Indeed, he reminded me of the small boy who, when asked to define "Now you see it, now you do not", said "A black dog running over a zebra crossing."
  The Minister talked about reduced contributions as if everyone would pay far less under the Bill. In fact, he talked about a substantially reduced contribution and of a reduction of 11 p per week for married women. I think that some of us us soon saw clearly which cup held the dried pea. The fact is that the hon. Gentleman was using the August figures as though they were the present figures and was talking about the Boyd-Carpenter scheme which is to be wound up in April.
  Let us get it absolutely clear. Women, who, after all, are the more practical of the two sexes, have no objection whatsoever to paying more money provided that they are to get more benefits in return. A mother, who in most cases is the chancellor of the exchequer in the ordinary home, does not object to paying weekly sums so that little Johnny will get a new coat at the end. But she objects root and branch to paying out contributions when there is no new coat for little

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  Johnny, no increased pension entitlement, nothing, at the end of it for her.
  If a married woman continued to pay under the Boyd-Carpenter scheme she would get more for her money. She would get a pension entitlement which she will not now get. That was where the Minister, even using great dexterity, failed to hide the pea in the cup.
  My hon. Friend the Member for Rushcliffe bowled the Minister middle wicket. Although some attempts were made to argue against what he said, they got feebler as time went on.
  The Opposition applaud several things in the Bill, We applaud the graduated contribution theory having been accepted by the Government. We are pleased that the structure of the 1973 Conservative Act has been adopted. We are pleased about the easement of the earnings rule, and we are pleased, too, about the increase in the invalidity allowance.
  Having tried as hard as I can to say kind things about the Bill, I must now come to some criticism of it, because criticism is needed, and it is well deserved. At a time when the Chancellor of the Exchequer's actions have greatly added to the burdens of everyone in Britain, at a time when prices in the shops are soaring and when electricity, postal and gas charges are rising rapidly, we now have this innocuous little Bill that will add one more burden to several backs.
  Married women will find the Bill unreasonable, widows will find it outrageous, the self-employed will find it unfair, and employers will find it worrying because it will add to the price of their goods.
  Mr. George Cunningham: May we take it that, in view of her comments, the hon. Lady will vote against the Bill?
  Mrs. Knight: Perhaps the hon. Gentleman will wait until the Bill gets into Committee, when I hope to have an opportunity to vote against parts of it and to move amendments to it.
  The Opposition do not object to paying for pensions and to putting the whole of the pensions system on to a solid basis. We want extra pensions to be paid out, and we want them to be paid for, but we want them to be paid for fairly. At present, a married women who exercises the option not to pay the full contribution but pays only 4p a week knows that she
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  will be covered by the payment of that sum for industrial injuries and National Health Service purposes. It has been said by several of my hon. Friends that the fact that so many women choose not to pay the full contribution indicates that they do not want this choice forced upon them. Three out of four married women do not pay the full contribution.
  My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) was right to draw attention to the fact that Clause 2(4) raises a nasty little cloud on the horizon and suggests to some of us that the married woman's option is to go. I heard the hon. Member for Islington, South and Finsbury (Mr. Cunningham) say "Hear, hear" when my hon. Friend referred to that possibility. There are grounds for considerable concern about the Government's long-term intentions with regard to the married woman's option.
  Under the 1973 Social Security Act we made plans for the contribution to be 0·6 per cent. of salaries between £8 and £48 per week. My hon. Friend the Member for Rushcliffe worked out how much more the married woman who has hitherto exercised her option will have to pay under the Bill. The sum involved will be between 64p and £1·16 a week, according to how much she is earning. If the Minister thinks that there will not be an outcry from married women when that provision comes into force, I assure him that he is wrong.
  The Opposition want to know exactly what extra benefit the married woman will get for her contribution, for the fact that she will have to pay 2 per cent. instead of 0·6 per cent. The effects of the Bill will seem unreasonable to the married woman because she will have to pay a lot more money but she will get no more than she gets now. What is more, the married woman is worried about what may happen to her option in the future.
  The Boyd-Carpenter scheme, which is to be wound up next April, made it plain that the married woman had to pay, but she paid for something concrete. As my hon. Friend the Member for Wells (Mr. Boscawen) said, married women do not work for fun. They work because they have to. In many cases, they work because the money brought home by their husbands is not sufficient to pay the bills.

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  I assure hon. Members on the Government benches that it is not very funny for a married woman to have to work, because all too often when she arrives home after a day at the factory—or in a shop, office, or wherever it may be—she has to turn to and prepare a meal for the family. It is fine for many husbands, because when they arrive home they sit down and put their feet up. I repeat that married women do not go out to work for fun. Most of them do a full-time job, and when they get back home at the end of the day they have to do another full-time job.
  It will be disturbing to married women to be told that they must pay this extra contribution without receiving any extra benefit. What cover will a married woman have for sickness and unemployment that she does not have now? Perhaps that information will be vouchsafed to us. If a divorced or deserted woman pays the contribution under this Bill, will she henceforth have any entitlement to allowances in the way that a married man receives allowances for his children? Will she procure the possibility of a pension of any kind, or any entitlement for any dependants? Many married women have dependants, and not only their children, either.
  There is no justification for a married woman having to pay an earnings-related contribution and receive an inadequate scale of benefits in return. What does the Bill entail for a woman who is separated from her husband? Will the Minister consider the plight of the woman who is alone? Can she, at least, be helped? The Opposition know that the Government have no love for the tax credit scheme—we do not know why, because it is a good scheme—but they should bear in mind the plight of the mother who lives alone, and I hope that the Minister will at least consider opting to implement the child credit part of the tax credit scheme.
  A deserted woman may be unable to pay the extra money that the Bill demands of her. What about a widow who may be in difficulties? I checked on the position of the widow. A widow, with children, drawing the widowed mother's allowance from the National Insurance Scheme who enters paid employment has the same option as a
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  married woman not to pay the full national insurance contribution, and very often she does not do so because it would not add to her advantage. She would not be able to qualify for sickness or unemployment benefit as well as the widowed mother's allowance, and the allowance would automatically be converted into the retirement pension when she reached the age of 60. But she, too, will have to pay the 2 per cent. rate under the Bill instead of the 0·6 per cent. envisaged by the Conservative Government.
  The Opposition would like more information about the Government's long-term proposals. We recognise that this is an interim measure, and we are anxious to know the way in which the Government's mind is working. For instance, how much, in addition to the 2 per cent. contribution under the Bill, will a married woman have to pay under the Government's long-term proposals? Incidentally, when will these long-term proposals be published?
  One tries hard to see the other merits in the Bill which have been as well hidden as the Minister's dried pea. Does the Bill mean that a married woman may be able to get a pension at the age of 60 if she is a lot older than her husband and if he is only 50? The Minister hinted at this difficulty, and it is a problem that has plagued many of us, because a woman who marries a man much younger than herself is not entitled to the old-age pension when she reaches pensionable age. If there is a difference of 15 years in their ages, she can be 80 before she receives a pension. Is it envisaged either in the Bill or in long-term proposals that that will be altered?
  I spoke a few moments ago of the need to show married women that the contributions that they are being asked to make are fair. There was a recent report of a woman who paid national insurance contributions from 1947 to 1965 and is now getting only 10p a week—after all those years of contributions—because she failed the married women's half test. I have a constituency case of a woman who paid for stamps from the age of 14 to the age of 52 and she is getting nothing because she is 123 contributions short.
  The fury of these women over what I consider is most unfair treatment will be

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  nothing to the fury which women will feel next April when they will have to pay more and more money but receive nothing at all for it. Why should a married woman with no dependants, and who may propose to work for only a short period of her married life, insure herself against sickness and unemployment and pay towards a pension when her husband's contributions cover her? Is this the first step to removing the married woman's entitlement through her husband—in these days of women's lib it is perfectly fair that we should probe this point—or is it considered perhaps that the age at which a woman should receive a pension will rise to 65. That may be in the minds of some Ministers who have framed the Bill and who may even now be framing long-term proposals.
  I turn now to another person who is heavily penalised under the Bill, the self- employed person, who has been mentioned by a number of my hon. Friends. At present a self-employed man pays £1·99 a week and a self-employed woman £1·66 a week. In August the contribution for a self-employed man will go up to £2·51 and for a woman £2·01. The Social Security Act 1973 suggested, quite rightly—this is a matter which we are glad the Government have accepted—that the self-employed person with profits over a certain limit should pay an additional contribution in proportion to the profits over and above the flat rate. Our Act would have meant a 5 per cent. payment on profits between £1,150 and £2,500, but under this Bill the figure will not be 5 per cent. but 8 per cent. My hon. Friend the Member for Rushcliffe worked out that the contributions will be double and that a self-employed man earning what is today quite a low wage of £50 a week will have to pay £12·50 a year more than under the scheme which we drew up, and it is very doubtful what additional benefit he will receive. As the scale rises he will have to pay more and more.
  Self-employed people are today very hard-pressed members of society. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) pointed out that they were useful and important to society, and indeed they are. In many cases self-employed people are those who are running small businesses, and they have a very difficult time. Reference was made to a self-employed person running a news-
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  agent's shop. There are also many other self-employed persons who work far longer hours than any trade union would support and find themselves hit on every side, with at present massive tax increases and now the thought of the considerable extra contribution which they will have to pay. A self-employed man who is also an employer is hit in all ways. It would be interesting to know what percentage of income it costs him to get the same pension as a self-employed man against what percentage an employee has to pay. Granted a self-employed person has to pay as both an employer and an employee, but there is a definite element of unfairness and I am not sure that the Bill does not widen the gap. The self-employed man gets no unemployment benefit at all.
  Mr. O'Malley: For identical benefits the total contribution of a self-employed person under the Bill and under previous proposals is about 8 per cent., whereas for Class 1 contributors it is about 12 per cent., and the balance of contributions—that is, those paid as a self-employed person on the one hand and as an employed person on the other—is on a basis which was agreed by successive Governments over most of the post-war period.
  Mrs. Knight: My point is not that there has never been any agreement from successive Governments on the position of the self-employed man. I am pleading for the case of the self-employed man under the Bill because he has already been hit very hard.
  We have debated the Bill against a background of steeply rising prices and taxes. Apart from married women and the self-employed, there are others who will not benefit despite what the Minister says. The single man—bearing in mind increased income tax which he has to face and the higher national insurance contributions—even if low paid will have a take-home pay each week less than it is now. I am thinking of the single man earning less than £20 a week, which is a poor wage. Similarly, for married couples with two children, if the man is earning £54, or just over, a week, he will have less take-home pay under these new proposals. Furthermore, married couples with no children will be worse off if earnings are up to £35 a week. I am not speaking here of wealthy people.

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  In 1965 the Labour Government withdrew arrangements whereby national insurance contribution paid by employed persons could count for tax relief.
  I beg the Minister not to look at only one set of figures but to look at the position of all these people I have spoken of, and to take into consideration their income tax increases and higher national insurance contributions. I have been speaking about facts which we shall have to argue further in considering the Bill. In the meantime, there are elements of the Bill which we can welcome and support in Committee, but there is a great deal over which we have the gravest possible reservations.
  6.38 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Robert C. Brown): My hon. Friend the Minister of State, who was referred to as the "comedian from Rotherham" by the hon. Member for Birmingham, Edgbaston (Mrs. Knight), made reference to the appearance for the first time on the Opposition Front Bench of the hon. Lady and the hon. Member for Rushcliffe (Mr. Clarke). It would be churlish of me if I did not join my hon. Friend in both congratulating the hon. Members on their first appearance on the Opposition Front Bench and expressing the wish that they will continue to occupy a position on that bench for many years.
  Both hon. Members are entitled to be congratulated upon their contributions. The hon. Lady spent some time complaining about my hon. Friend quoting one set of figures, while she was quoting another set of figures—
  Mr. O'Malley: My figures were right.
  Mr. Brown: It is an easy thing to quote figures and I shall have something to say later about spurious figures. But the figures which my hon. Friend has used have been telling figures. I can understand hon. Members on the Opposition Front Bench not liking figures of that sort. Nevertheless, they are valid figures.
  Those hon. Members who mentioned married women tended to overlook the fact that all married women pay some graduated contributions now on earnings
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  over £9 a week, whether or not they have opted out of the flat-rate contribution. Contracted-out people pay less in graduated contributions than participants but they still pay the major part of graduated contributions, and married women are treated no differently from anyone else in this respect. That is a point that hon. Members seem to have missed. Nearly all married women will pay less from April 1975 than they will have been paying before simply because the graduuated scheme will then end. That point, clearly, has been missed.
  Mr. Kenneth Clarke: Would the Minister not agree that both my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) and I referred to that? Would he not acknowledge that those contributions are being ended because those benefits are being ended? There is to be no more graduated pension benefit. The Minister cannot possibly rely on the abolition of the contributions and benefits under that scheme to justify trebling the cost of the other benefits, which, as my hon. Friend said, remain quite unchanged.
  Mr. Brown: Yes, but the fact remains—we are getting perilously close to the subject of the next debate—that the reason why we are abolishing those so-called benefits is that they were derisory benefits. They were not worth a light in the first place, and without dynamism they would have been worth little or nothing in future. No one can deny that.
  Sir Geoffrey Howe: I should be grateful for an explanation on one matter which seems to be the heart of the point raised by my hon. Friends. On either view, on the law as it now stands or on the law as changed by the Bill, those benefits and the graduated scheme will disappear, and the world in that sense will be the same after the Bill is on the statute book as it was before. One change that will be made is that married women who are contracted out, exercising the option, instead of paying 0·6 per cent. of their income will be paying 2 per cent. In other words, the amount they pay will be more than three times what it was. Would the Minister accept that and then tell me what, if any, benefits those women will get for the trebling of their contributions by the Bill?
  Mr. Brown: I am coming to that. It is true that they will be paying 2 per cent. instead of 0·6 per cent. and that we have abolished the reserve scheme, but the fact remains that the right hon. and learned Member for Surrey, East (Sir G. Howe) is quoted in the Press as saying that the majority of married women will be paying more when, in fact, they will be paying less. If one uses a spurious figure, one can prove any argument. The right hon. and learned Gentleman is quoting post-April 1975 figures which are not yet in effect and have not been in effect and will not come into effect. How is it reasonable or fair to say that married women will pay more on the basis of a figure which the right hon. and learned Gentleman knows will not be enacted?
  A woman earning £40 a week on the basis of the rate of 0·6 per cent. of her earnings would be paying £1·53 less; on the 2 per cent. rate she will be paying 97p less. If one argues on a figure which has never been implemented, one can show that she will be paying more, but, in fact, she will be paying less. That is undeniable. If one argues on a 1975 figure which will not be implemented, one can prove that she would be paying more. We have now answered this point. The Minister of State has done so at least six times now.
  Sir Geoffrey Howe: The Minister must accept and explain one point. What we have on the statute book now is a figure of 0·6 per cent. At the same time, the graduated scheme and all that goes with it are already due to be abolished. As a result of this legislation the percentage of the married woman's income that she will have to pay will go up from 0·6 per cent. to 2 per cent. What I was comparing in my speech—it is this comparison that the debate is all about—is the position before the Bill is enacted and the position after. Would the Minister not agree that the Bill will treble the percentage take from the married woman's income compared with what it is today for no additional benefit? Would he accept that that is so and then explain why it should be so?
  Mr. Brown: I will accept that the contribution for the married woman is going up from 0·6 per cent. to 2 per cent. We shall have to pursue this point in Com
  94
  mittee. I now want to go on to some of the other points raised.
  There will be no increase in contributions paid by the self-employed man earnings up to £1,600 a year. Such people will continue to pay the same flat-rate Class 2 contribution of £2·41 which will apply from 5th August next. Above that earning level, the effect of the new earnings-related Class 4 contributions is that people earnings £2,000 a year will pay an extra 61p a week, those on £2,500 will pay £1·38 extra, those on £3,000 will pay £2·15 extra and at the upper limit those on £3,600 will pay £3·08 extra. In the upper range, these are admittedly considerable increases, but the object of the new Class 4 contribution is to ensure that the self-employed pay their full share towards the general cost of pensions. The extent of the increase shows the extent to which they have not done that in recent years.
  The self-employed have over the years paid progressively less and less towards the cost of the scheme because they have escaped graduated contributions and paid only the flat rate while increasing emphasis has been put on holding down the flat rate and raising the necessary money from graduated contributions. Thus, in 1948 the self-employed person paid 70 per cent. of the Class 1 contribution, employer-employee combined. That has now declined to about 40 per cent. of the combined Class 1 contribution for the male average earner. The 1973 Act and the Bill go some way towards restoring the original relationship because from April 1975 the self-employed person will be paying about 65 per cent. of that combined contribution. All we are doing is putting the situation back to what it was in 1948, or near enough.
  The hon. Member for Merioneth (Mr. Thomas) asked several questions about individual benefits. I hope that he will forgive me if I do not attempt to answer them tonight. The Government's proposals for the future of benefits will be published in a White Paper as quickly as possible, and I would ask him to await that White Paper. The Bill is confined to the contribution adjustments necessary to finance the scheme from April next year. The schedule listing benefit rates is simply to ensure that they continue and do not cease in April next year when the existing national insurance legislation is

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  repealed. All the figures are merely a confirmation of the figures in the uprating Bill which the House has already passed.
  My hon. Friend the Member for Keighley (Mr. Cryer) raised the question whether the new allowances for local councillors count as earnings for the purpose of the retirement pensions rule. That is not a matter for me or for my right hon. Friend the Secretary of State. It is a matter for the national insurance adjudicating authorities, the independent statutory authorities—the insurance officer, the local appeals tribunal and the National Insurance Commissioners. In any event, the nature of the new allowances is a matter for my right hon. Friend the Secretary of State for the Environment. The allowances came into operation in England and Wales only in April of this year. Nevertheless, my hon. Friend's point will, I am sure, be noted by my right hon. Friend.
  The hon. Member for Lancaster (Mrs. Kellett-Bowman) pressed my hon. Friend the Minister of State on the question of the £47 million mentioned in the Government Actuary's report. I can only underline—hoping that I am more successful than was my hon. Friend—the fact that the £30 million decrease is to be compared with the pre-April 1975 situation, whereas the £47 million increase is to be compared with the 1973 Act figure—namely the 0·6 per cent.—which, it is admitted, had to be revalued—that is, on the upper and lower earnings limit—apart from the 0·6 per cent. to 2 per cent. change.
  The hon. Lady was clearly pressing her argument on an assumption that the contracted-out paid no graduated contributions. That is not so. Whether they are opted out married men, married women or single women, they pay a certain amount of graduated contributions at present. We shall have to leave the matter there.
  Mrs. Kellet-Bowman: What is the hon. Gentleman's answer to the point that raised about Section 42(2) of the 1973 Act, which is of considerable importance to women, and the amendment proposed thereto?
  Mr. Brown: In view of the time available, I shall have to write to the hon. Lady about that point.
  Mr. Kenneth Clarke: Surely the hon. Gentleman can give a simple answer. The amendment referred to by my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) seems to be giving the Secretary of State power severely to limit the right of married women to opt for lower contributions. What are the Government's long-term aims in regard to the married woman's option? Do they remain committed to taking away entirely from married women the right to pay a low contribution?
  Mr. Brown: The hon. Gentleman is tempting me.
  Mrs. Kellett-Bowman: The Minister still has seven minutes.
  Mr. Brown: The hon. Gentleman will have to await the White Paper. I shall not be tempted to say what my right hon. Friend will be putting in that White Paper, which the nation will be delighted to see and to benefit from.
  Mrs. Kellett-Bowman: Surely the hon. Gentleman knows what is being done by the Bill.
  Mr. Brown: If the hon. Lady can contain herself, I should like to come to the matters raised by the hon. Member for Hazel Grove (Dr. Winstanley), who was speaking for the Liberals. I think that he was speaking for the official Liberal Party. He went very wide in his speech. While I do not want to make any reference to the Chair, I thought that the hon. Gentleman was speaking to the motion that we shall be discussing at the conclusion of this debate. He said that the discussion on that motion will involve taking part in a sterile exercise. He said that, having taken part in that sterile exercise, the Liberal Party, to a man, will trot into the Lobby with the Tories to try to down the Government. I have no intention of straying from the rules of order and trying to reply to a debate to which my hon. Friend the Minister of State will be replying, so I leave the matter there. Nevertheless, it is right to put it on record that the Liberal Party will take part in what it calls a sterile exercise with the Tories and then go into the Lobby to try to down the Government.
  Mr. Kenneth Clarke: The Minister will be delighted to see that he has five minutes left in this debate. Will he please

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  state whether it is the Government's longterm intention to take away from married women altogether the right to opt for a lower level of contribution?
  Mr. Brown: The hon. Gentleman will have to learn to be a little more patient and to wait for the White Paper.
  Question put and agreed to.
  Bill according read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  SOCIAL SECURITY AMENDMENT BILL

    SOCIAL SECURITY AMENDMENT [MONEY]
    Queen's Recommendation having been signified—
    Resolved,
    That, for the purposes of any Act of the present Session to amend the provisions of the Social Security Act 1973 as to the rate or amount of benefit and contributions, it is expedient to authorise the payment out of money provided by Parliament of:

    (1) any increase in the sums payable out of money so provided under any enactment where the increase is attributable to provisions of the said Act of the present Session:

    (a) raising to £8·00 and £5·35 the rates of attendance allowance;

    (b) raising to £6·00 and £3·70 the rates of Category C and D retirement pensions or raising the rates of increases (where payable for children and adult dependants;

    (2) any increase in the sums payable out of money so provided by way of Treasury supplements under subsection (5) of section 1 of the said Act of 1973 where the increase is attributable to provisions of the said Act of the present Session altering such contributions as are mentioned in subsection (2) of that section.—[Mr. Walter Harrison.]

    WAYS AND MEANS

      SOCIAL SECURITY AMENDMENT
      Resolved,
      That, for the purposes of any Act of the present Session to amend the provisions of the Social Security Act 1973 as to the rate or amount of benefit and contributions, it is expedient to authorise:

      (1) any increase attributable to the said Act of the present Session in the sums which, under the said Act of 1973, are to be taken as paid towards the cost of the national health service in Great Britain;

      (2) the payment into the Consolidated Fund of any increase attributable to the said Act of the present Session in the sums payable into that Fund under the said Act of 1973.—[Mr. Walter Harrison.]

  PENSIONS
  Mr. Speaker: Before calling the right hon. and learned Member for Surrey, East (Sir G. Howe) to move the motion, I must inform the House that I have selected the amendment in the name of the Prime Minister and the names of his right hon. Friends.
  6.56 p.m.
  Sir Geoffrey Howe: I beg to move,
  That this House deplores the arbitrary decision of the Secretary of State for Social Services not to bring into operation Parts II and III of the Social Security Act 1973; regrets the serious confusion and uncertainty that this will cause; further regrets that this is likely to deprive many people of an early opportunity to secure a second retirement pension; and calls upon the Secretary of State to reverse her decision so as to allow the 1973 scheme to come into effect, while referring any proposals for subsequent improvement of that scheme to an all-party committee, with the intention of establishing an agreed foundation for pension policy.
  This motion is being discussed separately from the Bill which we have just debated because that Bill deals with the financing of the National Insurance Scheme as it now stands. The motion deals with the very important and distinct question of the future of the National Insurance Scheme and other insurance schemes that were to be established as a result of the Social Security Act 1973 with effect from 1st April next year.
  This is very much a critical motion. It is critical because the decision taken by the Secretary of State, quite apart from being one of the most unexpected decisions taken by the present minority Government and not foreshadowed in some of the right hon. Lady's earlier statements, is the least justifiable and one of the most destructive decisions taken by the present Government. Here, surely, one would have expected a minority Government to have shown more humility and restraint in their approach to the subject of pensions than they have done.
  The motion is not only critical. It is also constructive, because, like hon. Members in all parts of the House, we recognise the need, especially in a period of inflation such as that in which we are living, for us all to work out the best ways of helping those who are in retirement and those approaching retirement.

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  In earlier debates we have welcomed improvements in the State basic scheme, we have discsused action taken by the previous Government as well as by the present Government to key the value of pensions to the cost of living and living standards, and we have discussed the possibility of letting that key operate more frequently than once a year. That is not a matter of controversy.
  It is a matter for the utmost regret, however, that the present Government have chosen to reject, as they have done, the opportunity of working on the established foundations laid in the 1973 Act for occupational schemes in the future and of proceeding on that foundation, as many on both sides of industry are already doing, to build pensions in the future and to work out ways of improving or changing the scheme thereafter so far as there is agreement on that. It would have been desirable for such future progress on that foundation to have taken place, so far as possible, with all-party agreement. That is why the last part of the motion calls for the establishment of an all-party committee to consider future pension policy.
  Unhappily, one contrasts with that desirable approach the fact that the Secretary of State has chosen—against, I suspect, her first instincts—to throw the whole of the pension situation back into the political arena so that it becomes, as many commentators have said, a political football. The right hon. Lady will, no doubt, say that, if that is the case I advance, why cannot the same case be made against the failure of the previous Goverment to work upon the foundation of the Grossman pension scheme?
  There are substantial and solid reasons for rejecting that argument. First, the Grossman scheme—I need not take the debate any further this evening—was the subject in itself of at least as many criticisms as those which the right hon. Lady and her friends advanced against the 1973 Act. I could say, but I need not say so this evening, that those criticisms were more formidable and more penetrating, and that the legislation introduced by Richard Crossman was incomprehensible and unlikely to work effectively. In fact far more important than that, the Grossman scheme was not on the statute book—nor was it being acted on by people
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  on both sides of industry; it was still going through Parliament at the time when the 1970 election took place.
  On this occasion, when the right hon. Lady came into office the legislation was on the statute book. The schemes were actually in being. Much work was being and had been done by Government, by employers, by unions, and by the pension industry, to bring schemes into operation.
  Incidentally, there is nothing in the fact which I have seen advanced by some hon. Members opposite that very few recognition certificates had been granted under the 1973 Act procedure at the time the right hon. Lady took her decision. I refer to a Press release by the Corporation of Insurance Brokers Society of Pension Consultants after the meeting which its representatives had with the Minister of State in the Department, which concludes by stating:
  "… the Society said that unless the Secretary of State really did ensure in her new policy that the impetus in the development of occupational pension schemes was maintained the loss to emloyees and their dependants could be very great. The Society, whose members have been responsible for the setting up of the great majority of insured pension schemes, gave evidence of the wide scale on which development had been taking place in recent months and the advanced stage which planning had reached. They explained that this had been obscured by the fact that at the date when the Secretary of State announced the suspension of recognition arrangements the timeable had not allowed the final stage of obtaining recognition certificates to be reached."
  So there is nothing in that argument, and what the right hon. Lady has done has been to deal a severe and unnecessary blow to the work that was well advanced on the basis of the legislation that was on the statute book.
  The House will not be surprised to know that I have received, through my hon. Friends and directly, many letters of bitter and angry complaint from people throughout the country about the Secretary of State's decision. One that reached me through the Smaller Businesses Association, and, I think, in different forms from my hon. Friends the Members for Basingstoke (Mr. Mitchell) and for Doset, West (Mr. Spicer), states:
  "We, and I imagine thousands of other companies, now find ourselves in this position. First, considerable time and expense expended both by us, our actuaries and other advisers in formulating a scheme for our employees has been totally wasted. Secondly, the discussions

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  with employees about the Social Security Act and its implications now become meaningless and since pensions are becoming a vital area of discussion especially since the introduction of Phases I, II, III there must be adverse repercussions to industrial relations. Thirdly, those considerations are damaging enough, but we now know nothing of what will be introduced to replace the State Reserve Scheme—are we therefore to `bash on regardless' must we expect the farcical provisions of the Grossman Scheme to be resurrected—or what? Logically we should do nothing, but this is hardly likely to be acceptable to staff, employees and Unions in the impending round of wage negotiations. The Minister's answer to this dilemma is the vacuous statement that 'the setting up of any good new occupational scheme or improvement of an existing one represents a move in the right direction'. What, one wonders, does she believe that everyone involved with pensions, be they employers, actuaries, life officers, lawyers and a host of others have been doing over the past year to eighteen months?"
  More crisply still, from the Isle of Ely comes this complaint and particularisation:
  "In the belief that the recent Conservative Government's new and enlightened approach to State and private pensions, and in particular the State Reserve Scheme, would be honoured by the present Government, and in the belief that such progress would make many employees more cognisant of the importance of pensions provisions, my company has not only set up its own alternative scheme but has done so twelve months in advance.
  "Our scheme provides the employee with a much improved pension, as well as substantial life cover and other advantages, and involves him in a contribution of 2½ per cent. less tax, which is about 1¾per cent. or only ¼per cent. more than the projected State Reserve Scheme.
  On the other hand, the employer's contribution we have elected to pay amounts by our scheme to 4·7 per cent., compared with the 2½ per cent. of the projected State Reserve Scheme.
  Our employees, both the Labour and the Tory ones alike, were quite stunned to hear of Mrs. Castle's pronouncement on this subject, and have asked us if we can get the whole thing 'frozen' until someone can tell us what is likely to happen under our new Government's administration.
  From the company point of view, I was happy to accept the considerable cost of our contribution at 4·7 per cent. of our wage bill while Government action was engendering a live interest in pensions, so that the payment would be appreciated by the employees. Indeed, it was our opinion that the new approach to pensions involving the State Reserve Scheme would mean that employers would find it necessary to provide good alternative schemes, as an adjunct to the normal terms of service, in order to retain a proper chance of recruiting the right sort of labour. But now, not only do our employees want to freeze or suspend our
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  new scheme, but we ourselves are doubtful whether we can see our way to making our own contributions to it."
  I have read those letters at some length to the House because they are typical of many comments and are representative of the reaction of many hundreds of employers on behalf of many thousands of employees throughout the country. It is for that reason that we regard the Secretary of State's decision as being so destructive.
  The effect of the right hon. Lady's decision can be analysed as follows. First, those employers who already have schemes, intending to introduce them in response to the legislation, will be obliged by the present uncertainty—it is massive—to discontinue those plans. This can have an adverse effect on the pension provision of about 12 million people already covered by occupational schemes.
  Secondly, many other firms intending to introduce schemes in response to the 1973 Act may well not do so. Personally, I hope that they will still continue to do so, but it would be idle not to recognise that a statutory obligation to introduce second occupational pension schemes has now been replaced by ministerial discouragement of the most explicit kind. Indeed, as Mr. Stewart Fleming, writing in the Financial Times on 10th May, said:
  "She—"
  he is referring to the Secretary of State—
  "—has provided a positive inducement to employers to postpone action at least until they have seen the Government's alternative proposals, promised in a White Paper later this year."
  So I would invite the House to conclude that the Secretary of State's decision is clearly wrong as a matter of policy. The error was summarised by Lord Byers, who has a prominent position in promoting compliance with the 1973 Act, when he described the work that had been going on in a letter to the Daily Telegraph on 28th May in these words, though he had made the statement in many other places:
  "All this has gone by the board to the possible detriment of thousands of workers, or at the very best, has been postponed for very many years."
  I have told the House previously of the unhappily not prophetic observations of Lord Houghton, speaking at the Financial Times Pensions Conference in 1973, when

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  he traced out what should have been the reaction of the present Government. He said this:
  "While the Labour Party has many criticisms of the present Government's 1973 Act, I am convinced that it would be a great mistake for a Labour Government, should there be one after the next General Election, to suspend the operation of the new scheme. That, I am certain must go on, … I conclude … that the 1973 Act should stand for a while before embarking on the next move forward. I see no alternative to that in the short run."
  It is because of that wise forecast—unhappily unfulfilled—that I said at the beginning of my speech that this decision by the Secretary of State was not only a disastrous one but was also a surprising one. It was wrong in policy and wrong, too, as a matter of politics for a minority Government to seek to act in this way.
  I have advanced elsewhere the suggestion that the decision may possibly be wrong as a matter of law as well. That has been considered by the Joint Select Committee on Statutory Instruments, at least from one point of view, and I do not wish to dwell now on it, save to say that the matter could yet be challenged elsewhere. It is certainly a very remarkable thing for an entire piece of legislative apparatus, being acted upon by thousands of people throughout the country, to be suspended—revoked, in effect—by means of an order described ironically as a "commencement order".
  Mr. George Cunningham: Is it not the fact that that order was possible without parliamentary approval because that was the procedure laid down in the Conservative Act? It could have been made subject to parliamentary approval if the previous Government had wanted it to be.
  Sir G. Howe: It could indeed have been done, but what Government in this country, in accordance with our traditions of constitutional government, could have foreseen, notwithstanding the observations and advice I have just quoted from Lord Houghton, that a minority Labour Government at any point within the next 12 months would have acted so irresponsibly as the right hon. Lady has done? One designs legislation to be worked by reasonable men, not by unreasonable minority Governments.
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  The case which the Government may seek to make against the existing scheme cannot justify the decision taken by the Secretary of State. It would be wrong, for example, to argue that the 1973 Act could have been set on one side because the benefits provided were too low and too slow to come into operation. The Act set out prescribed minimum standards, and they could have represented a major advance in pension provision. It established a firm base on which any Government should have been willing and able to operate.
  Experience shows that once a pension scheme is started improvements to it are inevitable over a period. That is why it is absurd for Labour Members to consider that under the 1973 Act the reserve scheme was set for all time. Improvements in due course were not only possible in that scheme but proper and probable, and it was quite wrong to set it aside in this way. On any view, even under the Crossman scheme, there is likely to be a gap till the scheme, whether it is a pay-as-you-go scheme or is funded, reaches full maturity. It has always been sensible to conclude that that gap in provision should be met by tax credit provisions, and that is another reason why we deplore the delay of the Government in bringing in the tax credit scheme.
  The second reason which might be advanced against the 1973 Act is that it did not make sufficient provision for women. That, of course, was the subject of much argument, and it may yet be so hereafter. It is still necessary to bear in mind that women both live longer and retire earlier, and any outcome that ignores those facts is not, whatever else it may be, equal. Even so, it is possible in future to reach different conclusions about provisions as between the sexes under the 1973 Act, possible to consider them again in the future, after the 1973 Act has been activated.
  However, neither of these reasons justifies a refusal to allow the 1973 scheme to come into force. It had very real merits which cannot be provided in any other way. It recognised that a pay-as-you-go alternative—if that is what the Government have in mind—means that there is no guarantee of a second pension. it recognises also that occupational schemes

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  with the consultative provisions imposed under the 1973 Act are far more in tune with the needs of our time than a massive State scheme.
  If one contemplates the flexibility of occupational schemes, the fact that they can be designed by a consultant, employees and employers, one can, see that they may be more attractive at the present time. I quote from the observations of the Chairman of the National Association of Pension Funds, reported in the Daily Telegraph, who said:
  "In my experience most people prefer to be in a well-run private fund. It is much more flexible and usually it is operated on a much more personal basis than a State scheme. Employees are quite rightly having more and more say in the running of funds, and obviously a State scheme cannot be altered except on a nationwide basis."
  Surely that is a second, solid and substantial reason for preferring the occupational schemes the 1973 Act was designed to promote.
  The present situation has very real demerits and difficulties for pensions and future pensioners. On any view it will involve a delay of several years in making a start. We are promised a White Paper later this year with legislation perhaps effected by 1976 and coming into effect by 1978. The right hon. Lady may smile at that with some curious sense of pride, but it is not something to be proud about. I quote from Mr. Haddon-Grant. He said:
  "The worst thing about it"—
  he was referring to the Secretary of State's action—
  "is that for the first time in the history of the pension fund movement something has been taken away without us knowing what is going to be put in its place."
  So, inevitably there will be a hiatus of three years at best, and if the present Government have their way, due to a combination of sloth and arrogance on the part of Labour Governments, the delay before the establishment of a second effective pension scheme will be prolonged.
  It will be one of the most important tasks of the next Conservative Government to repair as quickly as possible the damage done by this minority administration. We need to secure progress as soon as possible in the establishment of the right to a second pension. We need to preserve the value of work already
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  done throughout the industry if we are to achieve just that. The next Conservative Government, therefore, will, with all reasonable dispatch, reactivate the 1973 Act by making a fresh commencement order at the earliest possible commencement date. The question of when that date will be, having regard to the time that has elapsed, will have to be subject to urgent consultation, but it would certainly not be later than April 1976.
  In addition, we shall consider ways in which any future improvements can best be considered—and this I emphasise—on an all-party basis so as to establish, if at all possible, an agreed foundation for future pension policy. It is upon that basis that we should approach the future of pensions provision.
  Perhaps I may now quote The Times leading article which greeted the Secretary of State's announcement. It said:
  "Every Government has the right to have its pension strategy judged by its long-term achievements more than by its interim decisions, but this Government's first move is to surrender ground which had been won in the long struggle to secure a decent pension for everyone in Britain."
  It is that we deplore, and it is upon that basis that I invite the House to join me in supporting the motion.
  7.17 p.m.
  The Secretary of State for Social Services (Mrs. Barbara Castle): I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
  notes that the financial provision made under the Social Security Act 1973 was insufficient to support an adequate level of retirement pension; welcomes the prompt improvements in pensions made by the present Administration; endorses the determination of the Government to ensure that employees are relieved from contributing to a scheme which would have provided inadequate pension cover, especially for women and older workers; recognises that the pension arrangements under the Act could not have served as a sound foundation for an effective and fair pensions policy directed to relating the living standards of pensioners more closely to their earnings and avoiding reliance on means tested benefits; and calls upon the Government to bring forward as soon as possible proposals for public and Parliamentary discussion which would meet the legitimate aspirations of workers in modern conditions and merit the widest possible support.
  The most significant remarks in the concentrated speech of the right hon. and

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  learned Member for Surrey, East (Sir G. Howe) was his last one. In the context of appealing to the House to take pensions out of politics he announced that if the Conservatives won the next election they would immediately reintroduce the reserve pension scheme. That is certainly a great foundation for unity in pensions policy! It is that, in keeping with all this great talk about actions of national unity and rising above party politics, that we are asked to approve tonight. I suggest to the hon. Member for Hazel Grove (Dr. Winstanley) that that is what he will be voting for if and when he supports the motion.
  The Opposition have made certain charges in their motion. The first was an epitome of the double standards that the Conservative Party always applies. The right hon. and learned Gentleman even said—I jotted down his words, hoping that he would fall for it, and he did—that we were making pensions a political football. I had not suspected that the right hon. and learned Gentleman would roll out one which had such whiskers on it, but he did. The double standards, as we noticed in the right hon. and learned Gentleman's criticisms, apply both legally and politically.
  The right hon. and learned Gentleman, very wisely from his point of view, skated over the legal argument that he tried to advance at one stage against my decision by order not to activate the reserve pension scheme. As my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) helpfully pointed out, I had only been using powers set out in a Conservative Government's Act. it does not do for Conservative Members to say "It is all right to have those powers if we are on the Government benches, but it is wrong if Labour Members are sitting there". [Interruption.] It is not a cheap debating point. There have been attempts, through the columns of The Times and elsewhere, to pontificate that I committed a constitutional monstrosity. In fact, I took advantage of a power that my Conservative predecessor took to himself.
  The second sphere for double standards is political. The right hon. and learned Gentleman knows what weak ground he is on when he says that it is outrageous for me to reverse the Con
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  servative Government's scheme, knowing full well that that is exactly what the Conservative Government did to the Richard Crossman scheme. It is no good his saying that there is a subtle difference, because the Conservative Government's scheme is on the statute book. As he himself admitted, it has not been activated.
  Sir G. Howe: The right hon. Lady must not be carried away by her debating ardour. How can she seriously say that there is not a difference between a Bill that is still being debated in Parliament and an Act on the statute book, with regulations having brought it into force, an Act in respect of which many thousands of people were carrying out their obligations? It is wholly different.
  Mrs. Castle: I will give the right hon. and learned Gentleman a recent example of the fact that there is no difference. The Industrial Relations Act is on the statute book. We have set out to repeal it. Are Conservative leaders attacking us for that? On the contrary the Leader of the Opposition has thanked us for removing it from the statute book and has said that if the Conservatives return to power they will not put it back. That is exactly the position on pensions. We have shown that we can improve upon the Conservatives' scheme.
  Mr. Kenneth Clarke rose—
  Mrs. Castle: I will not give way. I am making a valid point. No doubt, if the hon. Gentleman catches the eye of the Chair, he can say whatever he feels about me that is now pent up to bursting point in him.
  It is nonsense to say that because one Government have legislated their successors are committing a constitutional impropriety if they reverse that legislation. Time and again, history has shown that the reversal of legislation has been to the national good. Just as that is happening in industrial relations, it will prove to be the truth in pensions as well.
  The Richard Crossman scheme had been thoroughly discussed in the House. Conservative Members did not like it, and they were free not to like it. On Second Reading the right hon. Member for Welwyn and Hatfield (Lord Balniel) made it clear from the Opposition Front

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  Bench, not knowing whether the Cross-man Bill would ever get on the Statute Book, that
  "We will not follow the Government in this new and unsound pensions structure."—[OFFICIAL REPORT, 19th January 1970; Vol. 794, c. 82.]
  He had a perfect right to do that, and I have a perfect right to do the same today. What is democracy all about?
  Let us get away from the irrelevances and discuss the merits, which the right hon. and learned Gentleman was very careful not to do. It was interesting that his defence of his Government's reserve pension scheme was so lukewarm and tentative. The motion admits that that scheme needs improvements, that it is already out of date.
  The right hon. and learned Gentleman tried to argue that all pensions policies evolve over the years, that when we have had a little experience of them we realise that we have to improve them, and so on. But we have had no experience of the reserve pension scheme. It is not even activated, and already the spokesman of the Government who introduced it is moving a motion appealing for all-party unity on the basis that we can together improve the reserve pension scheme.
  When I listened to the right hon. and learned Gentleman I felt that there was already one bonus from our refusal to rubber stamp our predecessors' policy. Already, before the scheme would have come into operation on their own timetable, they are admitting that it is inadequate. Does the right hon. and learned Gentleman really mean to tell the House that if I had meekly said "I shall introduce the reserve pension scheme", they would have been at the confessional this evening saying that it was in effect inadequate?
  As Liberal Members and Conservative Members rush to the television microphones to tell the country that what we need is a coalition Government, I can only say that the right hon. and learned Gentleman's admission now of the inadequacy of the reserve pension scheme is proof of the value of party government.
  Sir G. Howe: The right hon. Lady must not build too large a structure on a simple proposition. The motion says
  "while referring any proposals for subsequent improvement of that scheme to an all-party committee".
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  That is not admitting the inadequacy of the scheme. Does not the right hon. Lady recognise that it is an attempt to suggest that the proposals put forward by her or by anyone else should be constructively considered upon the basis of a going scheme? That is no admission. It is a sensible proposition.
  Mrs. Castle: If we are to have a sound foundation for pensions policy on a non-party or all-party basis, we had better begin by understanding each other's policies. Is or is not the right hon. and learned Gentleman saying that the reserve pension scheme is inadequate? I suggest that Liberal Members should listen to the right hon. and learned Gentleman's reply, because they will be voting for it. Does he or does he not think that the reserve pension scheme is inadequate?
  Sir G. Howe: I made it perfectly clear in my speech that the reserve pension scheme was sensible and a good foundation for further progress. It was a foundation upon which many occupational schemes were coming forward, all of which are to be retarded through the right hon. Lady's arrogance.
  Mrs. Castle: There would be more validity in the right hon. and learned Gentleman's suggestion that we should find a way of taking pensions out of politics if he had given us an indication of what he now feels is wrong about the reserve pension scheme. Are we voting tonight for the previous Government's scheme or for the possibility of amending it?
  Of course the Liberals could not enter into any such all-party agreement about improving the reserve pension scheme. After all, in their last election manifesto they came out in categorical opposition to it. They said:
  "The Conservative Government's Occupational Pension Scheme incorporates a degree of compulsion which is anathema to Liberals in forcing everyone to contribute to a second pension scheme which will do nothing for today's pensioners."
  Obviously the great national unity front on pensions cannot include the Liberals. That must apply even if any modifications are to be made to the reserve pension scheme or statutory recognition conditions for occupational pension schemes. That must also apply if any scheme contains compulsion for someone to be a member

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  of an all-embracing earnings-related scheme.
  Dr. Michael Winstanley: Our position has not changed. We have said that the State reserve scheme is unsatisfactory. We have said time and again that we would like it to be improved. We would like as an addition a universally available occupational pension scheme to which those who wish to have a second pension can contribute. Will the right hon. Lady tell me what possible reason there could have been for not keeping the present scheme and building upon it? Can she give me any possible explanation?
  Mrs. Castle: I am delighted to do that. This is the centre of the argument. However, the hon. Gentleman cannot say that he has no altered his party line since the manifesto was published on which so many votes were won, because his party's manifesto denounced compulsory membership of reserve or alternative occupational pension schemes.
  The Liberals, if they stand by what they said at the last election, are way out in a one-man band of their own and are not within the central argument in which I am now about to engage. The Labour Party is not as sweeping about this proposition as the Liberals. We believe that people should be made to provide adequately for their old age. If they do not do so, society must pick up the bits. It is better to have provision properly planned and organised.
  Let me tell the House what the Government believe is wrong with the previous Government's scheme. In our view there must be -bur main aims of a pensions policy. The first must be to lift everyone in retirement off supplementary benefit. I am sure that the Liberals will agree with that. The second aim must be to give women full equality. The third aim must be to make adequate provision for widowhood. The fourth aim should be to safeguard the value of pensions against the erosions that inflation can bring.
  One of the tragedies in modern society is that there are still people who contribute to various schemes who have no guarantee that the value of the pensions of those schemes will not melt away before their eyes in today's inflationary world. I put to the House in extreme
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  seriousness the Government's thinking. Pensions policy is a matter of profound seriousness which strikes at the heart of every party's policy and its philosophy of society. I say seriously that none of the aims which I have mentioned would be achieved by the previous Government's reserve pension scheme or by the recognition conditions for occupational pension schemes that were linked with it.
  I go further than that. The previous Government's scheme cannot be amended to provide for the four aims I have listed. That is the challenge every hon. Member must face this afternoon. It is basic to the structure of the reserve pension scheme that many contributors and their widows will still be drawing inadequate pensions well into the twenty-first century.
  Why do I say that that challenge is basic to the structure of the reserve pension scheme? First, under the reserve pension scheme the build-up of entitlement is so slow that a 20-year-old man entering the scheme next year, when it was due to come into operation, would not get his full entitlement until the year 2019. Second, because the level of contributions and, therefore, of pensions is so low, the best that can be achieved under the scheme, on the assumption made by the previous Government about rises in real earnings and bonuses, is one-fifth of a man's reckonable earnings on retirement. That means that by the year 2018 a man aged 22 and earning £30 a week who entered the reserve pension scheme next year would, in terms of today's earnings, earn the magnificent second pension of £5·70. Third, under the reserve pension scheme and under the recognition conditions for occupational pension schemes it is provided, unlike the position in good occupational pension schemes, that women will get a lower accrual rate than men.
  I take a parallel to the male example that I have just given. A woman of 22 on £20 a week, entering the scheme at its outset next year, would, in terms of today's earnings, receive after 38 years a second pension of only £2·60 a week. That is what we are considering. Fourth, a widow under the reserve pension scheme—
  Mr. A. G. F. Hall-Davis rose—
  Mrs. Castle: I do not want to be too long and I must get on.

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  Fourth, a widow is entitled under the reserve pension scheme to only one-half of her husband's already inadequate pension entitlement. Fifth, the scheme gives no guarantee of inflation-proofing. It is a funded scheme. The right hon. and learned Gentleman said that a pay-as-you-earn scheme could not meet its obligations, but such a scheme with State backing or employer backing is the only sort of scheme that can offer inflation-proofing. Can any hon. Member lay his hand on his heart and say that the bonuses which are earned by a funded scheme will be sufficiently strong, as a result of investment, to guarantee to pensioners in future years the inflation-proofing which is so essential?
  We are asked to debate what is called a serious motion of censure. The right hon. and learned Gentleman has not suggested one way in which the basic defects in the reserve pension scheme can be remedied. He has not done so for the simple reason that the defects cannot be remedied through a money-purchase scheme such as the reserve pension scheme except at levels of contribution for older workers which would be intolerable. That is the reality which we must all face if we are seriously talking about taking pensions out of politics. Pensions will come out of politics when everyone feels that he has security in retirement, but not until then.
  It follows that the minimum conditions laid down by the Conservatives' policy for the recognition of contracted-out occupational pension schemes are equally derisory. I was a member of the Standing Committee which discussed the 1973 Social Security Act. I moved an amendment—Conservative hon. Members can laugh, but let them tell the House and country what they thought about the amendment I moved. I thought that it was one of such elementary justice that not even a masculine-dominated House of Commons could have rejected it. My amendment provided that where women worked side by side with men in the same firm they should have the same right as men to belong to the firm's occupational pension scheme.
  My amendment was rejected by the last Conservative Government. I am glad to see that the hon. Member for Somerset, North (Mr. Dean) is present. Why did they reject it? The hon. Member for
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  Somerset, North told me that my amendment would result in some occupational pension schemes being closed down. The difference between the present Government and Opposition Members—this does not apply to the Liberals because they have an entirely different policy—is not that we do not agree that there should be a partnership between the State scheme and occupational pension schemes but that we want that partnership to be only with good occupational pension schemes.
  We say that no occupational pension scheme can be good which refuses to include the women in a firm on the same terms as the men—in which, in other words, if it is too inconvenient to do so, the chaps will close it down. This is the sort of issue we are considering, and I ask the right hon. and learned Gentleman to tell us whether he agrees with what his hon. Friend the Member for Somerset, North said on that occasion. The right hon. and learned Gentleman is wise to refrain from answering, because this question enters into the whole question of partnership with occupational pension schemes.
  We are not talking about people having been robbed of immediate benefits. We are talking about whether we are to scrap a scheme which is, by the Opposition's own admission, now seen to be inadequate. [HON. MEMBERS: "No".] It is not inadequate? So Tory hon. Members believe, do they, that women should be excluded from the right to belong to occupational pension schemes? I am glad to have that point made known. I shall make it widely known among the women's organisations. I recall how even the Women's National Commission bombarded the Conservative Government with protests about the 1973 Act when it was going through the House.
  Mr. John Davies rose—
  Mrs. Castle: No, I am sorry. I am not giving way to you. I will give way to the right hon. and learned Member for Surrey, East if he wants to tell me in what respect he thinks that the Government scheme is inadequate. You cannot speak for the right hon. and learned Gentleman.
  Mr. Davies: No. I speak for myself.
  Mr. Deputy Speaker (Mr. George Thomas): Order. I, too, have no desire

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  to speak for the right hon. and learned Member for Surrey, East (Sir G. Howe) or anyone else.
  Mrs. Castle: I apologise, Mr. Deputy Speaker. I was not referring to you but at that stage I had forgotten the constituency of the right hon. Member who interrupted.
  Mr. Davies: Knutsford.
  Mrs. Castle: I was speaking of the right hon. Member for Knutsford (Mr. Davies).
  It is not a question of robbing anyone of benefits. If the right hon. and learned Gentleman were to look at what would have accrued in the way of additional benefits under this pathetic system, he would have seen quickly how any decent scheme could have overtaken them in less than the time of our postponement of it. The House must never forget that, as against this short postponement, pensioners as from July this year will be enjoying the highest increase in their basic pension in the history of national insurance. This is an essential part of the whole process. We are bringing in increases of 29 per cent. and 28 per cent. in the basic pension.
  Mr. Patrick Cormack: And in the cost of electricity.
  Mrs. Castle: The hon. Gentleman knows perfectly well that the 29 per cent. increase after a period of 10 months is still way ahead of the price increases which that figure was taking into account—far further ahead than was the last increase of the Conservative Government, who gave a rise of 15 per cent. over 12 months, during which the retail price index rose by nearly 10 per cent. We are in a different dimension here.
  Mr. Cormack rose—
  Mrs. Castle: No, I cannot give way. I did not give way to the right hon. Member for Knutsford, for whom I have a very soft spot, simply so that I could make more rapid progress.
  I want to ask the Liberals what on earth they will be voting against if they vote against us tonight. We are told that they will vote against us. It is fascinating. On Second Reading of the Social Security Bill
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  the hon. Member for Cornwall, North (Mr. Pardoe), speaking, I understood, for the entire Liberal Party, said that what they thought was most important was that a married couple should get a minimum pension increase to half the average national earnings. That would have meant at the time £16 a week. The hon. Gentleman added:
  " … it should be done over a period."—[OFFICIAL REPORT, 28th November 1972; Vol. 847, c. 295.]
  We have taken a very big step towards that aim. The figure of £16 is already in operation. I agree that it does not meet the target of 50 per cent. of average national earnings, but we have made it our priority. Apparently, however, that is what the Liberals now object to.
  Dr. Winstanley: Clearly the right hon. Lady has a soft spot for me, for which I am grateful. She asks what we would be voting for and against. We have made our position clear. If the right hon. Lady reads what I have said, she will find that our policy has not changed. We say that by abandoning the 1973 scheme she has caused a great deal of trouble and uncertainty and has deprived many people of rights that they would have had, to no obvious benefit. We see no reason why she should not have allowed that scheme to operate and built upon it. Had she tried to build upon it, she would have had our enthusiastic support.
  Mrs. Castle: I hope that the hon. Gentleman has also paid careful attention to what I have just said. I ask him to go away and talk to his pensions experts, wherever they may be. One cannot achieve the four aims I have set out by a money-purchase scheme—
  Sir Brandon Rhys Williams: Yes one can. It was done in New Zealand.
  Mrs. Castle:—except at contribution rates which would be prohibitive. I ask the hon. Member for Hazel Grove to realise that some of us have spent a great deal of time struggling to understand the actuarial complexities of pensions, and the conclusion is inescapable. Does the hon. Gentleman think that any Government would have gone out of their way to court criticism and misrepresentation when it

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  would have been easier simply to say, "Take it on and then improve on it"?
  It is because we know that mere treatment within the framework of the Conservative Government's policy could not achieve the aims which we believe are paramount that we are compelled to do the only sensible thing—to scrap the reserve pension scheme and start afresh.
  The right hon. and learned Gentleman read bits and pieces from different firms protesting about our decision. Lord Byers is taking a far more forward-looking attitude than the right hon. and learned Gentleman would give him credit for. He says, in effect, "Let us look to the future. We are sorry that the reserve pension scheme is scrapped, but now we must be concerned with what the Government are putting in its place." That is really what the House should be concerned about.
  The right hon. and learned Gentleman read a letter from someone saying that it would cause terrible industrial trouble to postpone the recognition conditions for the introduction of occupational pension schemes. But the TUC is the real expert about what workers feel about occupational pension schemes. Its social insurance committee is very concerned about them. Like the Government, the TUC is 100 per cent. behind good occupational pension schemes. Yet the TUC, after mature consideration, welcomed the scrapping of the reserve pension scheme because it would clear the way, and was the only way to do so, for the provision of a more satisfactory system.
  Hon. Members might better have said "Never mind about arguing as to who was right or wrong in the past. Let us get together and find a way forward for taking pensions out of politics."
  Mr. Leslie Spriggs: I have been listening with great care to my right hon. Friend's speech. She has been making every effort to make the Opposition understand the Government's case. How does she expect the Opposition to understand the case when it was the last Conservative Government which caused the worst industrial disruptions in history through the Industrial Relations Act?
  Mrs. Castle: I agree with my hon. Friend. This certainly shows that they are not the right people to talk about
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  what will cause industrial unrest. My advice was that there would have been profound anxiety and disillusionment in trade unions if the Government had merely proceeded with the Conservative scheme which had been so critically attacked.
  Even if we wished to build an all-party pensions policy, it could not have been done by way of this motion. In the first place—this is a minor but perhaps significant point—the motion is defective in that it talks about my refusal to bring in Parts II and III of the 1973 Act. I have done nothing of the kind because some of those provisions are still to take effect, for example those referring to the preservation of pension rights.
  The motion asks for the administratively impossible. Even if it were carried it would not now be possible to bring the second pension provisions into effect by April 1975.
  Sir B. Rhys Williams: That is your handiwork.
  Mrs. Castle: Whatever the reason, I am explaining the situation.
  Mr. Cormack: You jigged it up.
  Mrs. Castle: All right. Hon. Gentlemen want a few fireworks to make them feel better. That is fine, but they cannot alter the practical, administrative and constitutional position. Their gesture would be meaningless. Regulations have to be made and administrative preparations have to be completed. Employers have to be given time to make their arrangements again. Incidentally there would be absolutely no chance of occupational pension schemes being able to put forward applications for recognition in time for them to be processed by April 1975. Even before the delay over this, the work on that was well behind.
  The scheme cannot be brought into operation next April. As it has to be brought into effect at the beginning of a tax year, if we were to reverse the policy now the first date on which it could be brought into effect would be April 1976. That would bring us even nearer to the starting date for our own scheme and, therefore, make it even more ridiculous to have an interim scheme which would then be superseded.

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  Above all, the motion asks us to amend a money-purchase scheme, which by its nature is substantially unamendable. It cannot take pensions out of politics by lifting pensioners above supplementary benefit. It cannot bring women equality, help widows adequately or guarantee pensioners against inflation. Moreover, by calling for our proposals to be referred to a Select Committee the motion could prolong the very uncertainty which has produced the accusations against me tonight.
  No one who has served on a Select Committee could think that there was any guarantee that at the end of it there would be agreement. For many months we sat in a Select Committee considering the tax credit system. There is no guarantee about agreeing anything. We would simply have taken time and produced further uncertainty and in the end we would have to agree to disagree. There would be more confusion and delay.
  There is already a great deal on which we can agree. We are agreed about the need to move to earnings-related contributions. We are agreed about the need to preserve pensioners' rights and about the need for the State to enter into partnership with good occupational pension schemes. The Opposition might show that little bit of extra humility and admit that it is just possible that, when they see our proposals, they might agree with them. We might have found a better formula.
  Why are we advocating delay tonight? We all know. The motion says it. We do not want a Select Committee to be set up until there are proposals to be referred to it. The House has admitted that thinking on these pension schemes has been moving forward, even in the past two or three years. We have promised that our proposals will be produced as soon as possible, certainly before any Select Committee could get down to work.
  The House has four more parliamentary weeks. No Select Committee could begin to operate effectively in that time. By the time a Select Committee could get together again after the recess, our proposals would be available. I tell the House frankly that I cannot guarantee that we can have them published before the House rises for the Summer Recess.
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  Certainly we will get them published as quickly as possible, certainly before a Select Committee could begin to examine them.
  Mr. Cormack: Before the election.
  Mrs. Castle: I should hope so. The public have the right to know and to choose. They have to know what they are buying. We are not running away from that. What if it happens that our proposals prove broadly acceptable? The House would not want the delay of a Select Committee. It would surely say "Let us move on to legislation as quickly as possible". It would be our intention to give the House and everyone concerned the fullest opportunity of expressing their views.
  How we would do that and what would be the best way must depend on the reception given to our proposals. The House would want it to depend on that. I say let us wait and see what the reception is before committing ourselves. I believe that the White Paper proposals will command widespread support, not least from those who back good occupational pension schemes. In the meantime we are making full use of the Occupational Pensions Board in its advisory capacity.
  I have today made three specific references to the board under Section 66(1)(b) of the 1973 Act asking it to give me its advice on various matters. These are, how we can get better supervision of occupational pension schemes and guarantee their solvency; whether there should be statutory provision for the disclosure of information to members of occupational pension schemes and generally; and to what extent members of a scheme should be involved in its management. That advice will be available to the House in time to influence legislation.
  If the Government are defeated tonight, it will not be because there is some mystic agreed foundation of pensions policy among Liberals and Conservatives. We offer that foundation to all those who genuinely wish to give fair treatment in retirement to everyone, young or old, rich or poor, male or female, manual or non-manual. Those who oppose us are in favour of what? An agreed policy between themselves? Oh! come off it! They offer us a hatch-patch of negative criticisms. I ask hon. Members to stand

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  up and be counted this evening and to say whether they are prepared to give the Government a fair chance to have their proposals examined on their merits.
  8.0 p.m.
  Mr. Paul Dean: I begin by declaring a double interest. In the last Parliament I had something to do with the Social Security Act 1973, and I am now involved in pension schemes outside the House. Former Ministers who make long speeches about legislation with which they have been involved in the past are likely to bore the House, so my remarks will be short, unlike those of the right hon. Member for Blackburn (Mrs. Castle). The right hon. Lady began her speech by referring to "this afternoon" and after 45 minutes ended it by referring to "this evening". It was one of the thinnest speeches I have ever heard the right hon. Lady make from the Treasury bench.
  The right hon. Lady totally failed to answer the question put by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and the hon. Member for Hazel Grove (Dr. Winstanley). She totally failed to say why she could not keep the Social Security Act and build on it. The four aims laid down by the right hon. Lady are advanced by that Act. It laid down new standards in all those areas, in most cases for the first time. It made provision for women and widows to be covered, it provided for a pension to be increased after award and it provided for certain people to come into pension schemes for the first time. In all those areas there was some advance, although I agree that in some cases it was modest. That was the cardinal omisssion from the right hon. Lady's speech.
  In 45 minutes the right hon. Lady failed to give any indication to the House, and to those outside the House who are responsible for pension schemes and are anxious about the future of those schemes, of her proposals and her thinking. To try to destroy one piece of legislation without giving an indication of what they wish to put in its place shows up the barrenness of Government thinking.
  I warmly welcome the important statement made by my right hon. and learned Friend the Member for Surrey, East when he explained to the House that the Act
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  is still on the statute book and that the next Conservative Government will reactivate it by a commencement order. I was glad to hear my right hon. and learned Friend say that he hoped that the Act would be in operation at the latest in April 1976.
  I wish to make three main points. My first concerns the way in which the right hon. Lady has set about her task. I was amazed at the way she came down to the House this afternoon at the behest of an Opposition motion to try to explain her conduct. If the right hon. Lady really believed in parliamentary government, surely she could have found a way of doing this major thing which would have given the House the opportunity to debate it. As it is, she has gone sneaking around obscure passages of the Act to find a way to attempt to cancel a major Act passed by Parliament after full debate, on which much work has been done outside. She does it without being answerable to the House in any way until the Opposition drag her down unwillingly to the Treasury Bench today to answer a motion.
  Mrs. Castle: The hon. Gentleman will admit that many weeks ago I volunteered a statement of my intentions and what I was doing under the Act.
  Mr. Dean: The right hon. Lady should not make it worse. Of course she made a statement, as Ministers do when they have something important to say, but she well knows that a statement occupies a small amount of time, there is no opportunity to put amendments and there is very little opportunity to make points. The right hon. Lady should not make it worse. This is a parliamentary outrage, and she knows it.
  The second matter which I should like to examine is the right hon. Lady's statement that nothing will be lost as a result of her attempt to postpone the Act. I suggest that a great deal will be lost, however fast the right hon. Lady works—assuming that she remains in a position to do so. It will take four or live years for a new scheme to be put into operation. That is assuming that she succeeds, and my hon. Friend will recollect that the Labour Party has never succeeded in bringing into operation a pensions scheme. In the meantime, how many

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  people will retire without a second pension who would have been building up for a second pension as from next April? How many men will die in service during those four or five years and leave their widows unprotected? Has the right hon. Lady attempted any calculations? Whatever she may do in four or five years' time, she will find no way adequately to compensate widows who as from next April would have had some cover, however modest. Those who will suffer by the postponement are not those who have good pension schemes now but the most vulnerable sections of the community, and there is nothing that the right hon. Lady can do to alter that unhappy fact.
  Who will pay? The right hon. Lady talks about catching up in some years' time. Already, towards the basic scheme under the Social Security Amendment Bill, to which we have just given a Second Reading, the employer will have to pay 8½ per cent. on payroll, and the employee will have to pay 5½ per cent. on payroll. There must be a limit to the extra contributions which can be put on employers without prices going up. There must be a limit to how much one can put on employees without pay going up.
  There is another lost opportunity in the tax credit scheme, which, had my right hon. Friends been in office, would have been well on the way to the statute book. That held out one of the most hopeful ways, in time, of removing a substantial number of people from supplementary benefit. Here is more delay, not only in the Social Security Act but in the Labour Government's intention not to follow up the tax credit proposals which we had worked out in considerable detail.
  My third point is closely related to the pensions scene. We cannot go on nationalising companies, be it 20, 100 or 4,000, without at the same time nationalising pension rights. It is as well that that should be generally realised outside. It is no accident that the right hon. Lady is one of the foremost supporters of the Secretary of State for Industry in his crusade for more nationalisation. If the right hon. Lady tries in this way to tamper with the pension rights of 12 million people and their families she will light a fire of opposition which will be felt from Land's End to John o' Groats.
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  What must be emphasised is that the nationalisation campaign is doing damage to investments. We are talking not primarily about rich individuals or companies but about life assurance premiums and pension contributions. Millions of people of modest earnings are salting away something for a rainy day or for their retirement. Thanks to wise investment and sound schemes, many pension schemes have been able to go on improving cover for existing members and pensions for existing pensioners, and they are still doing so. But this progress is bound to be at risk if the present uncertainty and depressed state of the market continues for long.
  We are dealing here not only with an important consideration from the point of view of the security of existing and future pensions schemes but with the ramifications of the extreme Left-wing policy of the Labour Government in other fields which will ricochet on today's pensioners and also on tomorrow's pensioners.
  It is easy to destroy, easy to sow uncertainty. The right hon. Lady the Secretary of State for Social Services has sown uncertainty. She has not yet destroyed—and it is up to us, and present and future pensioners, to see that she does not have the opportunity to destroy.
  8.12 p.m.
  Mr. George Cunningham: The hon. Member for Somerset, North (Mr. Dean) began his remarks by declaring his interest. Now, in Opposition, he holds a position in the pension industry outside. Those of us who fought with him on some aspects of social security legislation are not surprised that, having left the Government, he should have been picked up by the pensions industry outside. I congratulate him on his appointment, and I think that he has been only properly rewarded for the valiant efforts he made while Minister, supposedly responsible for looking impartially at these matters in the interests of that industry.
  The hon. Gentleman's support of the industry was limitless. He was even prepared to take over the taxation system and rig it to give an unfair advantage to the private pensions industry against the Government's own State reserve scheme. I can now see on the Opposition benches three hon. Gentlemen, members

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  of the Conservative Party, who felt the hon. Gentleman's action on that point so abhorrent that they were prepared to vote against him upstairs and downstairs when he "whipped" his hon. Friends into the Lobby to undo the amendment which was carried in Committee upstairs. Therefore, I have no doubt he will continue outside to be the spokesman of the pensions industry, and, if the Conservatives, unfortunately, ever return to power, will continue to be the spokesman for the private pensions industry if restored to his position as Minister.
  The hon. Member for Somerset, North referred to the Secretary of State for Social Services "sneaking around" the statute book finding ways in which, without the approval of the House, she could postpone or put off indefinitely the coming into effect of the State reserve scheme. It must be extremely galling for Conservatives that my right hon. Friend has used a statute which was wished on us against our wishes by the Conservative Party. If they botched up the statute so that its working can be undone by an order not subject to either affirmative approval or negative approval of the House, they have only themselves to blame. One well understands that they might feel irritated at the incompetence displayed in leaving such a provision in the statute. I sympathise with them on the fact that this is a point of substance and that it should not be possible to undo an Act of Parliament by an order which is not subject to the will of the House. I see the hon. Member for Somerset, North—who was the Minister in charge of that legislation—nodding his head. Either it was intentional, in which case he has changed his mind, or it was an oversight, in which case he was incompetent.
  Mr. Paul Dean: I hope that the hon. Gentleman will join those of us who feel that it was a mistake. I freely admit that I now feel it was a mistake to allow that sort of provision to go into an Act. I hope we can count on the hon. Gentleman's support to ensure that this does not happen in future legislation.
  Mr. Cunningham: I am always in favour of Governments not having powers to make orders without the approval of the House. I moved an amendment in a different context only the other week to stop the Labour Government from having that sort of power.
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  The hon. Gentleman said it was a mistake. It was not a mistake; it was a botch-up. He did not look at what he was doing.
  The hon. Gentleman spoke feelingly about those people who will retire during the period of delay. He talked of a delay of four or five years. I would be upset with my own Government if the delay approached that sort of dimension. I should have thought a maximum of two years was the most we could tolerate in terms of delay in bringing our scheme into effect. However, let us say that the delay is as much as three or four years. Has the hon. Gentleman worked out how much pension under the State reserve scheme anybody at the end of his working life would receive from a period of contribution of three or four years? The sum would be utterly derisory. It is better than nothing, but it is little to give up as the price of a much improved scheme.
  Nobody will deny—certainly I shall not deny it—that the termination of the 1973 Act was a serious step to take. I am sure the argument was a balanced one of, at best, 65: 35. There are certain disadvantages in putting off the scheme. The obligation is on Labour Members to show what features of the 1973 scheme were bad and the matters which could not be corrected within the confines of that scheme. I hope to suggest a few respects in which it could not have been properly corrected.
  The basic fact is that a pension scheme has an extremely long period of maturity. It has a maturity of 45 years—the length of a man's working life. Therefore, it is important to get a scheme as right as possible to start with, because jigging around with it half way through is a complex process. If the State reserve scheme had been just a little better in a number of respects one could have put up with its disadvantages for a short period and with the inconvenience of changing those features in midstream, but the scheme was so seriously wrong that it is better to put up with a couple of years' delay to get a better scheme right from the beginning.
  The faults of the 1973 scheme were as follows. First, the percentage contribution was far too low to provide a pension which would bear any relationship to anybody's likely final salary. A total

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  contribution of 4 per cent—1½ per cent. from the employee and 2½ per cent. from the employer—does not provide a good scheme at the end of one's life, except possibly for the person who has a level standard of earnings throughout the whole of his life. In those circumstances, 4 or 5 per cent. might give a person a bearable pension, but those are unusual circumstances. In normal circumstances a total contribution from both sides of about 10 per cent. is what is required to buy a decent pension. We should remember that the total contribution in respect of the pension scheme for Members of Parliament amounts to well over that figure; namely, to about 13 per cent. That is what is provided in good occupational pension schemes.
  I accept that that is a feature of the 1973 scheme which could have been changed as we went along. That is a fault of it, but that could have been put right in time without changing the very basis of the scheme.
  Another fault was its treatment of women. I shall not go on about that at any length because it has been dealt with by my right hon. Friend, but there has been no indication from the Opposition Front Bench that the Opposition are now prepared to treat women on an equal basis with men in this respect. Surely it is no longer justifiable, as we said in Committee when we were considering the 1973 Bill, to penalise women for their longer lives. They do not ask to live longer than men. In a general sense, they suffer grave consequences to their incomes for doing so. To say to them that because they live longer they must draw smaller pensions than men is unacceptable.
  It is right to say that, so long as women choose to retire or simply do retire earlier than men, they must draw smaller pensions. There is no justification for paying women at the age of 60 the same pension as that paid to men retiring at 65. I hope that there will not be pressure on us to move to a retirement age for men and women of 60. If anything, we need to move in the opposite direction, with people being free, if they wish, to retire at later ages than 65, because the plunge from working life to total retirement is one which many people find literally killing. But to
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  penalise women only for living longer than men is no longer justifiable. We might as well give people suffering from bronchitis a higher pension on the ground that they will live for a shorter period than other people.
  Again, I accept that in this respect, though the treatment of women would have been more difficult, it would have been possible to alter the 1973 scheme as we went along.
  Thirdly, there was the tax treatment in the State reserve scheme. The hon. Member for Somerset, North bears total responsibility for the gross, manifest unfairness of giving no tax deductibility for contributions to the reserve pension scheme. The hon. Gentleman resisted all efforts in Committee, unsuccessfully, but on the Floor of the House just successfully, to have that put right.
  Mr. R. A. McCrindle: If the hon. Gentleman is concentrating rather more on what we intend to do about pensions rather than on what might have happened under the previous administration, remembering that there were many Conservative Members who joined the hon. Gentleman and his colleagues in voting in favour of tax relief on contributions to the State reserve scheme, if the Government had chosen to move in that direction now they might have been surprised at the support which they received.
  Mr. Cunningham: I remember the debates and votes very well, and the hon. Member for Brentwood and Ongar (Mr. McCrindle) was one Conservative Member who both in Committee and in this House voted against his Government in that respect. That third point of mine is a characteristic in respect of which we would have been able to change the scheme as we went along, but today we are invited by the Opposition to treat the 1973 scheme as though it was perfect, and, in my view, it is legitimate, before I come to what I want to see brought about, to point out the many defects in the 1973 scheme.
  The fourth one was what was to happen to the contributions. They were to be invested in the market. This was a feature of the 1973 scheme which could not easily have been treated differently. The contributions were to go on to the market to be invested, like any normal fund in

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  a private pensions scheme. The effect would not have been simply to increase the amount of money available for investment, which is the purpose of pumping money into the stock market. The effect would have been to blow up share prices. Every year it would have been a godsend to those who wanted to sell. That feature could not have been corrected as we went along.
  I should prefer the new scheme to be at least partially funded. The difficulties of complete non-funding are even greater than the difficulties of funding, but we have to do something useful with the money and not just pump it into the stock market to inflate prices.
  The most serious aspect of the 1973 scheme and the one which could have been altered sufficiently without tearing the scheme apart was transferability. The Conservatives admitted that they had found no solution to transferability. The reason was clear. They insisted on basing their legislation upon the freedom of the private pension industry to provide its chosen model for each profession. The result was that they ordained minimum standards for the recognised pensions to meet, but they did not ordain a model with which a private pension scheme had to comply. The consequence was that transferring from one pension scheme to another presented such great difficulties that they could not find a way of insisting on it. We all recognised that. I see the hon. Member for Kensington (Sir B. Rhys Williams) does not agree. However, I think that that was recognised in Committee as being the principal disadvantage of the Conservative scheme.
  With that scheme in operation, even for someone who was in one or another private occupational pension scheme all his life, it would still be possible for him to reach retirement age with no provision from those private schemes. If he moved from one job to another, spending less than five years in each job, he could have ended his working life without any entitlement from those private schemes. The preservation features in the 1973 Act would have been very unsatisfactory compared with normal transferability.
  Those are the features which ought to characterise any new scheme. First, we must distinguish between the long term and the short term. We should try to
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  create a scheme which, when it has fully matured, when people are retiring who have contributed to it throughout the whole of their working lives, is adequate. Then, having thought about it in isolation, we should go on to think about how we treat those people who are retiring in the meantime. If we muddle the two, we shall fail to get a good scheme in the twenty-first century, which is what we should have our eyes on in devising this scheme.
  Secondly, the benefits must be such that the recipients are not only above but way above the supplementary benefits level. Otherwise people will be forced to pay for what they would be given if they did not choose to save in this manner. Though we often stress, particularly from this side of the House, that social security, supplementary benefits, and so on, are no disgrace, they are felt as a disgrace by those who receive them. That is an inevitable fact. It is desirable not only when we look at individuals, but from the point of view of society as a whole, that we should get rid of dependence on social security after retirement.
  Thirdly, we must provide for a contribution of about 10 per cent. If we feel that that is imposing too high a burden on contributors in the early stages, moving from no contribution to a contribution of 10 per cent.—I think that would be the situation—we must stagger it, but build in the staggering from the beginning so that gradually, perhaps every decade, we move from 4 per cent. to 8 per cent. to 10 per cent.
  Fourthly, we should fund, but make sure that the funded contributions are available for the people who are paying the contributions. It is interesting to think that the people who will tend to contribute to a State reserve scheme are, on the whole, those who do not own their own homes because they cannot afford mortgages. It should not be beyond the capacity of this House to evolve a scheme which allows that money to be used to assist people on and below average earnings to afford houses just like other people in society.
  Finally, there is the relationship of the State reserve scheme, the new one, whatever it is called, to private occupational schemes. I stress again that we require

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  a model for the private schemes. They ought to be able to vary their content. They ought to be able to have different provisions for widows, children and life insurance. These are the frills around the basic scheme. If we could get a consistent central core to which all private schemes must adhere it would be possible to have transferability on that central core with the frills not being transferable. I suggest that only in that way will we avoid people reaching retirement age without full cover.
  We are still in a situation where the population can be divided into two great halves. On the one hand, there are basically the professional people who reach retirement age and are about as well off in retirement as when they were working because their houses are paid for, their children have left home and they have pretty high pensions. On the other hand, we have the wage earners, many of whom do not own houses and therefore must go on paying high council rents, who, when they retire, receive only the basic State pension. There is an urgent call on our social policy to correct that situation. I hope that the Government can bring forward a scheme to do that along the lines that I have suggested and coming into effect no more than two years after the date when the State reserve scheme would have been introduced.
  8.33 p.m.
  Sir Brandon Rhys Williams: The hon. Member for Islington, South and Finsbury (Mr. Cunningham) has, as usual, made an interesting and useful contribution on the subject of pensions. I did not seek to intervene in his speech and I will not attempt to follow him now, as we are short of time, but I should like to register the fact that I did not agree with his point about transferability. The manner of his speech encourages us to feel that if an all-party committee were set up we could enjoy the co-operation of Labour back-benchers in seeking satisfactory answers to the problems. I hope that the Government will not be stiff-necked and wooden about it.
  The Secretary of State's speech did not encourage us. The problem is that she has never quite taken the trouble to
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  understand the potential of the 1973 Act any more than she took the trouble to understand the possibilities of the tax credit scheme. She is still pleased with her handiwork in destroying—or delaying for a year—the coming into effect of the 1973 Act. But I believe that when she looks back over her career that will be one action of which she will not be proud.
  I should like to point to the ways in which I believe that the 1973 Act could he improved. All the points made by the right hon. Lady and by critics of the scheme on both sides could be met within the context of the 1973 Act. We must not allow the Secretary of State or her advisers to believe that the 1973 Act could not meet her four criteria, because it could. I hope to demonstrate how it can be done.
  The Act appears to leave a large proportion of pensioners without sufficient income to lift them above the supplementary benefit level. The only way to put that right is to find more money from taxation or contributions. To try to raise the whole mass of the insured pensioner population simultaneously so that they are all above the supplementary benefit level, even in the most adverse circumstances—for instance, regarding rent—is a foolish endeavour because it will mean going beyond our objective in many cases. We ought to break up the mass of the retired population and ensure that our money reaches the people who are most exposed to need.
  We should begin by considering seriously the whole structure of housing allowances. I should like to see a housing allowance included as part of the tax credit scheme. We already have the beginnings of a housing allowance in the structure of the existing national insurance pension, and we must now study ways in which that allowance can be adapted to the actual housing outgoings of the pensioner or pension couple. We ought to bear in mind too that not all pensioners live in their own accommodation. Many live with families or have made other arrangements for their housing.
  We should look at the age increment. The Conservative Government scored a great success with their policy of separating the over-80s for special treatment. We ought to deal with the over-70s or the over-75's, because an age increment

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  would again go to the people who are most in need.
  We ought to abolish the earnings rule, so that in the first five years after retirement people are given the maximum encouragement to look after themselves. When that rule has been abolished employers will gradually come round to making better use of part-time workers, and this is where pensioners could come in and make a useful contribution to the national product. I recognise, of course, that will not happen overnight.
  We must do more about sickness and disability allowances, and here, too, if we are generous enough in our provision for the sick and disabled, we shall be reaching the people who, when they are coming to the end of their lives, are in the most desperate need.
  We must do more to encourage assistance in kind for pensioners, through meals on wheels, home help and services such as that which pensioners do not find humiliating, whereas many of them feel humiliated if they have to apply for supplementary benefits, and one can understand that.
  We must recognise that the time has come for increments for postponed retirement to be increased. From an answer to a Parliamentary Question I learned that the cost would be only £25 million by the end of the century to offer a fair actuarial return for the benefits forgone by postponed retirement. If that figure is correct, what is the House waiting for? This is obviously something else that should be done to encourage pensioners to look after themselves.
  It is obvious that the administration of the national insurance pension scheme is on the verge of breakdown. During the election the Conservative Government undertook that they would introduce six-monthly upratings, and with inflation as it is such upratings are clearly necessary. Equally clearly, however, it cannot be done under the old system. I understand the feelings of those who are expected to operate the old system. Let us get rid of it and bring in computers, which do these jobs so easily in continental countries. What are we waiting for?
  With regard to the earnings-related pension, one recognises that there is a campaign for women's benefits to be put on
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  the same basis as men's with regard to the annuities they draw if they retire at the same age as men—and the scheme can give them that. Annuities are not the only benefits that pensioners draw from their second pension schemes, and if necessary there can be adaptation of the other benefits for survivors, or one could introduce lump sum benefits which would equalise the value of a man's and a woman's retirement asset at any particular retirement age.
  I mention the possibility of introducing lump sum benefits advisedly, because we shall have to consider the situation that arises when a pensioner wishes to bequeath something to a housekeeper, a close relative or someone who has cared for him out of wedlock. It also belongs to another recommendation I am coming to.
  I accept that the level of benefits under the Act as it stands is not high enough, and therefore the build-up of entitlement is not high enough. The reason is that the level of contributions which it was felt the public were willing to bear is not high enough. One cannot get out of a scheme more than one puts in.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): There is one further fundamental difficulty which my right hon. Friend mentioned. The hon. Gentleman understands pension schemes, and he knows that to produce adequate benefits under a money-purchase scheme for older workers one has to pay an unacceptable level of contributions. That is what is basically wrong with the structure of a money-purchase scheme.
  Sir B. Rhys Williams: There is, unfortunately, all too wide a frame in which to argue about the meaning of the word "adequate". We have to consider the expectations which people have for retirement in the last years before retirement. A large number of people who have made virtually no provision for retirement are now getting earnings of £60, £70 and £80 per week in the closing years of their working lives, and they will nosedive to £16 per week, which is a serious matter for them. The suggestion that other taxpayers' money should be used in subsidising people in retirement has to be debated. I am coming to a

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  recommendation which I hope will make a contribution to solving the problem.
  We must contemplate at an early date the doubling of the rate of contribution under the 1973 Act. I could contemplate the rate rising from 4 per cent. to 8 per cent. forthwith, if only because it would enable the Government to reduce the general level of taxation because of the higher rate of capital formation involved.
  I believe that to give people better pensions, contributions must be higher—and we need more saving for investment at the same time. Complaints might be made that the Act as it stands increases the funds for investment in equities but not in the gilt-edged market. I hope that what I have to suggest may remedy that difficulty. I recognise that nationalised industries need capital just as much as the private sector, and the instinct to save for retirement is the strongest motive for creation of capital that we have. We should exploit it.
  It may be said that private schemes have a tax advantage against the State reserve scheme. We do not need to go all over this again, but the passage of time since the 1973 Act was passed has shown that it is unnecessary to give private schemes this special selling point. Good schemes sell themselves and bad schemes should not be sold at all.
  The most significant point that might be made against private schemes is that they cannot undertake to give full post-retirement protection against inflation. Some schemes which are not based on final salary or do not have some built-in guarantee may not even give pre-retirement dynamism; but that can be remedied. While an employee is in an employer's service he might feel fully entitled to expect pre-retirement dynamism. But how to give the best protection against inflation after retirement needs study. I understand that the scheme in course of being introduced in New Zealand, which obviously the right hon. Lady and other Ministers will be fully informed about, meets the problems involved. As I understand it, it runs on lines which I shall try briefly to outline. In spite of snags, I believe that there is a will in the House to find a consensus.
  I should like to make one or two suggestions. Firstly, we should dynamise
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  the bricks in the Boyd-Carpenter scheme. We have there an accurate record of employment earnings during the past 10 years which would otherwise be lost; and the money for the same object will have to be found from somewhere. Therefore, let it be applied on a strictly fair and arithmetical basis in the light of the records which the Department retains.
  Secondly, we have to find some system of index-linking for private occupational schemes in the light of the conditions of inflation we have at the moment, which seem all too likely to continue. Should we allow private schemes to buy an indexed stock issued specially for them as they go along? My answer is categorically "No" because it seems to be a sort of benzedrine for the private schemes which gives them an appearance of life and independence whereas it weakens them all the time.
  Should we revert to a Crossman-style abatement scheme, which is what I fear the right hon. Lady has in mind? She gave no inkling of any ideas she may have in her extraordinary speech. I would be deeply opposed to that. Abatement makes private schemes purely subordinate and superfluous as against the State scheme and inevitably introduces an element of incomprehensible complexity. A suggestion which might be worth further study is that schemes which have contributed by putting, say, half their contributions into the gilt-edged market, which I would not oppose, should acquire the right to transfer the eventual accrued asset of each employee at retirement into a Government-guaranteed fund which would then give dynamised benefits afterwards. That suggestion would allow the retention of the sound actuarial principles of private schemes but at the same time would introduce the element of repartition which is inevitable in conditions of inflation.
  Why, one might ask, should private schemes have Government support in this way? My answer would be that in return they must support the Government during the working life of the employee by putting at least half the money raised through contributions into the gilt-edged market. It would be a tonic to that market and it would also give them a claim for an element of support in giving post-award dynamism.

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  There are two final points. We should permit private schemes to offer invalidity cover without losing their tax concessions. Finally, we should now require all schemes that wish to continue to benefit from tax concessions to give transferability of existing accrued rights on change of job. This was the subject of the first speech I made in the House in 1968. I hope that I shall not still be calling for it when I make my last.
  8.47 p.m.
  Mr. R. A. McCrindle: I am sorry that the Secretary of State and the hon. Member for Islington, South and Finsbury (Mr. Cunningham) have left. I wanted to underline the seeming split between the two. The right hon. Lady had great fun finding real and imagined splits between the Conservative approach tonight and that during the period of the Conservative Government, and further entertained us by trying to set off the Liberal attitude and voting intentions tonight against those of the Conservatives.
  The right hon. Lady should now be asked how it is that she should be able to say by implication that she is not attracted to a funded scheme, whereas the hon. Member for Islington, South and Finsbury could say that he hoped that when the Labour Government scheme was introduced it would have a large element of funding. That seemed such a fundamental difference of approach that it would be helpful to find out from the Minister upon which basis the Government's proposals are likely to be introduced.
  Mr. O'Malley: The Secretary of State did not denigrate funding. All she said was that in the present climate of inflation and investment performance there were, as the insurance and pensions industries are now discussing, formidable problems.
  Mr. McCrindle: The right hon. Lady said, I think, that there would be difficulties in funding a scheme, whereas her hon. Friend said that it should be funded notwithstanding the difficulties. One could take that as a difference of emphasis, but I would suggest that it is a basic difference of approach. I shall be interested to see the proposals when they come forward.
  I want to concentrate on four points. First, was the approach of the previous
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  Conservative Government to the Social Security Act the right one? Second, was the Act inadequate in its provisions and if so how? Third, notwithstanding the defects, if any, were the present Government right to overthrow the reserve scheme? Last, following the theme of several hon. Members, is there some middle way in pensions to prevent the undoing by Governments of their predecessors' legislation?
  I am quite unrepentant about the support that I gave to the Social Security Act in broad principle. Although it is an exaggeration, perhaps, to describe it as a social revolution, the introduction of a second pension, no matter how meagre it was likely to be, marked the beginning of a new period in pension provision. Whatever else the Government may seek to change, I hope that we shall be assured that they will not seek to alter that basic change in direction which the Conservative Government took.
  The emphasis that was placed on the development of occupation pension schemes was absolutely right. It gave people the best promise of a buoyant income during retirement. I am the first to confess that, in a period of hyperinflation, for occupational pension schemes to continue to guarantee this buoyancy of income is something which is questionable, but at present I am looking back on the basic philosophy. At the time of the introduction of a second pension, I accepted that it would be a travesty if the opportunity of a second pension were not extended to all in employment. Recognising that demonstrably, by the nature of people's jobs, it was impossible to extend the provision of an occupational scheme to all of them, a State fall-back scheme—as it was described—was absolutely right and proper.
  I believe, too, that a move towards funding of a second pension was something which people understood and supported. It was recognised then, and is still recognised, that the borrowing from Peter in employment to pay Paul who has already retired was something which had been maintained for so long that there was need for a change and some sort of basic funding was clearly desired.
  The other provisions of the Social Security Act—a move towards the preservation of pension rights, an attempt to

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  deal with widows, and some basic form of inflation-proofing—were, and are, important parts of the deal that was extended to the nation under that Act. The broad approach embodied in that Act was right.
  I now ask the question: Was it adequate? Hon. Members on both sides of the House will recall that I argued for a better reserve scheme. The timidity of my hon. Friends in keeping the provisions of the reserve scheme as low as they did was, in retrospect, a mistake. It was not necessary that that should be done to encourage the development of occupational schemes.
  I am also persuaded, particularly with regard to women, that we did not aim high enough. Perhaps we could, and should, have placed them in a position identical to that of men and worked gradually, in various ways, to a common retirement date. Here I echo a remark of the hon. Member for Islington, South and Finsbury—one cannot extend to women the right to the same pension while they retain the right to a preferential retirement date. However, whether that is done in one move or gradually over the years is a matter for debate. Perhaps we should have encouraged women to come into the scheme at an early age and should have allowed them to build up some preserved benefits before they retire to marry and to raise a family. In all those ways, perhaps, we should have been more ambitious in both the occupational pension provisions and the State reserve scheme.
  Reverting to some of the things that I have said in Standing Committee and in the House, I consider that we were wrong not to extend tax relief to the contributions to the State reserve scheme. I led something of a revolution within the Conservative Party when, on a Division, the Government of the day survived by a majority of only four—an experience for which they were loth to extend any gracious thanks to me. That is, perhaps, why I continue to occupy a position on the back benches. Nevertheless, the reserve scheme clearly could, and should, have been better. It could, should, and still can, be improved. Why revoke the whole thing, causing damage and uncertainty, postponing even the minimal provisions of the Act—which the Government concede would have materialised—and
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  pushing the whole business of pensions provision back into the party dogfight? I cannot stress the latter point too much, because I deeply regret it.
  Why did not the Government improve the scheme? Why rescind it? I do not accept what the Secretary of State said tonight. It would be possible, although difficult, to build upon the provisions of the Social Security Act and to achieve some, at least, of the objectives she has in mind without necessarily eliminating for all time her ability to develop a different approach to social security provisions.
  So it is more in sorrow than in anger that even now I ask the Secretary of State, certainly in no partisan spirit, whether she will not think again. The Government can improve on the position of women. They can introduce tax relief under the State reserve scheme without throwing the whole scheme into the melting pot.
  Mr. George Cunningham: Transferability?
  Mr. McCrindle: That is, by the hon. Gentleman's own admission, a much more difficult proposition. I believe that, with the preservation of the provisions which were built into the 1973 Act, it would not be impossible to move at least some way. It made my heart bleed as I listened to the Secretary of State this evening and heard her sheer rejection of any spirit of compromise or of national unity, about which we read so much in the Press. I believe that if she were to listen to such an appeal it could mark the beginning of a new approach to pensions as free as possible of party bias.
  If the Secretary of State is to maintain the attitude that regrettably she showed to the House tonight, she must answer three questions which the House and the country will want answered. What is it in- the reserve scheme that causes her to reject the principle of the scheme when we contend that, if she were so minded, she could build on and improve that scheme? Secondly, why could she not have introduced improved provisions in those areas which grieve her most and allowed the whole Act to go forward? Lastly, how does she justify postponing even the minimal pensions benefit for perhaps three or four years, because it

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  is optimistic to suggest that it could be done within two years?
  These are questions which my electors and the Secretary of State's will ask. If we do not get satisfactory answers in terms of pension provision we shall reluctantly have to assume that the right hon. Lady's approach to pensions is such a doctrinaire one that the House will wish to criticise her for it. However, before we reach that point of criticism, I hope that the Minister, having listened to the pleas which have been made from both sides that she should build upon the scheme rather than reject it, will understand that this is the feeling of perhaps the majority of people in the country and that she will respond to it.
  8.58 p.m.
  Mr. A. G. F. Hall-Davis: My intervention in this debate takes me back to the debates we had in Committee on the Crossman plan. I believe that the Government's decision to abandon the State reserve scheme under the 1973 Act cannot be considered without reference to the background and delay over many years in securing substantial improvements in pension arrangements.
  The right hon. Lady devoted a considerable part of her very long speech to asserting the right of her administration to reverse the legislation of their predecessors. No one disputes that constitutionally. However, we are a practical nation and each decision should be considered against what went before. The previous Labour administration in 1964 took an unconscionable time producing their proposals for improving pension arrangements. They took such a long time that the Crossman Bill, as we call it, was only in Committee at the Dissolution in 1970. The last Conservative administration in a much shorter period placed the 1973 Act on the statute book after lengthy preliminary discussion with those interested in occupational pension schemes. I am not referring only to those whom the hon. Member for Islington, South and Finsbury (Mr. Cunningham) might say had a direct financial interest and not a lot else; I am talking of direct consultation with companies and firms.
  The difference between the 1973 Act and the Crossman Bill is that on the whole the Crossman Bill was not understood, was not liked and was not
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  accepted. I believe that the 1973 Act was understood and was generally accepted. It is against that background that the decision to reverse it and to put the whole issue into the melting pot must be considered, and it is because of that background, because of a 10-year delay in introducing an improved pension structure and because of what was an abortive attempt in 1969–70, that the last Labour administration did not carry the country with them. I am satisfied in my own mind about that, and we all have constituency contacts. I am sure, too, that the 1973 Act did carry the country with it, that it was accepted.
  Mr. George Cunningham: By whom?
  Mr. Hall-Davis: By the great majority of people concerned with pension negotiations which, in the background in which I have been involved, embraced employees and employers.
  There is no doubt that as a result of the 1973 legislation there was a considerable quickening in the pace of provision of occupational pensions. What worries me about the Secretary of State's attitude is that she does not appear to understand why the House of Commons is falling into disrepute in the eyes of the electorate. She chided my hon. and learned Friend the Member for Surrey, East (Sir G. Howe) because Conservatives had actually used the word "improvement" with regard to our arrangements. I believe that the people of this country are having less and less regard for all hon. Members because we are concentrating too little on improvement and construction and too much on destruction and reversing the decisions of our predecessors.
  The issue before us is an outstanding example of just that kind of negative destructive attitude which brings Parliament into disrepute. We were told at the General Election over and over again that we did nothing but slang each other as politicians. I was never sure whether I was meant to take that personally or whether it was just a general remark, but it certainly embraced a political genre generally. People can be slanged by actions as well as by words and the Government's reversal of the decision on the 1973 Act is just the type of approach that the electorate objects to and which brings Parliament into disrepute. I believe that the

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  suspension of the reserve scheme has dealt a damaging blow to the improvement and expansion of occupational schemes, damage which may prove permanent and irreparable.
  I am open to be proved wrong by events but there sometimes comes a tide when things are flowing favourably for a particular course of action. There is no doubt that at the beginning of this year the tide was flowing favourably for the expansion and improvement of occupational pension schemes. The provisions of the statutory pay code, whether one liked them or not, encouraged the improvement of pension schemes. The approach of the reserve scheme had focused employers' attention on the need to give the matter consideration.
  I believe that two things will now happen to reverse that tide. First, I believe that the Labour Party is to introduce some form of pay-as-you-go scheme, which is not easily understood. Until employers understand a scheme, they will not saddle themselves with additional commitments. Secondly, I believe that the impact of inflation on occupational pension schemes, whilst perhaps appreciated by those hon. Members on both sides who have taken part in the debate, is not yet appreciated not only by the country at large but by many of those responsible for the funding and benefits of occupational pension schemes.
  Scheme after scheme will have drawn to its attention by its actuarial advisers, whom many schemes employ far too infrequently to examine ther commitments and liabilities, that there is a large potential deficit in the scheme. The advantage of the reserve scheme was that it drew attention to a pensions structure that was particularly suitable for the small employer. The employer of small numbers is reluctant to introduce a final-salary pension scheme, because he knows that it gives him a liability for what is in effect an open-ended commitment. I know that all pension schemes have the right to be wound up provided that the obligations are met.
  The right hon. Lady said that the only scheme in which one could meet one's obligations in an inflationary age was a pay-as-you-go scheme. I go along with that to the extent that it is the only
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  scheme in which one can meet them for one year. That is one's only obligation—to meet them for one year. It is the strength of a funded scheme that at any one time it can be wound up and be asked to meet the obligations accumulated up to that date. Otherwise, it would not receive the actuary's certificate. That is the sort of fear that inhibited the introduction of occupational pension schemes by small employers.
  The advantage of the reserve scheme was that it served as a model. The hon. Member for Islington, South and Finsbury talked about the need for a model for occupational schemes. He may not have liked that model, but it was one that was particularly suitable for the employer with a small number of employees. That was recognised because a number of chambers of commerce were offering facilities to employers in different parts of the country, or any part of the country in some instances, to join an occupational scheme similar in structure to the reserve scheme but with the flexibility and additional advantages that could be written into a private occupational scheme but could not, certainly in the initial stages, be written into a State scheme.
  If the Labour Government destroy the State reserve scheme based on money purchase, they will have discouraged from getting adequate occupational pensions many people who would otherwise have got them.
  I find it extraordinary that at one and the same time Labour Members attack the 1973 Act and draw attention to the need to overcome the transferability problem. The State reserve scheme of the 1973 Act is the only type of pension arrangement that I have come across which offers total transferability. Under that arrangement the individual owns his own pension. For that reason, I think that many small employers in occupations where people move frequently would have been well advised to consider whether it was not in their employees' interests to let them enter the reserve scheme, in which they would be assured of full transferability.
  When people draw attention to the inadequacy of the State reserve scheme it is worth asking them to cite a few examples. Of course, examples can be as misleading in this area as in any other.

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  We must demonstrate the relative positions of a man who stayed in the State reserve scheme all his working life and a man who moved into five, six, seven or eight occupational schemes with the best transferability arrangements that have been devised.
  I believe that we have our pension arrangements the wrong way round. What we should have is a personally owned pension on the lines of the State reserve scheme with the only obligation being for the employer to contribute to some form of approved pension arrangement and then to top it up with some sort of State approved scheme.
  Mr. George Cunningham: But that is not in the 1973 Act.
  Mr. Hall-Davis: The Government give the impression that they will make some accelerated provision for the person who is now near retirement. If they are to make such provision and if it is within the context of this Government's scheme, whatever it may be, it will be accelerated provision by a subsidy from the young for the benefit of older people as has taken place in almost all occupational pension schemes. Presumably, there will be a subsidy from the young in the State reserve scheme which would not be paid by employers and employees who are not concerned with the second State scheme. If it were to be paid by nonmembers there is no reason for that subsidy not to be given to occupational pension schemes to help them to get off the ground and to help meet some of the problems that arise when introducing such schemes. If that is the intention, it could have been done perfectly well under the State reserve scheme as envisaged by the 1973 Act.
  For all the reasons that I have given, I think that the Government's approach shows a total disregard of the attitude that the country wants the House to take towards its conduct of affairs—namely, to build on what has been done before and not to pull everything to the ground every time there is a General Election. Further, I believe that the right hon. Lady's time scale is totally impracticable. I had the impression at the end of her speech that she could not guarantee whether we would get the White Paper before the Summer Recess. I do not know whether she intends to publish it during the recess. That would be unusual but not unknown.
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  How she thinks that she will get adequate consultation to allow her to introduce legislation in the next Session I do not know. It seems in this day and age that the time scale in everything gets longer and longer. Therefore, it will be a long time before the alternative scheme is produced.
  It will give me the greatest pleasure to vote against the Government amendment and to support the motion of my right hon. and hon. Friends.
  9.14 p.m.
  Mr. Timothy Raison: We have had today a serious debate on a serious topic. I think that the debate as a whole has been thoroughly constructive. The one exception was the speech of the Secretary of State. The right hon. Lady had the least right to approach the debate in such a way. She came into the House and treated us with a great deal of contempt. She spoke at great length and with the minimum of serious content. She made it clear that it is her intention to scrap what is by any standards a major piece of social legislation, however one may argue about its components. However, she gave no indication of what should take its place. All we learned from the right hon. Lady was that we are likely to have her plans some time after the recess.
  The right hon. Lady has adopted her present attitude in an area where continuity above all else is vital. I believe that her speech was a completely cynical piece of politics. I do not want to say more about it now, but I will return to it later.
  The right hon. Lady's approach stood out in marked contrast to the rest of the House in the debate. I think that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) made a serious contribution, arguing his case fully. I believe that the improvements he talked about could all be brought into being under our scheme. Indeed, he himself said that the bulk of them could be. He said, fairly, that transferability is a very great problem. All of us who have studied this problem know that that is true, that transferability is one of the most difficult ingredients. But we should not despair. I do not think that it is necessarily impossible to find some further development in that area.

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  The hon. Gentleman was also right in wanting to see some kind of funded scheme. I have no doubt that the psychology of the country, represented in the overwhelming majority view of those who think about this problem, is that a funded scheme would be preferable. That is one of the merits of our approach. But it appears that the right hon. Lady is against a funded approach. The indications that we have had from her—she has not told us formally of what her answer is—seem to suggest that we are likely to see some kind of pay-as-you-go scheme. I think that the hope of the hon. Member for Islington, South and Finsbury that something could be produced in two years is wishful thinking. I should be surprised if the Under-Secretary of State could give him any serious consolation or support on that point.
  We have had an extremely good debate with a very high level of contributions. All of us who have followed pensions debates over the years know that my hon. Friend the Member for Somerset, North (Mr. Dean) talks to us with enormous knowledge and in an extremely balanced way. I had perforce to spend a large chunk of the weekend reading through the Committee stage of the Social Security Act 1973. I do not think anyone would choose that as a way of passing a June weekend in Buckinghamshire, but I had to do so. Not having served on that Committee, I was profoundly impressed by the way in which, day in and day out, my hon. Friend battled on without a mistake and in a most reasoned way.
  My hon. Friend the Member for Kensington (Sir B. Rhys Williams) is probably the most original expert on this subject in the House. He always has something new to say. I, as a layman, never cease to be astonished by the freshness of his mind. He did a great deal to answer the hon. Member for Islington, South and Finsbury.
  My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) talked eloquently about ways, of building on our scheme in the 1973 Act. He asked "Why rescind the scheme? Why not improve it?" I believe that the scheme was the fundamentally right basis for the future. Nevertheless, I think that when
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  my hon. Friend used those words he did catch the flavour of the debate. In other words, he expressed the view that we have something which should be developed, and that the notion of casting the whole thing to the winds is contrary to the mood of the House as expresesd in the debate.
  My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) made another extremely interesting speech. I am sure that he was right when he said that, by and large, the Act was understood and accepted. I think this has been the sign of a very sensible approach. I have no doubt that my hon. Friend was right to condemn the damage which has been done by the right hon. Lady's wanton action, and it is clear that the House does not support her in it.
  The 1973 Act provided something which we had needed for a long time—a long-term basis for pensions—and I am sure the system is the right one for this country. It consists, firstly, of a basic pension which is a pay-as-you-go scheme and has in it an element of redistribution, brought about through the ingredient of variable contributions but flat-rate benefits. It also has a State contribution. I believe that the redistributive scheme provides the best basis upon which we can look at pensions in future. If there are sharp changes in the value of money and so on, at least we have that measure with which to take immediate steps. It is notable that so far the Government have not rejected this ingredient.
  Then we have the second pension, the choice between the occupational scheme or the State reserve scheme. It is important to remind the House of some of the things which this system has brought in. It has brought in a compulsory level of personal provision, death benefit cover and pensions for widows. It has brought in a measure of protection against inflation. I acknowledge that these things are not final and for all time. I remind the House that they all represent important improvements upon what we had before. It is the essence of social policy in so many areas that we proceed by building and improving upon what we have got. That is what our important Act did.
  The second pension is to be financed by contributions, whether through the occupational schemes or the State reserve

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  scheme. The essence of it is that it provides independence. I have a strong feeling that, more and more, the future of social policy will lie in the notion of giving people a feeling of independence. It is right that the State should be there to make sure that certain standards are upheld. That is a proper rôle for the State here. But psychologically, and in many other ways, what people want now is not an ever-increasing dependence on the State and what it has to provide for them, but an ever-strengthening feeling that they can stand on their own feet, that they have rights that they have bought.
  The underlying philosophy of our 1973 Act was entirely in accord with the way in which social policy is bound to develop. It will take time for the State reserve scheme and the occupational schemes to come to fruition. It is nonsense to pretend that there is any easy way to produce quick results. The Secretary of State seemed unable to face up to this. The truth is that we cannot pluck a pensions policy out of the air and say that suddenly everyone will have the kind of level we would all like to see available in the fullness of time.
  I have no doubt that one of the strongest objections to what I suspect the Secretary of State has in mind is that it will be susceptible to political jiggery-pokery in a way in which our type of scheme is not. We do not know what the right hon. Lady has in mind but it seems likely that it will entail substantially increased contributions on the part of industry. There is a widespread feeling at the moment, since the Budget and in the past few weeks, that it is completely intolerable to go on believing that we can pile more and more on to the back of already hard-pressed industry.
  I turn to some of the objections put forward to the 1973 scheme. The first had to do with the time lag before the reserve scheme pension reaches its full level and also the level of benefits. At the moment, as I understand it, about 1,800,000 pensioners are drawing supplementary benefit. This is a substantial number. We ought to remember that when our tax credit scheme comes into being, as it unquestionably will, that in itself will take a substantial number of retirement pensioners off supplementary benefit level. I cannot say how many, but one figure I have seen is 800,000.
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  There is no doubt that the tax credit scheme, if allowed to develop, as it will do when we come back to power, will be of great help. As time goes on, more and more people will be drawing benefit from their pension schemes, and that in itself will reduce the number of people who are dependent on supplementary benefit. That answers at least part of the point.
  The Secretary of State was unfair when she was describing the benefits under the reserve scheme in ignoring completely the fact that there will be bonuses. Admittedly, if we have a Labour Government dedicated to the sort of policies we see at the moment, the bonuses will not be very large. We have seen the effect on British industry of a Labour Government in power. That is a point we have to consider. But it is to take a profoundly gloomy view of the longer-term future to ignore any possibility of the fund behind the reserve scheme increasing in value over the years. An important part of the scheme is that its funds will be invested for the benefit of those who belong to the scheme, and the Secretary of State might have taken notice of that factor.
  We had a reasonable discussion about the position of women in the scheme. The question was raised whether women should be regarded as retiring at an earlier date than men. I believe that at present women, by and large, accept the notion of earlier retirement, but I am not for one moment saying that this will be so for all time. Social habits and social attitudes change with time, and it may be desirable to look again at this. That is exactly the kind of matter that we believe can usefully be discussed by the Select Committee which we propose.
  The hon. Member for Islington, South and Finsbury said that the scheme penalises women for living longer. The scheme is based on arguments which are actuarially perfectly sound, but if there is an increasing feeling in society that women are being penalised in this way—and more and more people may express this feeling in years to come—this again could be looked at, and there is no reason why an appropriate adjustment should not be made. That argument does not justify the scrapping of the whole of our scheme.
  In the reserve scheme widows get 50 per cent. of the pension for men. Much

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  has been said about this. The 50 per cent. represents an enormous advance on what has gone before. For most people there has been nothing, and 50 per cent. is very much better than nothing. We believe that this was one of the most important achievements of the 1973 scheme. But that does not mean that in future this question should not be looked at.
  It has been argued that the whole pattern of provision in the 1973 Act is biased towards occupational schemes rather than towards the State reserve scheme. We certainly want to see occupational schemes developing strongly.
  It has been said that tax relief is not provided for under the reserve scheme for employee's contributions. The arguments put forward in Committee by my hon. Friend were powerful. Many people who will be paying into the reserve scheme will not be taxpayers. It does a person who does not pay tax no good to receive tax relief. The argument for the 1½1 per cent. is based on a solid foundation. In Committee my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) raised the possibility of a scheme similar to the mortgage option scheme, and that, again, might be considered by the Select Committee. The answer is to accept the structure we offer and in time see how it can be improved.
  Mr. George Cunningham: Will the hon. Gentleman say categorically whether the Opposition stand by what they did in refusing tax relief on contributions to the State reserve scheme for those who pay tax, or have they changed their mind?
  Mr. Raison: No; I am simply saying—
  Mrs. Castle: Answer.
  Mr. RaisonAllow me to do so, and I will. I am saying that we believe that what we did was right in the 1973 scheme, but there is no reason why in time one should not take a fresh look at these things. The whole essence of social policy is that it must be allowed to develop.
  Mrs. Castle: Now we know.
  Mr. Raison: I assure the House, and particularly the Secretary of State, that
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  one of the great merits of occupational schemes—and this is one of the reasons why we support such schemes very strongly—is that they are the most flexible way of meeting a variety of needs and desires which exist among different employees. We believe that that is the right structure for the future. Therefore, we are convinced that the 1973 Act provides the best basis for a pensions pattern for this country. There is an extremely strong case for reaffirming this policy, while at the same time setting up a Select Committee to examine the possibilities of some form of improvement in the fullness of time.
  I have no doubt that many people in the country as well as in this House resent the Secretary of State's attitude to this problem. Time and again she speaks as though she, and she alone, knows what women want. She seems to believe that she has a kind of divine right to speak for women. She acts as a sort of high priestess. We cannot believe that this magical power lies with her. She comes to this House not to argue or debate, but to assert and rant. That was her attitude this afternoon. That is a deplorable way to approach this topic.
  We believe that the way in which the right hon. Lady has flouted the House of Commons in refusing to put forward the two parts of the scheme is a disgrace. My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) set out this argument in the course of his speech. I reiterate that it is a travesty of parliamentary government to use a commencement procedure to scrub a major piece of legislation. It is a particularly blatant travesty for a minority Government to take this course with an election clearly in the offing. Above all, it is a tragedy to do so without offering the House or the country any indication at all of what the right hon. Lady has in mind to put in place of this policy.
  We believe that the right hon. Lady has shown arrogance right across her social policy. We believe that one of the gravest objections to the social policy which she has put forward is that time and again she has aroused expectations which she knows she cannot fulfil. She likes to see herself as a kind of Lady Bountiful. She goes round the country making vague promises. She knows perfectly well that the background against

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  which we are operating is one of tough financial stringency. She well knows that any sort of scheme of the kind she apparently has in mind will cost the country a great deal more at a time when it is totally irresponsible to think in terms of increasing public expenditure.
  In short, the Secretary of State's speech was pure fairground stuff. It was a blemish on this debate. I believe the country as a whole will bitterly resent her approach to this matter. I hope the House will reject the Government amendment and support our motion as being the right basis for a sensible long-term pensions policy for this country.
  9.33 p.m.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): The two speeches we have heard from the Tory Front Bench in this debate have been among the most flimsy, reactionary, divisive and backward-looking we have heard in this House for a long time. I had hoped, more in optimism than in belief, that today's debate could have been a vehicle for a sensible discussion of pensions policy.
  The Conservative Party could have used the debate for a constructive examination of pensions needs now and in the future. Instead, the right hon. and learned Member for Surrey, East (Sir G. Howe) concentrated the same keen intelligence as created the Industrial Relations Act, and the same blindness to social tensions as is an inevitable concomitant to this and as runs throughout the whole of his policy, on defending, first, a pension structure, about which there has been no argument across the Floor in this debate and which would condemn millions of pensioners now and far into the twenty-first century to dependence on means-testing, and, secondly, a reserve pension scheme which has been expressly denigrated throughout the pensions industry and which was designed, as the hon. Member for Somerset, North (Mr. Dean) knows better than anyone, purely as a vehicle for contracting out. To express it more bluntly, it was designed as a pension dustbin for those whose employment or employers prevented membership of a private occupational pension scheme.
  The hon. Member for Somerset, North opened a market for insurance com
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  panies and others, about whose activities I do not complain, to sell rubbish. It is no wonder that the hon. Gentleman is now a director of such a company. He opened every factory door to slick insurance salesmen selling schemes which would have been a disgrace to the second half of the twentieth century.
  Mr. Paul Dean: The hon. Gentleman must know that he is talking absolute rubbish. For a responsible pensions Minister to make disgraceful remarks of that kind from the Dispatch Box shows how flippantly the present Government treat the serious matter of making better provision for pensions.
  Mr. O'Malley: Not only will I make those allegations; I shall prove them before I sit down. It is on that that my speech will be concentrated.
  It is no wonder that the right hon. and learned Member for Surrey, East and the hon. Member for Somerset, North did not go into any details of the State reserve pension scheme or about the minimum conditions of recognition. Had they spelled them out adequately, they might not even have had the support of the Liberal Party.
  I understand why the Opposition are anxious not to discuss the details of the State reserve scheme. Their contributions show no understanding that it is intolerable and unacceptable to continue a system of two nations in retirement, the two nations being those fortunate enough to be in good occupational schemes, in both the public and the private sector, with half pay in retirement, with post-award dynamism and with a lump-sum when they retire, and the remainder being those who would have been condemned to the inadequate levels of the State reserve pension scheme and the minimum levels set by it.
  How could the managing director of any company in the future defend a situation where his white collar employees were in a final salary scheme whereas for his manual workers on the shop floor any old thing would do? That is what the Opposition were trying to perpetuate in their legislation when they were in government. The very existence and creation of the tax credit scheme was an open admission that their pensions policies were inadequate to provide enough

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  for people to live on in retirement after a lifetime of service.
  After months of insisting that the country was wrong and he was right, the Leader of the Opposition, under the pressures of electoral reality, is now sitting on the penitent's stool and agreeing to bury the Industrial Relations Act. The right hon. and learned Member for Surrey, East should now lay to rest the State reserve pension scheme and the associated low levels of minimum ocupational pensions.
  There are hon. Members on the Opposition benches who know something about pensions. We had some thoughtful speeches from them today. I have in mind the hon. Member for Brentwood and Ongar (Mr. McCrindle) and the hon. Member for Kensington (Sir B. Rhys Williams). They regard the State reserve scheme as unsatisfactory. They made their views known throughout the Committee proceedings on the 1973 Social Security Bill.
  How has the right hon. and learned Member for Surrey, East the intolerable arrogance to speak of seeking national unity, of seeking an agreed policy on pensions and of stopping them from being a political football when his last pronouncement in very strong terms was that if the Conservative Party was returned to office after the next General Election the State reserve scheme would be reintroduced? The Opposition have now made their pensions policy very clear, and we welcome the right hon. and learned Gentleman's statement today.
  The Labour Party rejects as completely unacceptable the minimum levels of provision for occupational pensions laid down in the State reserve scheme. I will tell the hon. Member for Hazel Grove (Dr. Winstanley), who apparently did not appreciate the argument, why it was that the present Government were unable and remained unable, as would any Government, to modify suitably the State reserve scheme in order to attain the objects of policy which my right hon. Friend the Secretary of State set out today and to which the hon. Gentleman nodded his agreement.
  The reason is simple. The hon. Member for Brentwood and Ongar (Mr. McCrindle) should know this, because he asked the question in his speech only
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  half an hour ago. If we are to provide a reasonable level of benefit for older workers—the forgotten generation; not only those in their sixties, but men over 45 and women over 40—we can do it in a money-purchase scheme only by imposing levels of contributions which will be totally unacceptable both to employers and to employees. Therefore, it is not only a question of the level of the accrual set in the scheme, it is also a question of the structure of the scheme. The structure itself precludes the measure of improvement which the Labour Party would find acceptable and which the Liberal Party should find acceptable if it meant what it said in its election manifesto.
  In addition, the low levels of total pension provision envisaged through both the basic and the reserve pension scheme in the Social Security Act are not in accord with the manfesto commitments of the Liberal Party, the SNP or the Welsh National Party.
  The present Government have begun to carry out their manifesto commitments on pensions, and to carry them out not only to the letter, but in the spirit of those commitments.
  It is significant and interesting, as my hon. Friends who have read the Tory motion will have noticed, that there is no mention of the basic flat-rate pension set out in the 1973 Act. There is a simple reason for that. There is something which the Conservative Party must hide.
  Again I turn to the Liberal Party. The finances of the basic scheme were inadequate—the Government Actuary pointed this out in his report on the Social Security Act—to provide a pension greater than the £7·75 pension which was operative at the time or a pension at about that level in real terms. That is why we have had to introduce the Social Security Amendment Bill to put up the level of contributions to a higher rate than the level at which they were set. We could not have paid the £10 and £16 pensions, let alone the higher figure which other parties have mentioned for a flat-rate pension. We could only have provided for a much lower pension. Therefore, the move towards a better pension provision for the present generation of retirement pensioners envisaged by all ether parties except the

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  Tory Party was precluded by the financial arrangements in the basic scheme of the Social Security Act 1973.
  Why have not the Opposition had the guts to admit that today? They did not oppose the national insurance uprating which brought in those £10 and £16 pensions, but when we bring in a Bill to levy the money to pay those pensions they start to oppose. They are in favour of the pensions but they are not in favour of paying the money for them. [Interruption.]
  The hon. Member for Somerset, North nods his head. He and I have spoken across these benches for too many years. He knows that on the very eve of the election he told me that £10 and £16 pensions were extravagant and that they would mean too great an increase in contributions from the working population to pay for them.
  Mr. Paul Dean rose—
  Mr. O'Malley: I will not give way again because of the time. The hon. Gentleman knows that that is an accurate reflection of the situation.
  Mr. Dean: I am trying to follow the Minister's argument. From what he is saying it might be thought that the Opposition voted against the Bill this afternoon, but patently we did not.
  Mr. O'Malley: Before the hon. Gentleman makes comments on proceedings in the House of Commons he should either be present or have read those proceedings. If he had been here earlier today he would have heard some of the nonsense spoken by his hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) in her winding-up speech.
  I now turn to the Conservative reserve scheme which is so dear to the hearts of so many Opposition Members and particularly the right hon. and learned Member for Surrey, East. I say in unequivocal terms that the Government make no apology for their decision not to implement the reserve scheme.
  Mrs. Jill Knight: Shame.
  Mr. O'Malley: The hon. Lady says "Shame", but it ill-becomes a political party to say one thing when in opposition
  158
  and another when in Government. [Interruption.] Hon. Gentlemen opposite are rather touchy on this. We all remember the pre-Selsdon Man period and what happened after that. Hon. Gentlemen opposite need not laugh at me. On pensions we are keeping our commitment, and I challenge anybody to show that we are not. Our actions in not bringing that scheme into operation are consistent with every criticism that we made of and every statement that we uttered about the reserve scheme when in opposition, and those criticisms are still valid.
  It is noticeable that those who now commend the reserve scheme are those who would not have been members of it. To those who this afternoon have defended the scheme I ask whether they would be happy if they thought that their pension cover was at the level set out in the reserve scheme and if their families had that kind of cover. All that I am getting are inane middle-class grins from some of the back benchers of the Conservative Party. No figures have been given of what would be the magnificent level of pension provision for which the Liberal Party will vote tonight.
  Over the three years between 1975 and 1978, to take a period quoted by the Tory Front Bench, a man of 62 on £25 a week would earn a pension of 28p, and that is if the bonuses matched prices. We are told about the difficulties of investment. A man on £30 a week would get 34p, a woman aged 57 on £20 would earn 19p, and on a wage of £25 she would earn 23p. I agree that we ought to take note of the best in occupational pension provision in the private sector and see how much of that we can provide for others who do not have the good fortune to belong to occupational pension schemes.
  Let us see what would be provided under the State reserve scheme. A man of 55 who paid into the scheme for 10 years would receive on retirement not half pay, not 50 per cent. or 66 per cent. but 4 per cent., and his widow would get 2 per cent. A man of 45 who retired in 1996 would get a pension not of 50 per cent. but of 8 per cent. and his widow would receive 4 per cent. Anyone unfortunate enough to pay into the scheme until the year 2019 would draw a pension of 19 per cent, for himself, or his widow would receive a pension of 9½ per cent. I invite

  159
  the House to compare that with good occupational pension provision.
  Mr. Robert Boscawen rose—
  Mr. O'Malley: I shall not give way.
  Mr. Boscawen rose—
  Mr. O'Malley: I have only 10 minutes in which to reply to the debate. I normally give way, but I shall not do so tonight.
  A woman aged 50, after paying into the reserve scheme for 10 years, would get a pension of 3 per cent. on retirement. A woman who joined the scheme when she was 40 would get a 6 per cent. pension, and if she joined when she was 22 she would get a final pension of 13 per cent. of her earnings. I invite the Opposition to compare that with good occupational pension provision. The trouble with the Opposition is that they want one level of pensions for themselves and their wealthy friends, and a different level for others.
  Mr. Boscawen rose—
  Mr. O'Malley: No. If the hon. Gentleman allows me to continue, I shall give way later if there is time.
  We were always criticised for the complexity of the Crossman scheme. We want a pension scheme that is capable of being understood by the public. The State reserve scheme was of such mathematical complexity as to make any large-scale explanation of individual entitlement absolutely impossible.
  Mr. Boscawen: The hon. Gentleman has spent 20 minutes talking about the State reserve scheme. Will he say what his scheme is to be? What sort of system will he adopt and who will cross-subsidise whom in that scheme?
  Mr. O'Malley: I said that I was going to give the Opposition some answers, but my first answer was to the Front Bench and to one of the creators of the Tory reserve scheme. It was not only the reserve scheme which was wrong. There were also structures and standards in occupational pension schemes which were as low as those in the State scheme. There were options where there were to be no increases in pensions after they were put into award, no revaluation during
  160
  working life, and even on the best assumptions the levels set in the Tory legislation were far below any reasonable standards in occupational pension schemes today. Those are the reasons why we opposed the Tory pension strategy and why the TUC, representing the millions of workers in this country, opposed that strategy.
  I do not know why the hon. Member for Cornwall, North (Mr. Pardoe) spoke as he did in November 1972. Whenever the Liberals voted on the Social Security Act they did not once support the then Government, but now they tell us, after all the difficulties and disadvantages, that they intend to support the Conservative Party. I can only assume that they take this attitude for electoral reasons. There are no valid pension reasons why they should act in this way. They want to get in bed with the Conservative Party because some members of the Liberal Party realise that had they not made the decision that they made a few months ago they could now be riding around in ministerial cars. The attraction is now too strong for them.
  We must also refer to other parties in the House. I have read the SNP manifesto, but the SNP would not, under the basic Tory scheme, get the level of pension provision which has been talked about for millions of people in 2019. Similarly, the Welsh Nationals say in their manifesto that the people of Wales have always had a deep-rooted concern for social justice and social equality. The Welsh Nations will not find social justice from the Tory Party—any Welshman knows that, no matter what he may think of my party.
  I shall now deal with the future. First, it is essential to end the situation of "two nations" in old age, to get rid of means testing in retirement and to bring to an end the sharp change in an individual household's income which is a tragic hallmark of retirement for many millions of people and would remain so under Conservative proposals. It is also essential that there should be a proper partnership between the State and occupational pension schemes. The TUC, the pensions industry and members of occupational pensions schemes will welcome the Government's intention to recognise the importance of occupational pension provision in this country.

  161
  Further, it is essential to use the occupational pensions board, which will, clearly, have an important rôle in the future, with a large body of expertise. I do not know why the hon. Member for Rushcliffe (Mr. Clarke), who is new to the Opposition Front Bench, should sneer at mention of the occupational pensions board. That attitude will not represent the general policy of his party. [Interruption.] If he stops shouting I will give him an answer.
  What kind of social justice should there be and what have been the Government's guidelines? First, there must be a rate of accrual adequate to look after the older generation of retirement pensioners who could never be brought off means-testing and never be given an adequate pension under the kind of Bill envisaged in the Tory scene. Second, pensions which are generations out of date even before they are paid have no future and there must be the type of pre-award dynamism which one finds in good final salary schemes in both the public and the private sectors. Third, there should be some post-award dynamism so that there can be protection against inflation.
  Fourth, we should get rid of the enormous social problem of poverty among widows. On any count, they are among the most deprived sections of the community. Almost half of all elderly widows in 1974 have to rely on means-tested benefits to be able to live at all. The policies which the previous Government brought forward and the type and scale of widowhood provision would certainly not have met the needs of widows in the twentieth century, even if they had begun to deal with them in the twenty-first century. Last, there must clearly be a build-up of invalidity cover, which is too often lacking.
  So the Government's intention—and, I would have hoped, that of the House—is that there should be the speediest implementation of our pensions policy. We shall introduce our White Paper in the near future setting out the structure
  to achieve our aims. This will be the basis of consultation both within Parliament and without. Our policy will be aimed for the widest possible support in the country. The Opposition must realise when they ask for a Green Paper what they are doing and what would be inevitable in the production of such a paper. It would set back the implementation of any new pension scheme for much longer than the time scale which we are prepared to envisage.
  Our aim simply is for better pensions. On the basis of what has been said tonight we have had no measure of agreement with the Conservative Party either before or during the election. Our decisions so far are in pursuit of the aims I have described. We seek the support of the House in working to achieve them, and in the end it will be not only this House tonight which judges the policy and record of the Government on pensions but the electorate. We shall be delighted to put proposals to the electorate and let them make the comparisons with the shabby arrangements that the previous Government have said they will defend—not only past but future arrangements.
  One of the most disappointing features of the debate is that, while we could have had a realistic and forward-looking debate on pensions, that has not been possible. The country will accordingly take note. I have no doubt that it will choose the policies of the Labour Party, aimed at reducing poverty in old age, as against the policies of the previous Government, which are designed to perpetuate it.
  Mrs. Knight: The Minister made much of the fact the he was sympathetic to widows. If he is as sympathetic as he said, why is he making widows pay—[Interruption.]
  Question put, That the amendment be made:—
  The House divided: Ayes 282; Noes 280.

  Division No. 61.]

  AYES

  [9.59 p.m.

  Abse, Leo

  Barnett, Guy (Greenwich)

  Blenkinsop, Arthur

  Allaun, Frank

  Barnett, Joel (Heywood & Royton)

  Boardman, H.

  Archer, Peter

  Bates, Alf

  Booth, Albert

  Armstrong, Ernest

  Baxter, William

  Boothroyd, Miss Betty

  Ashley, Jack

  Benn, Rt. Hn. Anthony Wedgwood

  Bottomley, Rt. Hn. Arthur

  Atkins, Ronald

  Bennett, Andrew F. (Stockport, N.)

  Boyden, James (Bishop Auckland)

  Atkinson, Norman

  Bidwell, Sydney

  Bradley, Tom

  Bagier, Gordon A. T.

  Bishop, E. S.

  Boughton, Sir Alfred

  Brown, Bob (Newcastle upon Tyne, W.)

  Hart, Rt. Hn. Judith

  Padley, Walter

  Brown, Hugh D. (Glasgow, Provan)

  Hattersley, Roy

  Palmer, Arthur

  Brown, Ronald (H'kney, S.& Sh'ditch)

  Hatton, Frank

  Park, George (Coventry, N.E.)

  Buchan, Norman

  Healey, Rt. Hn. Denis

  Parker, John (Dagenham)

  Buchanan, Richard (G'gow, Springb'rn)

  Heffer, Eric S.

  Parry, Robert

  Butler, Mrs. Joyce (H' gey, WoodGreen)

  Horam, John

  Pavitt, Laurie

  Callaghan, Rt. Hn. James (Cardiff, S.E.)

  Howell, Denis (B'ham, Small Heath)

  Perry, Ernest G.

  Callaghan, Jim (M'dd'ton & Pr'wich)

  Huckfield, Leslie

  Phipps, Dr. Colin

  Campbell, Ian

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Prentice, Rt. Hn. Reg

  Cant, R. B.

  Hughes, Mark (Durham)

  Prescott, John

  Carmichael, Neil

  Hughes, Robert (Aberdeen, North)

  Price, Christopher (Lewisham, W.)

  Carter-Jones, Lewis

  Hughes, Roy (Newport)

  Price, William (Rugby)

  Castle, Rt. Hn. Barbara

  Hunter, Adam

  Radice, Giles

  Clemitson, Ivor

  Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)

  Rees, Rt. Hn. Merlyn (Leeds, S.)

  Cocks, Michael

  Irving, Rt. Hn. Sydney (Dartford)

  Richardson, Miss Jo

  Cohen, Stanley

  Jackson, Colin

  Roberts, Albert (Normanton)

  Coleman, Donald

  Janner, Greville

  Roberts, Gwilym (Cannock)

  Colquhoun, Mrs. M. N.

  Jay, Rt. Hn. Douglas

  Robertson, John (Paisley)

  Conlan, Bernard

  Jeger, Mrs. Lena

  Roderick, Caerwyn E.

  Cook, Robert F. (Edinburgh, C.)

  Jenkins, Hugh (W'worth, Putney)

  Rodgers, George (Chorley)

  Craigen, J. M. (G'gow, Maryhill)

  Jenkins, Rt. Hn. Roy (B'ham, St'fd)

  Rodgers, William (Teesside, St'ckton)

  Crawshaw, Richard

  John, Brynmor

  Rooker, J. W.

  Cronin, John

  Johnson, James (K'ston upon Hull, W)

  Roper, John

  Crosland, Rt. Hn. Anthony

  Jones, Barry (Flint, E.)

  Rose, Paul B.

  Cryer, G. R.

  Jones, Dan (Burnley)

  Ross, Rt. Hn. William (Kilmarnock)

  Cunningham, G.(Isl'ngt'n, S & F'sb'ry)

  Jones, Alec (Rhondda)

  Rowlands, Edward

  Dalyell, Tam

  Judd, Frank

  Sandelson, Neville

  Davidson, Arthur

  Kaufman, Gerald

  Sedgemore, Bryan

  Davies, Bryan (Enfield, N.)

  Kelley, Richard

  Selby, Harry

  Davies, Denzil (Llanelli)

  Kilroy-Silk, Robert

  Shaw, Arnold (Redbridge, Ilford, S.)

  Davies, Ifor (Gower)

  Lambie, David

  Sheldon, Robert (Ashton-under-Lyne)

  Davis, Clinton (Hackney, C.)

  Lamborn, Harry

  Shore, Rt. Hn. Peter(S'pney & P'plar)

  Deakins, Eric

  Lamond, James

  Short, Rt. Hn. E. (N'ctle-u-Tyne)

  Dean, Joseph (Leeds, W.)

  Latham, Arthur(City of W'minster P'ton)

  Short, Mrs. Renée (W'hampton, N.E.)

  de Freitas, Rt. Hn. Sir Geoffrey

  Lawson, George (Motherwell & Wishaw)

  Silkin, Rt. Hn. John (L'sham, D'ford)

  Delargy, Hugh

  Leadbitter, Ted

  Silkin, Rt. Hn. S. C. (S'hwark, Dulwich)

  Dell, Rt. Hn. Edmund

  Lee, John

  Sillars, James

  Dempsey, James

  Lestor, Miss Joan (Eton & Slough)

  Silverman, Julius

  Doig, Peter

  Lever, Rt. Hn. Harold

  Skinner, Dennis

  Dormand. J. D.

  Lewis, Ron (Carlisle)

  Small, William

  Douglas-Mann, Bruce

  Lipton, Marcus

  Smith, John (Lanarkshire, N.)

  Duffy, A. E. P.

  Lomas, Kenneth

  Snape, Peter

  Dunn, James A.

  Loughlin, Charles

  Spearing, Nigel

  Dunnett, Jack

  Loyden, Eddie

  Spriggs, Leslie

  Dunwoody, Mrs. Gwyneth

  Lyon, Alexander W. (York)

  Stallard, A. W.

  Eadie, Alex

  Lyons, Edward (Bradford, W.)

  Stewart, Donald (Western Isles)

  Edelman, Maurice

  Mabon, Dr. J. Dickson

  Stewart, Rt. Hn. M. (H'sth, Fulh'm)

  Edge, Geoff

  McCartney, Hugh

  Stonehouse, Rt. Hn. John

  Edwards, Robert (W'hampton, S.E.)

  McElhone, Frank

  Stott, Roger

  Ellis, John (Brigg & Scunthorpe)

  MacFarquhar, Roderick

  Strang, Gavin

  Ellis, Tom (Wrexham)

  McGuire, Michael

  Strauss, Rt. Hn. G. R.

  English, Michael

  Mackenzie, Gregor

  Summerskill, Hn. Dr. Shirley

  Evans, Fred (Caerphilly)

  Maclennan, Robert

  Swain, Thomas

  Evans, Ioan (Aberdare)

  McMillan, Tom (Glasgow, C.)

  Taverne, Dick

  Evans, John (Newton)

  McNamara, Kevin

  Thomas, D. E. (Merioneth)

  Ewing, Harry (St'ling, F'kirk & G'm'th)

  Madden, M. O. F.

  Thomas, Jeffrey (Abertillery)

  Faulds, Andrew

  Magee, Bryan

  Thorne, Stan (Preston, S.)

  Fernyhough, Rt. Hn. E.

  Mahon, Simon

  Tierney, Sydney

  Fitch, Alan (Wigan)

  Mallalieu, J. P. W.

  Tinn, James

  Flannery, Martin

  Marks, Kenneth

  Tomlinson, John

  Fletcher, Tea (Darlington)

  Marquand, David

  Torney, Tom

  Foot, Rt. Hn. Michael

  Marshall, Dr. Edmund (Goole)

  Tuck, Raphael

  Ford, Ben

  Mason, Rt. Hn. Roy

  Urwin, T. W.

  Forrester, John

  Mayhew, Christopher (G'wh, W'wch, E.)

  Varley, Rt. Hn. Eric G.

  Fowler, Gerry (The Wrekin)

  Meacher, Michael

  Wainwright, Edwin (Dearne Valley)

  Fraser, John (Lambeth, Norwood)

  Mellish, Rt. Hn. Robert

  Walden, Brian (B'm'ham, Lady wood)

  Freeson, Reginald

  Mikardo, Ian

  Walker, Harold (Doncaster)

  Galpern, Sir Myer

  Millan, Bruce

  Walker, Terry (Kingswood)

  Garrett, John (Norwich, s.)

  Miller, Dr. M. S. (E. Kilbride)

  Watkins, David

  Garrett, W. E. (Wallsend)

  Mitchell, R. C. (S'hampton, Itchen)

  Watt, Hamish

  George, Bruce

  Molloy, William

  Weitzman, David

  Gilbert, Dr. John

  Moonman, Eric

  Wellbeloved, James

  Ginsburg, David

  Morris, Alfred (Wythenshawe)

  White, James

  Golding, John

  Morris, Rt. Hn. John (Aberavon)

  Whitehead, Phillip

  Gourlay, Harry

  Murray, Ronald King

  Whitlock, William

  Graham, Ted

  Murton, Oscar

  Wigley, Dafydd (Caernarvon)

  Grant, John (Islington, C.)

  Newens, Stanley (Harlow)

  Willey, Rt. Hn. Frederick

  Griffiths, Eddie (Sheffield, Brightside)

  Oakes, Gordon

  Williams, Alan (Swansea, W.)

  Hamilton, James (Bothwell)

  Ogden, Eric

  Williams, Alan Lee (Hvrng, Hchurch)

  Hamilton, William (Fife, C.)

  O'Halloran, Michael

  Williams, Rt. Hn. Shirley (H't'd & St'ge)

  Hamling, William

  O'Malley, Brian

  Williams, W. T. (Warrington)

  Hardy, Peter

  Orbach, Maurice

  Wilson, Alexander (Hamilton)

  Harper, Joseph

  Ovenden, John

  Wilson, Gordon (Dundee, E.)

  Harrison, Walter (Wakefield)

  Owen, Dr. David

  Wilson, Rt. Hn. Harold (Huyton)

  Wilson, William (Coventry, S.E.)

  Woof, Robert

  TELLERS FOR THE AYES:

  Wise, Mrs. Audrey

  Wrigglesworth, Ian

  Mr. Thomas Cox and

  Woodall, Alec

  Young, David (Bolton, E.)

  Mr. Walter Johnson.

  NOES

  Adley, Robert

  Fletcher-Cooke, Charles

  McAdden, Sir Stephen

  Aitken, Jonathan

  Fookes, Miss Janet

  MacArthur, Ian

  Alison, Michael (Barkston Ash)

  Fowler, Norman (Sutton C'field)

  McCrindle, R. A.

  Allason, James (Hemel Hempstead)

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

  Macfarlane, Neil

  Ancram, M.

  Freud, Clement

  MacGregor, John

  Archer, Jeffrey

  Fry. Peter

  McLaren, Martin

  Atkins, Rt.Hn. Humphrey (Spelthorne)

  Galbraith, Hn. T. G. D.

  Macmillan, Rt. Hn. M. (Farnham)

  Awdry, Daniel

  Gardiner, George (Reigate & Banstead)

  McNair-Wilson, Patrick (New Forest)

  Baker, Kenneth

  Gardner, Edward (S. Fylde)

  Madel, David

  Balniel, Rt. Hn. Lord

  Gibson-Watt, Rt. Hn. David

  Marshall, Michael (Arundel)

  Banks, Robert

  Gilmour, Rt. Hn. Ian (Ch'sh' & Amsh'm)

  Marten, Nell

  Barber, Rt. Hn. Anthony

  Gilmour, Sir John (Fife, E.)

  Mather, Carol

  Beith, A. J.

  Glyn, Dr. Alan

  Maude, Angus

  Bell, Ronald

  Goodhart, Philip

  Maudling, Rt. Hn. Reginald

  Bennett, Dr. Reginald (Fareham)

  Goodhew, Victor

  Mawby, Ray

  Benyon, W.

  Goodlad, A.

  Maxwell-Hyslop, R. J.

  Berry, Hon. Anthony

  Gorst, John

  Mayhew, Patrick (Royal T' bridge Wells)

  Biffen, John

  Gow, Ian (Eastbourne)

  Meyer, Sir Anthony

  Biggs-Davison, John

  Gower, Sir Raymond (Barry)

  Miller, Hal (B'grove & R'ditch)

  Blaker, Peter

  Grant, Anthony (Harrow, C.)

  Miscampbell, Norman

  Boardman, Tom (Leicester, S.)

  Gray, Hamish

  Mitchell, David (Basingstoke)

  Body, Richard

  Griffiths, Eldon (Bury St. Edmunds)

  Moate, Roger

  Boscawen, Hon. Robert

  Grist, Ian

  Money, Ernie

  Bowden, Andrew (Brighton, Kemptown)

  Grylls, Michael

  Monro, Hector

  Boyson, Dr. Rhodes (Brent, N.)

  Gurden, Harold

  Moore, J. E. M. (Croydon, C.)

  Braine, Sir Bernard

  Hall, Sir John

  Morgan, Geraint

  Bray, Ronald

  Hall-Davis, A. G. F.

  Morgan-Giles, Rear-Adm.

  Brewis, John

  Hamilton, Michael (Salisbury)

  Morris, Michael (Northampton, S.)

  Brittan, Leon

  Hampson, Dr. Keith

  Morrison, Charles (Devizes)

  Brocklebank-Fowler, Christopher

  Hannam, John

  Morrison, Peter (City of Chester)

  Brown, Sir Edward (Bath)

  Harrison, Col. Sir Harwood (Eye)

  Mudd, David

  Bruce-Gardyne, J.

  Harvie Anderson, Rt. Hn. Miss

  Neave, Airey

  Bryan, Sir Paul

  Hastings, Stephen

  Neubert, Michael

  Buchanan-Smith, Alick

  Havers, Sir Michael

  Newton, Tony (Braintree)

  Buck, Antony

  Heyhoe, Barney

  Normanton, Tom

  Budgen, Nick

  Heath, Rt. Hn. Edward

  Nott, John

  Bulmer, Esmond

  Henderson, J.S.B.(Dunbartonshire, E.)

  Onslow, Cranley

  Burden, F. A.

  Heseltine, Michael

  Oppenheim, Mrs. Sally

  Butler, Adam (Bosworth)

  Higgins, Terence

  Orr, Capt. L. P. S.

  Carlisle, Mark

  Hill, James A.

  Osborn, John

  Carr, Rt. Hn. Robert

  Holland, Philip

  Page, Rt. Hn. Graham (Crosby)

  Chalker, Mrs. Lynda

  Hordern, Peter

  Page, John (Harrow, W.)

  Channon, Paul

  Howe, Rt. Hn. Sir Geoffrey (Surrey, E.)

  Pardoe, John

  Chataway, Rt. Hn. Christopher

  Howell, David (Guildford)

  Parkinson, Cecil (Hertfordshire, S.)

  Churchill, W. S.

  Howell, Ralph (Norfolk, North)

  Pattie, Geoffrey

  Clark, A. K. M. (Plymouth, Sutton)

  Howells, Geraint (Cardigan)

  Percival, Ian

  Clark, William (Croydon, S.)

  Hunt, John

  Peyton, Rt. Hn. John

  Clarke, Kenneth (Rushcliffe)

  Hurd, Douglas

  Pink, R. Bonner

  Cockcroft, John

  Iremonger, T. L.

  Price, David (Eastleigh)

  Cooke, Robert (Bristol, W.)

  Irvine, Bryant Godman (Rye)

  Prior, Rt. Hn. James

  Cope, John

  James, David

  Pym, Rt. Hn. Francis

  Cormack, Patrick

  Jenkin, Rt. Hn. P. (R'dge W'std &W'fd)

  Quennell, Miss J. M.

  Corrie, John

  Johnson Smith, G. (E. Grinstead)

  Raison, Timothy

  Costain, A. P.

  Jones, Arthur (Daventry)

  Rathbone, Tim

  Crouch, David

  Jopling, Michael

  Rawlinson, Rt. Hn. Sir Peter

  Crowder, F. P.

  Joseph, Rt. Hn. Sir Keith

  Redmond, Robert

  Davies, Rt. Hn. John (Knutsford)

  Kaberry, Sir Donald

  Rees, Peter (Dover & Deal)

  d'Avigdor-Goldsmid, Maj-Gen. James

  Kellett-Bowman, Mrs. Elaine

  Rees-Davies, W. R.

  Dean, Paul (Somerset, N.)

  Kershaw, Anthony

  Renton, Rt. Hn. Sir David (H't' gd' ns' re)

  Deedes, Rt. Hn. W. F.

  Kimball, Marcus

  Renton, R. T. (Mid-Sussex)

  Dixon, Piers

  King, Evelyn (Dorset S.)

  Rhys Williams, Sir Brandon

  Dodds-Parker, Sir Douglas

  King, Tom (Bridgwater)

  Ridley, Hn. Nicholas

  Dodsworth, Geoffrey

  Kirk, Peter

  Ridsdale, Julian

  Drayson, Burnaby

  Kitson, Sir Timothy

  Rippon, Rt. Hn. Geoffrey

  du Cann, Rt. Hn. Edward

  Knight, Mrs. Jill

  Roberts, Wyn (Conway)

  Durant, Tony

  Knox, David

  Ross, Stephen (Isle of Wight)

  Dykes, Hugh

  Lamont, Norman

  Rossi, Hugh (Hornsey)

  Eden, Rt. Hn. Sir John

  Lane, David

  Rost, Peter (Derbyshire, S.-E.)

  Edwards, Nicholas (Pembroke)

  Langford-Holt, Sir John

  Royle, Sir Anthony

  Elliott, Sir William

  Latham, Michael (Melton)

  Sainsbury, Tim

  Emery, Peter

  Lawrence, Ivan

  St. John-Stevas, Norman

  Eyre, Reginald

  Lawson, Nigel (Blaby)

  Scott-Hopkins, James

  Fairgrieve, Russell

  Le Marchant, Spencer

  Shaw, Giles (Pudsey)

  Fell, Anthony

  Lester, Jim (Beeston)

  Shaw, Michael (Scarborough)

  Fenner, Mrs. Peggy

  Lewis, Kenneth (Rtland & Stmford)

  Shelton, William (L'mb'th, Streath 'm)

  Fidler, Michael

  Lloyd, Ian (Havant & Waterloo)

  Shersby, Michael

  Fi berg, Geoffrey

  Loveridge, John

  Silvester, Fred

  Fisher, Sir Nigel

  Luce, Richard

  Sims, Roger

  Sinclair, Sir George

  Temple-Morris, Peter

  Wall, Patrick

  Skeet, T. H. H.

  Thatcher, Rt. Hn. Margaret

  Walters, Dennis

  Smith, Dudey (W'wick & L'm'ngton)

  Thomas, Rt. Hn. P. (B'net, H'dn S.)

  Weatherill, Bernard

  Spence, John

  Thorpe, Rt. Hn. Jeremy

  Wells, John

  Spicer, Jim (Dorset, W.)

  Townsend, C. D.

  Whitelaw, Rt. Hn. William

  Stainton, Keith

  Trotter, Neville

  Wiggin, Jerry

  Stanbrook, Ivor

  Tugendhat, Christopher

  Winstanley, Dr. Michael

  Steel, David

  Tyler, Paul

  Winterton, Nicholas

  Steen, Anthony (L'pool, Wavertree)

  van Straubenzee, W. R.

  Wood, Rt. Hn. Richard

  Stewart, Ian (Hitchin)

  Vaughan, Dr. Gerard

  Woodhouse, Hn. Christopher

  Stodart, Rt. Hn. A. (Edinburgh, W.)

  Viggers, Peter

  Worsley, Sir Marcus

  Stokes, John

  Waddington, David

  Young, Sir George (Ealing, Acton)

  Stradling Thomas, John

  Wainwright, Richard (Colne Valley)

  Tapsell, Peter

  Wakeham, John

  TELLERS FOR THE NOES:

  Taylor, Edward M. (Glgow, C'cart)

  Walder, David (Clitheroe)

  Mr. Walter Clegg and

  Taylor, Robert (Croydon, N.W.)

  Walker, Rt. Hn. Peter (Worcester)

  Mr. Paul Hawkins.

  Tebbit, Norman

  Walker-Smith, Rt. Hn. Sir Derek

  Question accordingly agreed to.
  Main Question, as amended, put:
  The House divided: Ayes 282, Noes 279.

  Division No. 62.]

  AYES

  [10.16 p.m.

  Abse, Leo

  Delargy, Hugh

  Hughes, Robert (Aberdeen, North)

  Allaun, Frank

  Dell, Rt. Hn. Edmund

  Hughes, Roy (Newport)

  Archer, Peter

  Dempsey, James

  Hunter, Adam

  Irvine, Rt. Hn. Sir A. (L'p'I, Edge HI)

  Armstrong, Ernest

  Doig, Peter

  Irving, Rt. Hn. Sydney (Dartford)

  Ashley, Jack

  Dormand, J. D.

  Jackson, Colin

  Atkins, Ronald

  Douglas-Mann, Bruce

  Janner, Greville

  Atkinson, Norman

  Duffy, A. E. P.

  Jay, Rt. Hn. Douglas

  Bagier, Gordon A. T.

  Dunn, James A.

  Jeger, Mrs. Lena

  Barnett, Guy (Greenwich)

  Dunnett, Jack

  Jenkins, Hugh (W'worth, Putney)

  Barnett, Joel (Heywood & Royton)

  Dunwoody, Mrs. Gwyneth

  Jenkins, Rt. Hn. Roy (B'ham, St'fd)

  Bates. Alf

  Eadie, Alex

  John, Brynmor

  Baxter, William

  Edelman, Maurice

  Johnson, James (K'ston upon Hull, W)

  Benn, Rt. Hn. Anthony Wedgwood

  Edge, Geoff

  Jones, Barry (Flint, E.)

  Bennett, Andrew F. (Stockport, N.)

  Edwards, Robert (W'hampton, S.E.)

  Jones, Dan (Burnley)

  Bidwell, Sydney

  Ellis, John (Brigg & Scunthorpe)

  Jones, Alec (Rhondda)

  Bishop, E. S.

  Ellis, Tom (Wrexham)

  Judd, Frank

  Blenkinsop, Arthur

  English, Michael

  Kaufman, Gerald

  Boardman, H.

  Evans, Fred (Caerphilly)

  Kelley, Richard

  Booth, Albert

  Evans, Ioan (Aberdare)

  Kilroy-Silk, Robert

  Boothroyd, Miss Betty

  Evans, John (Newton)

  Lambie, David

  Bottomley, Rt. Hn. Arthur

  Ewing, Harry (St'ling, F'kirk & G'm'th)

  Lamborn, Harry

  Boyden, James (Bishop Auckland)

  Faulds, Andrew

  Lamond, James

  Bradley, Tom

  Fernyhough, Rt. Hn. E.

  Latham, Arthur(City of W' minster P'ton)

  Broughton, Sir Alfred

  Fitch, Alan (Wigan)

  Lawson, George (Motherwell & Wishaw)

  Brown, Bob (Newcastle upon Tyne, W.)

  Flannery, Martin

  Leadbitter, Ted

  Brown, Hugh D. (Glasgow, Provan)

  Fletcher, Ted (Darlington)

  Lee, John

  Brown, Ronald (H'kney, S. & Sh' ditch)

  Foot, Rt. Hn. Michael

  Lestor, Miss Joan (Eton & Slough)

  Buchan, Norman

  Ford, Ben

  Lever, Rt. Hn. Harold

  Buchanan, Richard (G'gow, Spring b'rn)

  Forrester, John

  Lewis, Ron (Carlisle)

  Butler, Mrs. Joyce (H'gey, WoodGreen)

  Fowler, Gerry (The Wrekin)

  Lipton, Marcus

  Callaghan. Rt. Hn. James (Cardiff, S.E.)

  Fraser, John (Lambeth, Norwood)

  Lomas, Kenneth

  Callaghan, Jim (M'dd'ton & Pr'wich)

  Freeson, Reginald

  Loughlin, Charles

  Campbell, Ian

  Galpern, Sir Myer

  Loyden, Eddie

  Cant, R. B.

  Garrett, John (Norwich, S.)

  Lyon, Alexander W. (York)

  Carmichael, Neil

  Garrett, W. E. (Wallsend)

  Lyons, Edward (Bradford, W.)

  Carter-Jones, Lewis

  George, Bruce

  Mabon, Dr. J. Dickson

  Castle, Rt. Hn. Barbara

  Gilbert, Dr. John

  McCartney, Hugh

  Clemitson, Ivor

  Ginsburg, David

  McElhone, Frank

  Cocks, Michael

  Golding, John

  MacFarquhar, Roderick

  Cohen, Stanley

  Gourlay, Harry

  McGuire, Michael

  Coleman, Donald

  Graham, Ted

  Mackenzie, Gregor

  Colquhoun, Mrs. M. N.

  Grant, John (Islington, C.)

  Maclennan, Robert

  Conlan, Bernard

  Griffiths, Eddie (Sheffield, Brightside)

  McMillan, Tom (Glasgow, C.)

  Cook, Robert F. (Edinburgh, C.)

  Hamilton, James (Bothwell)

  McNamara, Kevin

  Craigen, J. M. (G'gow, Maryhill)

  Hamilton, William (Fife, C.)

  Madden, M. O. F.

  Crawshaw, Richard

  Hamling, William

  Magee, Bryan

  Cronin, John

  Hardy, Peter

  Mahon, Simon

  Crosland, Rt. Hn. Anthony

  Harper, Joseph

  Mallalieu, J. P. W.

  Cryer, G. R.

  Harrison, Walter (Wakefield)

  Marks, Kenneth

  Cunningham, G.(Isl'ngt'n, S & F'sb'ry)

  Hart, Rt. Hn. Judith

  Marquand, David

  Dalyell, Tam

  Hattersley, Roy

  Marshall, Dr. Edmund (Goole)

  Davidson, Arthur

  Hatton, Frank

  Mason, Rt. Hn. Roy

  Davies, Bryan (Enfield, N.)

  Healey, Rt. Hn. Denis

  Mayhew, Christopher (G'wh, W'wch, E.)

  Davies, Denzil (Llanelli)

  Heffer, Eric S.

  Meacher, Michael

  Davies, Ifor (Gower)

  Horam, John

  Mellish, Rt. Hn. Robert

  Davis, Clinton (Hackney, C.)

  Howell, Denis (B'ham, Small Heath)

  Mikardo, Ian

  Deakins, Eric

  Huckfield, Leslie

  Millan, Bruce

  Dean, Joseph (Leeds, W.)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Miller, Dr. M. S. (E. Kilbride)

  da Freitas, Rt. Hn. Sir Geoffrey

  Hughes, Mark (Durham)

  Mitchell, R. C. (S'hampton, Itchen)

  Molloy, William

  Roper, John

  Tinn, James

  Moonman, Eric

  Rose, Paul B.

  Tomlinson, John

  Morris, Alfred (Wythenshawe)

  Ross, Rt. Hn. William (Kilmarnock)

  Torney, Tom

  Morris, Rt. Hn. John (Aberavon)

  Rowlands, Edward

  Tuck, Raphael

  Mulley, Rt. Hn. Frederick

  Sandelson, Neville

  Urwin, T. W.

  Murray, Ronald King

  Sedgemore, Bryan

  Varley, Rt. Hn. Eric G.

  Newens. Stanley (Harlow)

  Selby, Harry

  Wainwright, Edwin (Dearne Valley)

  Oakes, Gordon

  Shaw, Arnold (Redbridge, Ilford, S.)

  Walden, Brian (B'm am, Ladywood)

  Ogden, Eric

  Sheldon, Robert (Ashton-under-Lyne)

  Walker, Harold (Doncaster)

  O'Halloran, Michael

  Shore, Rt. Hn. Peter (S'pney & P'plar)

  Walker, Terry (Kingswood)

  O'Malley, Brian

  Short, Rt. Hn. E. (N' clle-u-Tyne)

  Watkins, David

  Orbach, Maurice

  Short, Mrs. Renée (W'hampton, N.E.)

  Watt, Hamish

  Ovenden, John

  Silkin, Rt. Hn. John (L'sham, D'ford)

  Weltzman, David

  Owen, Dr. David

  Silkin, Rt. Hn. S.C.(S'hwark, Dulwich)

  Wellbeloved, James

  Padley, Walter

  Sillars, James

  White, James

  Palmer, Arthur

  Silverman, Julius

  Whitehead, Phillip

  Park, George (Coventry, N.E.)

  Skinner, Dennis

  Whitlock, William

  Parker, John (Dagenham)

  Small, William

  Wigley, Dafydd (Caernervon)

  Parry, Robert

  Smith, John (Lanarkshire, N.)

  Willey, Rt. Hn. Frederick

  Pavitt, Laurie

  Snape, Peter

  Williams, Alan (Swansea, W.)

  Perry, Ernest G

  Spearing, Nigel

  Williams, Alan Lee (Hvrng, Hchurch)

  Phipps, Dr. Colin

  Spriggs, Leslie

  Williams, Rt. Hn. Shirley (H'f'd & St'ge)

  Prentice, Rt. Hn. Reg

  Stallard, A. W.

  Williams, W. T. (Warrington)

  Prescott, John

  Stewart, Donald (Western Isles)

  Wilson, Alexander (Hamilton)

  Price, Christopher (Lewisham, W.)

  Stewart, Rt. Hn. M. (H'sth, Fulh'm)

  Wilson, Gordon (Dundee, E.)

  Price, William (Rugby)

  Stonehouse, Rt. Hn. John

  Wilson, Rt. Hn. Harold (Huyton)

  Radice, Giles

  Stott, Roger

  Wilson, William (Coventry, S.E.)

  Rees, Rt. Hn. Merlyn (Leeds, S.)

  Strang, Gavin

  Wise, Mrs. Audrey

  Richardson, Miss Jo

  Strauss, Rt. Hn. G. R.

  Woodall, Alec

  Roberts, Albert (Normanton)

  Summerskill, Hn. Dr. Shirley

  Woof, Robert

  Roberts, Gwilym (Cannock)

  Swain, Thomas

  Wrigglesworth, Ian

  Robertson, John (Paisley)

  Taverne, Dick

  Young, David (Bolton, E.)

  Roderick, Caerwyn E.

  Thomas, D. E. (Merioneth)

  Rodgers, George (Chorley)

  Thomas, Jeffrey (Abertillery)

  TELLERS FOR THE AYES:

  Rodgers, William (Teesside, St'ckton)

  Thorne, Stan (Preston, S.)

  Mr. Thomas Cox and

  Rooker, J. W.

  Tierney, Sydney

  Mr. Walter Johnson.

  NOES

  Adley, Robert

  Clark, A. K. M. (Plymouth, Sutton)

  Goodhart, Philip

  Aitken, Jonathan

  Clark, William (Croydon, S.)

  Goodhew, Victor

  Alison, Michael (Barkston Ash)

  Clarke, Kenneth (Rushcliffe)

  Goodlad, A.

  Allason, James (Hemel Hempstead)

  Cockcroft, John

  Gorst, John

  Ancram, M.

  Cooke, Robert (Bristol, W.)

  Gow, Ian (Eastbourne)

  Archer, Jeffrey

  Cope, John

  Gower, Sir Raymond (Barry)

  Atkins, Rt. Hn. Humphrey (Spelthorne)

  Cormack, Patrick

  Grant, Anthony (Harrow, C.)

  Awdry, Daniel

  Corrie, John

  Gray, Hamish

  Baker, Kenneth

  Costain, A. P.

  Griffiths, Eldon (Bury St. Edmunds)

  Balniel, Rt. Hn. Lord

  Crouch, David

  Grist, Ian

  Banks, Robert

  Crowder, F. P.

  Grylls, Michael

  Barber, Rt. Hn. Anthony

  Davies, Rt. Hn. John (Knutsford)

  Gurden, Harold

  Beith, A. J.

  d'Avigdor-Goldsmid, Maj-Gen. James

  Hall, Sir John

  Bell, Ronald

  Dean, Paul (Somerset, N.)

  Hall-Davis, A. G. F.

  Bennett, Dr. Reginald (Fareham)

  Deedes, Rt. Hn. W. F.

  Hamilton, Michael (Salisbury)

  Benyon, W.

  Dixon, Piers

  Hampson, Dr. Keith

  Berry, Hon. Anthony

  Dodds-Parker, Sir Douglas

  Hannam, John

  Biffen, John

  Dodsworth, Geoffrey

  Harrison, Col. Sir Harwood (Eye)

  Biggs-Davison, John

  Drayson, Burnaby

  Harvie Anderson, Rt. Hn. Miss

  Blaker, Peter

  du Cann, Rt. Hn. Edward

  Hastings, Stephen

  Boardman, Tom (Leicester, S.)

  Durant, Tony

  Havers, Sir Michael

  Body, Richard

  Dykes, Hugh

  Heyhoe, Barney

  Boscawen, Hon. Robert

  Eden, Rt. Hn. Sir John

  Heath, Rt. Hn. Edward

  Bowden, Andrew (Brighton, Kemptown)

  Edwards, Nicholas (Pembroke)

  Henderson, J.S.B.(Dunbartonshire, E,)

  Boyson, Dr. Rhodes (Brent, N.)

  Elliott, Sir William

  Heseltine, Michael

  Braine, Sir Bernard

  Emery, Peter

  Higgins, Terence

  Bray, Ronald

  Eyre, Reginald

  Hill, James A.

  Brewis, John

  Fairgrieve, Russell

  Holland, Philip

  Brittan, Leon

  Fenner, Mrs. Peggy

  Hordern, Peter

  Brocklebank-Fowler, Christopher

  Fidler, Michael

  Howe, Rt. Hn. Sir Geoffrey(Surrey, E.)

  Brown, Sir Edward (Bath)

  Firtsberg, Geoffrey

  Howell, David (Guildford)

  Bruce-Gardyne, J.

  Fisher, Sir Nigel

  Howell, Ralph (Norfolk, North)

  Bryan, Sir Paul

  Fletcher-Cooke, Charles

  Howells, Geraint (Cardigan)

  Buchanan-Smith, Alick

  Fookes, Miss Janet

  Hunt, John

  Buck, Antony

  Fowler, Norman (Sutton C'field)

  Hurd, Douglas

  Budgen, Nick

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

  Iremonger, T. L.

  Bulmer, Esmond

  Freud, Clement

  Irvine, Bryant Godman (Rye)

  Burden, F. A.

  Fry, Peter

  James, David

  Butler, Adam (Bosworth)

  Galbraith, Hn. T. G. D.

  Jenkin. Rt. Hn. P. (R'dgeW'std & W'fd)

  Carlisle, Mark

  Gardiner, George (Reigate & Banstead)

  Johnson Smith, G. (E. Grinstead)

  Carr, Rt. Hn. Robert

  Gardner, Edward (S. Fylde)

  Jones, Arthur (Daventry)

  Chalker, Mrs. Lynda

  Gibson-Watt, Rt. Hn. David

  Jopling, Michael

  Channon, Paul

  Gilmour, Rt. Hn. Ian (Ch'sh' & Amsh'rn)

  Joseph, Rt. Hn. Sir Keith

  Chataway, Rt. Hn. Christopher

  Gilmour, Sir John (Fife, E.)

  Kaberry, Sir Donald

  Churchill, W. S.

  Glyn, Dr. Alan

  Kellett-Bowman, Mrs. Elaine

  Kershaw, Anthony

  Mudd, David

  Skeet, T. H. H.

  Kimball, Marcus

  Neave, Airey

  Smith, Dudey (W'wick & L'm'ngton)

  King, Evelyn (Dorset S.)

  Neubert, Michael

  Spence, John

  King, Tom (Bridgwater)

  Newton, Tony (Braintree)

  Spicer, Jim (Dorset, W.)

  Kirk, Peter

  Normanton, Tom

  Stainton, Keith

  Kitson, Sir Timothy

  Nott, John

  Stanbrook, Ivor

  Knight, Mrs. Jill

  Onslow, Cranley

  Steel, David

  Knox, David

  Oppenheim, Mrs. Sally

  Steen, Anthony (L'pool, Wavertree)

  Lamont, Norman

  Orr, Capt. L. P. S.

  Stewart, Ian (Hitchin)

  Lane, David

  Osborn, John

  Stodart, Rt. Hn. A. (Edinburgh, W.)

  Langford-Holt, Sir John

  Page, Rt. Hn. Graham (Crosby)

  Stokes, John

  Latham, Michael (Melton)

  Page, John (Harrow, W.)

  Stradling Thomas, John

  Lawrence, Ivan

  Pardoe, John

  Tapsell, Peter

  Lawson, Nigel (Blaby)

  Parkinson, Cecil (Hertfordshire, S.)

  Taylor, Edward M. (Glgow, C'cart)

  Le Marchant, Spencer

  Pattie, Geoffrey

  Taylor, Robert (Croydon, N.W.)

  Lester, Jim (Beeston)

  Percival, Ian

  Tebbit, Norman

  Lewis, Kenneth (Rtland & Stmford)

  Peyton, Rt. Hn. John

  Temple-Morris, Peter

  Lloyd, Ian (Havant & Waterloo)

  Pink, R. Bonner

  Thatcher, Rt. Hn. Margaret

  Loveridge, John

  Price, David (Eastleigh)

  Thomas, Rt. Hn. P. (B'net, H'dn S.)

  Luce, Richard

  Prior, Rt. Hn. James

  Thorpe, Rt. Hn. Jeremy

  McAdden, Sir Stephen

  Pym, Rt. Hn. Francis

  Townsend, C. D.

  MacArthur, Ian

  Quennell, Miss J. M.

  Trotter, Neville

  McCrindle, R. A.

  Raison, Timothy

  Tugendhat, Christopher

  Macfarlane, Neil

  Rathbone, Tim

  Tyler, Paul

  MacGregor, John

  Rawlinson, Rt. Hn. Sir Peter

  van Straubenzee, W. R.

  McLaren, Martin

  Redmond, Robert

  Vaughan, Dr. Gerard

  Macmillan, Rt. Hn. M. (Farnham)

  Rees, Peter (Dover & Deal)

  Viggers, Peter

  McNair-Wilson, Patrick (New Forest)

  Rees-Davies, W. R.

  Waddington, David

  Madel, David

  Renton, Rt. Hn. Sir David (H't' gd' ns' re)

  Wainwright, Richard (Colne Valley)

  Marshall, Michael (Arundel)

  Renton, R. T. (Mid-Sussex)

  Wakeham, John

  Marten, Neil

  Mather, Carol

  Rhys Williams, Sir Brandon

  Walder, David (Clitheroe)

  Maude, Angus

  Ridley, Hn. Nicholas

  Walker, Rt. Hn. Peter (Worcester)

  Maudling, Rt. Hn. Reginald

  Ridsdale, Julian

  Walker-Smith, Rt. Hn. Sir Derek

  Mawby, Ray

  Rippon, Rt. Hn. Geoffrey

  Wall, Patrick

  Maxwell-Hyslop, R. J.

  Roberts, Wyn (Conway)

  Walters, Dennis

  Mayhew, Patrick (Royal T'bridge Wells)

  Ross, Stephen (Isle of Wight)

  Weatherill, Bernard

  Meyer, Sir Anthony

  Rossi, Hugh (Hornsey)

  Wells, John

  Miller, Hal (B'grove & R'ditch)

  Rost, Peter (Derbyshire, S.-E.)

  Whitelaw, Rt. Hn. William

  Miscampbell, Norman

  Royle, Sir Anthony

  Wiggin, Jerry

  Mitchell, David (Basingstoke)

  Sainsbury, Tim

  Winstanley, Dr. Michael

  Moate, Roger

  St. John-Stevas, Norman

  Winterton, Nicholas

  Money, Ernle

  Scott-Hopkins, James

  Wood, Rt. Hn. Richard

  Monro, Hector

  Shaw, Giles (Pudsey)

  Woodhouse, Hn. Christopher

  Moore, J. E. M. (Croydon, C.)

  Shaw, Michael (Scarborough)

  Worsley, Sir Marcus

  Morgan, Geraint

  Shelton, William (L'mb'th, Streath'm)

  Young, Sir George (Ealing, Acton)

  Morgan-Giles, Rear-Adm.

  Shersby, Michael

  Morris, Michael (Northampton, S.)

  Silvester, Fred

  TELLERS FOR THE NOES:

  Morrison, Charles (Devizes)

  Sims, Roger

  Mr. Walter Clegg and

  Morrison, Peter (City of Chester)

  Sinclair, Sir George

  Mr. Paul Hawkins.

  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

  Question accordingly agreed to.
  Resolved,
  That this House notes that the financial provision made under the Social Security Act 1973 was insufficient to support an adequate level of retirement pension; welcomes the prompt improvements in pensions made by the present Administration; endorses the determination of the Government to ensure that employees are relieved from contributing to a scheme which would have provided inade
  172
  quate pension cover, especially for women and older workers; recognises that the pension arrangements under the Act could not have served as a sound foundation for an effective and fair pensions policy directed to relating the living standards of pensioners more closely to their earnings and avoiding reliance on means tested benefits; and calls upon the Government to bring forward as soon as possible proposals for public and Parliamentary discussion which would meet the legitimate aspirations of workers in modern conditions and merit the widest possible support.

  PAKISTAN BILL
  Considered in Committee; reported, without amendment.
  Bill accordingly read the Third time and passed.

  CHURCH OF ENGLAND (GENERAL SYNOD)
  10.32 p.m.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop): I beg to move,
  That the Synodical Government (Amendment) Measure 1974, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
  I move this motion because I was, until a few days ago, the Second Church Estates Commissioner.
  Both this Measure and the Ecclesiastical Jurisdiction (Amendment) Measure 1974 are non-controversial. Both have been scrutinised carefully. During their passage through the General Synod certain changes were made but at no stage was there a Division. The first Measure modifies the 1968 Measure and authorises the Synod to provide for the addition to its membership of nine suffragen bishops, to be elected full members of the House of Bishops of the Church Synod. It simplifies the procedure to be adopted in respect of the relationship of the Church of England to overseas Churches and makes changes with regard to the method of voting in Synod.
  Question put and agreed to.

  CHURCH OF ENGLAND (ECCLESIASTICAL JURISDICTION)
  10.34 p.m.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop): I beg to move,
  That the Ecclesiastical Jurisdiction (Amendment) Measure 1974, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
  This Measure updates the 1963 Measure, to bring it into line with changes Parliament has made recently in other aspects of the law with regard to deprivation of clergy following trial by secular courts. It also provides for discretionary powers.
  Question put and agreed to.

  CHURCH OF ENGLAND (ECCLESIASTICAL JURISDICTION)
    ADJOURNMENT
    Motion made, and Question proposed, That this House do now adourn—[Mr. Golding.]

  ROADS (WASHINGTON NEW TOWN)
  10.35 p.m.
  Mr. Giles Radice: I am raising the question of road closures and alternative routes in Washington New Town not only because they are important to my constituency but because they raise matters of wider interest. Although Village Lane has been closed, the planning decision on which I wish to concentrate concerns Spout Lane which, until it was closed, was the main route joining the north and south of Washington New Town.
  I concede that the road is narrow and, perhaps, unsuitable to be the main north-south link of a growing new town. However, it is important because it connects the health centre, the doctor's surgery and shops in north Washington with the public library, the main post office and churches in south Washington. In addition, it provided a means of speedy access for parents to Washington Comprehensive School and was vital to the social life of the community, in that it provided speedy access to many working men's clubs in the area.

  175
  Washington Development Corporation first gave notice of its intention to close Spout Lane when it published its master plan in 1967. I have no complaint against the way in which the development corporation carried out its obligations to inform the public of what it intended to do. Indeed, in the 1968 and 1973 publications of its review—which goes to every house in Washington—and in several public meetings it went beyond its legal obligations. The county council and the Washington Urban District Council both agreed to the closure and at no stage was there any complaint from the public. I emphasise that, because it will be common ground between the Minister and myself and it is relevant to the case which I wish to develop.
  As there was no protest, the Minister had no choice but to make an order closing Spout Lane, which he did on 4th May 1972. The order was not enforced immediately because of the absence of alternative routes, and only on 22nd November 1973 was it closed. Just before that date, following a public meeting, public protest began to mount. An action group was set up, a petition was organised which immediately gathered about 4,000 signatures and local councillors and the Member of Parliament were called in.
  On 19th November, I wrote to the Minister's predecessor to urge that the closure of Spout Lane be halted until north-south communications were developed. On 18th December, the Minister's predecessor replied that he had no powers to delay the closure. He suggested that I should contact the Development Corporation about the provision of alternative routes. On 4th December 1973 the corporation approached me to assist it in making representations to the Minister about approving funds for an early start to the Northern Expressway. I wrote to the Minister on 5th December about that alternative route.
  On 25th January the Minister replied to my letter of 5th December about alternative routes. He was pessimistic about the chances of the northern part of the Northern Expressway starting in the scheduled year, 1974–75. Meanwhile, after the closure in Washington protests continued at a high level. People began to
  176
  find that they were seriously inconvenienced by the closure, and 10,000 signatures were collected. Buses had to be re-routed and this caused considerable hardship. Car traffic had to travel an extra mile or two. Doctors, churchmen, shopkeepers, old-age pensioners, parents and housewives were up in arms. People wrote letters to the Press, to their councillors and to their Member of Parliament. There were further public meetings which, incidentally, were the best attended public meetings that I have spoken to in my constituency. Nearly 1,000 people attended.
  Significantly, Washington council in the last few months of its existence changed its mind and asked me to arrange a deputation to see the Minister. Spout Lane became an election issue in the 1974 election. Immediately following the election I asked the new Minister to receive a deputation, but he declined because he stated that he had no further jurisdiction in the matter as the road was closed.
  Important issues are raised by the Spout Lane closure. The first matter is that of timing. Whatever the case for closing Spout Lane—and I concede that it was a narrow road and had its traffic dangers—the timing must be wrong. At present there are no adequate alternatives because there is no adequate north-south link. As a result there is a level of hardship and public inconvenience.
  I wish to ask the Minister two specific questions, of which I have already given him notice. First, what would be the cost of converting Spout Lane into a bus-only link? Such a link would avoid the hazards and would prove of great use to residents. The Northern Bus Company favours such a link. Secondly, what is the cost of providing alternative routes and when are we likely to get them? It is important that we have these two figures so that we can make a comparison of cost and of the time which both projects might take.
  I turn to the question of planning procedure. The striking thing about the Spout Lane closure is that people were aroused to protest only just before and after the closure was announced. Therefore, is there not a case for reviewing planning procedure? Is it not possible to have a trial period of closure so that people may see what is involved? People do not always understand maps and

  177
  plans—and that includes me. Should we not take this factor into account where possible? It would have been possible to put bollards across Spout Lane and say, "This is what we shall do", so that people could have understood what the closure would mean.
  I am a great admirer of Washington New Town. I believe that it is one of the most exciting and imaginative projects in Great Britain. But I wonder whether the basis on which the new town was planned—namely, that everybody would have a motor car—will be as relevant in the future as it seemed to be at that time. I hope that the Minister will have a word with the corporation and advise its members to be a little more flexible in their approach. It may be that we in Washington should be building fewer urban motorways and providing faster bus services, perhaps subsidised by the corporation.
  I am not saying that the master plan is wrong, but in the light of recent events such as the increase in oil prices and the drop in car sales—which may not be temporary phenomena—we may need modifications of the plan. I thank the Minister for his attention and await his reply with some eagerness.
  10.45 p.m.
  The Under-Secretary of State for the Environment (Mr. Neil Carmichael): My hon. Friend the Member for Chester-le-Street (Mr. Radice) is quite understandably concerned both about the local effects of those road closures in Washington New Town and about some wider related issues of planning and procedure. In the past few months, I have become aware of his great interest and assiduous concern for his constituents on this topic.
  In responding to the debate, I want, first of all, to put this question of road closures into some sort of perspective.
  What we are concerned with is in fact part of the development of Washington New Town; and that means the whole task of creating in that part of the North-East a new economic growth point with a new standard of urban life. It means a lot of change by way of redevelopment of existing built-up areas, fresh development where there was none before, and reclamation of industrial dereliction.
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  No one, I hope, will deny that changes of this kind in that area must be most desirable, or that the new town development corporation, with the collaboration of the local authorities, is generally making a good job of it. But of course, these changes cannot be brought about without a measure of disturbance. In such cases, we simply have to prefer the greater to the lesser good while ensuring, as far as possible, by good planning and careful execution that any disturbance is kept to the lowest level which can reasonably be achieved.
  In developing Washington to take an eventual inflow of 50,000 to 60,000 new inhabitants, the development corporation and the local authorities will have achieved in many ways a better environment for the 20,000 or so who live there already—better general communications, better shopping, better facilities of every kind. But it will be different from what they were used to.
  One feature of the master plan for Washington New Town, which was endorsed in 1967, is the creation of a new pattern of roads to aid traffic circulation within the town and to speed up its links with outside. This is an important feature both for the convenience of those living in the town and as part of the development corporation's successful drive to attract there the employers needed to provide the jobs which are as important in a new town as the houses the corporation builds.
  The new road pattern is based on a one-mile grid of dual carriageway roads with limited access. New north-south and east-west roads will open up the undeveloped parts of the designated area, join up the various parts of the town, and divert through traffic on to less congested and safer routes. There will then be high standards of pedestrian and vehicle segregation. About half this new road system is now open or under construction.
  It follows from the introduction of these new roads that some of the existing roads in Washington had to be closed to through traffic. Inevitably, such closures can cause local difficulties which have to be weighed against offsetting local benefits as well as the benefits of the scheme as a whole.
  My hon. Friend has mentioned the inconvenience to residents caused by the

  179
  recent closure of two of these roads, Spout Lane and Village Lane. Certainly these were both long-accepted and well-used roads. Spout Lane, in particular, was, until its partial closure in November 1973, part of the main route for the north-south traffic through the original township of Washington—areas now known as Washington, Columbia and Concord. With the growth of the new town, Spout Lane was carrying an increasing load of heavy through traffic, but it was a narrow winding road, in some places not more than 20 feet wide.
  Both Spout Lane and Village Lane have been severed by a major road—the Eastern Highway—which is to link the centre of Washington with Sunderland. So their use by through traffic has been prevented and they are now usable for local access only. Through traffic now takes the recently opened Central Highway and has not been seriously affected. There is still a pedestrian link under the Eastern Highway, but, for vehicles, new local journey patterns must be used for journeys to schools, shops, etc. in one of the older areas of the town.
  These closures did not come about without due publicity and opportunities for objection. My hon. Friend made some interesting suggestions in this connection, to which I may have time to refer. Proposals for the closures were first published in 1967 when the development corporation presented its master plan to the public. No objections were received during the objection period. There was further publicity in the Washington New Town Review which is a quarterly information leaflet published by the development corporation and delivered to householders in the new town. As early as the spring 1968 issue of the review, it was made clear that Spout Lane would be closed in the early 1970s to permit construction of the Eastern Highway.
  Approval for construction of the Eastern Highway was given by the Secretary of State in 1971 under the New Towns Act 1965. The local planning authority, the former Durham County, was, as required by statute, consulted before the approval was given, but put forward no objection to the proposals.
  The actual closures of parts of Spout Lane and Village Lane were made under
  180
  order by the Secretary of State only after the statutory procedures required under the Town and Country Planning Acts of 1962, 1968 and 1971 had been completed. The statutory notices were published in the London Gazette and in local newspapers and were displayed at the proposed points of closure. Once again no objection was received during the 28-day period. Following the making of such orders there is a right to challenge their validity in the High Court, but no such challenges were made. The order closing Spout Lane came into operation on 4th May 1972 and was brought into effect on 22nd November 1973. The Village Lane Order was made on 5th November 1973 and came into effect on 13th December 1973. In both cases the operative date was made as late as it seemed reasonably possible to make it, given the construction programme for the Eastern Highway.
  The corporation had arranged that when Spout Lane was severed, the buses serving the area would be re-routed via the new town centre. The town centre already provides a very good range of shopping and commercial facilities. The corporation also gave advance warning of the proposed closures in its 1973 summer and autumn issues of the Washington New Town review.
  My hon. Friend suggested that there might be trial periods for road closures so that people would have practical experience of what is involved before they made up their minds. I am grateful for the notice that he gave me of that point. I accept that this is an attractive concept and, indeed, one that might be worth trying in cases where the effect of alternative courses of action can be treated experimentally without undue expense. But in the present case it would not really have been practicable, if only because the experiment would have had to be conducted at a stage when, although the disadvantages of the closures would have been real and apparent, the compensatory advantages of the new developments would still have had to be left to the imagination; and when, moreover, the affected population, at the time of the experiment, would not necessarily have been substantially the same as at the time of the final bringing into effect.
  In all these circumstances, the corporation and the Secretary of State between

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  them did as much as, and, indeed, a great deal more than, the law required to make it possible for the views of the public to be made known and taken into account.
  There was, nevertheless, and perhaps inevitably, a surge of local feeling when the closures actually took place and the need for new journey patterns became an immediate problem. The corporation paid close attention to this and it is doing something about it.
  First, a new bus service has been introduced, helped by a contribution from the development corporation, to improve the links between the severed areas: secondly, a new link road has been provided at a cost to the corporation of £35,000, and another, at a cost of £163,000, will be built as soon as financial circumstances permit. These two sections of road will in fact be on the line of the proposed Northern Expressway in which they would in due course be incorporated.
  I understand from the corporation that local opposition to the closures has now subsided and, indeed, that people living in the affected areas are now beginning to appreciate the improved conditions resulting from the exclusion of through traffic. I hope that my information on this point is reasonably correct. In short, the statutory procedures for these road closures were properly completed and, in spite of all the opportunities offered, at no stage were any objections made. The improved traffic management resulting from the closures is in line with the proposals in the new town master plan, accepted by a previous Government after full consultation with the public and local authorities. The loss of through traffic has compensatory local advantages and the local disadvantages are being mitigated by improved bus services and link roads. The cost of reopening Spout Lane for buses only is in the region of £500,000 and it would require demolition of 26 houses. Moreover, the saving in bus journey times would not be significant.
  Bearing all these factors in mind, my right hon. Friend does not consider that there is a sufficient case for reopening Spout Lane or Village Lane. My hon. Friend referred to the delay in construction of the Northern Expressway, a project which might further ease the diversion problems caused by the closure of Spout
  182
  Lane. Work on this route was to have started in the current financial year but unfortunately with the cut-back in public expenditure, this has not been possible; and I cannot yet say when this £4 million scheme might now be started.
  I was grateful to my hon. Friend for commending Washington Development Corporation in its efforts to make the effects of development proposals more understandable by the people affected. I share his view that the development corporation has set a fine example in this field, as indeed have many other of our new towns.
  My hon. Friend has suggested, nevertheless, that the corporation, foreseeing the difficulties arising from the closure of Spout Lane, might have delayed that closure until fully acceptable alternatives had been found. The answer must be that we all have something to learn from experience.
  I would, incidentally, take the opportunity to remind my hon. Friend that the corporation is planning a further severance of Spout Lane because of the construction of a bypass at Concord. The statutory order—to which once again no objections were received—was made on 30th November 1973. I can, however, tell my hon. Friend that, in the view of the development corporation, reasonable alternative routes will have been provided in this case.
  My hon. Friend also raised a more general question about the extent to which Washington New Town provides for the use of private motor transport. It is easy to be wise after the event and I will not say that, if we were to start afresh today, everything would look exactly the same: but certainly a new town must offer good transport facilities if it is to attract its industry and its population, and master plans cannot be altered every week. Washington can only stand to benefit from its improved links with Sunderland and Newcastle and with the national motorway system: and diversion of traffic on to these major roads has greatly improved the living conditions in the new town's residential areas.
  My hon. Friend further suggested that more effective participation in road planning was needed. A new procedure for public participation in the choice of trunk

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  road routes was introduced in July 1973. This involves giving to the public details of possible alternative proposals, so that local reaction can be assessed. This procedure has been commended to local authorities for their own schemes but it is not mandatory. It is being kept under review as experience is gained, so that modifications and improvements may be introduced.
  184
  I hope that with those words and with the suggestion that new techniques are continually being developed my hon. Friend will feel satisfied, or at least glad that he raised this matter tonight. I hope that some of the answers that I have given will be satisfactory.
  Question put and agreed to.
  Adjourned accordingly at two minutes to Eleven o'clock.

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

NATIONAL HEALTH MATERNITY SERVICES
BARONESS PHILLIPS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware of the growing concern of the Royal College of Midwives that the hitherto efficient service given to mothers and babies is in danger of deterioration.
BARONESS BIRK: My Lords, my right honourable friend the Secretary of State for Social Services has received no representations to this effect from the Royal College of Midwives. The reorganisation of the National Health Service should help by bringing together the different elements of the maternity services, hitherto administered by three separate bodies, under a single authority. But if the Royal College will bring to the notice of the noble Baroness, Lady Phillips, examples of cases in which deterioration is
2
thought likely as a consequence of reorganisation or because resources are said to be lacking, my right honourable friend will be glad to investigate.
BARONESS PHILLIPS: My Lords, while thanking the noble Baroness, Lady Birk, for her reply, may I ask her whether she is aware that the Royal College of Midwives have throughout adopted a very dignified posture, that they have deliberately refrained from withdrawing labour, as has been suggested in other branches of the profession, but they are concerned about the fact that their members are leaving the profession because of conditions? I feel that events have overtaken us. Perhaps the noble Baroness's right honourable friend is now looking into this matter?
BARONESS BIRK: My Lords, I thank my noble friend for her remarks on this matter. Midwives are included in the Inquiry which the Secretary of State has set up under Lord Halsbury. I am aware that midwives have not taken industrial action, but they are included with the nurses as part of the subject of the independent Inquiry. I do not think there is anything further I can add at this moment, except to say that the number by which they have diminished. which my noble friend referred to, is quite small, and is mainly due to the fact that more and more mothers are having their babies in hospital.
BARONESS MASHAM OF ILTON: My Lords, when the results of the latest dispute die down, may I ask the Minister

3
whether Her Majesty's Government intend to mount an intensified campaign to recruit more midwives and nurses, who are so desperately needed? Does the noble Baroness know that some midwives are doing two jobs, and being paid for only one?
BARONESS BIRK: My Lords, in reply to the second part of the question of the noble Baroness, Lady Masham of Ilton, if the noble Baroness has any details of such cases, perhaps she would make sure that I or my noble friend Lord Wells Pestell receives them, and they will be forwarded to the Secretary of State. Turning to the first part of the question, it is part of the objective underlying the restructuring of the Health Service to try to recruit more nurses; and in using the word "nurses" in the wider sense I am including midwives. However, I must also point out that one reason why we are in the present situation is due to the cuts in public expenditure introduced at the end of last year by the previous Government.

CONCORDE: INTERNATIONAL SERVICE
2.37 p.m.
THE EARL OF KINNOULL: 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 serious consideration is being given to the concept of setting up an international Concorde service.
THE MINISTER OF STATE, DEPARTMENT OF INDUSTRY (LORD BESW1CK): My Lords, up to the present time orders for Concorde have been placed by British Airways and Air France. Their intention is to bring a Concorde service into operation at the earliest possible date. No other airline has yet placed orders for Concorde, but obviously we welcome any interest shown by foreign airlines in acquiring Concorde and would consider carefully any proposals whereby they might be associated in some way with Concorde operations.
THE EARL OF KINNOULL: My Lords, while thanking the noble Lord,
4
Lord Beswick, for that reply, may I ask whether he can say what stage Concorde has reached now in type certification? Can he further say how soon the Government expect Concorde to come into service?
LORD BESWICK: My Lords, the anticipated date was April, 1976, but it is just possible that that date may be brought forward. With regard to type certification, the tests seem to be going very well. It is of some interest that the Civil Aviation Authority, who are responsible for the type certification, have said that as a result of their tests,
"Concorde is unequivocally the nicest flying aeroplane that we have ever seen in normal operation",
which seems to be quite a considerable tribute.
LORD HARVEY OF PRESTBURY: My Lords, is the noble Lord aware that since he referred to this matter last week, a Concorde flown by a French crew, starting in Paris, has flown the Shah of Iran back to Teheran? When are the British Government to get involved in this major and important contract? Week after week goes by and we seem to be losing out on it.
LORD BESWICK: My Lords, the noble Lord has made this point before. Surely, it is most natural that, if the Shah of Iran visits Paris and flies back from Paris, the crew should be French. That seems to be quite reasonable. As a matter of fact, the operation to Boston and back the other day was undertaken by a British crew. An order by Iran for Concorde, when signed, will be a British operation.
LORD SLATER: My Lords, is my noble friend aware that, in view of the number of statements that have been made with regard to Concorde, it will probably be obsolete so far as Her Majesty's Government are concerned? His reply seems to indicate to the House that such is not correct, and that the attitude of Her Majesty' Government is to proceed, alongside our French counterparts, with this major project. Is that correct?
LORD BESWICK: My Lords, everyone makes their own estimate or guess. I am only dealing with facts.
THE EARL OF KINNOULL: My Lords, can the noble Lord advise the House on the timing of our discussions with our French partners?
LORD BESWICK: My Lords, no date has yet been fixed. I should think that it will be in a matter of the next two or three weeks, possibly the middle of July.
LORD BROCKWAY: My Lords, can the Minister say for how long the negotiations with Iran are likely to go on?
LORD BESWICK: My Lords, they have been going on for a long time now, and, of course, there are many details to be settled. It is just possible that there may be some conclusion by the autumn.
LORD GORE-BOOTH: My Lords, without asking the Minister anything which would be difficult for him to answer, or getting into the controversy about whether the French or the British are doing this or that, may I ask him whether he would agree that if we can go ahead soon this will be a most welcome confirmation of longer-term Anglo-French co-operation in industrial matters, which was so difficult to arrange in de Gaulle's time?
LORD BESWICK: My Lords, I quite agree with the noble Lord that it would be an absolutely wonderful example of constructive co-operation between two allies.

E.C.G.D. OPERATIONS
2.42 p.m.
LORD DRUMALBYN: 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 to what extent there has been a departure from the convention and practice in accordance with which Ministers do not intervene in the exercise by the Export Credits Guarantee Corporation (in consultation with the Advisory Council and subject to Treasury consent) of their commercial judgment in giving guarantees; and whether they will state the countries and classes of goods and services affected by such intervention.
LORD BESWICK: My Lords, there has been no change either in convention or practice regarding the availability of facilities from the Export Credits Guarantee Department since the present Administration took office. Any uncertainty arose from unfounded Press reports.
LORD DRUMALBYN: My Lords, while very much welcoming that Answer, may I ask the noble Lord whether there has been any cancellation of exports, or would-be exports, to any country as a result of the refusal of a guarantee from the Export Credits Guarantee Department which was induced by the Government?
LORD BESWICK: Not to my knowledge, my Lords. But I hesitate to give an absolutely categorical assurance, because I am not certain what question the noble Lord has asked. There may have been some cancellation, but not because there has been any change so far as the relationship between the Government and the E.C.G.D. is concerned.
LORD DRUMALBYN: My Lords, if I may put the question a little more bluntly, have the Government brought pressure to bear at any time on the Export Credits Guarantee Department not to give guarantees in respect of certain classes of goods or to certain countries?
LORD BESWICK: The answer to that is, "No" my Lords.

LONDON WEIGHTING: PAY BOARD REPORT
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Beswick will be making a Statement on the Report of the Pay Board on London Weighting.
EASTBOURNE HARBOUR BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
UNIVERSITY OF BRISTOL BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

INSURANCE COMPANIES BILL [H.L.]
2.47 p.m.
THE LORD CHANCELLOR (LORD ELWYN-JONES): My Lords, I understand that no Amendment has been set down to this Bill and that no noble Lord wishes to move a manuscript Amendment or to speak to a clause or Schedule. I therefore beg to move that the Order of Recommitment be discharged. At this point I should inform your Lordships that this is purely a Consolidation Bill. The Joint Committee on Consolidation Bills are of the opinion that the Bill, as amended, represents the existing law and there is no point to which the attention of Parliament should be drawn. I beg to move that the Order of Recommitment be discharged.
Moved, That the Order of Recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

PRICES BILL
2.49 p.m.
THE MINISTER OF STATE, HOME OFFICE (LORD HARRIS OF GREENWICH):My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Harris of Greenwich.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 1 [Food subsidies]:
LORD ABERDARE LORD ABERDARE moved Amendment No. 1:
Page 1, line 11, leave out from ("sale") to ("and") in line 12.
The noble Lord said: The noble Lord, Lord Harris of Greenwich, will be relieved to know that I have no intention of pressing this Amendment. It is purely an exploratory Amendment concerned with the scheme for subsidising household flour. The schemes for subsidising the other foods—milk, butter, cheese and bread—have already been announced; we know how they will work and what
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they will cost. But if the noble Lord is in a position to give us further information about the scheme for flour we should be most grateful. I beg to move.
2.50 p.m.
LORD HARRIS OF GREENWICH: I think I should explain why the Government have felt it necessary to subsidise household flour, before coming to the specific points about which the noble Lord asked. When the Bill was first published, Clause 1(2) referred only to subsidies on milk, butter and flour for the production of bread, but as the subsidy programme was developed it was decided to add cheese and, more recently, household flour. The Government's objective has been to select basic foodstuffs that feature regularly in the shopping of most households, and, in particular, to take action where prices have been subject to sharp increases. Household flour meets these criteria. Although it obviously does not account for such a large proportion of consumer expenditure as milk or bread, it is none the less an important item for the average housewife. Total household consumption has been estimated at about 400,000 tons a year, with a value at the retail level of around £40 million.
Against this background the Government were particularly concerned about the rising price of household flour. All cereals-based products have been subject to large price increases, and flour is no exception to this. Between December last year and May, the index of the Department of Employment showed that the average price of a 3 lb. packet of self-raising flour rose from 14·9p to 20·2p. This is an increase of over 5p, or about 35 per cent., in only five months. Because of this serious situation the Government are anxious to act as quickly as possible. Indeed, this is the basic reason why powers have been taken in the Bill, so that action can be taken without going through the formality of an order under Clause 1(2)(b) of the Bill.
I know that this problem has been causing concern to a number of people outside this House, as well as inside it. There are a number of important details to be worked out in consultation with the trade. Perhaps even more important, it is still uncertain whether there will be further price increases in the near future. It is true that cereals prices have fallen back from the exceptionally high levels

9
obtaining at the beginning of this year, but prices are still considerably higher than normal. To ensure continuity of supply, it is the normal practice for the trade to contract for supplies some way ahead. It will therefore take some time before deductions in world market prices work their way through to the consumer. At the same time, other overheads and basic costs—for example, labour, fuel, and packaging—are rising and will tend to offset the present scale of reduction in world prices.
It will take a little more time, I fear, to clarify these problems, but as soon as they are clarified we will announce the full details of the scheme, including its coverage and indeed the rate of subsidy. I recognise that it would have helped your Lordships in the consideration of this aspect of the Bill if the details of the scheme could have been made available to-day, but unhappily, for the reasons that I have mentioned, I am afraid that this is not possible. I can give some figures for the purpose of illustration, and I think that these will meet the specific point that the noble Lord raised. A subsidy of 3p on the usual 3 lb. packet would involve annual expenditure of the order of £10 million. There would be some marginal additional administrative costs, but I do not think that they would be unduly large.
There is one other point to which I might refer in support of the general subsidy on household flour; that is, the very large number of representations that the Government have received asking for just such a subsidy. There are the housewives who prefer to make their own bread, and who were thus unable to obtain the benefit of a general bread subsidy. The Government will seek to meet the wishes of these consumers by including in the subsidy scheme all the main types of flour used for home baking, including whole-meal flour which has been specifically mentioned in quite a substantial number of the letters received.
I was reassured to hear what the noble Lord said about not pushing this Amendment to a Division, because it is now unnecessary for me to quote the gracious words of the noble Baroness, Lady Young, when my noble friend Lord Jacques made a Statement on the bread subsidy, on May 9 at column 651 of the OFFICIAL REPORT. However, if I may
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quote the words of the noble Baroness, speaking from the Front Bench opposite, she said:
"Finally, if the bread subsidy is to continue, will the noble Lord consider subsidising flour directly so that it might be of benefit to those provident housewives who bake their own bread?"
I am glad to reassure both the noble Baroness and the noble Lord, Lord Aberdare, that the Government have met this point totally within the provisions of the Bill. In view of the various factors that I have mentioned this afternoon, I would commend this proposition to the Committee.
2.56 p.m.
LORD HALE: May I intervene to make two brief observations about this matter expressing something near to a minor dissent? Flour is not a working-class commodity. The old-age pensioners of Oldham do not use flour because they have not got the cooking facilities to use it; indeed, cooking is exceedingly expensive. Flour is a middle-class commodity. But I think that the middle-class have probably been hit harder, relatively speaking, these days than any other class, and I am perfectly prepared to let them have this modest subsidy without objection.
I hope that the noble Lord will go on to say that the Government are going to reverse the practice of the last Government in relation to international wheat dealings and commodity markets. This matter will be considered by the United Nations at two separate conferences being held this year. The British Government voted against any organisation through the United Nations to try to keep a tab on gambling in raw materials and commodities, and everybody now knows—indeed we are indebted to, I think, the noble Earl, Lord Kinnoull, for opening the debate which developed the point—that the reason why flour is more costly in England depends a very great deal on the fact that the Russians managed to buy from the Americans more wheat than the Americans had got at a low price, which greatly added to the prices of American food generally.
I am quite sure that this is out of order, and would have been ruled out of order in another place; but, in a rare example, I am trespassing on the courtesies of the House to mention this matter

11
and to express the hope that the Government are dealing with the question very seriously, because it is important.
LORD HARRIS OF GREENWICH: I shall be glad to take note of the point that my noble friend has raised.
LORD ABERDARE: I am grateful for the information that the noble Lord, Lord Harris of Greenwich, has given to the Committee. I do not think that it is really very satisfactory that we should have in the Bill a provision for the subsidy of an item without knowing the details of the scheme that is concerned. As I said, on the other items we know what is involved, and if it is desired to add a further item then that has to be done, as I understand it, by an Order which is subject to the affirmative approval of both Houses. Therefore, to that extent the provisions for flour fall into a sort of intermediate case where they are in the Bill, but we do not know any details about them.
I appreciate the difficulty of the noble Lord. I would only ask that if the details of the scheme become known during the course of this Bill going through this House that he would be kind enough to let us know. I beg leave to withdraw the Amendment.
LORD BARNBY: We are all indebted to the noble Lord, Lord Harris, for his explanation. I should like to support a portion of the remarks just made by the noble Lord, Lord Hale. It seems that this is an instance where support is being given to families that are outside the less affluent sections of the community, because of the fact that a very small proportion of the less affluent households have the facilities for using the flour. Therefore, it would seem that in this instance the majority of the support under this category will go to families that are least in need of that subsidy.
Perhaps the noble Lord, in replying to my noble friend Lord Aberdare, would give some indication as to how this is to be administered. Is there any way in which the discrimination which should be in the Bill to give the least support to the most affluent people can be carried out? Again, is there to be any differentiation in regard to the proportion of support which will be given under this Part of the Bill, about which the noble Lord,
12
Lord Harris of Greenwich, replied to my noble friend Lord Aberdare? Then, has there been any thought as to differentiating the support which is to be given to different classes of flour? Without going into technical terminology, it is generally understood that certain classes of flour are less deleterious to the consumer than others. It would seem that there is an admirable opportunity here, not only to save money, but to contribute something to the educational requirements of guiding people as to how nutrition should best be given.
LORD LEATHERLAND: I do not intend to let my noble friend Lord Hale and the noble Lord, Lord Barnby, get away with this myth that flour is not used in working-class households but is the prerogative of the middle classes. Have they never heard of Yorkshire pudding with the Sunday joint? My noble friend Lord Hale probably has not; he sat for a Lancashire constituency for many years. But the noble Lord, Lord Barnby, is a Yorkshireman, I believe, and he should be fully conversant with this great delicacy, which is the apple of the eye of working-class families on Sundays.
Working-class families, too, like steak and kidney pie, which also calls for flour; they like jam tarts, too. The rolling pin is one of the essential domestic items in the ordinary working-class household. I have never heard so much rot in all my life. I am glad that my noble friend is subsidising flour. It is one of the most sensible subsidies to have been put into operation under this Bill.
LORD HALE: May I thank my noble friend for his courteous reference to my observations, which is not untypical of some of the observations he has been making recently in relation to other of my honourable friends. But the plain answer is that I referred to the old-age pensioners of Oldham. I do not think I said anything about working classes: if I did, I apologise. It is a phrase I do not like to use. It is an objectionable form of terminology and classification from any point of view. Indeed, I call myself "lower middle-class" and I do not think that gives any distinction. In the old days, when they did serve Yorkshire pudding over the Yorkshire Border, they made them mainly with

13
eggs. In those days people in full employment were able to buy an occasional egg, but not many. On the other hand, as I have made a comprehensive study into the feeding habits of old-age pensioners and their feeding potentiality, I can say that if anyone tries to work it out on the many figures available they will find that the largest single item involved is potatoes.
In towns like Oldham—about which I do know because I have been there thirty years and visited every house in the town—for many years 80 per cent. of the houses scheduled for destruction did not contain a modern gas or electric cooking stove. With the price of electricity and gas to-day, I should be most happy if the noble Lord would contribute to the old-age pensioners' monthly journal a little advice on how to cook, and at what expense, in allocating at least half their income to the desperate expense these days of trying to keep a roof over their heads. Therefore, I have nothing to withdraw or apologise for in the observations that I made, which were based on a long and extensive experience of the living of the less well-off classes of the community in over-populated urban areas.
LORD LEATHERLAND: My noble friend has invited me to teach people how to cook. Fortunately, that is one of the things I can do. Long ago when I was in the Army I was sent away on a cooking course because it was felt that a company quarter-master sergeant, as I then was, should know how to make the best use of the rations. I can tell my noble friend how to cook a Yorkshire pudding, and he does not need a gas or electric stove to do it. I have seen them cooked in ordinary coal ovens in many humble cottages.
LORD BARNBY: Being a Yorkshire-man I cannot let pass the opportunity of commenting on the noble Lord's remarks. Certainly a Yorkshire pudding is something which we all enjoy and are proud of. But again it is contestable as to what proportion of households in the different affluent categories of the community would have Yorkshire pudding. In any case it is a small proportion that would have the proper kind of Yorkshire pudding. But the noble Lord did not make any comment in which I would
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have been interested on the relative merit of a subvention on flour as against bread. It would seem that there is a differentiation and a justification for it, and that the proportion of bread consumed in relation to flour consumed in the different categories of the community varies a good deal.
BARONESS SUMMERSKILL: May I remark with what great pleasure I hear two male Members of the House argue the merits of how to cook a Yorkshire pudding?
LORD HARRIS OF GREENWICH: I think the safest thing to do in this rather perilous controversy between my noble friends Lord Hale and Lord Leatherland is to steer a discreet path between them. I can confirm that so far as I am aware the Government have not a clearly defined policy on Yorkshire pudding, except to confirm, I think, that the flour element of it will receive a subsidy once the Bill goes on to the Statute Book. On the point raised by the noble Lord, Lord Barnby, and as his noble friend Lady Young indicated earlier, in this question which I quoted it is only fair to subsidise flour so that those people who do bake bread themselves, quite apart from the other people who will gain some degree of advantage from the provision, should have a subsidy for household flour. That is why the Government have made this proposal.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Power of Secretary of State to regulate price of food and certain other goods]:
3.9 p.m.
LORD ELTON LORD ELTON moved Amendment No. 2:
Page 4, line 32, at end insert
("(d) an order under paragraph (a) of that subsection shall not have the effect of requiring persons to sell at a loss.").
The noble Lord said: This is a straightforward and simple Amendment, but it seems to me that it is not so regarded on the other side of the Committee, and that noble Lords opposite need to be reassurred that my sleeves are empty of cards on this occasion. The aim of the Amendment is perfectly straightforward.

15
The proposition that the Minister might, as a matter of course, require retailers to retail goods for less than they had been forced to pay for them for any length of time is an unlikely one. I shall refer later to the dangers of that proposition when we discuss the condition of the small shopkeeper, which is very parlous indeed at the moment. No concern, however large, profitable and well-run could be expected voluntarily to sell goods at a loss, and if they were so required the line of goods in question would very soon cease to be stocked. As the goods to which this Bill applies are those which the Minister regards as either the staple diet or the basic household necessities of the people of this country, one cannot expect her to pursue a course of action which would result in driving the commodities in question off the shelves of the shops, of whatever sort they may be.
It occurred to me, while searching for the grounds upon which Her Majesty's Government might resist this Amendment—and I must say that from their reaction it seems to me that they may have been more thorough in their research than I have—that they might be finding it difficult to define the term "at a loss". This is something which I shall be happy to help them with at a later stage if they feel it necessary, and I hope that we shall be able to arrive at a definition which will be satisfactory on both sides of the counter, as well as on both sides of your Lordships' Committee. But, in the meantime, I will rest simply upon saying that an insistence upon retaining powers which will enable her to make it impossible for the less well-off to buy a loaf of bread makes the Minister look more like Marie Antoinette than the benefactor of the people that she and all of us wish her to be. I shall therefore be interested to hear what it is that Her Majesty's Government are about to say on this question. I beg to move.
LORD JACQUES: At an earlier stage of this Bill, the noble Lord's colleagues in another place indicated their concern that an order put forward by the Secretary of State should not require anyone to sell their goods at a loss. I can assure the noble Lord that the Government have the fullest sympathy with the objectives of the Amendment. We fully accept the principle that the price-regulation powers
16
under this clause must be exercised with discretion and must avoid an unjustifiable impact on profits. It is certainly not the intention to use the power to drive firms into loss-making situations, or to create bankruptcies, or to erode profits unduly. I would particularly direct the attention of the Committee to subsection (5), which puts a time limit on the order-making powers. As the Bill stands at the moment, orders made under this clause cease to have effect on March 31, 1975. That is only nine months from now. It can be extended for a further twelve months to March 31, 1976, but that is the absolute limit. So we are talking about something which can have a duration of only one year and nine months.
Those dates have been selected deliberately, because they are the dates used by the past Administration in connection with the Counter-Inflation Act and the Price Code. They have been chosen deliberately so that the trader will have all the protections under the Price Code while the orders under this clause apply; that is to say, protections not only against losses but also against low profits. Of course, the Price Code operates case by case in relation to the circumstances of each individual firm. Since price-regulation orders will necessarily operate across the board, it would not be practicable to reproduce the Code's safeguards in equivalent form in the orders. It is necessary to set about it in a rather different way, by applying the same general principles to the content of the particular order.
As my colleagues in another place have already made clear, the Government propose to set prices which are reasonable for the generality of the trade affected. We shall fix prices in the light of the best possible information about the general circumstances of particular sections of the trade. The clause ensures that consultation with interested parties must take place before any order is made. Moreover, it gives sufficient flexibility to allow orders to take account of the different circumstances of shops of different size and different types. But the Government have gone further than this. In response to the representations which the noble Lord's colleagues made in another place, we introduced a new subsection, which is now subsection (7). This specifically requires the Secretary of State to look at

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the circumstances of the trade in the goods concerned, and at the effect of any order on the profitability of those trades before it is made.
This will ensure that in making orders under this clause the Secretary of State will consider whether regulation of a price would give rise to a general risk of loss-making, or of unacceptably low profits. We have also had the voluntary agreement, and the Secretary of State has given an undertaking that so long as the agreement is working satisfactorily she will not use any powers under this clause except in the case of subsidised foods. I hope the noble Lord will accept that, for the reasons which I have explained, the additional provision in subsection (7) goes as far as we believe can reasonably be gone to meet the points he has made. In the light of the explanations I have given, I trust he will feel able to withdraw his Amendment.
LORD ELTON: If I may recapitulate, orders of this sort will be laid regarding subsidised foods only after lengthy consultation with interested parties, during which profitability will be considered as a respectable ingredient of trading, and a reasonable amount of profitability will be allowed to the traders. The noble Lord went further and said that different sorts of traders might be treated in different ways, which gives me grounds to hope that the small trader, whose position is very shaky at the moment, will be carefully considered on his own. If the noble Lord would confirm this and would allow me time to consider in greater detail what he has said, for which I am grateful, I should be able to withdraw this Amendment. But perhaps he would tell me whether I have understood correctly.
LORD JACQUES: We are fully aware that in the food trades there is, at one end, the small convenient shop—the shop where the customer can usually go to replenish supplies without any inconvenience of travelling—and, at the other end, the large supermarket which depends upon scale in order to reduce prices and attract trade. The supermarket needs a large catchment area, so that most of its customers have to travel; they travel to get low prices. We have that very much in mind, and consequently we have
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Clause 5, which provides for a range of prices.
LORD ELTON: In the light of what the noble Lord has said, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.18 p.m.
On Question, Whether Clause 2 shall stand part of the Bill?
LORD ABERDARE: May I make one point on Clause 2? I regret that I have not been able to give notice of it to the noble Lord because it has been drawn to my attention only very recently, but if he would be kind enough to consider it and perhaps let me know in due course, I would be very grateful. It arises under subsection (4)(a), which says:
"an order under paragraph (a) of that subsection may make provision whereby the price to be charged by a person is not to exceed his buying price as determined in accordance with the order by more than a margin so determined".
I am told that this could give rise to difficulty for the vertically integrated wholesaler/retailer, either a company which is both wholesaler and retailer or an individual. In that case, they are buying as wholesalers and selling as retailers, but there is no intermediate sale within the one company when it is transferring the goods from the wholesale part of its business to the retail part, as there would be in the case of separate companies or separate individuals. If one were to regulate their margin under this subsection by reference to the price at which they buy as wholesalers, then clearly that would be most unfair on them.
A similar difficulty would arise in the case of separate wholesale and retail companies within a single group but under one single management. I want only to ensure that this situation will be taken into account when an order is made under this subsection, so that it will not be unfair on those who are both wholesalers and retailers. If the noble Lord cannot give me that assurance now, perhaps he would write to me in due course and give it to me.
LORD JACQUES: The point as I understand it, is that some retailers are retailers only and buy in relatively small quantities from wholesalers. But other

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retailers are their own wholesalers. They buy in bulk and from their warehouse they supply several of their branches. They are able, because they are buying in bulk, to buy at lower prices. But they also have higher expenses because, having received the goods in bulk, they have to break down the bulk and distribute the goods to their branches. That I understand to be the position. It is an excellent point and I undertake unreservedly to draw it to the attention of my right honourable friend.
LORD ROYLE: I wonder whether my noble friend can help me as regards the new form of trading—"cash and carry"—which has arisen during recent years. Are such traders wholesalers, are they retailers, are they both, or are they neither? How are they affected by this subsection?
LORD JACQUES: From my observations, I would say that they are both. I have observed that they have in the store or warehouse—sometimes it is a warehouse rather than a store—at the same time, both the retail customer and the shopkeeper, so they are doing both retail and wholesale trade. How are they affected by this subsection? I should have thought that in selling at their prices for large quantities of "cash and carry" they are unlikely to be seriously affected.
LORD ABERDARE: I am very grateful for the assurance which the noble Lord has given me.
Clause 2 agreed to.
Clause 3 [Additional powers of Price Commission to prevent or restrict price increases]:
3.22 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 3:
Page 6 line 4 after ("implemented") insert ("so long as such implementation had not occurred earlier than three months prior to the Secretary of State's direction.")
The noble Lord said: Clause 3 gives power to the Price Commission in certain wholly exceptional circumstances to prevent or restrict a price rise even though that rise is consistent with the general rules of the Price Code. At Second Reading, if I recollect correctly—because there is no Hansard available—the Government
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said that just as the Minister may after consultation with the Commission allow a price rise in exceptional circumstances, even though it is inconsistent with the Price Code, so equally there should be a provision for disallowing a price rise in exceptional circumstances. I can see that there is some logic in that proposition. But what alarms me is the element, if not of retrospection then at least of retroaction in subsection (4) of this clause. It is perfectly satisfactory to start with when it says:
"This section does not apply to any increase implemented before the passing of this Act";
but it goes on to say:
"but, subject to that, applies both to a proposed increase and to an increase that has already been implemented;"
So far as I am concerned, that is where the worry comes in. There is there no limit of time. The direction can be backdated to any time after the passing of the Act.
What the Amendment seeks to do is to limit the time of backdating to three months. It would limit the power of the Secretary of State to give a direction under this clause to price increases that had been implemented not more than three months before. Certainly that would seem to me to be a perfectly reasonable proposition. The procedures that have to be gone through under the section should certainly, I should have thought, be capable of completion well within three months. The Price Commission first has to satisfy the Secretary of State that there are exceptional circumstances justifying intervention and then, if the Secretary of State agrees, she has to consult with the firm concerned and perhaps with other interested persons, and then she may give a direction by Statutory Instrument. It would seem to me that three months is ample time after a price rise for the Price Commission to satisfy the Secretary of State and for the Secretary of State to complete her consultations. We all dislike anything to do with retrospection or retroaction. I know it is necessary here, but all I would suggest is that it would be reasonable at least to put a time limit on it, and in this Amendment I suggest three months. I beg to move.
VISCOUNT SIMON: I should like warmly to support what the noble Lord, Lord Aberdare, has said in proposing this

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Amendment. This matter was referred to several times while the Bill was going through another place and it was referred to also on Second Reading here. It seems to me, as it does to the noble Lord, that three months is a reasonable time within which action could be taken if there are exceptional circumstances that require it to be taken, but that it is quite unfair for there to be a possibility, as there is under the Bill as at present drafted, for an almost indefinite time to pass and then for action to be taken requiring, as I understand it, a "pay back" of prices charged a long time ago.
BARONESS BIRK: This Amendment raises a point which was very thoroughly debated in another place, where the Government made it absolutely clear that firms need not expect to find themselves vulnerable to the new procedure for an indefinite period after every price increase. But here we are concerned with a procedure which can be initiated by the Price Commission bringing a particular case to the attention of the Secretary of State. If the Secretary of State is satisfied by the Price Commission that there are exceptional circumstances justifying intervention, then after consultation the Secretary of State is empowered to give a direction.
I am giving this background, although as I understand it the principle was accepted by the noble Lord, Lord Aberdare, because it is very pertinent to the whole question of the three months which has been raised by the noble Lord, Lord Aberdare, and also by the noble Viscount, Lord Simon. If the Price Commission think it necessary to intervene in relation to a particular proposal they will do so as promptly as possible, and the considerations will be the same whether the Commission take the view that the increase is inconsistent with the Code and hence that the Commission's powers operate, or that while the increase is consistent with the Code there are such exceptional circumstances justifying intervention that the case should be brought to the attention of the Secretary of State under the new procedure in this clause.
The previous Administration evidently considered that it was unnecessary to specify a time limit within which the Commission must act to restrict a price increase under Section 6 of the Counter-Inflation
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Act. Theoretically these powers are available indefinitely. In practice, of course, the Commission can normally be expected to reach a view on a proposal during the period in which it is before them under the pre-notification rules or as shortly afterwards as possible. Nobody has seriously suggested—and I am certainly not going to do so to-day—that the Price Commission will suddenly and for the first time direct their attention to a price increase effected without comments many months previously. They have certainly enough to do to keep pace with all the current proposals. Precisely the same considerations will apply in the future when the Commission will also be free to consider the applicability of this new provision.
The detailed proposal in this Amendment, which is the core of the Amendment, would provide that any direction relating to a completed price increase must be given within three months of the price going up. From what I have already said, I hope it is clear that the procedure will be invoked very rarely (which is why it is spelt out in exceptional cases), that it will be initiated and completed as quickly as possible and that it is unlikely that directions will have to be given in relation to completed price increases, and still less likely that they will relate to an increase completed many months previously.
Nevertheless, I must advise your Lordships against amending the Bill in the manner proposed for the following reasons: first, the Amendment could—and in certain circumstances undoubtedly would—put a premium on delay, for it could operate as an incentive to a firm to put up its prices as soon as the Price Commission initiated the procedure. The Secretary of State is quite properly required by subsection (2) to engage in extensive consultation before giving a direction. If Parliament sets a statutory time limit to the Secretary of State's action, the firm will have every incentive to raise its prices and drag out the consultative process, so that any direction would be out of time. I am sure that noble Lords will agree that it is in the interests of all concerned that the firm should defer implementing the price increase until the procedures have been completed. Secondly, there is some general difficulty about statutory time

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limits of this nature, and we have seen this operating in quite different matters which have no connection at all with prices. Such limits tend to become regarded as the norm. Three months may be ample for the majority of cases, but, if that period is written into the Statute, it may be restrictive in a complex case and may tend to prolong the procedure in the simpler case.
It was no doubt with such considerations in mind that the previous Administration refrained from imposing any general time limit on the exercise of the Price Commission's powers under Section 6 of the Counter-Inflation Act in relation to a price increase which had already been implemented. Clause 3 of the Bill deals only with a special instance of that general case and, in the light of the explanation that I have given, I hope that the noble Lords opposite will not wish to press their Amendment.
In answer to the point raised by the noble Viscount, Lord Simon, that it is quite unfair for an almost indefinite time to be allowed, I hope that he will take the point that in some circumstances it could work either way: it could be unfair to restrict this time, and people could take advantage if this were done; on the other hand, it could mean that the Secretary of State would not have sufficient time for consultation. I think that one point upon which we all agree is that, if something of this nature is to operate, it is essential that the Secretary of State should have the opportunity to consult with everybody concerned.
LORD ABERDARE: I am very grateful to the noble Baroness for having given me such a full answer on my Amendment and I must say that I found it convincing in places. I especially understand the point that it might put a premium on delay and that this would not be desirable. Like her, I hope and think that the possibility of this procedure being used is extremely remote. In view of what the noble Baroness has said, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 agreed to.
LORD JACQUES: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

LONDON WEIGHTING: PAY BOARD REPORT
3.37 p.m.
LORD BESWICK: My Lords, with permission, I will repeat the Statement made in another place by my right honourable friend the Secretary of State for Employment. The Statement is as follows:
"The Government have today laid before the House and published the Report of the Pay Board on London Weighting.
"The Report was commissioned by the previous Administration as an independent examination to advise what changes are required in the basis and operation of the London Weighting formula, which was generally adopted on the recommendation of the National Board for Prices and Incomes in 1967. On taking office, the Government decided that it was desirable for this review to be completed and have urged all those concerned to await its outcome.
"The Pay Board have taken evidence from many groups and have undertaken detailed surveys. They have concluded—as did the N.B.P.I.—that the proper purpose of London Weighting is to take account of the different costs of working in London from elsewhere in the country, and that it is applicable only to those in London who have national rates of pay and not to those who adjust their rates of pay to the London labour market. London Weighting is therefore a solution for a largely public sector problem and should not be paid to those in the private sector who are not in exactly the same position.
"With this in mind the Board recommend that London Weighting should be made as comprehensive as possible to deal with the measurable differences in the costs of working as between London and the rest of the country. It should take account of housing, travel

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to work and certain other quantifiable costs, for all of which the Board suggest what they regard as valid measures. They also set a value on certain intangibles, such as relative standards of housing. On this basis they suggest that the level of weighting should be raised to £400 for Inner London and to £200 for Outer London.
"By 'Inner London' the Board mean an area within four miles of Charing Cross and for the limit of 'Outer London' they take the G.L.C. boundary. It would, however, be left to negotiations to decide whether or not to alter these boundaries to suit their circumstances. If they do so, the Board envisage that they would distribute the same total sum of money which the Pay Board's boundaries would have produced for the employees concerned.
"The levels of weighting suggested by the Board are based on information relating to last April and the Board make no recommendation on the question of retrospection. Looking forward, the Board suggest that there should be a simple annual up-dating operative from July 1 each year and relating to costs in the preceding April as published by my Department. There would be a major review of the whole operation of the scheme after three or five years.
"The Board say that London Weighting cannot be designed to help the first-time house purchaser. They see this as a major but separate problem with which each employer must deal in whatever way the situation merits. Assistance for first-time house purchasers would raise issues for the public sector which the Government will have to consider in the light of the Report. There is little doubt, however, that housing is at least as important as pay in many of the labour supply problems of London.
"The Government appreciate the clarity and thoroughness of the Report's analysis. The Board's examination was set in train when statutory pay controls were in full operation, but the recommendations are entirely applicable to a voluntary situation. These recommendations provide a common set of principles by which substantial improvements can be negotiated
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in the existing rates of London Weighting and by which negotiators can arrange for their objective adjustment in the future. The Government regard the Report as a most useful contribution to the resolution of this particular problem and believe that the principles proposed should be applied in negotiations on London Weighting both in the public sector and by private sector negotiators who are in the same position.
"As I have earlier made clear, it is the Government's intention that employers and unions should be free to negotiate on this matter; and the Government are glad to endorse the Report as affording guidance by which negotiations on London Weighting can now sensibly proceed. If these negotiations lead to settlements before the statutory pay controls are ended, the Government consider that the Report provides the exceptional circumstances to enable me to enter into consultation with the Pay Board with a view to using my consent powers to enable implementation.
"Although action on London Weighting should help to ease labour shortages in the services affected as between London and the rest of the country, I recognise that it is not a complete answer to the special problem of London Transport, on which a strong case was put to me some time ago jointly by the employer and unions. Action on that special situation will need to be taken in the light of the outcome of the current arbitration on London Transport pay."
My Lords, that concludes the Statement.
3.40 p.m.
LORD ABERDARE: My Lords, I should like to thank the noble Lord for repeating that interesting Statement, and to welcome this Report on London Weighting which, as he said quite rightly, was commissioned by us when we were in Government. I am very glad that the present Government have welcomed it and I should like to join with the noble Lord in paying tribute to the Pay Board for having produced it. But it seems to me to be extraordinarily paradoxical that here the Government are coming forward with a Report from the Pay Board, which

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they thoroughly commend, on the very day when we are discussing the Prices Bill, which under Clause 6 contains powers to abolish the Pay Board. I should have thought that this Report was further evidence of the usefulness of the Pay Board in its approach to these problems, and in making sure that we deal with them in a fair way and in a way that all can see is fair.
I would ask the noble Lord only one question, which is stimulated by his repeating the phrase, "entirely applicable to a voluntary situation". As I read it, when statutory controls are ended unions will then be free to negotiate whatever London Weighting they wish, regardless of the guide lines in this Report. I wonder what is the intention with regard to an annual review every July 1, if there is no statutory policy and if the findings of that review have no weight and are simply open for negotiation between unions and management.
LORD AVEBURY: My Lords, may we also thank the Minister for repeating the Statement made in another place? May I ask him whether, in view of the fact that the Government have repeatedly urged those concerned to await the outcome of the Board's deliberations, they feel that there is a strong case for retrospection, at least to April 1, especially since the cost of living has continued to increase since then? Presumably, if this amount was paid, it would compensate workers only for the differential in the cost of living in London up to April 1, and not for the increased differences between the costs of living in London and elsewhere in the country which have occurred since April 1.
Bearing in mind the consideration of transport costs in these findings, does the noble Lord consider that there is a case for the Government's making a contribution towards the cost of subsidising fares on London Transport—a policy which has been followed by the Greater London Council? Also, can he say anything further on the assistance which might be offered by the Government to first-time house purchasers? Does he realise that this is a practice which is fairly widespread in private industry? I believe that banks, insurance companies and building societies all give assistance to some extent. This might be an additional means of
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ensuring that workers in essential occupations are available in Greater London.
LORD BESWICK: My Lords, I should like to thank both noble Lords for the welcome which they have given to this Statement. I understand the difficulty mentioned by the noble Lord, Lord Aberdare, in accepting this Report within the context of a voluntary wage negotiation system. There is clearly a most important factor here and the noble Lord should try to understand what we are trying to do. We do not want the over-rigid compulsory system, but we do want certain guide lines to be accepted. The Trades Union Congress lays down certain guide lines. There is a guide line laid down here in respect of London Weighting, and we hope very much that that guide line will be respected. There is a difference from the rigid system of statutory control which, as the noble Lord knows, gave rise to so much trouble.
With regard to the questions asked me from the Liberal Front Bench, I am unable to say anything either about the first-time house purchaser or about London Transport. As I indicated in the Statement, there are certain special problems there in regard to under-manning. Negotiations are taking place between the employer and the London Transport unions concerned and this Statement. I have no doubt, will be taken into consideration. So far as retrospection is concerned the argument is a definite one, that the figure established here is one which has relation to this year. Therefore, one cannot say, retrospectively, that there was this difference between London and the Provinces last year. At the same time, some undertakings have been given in certain cases and I have no doubt that those will be borne in mind when negotiations are considered in the light of this Statement.
LORD ROBBINS: My Lords, may I ask the noble Lord whether the Statement is to be taken to imply that the Government will be prepared to provide the finance for the increases which arise under this formula, not only in respect of the central Government services within the ambience of Whitehall, but quasi-public services—such as demonstrators and assistants in scientific laboratories and so on—depending on Government grants for their continuation?
LORD BESWICK: My Lords, it would be wrong of me to say—and I am sure that the noble Lord, Lord Robbins, does not expect me to do so—that whatever agreement is reached between employers, whether public or otherwise, and the unions will be financed from public funds. Clearly, if a settlement is reached within the guide lines laid down here the consequences will have to be faced when the financing of any public authority is considered.
LORD ROBBINS: My Lords, will the noble Lord forgive me if I say that he must not regard my question as unreasonable. Considerations of the kind I have ventilated must necessarily be in the minds of those who are negotiating on the employing side. I am talking about nonprofit making institutions where a very grave problem of this sort exists at the present time.
LORD BESWICK: My Lords, I absolutely agree with what the noble Lord said. Of course, those considerations must be taken into account. I am saying that I am not here going to lay down a rigid blanket rule as to what will happen.
LORD LEATHERLAND: My Lords, is my noble friend aware—I am quite sure that he is—that this will give welcome increases of pay to teachers, firemen, local government clerical workers, local government manual workers and many others? Is he further aware that this will increase very considerably the expenditure of local authorities in and around London, and that this will necessitate increases in local rates? Therefore, do the Government intend to increase the rate support grant to these authorities, so that the ratepayers shall not have to bear an additional burden?
LORD BESWICK: My Lords, I think the noble Lord is putting in more concrete terms some of the problems which the noble Lord, Lord Robbins, put to me earlier, and my answer to him must be the same. I am not going to say exactly what will happen in particular cases. It is interesting to realise that the full implementation of these recommendations will increase the cost. There is already a cost of London Weighting, and this will mean increasing the cost of London Weighting by £154·5 million a year, or 6½ per cent.
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of the London pay bill, and will add about 0·38 per cent. to the total national pay bill. There are problems arising from this, which I have no doubt we all accept, but we must also accept that from all sides of the House there have recently been complaints about inferior services on public transport, about the understaffing of the police force in the metropolitan area and about the difficulty of getting teachers in the London area. One has to recognise that some of these things have to be paid for.
BARONESS PHILLIPS: My Lords, will my noble friend answer a further question? Does this mean an end to the chaos in the town halls? I am not quite sure whether there is a "go slow" or an industrial dispute. Does it also mean an end to the fact that we do not get any printed matter in this House?
LORD BESWICK: My Lords, I would rather not say anything about the printed matter in this House. I should myself have thought—and I speak here without a note—that printers are already paid as London printers and do not qualify for the London Weighting Allowance. With regard to the chaos in the town halls, I hope it will now be possible to negotiate a settlement.
LORD LEATHERLAND: My Lords, when my noble friend said that the cost of this award will be £154·5 million, did that sum relate to the actual rises which will be paid to the actual people who are in employment today? Does it take account of the fact that this increase in pay will be an inducement to recruits to come forward so that in six months' time there may be an extra 20,000 or 30,000 teachers, local government clerks and so on in employment?
LORD BESWICK: My Lords, as usual, my noble friend has put his question so simply that I find it impossible to answer! Obviously I ought to know the answer, but I should not like to give him a definite reply without making further inquiries. I will do that, and let him know.
BARONESS HORNSBY-SMITH: My Lords, while welcoming the Statement made by the noble Lord and being in full agreement with the increases proposed, I wonder whether the noble Lord would feel that this differentiation between Inner and Outer London is

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rather unrealistic?—because according to the experience of several Members of this House, if you are a teacher it is just as expensive to live in Croydon or Bromley as it is in Southwark. Those who have to commute to Inner London have ever-increasing fares. Would not the noble Lord think that doubling the amount for four miles round the City centre and giving only half the recommended rate for round the perimeter of Greater London is a very wide and discriminatory differentiation indeed?
LORD BESWICK: My Lords, I understand what the noble Baroness is saying and I am quite certain there will be arguments about these boundaries. All I can say is that an objective and most thorough inquiry has taken place and the figures recommended here are based on that inquiry and not on the "hunch" or personal experience of any one of us. In certain cases it will be possible for an employer who employs people both inside and outside the suggested boundary—perhaps with depots outside—to come to an arrangement with employees, based on sharing the total amount available but on a different basis. This will be open to negotiation and I have no doubt that in certain cases it will help to offset the difficulties to which the noble Baroness has referred.
LORD DAVIES OF LEEK: My Lords, is my noble friend aware that the problems to which he has drawn our attention, in so far as this economic weighting is being taken into account, is a universal problem throughout the world in large cities? Metropolitan man is now living in such conditions that the old-fashioned idea of private enterprise completely falls down. Therefore, I suggest we should be trying to study universally this problem of the attracting of mankind into huge cities which are unhealthy, noisome and conducive to the destruction of the best characteristics of the human being.
LORD BESWICK: My Lords, I am not sure that this is a question of private enterprise, but certainly I agree with the noble Lord that I myself am finding the idea of living outside the greater Metropolitan area increasingly attractive. However, unless something is done about pay scales the people living inside the
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Metropolis will find themselves without any public services.
LORD SHINWELL: My Lords, may I ask my noble friend who started this problem? Was it this Government or the previous Government?
LORD BESWICK: My Lords, the tendency for human beings to congregate together I think pre-dates both this Government and the last Government.

REHABILITATION OF OFFENDERS BILL
Brought from the Commons; read 1a, and to be printed.
CARRIAGE OF PASSENGERS BY ROAD BILL
Brought from the Commons; read 1a, and to be printed.
MINES (WORKING FACILITIES AND SUPPORT) BILL
Brought from the Commons; read 1a, and to be printed.
TOWN AND COUNTRY AMENITIES BILL
Brought from the Commons; read 1a, and to be printed.

PRICES BILL
3.56 p.m.
Committee stage resumed.
On Question, Whether Clause 5 shall stand part of the Bill?
VISCOUNT SIMON: I put down an Amendment to delete this clause from the Bill, because it seemed to me that the implementation of this clause will be largely impracticable, and, to the extent that it is practicable, its effect on balance may be more harmful than helpful. We have been in some difficulty over this clause because there has not really been a great deal of discussion about it. I seem to recollect it was mentioned by the noble Lord, Lord Harris of Greenwich, on Second Reading. It is a pity that one

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cannot refresh one's memory by referring to Hansard. I myself raised one or two points in connection with this clause and believe my recollection is correct when I say that the noble Lord who was replying to the debate did not comment on them.
I know that I shall be told, and quite rightly, that this is a clause which only gives the Secretary of State power to do various things but does not require him to do them; and also any Order which the Secretary of State decides to make is subject to annulment by Parliament, provided that is thought to be desirable. However, I do not think members of the Committee would differ from me when I say that discretionary powers should not be given to the Secretary of State, unless there is good reason to suppose they will be used and, if used, that they will be both effective and beneficial. As regards Parliamentary control through the Negative Resolution procedure, I think that noble Lords will agree that it is not an effective method of controlling Secretaries of State. We all know how difficult it is to apply that procedure. It has always to be applied in arrears, so that if harm and confusion has been caused it will already have been caused before Parliament has an opportunity of putting it right. Therefore, I hope we may proceed on the assumption that this clause is intended to be operated; otherwise it would be wiser to leave it out of the Bill.
I should like some information from Her Majesty's Government on how the Secretary of State is to get the information which he will require traders to display in their places of business. The clause says that information will be required:
"…with respect to the range of prices within which it appears to the Secretary of State that such goods are being commonly sold by retail in the United Kingdom, or in a particular part thereof,…"
I suggest that if the Committee decided to let this clause go forward the Government might consider between now and Report stage whether they should remove the reference to the United Kingdom. What is the use to anybody of having a range of prices put up in a shop in some area which relates to the United Kingdom as a whole, when either end of the range, or certainly the lower end, might not be available anywhere within the reach of the shopper. I mentioned this point on
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Second Reading, but I do not think the noble Lord, Lord Jacques, replied to it. This seems a nonsensical arrangement.
The customer is only concerned about where he or she can get goods which are reasonably priced, and that can only be in the nearby vicinity. I do not imagine for a moment that the Secretary of State herself, or through direct agents, will go to every part of the country and discover the right figures to put on these notices. I think there was a hint that the local weights and measures inspectors might be employed. I notice in the Explanatory Memorandum that it is said that outside Central Government service a small increase in the staff of weights and measures authorities is possible. That does not seem to go very far in the direction of monitoring the range of prices which are commonly in operation at any given time in any given area. The weights and measures authorities are also employed by local authorities, and I would remind the Committee that local authorities nowadays cover a wide area, much too wide for the convenience of a shopper. In any rural district authority there may be 30 or 40 miles between one end and another. In my part of Devonshire it would be no good telling a housewife in Moretonhampstead that she could get things cheaper in Kingsbridge, because she would not dream of going there to make her purchases. If this is to be effective it has to be done in units smaller than a district council. This will involve a great many people in trying to establish what the correct figures are.
How is the list to be kept up-to-date? This seems extraordinarily difficult at the lower end of the range, and particularly after we heard recently of the agreement which the Government have reached with the trade about special prices which, if I understood the Statement correctly—and there was a question from the noble Lord, Lord Leatherland, which brought this out—meant that there might be at one time a particular article given a special cut, but there might be a different article at another time. I imagine this might involve changes from day to day, and certainly from week to week. How are these ranges of prices to be kept up-to-date? After all, if a range of prices is put up with the authority of the Secretary of State, it is necessary for the Secretary of State, through her agents, to be at all

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times responsible for the correctness of the statement.
There was one question that has not been touched upon: in putting up the range of prices is any account to be taken of such things as stamps, Co-operative dividends or special offers that accompany some goods offered for sale? All these things. within a small range, affect the price. I now come to another difficulty: where should notices of this range of prices be displayed? Whether one considers a small shop—sometimes called a "corner shop"—or a large supermarket, great difficulties will arise in the congestion which is bound to be created wherever these lists are put up. Whether the lists are useful or not, we may be sure that shoppers will, at least initially, tend to congregate around them to see what is written on them. Most of these shops—and this applies just as much to the big supermarkets as the small village store—have no room for the people to stand and stare; the shops are crowded already, especially on Saturday mornings and days like that. Confusion is going to arise with these notices. If the notice was displayed on the shop window there would be congestion on the pavements, and I should be surprised if the police did not have some views about that.
I suggested on Second Reading that it would be better that notices of this kind should be displayed in the post office or other public place where such notices are sometimes put up. My suggestion met with no response from the noble Lord, Lord Jacques, and the Government have not put down an Amendment, so I assume they reject that idea. It might perhaps be considered again because, thinking of shops that I know and which I am sure other noble Lords know, there will be difficulties in having these notices displayed.
Then, if I may leave the practical difficulties, I want to ask the Committee to consider what the effect of this is on the customer. Let us assume the practical difficulties are overcome. I concede that there is some value in knowing the price range of the article which the customer is seeking to buy, particularly if the price range is a reliable indication of the ability to buy within that range somewhere in the neighbourhood. Unless the cheaper prices can in some way be identified the
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customer will not be very much better off. Most customers know that prices in the supermarkets are lower than those in the small village stores. They weigh up whether it is worth going to a supermarket or whether they should deal in the place to which they are accustomed. Displaying the prices does not tell them very much more than they know already. It may only cause frustration and despondency, because they will say, "Why should I have to pay 18p here when I see somewhere else I can get this article for 16p?". Apart from the frustration and despondency which it may create in the customer, there is likely to be created a certain amount of friction and unpleasantness as between the customer and the shopkeeper. Although customers are well aware of the differences in prices, it is rather throwing it in their faces to say that here is a shop where you can buy the article for 18p and somewhere else you can buy it for 16p. I do not feel this is going to create a happy situation. I do not think that this is going to give much advantage to the customer at all.
I doubt also whether it is fair visually to remind the customer—here again going to the corner shop—of the one factor that the price is a little bit higher there than somewhere else when you cannot remind them visually of the counter advantages which are recognised but some of which cannot be easily expressed in terms of money. Is the object—and I hope it is not—of this proposal, in a rather indirect and unpleasant way, to pressurise the small trader and make him feel a little ashamed that his prices are higher than the minimum quoted somewhere else? In that way he is put under an indirect pressure to reduce his prices when we know that the small shops are not making much profit these days. I hope that is not the intention because I would think it rather unfair.
I have only one other point I would make and it arose out of something the noble Lord, Lord Jacques, said in reply to the Amendment on Clause 2. The noble Lord referred in his reply to the noble Lord, Lord Aberdare, to this question of ranges introduced in Clause 5. I did not quite follow the relevance of this. Perhaps whoever is going to reply to this question will be able to say how the range proposal contained in Clause 5 really ties up at all with Clause 2,

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because Clause 2 deals with the regulation of prices, whereas, as I understand it, Clause 5 is concerned merely with information and not with regulation at all. I hope that the Government will be able to give us a little more explanation as to how this clause is intended to work. Naturally, I shall listen to what the Government have to say and reserve until later any remarks I have to make about the course I would recommend the Committee to pursue.
4.11 p.m.
LORD JACQUES: I would at once apologise to the noble Viscount for not having replied to the points he raised on the Second Reading. I believe I said that some of the points would be best dealt with in Committee. Let us assume that these points fall into that category. The clause makes provision which would be available to the Government on a permanent basis to provide factual information to shoppers about the range of prices at which goods are being offered As I explained at Second Reading, it is the Government's intention to use these powers in connection with subsidised foods for which the top of the range will he the maximum price prescribed under the provisions of Clause 2(1)(a). One objective of Clause 5 is to protect the small trader. As I said earlier in Committee, we appreciate that at one end of the scale we have the convenience shop which is of great convenience to the customer, to which he has not to travel and at which he can expect to pay a little more for the convenience. At the other end we have the supermarket which depends on cutting prices to obtain its trade; in order to cut prices it must have scale, and if it is going to have this scale it has to have a huge catchment area and consequently its customers are going to have some inconvenience. But of course in between is a great variety of shops. In particular there is what I would call the medium-sized shop, particularly in the suburbs of large towns. They have some merits of convenience in that a vast number of their customers can walk to the shop—the shop is placed in a congested area. They also have some of the advantages of scale in that they have a quite substantial turnover and therefore are able to some extent to cut prices. So we have this wide range of shops.
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It is difficult to fix prices to cover the whole wide range without being unfair to somebody. The Secretary of State is trying to put herself in the position where she can fix a maximum which is fair to the small trader without encouraging other traders to climb up to it. For example, in the case of bread, I have no doubt whatever that when the Secretary of State fixes the maximum price, that price will almost certainly be a greater price than that at which some of the supermarkets are already selling, in order to cover the small trader and to be fair to him. But the Secretary of State is anxious that those stores which have lower costs should not climb up to the maximum price, and it is for that reason that she wishes to have the powers embodied in this clause. So in essence one of the objects is to protect the small trader. Outside the subsidised field my right honourable friend has made it clear that so long as the voluntary agreement is working satisfactorily the clause will be a reserve power only.
The noble Viscount suggested that a national price range will not be equally applicable to all areas. It is precisely because we recognise this that the clause gives us power to prescribe different ranges for different areas. Indeed, we shall probably have to do this in the case of bread. I can assure the noble Viscount that we are fully alive to this point. He also suggested that the shop was not the best place in which to display such ranges. While I think shoppers have a right to see information of this kind where it can be most immediately useful, I agree that other organisations have a valuable part to play in disseminating food price information. Indeed, it is the Government's earnest hope that it will be one of the functions of the consumer advice centres which we are encouraging local authorities to set up to collect and disseminate information about prices locally. This will be a most helpful voluntary service to supplement the national information the Government already put out. I hope therefore that the noble Viscount will be able to accept that we have broadly the same aims in view.
I should perhaps explain how the ranges will be determined and displayed. The ranges to be displayed will cover the prices at which the corner shop, with

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its necessarily higher costs, and the most efficient supermarket are selling the goods in question. Shoppers will therefore have an objective standard of comparison for the prices of these key products. Information is available through Government sources which gives broad ranges of prices for about 80 food items. Ranges of these foods to which the provisions of the clause are to apply will be determined from this information. The range to be displayed will necessarily be a wide one, but not too wide. I understand that the present practice is to include within the range four-fifths of the sample excluding the extreme items in the sample at either end—which is reasonable. It is intended that the range will be displayed in a simple and conspicuous manner to ensure that the cost to shopkeepers of display is kept to a minimum and that the public is not confused by too many prices. The statutory consultations for which the clause provides will ensure that the trade's views on these matters are fully taken into account. That of course would also include some of the points which the noble Viscount mentioned, such as stamps. But I would say from a personal point of view that stamps should not be taken into account. The shopkeeper who offers stamps, whether a co-operative society or private trader, is implying that he is selling at competitive prices and that the stamps are something in addition.
I would direct the noble Viscount's attention to West Germany. In West Germany a range of prices for each of several commodities is displayed. We believe that West Germany's success in combating inflation is in part due to the way in which they have used such instruments. We are so convinced that we have taken the powers in this clause and, if need be, intend to use them. I hope the noble Viscount will accept that the clause will enable the Government to provide some much needed information to the public in an acceptable way; that the powers will be used sparingly and with discrimination, and that display will be simple and as inexpensive as possible for shopkeepers. I trust that he will accordingly feel able to withdraw his Amendment.
LORD MERRIVALE: May I ask the noble Lord, Lord Jacques, for clarification
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on a purely local point? Let us take the area of South Kensington and Knightsbridge where one finds, regarding fruit, vegetables, tinned foods, a great range of prices and great differentiation. Can the noble Lord say how often there will be a change in the display of the range of prices? If one goes to one shop one gets a certain price, and if one goes to another shop one gets a much lower or higher price; and if one goes on a Saturday evening the price is considerably lower. There is a great discrepancy, and I do not think that the shopper has any guarantee that he is getting the best value for money.
Taking as an example what is done abroad—I will not specify any particular country—there seems to be a lack of control regarding price fixing. In order that the consumer or buyer has the feeling that he is getting the best value for money and that the range of prices is being kept up to date by the Department and the Secretary of State, can the noble Lord say that these notices are kept up to date and changed regularly?
LORD JACQUES: It would be necessary for the Department first to experiment in price ranging in those commodities which are not perishable and which do not change from day to day. Clearly, those are going to be the most difficult. so far as prices for perishable goods are concerned, the prices of which change from day to day, the telephone is the best way of dealing with them. The Department already has a telephone service for this purpose which consumers can use.
LORD ABERDARE: I have listened with interest to what has been said in this short debate and to the noble Viscount who proposed this Amendment. In my view, it would be wrong to leave out this clause entirely. It seems to me that the more one can produce factual information for the shopper the better, and although there may be difficulties in operating the clause, in principle it would be wrong to omit the whole clause. It was fully discussed in another place. It has come to us and I do not feel able to support the noble Viscount in going so far as to remove it. What we are more concerned about—and this will emerge in the next Amendment—is the protection of the small shopkeeper.
VISCOUNT SIMON: I am grateful to the noble Lord, Lord Aberdare, for explaining his point of view and to the noble Lord, Lord Jacques, for his full explanation. I cannot say that I am completely satisfied but it would not be my intention to press my point of view to a Division because by doing so we would lose the benefit of the noble Lord, Lord Aberdare's next Amendment.
Between now and Report stage may I ask the Government to consider one or two points. The noble Lord, Lord Jacques, said that it was only intended to use this provision in connection with subsidised goods. I do not suppose that he would think of confining the clause to subsidised goods. He recognised the irrelevance of a range covering the whole of the United Kingdom, and indicated that it would be done on a local basis. I hope that in this connection the localities will be small enough to be meaningful to the shopper. As he practically admitted that it would not be used, would the noble Lord consider an Amendment deleting the reference to the price range in the United Kingdom? Perhaps we could have a discussion about it between now and the next stage.
LORD JACQUES: I am sure that my right honourable friend, to whom I should have to go and to whom I am answerable for all promises I make, would not be prepared to accept an Amendment to confine the clause to subsidised goods. Let us be practical. In negotiating with the trade you need to have muscle, and you have muscle according to the power which you have behind you. This is a reserve power. It is partly because of these reserve powers that my right honourable friend was able to obtain the voluntary agreement. She has given an assurance, having obtained that agreement, that she will not use these powers except in relation to subsidised foods. That is the happy and businesslike way to go about it. I could not give the kind of assurance for which the noble Viscount has asked.
So far as the United Kingdom is concerned, we have power within the clause to give different prices for different areas. As I have said, we shall almost certainly have to do so in the case of bread.
Clause 5 agreed to.
4.27 p.m.
LORD ELTON LORD ELTON moved Amendment No. 4:
After Clause 5 insert the following new clause
Exceptions.
".—(1) No order made under subsection (b)of section 2 or under sections 4 or 5 of this Act (except an order relating exclusively to food subsidised under section 1 of this Act) shall apply to a person who carries on the business of selling food by retail in or from a shop and who:—

(a) has sales to which this section applies; and

(b) has no licence or interest in land in any other shop in or from which is carried on the business of selling any goods by retail.

(2) This section applies to sales where:

(a) the total annual sales were less than £25,000 in the course of the last complete account year of the enterprise ending on or before the date of coming into operation of the order; or

(b) if the enterprise has not been carried on for a complete account year before that date, the sales were less than £6,250 in the course of the last complete quarter before that date.

(3) It shall be a defence to any person prosecuted under paragraph 5 of the Schedule to this Act to show that he is a person to whom the provisions of this section refer."
The noble Lord said: This is a more formidable Amendment than the last Amendment I spoke to and I have to open with an apology. Your Lordships will see that there is a reference in the first line of the proposed amended Bill to "subsection (b)of Section 2." This should read "subsection (1)(b) of Section 2"; otherwise your Lordships will find that it has no meaning. I apologise for this piece of over-hasty drafting which has arisen out of the difficulties which have also produced the rather odd form in which all the Amendments are now before your Lordships.
This Bill aims to regulate the prices at which goods are sold and to keep them as low as possible, which is an estimable aim. Also it aims to provide a wide range of information to the shopper, which in itself may be an estimable aim. But what I wish to point out to your Lordships at this stage is the unlooked-for effect that this will have upon the small shopkeeper and upon his customer. It is those people whom we, by this Amendment, are seeking to protect.
If I may begin by defining what is meant by a small shopkeeper, since this must be done in a mathematical form which can be understood by the law, it refers to shops where the annual sales amount to £25,000 or less. We pitched on the phrase "annual sales" because in another place there was difficulty about identifying the meaning of the phrase "turnover". Therefore the phrase "total annual sales" has been taken from an Order—Statutory Instrument No. 785 of 1974—which was made by the present Government under the Counter-Inflation Act 1973; and as this phrase is used by them we can safely assume that the meaning of it is clear. The meaning may be clear legally, but it may not be clear to your Lordships' House exactly what kind of a shop it is that we are talking about. The simplest mathematical way of describing it would be to say that the best advice I can get is that a shop with sales of that order would be unlikely to be making an annual profit of more than £1,200. Your Lordships, especially those who would be sitting on the Bishops' Benches, were they here, could equate that with the now quite well known stipend of a newly appointed curate, or perhaps would find it more illuminating to realise that this brings the small shopkeeper himself within the bracket of the less well-off whom the Minister, by this Bill, is seeking to help. That is something to bear constantly in mind and there is an irony in it, as we shall see.
The next thing we have to do is to decide how many of these shops there are. There was loud alarm in another place about the enormous number of shops which would be affected by this. The honourable Member the Under-Secretary for Employment stated categorically in another place that a total of 25 per cent. of all food shops have an annual turnover of less than £25,000. This figure of one shop in four produced surprise, amounting almost to incredulity, among those in the trade with whom I discussed it. Therefore I came to reflect upon what might be the source of these figures. Apparently, no up-to-date figures are currently available to the public. The only ones that are more or less up to date which I can discover are those arising from the business census of 1971 and these are not yet available to the public.
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I understand that they will be published in September, Presumably, however, they are available to Her Majesty's Government.
If that is the case and if it is upon these figures that the number of one in four—that is, about 25,000 shops—has been arrived at, I would draw your Lordship's attention to the fact that these are rather elderly figures. Inflation has been galloping on since they were accumulated and a shop which had a turnover of £25,000 in 1970, the year in which the figures were collated, would have to make a great deal more now simply to stay in the same place. This is the effect of inflation. It is a treadmill and one has to run faster and faster to stay where one was to begin with. So the number of shops concerned is small, but what is a great deal smaller is the amount of food that they sell in comparison with the amount of food sold by other food shops.
Mathematically that is the description of the shop, but I think one could describe it, in order to get it clearly in one's mind, more as the kind of shop which goes "ping" as you open the door, and from the edge of whose counter small children anxiously peer up at sweets. Some are cheerfully modern and some are cluttered; some specialise in food and more are general stores and a few aspire to be post offices as well. Such a shop is usually located in the centre of a community, very often a rural community, in which it retails gossip as well as goods, and to which it gives a great deal of the feeling of the identity of the community, which will vanish if it vanishes. Again I would remind your Lordships that the proprietor is probably getting a salary—for want of a better term—of £1,200 a year. So this is not an opulent and scarcely even a secure concern. Some would say that it was not viable already; in fact this shop that I am speaking of is in the position of a camel overloaded with straw. and the aim of this Amendment is to stop the last straw being dropped incontinently upon its back.
Let us consider first the disadvantages of the position of a small shop. Of course, the first and most obvious, is the disadvantage of concentrated overheads, with which your Lordships will be familiar; the bigger the size of the concern the more you can spread its expenses.

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Secondly and more formidably is its exclusion from the discount benefits on large orders. This is a handicap which is increasing, and I wonder whether I might explain. First, most concerns wholesaling to such shops sell their goods at a lower price for a large quantity. This is perfectly normal.
There is a minimum case rate below which you get no discount and above which in steps (as it were on a ladder) you get increasing discount or a lower price per unit according to the number of units you buy. For instance, 1 lb. tin of Cadbury's Bournville cocoa at the 10-case rate, at present, so far as I can understand it, comes at 41·25 pence exclusive of V.A.T.; at the 400-case rate (and can your Lordships imagine 400 cases of Bournville cocoa in the shop that I have just described?) 37·50 pence is the price. Thus, there is a difference of 3·75 pence per tin on every tin sold over that counter and it is a disadvantage to that concern as against the large concern down the road. Does the noble Lord wish to intervene?
LORD JACQUES: Can the noble Lord bear in mind that one half of the independent retailers in the grocery trade are part of voluntary groups and, therefore, enjoy bulk buying?
LORD ELTON: So much the stronger my argument for saying that not too many shops will be affected by this Amendment. In reply to a request to the trade I was given a number of these sheets from which I took the first example which I have just quoted. The average of them, between the top and the bottom case rate, showed a difference of between 10 per cent. and 13 per cent. in the actual cost per unit to the purchaser. It goes further than that, because there is a minimum quantity, as I said, below which one does not qualify to get this reduced rate, and that minimum quantity is now being remorselessly raised. For instance, if I may quote another informant, John West's salmon for the 15½ ounce tin comes out at about £1 a tin wholesale; the minmum case rate used to be 20 cases of 24, i.e. one had to buy 480 tins in order to get the case rate. The minimum is now 50 cases of 24, which is 1,200 tins and, please note, a capital outlay of a minimum of £1,200 to stay in the game if you are to get the
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discount. Other firms do not raise this minimum, but they charge an amount for delivery on the lower rates.
I will not go on with too many examples, because I think I have made the case and I am certain that the noble Lord, Lord Jacques, is better equipped with examples than I am. Therefore, I need only to jog his memory rather than drive the point home. However, there is another disadvantage to which the small retailer is subjected. He is really boxing in the dark because, although he has these lists, from which I have been quoting, giving the rates at which he might assume the competition is buying its own supplies, when he goes into the town on early closing day he sees prices marked in the windows of the supermarket which are below what apparently they could have been bought for. These are not loss leaders; they are wholesale goods bought at a private contract between the multiples and the suppliers direct.
We have here a man—or very often a woman—who is already overburdened and under-rewarded and the Bill lays upon him the prospect of even more work, some of which has the effect of requiring him to advertise, at no cost to them, the competitors' prices in a local town. The noble Viscount, Lord Simon, referred to this earlier and I am grateful to him for doing so. If this has the effect which one cannot help expecting the Minister to foresee, some of those customers in the rural community who have transport of their own, or who are blessed with public transport, will remove their custom to the town—in fact, if they do not do so there seems little point in the exercise. If they experiment in that way, if only for a short time, this will bring the village shop into grave danger. Therefore, what Her Majesty's Government have achieved for the shopkeeper is not a smaller fur coat for his wife, not that he has to keep his large motor car for an extra year or take a shorter holiday in Greece, because this man is one of the much less well-off that Her Majesty's Government wish to help. They have given him an extra couple of hours' work each week, and I suspect those hours would have been spent in well-earned rest because these men are already overworked and under-rewarded. The chances are that as a result the man or woman will say that the game is no

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longer worth the candle and will shut up shop. That is a very definite possibility.
So now we come to the consumers, that other less well-off group which Her Majesty's Government are seeking to assist in the Bill. Your Lordships are familiar with the acute problem of rural transport; many facets of it were rehearsed in a recent debate in your Lordships' House, where your Lordships wisely returned to the Road Traffic Bill some provisions which had been dropped from it since it was last seen here. You are therefore aware that the least likely person to have a motor car is that less well-off person. In a Norfolk survey not so long ago it was found that in five parishes only 29 per cent. of the retired and 30 per cent. of farm workers had transport of their own. These people will either have to go at an average rate of about 30p for a 10 mile return trip to the local town to get their goods at the rates which are advertised in the village store, or else they will be stuck without being able to get them at all.
Thus, if Her Majesty's Government wish to help the elderly and less well-off they are going an odd way about it. The retired and the farm workers are among these people; many of the former and just about all of the latter live in rural communities, served by the kind of shops of which I have spoken, and many of both categories have no private transport and no public transport either. Her Majesty's Government, professing for them their undying sympathy, obligation and regard, introduce a measure which will have for many of them the effect of closing down their only supply of food. Therefore I ask the Committee to consider carefully this Amendment which will remove from the small shop keeper one of the largest administrative, and, from the point of view of the Government, the least expensive, burdens. I beg to move.
4.40 p.m.
VISCOUNT AMORY: I think that the case made by my noble friend for the small shopkeepers is one we ought to regard with great sympathy. Small shopkeepers in general render great service to the community. From my experience, very few of them make an extravagant income out of the services they render. In fact, if their time per hour were worked out, very often it would come to
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to a very modest rate indeed, as was hinted by my noble friend. To me, all was made instantly clear when my noble friend mentioned the shop that went "ping" when one opened the door. At first sight, I thought his Amendment could be abbreviated somewhat by confining the exemptions automatically to a shop that went "ping", but I realise that that would carry the necessity of putting the instruments that make the "ping" under licence, with terrible penalties for anyone whose shop went "ping" without a licence. So perhaps the Amendment of my noble friend as it stands is the right one. In principle, I am sure we should do well to pay great attention to everything that he has said. These small shops generally, at the end of the day, have extremely modest margins non-existent in many cases. If they were not able to stay in business, most of the communities concerned would be very much worse off.
LORD ORR-EWING: May I add a word or two on behalf of the village shopkeepers. In my own village there is a single village shop which is open seven days a week—it has to be, in order to provide a living—although I do not know whether that is correct. I have seen three separate owners give up and others take over the shop because the increasing load of administration is too much for a husband and wife. V.A.T. has added to this burden. I asked the previous Government whether they could not raise the level of V.A.T. in order to bring some of the small shops under the turnover—a figure of £5,000 a year at present—which has no V.A.T. levied on it.
In our small village in Hertfordshire, the public bus service was withdrawn. In rather significant and unpleasant circumstances we were told that the rumour was totally untrue, but suddenly we found one Saturday that all the bus stops were being removed. On the following Monday morning, the bus service was stopped so there was no possibility for the 70 per cent. enumerated by my noble friend Lord Elton to make other arrangements. We "ganged together" and subscribed to a minibus. We then found that many of the old-age pensioners were turned off it because it was not allowed to carry more than five or six passengers. The old-age pensioners could not even go out of the

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village to do their shopping in the town of Hertford.
So we have seen a steady but slow eroding of village shops all over the country. I know under the new Transport Bill we have now allowed minibuses to be operated. We are to have post buses, a very successful experiment in Switzerland. I filled up a form over this week-end, in which the Post Office asked whether there was a case in our household (I am glad they are taking this into consideration) for running a post bus from our village to the county town of Hertford. I noticed from the timetable that a 10-mile journey was timed at 50 minutes. Here again, if we drive the local shop out of business, we are going to put an extra burden on the less well off, in that they will take 50 minutes to do the journey, and the bus would have taken only 15 minutes. Time and time again we are putting an added burden on the less well off and the village shops in particular, so I hope the House will take very seriously the sensible and humane Amendment of my noble friend to this clause.
LORD SOMERS: May I also bear witness to the truth of what other noble Lords have said. In Epsom where I live, we have very few shops where one can buy anything at all. There are a few left and they are small, privately owned shops. One of them is definitely of the type which could he called the local village shop, where one can buy practically anything. I am quite certain that the owner of the shop does not make a large income, but it is absolutely invaluable to the poorer people who live in the immediate vicinity. Incidentally, it is extremely valuable to the rest of us who live in Epsom. If that kind of shop were to go, we most certainly should be very much worse off, and I really do not know where we should go.
VISCOUNT HANWORTH: I have every sympathy with the small retailer, but one has to consider what effect the Bill as it stands will have. It may have an adverse effect in two ways; first, because it may make it more clear that the village shop is charging more. I do not view that very seriously. I think people are already well aware of this. Those who are not possibly will benefit by being told and by being given the option. I admit there
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is a point here, but I do not attach a great deal of validity to it.
The second disadvantage may be the extra work entailed in setting out the prices. Here again, from all we have heard, I do not believe that this is a very serious objection. So on balance, I do not think I would support this Amendment because it makes an exception to the Bill which is undesirable. I do not believe it is really necessary.
THE DEPUTY CHAIRMAN OF COM MITTEES (BARONESS EMMET OF AMBERLEY): Before the Minister replies, and with the permission of the House, I should like to read an alteration in the Amendment which is:
"… No Order made under subsection (1) (b)of Section 2 or under Sections 4 or 5 this Act…".
That is in the first paragraph. I do not know whether it is any clearer to your Lordships than it is to me, but perhaps the Minister will be able to explain.
4.48 p.m.
LORD JACQUES: I understand it, and will be dealing with that point. This new clause deals with a subject very fully debated on two occasions during the passage of the Bill in another place. Before I come to the details of the clause, perhaps I may say a word about the general objectives of the Government in this area. We are all aware that there is widespread concern about the cost of living. The Government have embarked on the important tasks of holding down the prices of essential foods of particular importance to the elderly and others on low incomes. They are providing better information for shoppers. That is the primary purpose of the Bill. In operating its provisions, we shall try to achieve a balance between the genuine needs of the consumer and the very real interests of the shopkeeper. This includes the small shopkeeper.
It may be interesting in this connection to recall that the smaller shopkeepers have been among the greatest enthusiasts for the concept of lower margins on essential foodstuffs and other goods. Indeed, it was one of the voluntary groups of smaller grocers, Spar, Vivo, which made the original proposal for a voluntary agreement on price restraint of the kind which the Government have succeeded in negotiating. Therefore, it

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is clear that among this important sector of the independent grocery trade, at least there is no fear of what the Government are trying to do. Outside the subsidised area, as your Lordships may be aware, the Secretary of State has already made it clear that she does not intend to use her powers under this clause while the voluntary agreement with the trade is working satisfactorily, so there is no risk there.
Retailers with an annual turnover of less than £250,000 a year—not £25,000 a year as mentioned in this clause, but ten times that amount—are excluded from the 10 per cent. cut in gross margin reference levels. These traders are participating in the voluntary agreement. Their representatives have assured the Secretary of State that they will be asking their members to co-operate to the fullest extent possible. The shopkeepers themselves feel more able to help the Government in their vital task of combating inflation than noble Lords opposite give them credit for.
LORD ELTON: Before the noble Lord leaves that point, I should point out that this Amendment has nothing whatsoever to do with price fixing, about which the noble Lord is speaking. Repeatedly he has made the point that the small shopkeepers are exempted or favourably treated, or are asked to do something in relation to price fixing. But this Amendmene is about price labelling and price range displays.
LORD JACQUES: I was just coming to that point and was going to say how astonished I am at the line the debate has taken. If this Amendment were carried, it would not make one penn'orth of difference to the profits of the small trader. This Amendment is dealing merely with the display of prices under Clauses 2, 4 and 5. It does nothing to prevent the Secretary of State from regulating prices. The Secretary of State can regulate prices under Clause 2. All this Amendment says is that they shall not be displayed. I do not see what sense there is in that. If the Secretary of State can regulate prices, surely she has a right to say that those prices should be displayed so that the customer as well as the shopkeeper knows what they are.
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Let me come to the effect on Clause 4. Clause 4 is in no way concerned with price regulation; it is concerned only with the display of traders' own prices, whatever they may be. I hope there will be a general measure of agreement that better price information for shoppers constitutes a valuable measure of assistance for all concerned. The marking of prices, and the giving of the unit price where this is helpful, is something which I am sure most noble Lords will agree should be available as widely as possible. It is the Government's intention that orders providing for price marking or unit pricing should be framed in such a way that few, if any, food shops will find it difficult to comply with one or other of the agreed alternative forms of marking. There have already been some preliminary discussions with retail organisations representing small grocers and other food retailers about the operation of Clause 4. They have been assured that there will be opportunities for them to comment on specific proposals for accommodating the special problems of their members, and to recommend how their interests might best be served. There should, therefore, be no cause for concern so far as Clause 4 is concerned.
We have already had a debate about the third clause, Clause 5, to which this Amendment would apply, so I shall not weary the House by repeating the arguments that were put then. Noble Lords will understand that the concept of Clause 5 is very similar to Clause 4, in that both are designed to improve the price information available to the shopper. I sought in my comments in relation to Clauses 2, 4 and 5 to show that the fears of noble Lords opposite about the operation of this part of the Bill are unfounded, and that they are not, generally speaking, shared by representatives of the trade to whom we have spoken. In moving this Amendment, the noble Lord said that the figure of one-quarter of all food shops with a trade of £25,000 a year is now out of date. Why is it out of date? It is because of the rate of inflation. This, I suggest, merely shows the need for the kind of Bill which is at present before the Committee.
I recognise, of course, that the new clause does not seek to deal with all food shops, and deals only with the independent food shops. Nevertheless, it is a fact

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that a substantial number of shops could be exempt from the provisions dealing with price regulation, price marking and the display of price range information. In 1973, 39 per cent. of the grocery trade was in the hands of independent shopkeepers, many of them with a turnover of less than £25,000 a year. This would be a fairly considerable incursion into the protection for the consumer which this Bill affords. Indeed, in some parts of the country the effect would be even more damaging, since outside the large towns it is probable that a much larger proportion of the food shops have a turnover of below £25,000 a year. This means that the benefits of better price information would be very unevenly distributed throughout the country, which would be to the detriment of the trade and consumer alike.
Moreover, research invariably shows that it is the elderly, the infirm and those with low incomes who tend to go to the small grocer for food, rather than to the multiples who employ much more sophisticated systems of pricing and price display. It would be quite wrong to deprive these people automatically of the consumer benefits to be derived from Clauses 2, 4 and 5.
VISCOUNT SIMON: I apologise for interrupting the noble Lord, because I am going back a little way. When he was starting his last passage, did he say, and did he really mean, that the effect of the Amendment would be to remove these small shops from price regulation? I do not think he meant that, because the Amendment does not refer to price regulation.
LORD JACQUES: If I said that, I was wrong and I apologise, but I do not think I said that. I said that the effect of the Amendment would not be to remove the small shops from price regulation; the Secretary of State would still be able to regulate the prices. What this Amendment does is to remove the necessity for the small shopkeeper to display prices under Clauses 2, 4 and 5, and I hope I said that earlier. I also added that I thought it made little sense for the Secretary of State to he able to regulate the prices, but not to insist that the customer be informed of the price.
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I should also like to emphasise to the Committee that a very large proportion of the specialist shops—in butchery, fish and greengrocery—are independent shops. A very large proportion have a turnover of less than £25,000 a year because they are specialists, because they trade in a restricted range of commodities. These are the trades where unit pricing is essential from the consumer's point of view. These are the trades where there is no sale by prescribed quantities. These are the trades in which the customer asks for a fillet of fish or a piece of steak, or even specifies a weight and says, "I want half a pound of cooked meat". The shopkeeper often replies, "It is a little more than half a pound. Will you take that?", and the customer usually takes it, which is to the advantage of both the shopkeeper and the consumer.
But in those circumstances the customer has a right to know not merely the amount she has paid, but the price per pound, the price per unit that she is being charged, and the shopkeeper has a moral obligation to supply that information by simply putting a ticket upon the goods. We are asking for the powers to insist that that be done. This Amendment is to avoid our having those powers so far as the small shopkeeper is concerned. I am sure the noble Lord did not have this in mind, but the effect of this Amendment in the area of unit pricing is this. There are a few who fiddle. Let them fiddle in peace and not be disturbed. We want to stop the few who fiddle by enabling the consumer to be fully informed.
This new clause would make much more difficult the enforcement of orders in the remaining shops. In practice, it would not keep out only the shops with a turnover of £25,000 a year or less. It would keep out far bigger shops, because the inspectorate service would naturally keep away from all shops which they thought might have a turnover of only around £25,000. They would not want to waste their time because they would know that that would be a defence. They would not want to be involved in an argument as to whether the turnover was £25,000 or £30,000 per annum. So that in practice you would exempt a much larger number of shops because of this attitude which would inevitably be taken by the Inspectorate.

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The Institute of Trading Standards Administration is strongly opposed to provisions of this kind for practical enforcement reasons. Why are they opposed to them? They are opposed to them because in provisions of this kind you always have anomalies, and sometimes you have injustices. Can I give one or two examples. I have already said that 39 per cent. of the grocery trade is done by independent shopkeepers, most of them having a relatively small turnover. One half of them are symbol shops—that is to say, one-half of the independent shopkeepers involved in this 39 per cent. of the food trade have given up some of their independence, have joined in a chain. They have joined in a chain in order to get the benefits of bulk buying. But very often the matter goes far beyond bulk buying: as part of the price that they pay for their goods, they make a contribution to advertising. The advertising is concerned very largely with prices, and consequently they lose control of prices policy, which passes over to the chain.
At what point does the independent trader cease to be independent? Surely we must take that into account? In many of our villages just a few years ago the principal competitors were the local cooperative societies and the independent traders. Both of these institutions have had to give up some of their independence in their fight against the supermarkets. The independent trader has joined in the voluntary chain. He has given up some of his independence to obtain bulk buying. He has given up the independence of fixing his own prices, and so on. Similarly, the local village co-operative society has had to give up some of its independence in order to get the advantages of bulk buying. It has had to join with the bigger co-operative society in the town.
But what does this Amendment say? It says that if you are an independent trader then you are exempt from all these conditions laid down in this Bill, but if you are a co-operative society you are not exempt. That is an anomaly; indeed, it is an injustice. I am not prepared to argue that the co-operative stores should be exempt; I am arguing that all should be included. I would point out that the small trader is included in every other
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law that affects the trade; for example, any law which affects hygiene or weights and measures involves the small trader. Why should not the laws relating to consumer protection also involve the small trader? After all, we are only discussing the display of prices, not price regulation.
I should like to give one more example. A few years ago I was in America and I came across a remarkable chain, and it was not the only one of its kind. It was supposed to be a chain of independent traders, but in point of fact the owner of the warehouse owned all the shops. He rented the shops to individuals, and it was one of the conditions that the individual bought all his goods from the central warehouse. The goods from the central warehouse were charged out at retail less a commission. So in point of fact the so-called independent retailer received a commission out of which he paid his expenses, including the rent, and the balance that was left was his. It was a kind of "lump" inside the retail trade. Is it the intention that that kind of chain should be exempt? It would be under this proposed clause. If that chain came to this country—and that is not an outlandish idea, because we already have American chains in our High Streets—under the proposed clause it would be totally exempt from these elementary needs of the consumer regarding the display of prices under Clauses 2, 4 and 5. Indeed, we need not go so far as America to find the case of a chain being in the position that it can get away from the needs of consumer protection. The independent trader who wishes to open another shop, but wishes to be exempt from the elementary needs of consumer protection, can form another company, and that company can own the second shop. Another company can own the third shop, and so on. By having each of his shops owned by a separate company—which is a person, in law—he would escape the elementary needs of consumer protection contained in Clauses 2, 4 and 5.
In conclusion, I can assure the noble Lord that we shall consider fully the position of the small shops, and particularly the specialist retailers, and we shall be in close consultation with them. We are as anxious as noble Lords opposite that Orders under these clauses should not place unduly onerous obligations on small shopkeepers, or drive them into financial

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difficulties; but we do not believe that it would be right that they should play no part in the Government's efforts to help the consumer. Any exemptions should not be in the Statute; exemptions should be in the Orders. Each Order is different; each Order covers an entirely different subject and entirely different sets of circumstances. In come cases the small trader should be included, in other cases he need not be included. Surely that is the way to grant exemption, not in the Statute. I hope in the light of the explanations I have given noble Lords opposite will feel inclined to withdraw this Amendment.
VISCOUNT COLVILLE OF CULROSS: I do not want to go into the points that the noble Lord has just made in an impassioned speech on the merits of the new clause, but when a proposal of this sort was put forward in another place various technical difficulties were raised on the way it was then drafted, and we have carefully sought to go through these piece by piece in order to remove the disadvantages which were then seen by the Government. I observe that the noble Lord is extremely fully briefed on this clause by his advisers, so could he advise us whether there are still technical difficulties of a major nature, because I am sure that we would not wish to put something in which is wholly faulty? I rather gather from what he said that we have now got over the difficulties of defining turnover, and the difficulties of the inspectors having to look at all the books before they decide whether or not a shop is exempt, because we have put the burden of proof on the shopkeeper. Whether the noble Lord likes it or not we have at any rate produced a definition of "independence", which was previously not very well dealt with. Has the noble Lord other technical criticisms? If so, we should like to know in order that we may be able to put them right.
LORD JACQUES: I have no technical criticisms other than those which I have given.
5.9 p.m.
LORD ELTON: The noble Lord, Lord Jacques, has carried an impressive head of steam an impressive distance in his objections to this Amendment. I have paid great attention to what he said. I would point out that in phrasing this
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Amendment we have embraced the smallest possible number of shops of the smallest possible size, and limited the area of our intereference with the action of the Bill to the minimum possible area. I would repeat what I said when the noble Lord kindly gave way to me, that the earlier part of what he said lacked force because we seek to do nothing to interfere with the price-fixing arrangements of the Bill. One could make out a case even for that, but we have not done so.
I would really like noble Lords to consider the burden of work which is being placed on these unfortunate people. If you have not had the onerous task of pricing a great number of things in the commercial way, then think of the running of a parish bazaar and tombola stall, and imagine that every ticket had to have on it the numerous extra provisions which the Minister has power to insist upon under paragraph (d) of Clause 4(2), where different provisions are made in relation to different circumstances and may contain such supplementary provisions that the Secretary of State may think necessary or expedient. This could be no small task. The noble Lord has experience in this form of trade, although I suspect that it was in a larger unit than that which we are now looking at so sympathetically. Only in the last phrases of his eloquent and moving speech did the noble Lord show the first vestiges of sympathy towards the small trader. He suggested that, unintentionally though it may be, we were aiding and abetting the fiddler. Far be it from us to do any such thing.
LORD JACQUES: But the noble Lord is doing it, whether he wants to or not. I said plainly that although it may not be the purpose of the Amendment, the effect was to allow the fiddler to get away with not unit pricing and to do it in peace.
LORD ELTON: I have two points to make on that. First, a fiddler who has a turnover of only £25,000 a year is not a successful one. On the larger scale, I perhaps gave way too soon, because I was about to say that the noble Lord had not suggested any way in which the Amendment might be altered in order that the fiddler could be excluded under the unit pricing. This would be possible but it has not been suggested. That is

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why I feel that Her Majesty's Government are hostile to the small trader, which they should not be.
All it comes down to is that Her Majesty's Government are laying upon the small trader, who performs a valuable and not very remunerative service to many people in scattered and isolated communities, extra hours of work and the danger of a reduction in an already small return. At the end of his speech, the noble Lord, Lord Jacques, said with some passion that the exemptions should not be in the Bill but in the Order. I hope very much that he will be able to amplify that statement and give some form of undertaking which will give us reason at least to take the Amendment away and reconsider it, and give him an opportunity to tell us, in what way, upon what grounds, within what guidelines and at what standards these exemptions would be operative. If he could tell us what these would be, how he will arrive at them and to what extent we can count on their continuance, then it would be possible for us to think again and discuss the matter between today and this day week when I understand the next opportunity for debate will arise.
LORD JACQUES: From hard practical experience I would say that there is nothing in the Bill which will increase the burden of work in pricing. The burden of work in pricing has nothing to do with the things in the Bill. The burden of work in pricing arises first of all in the calculations that will have to be made in putting the on-cost on to the buying price and arriving at the new price. The placing of the ticket upon goods is not a major fact of work. It was suggested that I had not shown how fiddlers might be excluded. I can tell noble Lords how fiddlers might be excluded. There is only one way of dealing with fiddlers, be it in this area or not; that is, to make it an offence, no matter what the alternative is. That is what the Government want to do.
On the question of the order giving exemptions, I see great possibilities in that. For example in making an order it might be possible for the Secretary of State to decide that the range of prices need not be shown in shops below a certain turnover. For example, in the case of subsidised foods, the Minister is
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trying to prevent the large supermarket from raising its price to the maximum price which has been determined bearing the small shopkeeper in mind. If the Secretary of State is, through price ranging, trying to put pressure on the larger shopkeeper, she could decide that that kind of range of prices need be displayed only in the largest shops and not in all shops. There are so many possible alternatives and so many different circumstances that each one would have to be considered entirely separately.
If there is to be any exemption for the small trader, I believe that all the circumstances must be borne in mind. Since they vary considerably, each case will have to be considered on its merits; that is each order and not the Statute as a whole. I remind the Committee that the question before it is not whether there should be price regulation; not whether small traders' profits should be affected one way or the other. The question is whether the small trader should carry out those practices which are necessary for consumer protection, such as the display of prices and unit pricing. That is what the Amendment is all about.
LORD ELTON: If the noble Lord would be kind enough to undertake before the weekend to give us some more detailed indication of the standards of exemption or application of orders we could consider them before we meet again on the Report stage. In other words, such further information would help to expedite the business of the House if it should allow us to withdraw the Amendment. I should like to know whether I could meet the noble Lord, Lord Jacques, and extract a little more detail from him direct.
LORD JACQUES: I give an assurance that I will discuss this question with my right honourable friend. I will then make contact with the noble Lord, Lord Elton, and hope to be able to satisfy him.
LORD ELTON: I am most grateful to the noble Lord. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 6 [Power to abolish Pay Board]:
5.18 p.m.
On Question, Whether Clause 6 shall stand part of the Bill?
LORD ABERDARE: I cannot let Clause 6 pass without a brief comment. I do not intend to repeat what I said on Second Reading. The clause only gives power to the Secretary of State by order to abolish the Pay Board, and the order would be subject to the Affirmative Resolution of both Houses. In those circumstances we will have an opportunity to debate the Order itself.
During the Statement on London Weighting this afternoon I commented that it seemed odd to abolish the Pay Board and at the same time to praise it for a useful Report on London Weighting. The noble Lord, Lord Beswick, told me that it was another example of a guideline being given for the new regime of voluntary wage bargaining. We take the view that these guidelines, admirable as they may be in themselves, are unlikely to stick. All the evidence that one sees daily in the papers is that every trade union takes the view that the social compact is a fine idea, but that in its own case there arc so many anomalies and difficulties that it is a special case, and until its own special case has been put right it does not feel happy with the proposed guidelines. We have debated this subject thoroughly in the past and will go on doing so in the future. It would not be appropriate for me now, other than to make these few remarks, to oppose the clause.
VISCOUNT AMORY: I wish to add a word or two to what my noble friend has said. The clause deals with an important matter. I realise that this is not the occasion to debate again the principle behind it. I realise, too, that the power given by the clause is not mandatory but permissive. But there are many of us who feel that if the Price Commission is to be operated while the Pay Board is abolished, it will leave a hopelessly unbalanced system. There is so much we do not know about the future. We do not know what the vacuum will be, whether there will be an intention to fill it in any other way, or whether incomes will be allowed to rise freely when the dam is removed. It would not be out of place to say that there are many of us who are very unhappy about the proposal to abolish one of these boards, while continuing to operate the other.
LORD HARRIS OF GREENWICH: As the noble Lord, Lord Aberdare, indicated, your Lordships will have an opportunity to discuss this matter again under the Affirmative Resolution procedure if the Government produce it—as indeed they will. But I would make one point to the noble Lord. I recognise that the last Government had a number of particularly difficult problems in this field and that, especially in the last year of their life, they had the exceedingly difficult problem of rapidly escalating commodity prices. Nevertheless, the existence of a statutory policy in the last twelve months of their life coincided with the highest degree of price inflation we have ever known in this country. I say no more than that I do not think it behoves any of us to be too self-righteous about this problem, which is one of exceeding and considerable difficulty.
The statutory policy of the Labour Government certainly did not succeed. I think it is also true that the statutory policy of the last Conservative Government did not succeed. The present Administration is at the moment attempting, with the co-operation of the T.U.C., to fashion a voluntary policy, and all we can say so far is that, as the noble Lord will be aware, we have had the statement made by the T.U.C. last week—which was a very welcome statement so far as the Government are concerned—expressing the strong approval felt by the T.U.C. of the economic and social policies being pursued by the present Government. All I would say is that none of us on this Bench would under-estimate in any way the difficulties of pursuing successfully a voluntary policy. But I do not think any of us should forget our experience of the very substantial and real difficulties of a statutory policy. With that relatively short statement of the position from this Bench, I shall sit down, aware of the fact that we will return to this matter within a week or so.
Clause 6 agreed to.
Remaining clauses agreed to.
Schedule [Enforcement]:
5.22 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 5:
Page 10, line 7, after ("may,") insert ("provided that he has reasonable cause to assume that an offence has been committed,").
The noble Lord said: It might be helpful if we discussed Amendments Nos. 5 and 6 together. We have not had very great success as the Government have not been showing their usual flexibility this afternoon, and the least we can hope, therefore, is that we shall be able to persuade them to make these very useful Amendments in the Schedule. Their object is to put a modest limit on the very sweeping powers of enforcement that are in the Schedule as at present. Paragraph 3(1) talks about:
"A duly authorised officer of the Secretary of State or of the Minister of Agriculture, Fisheries and Food",
who may operate these powers. Then, under paragraph 4 the powers conferred by paragraph 3 shall
"… also be exercisable by any officer of a department, board, authority or body with which the Secretary of State has made arrangements … and who is designated for the purposes … by the Secretary of State".
So there is a wide range of people who can use these enforcement powers.
The powers are very sweeping. Under paragraph 3(2) they are,
"(a) a power to inspect and take samples of any goods and to enter any land or any premises other than premises used only as a dwelling; and
(b)a power to require any person carrying on a business, or employed in connection with a business, to produce any documents relating to the business",
and so on. These seem to be enormously sweeping powers. We realise that certain enforcement powers are necessary, but all we are attempting to do by these Amendments is to limit them in two ways.
Amendment No. 5 is to ensure that before an officer uses these powers he has reasonable cause to assume that an offence has been committed. I should have thought that that was self-evident. I should have thought that these authorised people would not in practice want to snoop around in these shops and take samples of flour, or whatever they are going to do, unless they think that there has been some offence committed. So I hope that the noble Baroness, who I think is to reply, will be able to assure me that these authorised persons will not be entering shops, taking samples, looking at the books and taking extracts, unless they really think that an offence has been committed before they go there.
The second Amendment, No. 6, merely makes the point that if they are going to take documents or copies of documents then, at least, they should take copies of relevant documents. Otherwise, the paragraph as it stands at the moment gives them power to require a person to produce any document relating to the business. I should have thought that the word "relevant" was very relevant in this instance. I beg to move.
BARONESS BIRK: I do not know whether I can be as flexible as the noble Lord opposite asked me to be. But I can assure him that the very sinister-sounding list of things which he read out at the end really do not apply to this Bill, and that his Amendments, while he may consider them relevant, are in fact quite unnecessary because the effects do not follow from what he has pronounced as the causes here. I can understand quite clearly the reasons why these Amendments have been moved, because on one reading there may be some concern felt that powers should not be given which allow access to premises and documents without any reason for such intrusion being given. I believe, and will show, that in fact this is not so, by the way the Bill has been drafted.
I can see that noble Lords may envisage businessmen being harassed by inspections which have no bearing on the food subsidy payments, and also that information obtained under these powers may be used for other purposes. Noble Lords have also observed, I am sure, that the powers given in paragraph 9 to a duly authorised officer of a local weights and measures authority are exercisable only for the purpose of determining whether an offence has been committed, and I imagine that it is this which has led the noble Lord to feel that a similar limitation should be set on the powers in paragraph 3(2). I shall try to explain why a limitation which is appropriate in paragraph 9 of the Schedule is not appropriate in paragraph 3.
In paragraph 9 it is possible to speak of,
"… determining whether an offence … has been committed",
because if there is reason to think that a price regulation order has been breached there is then suspicion of an offence; if not, there is nothing to investigate. But

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in paragraph 3 we are not only taking powers to investigate suspected offences, but are also providing for checks that payments have been correctly made and that breaches have not been committed. In fact, I am drawing a distinction between an offence and a breach or, if you like, an abuse. Your Lordships are well aware that considerable sums of money have been committed to these food subsidies, and what paragraph 3 of the Schedule does is to confer powers on duly authorised officers to check on the proper operation of the subsidy schemes. Here the officers in question, probably the audit staff of the Ministry of Agriculture, may, for example, need to satisfy themselves that a baker in receipt of subsidy has used the subsidised flour for the manufacture of bread, and not for Bath Oliver biscuits.
The subsidy funds are aimed at helping those in need and I am quite sure, from what has been said throughout the passage of the Bill, that your Lordships would agree that all appropriate measures should be taken to ensure that, so far as possible, they are not diverted to other purposes. Whether or not there is evidence to suggest that a firm has breached the conditions of a subsidy scheme, inspection on a spot-check basis may be necessary. In most cases, one cannot find out whether there has been abuse or a breach committed until a check has been carried out. I believe that the Department would be failing in its duty if it were not prepared to conduct these checks in the case of any firm which has been in receipt of public funds.
The second reason for resisting the Amendment is that a breach of subsidy conditions will not necessarily constitute an offence, and I do not really think that your Lordships would want us to create more offences than are necessary. At the moment, it is a question of discovering whether there has been abuse of the use of the subsidy—and there is one concerned that the subsidy should be repaid to the Secretary of State—which is more important than creating an offence and taking proceedings under the erosion. However, steps have been taken to allow certain conditions relating to subsidy payments to be made enforceable by Order and paragraph 2 of the Schedule provides that such conditions will apply not only to the claimant but also to subsequent
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sub-purchasers prior to the retail level. A breach of the conditions contained in an Order would constitute an offence. However, if the Amendment was passed it would limit the powers of inspection to cases where an offence was suspected and it would not be good enough for the inspectors' hands to be tied in this manner where the Department is to be accountable for the correct expenditure of subsidy funds. In this case, there would be no alternative but to incorporate in Orders all the conditions which at present exist in contracts so that every breach would become an offence. I am quite sure that the noble Lord would not consider this desirable.
Having said this and having said that this is the reason why I shall have to resist the Amendment, I should also like to emphasise that an inspector does not have a right to exercise his powers of entry and inspection completely at random and that the Bill as drafted has already clearly circumscribed the powers which are given in paragraph 3(2). In paragraph 3(1) it is stated that there are two purposes for which the powers may be exercised. On the one hand, they may be used to determine whether the subsidy payment has been correctly paid or whether a repayment is due because a condition has been breached or the food has been exported. On the other hand, the powers may be used to determine whether conditions relating to subsidy payments, which are prescribed by Order, have been contravened. This is the parallel to the phrase in paragraph 9 to which I have referred and which the Amendment seeks to introduce. Rights of inspection do not exist outside these purposes and, as the purposes are defined in this way, the further safeguard condition proposed in the Amendment is not necessary and would indeed defeat the object of the exercise.
In the light of this explanation, I hope that the noble Lords will not press their Amendment. The noble Lord, Lord Aberdare, was kind enough to take the two Amdenments together. They are interlinked so that, if noble Lords will hear with me for a moment, I will go on to speak of the second Amendment, which introduces the word "relevent" to the production of any documents. I imagine that it is a similar concern which links the two together, so I will not go over

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the ground again. I should have thought that it was quite clear from what I have already said as a background to the explanation of the conditions covering both the clauses, that the Bill as drafted gives an officer no power to demand totally extraneous documents. For example, he could not possibly demand to see the Managing Director's gas bill or anything like that. The documents must be "relating to the business", as stated in paragraph 3(2)(b). Secondly, the power to require the production of documents, like all the powers under paragraph 3(2) is limited by the overriding provisions of paragraph 3(1). In the case of orders under Sections 2, 4 and 5 concerning the regulation of prices, and the display of information about prices, the purpose must be that described in paragraph 9(1).
The introduction of food subsidy schemes has required the close-cooperation of the trade, so that they are already aware of the kind of document which will be required for inspection. Claimants of subsidy give an undertaking to keep records and to make them available for inspection. In the case of price regulation Orders, there is a statutory obligation to consult with representatives of the trade before the introduction of any Order, so that, at these consultations, the trade will have the opportunity to inquire in more detail about the documents which they might be required to produce to "duly authorised officers" It seems to me that it is at that level—with the trade organisations and through their own journals—that this could be completely clarified wherever necessary and that when individuals want information they will be able to go to their own trade organisations who will have been consulted throughout.
The introduction here of the word "relevant" implies a subjective judgment, and although there is no indication in the Amendment as to who should decide what is or is not relevant, it could, on the basis of the way in which it is drafted, only be the person who has the documents in his possession, so that the authorised officer would have no means of knowing whether or not all the relevant documents had been produced. If a person feels that he is being asked to produce something that is not relevant he has only to refuse to do so
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and, if he refuses to produce something which turns out to be necessary and which it transpires should have been produced, the officer can take the means of going to court to obtain production of the document.
I also draw the noble Lord's attention to paragraph 12 of the Schedule which places restrictions on the disclosure of information supplied in the course of the exercising of the powers conferred by the Schedule. Again, there is no danger of any information which becomes available, even as a result of the restricted powers, being abused. In conclusion, I think that I should point out that the powers of entry and inspection are not completely new in the Bill. They are similar to those contained in recent legislation such as the Counter-Inflation Act 1973, the Fair Trading Act 1973 and the Trades Description Act 1968. They are necessary, I repeat again, for adequate safeguarding of the considerable sums of public money which are committed to food subsidies. However, they do not go beyond that purpose or seek to introduce any novel incursion into the rights of the individual. Therefore, while appreciating the motives behind the Amendments, I hope that the noble Lord will accept the explanation and will not press the Amendments.
LORD ABERDARE: I am most grateful to the noble Baroness for the assurances which she gave me in the course of her speech and for the explanation that these powers are not so far-reaching as I had thought. As she rightly says, they have been included in other legislation, which has been legislation of both Governments, but I think that this is one reason why one should be suspicious of all the powers given to inspectors. I know that the grocers, for instance, now have six different authorities which have access to their shops for inspection purposes, and two of those authorities provide two different inspectors for different aspects of their subject, so that there are eight different authorised people—now to be nine—dodging in and out of grocers' shops inspecting them for one reason or another. However, I am grateful for the explanation which the noble Baroness has given me and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule agreed to.
House resumed: Bill reported without Amendment.

RENT BILL [H.L.]
5.41 p.m.
THE LORD PRIVY SEAL (LORD SHEPHERD): My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Lord Shepherd.)
On Question, Motion agreed to.
Clause 1 [Extension of protection afforded to furnished tenancies]:
Lord BETHELL Lord BETHELL moved Amendment No. 1:
Page 1, line 7, after ("date,") insert ("subject to subsection 1A below—").
The noble Lord said: My Lords, I beg to move Amendment No. 1 and I hope it will be for the convenience of the House if I also speak to Amendment No. 2. The purpose of these two Amendments is to reduce the rateable value limit on which protection under the Bill will come into effect for furnished accommodation. Your Lordships will recall that the rateable value limit was changed by the previous Government about a year ago, and that under the present rateable system it now stands at £1,500 for residential units in London and £750 outside London. Any unit above this figure which is unfurnished has no protection. But, there are very few residential units that fall into this category. I believe that there are probably less than 10,000—just a few thousand in the whole country—so it is a question of 99·9 per cent. in one category and 0·1 per cent. in another, and I suggest that it would be more practicable and advantageous to reduce this figure only with regard to furnished accommodation under the legislation that is proposed under this Bill. This would mean that residential units at half the proposed figure—that is, £750 for residential units in London and £375 for units outside London—would not, if they were furnished, have the protection proposed under the Bill.
The reason why I am suggesting this Amendment is indicated by a certain amount of research I have done, which
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shows that a flat or a house in London with a rateable value of £750 would, on average, command a furnished rent of £75 a week and might, at the top end of the market, command a rent of £125 a week. This information has been given to me on the basis of research conducted by the agents Chestertons who act, among other clients, for the Church Commissioners. I hope your Lordships will agree that there is nothing "Rachmanite" about them and that any information gathered by this most respected firm is likely to be accurate. We are therefore discussing residential units in central London which would have an average weekly rent of £75, around twice the wage for an industrial worker. I ask your Lordships to consider whether it is appropriate that this Bill should provide protection for tenants who will be paying this sort of rent—£75 a week.
By and large, I think we know the purpose of the Rent Bill which has been brought in by the present Administration. The nub of it is contained in the words used by the noble Lord, Lord Garnsworthy, on Second Reading, when he spoke of young people, particularly young married couples, who were forced because of the shortage of council accommodation to move into the furnished private sector who were unable because of the difficulties in obtaining mortgages to buy their own houses at the moment; who were forced to pay high rents, higher than they could afford, and who had no assurance against eviction. These people, the noble Lord, Lord Garnsworthy, said:
"… have such incomplete security of tenure that many live in permanent fear of eviction and subsequent homelessness. It is for such people that this Bill is designed to provide help."—[OFFICIAL REPORT, 10th June 1974; col. 240.]
Probably most of your Lordships on both sides of the House sympathise with the plight of people who are in this position, and who face the danger of homelessness if they do not have protection. I do not qaurrel with that Part of the Bill which seeks to help them. But the Bill, as was also indicated by the noble Lord, Lord Garnsworthy, has been drafted in a rather complicated way and there is a certain feeling that it was done with a lot of haste. Therefore, it may have certain unfortunate side effects which the House should be very careful about and should know about. One of the side

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effects is that the Bill as at present conceived will have a very serious effect on the present market of furnished flats now available to transients, particularly in London.
I suggest that it is very important that the city of London, which is one of the great world centres, should continue to have a large number of furnished flats and houses available for diplomats, representatives of foreign companies, foreign individuals who come here, people who come from other parts of the country for short terms of a year or two, for people moving jobs and coming to London briefly, perhaps looking for a house or intending to stay only for a year or two for a term of duty to which they have been assigned by the organisation for which they work. It is these people who need the service which is provided by the private sector of furnished accommodation. Without this service one does not quite know what they would do. They may decide not to come to this country if they cannot find accommodation for a year or so. They may decide to go elsewhere. I am thinking now of wealthy individuals from overseas who are looking for a place to live. They may decide to buy accommodation. Embassies and companies may decide that instead of going to the private sector they will buy blocks of accommodation in London.
The result of this would be that pockets of residential accommodation would very soon be in foreign hands and the income from the service would cease, with a consequent loss to the balance-of-payments situation and to the Exchequer. A further consequence might be that people coming to this country for a few months or perhaps a year may be forced to turn to hotels. This might be the only recourse left open to them; they would find themselves forced to take two rooms or a suite in a hotel. The result would be to put up the price of hotel accommodation and to make the hotel situation even more acute than it is now, and in a thoroughly artificial manner. Normally someone coming for as long as six months or a year would not stay in a hotel but would find a furnished flat. If this Bill is passed without something like the Amendment which I have put down, it seems to me extremely unlikely—and I have already declared my personal interest
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in this matter and have taken some advice—that private landlords who provide this service will continue to do so.
It would be commercial madness, my Lords, for a landlord who is obtaining a rent of, say, £75 a week for a flat (he is not, of course, making a profit of £75 a week because he is providing furniture which cost several thousand pounds; he has to maintain his flat to a high standard of decoration at a cost of several hundred pounds a year; he has to provide services and to replace the furnishings and fittings to keep it to the sort of luxury standard we are talking about) to provide this service if the flat is let to an individual or to sharers who are able to obtain security of tenure and go to a rent officer or a rent tribunal and obtain a fair rent which excludes the element of scarcity. I have taken advice and my advice is that this would probably reduce the weekly rent of such a flat from £75 to between £35 to £40. It would be commercially impossible for a landlord to continue in business in this way.
My case is that above a certain level the ordinary market forces should be able to apply, and it should not be necessary for the Government or the local authority to step in as the guardian of the tenant because the tenant of such accommodation does not need the protection of the authorities in his battle against the landlord. It is sufficient for him to be able to negotiate with the landlord on a free basis and to sign whatever agreement he can achieve. If this Bill goes through without some such amendment I suspect that landlords will wait until they gain possession of the flats which are being let at these high rents and will not relet them, but will wait to see whether the Government reconsider and make some provision for the service they are providing; and then will sell the flat or the house for owner-occupation. It would be crazy of them to take the risk of allowing to move in a tenant who might then gain security and have the rent reduced and remain in the flat for a number of years. I would ask the Government to consider whether they need to provide security for people paying the sort of rents I have been discussing.
The noble Lord, Lord Avebury, in his speech on Second Reading suggested that the private landlord was a dying animal,

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someone who was disappearing off the face of the earth. I dare say there are noble Lords who would think that that was a good thing; but to me—and to many other noble Lords who sympathise with the general purpose of this Bill and who have no wish to see homelessness inflicted on any person in this country—it would seem hopeless to abolish this particular service which is provided for people who do not need protection. It is quite right for the Government to curb landlords who have too much power and who are in a position, at a few months' notice, to evict young married couples from a flat. It is absurd that people who have a furnished flat as their only home should be able to obtain only a few months' protection. Certainly until the housing situation is in a far better state than it is now they need more protection. With the Bill in its present form I would suggest that by abolishing one social evil the Government are having little regard to the harmful side effects of their legislation, one of which will be the disappearance of high quality flats available as short term London residences.
5.58 p.m.
LORD SHEPHERD: My Lord, I am grateful to the noble Lord, Lord Bethell, for his general support of the purpose of this Bill and the lucid way in which he has moved his Amendment. The effect of the Amendment, as he said, would be to provide that no furnished tenancy would become protected if the rateable value of the dwelling-house was more than half the rateable value limits currently fixed for protected tenancies by virtue of Clause 1 of the 1968 Act, as amended by the Counter-Inflation Act of 1973.
The noble Lord, Lord Bethell, has again raised the subject of the effect that this Bill would have on furnished accommodation provided by landlords, such as himself, for the use of foreign diplomats, businessmen and rather wealthy visitors staying temporarily in this country, particularly, of course, in London. He has expressed concern that these visitors will no longer be able to find accommodation suitable for their needs. I am afraid I will have to repeat what I said in Committee when the noble Lord raised this same point on the Question, That the Clause stand part of the Bill? I repeat,
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I cannot accept that what he is seeking to achieve is either necessary or desirable.
I emphasised in Committee that where furnished accommodation is taken by a Government or by a limited company on behalf of a member of their staff the Government or the company would, under no circumstances, claim Rent Act protection once a contractual tenancy has come to an end. I admit that there is nothing to stop an individual diplomat or businessman to whom a tenancy is granted from claiming protection, but I cannot seriously believe that there will be many foreign visitors who would ever have occasion to do this. I certainly would not agree with any proposal to restrict the scope of the protection we are giving to furnished tenants. The reasons which led us to support the previous Government in extending protection to higher rateable value unfurnished tenancies apply with equal force in the furnished sector now that this will be protected. The noble Lord suggests that expensive furnished accommodation does not provide homes in the sense that we understand that term. But people who are desperate for accommodation are forced and will be forced into the unprotected market and be subject to the high rents and insecurity which we are determined to get rid of.
I should like to remind the noble Lord and the House that his proposal would exempt from protection not only the expensive furnished flat used by the visiting diplomat or businessman, but also that accommodation which has a rateable value between £750 and £1,000 in Greater London. which may well be occupied as homes by long-term residents. I gave most careful consideration to what the noble Lord said in Committee, and considered whether I would be justified either in accepting the Amendment on the Marshalled List, or in seeing whether there was any way around the difficulty. However, I have come to the view, which I ask the House to accept, that we should treat furnished tenancies in the same way as we have treated unfurnished tenancies in the past, and use the same rateable value as the guide. I very much regret to have to say to the noble Lord that we are not in a position to accept his Amendment.
BARONESS YOUNG: My Lords, I wonder whether I might press the noble Lord, Lord Shepherd, to reconsider this matter, in spite of the fact that he has said—and, indeed, I am very grateful to him for it—that he has already given it further consideration. It is perfectly true that the Amendment may not be correctly drafted, but its aim is to meet what appears to me and to my noble friend Lord Bethell a rather exceptional case. It seeks to remove from the protection of this Bill only the most expensive flats, the kind of flats occupied by people who may well come to London because it is the capital city and the centre for commerce and business, and not in the way they would go to other places. Because of that they bring in foreign currency, contribute to our balance of payments and no doubt contribute, directly or indirectly, to the economic growth of our society.
The second group of people who will be concerned are those who may come through foreign embassies. I should like to know whether the Government have had discussions with the Foreign Office on this point because, as I understand it, if a flat is let to an individual and not through an embassy, the individual will have security of tenure under Clause 1. Therefore, in a world in which Governments do not always seem to be as stable as we should like, there could be difficulty for a Government in finding accommodation for other officials. In this Amendment we are not talking about tenants who need protection because they are likely to become homeless, or because they are poor and cannot afford to find other accommodation. We are talking about tenants who are able to pay at least £75 a week. I hope that the noble Lord, Lord Shepherd, will feel that such people do not need the protection of this Bill, and that he will look at the principle and see whether he can find some way of meeting it.
LORD SHEPHERD: My Lords, I should be the last person to resist the approaches of the noble Baroness on this matter, but I will be honest with the House. I have looked at this matter and have discussed it with my advisers, and I have come to a view which I believe is shared by my colleagues. What I can
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undertake to do—and I hope this will satisfy the noble Baroness—is to draw her remarks and those of the noble Lord, Lord Bethell, to the attention of my right honourable friend who, I hope, will be taking this Bill through another place later this week. I will also draw his attention to the points that have been made. I am not putting forward any real hope, but I will certainly see that my right honourable friend is made aware of the case which has been put and I will leave it with him for his personal consideration.
LORD BETHELL: My Lords, I am most grateful to the noble Lord, Lord Shepherd, for the careful consideration which I know he and his advisers have given to my Amendment, and also for what the noble Lord has said this afternoon. There is one point which I should first like to emphasise in regard to the dangerous situation that I outlined in my speech, whereby landlords arc withdrawing their flats from the furnished private market. It has already begun. I have discussed this with certain agents who specialise in this type of accommodation, and I am assured that some landlords are keeping their flats empty because of this Bill and are awaiting events. If some way cannot be found of reaching a solution, such accommodation will vanish from the private furnished market. I can only hope that the noble Lord, Lord Shepherd, will be able to discuss this matter with his colleagues and his right honourable friend and that perhaps some way might be found of keeping the main purpose of the Bill without doing the damage that I believe would be caused if some Amendment similar to my own is not introduced. With that hope, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.7 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 3:
Page 2, line 2, after ("above") insert (", subsection (4)(a) below").
The noble Lord said: My Lords, this is a drafting Amendment. Tenancies are brought into the protection of the Bill by virtue of the Amendment to Section 2(1)(b) of the Rent Act, contained in subsection (4)(a) of Clause 1, a well as by

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virtue of subsection (1) of that clause, and it effectively repeals Schedule 4 of the Bill. I beg to move.
On Question, Amendment agreed to.
Clause 2 [Certain tenancies not to be protected]:
BARONESS YOUNG BARONESS YOUNG moved Amendment No. 4:
Page 2, line 29, leave out from ("pursue") to second ("or") in line 32 and insert—("—

(i) a course of full-time instruction at any university, college, school or other educational establishment or institution,

(ii) a course provided or approved under section 2 of the Industrial Training Act 1964 as amended by the Employment and Training Act 1973, or any service contract, apprenticeship or further education associated with any such course, or

(iii) a course of study leading to any of the following—

entry on the roll kept under section 2 of the Midwives Act 1951,
registration under section 7 of the Medical Act 1956,
admission to the register or roll maintained under section I of the Nurses Act 1957,
registration under section 2 of the Dentists Act 1957,
registration under section 2 of the Opticians Act 1958,
registration on any register maintained under section 2 of the Professions Supplementary to Medicines Act 1960,
registration under section 2 of the Veterinary Surgeons Act 1966,
admission under section 1 of the Solicitors Act 1974,
qualification to practice any other specified trade or profession").
The noble Baroness said: My Lords, I beg to move Amendment No. 4 and at the same time to speak to Amendment 5. I should like to begin by thanking the noble Lord, Lord Shepherd, for the meeting we had and our full discussion on this problem, and also for the thought he has given to this matter. We all recognise there is a real problem for universities and polytechnics, and for students and young people generally as a result of the Bill, and in particular, Clause 1. I do not wish to repeat all the arguments that were fully explained at Committee stage, except to say that we on this side of the House consider that Clause 2, as now drafted, is unsatisfactory.
It may be helpful to explain the main point at issue. Clause 2 is concerned with exemptions from Clause 1, regarding full security of tenure to furnished tenants, and Clause 2(1)(bb) refers to students. Most students living in colleges, halls of residence, or flats owned by the university or polytechnic, will almost certainly be exempted from the provisions of Clause 1 because they are not tenants but live there on licence. The university or college therefore can get back the rooms when a student has completed his course and use the accommodation for another student. Students living in the old-fashioned "digs" with a resident landlady are exempted because under the Bill there is no security of tenure in furnished accommodation where the landlord is resident. As I understand it, this exemption under subsection (1)(bb) was inserted because there are few cases of students who are actually tenants of universities and would, therefore, have protection under Clause 1 but for this exemption.
Therefore, the university might not get back the accommodation it provides when a student has finished his course, and which it needs for future students coming in. This principle is important, because it means that the Government recognise there is a problem for universities and polytechnics if students do not leave their accommodation when they have finished their courses and make room for somebody else. What we on this side of the House are seeking to do by this Amendment is to widen this exemption, because thousands of students now live in furnished flats and will have complete security of tenure under Clause 1. As a result, there will undoubtedly be fewer flats to let, and for future generations of students very little accommodation of the type that students prefer—that is, to be independent of the university and what they regard as a paternalistic attitude. Secondly, in this Amendment we have sought to widen the exemptions to include other young people, including those doing courses under industrial training legislation and those taking medical courses of one kind and another.
Under Amendment No. 4 there is still provision for the Secretary of State to specify other institutions that might be exempted if he so wishes, and the House will realise that we have amended the original Amendment at the bottom of

79
paragraph (iii) to include qualification to practise any other specified trade or profession and therefore to widen it. I have re-read what the noble Lord, Lord Shepherd, said at the Committee stage and, as a result, we have further redrafted this Amendment to meet the criticisms.
Before going into detail, I would make one general point because there is one criticism that the Amendment does not meet. The noble Lord, Lord Shepherd, said that if the Government agreed to the Amendment, students would be discriminated against because they would not have the full protection of the Rent Bill. My answer to that is that under this Amendment students will be no worse off than they are now, because they will still have all the protection that Part VI of the Rent Act 1968 affords. It is true that they will not have the added protection of the Rent Bill, but, as I indicated on Second Reading, it is arguable how much better off collectively they will be; those in accommodation will be protected, those seeking accommodation will encounter difficulties in finding it. If this Amendment were agreed to, it could well be argued that students would find themselves the only people able to get furnished accommodation. So it is equally arguable that they would be better off.
I turn now to the Amendment and to the next criticism which was made, which was that it would be very difficult to identify who was a bona fide student. The new subsection (4) in Amendment No. 5 is designed to meet this criticism—that is, it would be difficult to know or prove in court, if necessary, who is or is not a student. The first part of subsection (4) says that in order for a person to prove that he is a student he must be able to show that he has entered a particular course. I understand that the term "entered for a course" is the generic term for starting any of those courses, particularly in the medical profession. Alternatively, he must show that he is engaged in a service contract. However, if the case should come to court, the burden of proof would be on the person who claims that he is not a student and is therefore entitled to security of tenure because the landlord would have let the rooms on the assumption
80
that he was a student and therefore he would leave at the end of his time.
The presumption in law, therefore, is that the person in question is a student. I understand that presumptions like this are not uncommon in law, and are used extensively in the law on food and drugs. If a housewife complains to the public health inspector that there is a mouse in a loaf of bread the presumption is that it is the responsibility of the bakery to show that they did not put the mouse in it, otherwise it would be extraordinarily difficult to prove who did so. The same principle applies in the new subsection (4) and it meets the criticism of determining who is or is not a student. The noble Lord, Lord Shepherd, also said that the Government have not found time to undertake all the necessary consultations, either with the Department of Education and Science or the local authorities.
Leaving aside the whole principle of whether or not it is right to introduce important legislation without undertaking these consultative procedures at all, subsection (5) is meant to help the Government out of this difficulty. It enables the Secretary of State to make regulations either adding to the list of exemptions, or making any other detailed Amendments which may well become necessary after these consultations have taken place, including the wording of subsection (4). It therefore enables the Government to carry out their consultations, but the result must be taken against the background of the first part of the Amendment which would stand as part of the Bill.
In moving this Amendment, I hope therefore that the Government will accept that we are trying to be helpful. This Amendment also has been drafted by my noble friend Lord Colville of Culross, and I believe it meets not only the anomalies which we all recognise exist in Clause 2, as now drafted, but also the criticisms made of the original Amendment at Committee stage. I hope that as we on this side of the House believe this to be an important Amendment, the Government will feel able to accept it. I beg to move.
6.16 p.m.
LORD SHEPHERD: My Lords, if we are to have a debate, it may be helpful if I intervene now. The noble Baroness

81
referred to our meeting, and I am grateful that she was willing to attend. I think she will accept—and I certainly give an assurance to the House—that we have a great deal of sympathy with the intention of this Amendment. I could be critical as to its drafting, even though it was done by the noble Viscount, Lord Colville of Culross. I could also be critical that it raises a new concept in rent legislation, because previously rent legislation dealt with the property and not with the profession or occupation of the occupier. I could do that and take some time on it; but I should like to make a short intervention to state what the Government's intentions are in this matter. This is an area of great complexity and I personally do not think that it is possible to legislate within the short period that we have to deal with this Bill. But perhaps the House will feel that I have gone most of the way to meet the case being made.
The Government are, as I have said, fully alive to the possibility that the supply of private lettings to genuine students may be at risk, and are anxious to secure the continuance of an adequate supply. Consideration of this problem suggests that the best way of tackling this might be by the introduction of a system for the registration of private lettings approved by specified educational institutions for occupation by students, whereby registered lettings should be excluded from full Rent Act protection. Such a system would well be established by regulation. But the regulation-making provisions that would be needed to establish such a system could not possibly be devised in a few weeks. This is a matter that greatly concerns public bodies outside the Government.
The framework of a registration system would have to be the subject of consultation with representatives of educational institutions, with institutions providing courses of vocational training, and with the local authority associations. All would be closely concerned with the implications of such a system, and with such matters as the criteria for approval, the method of approval and registration and provisions for review of registrations and deregistration. Until they have been consulted it would be impossible for the Government to lay before Parliament measures enabling such a system to be set
82
up. The Government therefore intend to launch these consultations as soon as possible after the passing of the Bill, and hope when they are complete to be able to lay before Parliament legislative proposals enabling a registration system to be established.
I hope, therefore, in view of this assurance that the Government will be tackling urgently the need to ensure a supply of private letting for students, and will be doing so by a means designed to exclude the serious weaknesses and dangers of the method which is embodied in the Amendment of the noble Baroness, that she will feel that I have gone pretty well all the way—not entirely, but nearly all the way—to meet her point. We sympathise with the need for some provision to be made in this area. We do not believe that we can include it in this Bill, but it is our intention to enter into immediate consultation with all the institutions and authorities involved, and then to produce the scheme in legislative form.
LORD HAWKE: My Lords, before the noble Lord sits down may I ask him a question arising out of his speech? At one stage he said that this matter could be dealt with by regulations, but further on he said it would require legislation. Which is correct?
LORD SHEPHERD: My Lords, it could be done by regulation, but before one can put down a regulation one needs to have consultation. The advice I have is that if we are going to embark upon a scheme of this kind, and if we are to ensure that it works satisfactorily both for the students and for the general community, including the local authorities who have a particular interest, we should have wide and careful consultation and then introduce the necessary machinery by legislation.
LORD WYNNE-JONES: My Lords, can my noble friend the Leader of the House assure us that the Government will act rapidly in this matter? As he must be aware, the problem becomes serious about September. In almost all higher educatíonal institutions one finds that it is round about September that pressure for accommodation builds up. There are involved the polytechnics, technical colleges, universities. The problem—I can speak for the City of Newcastle—is

83
very grave indeed, although the local authority has done its best in the matter. If the noble Lord could reassure us that the Government are prepared to act quickly in the matter, I personally would be very happy and satisfied.
LORD AVEBURY: My Lords, it is undeniable that some anxiety has been felt by landlords in the university towns that students would stay on after expiry of the residential contract, although, as I explained when we were discussing this matter previously, I felt the fears were considerably exaggerated. By the very nature of a student's life, it comes to an end when he has completed his degree or further degree, as the case may be. It is extremely unlikely that in those instances he is going to take employment in the town where he happens to have been educated with the U.C.C.A. system. Larger and larger numbers of young people are going to universities miles away from their home towns, and in nearly all cases they will seek employment nearer to the place they know from their childhood. I can, however, see the force in what the noble Lord has said in so far as it is necessary to be sure that the landlords will continue to allow their property to be used for these purposes.
The only qualification is that if it is discovered during the process of consultations which the noble Lord has mentioned that there are no cases of students overstaying their welcome after the expiry of a contract, then surely this fact could be drawn to the attention of those who represent the landlords in the discussions and they may feel that the complicated and burdensome system of registration, as no doubt it will be, could be dispensed with and that the protection of students leaving voluntarily at the end is all that would be required. The method that the noble Lord has chosen to deal with the problem is vastly preferable to that advanced by the noble Baroness, in spite of the fact that, as she told us, her Amendment was drafted by no less an expert than the noble Viscount, Lord Colville of Culross. One serious defect in the wording of her clause which should be drawn to the attention of your Lordships is that it would apply to all tenants who are students of the kinds described here. Perhaps somebody who is already
84
a tenant of a private landlord takes up a course of education. It may be a mature student—a lady who upon reaching the age of 35 or so decides she can go back to university, her children being old enough to cope on their own. She can suddenly be taken out of the protection provided by the Bill. I am sure that that cannot be what the noble Baroness, Lady Young, intended. So even if the noble Baroness is not completely satisfied with the solution posed by the Government, I hope she will not press her own Amendment to a Division.
6.26 p.m.
LORD SHEPHERD: My Lords, before the noble Baroness replies, may I say that I would agree with the noble Lord, Lord Avebury. That is one of the consequences of the Amendment; but in reply to the noble Baroness I did not want to spend too long in dealing with the defective part of the Amendment and some of the consequences. But I should like, since this is a matter of interest, to reply to the point my noble friend Lord Wynne-Jones has put to me. Clearly I cannot commit a future Parliament, but what I can say is that when the adequate framework for a registration system has been worked out it would be our intention to take the first opportunity of introducing enabling legislation.
LORD LEATHERLAND: My Lords, I am very satisfied with the assurance my noble friend Lord Shepherd has given. I realise full well the great difficulty of this problem. I have been for 10 years or more treasurer of a university—that was up until last year—and I realise the great difficulties which universities have in obtaining lodgings for their students. They are inhibited to a great degree from building their own accommodation, although in the case of the university with which I have been associated a great deal of accommodation has been built. One has to bear in mind that this is not a problem of static proportions. A certain number of students, having finished their third year, will go out this July; a corresponding number will come in and take over a corresponding number of lodgings. But another factor has to be borne in mind. The numbers of students in many of the universities are growing. A number of lodgings will be vacated this summer and reoccupied by

85
students in September, but that will still leave all the additional students to be catered for.
I suppose that other towns in which universities are situated have had the same problem. We seem to have skimmed the barrel dry of available lodgings in the particular towns concerned. We may make Amendments as the noble Baroness has suggested—and I welcome those Amendments—but at the same time we cannot get a quart out of a pint pot, and if the lodgings are not available, and the potential landladies are not willing to come forward, it is going to be a very difficult problem indeed. I am wondering whether—it is irrelevant to this Bill—local authorities in university towns could be encouraged to build blocks of flats which would be available for students. It may be said: "Why do not the universities themselves do so?" My particular university has built them in considerable numbers. But I feel that something over and above the available lodgings in private houses must be provided for students in these growing universities.
THE EARL OF KINNOULL: My Lords, I should like briefly to support my noble friend. It seems clear that the issue between my noble friend and the noble Lord the Leader of the House is a fairly small one. It is whether or not one writes this provision into the Bill now or deals with it by regulation later. I was very struck by what the noble Lord the Leader of the House has just said about committing the Government on the undertaking he has just given to the Committee. However, one has to recognise that there is uncertainty about the length of this Parliament. Therefore I feel that no harm can be done by writing this Amendment into the Bill, even if another place amends the precise wording.
6.30 p.m.
BARONESS YOUNG: My Lords, I should like to thank the noble Lord, Lord Shepherd, for the careful thought and consideration that he has given to this matter. I appreciate that lie has done everything in his power to try to meet the point that we both agree is not settled by Clause 2 of this Bill. He has made the offer to look into this question as a matter of urgency and to bring in regulations and, later on, legislation to deal with it. However, as both the
86
noble Lord, Lord Wynne-Jones, and the noble Lord, Lord Leatherland, have said, this is an urgent matter. We have already heard that flats which were available are not going to be available quite soon. Once the Bill is on the Statute Book this will happen even more quickly. I do not know in detail what timetable the noble Lord, Lord Shepherd, has in mind; but given that he starts the consultations while this Bill is going through another place, he knows, as I do, that most local authorities will be in recess in August. Therefore it will be difficult to take decisions then. Also, many universities will be in the depths of the long vacation and the problem will be upon them in September or October. It is unlikely that they will have come to any conclusions by then, because this will require careful and detailed consultation with all the universities and polytechnics and with all districts as housing authorities—or, at any rate, with all those districts which include within their boundaries universities, polytechnics and other educational establishments of one kind or another.
The noble Lord, Lord Avebury, has said that I have exaggerated the problem. I should like to think that that was so. I have tried very hard to find figures. The only other university for which I have been able to find figures is Leeds University where it is estimated that about 4,500 students live in flats of this kind. The noble Lord, Lord Avebury, says that almost all of them will leave at the end of three years. I wonder whether that is so. I doubt very much whether that is so in London, since many students find employment in London; and I doubt whether that is so in Birmingham, since again many students find employment in Birmingham. Also I doubt whether that is so in the case of polytechnics, where students could be doing sandwich courses, and in the case of medical students who would stay where they are. In these particular cases it is not an exaggeration to say that a large proportion, given security, could well stay on for much longer. Indeed, T believe that the Government think that is so, otherwise they would not have put Clause 2(1)(bb) into this Bill; they know that these educational establishments need a constant re-use of accommodation in order to find places for the constant inflow of students. Furthermore, it leaves out all

87
the other students whom my Amendment covers. We need to look much further than simply at the universities and the polytechnics. There are a great many other young people who will need accommodation.
I hope I have said enough to show that I have considered this matter very carefully indeed. Having listened to what the noble Lord, Lord Shepherd, has said, I feel that I cannot accept it and that I must press my Amendment.
BARONESS BACON: My Lords, the noble Baroness mentioned Leeds and 4,500 places, and I was not quite sure what she meant by that. Is she aware that the local authority in Leeds proposes to make available to students fiats in the big Quarry Hill complex which will be closed for normal housing?
BARONESS YOUNG: My Lords, I had heard that the local authority was going to make some flats available and I was glad to hear it. I had my figures from a responsible person at the university. However, as the noble Baroness, Lady Bacon, was not here at Committee stage, she may not have appreciated which group of students we are talking about. We are not talking about those students who are living in halls of residence or in colleges. We are talking about students who choose to live in private flats as tenants. That was the number which I was given of students who were thought to be living in private flats in Leeds. This figure could include other educational institutions besides the university. However, in round figures that was the information which I was given.
BARONESS BACON: My Lords, I am not disagreeing with the figures which the noble Baroness, Lady Young, has given. I am only saying that there will be this extra accommodation, since the big Quarry Hill complex will no longer be used for local authority family housing. Many of the flats there will be made available for students who would normally be in private accommodation.
LORD AVEBURY: My Lords, before the noble Baroness, Lady Young, sits down, can she say whether she has taken into consideration the point which I made about tenants who will be protected at the time the Bill goes through but who, by subsequently taking a course of education,
88
will be removed from protection by her Amendment? Does the noble Baroness think that this is the way to encourage mature students to go back to university?
BARONESS YOUNG: My Lords, I accept that the noble Lord, Lord Avebury, may have identified one hard case. However, I should not like to agree with him that all mature students will be in that particular position. After all, a great many mature students are married women who decide to take a further degree either at the Open University or somewhere else. Therefore they will be living in their own homes and will not necessarily be tenants of furnished accommodation. The only people who would be affected by the particular case which the noble Lord gives are those mature students who happen still to be in furnished accommodation.
LORD SHEPHERD: My Lords, would the noble Baroness not agree that if she had a son who was working but who, at the age of 25, decided to take a course and become a student, he would lose all the protection that he previously had? That would be a consequence of the Amendment of the noble Baroness.
LORD GIFFORD: My Lords, before the noble Baroness replies again, would she not accept that it is not just a question of furnished tenancies to which her Amendment refers but any tenancy granted to any student?
BARONESS YOUNG: My Lords, I am particularly concerned with furnished tenancies because I think that it is exceedingly unlikely that many students will be in unfurnished accommodation. The noble Lord, Lord Gifford, may know of students who are rich enough to furnish an unfurnished fiat. However, most of the students whom I know are living on grants in furnished accommodation and certainly could not equip themselves in unfurnished accommodation. They are living in simple accommodation. However, I accept that some students might be living in unfurnished accommodation. If the Amendment extended relief to unfurnished accommodation I would regard this as no bad thing—as, indeed, I welcomed at Second Reading the extension by the Government in this Bill of freedom to unfurnished accommodation where the property has a resident landlord.
LORD SHEPHERD: My Lords, I have been guilty of a number of offences because I have been seeking to persuade the House not to do something which the noble Baroness has in mind and which I think would be wrong. However, as Leader of the House I think that I ought to try to bring myself to order in that Members of your Lordships' House should speak once only at Report stage. I understand that Ministers are permitted
Resolved in the affirmative, and Amendment agreed to accordingly.
6.48 p.m.
BARONESS YOUNG: My Lords, I beg to move Amendment No. 5.
Amendment moved—
Page 2, line 36, leave out from ("following") to ("and") in line 41 and insert—("subsections:—
(4) For the purposes of paragraph (bb) of subsection (1) above, any person who has had his name entered for a course of further education, or who has engaged in a service contract
to speak, with the leave of the House, and that the mover of the Amendment can move it and wind up. My Lords, I bring myself to order and suggest that everybody follows suit.
6.40 p.m.
On Question, Whether the said Amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 37.
or apprenticeship, as referred to in that paragraph shall be presumed to be pursuing or intending to pursue that course, service, contract, apprenticeship or further education unless the contrary is proved.
(5) The Secretary of State may by statutory instrument make regulations modifying amending and adapting the provisions of this Act and of the Rent Act 1968 as may be necessary to give effect to paragraph (bb) of subsection (1) above; in that paragraph "specified" means specified by such regulations;").—(Baroness Young.)

CONTENTS

Aberdare, L.

Gisborough, L.

Nugent of Guildford, L.

Amherst of Hackney, L.

Goschen, V.

Rankeillour, L.

Amory, V.

Gowrie, E.

Ruthven of Freeland, Ly.

Auckland, L.

Grenfell, L.

St. Aldwyn E. [Teller.]

Belhaven and Stenton, L.

Hailes, L.

St. Helens, L.

Belstead, L.

Hailsham of Saint Marylebone, L.

Sandford, L.

Berkeley, B.

Sandys, L.

Bethell, L.

Hawke, L.

Sempill, Ly.

Cathcart, E.

Hornsby-Smith, B.

Sharpies, B.

Colville of Culross, L.

Hunt of Fawley, L.

Somers, L.

Cowley, E.

Killearn, L.

Strange, L.

Cullen of Ashbourne, L.

Kinnoull, E.

Swinton, E.

Denham, L. [Teller.]

Long, V.

Tenby, V.

Derwent, L.

Luke, L.

Tweedsmuir, L.

Drumalbyn, L.

Masham of Ilton, B.

Vivian, L.

Elles, B.

Mersey, V.

Waldegrave, E.

Elton, L.

Monck, V.

Windlesham, L.

Exeter, M.

Mowbray and Stourton, L.

Yarborough, E.

Fortescue, E.

Northchurch, B.

Young, B.

Gainford, L.

NOT-CONTENTS

Arwyn, L.

Garnsworthy, L.

Peddie, L.

Avebury, L.

Gifford, L.

Raglan, L.

Bacon, B.

Goronwy-Roberts, L.

St. Davids, V.

Birk, B.

Greenwood of Rossendale, L.

Segal, L.

Blyton, L.

Harris of Greenwich, L.

Shannon, E.

Buckinghamshire, E.

Henderson, L.

Shepherd, L. (L. Privy Seal.)

Castle, L.

Jacques, L.

Slater, L.

Crook, L.

Leatherland, L.

Snow, L.

Darwen, L.

Llewelyn-Davies of Hastoe, B.

Stow Hill, L.

Davies of Leek, L.

Lloyd of Kilgerran, L.

Strabolgi, L. [Teller.]

Donaldson of Kingsbridge, L.

Melchett, L.

Wells-Pestell, L.

Elwyn-Jones, L. (L. Chancellor.)

Milner of Leeds, L. [Teller.]

Wynne-Jones, L.

Feather, L.

On Question, Amendment agreed to.
Clause 2, as amended, agreed to.
Clause 3 [Recovery of possession of holiday accommodation let on out of season tenancies]:
BARONESS YOUNG BARONESS YOUNG moved Amendment No. 6:
Page 3, leave out from beginning of line 15 to ("the") in line 17 and insert—
"In Part II of Schedule 3 to the Rent Act 1968 (Cases in which court must order possession of dwelling-house subject to regulated tenancy)—

(a) in the first line of Case 10 after the word "occupied" there shall be inserted the words "or intended on his retirement to occupy", and

(b)".

The noble Baroness said: My Lords, I beg to move Amendment No. 6. A similar Amendment to this—moved by my noble friend Lord Kinnoull—was discussed at the Committee stage of the Bill. We all agreed—and I am sure the noble Lord, Lord Shepherd, has much sympathy—with the case of a person who buys his house for retirement. This might apply to a Minister of Religion, a schoolmaster, or someone living in tied accommodation who buys a house for retirement, lets it until he is ready to retire and then expects the tenants to leave so that he can go to live in it himself. Or there is the alternative case of, perhaps a man who lives in London but who has always wished to retire to the Yorkshire Dales; he buys a cottage which he then lets and wishes to have once he retires from his business.
On reading what the noble Lord, Lord Shepherd, said during the Committee stage, as I understand it, the difficulty was that if he had accepted the Amendment moved by my noble friend Lord Kinnoull he considered that it might well open the flood gates to many people who would try to get round the provisions of the Rent Bill by buying houses for their retirement which were not intended for that purpose. Therefore, we have looked at the Amendment again and have redrafted it in order to meet this criticism. In the present Amendment the burden of proof will be on the person to show that he bought his house for retirement. Given that he can show this, under Schedule 3 to the 1968 Act he would fall within those cases in which the court must order possession rather than leave the position as it stands (as the noble Lord, Lord Shepherd, described it) for him to argue his case
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under Case 8, which is a case in which the court may order possession. The difficulty now will be that the court will consider the case with a background of the security of tenure which the Rent Bill affords. I do not think it is good enough to leave the position like this. On this side of the House we are concerned only with bona fide cases of people who, either because of the nature of their work, or because they have always wished to retire to some part of the country, have bought a house in which they wish to live themselves. Therefore, I hope that the Government will feel able to accept this Amendment; that it does meet the criticism which the noble Lord, Lord Shepherd, raised on Committee, and that he will feel that these deserving people ought to have the assurance that when they wish to retire they will be able to occupy their own house without any difficulty at all. I beg to move.
LORD SHEPHERD: My Lords, I have sympathy with this Amendment, as I did with the last one. But in view of the giants opposite who flexed their muscles on the previous Amendment, I wonder whether I should be equally conciliatory to this Amendment. Perhaps I was remiss on the last Amendment in that I did not seek to expose its weaknesses and dangers. The noble Lord, Lord Avebury, mentioned one of these. I did it deliberately, because I was hoping that one could reduce the time spent on Report stage, and hoping also to put forward what I thought was the right approach for dealing with a very complex matter. But in the light of the fact that the House clearly wants full explanations on Amendments moved, I fear I may have to speak at some length on this Amendment.
As the noble Baroness, Lady Young, said, this Amendment is a revision of one the noble Earl, Lord Kinnoull, intended to move, but which the noble Baroness moved in his absence. After an intervention on my part, the noble Baroness withdrew the Amendment. Case 10 of Schedule 3 to the Rent Act is the Case that enables an owner-occupier to regain possession of a dwelling he formerly occupied as his residence, and then let. It is one of the "absolute possession" cases; that is, a case in which a court, if satisfied that certain

93
conditions exist, must make an order for possession. One of these conditions, common to all absolute possession cases, is that the tenant must be given notice not later than the start of the tenancy that the landlord reserves the right to regain possession under the Case. The other conditions are that the landlord formerly occupied the dwelling as his residence; that he has never let the dwelling since December 8, 1965, on a protected tenancy not subject to Case 10; that the dwelling is needed for his occupation, or for a member of his family who lived there with him when he lived there before.
This Amendment is designed to extend Case 10 to cover the situation in which the landlord has never lived in the dwelling, but intends to do so on retirement. It is defective for its purpose. For instance, to refer to the first line of Case 10, to the intended retirement home which the landlord has never occupied, if I may say so makes a nonsense of the final Case 10 condition which refers to members of the landlord's family who lived there with him. More seriously, it would leave the case as open as would the previous Amendment to allowing evasions of the Act.
My Lords, intentions are easily expressed, and "retirement" is an undefined term. It should also be remembered that the person who has let the dwelling which he wishes to occupy when he does retire, already has a right to seek possession under Case 8 of Schedule 3, as has any landlord who needs for his own occupation or that of the owner's relatives, the dwelling he has let. This Case certainly does not give an absolute right of possession, which will be granted only if the court considers it reasonable and is satisfied that making the order will not cause the tenant more hardship than not making it would cause the landlord. None the less, it gives the landlord a good prospect of repossessing the dwelling in which he hopes to live.
During the Committee stage of the Bill, I was asked whether any difficulties had been drawn to the attention of the Department. No such cases have been. I admit that this proves nothing in itself, but it may be accepted, perhaps, that in the circumstances we have no grounds to suppose that people who in good faith let unfurnished dwellings in which they
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hope to live on retirement, have had difficulty in repossessing those dwellings when needed. Nevertheless, the Government recognise that the lack of certainty that a retirement home will be available when needed can be distressing.
The problem is one of giving an absolute right of repossession of the true retirement home without at the same time opening a door for potential evaders of the Act who would seek to use such a right to deny tenancies in dwellings they themselves do not really mean to occupy as their own ultimate home. The Government intend to examine this problem in the hope of finding some way of reconciling the need of a landlord for assurance that he will be able to live in his true retirement home, with the tenant's need for security, in any dwelling that will not be genuinely so needed. These requirements are not easy to reconcile. I will be frank with the noble Baroness. I have spent a considerable time in seeking a way round this. We will proceed with our inquiries. Although I cannot undertake that there is an immediate solution which we can incorporate in this Bill, despite what happened on my earlier offer to help I can say I will continue in my endeavour to find a way of meeting this point, with which we have a good deal of sympathy, between now and consideration in the Commons.
THE EARL OF KINNOULL: My Lords, I should like to support my noble friend Lady Young, and to apologise to the House for not having been present during Committee stage. I am very grateful to the Leader of the House for the sympathetic answer which he has given, and for recognising that there is a case for consideration arising specifically from this Bill. We all know the kind of case we have in mind: the case of those serving in the Foreign Office, or those who are abroad for one reason or another in the service of their country. We know cases of teachers—
LORD SHEPHERD: My Lords, I thought these individuals were dealt with in Committee stage. These people are in fact covered in the Bill. It seems to me that in this Amendment we are considering those who have retirement homes.
THE EARL OF KINNOULL: My Lords, I must apologise if I misread my brief.

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I wish to support my noble friend Lady Young in whatever action she wishes to take in view of what has been said by the Leader of the House.
BARONESS YOUNG: My Lords, I have listened with great care to what the noble Lord, Lord Shepherd, has said, and I should like to say immediately how much I appreciate the offer to look at this matter before the Bill goes to another place. The difficulty that I find myself in is that I accept that the drafting may not be perfect. I drafted it or, more accurately, my noble friend Lord Colville drafted it, with the intention of meeting the point of criticism that people would seek to evade the provisions of the Bill by using this Amendment. I thought we had met this difficulty, and I should like to give an assurance that we are not seeking a loophole in this Bill, but are simply trying to put right what I think is a very real fear among a number of people. I am bound to say that I am surprised that the term "retirement" is not defined in law. Not being a lawyer, I am sure that this advice is right, but I should have thought that in all the legislation governing pensions and social security it would have been defined.
The difficulty about the proposition that we should leave this to the Case 8 situation is that there can be no guarantee that a person would get his house back, because Case 8 of Schedule 3 covers cases in which the court may order possession and the court will clearly consider the situation in the light of the background of this Bill. Therefore, the situation will have been altered from what it was. As I think the noble Lord said, even if there are no cases on record where the owner has been dissatisfied, that does not prove that there will not be cases in the future or, indeed, that there are no dissatisfied people; it merely means that they have not complained. I feel that I am speaking on behalf of a number of people now coming up to retirement age who, undoubtedly, have bought houses to which they expect to retire and into which they expect to be able to move when they reach the age of 65. I should have thought that if somebody bought a house at the age of, say, 25 and said, "I am buying it for retirement", the court would realise that that was an absurd situation. But if
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somebody buys one at the age of 55 or 60 it is a very different proposition, and I should therefore have thought that the wording of this Amendment would allow for the evasions.
Because I have had a great many representations made to me on this point, I feel that, despite all the assurances, I cannot withdraw the Amendment. I hope the noble Lord, Lord Shepherd, will realise that I am very grateful for his offer, and that he will accept that he can put this matter right in another place and thus give to a great many people, who are at present very worried, this security which I think is rightly theirs.
On Question, Amendment agreed to.
7.3 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 7:
Page 4, line 5, leave out from ("period") to end of line 8 and insert—
"(i) of less than 8 months, if it is determinable at the option of the landlord (other than in the event of an irritancy being incurred) before the expiration of 8 months from the commencement of the period of the tenancy, and
(ii) of 8 months or more, if it confers on the tenant an option for renewal of the tenancy for a period which, together with the original period, amounts to 8 months or more, and it is not determinable as mentioned in paragraph (i) above.")
The noble Lord said: My Lords, on behalf of my noble friend, I beg to move Amendment No. 7. The Amendment defines what is meant by the expression "a tenancy for a specified period not exceeding 8 months" in Case 11A which is inserted into Schedule 3 to the Rent (Scotland) Act 1971 by Clause 3(2). This case applies to Scotland only. The purpose of Case 11A is to enable a landlord to recover possession of a holiday dwelling house where he has let it for a specified period not exceeding eight months on an out of season let. At present, Case 11A provides what should be treated as being a tenancy for a specified period for the purpose of this case, but it is considered that in Scotland the difficulty which may arise is not as to what is meant by "a tenancy for a specified period", but as to what is meant by, "a tenancy for a specified period not exceeding 8 months". The Amendment proposes to define what is meant by, "a tenancy not exceeding 8 months" in terms similar to the way in which, "a

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lease for a period less than 7 years" is defined in Section 9(1) of the Housing (Scotland) Act 1966. I beg to move.
On Question, Amendment agreed to.
Clause 4 [Transitional provisions affecting furnished lettings which become furnished tenancies]:
LORD SHEPHERD: My Lords, I beg to move Amendment No. 8, and with your Lordships' permission will speak to Amendment No. 9. These are drafting Amendments to the provisions about the determination of a suspended notice to quit relating to a furnished tenancy which becomes protected on the commencement date by virtue of Clause 1 of the Bill. The order of the paragraphs is changed and the existing paragraph (d) is re-written in different terms in the interests of clarity. There is no change of substance. I beg to move.
Amendment moved—
Page 4, line 38, leave out paragraph (b).—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD: My Lords, I beg to move Amendment No. 9.
Amendment moved—
Page 5, line 1, leave out paragraph (d) and insert—

("(d) that period has not expired before the commencement date, and

(e) on the commencement date the furnished letting becomes a protected furnished

tenancy by virtue of section 1 above.").—(Lord Shepherd.)
On Question, Amendment agreed to.
Clause 6 [Furnished lettings: amendments relating to control and registration of rents]:
LORD SHEPHERD: My Lords, I beg to move Amendment No. 10 and will also speak to No. 11. Both of these are drafting Amendments. Part VI of the Rent Act re-enacts the Furnished Houses (Rent Control) Act 1946 and uses the expressions "lessor" and "lessee". The Rent Act is drafted in terms of "landlord" and "tenant". This Amendment to the new Section 74(2A) of the Rent Act brings the terminology into line with that used in the rest of Part VI. I beg to move.
Amendment moved—
Page 6, line 16, leave out ("landlord or a superior landlord") and insert ("lessor or any person having any title superior to that of the lessor").—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD: My Lords, I beg to move Amendment No. 11.
Amendment moved—
Page 7, line 36, leave out ("landlord") and insert ("lessor").—(Lord Shepherd.)
On Question, Amendment agreed to.
Clause 13 [Short title, citation, application, commencement and extent]:
7.8 p.m.
LORD GIFFORD LORD GIFFORD moved Amendment No. 11A:
Page 10, line 16, leave out from ("operation") to ("the") in line 17 and insert ("on the day after").
The noble Lord said: My Lords, out of the great number of Amendments which my noble friend Lord Melchett and I moved on Committee, this is the only one we have retained for consideration this afternoon. The object of the Amendment is very clear. The Bill at present will come into force one month after the day on which it is passed. My Amendment is designed to reduce that period of one month to one day. So far as the other Amendments which my noble friend and I moved on Committee are concerned how grateful I am to my noble friend Lord Shepherd for the very serious attention he gave to them. In some cases the Amendments to be moved this evening take those Amendments into account. In other cases certain letters have been written and assurances given, and I am very happy to say that, although not entirely content, I certainly do not want to press the points further. However, on this Amendment, the date of coming into force of the Act, I am bound to say that on reading what my noble friend had to say on Committee I find myself most dissatisfied by the reasoning which he gave for not bringing this Bill into force immediately after it is passed.
One of the reasons he gave was that there had in any case been enough time to protect tenants who were given notice to quit on the coming into power of this Government. He said if all the procedures had been gone through and the

99
tenant had applied to the rent tribunal, there would not be enough time for the landlord to obtain possession before the Bill came into law. That may be true of people given notice to quit who have the knowledge to go to the rent tribunal, but of course it is not true at all of tenants on fixed term tenancies.
As my noble friend knows, a convenient device has been found in the past by many landlords to avoid being subjected to the security of tenure provisions of the rent tribunal by granting fixed term tenancies to their tenants. To give one such example of a trend that I believe is quite widespread at the moment, I am given to understand that a certain gentleman called Lord Elliot—he is not a Member of your Lordships' House but one day may be a Member of your Lordships' House—has a number of properties in London let on fixed term tenancies, some of which have come to an end in recent weeks. He is going straight to the county court for possession on the grounds that it is necessary to get early possession to avoid being caught by the Rent Bill. I have written to Lord Elliot saying that I had this information. I have received no comment, or denial that that indeed is his intention. What is certainly happening during this month is that a number of landlords with tenants on fixed terms are going to the county court for possession. They will get it some time during July, and if there is a month's delay thereafter they will be able to execute those orders for possession during August, before the Bill can possibly become law.
My noble friend at Committee stage said that it was customary for a period of delay to be given so that people should get to know the law before it comes into force. I would suggest that that is not the custom, nor indeed is it desirable, with a Bill such as this. The precedent is the Protection from Eviction Act, 1964. Then, as now, tenants were losing their homes, or being threatened with eviction from their homes, because of the coming to power of a Labour Government pledged to give security. Then, as now, there was a need to act quickly; then, as now, there was a point to be made that landlords might not know about the law, and therefore would act unlawfully without being aware of the fact. Parliament then thought it right to bring that Act
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into force directly after it was passed, and they did so, rightly, because there was a social evil to be prevented. The evil may be less great now, but it is certainly there.
Undoubtedly, landlords are becoming more and more familiar with the provisions of this Bill as it passes through Parliament and as it begins to get more and more widely known. That is the reason why it is necessary to have the shortest possible delay before it comes into law. The Government have recognised this by saying all along, and with my full agreement, that we need to get this Bill through quickly. I would wish to see it come into law quickly, and I would urge my noble friend to look again at the reasons why there should he a month's delay. I hope that he can tell me that those reasons, in the context of this Bill, are really not strong enough, and that an earlier date can be arrived at. I beg to move.
LORD MELCHETT: My Lords, I should like to rise briefly to support everything that my noble friend Lord Gifford has said, both in regard to the careful consideration that my noble friend has given to all the Amendments we spoke to at Committee stage and in urging this Amendment on my noble friend. I think that it is fair to say we have all agreed that the Bill still contains some omissions, even loopholes, and we are all agreed that, for reasons of speed and necessity, the Bill must become law very quickly. I certainly accept that argument. Inevitably, it follows from that that the Bill must come into effect quickly as well. As my noble friend Lord Gifford has said, there are already cases coming up where landlords are rushing to get possession, in one way or another, to evade the provisions of the Bill. It would be a tragedy if people were evicted from their homes merely to give my noble friend's advisers time to prepare documentation to explain the Bill so that people can understand it. I hope that he will feel able to accept the Amendment moved by my noble friend.
BARONESS YOUNG: My Lords, I do not know whether the noble Lord, Lord Shepherd, is to reply to this Amendment as he did at Committee stage, but I felt that he then advanced important arguments why this Amendment should not be accepted. Among his arguments, I

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think that the most important was the need for consultation with local authorities, because clearly this will affect them. Even if it is not considered to be necessary, the noble Lord, Lord Shepherd, gave an undertaking, which I think was accepted by all parts of the Committee, that in this very complicated piece of legislation there should be some kind of simple explanatory memorandum, so that many individuals who will be affected will understand how the Bill is to affect them.
I am bound to say that I was slightly shocked by the noble Lord, Lord Melchett, saying that we must rush the Bill through because so many people would understand it that they would do something about it. It may well be that some unscrupulous people will do just that; it certainly will not be for want of warning on this side of the House, because we have consistently said that this is what will happen, that fewer people will let furnished accommodation. Be that as it may, a great many other people, who are not unscrupulous landlords but are performing a useful service in letting furnished accommodation, are entitled to understand the Bill and to have a reasonable explanation of it; quite apart from them, so are local authorities. For those reasons, I hope that the noble Lord, Lord Shepherd, will speak in the same terms as he did at Committee stage.
7.17 p.m.
LORD SHEPHERD: My Lords, when I hear from the noble Baroness that we need time for consultation, time to consult the various local authorities, when that was the bone, and meat of my argument on an earlier Amendment of considerable importance which the noble Baroness herself rejected, supported by her colleagues (some of whom came from distant parts of the House without having heard the argument), I must say I find it rather hard to accept, and equally if I may say so to my noble friend, his suggestion that my arguments on Committee were not good enough. I recognise that there ought to be a proper period of time before a Bill becomes an Act in order that those who are affected should be aware of its implications. That was, if my noble friend will remember, the basis on which I objected to his Amendment and which I must also do this evening.
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However, I recognise that, in regard to those who are affected by Schedule 3, there is a considerable case for the Bill being implemented sooner. However, I have been advised that to amend Schedule 3 would be a mammoth undertaking, and I know that Parliamentary counsel are now already well occupied not only on this Bill but on the Housing Bill and other legislation concerned with the Department of the Environment. I am, therefore, very loth, while recognising the case that has been made particularly as it affects Schedule 3, to impose further labours on them.
I have considered how best I could meet the two problems. I would, therefore, ask my noble friend whether he would be willing to withdraw his Amendment, on the proposition that, if lie does, I would immediately, by manuscript Amendment, move an Amendment which would leave out the words "one month" and insert "two weeks". This would mean that there would be a period—I admit somewhat short—between the enactment of the legislation and the bringing into effect of parts of it. I do this because I have already heard through the grapevine that the noble Lord intends to press this Amendment. I hope he has not taken it from the noble Baroness—but I fear that if he wants to press it to a Division, looking around your Lordships' House and realising that the work of the noble Lords opposite has been well done and many have all gone home, we would be without a quorum, in which case I would not be able to get my Bill this afternoon when it is much needed. Therefore, I say to my noble friend that were he willing to withdraw his Amendment I will then move an Amendment to leave out the words "one month" and insert "two weeks".
LORD GIFFORD: I am sure that my noble friend is not asserting that proposition purely because he fears the Division but because I think that he recognises that there is a substantial point, in that it would be wrong for Parliament to have passed a Bill which gives protection to people in their homes if during the next month those against whom the legislation is aimed can rush to the bailiffs, take out warrants and get possession Orders which could not be suspended

103
under Schedule 3 until the commencement date has passed. Therefore, there is a need for a shorter period. Having said that, I recognise that I have made progress in just over two weeks and I will not press the matter further. I am grateful to my noble friend for having made that concession. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD SHEPHERD: My Lords, I beg to move a further manuscript Amendment to Clause 3.
Amendment moved—
Page 10, line 17, leave out ("one month") and insert ("two weeks").—(Lord Shepherd.)
BARONESS YOUNG: The noble Lord, Lord Shepherd, would hardly expect me to allow this Amendment to pass without comment particularly when we have already discussed it in Committee and on the Amendment moved by the noble Lord, Lord Gifford. It is a convenient way of settling a difference. I think it is the usual trade union management way of splitting the difference and coming out with "half-way". Perhaps it is all part of the social compact with Back-Bench Members of the Government to make everything go smoothly. I think there is a serious point here. All of us who are knowledgeable about housing recognise the hard cases and recognise, as I have done consistently through this Bill, that many people who are in accommodation at present will be helped by having, security of tenure. But there will be injustice to everybody else, particularly those smaller landlords who will find this an exceedingly complicated Bill to under stand. It is easy for the noble Lord, Lord Gifford, if I may say so, to speak so fluently about the Bill. He is, after all, a barrister, but to those of us who have no legal training it is difficult to understand. I believe that many land lords should not do anything now with out having their solicitor by their side. They probably have never thought of employing a solicitor before. Maybe they should have done, but they have not and no doubt the Bill, whatever else it may or may not do, will be very good for the legal profession.
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I believe the whole House accepted that there was a need for a simplified explanation. I have found myself deluged by inquiries about the Bill, some of which I have been able to answer and about some of which I have been only too glad to find out from some of the experts of the Department of the Environment, for it is dangerous to give a quick answer when one is not sure. For all these reasons I think it is not unreasonable to leave the length of time between the passing of the legislation, the Royal Assent and its coming into force, as originally drafted in the Bill.
LORD SHEPHERD: I respond to the noble Baroness, Lady Young, in a serious way, because she has dealt in Committee with the question of publicity. I had intended to speak at some length on this matter on Third Reading. The noble Baroness will remember I undertook to do that. This is not a trade union arrangement. I have gone half-way, if I may say so, with my noble friend as I have sought to go half-way with the noble Baroness. By withdrawing his Amendment my noble friend has accepted my overture with the noble Baroness. It is difficult to strike a balance. There is need for quick implementation of the Bill. Equally, as the noble Baroness has said, there is need for a reasonable pause before the enactment takes landlords in line. In the rent legislation, as the noble Baroness will remember, is the 1964 Act which came into force immediately after the Royal Assent. Therefore with this Bill and also with the case which I put in Committee. I sought to go half way to meet the noble Lord, Lord Gifford. I hope the House will now accept the Amendment.
On Question, manuscript Amendment agreed to.
Schedule 1 [Consequential amendments of Rent Act]:
7.27 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 12:
Page 11, line 35, at end insert ("having regard to the provisions of that Part.").
The noble Lord said: This Amendment relates to Case 9, Schedule 3 of the Rent Act as amended by paragraph 4 of Schedule 1 to the Bill. Under Case 9

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a landlord can apply for a possession order on the ground that his tenant has overcharged a protected or a statutory sub-tenant. Paragraph 4 extends this case to allow a landlord to apply on the ground that his tenant has overcharged a Part VI sub-tenant. But as the Bill is drafted the case could apply if, for example, the tenant charged the subtenant a higher rent than the maximum rent recoverable under the current rent freeze. The Amendment ensures that he may only apply where the tenant has charged the sub-tenant more than the rent registered under Part VI of the Act or Part VII of the Scottish Act. I beg to move.
On Question, Amendment agreed to.
LORD SHEPHERD LORD SHEPHERD: Amendment No. 13 is one of the more pleasant Amendments, a drafting Amendment to remove unnecessary words. I beg to move.
Amendment moved—
Page 12, line 16, leave out ("protected furnished").—(Lord Shepherd.)
On Question, Amendment agreed to.
7.29 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 14:
Page 12, line 36, leave out paragraph 9.
The noble Lord said: I beg to move Amendment No. 14 and to speak at the same time to Amendment No. 15. This is a technical Amendment. Section 45 of the 1968 Act provides that a rent officer may issue a certificate of fair rent for a dwelling-house before it is let on a regulated tenancy. Subsection (2) sets out the assumptions to be made about the terms of a future tenancy, unless these are specified in the application. The rent officer must assume that the tenant will be liable for internal decorative repair and that no services or furniture would be provided under the tenancy. It is not necessary to delete the reference to the furniture, as if furniture is to be provided this will be specified as a term of the tenancy in the application for the certificate. I beg to move.
On Question, Amendment agreed to.
LORD SHEPHERD: My Lords, I beg to move Amendment No. 15.
Amendment moved—
Page 14, line 8, leave out paragraph 19.—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 16:
Page 14, line 35, leave out ("words "this Act "") and insert ("word" 1965" there shall be inserted the word and" and after the word "1972"").
The noble Lord said: My Lords, on behalf of my noble friend Lord Hughes, I beg to move this Amendment which is mainly to allow local authorities to publicise the rights under the Bill, which power is presently available under Section 125(1) of the Rent (Scotland) Act 1971. I beg to move.
On Question, Amendment agreed to.
Schedule 2 [Tenancies granted by resident landlords]:
7.32 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 17:
Page 15, line 25, leave out from ("(1)") to second ("which") in line 26 and insert ("Subject to subsection (5) below, a tenancy of a dwelling-house").
The noble Lord said: My Lords, I beg to move Amendment No. 17, which is a paving Amendment to a substantive Amendment, No. 22; and with permission, I should also like to speak to Amendment 19, which is a paving Amendment but which is of substance, and to Amendments 20 and 21, which are again paving Amendments to Amendment No. 22.
Amendment No. 19 makes it clear that a landlord cannot claim that the exemption applies to a tenancy which was granted at a time when there was not a resident landlord in the building. The redrafting of this subsection was necessary to ensure that the exemption applies only to a tenancy granted by a resident landlord. The new subsection (2)—that is, Amendment No. 22—imposes the continuing residence obligation on the landlord. Thus the exemption applies only if the landlord was living in the building when the tenancy was created, and only so long as he continues to live there.
My Lords, with permission I would now come to Amendment No. 22, which

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is of substance, and I would ask forgiveness if I speak at some length because this is an extensive redraft of Schedule 2. It introduces four subsections to replace and correct the provisions in the existing subsections (2) and (3), and to make special provisions for certain circumstances in which the resident landlord does not fulfil the residence requirement set out in subsection (1).
For the purposes of the exemption it is necessary to make quite clear what the residence requirement on the landlord is. Subsection (7) below, introduced by the Amendment to page 16, line 21, applies the same test to the landlord as is applied to a statutory tenant by Section 3(2) of the Rent Act. But it is necessary to make additional provision to cover those circumstances which can apply to a landlord but which cannot apply to a Section 3(2) statutory tenant, and so are not covered by the application of Section 3(2). A statutory tenant has no interest in land, but a landlord usually has, unless he himself is a statutory tenant; and so there must be arrangements to cover those cases in which the interest in land changes hands and, for one reason or another, there is a period when the person who owns the interest is not resident. But at the same time it is necessary to ensure that these provisions cannot be abused by landlords who attempt to evade the Acts. The Amendment therefore puts a limit on the length of time for which a tenancy remains in Part VI despite the fact that the landlord is not in residence.
Subsection (2) deals with the cases of temporary gaps in residence which occur on the transfer of the landlord's interest in the property, either on purchase or death. It provides that these gaps shall be disregarded when considering whether the residence requirement is fulfilled. The first case to be dealt with is where a resident landlord sells his home to another person who intends to be a resident landlord. It is clearly necessary to provide for this case. If no provision is made, a resident landlord who wants to sell his home would evict his tenants before he moves in order to avoid creating a protected tenancy, which might make it difficult to sell the property. Subsection (2)(a) makes it possible for an intending resident landlord to preserve
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the exemption if, within 14 days of the conveyancing date, he serves written notice on the tenant that he intends to take up residence in the building. This ensures that the tenant is not left in any doubt about his tenancy. But quite clearly there must be some limit to the time before the landlord takes up residence, or this provision could be abused. Subsection 2(b) states that the exemption will apply for only six months, or until the property passes to someone who does not intend to live there, or until the residence qualification in subsection (1)(c) is satisfied, whichever is the earlier. The period of six months is allowed to enable a landlord who, for example, wants building works done before he moves into his new home, or who buys a little in advance of his actual need to move in, to preserve the exemption. However, if he sells within that period to someone else who does not intend to be a resident landlord, the exemption dies on the date on which the property becomes vested in the absentee landlord, and the tenancy becomes protected.
The second case, which is dealt with in subsection 2(c), concerns the situation which arises when a resident landlord dies and the property is temporarily vested in personal representatives, trustees or the probate judge while the estate is settled. None of these is likely to be resident in the building, but the eventual beneficiary may well be, or intend to be. Subsection 2(c) therefore allows 12 months for the settling of the estate, during which the exemption will still apply. If, on the settling of the estate, or at the end of 12 months, the landlord's interest is not vested in a person who is resident, the tenancy becomes protected.
During these periods of deemed residence the tenant may well be in some doubt about his position. The provisions in the Housing Bill which give tenants the right to know the identity of their landlord on application will be of some assistance. But in order to ensure that no tenant is deprived of his home while there is not in fact a resident landlord on the premises, subsection (4) provides that the county court shall not make an order for possession on the basis that the tenancy is unprotected. Instead, the court will be able to make an order during such a period only if one of the

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grounds for possession of a protected or statutory tenancy applies.
Subsection (3) covers the situation in which the legal interest is never vested in the person who to all intents and is the resident landlord. This is the where the property is vested in on a trust for sale, or in trust for beneficiary who fulfils the residence requirement. In these circumstances they are the resident landlord for the purposes of the exemption.
Subsection (5) contains a corrected and amended version of the present subsections (2) and (3) of Section 5A. It provides that the resident landlord exemption shall not apply in either of the following cases. The first case is where the tenancy in question is granted to a person who was previously a protected tenant of dwelling-house in the same building. This not only corrects the previously erroneous subsection (3) but also meets the substantial Amendment to this subsection put down by my noble friend Lord Gifford at Committee stage. The original version related only to a tenancy which was of the same dwelling house, or which included part of the same dwelling house, as the previous tenancy. My noble friend proposed that this should be amended to relate to tenancy of any dwelling-house in the same building, and the Government undertook to consider the point. I have decided that my noble friend Lord Gifford has identified a loophole by which tenants could be deprived of protection by a landlord, and that this loophole should be closed by incorporating my noble friend's Amendment.
The second case in which the resident landlord exemption will not apply is where the tenancy in question is a fixed-term contract and immediately before the tenancy was granted the tenant had an earlier tenancy contract of a dwelling house in the same building. This is an amendment of the existing subsection (2) which adopts the principle proposed by my noble friend on the first case and adopted by the Government in subsection (5)(a). It prevents a landlord from depriving a tenant of the protection he would otherwise have by granting him a fixed term tenancy of another dwelling house in the same building.
LORD GIFFORD: My Lords, the Amendment which my noble friend has
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moved has needed a good deal of time to explain because it is so long. But it is a great improvement on the Bill as previously drafted. I certainly acknowledge that and I am grateful for the references which he has made to Amendments which I moved on Committee stage. Two or three of them are taken care of here. The only point I want to ask about is the reference in the new subsection (5) to fixed-term tenancies. In the Bill as originally drafted, the intention was that, where fixed-term tenancies under two years in length were granted, they should be within the resident landlord exemption—the effect, of course, being that the tenant could not go to the rent tribunal when the tenancy came to an end. Tenancies over two years would not be within that exemption. However, that two-year limit does not reappear in the amended version to which my noble friend has just spoken. As I understand it, the effect will he that, whenever a resident landlord grants a tenancy for any term of years—be it for one, two, three, five or more years—when that tenancy comes to an end, the tenant will thereupon be in danger of almost immediate deprivation of his house. So that a family which may have lived for five or ten years in a house where the landlord is a resident landlord will find upon the ending of that period, if the tenancy is not renewed and made a periodic one and the landlord goes to the court, that they have no possibility of any security or any protection—even that afforded by the rent tribunal.
My noble friend, in explaining that fixed-term tenancies were for this purpose to be permitted was, I thought, thinking about short fixed terms where the tenant—maybe for six months or for one or two years—would go into residence knowing that he might have only a comparatively short period of stay in the house, though if there were an extension he would have rent tribunal rights. I am rather disturbed that although tenants who receive fixed term tenancies have the security of that fixed term, they do not even have the right to go to the rent tribunal to get an extension of security of tenure when that fixed term comes to an end. That appears to be a weakness in the clause as it is now drafted. I have a Manuscript Amendment down, but I do not propose to move it because I recognise that it does not meet the problem. But I ask my noble friend if

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he cannot answer immediately, to consider what I have said, so that the original limit of two years for these fixed term tenancies might be reinstated in another place.
LORD SHEPHERD: My Lords, in reply to my noble friend, I will first undertake to consider very carefully what he has said. But as he has drawn attention to the fact that we have omitted the significant words, "two years", it is perhaps right for the sake of those who may be looking at the Bill in another place, or those who may be interested in the legislation, for me to give the reason why we have deleted them. On reflection, I felt that this limitation would be too arbitrary and should therefore be omitted from the Bill. In making this decision I had in mind the situation, which I had previously mentioned, of the resident landlord who knows that he will have spare accommodation for a fixed period, but that at the end of that time he will need it back; for example, to provide accommodation for a child who may be returning home after a certain period away. There is no reason to assume that in all such cases the time during which the landlord can let will be two years or less—it might be two and a half or three years. By deleting the words, "two years" we would give a much greater flexibility to the clause. I think that this is an advantage to possible tenants, because we do not wish to put any unnecessary burdens upon landlords which may help to dry up the availability of accommodation. However, I will look carefully at what my noble friend said in the earlier part of his speech and will see that it is conveyed to my right honourable friend who, I hope, will be responsible for the Bill from tomorrow.
BARONESS YOUNG: My Lords, I wonder whether I may raise a point of clarification. As I understand the Bill, the whole shift in emphasis will be away from the devision between furnished and unfurnished accommodation, towards a distinction between whether or not the landlord is resident. One of the advantages of this system will be that if someone owns a house in which there is considerable spare accommodation he will let it to all the groups of people who need it. Am I to understand from what
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the noble Lord, Lord Shepherd, has said, that the redrafted Schedule 2 will allow a resident landlord to give fixed term tenancies of a variable length of time, with security for a given length of time, but with the right—should his family circumstances alter—to have the accommodation back at the end of that length of time? If my understanding is correct, this seems to be a distinct improvement to the Bill, because it gives flexibility and will do what I feel to be very important; that is, encourage people who have large under-occupied houses to let them.
LORD SHEPHERD: That is my understanding, provided of course that it is for only one fixed term tenancy. It cannot be repeated for the same tenant.
On Question, Amendment agreed to.
7.49 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 18:
Page 15, line 30, after ("building") insert ("and that bulding is not a purpose-built block of flats").
The noble Lord said: My Lords, I should like also to speak to Amendment No. 23. Amendment No. 18 limits the resident landlord exemption so as to prevent it from applying to tenancies of purpose-built blocks of flats. This term is defined in new subsection (6) of Section 5A which is introduced by Amendment No. 23. In the original version, the tenancy of a dwelling house in a block of flats would not have been protected if the owner of the block occupied another dwelling house in that block as his residence. This would have presented a possibility for exploitation by commercial landlords who could have claimed the benefit of exemption by investing the ownership of a block of flats in an individual director. It was therefore decided to prevent such misuse of the provision by specifically excluding blocks of flats from the term "building".
The word "building" is preferred to "house" which, in Rent Act terms, may include a flat in a block of flats. "House" is not defined in rent legislation although it is used in the Acts. It is subject to interpretation in the light of a vast body of existing case law, most of which concerns the Housing Act. The word "building" would of course cover such structures as converted stables or

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warehouses, renovated priories, barns, and so on, if these contained dwelling houses.
The Amendment to some extent meets the points made at Committee stage by the noble Lord, Lord Gifford, and by the noble Lord, Lord Avebury, about the width of the resident landlord's exemption, because it provides a new restriction of scope and my noble friend tabled an Amendment to restrict the scope to buildings in which there were no more than two tenanted dwelling houses in addition to the dwelling house occupied by the resident landlord. This Amendment goes some way towards doing this by virtue of the definition of a purpose-built block of flats in subsection (6), but it is not desirable to limit the scope of the exemption further by defining the structure so specifically that it does not cover all possible circumstances. For example, a house, as commonly understood, which has been divided into flats may be capable of conversion back into a single unit of accommodation for use by the landlord and his family. With that explanation, I hope that the House will accept the Amendment. My Lords, I beg to move.
7.52 p.m.
LORD GIFFORD LORD GIFFORD moved as an Amendment to Amendment No. 18A:
Page 15, line 30, in the words proposed to be inserted, leave out ("purpose-built").
The noble Lord said: My Lords, I beg to move an Amendment to my noble friend's Amendment and that is to leave out the words "purpose-built". I speak also to the other Manuscript Amendments Nos. 23A, 23B and 23C on the list which has been duplicated. The effect of those other Amendments would be to define a block of flats in this way: that a building would be a block of flats provided it contains three or more flats.
My Lords, I recognise that my noble friend's Amendment goes a little way towards meeting the objections that both I and the noble Lord, Lord Avebury, were making to the wide resident landlord exemption in the Bill as it was printed. But I feel that it does not go very far. The problem will be with the larger London terraced houses with which both the noble Lord, Lord Avebury, and myself have experience. One would have to go back into the history of the late 1890s to discover how these were constructed. One
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can imagine difficult researches having to be instituted to discover, in the kind of large house of which I once occupied a part, whether or not the butler had a separate flat in the basement.
As my noble friend's Amendment is at present drafted it gives rise to this kind of consideration and it will be difficult to draw the line. Of course, I understand that what I would expect and what I am sure my noble friend suspects is that most of these large terraced houses were originally built in the late Victorian age for single occupancy by the growing bourgeoisie who needed spacious accommodation in which to live. But it is nevertheless rather absurd. However, my noble friend's Amendment recognises the point that I have been making all along, that where the building was all along designed to be separately occupied by different households there is no case for retaining a resident landlord exemption. There is no difference in principle between a purpose built block of flats and a purpose converted block of flats. There are many of these Victorian terraces, which are now converted into half a dozen, or sometimes a dozen flats or flatlets, where the same reasoning which has prompted this Amendment equally applies.
My Lords, I recognise that the Amendment that I put forward to my noble friend's Amendment is using his formula to reinstate something very similar to the words of the Amendment by the noble Lord, Lord Avebury, on Committee. Because it does that and because I know that it will meet with criticism from my noble friend and certainly with opposition from the Opposition Front Bench, I believe that something more needs to be said about the argument used against the Bill and against narrowing the resident landlord exemption; namely, that it will dry up the stock of letting accommodation.
I recognise that where an owner occupier has a spare room or a spare floor, he may be reluctant to let it if he feels he will not be able to get possession if later on he changes his mind and finds that he needs the accommodation. But in the majority of cases that those who work in this field have to contend with, the landlord lives in one floor out of four or five floors. He cannot afford not to let because he has mortgage payments

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to keep up. So he will either keep on letting—and if my Amendment is passed he will have to recognise the obligation to provide the families to whom he lets with a home—or, if he does not want to do that, let him sell and let the local authority or a housing trust take over the house—and probably they will make much better landlords in that field.
I believe that this fear of drying-up the stock of letting accommodation has been grossly exaggerated during the course of this debate. It applies only to the small extra accommodation in what is basically a single household home. There I recognise it has validity. Therefore, this Amendment would allow the owner occupier to let one floor of his home without giving the tenant full protection. But once he lets two floors or more—and anyone who has two or more spare floors to let must have bought far too large a house and is most probably running a business and receiving a fair income—then in those cases they would be outside the proposed exemption to the Bill. I beg to move the Amendment.
LORD AVEBURY: My Lords, I too am most grateful to the noble Lord, Lord Shepherd, for the careful consideration he has obviously given to the case that was advanced on Committee stage of restricting the rights of the resident landlord. But I am also forced to agree with the noble Lord, Lord Gifford, that we have not gone far enough here, and that there is no logical distinction between the purpose-built and the purpose-converted block of flats, as the noble Lord, Lord Gifford, has said. Those of us who are familiar with London will be well aware, as he said, that in a place such as Pimlico where you have these large Victorian houses—many of which have five storeys and a basement which can also be let off separately as a flat, so that you have six separate dwellings in all—there can be no logical distinction between a building of that kind and one that was purpo sely constructed to hold six flats in the first place. The noble Lord should perhaps give further consideration to this matter to see whether he cannot draft a form of wording, when the Bill goes to another place, that will take into account the purpose conversions as well as the purpose-built. It surely cannot be difficult for the lawyers to
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bring in that element as well. The arguments that the noble Lord has advanced in moving his Amendments show that by doing this we shall not dry up the stock of accommodation, particularly in London. That seems to me irrefutable. The cost of large Victorian houses in Pimlico, for example, is very high indeed despite the fallback in the property market, and nobody will withhold accommodation from the market when he is paying high interest charges to the bank or to whoever he has had to borrow the money from in order to acquire the property.
While I am extremely grateful to the Government for what they have done and the extent to which they have met the arguments proposed on Committee, I hope that before the Bill reaches another place they will go a little further and tighten up the resident landlord clause to the extent that we have suggested.
8.0 p.m.
BARONESS YOUNG: My Lords, the noble Lord. Lord Gifford, has raised a different matter and a very important point and, as he will not be surprised to hear, I cannot accept it. If I understood him correctly, he is saying that there is no difference between a purpose-built block of flats and a large house converted into flats. I should have thought that there were very real differences. I will tell him one. When I was on a planning committee, we used to have a great many planning applications for the conversions of Victorian houses. If a Victorian house is properly converted it can be made into three or four flats which provide very good homes for people. Once it is decided that the resident landlord rule will not apply, it is very easy to see that no one would bother to convert. You will simply have a large house, unconverted, full of people, because then the resident landlord rule would be bound to apply.
It seems to me that there is a very real danger of encouraging a great deal of deteriorating slum property. The noble Lord shakes his head, but I think he has already accepted that this will be so. He said that we were exaggerating the fear of the drying up of accommodation to let, and yet when we had the little debate as to when the Bill was to come into force his great argument for bringing it into force the day after Royal

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Assent was that so many landlords were going to evict tenants, and so on. One cannot have the argument both ways, arguing first of all that everybody will want to get rid of their furnished tenants and therefore you must bring the Bill in immediately; and three Amendments later saying that this is a grossly exaggerated argument and that no one will want to do so.
My third argument is this. I agree that I am not, like the noble Lord, Lord Avebury, or the noble Lord, Lord Gifford, familiar with conditions in Pimlico, but I can think of other situations where somebody buys a Victorian house. The argument is that it is too large. Very well, it is too large and it is expensive, but they have bought it because they wish to live somewhere reasonably centrally in a town. For many people who buy houses the alternative is either to buy one that is too large and let part of it, or to buy a house a very long way out. Everybody who is concerned about towns recognises that one of the reasons why they have so many problems is that middle class people and people who are slightly better off have gone out from the centre of towns to live somewhere on the edge or in surrounding villages. The result is that we have a multiplicity of problems in towns, and it seems to me that the same argument applies. In the case of buying large houses and making proper conversions and letting the flats, which would be the effect of this Amendment, you could help to create social problems in towns.
I quite accept that you could have a loophole in the case of a purpose-built block of flats where you have a resident landlord and say this is a qualification. I accept this point, but I cannot accept that the same argument applies in the case of the large house. I hope that the noble Lord, Lord Shepherd, will consider that these are very serious arguments.
LORD SHEPHERD: My Lords, I would agree with the noble Baroness that the case she has put forward is a serious matter. One of the problems I have had in drafting this Amendment was to strike the right balance between the case that was put by my noble friend Lord Gifford and the noble Lord, Lord Avebury, and the problems and difficulties which the noble Baroness has in
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mind. My feeling was that we had struck the right balance, but perhaps one can never really satisfy one side or the other when striking a balance of this sort. Clearly we do not wish to create a situation where, at least in the mind of a landlord or a potential landlord, things get so tough that he will not put premises on the market. That was very much in my mind when we were considering this Amendment. However, since this is but a step forward, an Amendment which I view for the first time—and I have no doubt that noble Lords have seen it only for a matter of a day or so—I will have another look at this matter and will consult my right honourable friend; but I would not wish to mislead my noble friends into believing that we could go very much further. As I say, one has sought to strike a balance and it is difficult to know where the balance should lie. I thought we had got it just about right, but I will look at it again.
LORD GIFFORD: My Lords, may I qualify one or two points raised by the noble Baroness. It is certainly not my purpose in putting forward these Amendments to discourage landlords from making conversions. That was a thought in an earlier Amendment which I put forward which relied on the Race Relations Act criteria, where the landlord who shared facilities would be within the exemption and self-contained lettings would not. This Amendment repeats the effect of the Amendment of the noble Lord, Lord Avebury, on Committee, and would apply whether or not the building was specially converted.
The noble Baroness accused me of trying to have it both ways. This assuredly is not the case. The reason why landlords are seeking possession at the moment is that no doubt they feel—and they may be right—that they will make more money by selling now with vacant possession than by continuing to let under the restriction of the new Act. But once the Act has come into force and the landlord is saddled with tenants to whom he has the responsibility of ensuring protection under the law, then he will decide either to sell or to stomach this Act and re-let. It is unlikely, in my view, that he will leave a large house empty because he does not like giving tenants a home. That would

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be an uneconomic thing to do. One must remember that the idea of resident landlords with protected tenants is not something new which is being introduced by this Bill. There have been resident landlords and protected tenants ever since rent legislation started. Many landlords and many purchasers of homes have to accept controlled tenants when they buy a house. In my experience there has sometimes been friction, but there has not been a great outcry that we cannot go on having controlled tenants. There has been a recognition of the law allowing controlled tenants to remain in their homes, and this will be the case once this legislation is passed.
In reply to my noble friend Lord Shepherd, I do not want to press this matter further and I accept that he will not only look at it again but will ensure that the matters raised in this House are drawn to the attention of his right honourable friend. I would only say to him that it is not so much a question of striking a balance, that is to say trying to please the landlord lobby and the tenant lobby. That is not the right approach. The right approach is to make a sound political judgment as to the social effect of legislation you are introducing. If the noble Lord and his right honourable friend consider the various points—as I am sure they have—and what has been said in this field, I am sure that they will realise progressively that they are in fact being faced with a landlord lobby. If they look at the situation objectively they will realise that if the law says so people will recognise that tenants should have protection and will not be deterred from making a fair income by that fact. Having said that, I beg leave to withdraw my Amendment to the Amendment.
Amendment to the Amendment, by leave, withdrawn.
On Question, Amendment agreed to.
8.10 p.m.
LORD SHEPHERD LORD SHEPHERD moved Amendments Nos. 19, 20 and 21.
Page 15, leave out lines 32 and 33 and insert—
("(b) the tenancy was granted by a person who, at the time that he granted it, occupied").
Page 15,line 36, after ("(c)") insert
("subject to subsection (2) below").
Page 15,line 39, leave out ("either").
The noble Lord said: My Lords, when I moved Amendment No. 17 I spoke to Amendments Nos. 19, 20, 21 and 22. With permission, I seek to move Amendments Nos. 19, 20 and 21 en bloc.
On Question, Amendments agreed to.
LORD SHEPHERD: My Lords, I beg to move Amendment No. 22.
Amendment moved—
Page 15, line 41, leave out from ("building") to ("a") in line 17 on page 16 and insert—
("(2) In determining whether the condition in paragraph (c) of subsection (1) above is at any time fulfilled with respect to a tenancy, there shall be disregarded—

(a) any period of not more than 14 days beginning with the date on which the interest of the landlord under the tenancy becomes vested at law and in equity in an individual who, during that period, does not occupy as his residence another dwelling-house which forms part of the building concerned;

(b) if, within a period falling within paragraph (a) above, the individual concerned notifies the tenant in writing of his intention to occupy as his residence another such dwelling-house as is referred to in that paragraph, the period beginning with the date on which the interest of the landlord under the tenancy becomes vested in that individual as is mentioned in that paragraph and ending—

(i) at the expiry of the period of 6 months beginning on that date, or

(ii) on the date on which that interest ceases to be so vested, or

(iii) on the date on which the condition in subsection (1)(c) above again applies, whichever is the earlier; and

(c) any period of not more than 12 months beginning with the date on which the interest of the landlord under the tenancy becomes, and during which it remains, vested

(i) in the personal representatives of a deceased person acting in that capacity; or

(ii) in trustees as such; or

(iii) by virtue of section 9 of the Administration of Estates Act 1925, in the Probate Judge, within the meaning of that Act.

(3) During any period when—

(a) the interest of the landlord under the tenancy referred to in subsection (1) above is vested in trustees as such, and

(b) that interest is or, if it is held on trust for sale, the proceeds of its sale are held on trust for any person who occupies as his residence a dwelling house which forms part of the building referred to in paragraph (a) of that subsection,

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the condition in paragraph (c) of that subsection shall be deemed to be fulfilled and, accordingly, no part of that period shall be disregarded by virtue of subsection (2) above.

(4) Throughout any period which, by virtue of subsection (2) above, falls to be disregarded for the purpose of determining whether the condition in subsection (1)(c) above is fulfilled with respect to a tenancy, no order shall be made for possession of the dwelling-house subject to that tenancy, other than an order which might be made if that tenancy were or, as the case may be, had been a regulated tenancy.
(5) This section does not apply to a tenancy of a dwelling-house which forms part of a building if—

(a) the tenancy is granted to a person who, immediately before it was granted, was a protected or statutory tenant of that dwelling-house or of any other dwelling-house in that building, or

(b) the tenant yis a tenancy for a term of years certain and is granted to a person who, immediately before it was granted, was the tenant under an earlier tenancy of that dwelling-house or any other dwelling-house in that building and, by virtue of this section, that earlier tenancy was not a protected tenancy,

and for the purposes of this subsection").—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD: My Lords, I spoke to this Amendment in moving Amendment No. 18. I beg to move.
Amendment moved—
Page 16, line 21, at end insert—
("(6) For the purposes of this section a building is a purpose-built block of flats, if as constructed it contained, and it contains, two, or more flats; and for this purpose "flat" means a dwelling-house which—

(a) forms part only of a building; and

(b) is separated horizontally from another dwelling-house which forms part of the same building.

(7) For the purposes of this section, a person shlal be treated as occupying a dwelling-house as his residence if, so far as the nature of the case allows, he fulfils the same conditions as, by virtue of section 3(2) above, are reuired to be fulfilled by a statutory tenant of a dwelling-house.")—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 24:
Page 17, line 37, at end insert—
("(5) If, immediately before a tenancy became a protected tenancy as mentioned in subsection (2) above, the rates in respect of the dwelling concerned were borne as mention in subsection (2A) of section 74 of this Act and the fact that they were so borne was noted as required by that subsection, then,
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in the application of Part IV of this Act in relation to the protected tenancy, section 47(2) of this Act shall be deemed to apply.
(6) If, in a case where a tenancy becomes a protected tenancy as mentioned in subsection (2)(a) above,—

(a) a notice to quit had been served in respect of the dwelling concerned before the date on which the tenancy became a protected tenancy, and

(b) the period at the end of which that notice to quit takes effect had, before that date, been extended under Part VI of this Act, and

(c) that period has not expired before that date,

the notice to quit shall take effect on the day following that date (whenever it would otherwise take effect) and, accordingly, on that day the protected tenancy shall become a statutory tenancy.")
The noble Lord said: My Lords, I beg to move Amendment No. 24 and at the same time to speak to Amendment No. 25. These Amendments introduce new subsections into subsection 102(a) of the 1968 Rent Act. Subsection (5) follows from the provisions of Clause 6(3), that in future rates borne by the landlord shall be noted separately on the register of Part VI rents. The new subsection provides that where this has been done and the furnished letting subsequently becomes a protected tenancy because the resident landlord exemption no longer applies, the amount of the rent shall be recoverable by the landlord in the same way as where a fair rent is registered and it is noted in the register that rates are borne by the landlord. Subsection (6) makes provision for the determination of any suspended notice to quit in a case where the furnished letting becomes a protected tenancy because the resident landlord exemption no longer applies. This provision parallels the transitional one in Clause 4 for furnished lettings which become protected on the Bill's commencement date. I beg to move.
On Question, Amendment agreed to.
LORD SHEPHERD LORD SHEPHERD: My Lords, I beg to move Amendment No. 25.
Amendment moved—
Page 18, line 29, at end insert—
("(5) If, immediately before a tenancy became a protected tenancy as mentioned in subsection (2) above, the rates in respect of the dwelling-house were borne as mentioned in subsection (2A) of section 89 of this Act and the fact that they were so borne was noted as required by that subsection, then, in the application of Part IV of this Act in relation

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to the protected tenancy, section 43(2) of this Act shall be deemed to apply.
(6) If, in a case where a tenancy becomes a protected tenancy as mentioned in subsection (2)(a) above,—

(a) a notice to quit had been served in respect of the dwelling-house concerned before the date on which the tenancy became a protected tenancy, and

(b) the period at the end of which that notice to quit takes effect had, before that date, been extended under Part VII of this Act, and

(c) that period has not expired before that date,

the notice to quit shall take effect on the day following that date (whenever it would otherwise take effect) and, accordingly, on that day the protected tenancy shall become a statutory tenancy.").—(Lord Shepherd.)
On Question, Amendment agreed to.
Schedule 3 [Transitional provisions]:
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 26:
Page 19, line 30, after first ("tenancy") insert ("(a)").
The noble Lord said: My Lords, I beg to move Amendment No. 26 and also to speak to Amendment No. 27. These Amendments introduce a technical amendment to sub-paragraph (4) of paragraph 2 of Schedule 3, to make good a minor omission in the Bill as drafted. They also provide in the new sub-paragraph (4A) that the rent registered under Part VI for a furnished letting shall be deemed to be registered under Part IV when the furnished letting becomes a statutory tenancy by virtue of the provisions of sub-paragraph (4). Clause 4 makes a similar provision for lettings which become protected by virtue of Clause 1 of the Bill. I beg to move.
On Question, Amendment agreed to.
LORD SHEPHERD: My Lords, I beg to move Amendment No. 27.
Amendment moved—
Page 19, line 32, at end insert ("and

(b)as the previous contractual tenancy for the purposes of paragraph 2 of Part III of Schedule 3 to the Rent Act. (4A) In any case where—

(a) immediately before the commencement date a rent is registered for a dwelling under the relevant Part of the Rent Act, and

(b) on the commencement date a person becomes a statutory tenant of that dwelling by virtue of sub-paragraph (4) above,

the amount which is so registered under the relevant Part of the Rent Act shall be deemed
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to be registered under Part IV of that Act as the rent for that dwelling, and that registration shall be deemed to take effect on the commencement date.")—(Lord Shepherd.)
On Question, Amendment agreed to.
Schedule 4 [Enactments repealed]:
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 28.
Page 20, column 3, leave out lines 15 and 16.
The noble Lord said: My Lords, I beg to move Amendment 28 and speak to Amendment 29. Both these Amendments are consequential on the deletion of paragraph 9 of Schedule 1, and they were Amendments No. 14 and 15 on the Marshalled List. I beg to move Amendment 28.
On Question, Amendment agreed to.
LORD SHEPHERD: My Lords, I beg to move Amendment No. 29.
Amendment moved—
Page 20, column 3, leave out lines 32 and 33.—(Lord Shepherd.)
On Question, Amendment agreed to.
Then, Standing Order No. 44 having been suspended pursuant to Resolution:
LORD SHEPHERD: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Shepherd.)
BARONESS YOUNG: My Lords, we have now reached the Third Reading of this Bill and I feel I cannot let this occasion pass without first of all saying to the noble Lord, Lord Shepherd, how grateful I am for the help that he has given to me. I must, however, indicate to him that, as I have said during the various stages, this Bill is not one which we on this side of the House can accept in principle. Although I have no doubt that it will be hailed as part of the "social contract"—or is it "social compact"?—and I accept that it will help those in furnished accommodation at present, there will be a great many people who will not be helped. I refer particularly to young married couples and young people generally, and anyone who needs for one reason or another to move about because of the nature of their employment. For this reason, I think the Bill will have a serious effect on our economy as a whole.

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The noble Lord, Lord Shepherd, said at an earlier stage, and he has repeated to-day, that he proposes to have discussions with local authorities on the effects of this Bill. I should be very interested to know, because presumably this is a matter to which the Government have given some attention, what advice and guidance they intend to give to local authorities in the light of the difficulties this Bill will create for a number of people. In particular, is the noble Lord going to advise them to review their housing programmes and to provide more accommodation for single people—perhaps a fixed proportion of it? This would meet the case of students or young people looking for work in cities. It would help, if it were, say, a onebedroomed flat, which would give a home of their own to a young married couple starting out in life. Will the noble Lord give local authorities guidance on how they are expected to help people who have to find temporary accommodation because of the nature of their work?—because in my experience this will bring a very new principle into local authority accommodation. It would mean that some accommodation would need to be left vacant for the person who might require it for a given but unexpected short time.
The Government have said quite consistently throughout the passage of this Bill that they expect the private landlord to disappear and they expect accommodation to be provided by local authorities, either by building it themselves or by buying up private houses. It is only right therefore that they should tell the House what advice they propose to give to local authorities about meeting these problems, because they are very real ones and, to the best of my knowledge and belief, very few housing committees will consider them at all. They will say they have long waiting lists for families, and these represent their first priority. So the net effect of this Bill will be that local authorities, unless urged to do so, will not meet the need, and the private landlord will not do so because of Bills of this nature.
I cannot give a welcome to this Bill, because it seems to me it will have the most unfortunate consequences. I believe that many people, if they can, will gain possession of their property and will begin
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to do so very rapidly. I regret to say that I see an increase in the amount of dilapidated property because the good landlord who expects the gap between tenants to be a time when he can do the necessary internal repairs and redecorations (for which of course he will be responsible in the case of furnished property), will find great practical difficulties in the way of doing this. Therefore, we may see far more dilapidated property.
I suspect that as a result of the Bill we shall see more of the bed and breakfast accommodation. Houses which were let as flats will become kinds of pseudo-hotels. I cannot see that this will be a desirable improvement. There will undoubtedly be a decrease in the choice of housing available to people. I know that it is difficult for many people to find the kind of accommodation they would like. But as a result of the Bill, there will undoubtedly be still less accommodation. I do not genuinely believe it will help the problem of homelessness. I know many people in housing are concerned because homelessness is so often caused because tenants are evicted from private furnished accommodation. But people only accept that accommodation because there is nowhere else for them to go. Unless someone provides that accommodation for them, they will simply not have the private furnished accommodation into which to go.
I do not believe that the Government have considered this problem of homelessness. The Bill could make the situation worse rather than better, because whatever we may say to the contrary, it is a sad fact that despite all the houses built since the ending of the War, the problem of homelessness remains with us in a form which did not exist before the war. It is difficult not to draw the conclusion that a great deal of homelessness has been caused because of the shrinking private market to which this Bill will simply add. There will be many hardship cases. We hear much about bad landlords, and I accept that there are bad landlords. But there are many good ones. Many landlords and tenants have over long periods of time enjoyed perfectly happy relations. For a great many of these people the Bill will not make matters any better. My Lords, for all these reasons we on this side of the House do not support the Bill.
8.23 p.m.
LORD MELCHETT: My Lords, I wonder whether I may make one point to my noble friend Lord Shepherd which arose on the Committee stage of the Bill and which has not come up again during the Report stage? This is to do with Case 3A which gives landlords grounds for possession where the tenant mistreats furniture. My noble friend Lord Shepherd kindly said during the Committee stage that he would look at this matter and he said that he would respond to the Amendments which we put down. They suggested that there should be an obligation on the courts to consider whether payment of damages should be ordered before giving an order for eviction. My noble friend Lord Shepherd said that he would look at that carefully and communicate with us. I wonder whether there is any chance of him producing that communication when he winds up this debate
Having said that, I wonder whether I could say a brief word to the noble Baroness opposite. On every occasion when we have discussed the Bill the noble Baroness has talked at some length about three particular groups of people whom she feels will be hard done by: young married couples, young people and people moving homes. One group she has not talked about at such great length are those people who are being made homeless daily from the furnished sector. Two-thirds of all families becoming homeless come from the furnished sector. In some areas it is considerably more than that. The Grieve Report on Homelessness found in 1969 that 52 per cent. of all applicants for emergency accommodation came from the furnished sector. The noble Baroness, and her supporters opposite, might at least give equal weight to the misery which this homelessness is causing daily, as opposed to the hypothetical dangers which the various groups she has mentioned so often may face when the Bill becomes law.
One cannot help being young, but people in the other two categories may in theory make a conscious decision as to whether to set up a home or to move home. That contrasts starkly with the group of people who can wake up in the morning and find a notice to quit on their doormat and face homelessness within a matter of months. I do not believe that the noble Baroness is being entirely accurate when she says that this is a group
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who have nowhere else to live. On the whole, people being made homeless from the furnished sector have lived in the accommodation for a very long time. They have not taken the accommodation on in a desperate search for somewhere to live. Certainly, in Pimlico people have often lived in the area for 30, 40 or 50 years. They have worked and lived in that area and are thrown out only when the landlord decides to sell the property and make more money in that way. I think that the noble Baroness ought to take into account that this Bill will prevent that ruthless throwing out by landlords of tenants who have families and who have been living in the accommodation for long periods of time.
Having said that, I accept, as everybody in this House has accepted, that this Bill will not increase the amount of furnished lettings and will probably add to the general decline which has taken place over the years in both unfurnished and furnished lettings. This Bill is a first step in a programme, which will continue in the future under this Government, of the provision of alternative sources of housing accommodation. After the Bill becomes law it must be followed by an increase in housing association housing and by an increase in building, particularly of council houses, as well as an increase of houses taken into municipal ownership. This is already starting to happen in Central London. My Lords, this Bill is an excellent first step and bodes well for the future.
8.27 p.m.
LORD SHEPHERD: My Lords, may I reply in a most sincere way to the short debate that we have had on Third Reading, and thank the noble Baroness, Lady Young for the work she has put into this Bill? A great deal of work has been involved because anything connected with rent legislation is extremely complex and takes a great deal of time, even when assistance is provided, to understand it. May I also say to my noble friends Lord Gifford and Lord Melchett now much I have appreciated their own contribution and persistence in matters about which they feel so strongly. In the case of my noble friend Lord Melchett, I do not need to say anything more in regard to this Bill and the reasons why it has

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been introduced, because he has done so in a most admirable form.
At the end of the day, there is only one solution; that is, more housing, both public and private. When the noble Baroness, Lady Young, speaks most feelingly about the homeless and about the shortage of accommodation, I cannot but reflect that she was a Member of a Government which saw continuously over the years a gradual, steady, persistent decline in housing built for local authorities and, in more recent years, even in the private sector. I say to the noble Baroness, with the utmost friendship, that when this Government took office in February we found the building industry knocked to pieces. It will require a great deal of effort by the present Administration to get the building industry to have sufficient confidence and resources, both of money and manpower, to be able to deal with the major problem that confronts us—the provision of houses for the local authority and private sectors. It is indeed a damning indictment of the previous Administration if one looks in this particular field.
In regard to my friend Lord Melchett and his point about furniture, I understand there is a letter in my box tonight for me to sign, and I hope that he will receive it tomorrow. There was only one further aspect that I would deal with. I accept from the noble Baroness the very great need for publicity of this legislation to be given to both landlords and tenants. I will write to the noble Baroness as to what we intend to do, but I give an undertaking that we will pursue the same sort of campaign as on previous rent legislation in order that all the interested bodies will have adequate leaflets and material so that they can understand this complex legislation.
The Bill now goes to another place. We have done a good deal of useful work on it. I hope we may have saved some time in another place because I share with my noble friend Lord Melchett the feeling that this legislation is necessary. I cannot help but feel that when it is passed there will be many thousands of people who will go to bed feeling a little more secure in their tenanted residences than they now do. If that is so, then this legislation is worth while.
Bill read 3a; an Amendment (Privilege) made.
LORD SHEPHERD: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Shepherd.)
BARONESS YOUNG: My Lords, I should like to thank the noble Lord, Lord Shepherd, for the very kind remarks he has made. I have found this Bill an interesting but a difficult one, and I am grateful for all the help I have received, in particular for the notes on clauses and for the opportunity of discussing the various technical points with members of his Department, for whose help I have always been and remain grateful. Having said this, which I do sincerely, I would draw the attention of the noble Lord, Lord Shepherd, to something he perhaps did not intend to do, which was to move a manuscript Amendment as he did on Report stage. I have now had an opportunity to look at the Companion to Standing Orders. Although I realise that it is probably not for me to advise the House on them, the Order in fact states that "manuscript Amendments are not out of order on Report but the disadvantages and inconvenience attaching to the moving of manuscript Amendments in Committee are even greater on Report than at the Committee stage".
LORD SHEPHERD: My Lords, would the noble Baroness proceed, because if she does she will see there are occasions when it is quite right to move manuscript Amendments in order to make an adjustment or to meet a point that has already been made with force.
BARONESS YOUNG: My Lords, I was not going to go on to say that anything the noble Lord did was out of order, but it is difficult when we have agreed on this side to take this Bill quickly through the House. We have had only a week between Committee and Report. We have had all the difficulties of printing, and we have known and accepted the reasons for the difficulties. We have tried to deal with these very complicated matters quickly. And then we are confronted with a sequence of manuscript Amendments, one of which was not written down. It makes the situation quite difficult. I leave the point at that. I would not have raised it at all, but I believe it to be a quite serious issue that we now have only two weeks between the Royal Assent and this Bill's coming

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into effect, instead of the month as the Bill has suggested. I have not had an opportunity to find out whether this is a usual practice, nor indeed have I any idea of the numbers of people who are likely to be severely inconvenienced by it. But I leave the point there. I feel, however, I should in fairness make it for the many people who will have to study this Bill. I do not wish to end on a disagreeable note, because I have been grateful for the help and co-operation we have received, and I have been grateful to those on this side of the House who have supported me in my Amendments.
LORD SHEPHERD: My Lords, I am grateful for what the noble Baroness has said. I will certainly take note of her—I will not say criticism but her admonishments. I felt that on this particular occasion there was substance in the points which my noble friends had put to me. I had intended to resist, but I took into account the powerful arguments they had put, and responded to them. I am grateful for what the noble Baroness said.
Bill passed, and sent to the Commons.

NORTHERN IRELAND (YOUNG PERSONS) BILL [H.L.]
8.37 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, NORTHERN IRELAND OFFICE (LORD DONALDSON OF KINGSBRIDGE): My Lords, I beg to move that this Bill be now read a second time. In spite of the fact that it is late and our audience is not quite so large as we are generally used to, I do not feel I have licence to deal with this Bill in a perfunctory way and I must, because it concerns the liberty of the subject and the safety of the public, go into its provisions in some detail. One of the saddest features of what is happening in Northern Ireland at the moment is the extent to which the young are increasingly used for the purpose of terrorist activity. Nowadays, it is quite common in Northern Ireland for a 15-year-old or 16-year-old boy to stand charged with murder or attempted murder or with other serious offences involving the possession of explosives or firearms. The noble
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and learned Lord, Lord Diplock, pointed out in his Report in December, 1972, that the I.R.A. had frequently used young boys to carry out serious acts of terrorism and these young people have been known to shoot with intent to kill and to plant lethal explosives, and so long as they remain at liberty they provide a direct threat to human life.
Under Section 51 of the Children and Young Persons Act (Northern Ireland) 1968, a young person may be remanded in custody to a remand home and can be remanded to prison only if he is certified as unruly or depraved. The Northern Ireland courts have taken the view, which is quite easy to understand, that the fact that one is accused of a serious offence does not mean one has committed it and therefore the fact of this accusation is not evidence that the person is unruly or depraved. So there is a tendency, which one can understand, for Northern Ireland courts to send even children accused of the most serious scheduled offences to a remand home, and not to describe them as unruly and depraved and send them to prison.
At the time of the Commission of the noble and learned Lord, Lord Diplock, there was no secure remand home in Northern Ireland. There were four training schools—one for Catholic girls and one for Catholic boys, one for Protestant girls and one for Protestant boys. They were all open homes with only the most modest way of preventing escape. Following the Report of Lord Diplock's Commission, a secure remand home was built and in 1973 it was opened at Lisnevin as a training school to provide an assessment unit for 20 boys on remand and an intensive care unit for a further 20 boys committed under training school orders. The distinguishing feature of Lisnevin is that it is interdenominational. Nobody knows whether the boys or the staff are Catholic, Protestant, or anything else. That is something which is both healthy and agreeable in Northern Ireland. However, in the peculiar circumstances prevailing there, this was not enough. It was not an easy place to escape from but it was not an impossible place to break into.
The normal concept of a remand home is a place from which boys occasionally abscond, usually going home where they are quickly picked up by the

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police and brought back. That is acceptable in society in normal circumstances, but the circumstances of Northern Ireland today are far from normal. What happened in Lisnevin is that after it had been open for a few months two people came in on a visitors' pass—a perfectly genuine one—held up the staff with pistols, tied them up and marched out with two boys. The staff said. "That is not what we were hired for. That is not the way we run things in a remand home. We are quite prepared to have a home which is difficult to escape from, but we cannot run a home which people can break into as easily as this if we are to have boys on scheduled offences."
My Lords, to give you some idea of the scale of the problem, since August 1, 1973, 39 boys charged with scheduled offences have absconded a total of 66 times, which your Lordships will be quick to see means that each boy, or many of the boys, have done it more than once. Of these, three were charged with murder, two with attempted murder, 21 with possession of firearms, two with armed robbery, five with causing explosions, one with intimidation, one with membership of illegal organisations, one with possession of illegal documents and three with riotous behaviour. Of these 39 boys, 13 are still at large. Of those still at large, two were charged with murder, 10 with possession of firearms and one with intimidation. If noble Lords bear in mind that scheduled offences—that is, offences scheduled in the Northern Ireland (Emergency Provisions) Act 1973—are those considered to be "terrorist" offences, clearly this situation cannot be allowed to continue.
However, the problem is a little wider than this. It is not just a question of absconding. As I have said already, last November three boys were abducted from Lisnevin. Therefore one has the problem of boys not only absconding from an open remand home like St. Patrick's, which is a Catholic one, but being extracted from a closed one at Lisnevin. It is lucky that on this particular occasion firearms were not used, nobody was hurt and the alarm system worked so that the boys were picked up before they got very far. However, that is not what you can expect a really dedicated remand home staff to do. It is not the kind of
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thing for which they were hired and trained.
My Lords, it is hard for the Army or the Royal Ulster Constabulary to find a young person back on the streets a day or two after they have arrested him at considerable personal risk. The worst feature is that the boy becomes a hero, a fugitive on the run, passing from gangster to gangster, missing out on education and the normal pleasures and pains of adolescence, who is quite likely to end up being shot or blowing himself up with a home-made bomb. This has happened on more than one occasion. I feel very strongly that we have a moral duty to prevent such a young person from drifting straight into the condition of a hardened criminal and vicious terrorist, a danger which is only too real, as those noble Lords who have experience of Northern Ireland will appreciate. We have another moral responsibility. There is a real danger that an absconder who has already committed crimes of this kind will commit further terrorist offences, perhaps involving the lives of others while he is on the run. Nobody likes remanding young persons to prison but the alternative is quite unacceptable.
I am afraid that the only secure institution available in Northern Ireland to-day for a young person on remand pending trial is prison. Steps have accordingly been taken to provide an entirely isolated juvenile wing on the ground floor of the hospital building in Belfast Prison in which juveniles are segregated from adults. Special arrangements have been made to provide for separate exercise facilities and an educational programme. Certain Members from another place have taken the opportunity to see these new arrangements, and I hope and believe they are satisfied that they are appropriate for their purpose.
The scope of the Bill is confined to dealing with the place of custody of young persons aged between 14 and 17 charged with scheduled offences. We are concerned here with a relatively small number of individual cases. The Bill in no way interferes with the powers of the courts in relation to sentencing. Perhaps I may run quickly through the Bill. It is not a long one. Clause 1 provides that the Secretary of State will be able to issue a direction to determine the place of

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custody during the period of remand of a young person charged with a scheduled offence. Such directions will be given where the Secretary of State is satisfied under the terms of Clause 1(4) that it is necessary in an individual case that a young person should be held on remand in the security of prison rather than in a remand home in order to prevent his escape so as to ensure his safety or the safety of others.
My Lords, the direction will have a limited duration of two months, during which time the young person concerned will re-appear regularly in court at the normal 8-day or 14-day interval until committed for trial. Clause 1 allows such directions to be given in respect of young persons already charged with scheduled offences and at present remanded in custody to remand homes. In other words, such young persons as are at the moment in remand homes can without further ado be directed to move into the remand centre. Obviously, this is a sensible provision.
Clause 2 indicates that the Bill is a temporary measure and will expire (unless continued in force) on January 24, 1975. The Secretary of State announced in another place earlier this year that he would have to renew the Emergency Provisions Act in July. The Bill which is before the House to-day has been drafted on the assumption that the Order to extend the Act will run for not less than six months. That is in the light of the present security situation and the time which the noble and learned Lord, Lord Gardiner, may need for his Commission to report on the Act. If Parliament decides on a longer period, arrangements will be made to extend the provisions of the Bill correspondingly.
My Lords, it would be wrong to conclude without paying tribute to the dedication and high standard of the work of the staff of remand homes and training schools in Northern Ireland. I have been around every one of them. I have been enormously struck by the dedication, the courage and the independence with which the staff run these homes, and by the immense kindness and care which they bestow upon their charges. One must never forget that to be kind to one person in Northern Ireland to-day may involve risking one's life with another, and that is
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something which these people do perfectly cheerfully.
My Lords, I hope that in addition to meeting an urgent security need the Bill will assist in enabling the training schools to carry on the vital work which they are undertaking and which, in my opinion, they are doing extremely well in helping those who can be helped in order to bring them back to society in a rehabilitated state. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(Lord Donaldson of Kingsbridge.)
8.49 p.m.
LORD BELSTEAD: My Lords, the need for this Bill arises from a problem with which I suppose most people in this country are unfamiliar. I think it would be fair to claim that over the years this House has always taken a close interest—indeed, it has many experts who are well qualified to take a close interest—in the variety of judicial sentences which Parliament has agreed shall become the law of the land as the years go by. However, it must be most unusual for either House of Parliament to be asked to legislate to prevent the threat of violence being directed from outside against institutions to which people are remanded or committed. Among the reasons for the Bill which the noble Lord has been so good as to give the House, this is one of the primary purposes and the noble Lord, Lord Donaldson, has explained the nature of the threat to those who at the moment are being asked to deal with all young persons who are on remand.
I am also grateful to the noble Lord for reminding the House of the reason why the courts cannot remove this threat unless the law is changed. The threat to the training schools does not of course arise from those youngsters who are "more adventurous than delinquent", as the Diplock Report described them. Such boys and girls make the task of the Security Forces difficult and dangerous but I think we would agree that these young people can and do benefit from a period of training. As the noble Lord said, it is now quite common, however, that among those who are on remand there are teenagers accused of crimes which are not only included among the scheduled offences but which are among the most terrible of the scheduled offences

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Such boys and girls may well be connected with terrorist organisations outside which will stick at nothing to effect their escape.
The noble Lord reminded us that in 1972 the Diplock Report said that there were only two institutions in Northern Ireland to which boys could be remanded. If I remember correctly, both of those have suffered intrusion. In the case of the Roman Catholic training school, it was intrusion of a particularly cruel nature which ended in the abduction and then the murder of a boy who was suffering from some form of mental handicap.
The noble Lord has explained that these institutions and the girls' establishments are not secure; they are training schools, and the Diplock Report recommended that a secure unit should be set up with great urgency. It was hoped that Lisnevin would be able to include this role in the work that it did. But as the noble Lord reminded us—and I must say that I had forgotten this—of course Lisnevin suffered a double intrusion which was extremely terrifying to the people who were working there.
If I may say so, it is typical of the interest which the noble Lord takes in a subject which I know has always been his greatest interest, that he has visited all the training schools in Northern Ireland. Like others who served there, I had the opportunity of visiting Lisnevin. I can testify to the devotion to their work and the practical commonsense of the staff, characteristics which I agree with the noble Lord apply to those who run the other training schools in Northern Ireland. I remember that when I visited Lisnevin there was at that time a 16-year old boy who had been remanded there, accused of a particularly bad and particularly serious terrorist offence and I remember that the staff were in no way reluctant to help this particular boy. Indeed, they said that they felt they were making progress, but what they naturally disliked was the effect on their work with other boys which extra tight security would impose—security which was especially necessary with such a boy in order to ensure safety and to prevent escape, the precise criteria which one finds in Clause 1(4) of this Bill is for a Secretary of State's direction.
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So this Bill certainly provides a practical solution to this particular threat to the work of the training schools in Northern Ireland. But of course the Bill is dealing with young people between the ages of 14 and 17, and Parliament will wish to be absolutely satisfied that the sort of arrangements that are being made for young people who are subject to direction by the Secretary of State are suitable for young people of that age. The noble Lord has given what I think are important assurances on this, the first time the Bill has been debated in either House of Parliament about the effect of a direction under the Bill, and particularly the assurance that accommodation at the Belfast prison for young persons on remand will be separate and that education will be provided.
I should like to ask just two questions to end with. First, I realise that in introducing the Bill it is not the intention of the Government that all young persons charged with scheduled offences shall automatically be subject to a direction. The criteria in Clause 1(4) make this quite clear. It seemed implicit in what the noble Lord said, particularly in his catalogue of the number of times that boys who had been charged with scheduled offences had escaped, from, I think Lisnevin, a great number of young persons who are charged with scheduled offences will probably be subject to the Secretary of State's direction. This leads me to ask this question. If this is the case, it will certainly remove a source of great difficulty from Lisnevin. But I am wondering what in the future will really be the difference between Lisnevin, and the regime there, and the curriculum of the other training schools.
The other question that I wish to ask arises directly from the drafting of the Bill. It is really a Committee point, but as we are going to take all stages tomorrow I should like to ask it now, and the noble Lord may prefer to answer tomorrow. I am uncertain of the effect of Clause 3(2)(c) if, under the Constitution Act 1973, the treatment of offenders, including young persons, becomes a transferred matter at any time in the future. As things stand now, it seems to me that this Bill, quite rightly, gives Parliament control over the expiry or continuation of Clause 1. But if the treatment of

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offenders were to become a matter transferred to a future Northern Ireland Executive, would the effect of Clause 3(2)(c) be that this Bill could be reactivated by a measure of the Northern Ireland Assembly? This Bill will enable the training schools in Northern Ireland to work with greater effect and it will ensure that the task of the Security Forces is not further endangered by the escape of young persons who have already been apprehended. For these reasons I agree with the noble Lord that the Bill is necessary, and I hope that it will pass through this House as rapidly as possible.
LORD DONALDSON OF KINGS-BRIDGE: My Lords, I am most grateful to the noble Lord for his comments. I will try to answer rapidly the two questions which he asked. The second one (I always remember the second question better than the first) was in relation to the transferred matter. I am advised that the Bill is only applicable to young persons who have been charged with scheduled—that is to say, terrorist—offences, and the Bill provides a special power for dealing with such a young person while awaiting trial. Schedule 2 of the Northern Ireland Constitution Act, provides that special powers and other provisions for dealing with terrorism or subversion shall be excepted matters and excepted matters cannot be transferred. I think that is a fairly clear answer. Clearly this situation can be altered by legislation, but that is where we stand at the moment.
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The other question was twofold: first, were we dealing with sufficient numbers and, secondly, were we giving them reasonable facilities. The answer in regard to the numbers is that this place that we have in the Belfast prison will take 16 to 20 persons. Remand should never last more than three months, though regrettably it sometimes does (but it often does not), so we think this would give a reasonable marginal turnover for the very difficult boys, and we think we can manage with this. As noble Lords know, there is a plan which will be ready in 1977 by which there will be a young offenders' centre at Hydebank, near Purtisburn, but, of course, this will not help us now. We hope to phase into this.
In regard to education, we have a part-time education officer already and we shall increase the education available. They have recreation, they have games, they have reasonable places to play them in. They are not quite as well off as they would be in Lisnevin, which has remarkable facilities, but they are really well off indeed compared with being on the streets. I am grateful for the support of the noble Lord.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

GREATER LONDON COUNCIL (MONEY) BILL
Brought from the Commons; read 1a, and referred to the Examiners.
  NORTHERN IRELAND: FINANCIAL SUPPORT
  NORTHERN IRELAND: FINANCIAL SUPPORT
  HOUSING SITES: RELEASE OF LAND
  HOUSING SITES: RELEASE OF LAND
  COURT LINE LIMITED
  COURT LINE LIMITED