Sitting of 2 May 1974

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

    Prices
    Mr. Pardoeasked the Chancellor of the Exchequer what were the percentage increases in wholesale and retail prices, respectively, for the latest 12-months' period for which such figure is available.
    The Paymaster-General (Mr. Edmund Dell): In the 12 months to March 1974 the wholesale price index covering home sales of manufactured products increased by 20 per cent. and the index of retail prices by 13½ per cent.
    Mr. Pardoe: Does the Minister agree that those figures indicate and herald a rate of inflation quite unprecedented in our history? Does he believe any steps that the Government have taken in the last few months will do anything to stop the rate of inflation rising to 20 per cent. next year and more the year after? Will he take steps to ensure that a Government financial health warning is attached to all advertisements for Government securities and Government-sponsored savings schemes in the future?
    Mr. Dell: The hon. Member has asked a wide variety of questions. I believe that the rate of inflation is unprecedented, except, perhaps, for wartime. The Government have taken many steps to try to reduce the rate of inflation, but it is perfectly clear that it will take some time before the rate of inflation can be reduced to below double figures.
    Sir B. Rhys Williams: Does the Minister agree that a sharp rise in the cost of living bears much more heavily on wage
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    earners with families than on single people, and will the Government therefore commit themselves now to increasing family allowances?
    Mr. Dell: I cannot commit myself to that now, but the hon. Member will realise that the point he makes is precisely the reason we have concentrated as much help as we can on families.
    Mr. Gwilym Roberts: In view of this high level of inflation, is it not surprising that the Opposition parties are so begrudging in their praise for the Government's food subsidies and rent freeze?
    Mr. Dell: I am grateful to my hon. Friend for that point. I wait for the parties opposite not to be grudging.
    Mr. Robert Carr: Why has the Government's action overall put up the cost of living?
    Mr. Dell: The right hon. Gentleman cannot get out of his party's responsibilities in that way. He knows perfectly well that the factor which made the net effect of the Budget positive in price terms was the price increases in nationalised industries. That would have been done by the Conservatives had they remained in Government, and had we not done it, that would in itself have been inflationary.

    Wealth Tax
    Mr. Cryerasked the Chancellor of the Exchequer if he can now say when he expects to publish his Green Paper on a wealth tax.
    Mr. Sillarsasked the Chancellor of the Exchequer which organisations he is consulting about the proposed wealth tax.
    The Chief Secretary to the Treasury (Mr. Joel Barnett): My right hon. Friend proposes to publish a Green Paper on the wealth tax in the summer. Representations will then be invited from all persons and organisations who wish to offer comments.
    Mr. Cryer: Does my hon. Friend appreciate that Labour Members look forward very much to his proposals, which we hope will set the Government on the path to establishing a fairer society, where people who have created wealth out of the work of the vast

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    majority of the population will make a contribution to the Exchequer?
    Mr. Barnett: I entirely agree with my hon. Friend.
    Mr. Peter Rees: In view of the complex questions likely to be involved, does the Chief Secretary not feel that the subject could be better examined by a Select Committee?
    Mr. Barnett: I cannot at this moment say anything on the question whether or not there will be a Select Committee.
    Mr. Lee: It is highly commendable of my right hon. Friend to receive representations about the proposals for this admirable tax. May we take it that the introduction of the tax will not be delayed by those representations, since many of them are bound to be of an obstructive and tendentious character?
    Mr. Barnett: We are more interested in reasonable representations than the kind my hon. Friend has mentioned.
    Mr. Higgins: Will the Green Paper give details of the related proposals for a gifts tax? In his Budget speech the Chancellor said that the tax would take effect "as from today." That phrase is normally restricted to proposals which are covered by a financial resolution and implemented in the immediately following Finance Bill. There is great uncertainty in this matter, which should be clarified as soon as possible.
    Mr. Barnett: I shall be dealing with the gifts tax when I answer another Question on the Order Paper.

    Industrial Investment
    Mr. Duffyasked the chancellor of the Exchequer if he is satisfied with the effect of his current policies on the level of industrial investment in the private sector.
    The Chancellor of the Exchequer (Mr. Denis Healey): Yes Sir, my Budget strategy is for resumption of growth at a good steady pace. This in itself is the best incentive for investment.
    Mr. Duffy: Has my right hon. Friend yet adopted a view on the question whether the level of industrial investment is governed primarily by the reluctance of loanable funds or the shortage of them,
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    or merely a secular tendency for the rate of reward for capital to decline, which has been dealt with in many talks, notably in NEDC? Is my right hon. Friend sure that his current policies are equal to all these contingencies?
    Mr. Healey: Successive Governments have found it so difficult to stimulate investment that I cannot claim to be certain on these matters. However, there is a wide degree of agreement, which was expressed in the meeting of the NEDC which I chaired yesterday, first, that shortages of funds are not likely to be an obstacle to investment this year, and, secondly, that the future rate of return on capital determines investment rather than the level of profits in the past. Thirdly, it is a registered fact that the decline of profitability which we have witnessed in Britain over the last 15 years is equally notable in Western Germany, which has achieved a much higher rate of investment.
    Mr. Tom King: The right hon. Gentleman will be aware of the importance of inward investment in total investment growth in this country. In that connection, how does he feel his proposals for tax on overseas management working in this country will help him with investment?
    Mr. Healey: I think that they will be neutral in that regard.
    Mr. Robert Carr: In view of the confidence that the Chancellor expresses in the effect of his policies on the future growth rate, will he now publish his forecast for the first half of next year, which he withheld from the House at the time of the Budget?
    Mr. Healey: No, Sir—for the reasons I explained in the Budget debate, which appeared to commend themselves to the House, as the Opposition did not divide the House against the Budget.

    Gross Domestic Product
    Mr. Rostasked the chancellor of the Exchequer what is the estimated growth in the gross domestic product for the current year.
    Mr. Healey: During 1974 I expect a strong recovery of economic activity. In the second half of 1974 gross domestic

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    product should be some 2½ per cent. higher than a year earlier. As I made clear in my Budget Statement, gross domestic product in 1974 as a whole may show a fall of around 1 per cent. when compared to 1973. This is due to the expected sharp fall in gross domestic product in the first half year as a result of three-day working.
    Mr. Rost: Why did not the Chancellor reveal those figures in his Budget Statement? Is not he afraid to do so because he is reverting to a policy of stagnation, such as we had under a previous Labour Government?
    Mr. Healey: The hon. Gentleman must have been asleep during my Budget Statement, because I referred to those facts in that speech.

    Company Liquidity and Profitability
    Mr. Norman Lamontasked the chancellor of the Exchequer whether he is satisfied with the present level of company liquidity and profitability following the Budget.
    Mr. Stanleyasked the chancellor of the Exchequer what estimate he has made of the effect of the Budget on company liquidity.
    Mr. Healey: The most recent information available about company liquidity shows that this was at a high level in the fourth quarter of 1973, and the indications are that in general companies have been remarkably resilient following the resumption of normal working. It has never been the practice to publish forecasts of the effects of the Budget on company liquidity.
    Mr. Lamont: Will the Chancellor confirm that there has been serious disagreement between the Government and the CBI about the level of corporate liquidity? Does he not agree that what matters is not the amount of liquid assets but the net position of companies after borrowing, that this is strongly negative at present, and that it is this, plus the prospective cash flow problems, which is very much alarming the CBI?
    Mr. Healey: The CBI is alarmed at many things, for reasons which we all understand. There is no dispute that the
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    total corporate liquidity in Britain was £10,000 million at the end of last year.
    Mr. Lamont: Net.
    Mr. Healey: There is no doubt that there will be a fall in liquidity this year—I referred to that many times in my Budget speech—but I am confident that sources of funds will be available for investment, if desired, notably from the banking sector.
    Mr. Denzil Davies: Does my right hon. Friend agree that the Opposition's concern about company liquidity would carry more weight if, when they were in Government, they had not changed a system of corporation tax which favoured retentions to a system which favoured distributions, thereby penalising companies that wanted to invest from retentions?
    Mr. Healey: There is a great deal in what my hon. Friend says. The Opposition's view on liquidity would be more convincing, also, if they had made every effort to avoid two months of three-day working, instead of provoking the miners into an unnecessary dispute, which is responsible for the main burdens carried by the British nation today.
    Mr. Stanley: What steps will the Chancellor take to avert the acceleration of the fall in company liquidity this year arising from the wage threshold provisions under the Pay Code, which will almost certainly become operative in the current month?
    Mr. Healey: The hon. Member, who was not a Member of the last Parliament and therefore carries no responsibility for the action of his right hon. Friends then, is aware, as I am, that the operation of the threshold agreement is acting on the economy in a sense exactly the opposite of that intended by the previous Government when they introduced it. But as so many people have already reached pay settlements with threshold agreements it would be improper for the present Government at this stage to do anything to interfere with them.
    Mr. Maxwell-Hyslop: Is the Chancellor aware that the liquidity figures for the last quarter of 1973 do not show the disastrous effect of the dramatic increase in rates in areas which have suffered from the Government's alterations in rate support grant,

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    or the loss of liquidity due to the increased national insurance contributions payable by all employers?
    Mr. Healey: I am sure that that is true, but, equally, they do not reflect the reduction of the rate burden in the industrial areas as a result of the recent decision of my right hon. Friend the Secretary of State for the Environment. The changes in the rate system are probably more important to companies in the industrial areas than in the rural areas.

    Charities
    Mr. Ashleyasked the chancellor of the Exchequer what representations he has received about the effect of his Budget on charities and what replies he has sent.
    Mr. Joel Barnett: Relatively few representations have been received about the effect of the Budget on charities. The replies sent have indicated that such bodies enjoy very considerable fiscal advantages, some of which will be made more valuable by the Budget proposals.
    Mr. Ashley: Is my hon. Friend aware that my right hon. Friend the Chancellor has been very helpful over the problems of disabled children who are affected by the Budget, but that, in spite of my hon. Friend's answer, many charities have been highly critical of the Budget as it affects their finances? The Spastics Society has called it a black Budget for charities. In view of the reasonable problems which have been raised by charities, is not it possible for reconsideration to be given to the Budget proposals affecting them?
    Mr. Barnett: As I said in my main answer, we have received relatively few representations. I note what my hon. Friend says, but we are satisfied that the Budget as a whole was actually advantageous to charities.
    Mr. Burden: Is the Chief Secretary aware that the increase in national health contributions, which is considerable, will impose great hardships on a number of charities, especially those employing many people?
    Mr. Barnett: In fact, the working of the income tax system, by a covenant, will help many charities, particularly the
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    larger charities, which I am sure the hon. Gentleman has in mind.
    Mr. William Hamilton: Does my hon. Friend understand that Eton and Harrow public schools are very concerned? Will he undertake to accept an amendment to the Finance Bill to make sure that they get their deserts under the term "charity"?
    Mr. Barnett: My hon. Friend has hit on one of the major problems—the definition of charities. We are examining the matter.

    £ Sterling (Value)
    Mr. Skinnerasked the Chancellor of the Exchequer what, on the basis of the General Index of Retail Prices, is the purchasing power of the £ sterling now, taking it at 100p on 18th June 1970.
    Mr. Dell: Taking the internal purchasing power of the £ sterling as 100p in June 1970, its value in March 1974, the latest date available, is estimated to be 71p, on the basis of the change in the General Index of Retail Prices.
    Mr. Skinner: Is my right hon. Friend aware that that figure covers up many casualties resulting from the operations of the last Tory Government? Will he ensure that in the course of this Parliament, at any rate, we safeguard those at the lowest end of the incomes scale? We are told that the property developers have made a claim to the Governor of the Bank of England, having fallen below the subsistence level. Will my right hon. Friend tell the House that if the property developers want bailing out they had better turn to the people who put them in their present predicament? If they cannot get anything from their friends in the Tory Party, let them make a claim upon their local supplementary benefit office.
    Mr. Dell: It is the Government's aim to reduce the rate of inflation and to protect those at the lowest end of the income scale. Regarding property developers and the Government's relations with them, my hon. Friend will have seen the answer that my right hon. Friend gave him yesterday.
    Mr. Ridley: I hope that the right hon. Gentleman will be prepared to answer further Questions from his hon. Friend the Member for Bolsover (Mr. Skinner)

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    every month, or every time he tables a Question on how the value of the pound has declined under this administration. Is he aware that some of us feel that the regrettable decline of the past three years will be nothing compared with what will happen under the policies pursued by the present Government?
    Mr. Dell: I know that my hon. Friend the Member for Bolsover (Mr. Skinner) has a practice of tabling such a Question as this every month. It is not for me to recommend whether he continues that practice. I do not disguise from the House the serious problems that the country faces as a result of inflationary pressures that are still in the pipeline. The Government will exert every endeavour to reduce the rate of inflation.

    Interest Rates
    Mr. Biffenasked the chancellor of the Exchequer what proposals he has to lower interest rates.
    Mr. Healey: It is the Government's aim to reduce interest rates from the high levels which we inherited as soon and as far as domestic and external conditions make this feasible. Short-term rates have already fallen as a result of the action we took to release special deposits last month.
    Mr. Biffen: In view of the recent and sharp increases in the prime rate of the United States, does the right hon. Gentleman feel that there is much prospect of lowering domestic interest rates without having a consequential effect on the sterling exchange rate?
    Mr. Healey: This is a matter that causes all observers some concern. The recent increase in American rates was unexpected by the American banking community as recently as a month or two ago. If external rates continue to decline, limits will be set on the ability of British rates to fall. I hope that Conservative Members will applaud the attempts that we have taken, so far successfully, within the existing context to reduce British interest rates.
    Mr. Cant: Apart from the problems mentioned by the hon. Member for Oswestry (Mr. Biffen), is not my right hon. Friend putting himself on the horns of a dilemma? By persuading the Bank
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    of England to release special deposits to buy Treasury bills and local authority bills, is he not going for something of an overkill, in the sense of trying to reduce the rate of interest? As a confirmed monetarist, is he mindful of the fact that the more he increases the money supply in this country the more he is likely to undermine his attempt to reduce the rate of interest?
    Mr. Healey: First, I must inform my hon. Friend that I am neither a confirmed nor an unconfirmed monetarist. However, I believe that the volume of money supply has an influence on many factors in the economy. I am afraid that all Chancellors in all Parties and in all countries live permanently on the horns of a dilemma.
    Mr. Bruce-Gardyne: Will the right hon. Gentleman revert to the practice of the previous administration and reveal the rate of interest to be charged on loans raised in the Eurodollar market by local authorities and statutory corporations? Is not it a fact that the latest borrowing operation by the Glasgow city authority attracted a premium over the inter-bank rate and considerably in excess of the rates applying to loans raised under the previous administration? Does not that fly in the face of the evidence that the right hon. Gentleman the Chancellor of the Duchy of Lancaster gave to the House in the Budget debate?
    Mr. Healey: I understand that my right hon. Friend the Paymaster-General has already written to the hon. Gentleman on the point that he has in mind. The hon. Gentleman will be aware that Governments are not at liberty to reveal the rates of interest charged when the borrower does not wish the rate to be revealed. That was the position in respect of the Glasgow loan to which the hon. Gentleman was referring.

    Council of Ministers
    Mr. Martenasked the chancellor of the Exchequer when he will next be attending the Council of Ministers in the Common Market.
    Mr. Healey: I expect to attend the next Council of Finance Ministers meeting on 20th May.
    Mr. Marten: As this is the last Question Time before that meeting, will the

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    right hon. Gentleman give us his view on economic and monetary union, the second stage of which should have been achieved by 1st January of this year? Further, will he express a view on the Italian action of imposing a 50 per cent. import surcharge? Does he agree that that action seems to make nonsense of the Common Market? Does that explain why Sir Christopher Soames is now applying—so we hear—for the safe Conservative seat of Chichester?
    Mr. Healey: I can think of at least one other reason why Sir Christopher Soames might be applying for that seat—if, indeed, he is doing so. I have no doubt that the right hon. Gentleman the Leader of the Opposition is equally aware of that possible reason.
    The hon. Gentleman will be aware that I have never regarded the commitment to achieve a European economic and monetary union by 1980 as being in any sense conceivable or possible. I find that that is the view of most of my colleagues among the European Finance Ministers.
    I regret the recent action of the Italian Government, although I can understand why that Government felt that they had no alternative. All hon. Members, whatever their views on the Common Market, should know that it is possible for a Common Market Government to take such action and to remain a member of the Common Market, in spite of the principles to which it has given its name.
    Mr. Norman Lamont: Will the right hon. Gentleman clarify the conflicting reports that appeared in the Press following the last meeting of the Council of Ministers and state his views on the rôle of gold in the international monetary system? Does he agree that it is now absurd that gold should be kept in countries' reserves at one-quarter the price that is available on the free market?
    Mr. Healey: All my colleagues among the European Finance Ministers, and even more strongly my colleagues among the Finance Ministers outside Europe, are strongly committed to the view that gold should be phased out of the international monetary system and be replaced by something in the nature of SDRs. We agreed at the Zeist meeting the other day to find out whether Finance Ministers outside Europe—especially the Finance
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    Minister of the United States—were prepared to consider whether monetary authorities should have the ability to buy and sell gold from one another. Whether the other Finance Ministers of the world will accept that suggestion is still unclear.
    Mr. Jay: Does my right hon. Friend's answer about Italy mean that the great advantage of being in the Common Market, which we have all been seeking, is that members can break the rules whenever they wish?
    Mr. Healey: I do not wish to quantify the advantages of the Common Market, least of all in answer to my right hon. Friend the Member for Battersea, North (Mr. Jay). However, there is something in what he says.
    Mr. Higgins: Will the right hon. Gentleman give the House an assurance that when the sixth directive on value added tax comes up before the Council of Ministers he will ensure that it enables us to retain zero rating permanently?
    Mr. Healey: I have made that clear already to my colleagues in the Council of Ministers.

    Corporation Tax
    Mr. Douglas Hendersonasked the chancellor of the Exchequer if he will publish to the most recent convenient date details of the amount of corporation tax paid by companies which relates to income earned in Scotland.
    Mr. Joel Barnett: No precise estimate is possible. Net receipts of corporation tax from companies whose registered office is in Scotland were £80 million in 1972–73; the tax on profits arising in Scotland would probably have been somewhat higher. The last time an attempt was made to provide an estimate of tax on profits arising in Scotland was for 1967–68, published by the Treasury in 1969 in "A Scottish Budget". Applying the 1967–68 proportion of estimated Scottish tax to United Kingdom tax to the 1972–73 receipt of corporation tax produces a figure of between £100 million and £110 million.
    Mr. Henderson: Does the Minister accept that that is a somewhat confusing reply? Is he aware that in Scotland it causes considerable surprise and disappointment, and, indeed, incredulity that in

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    these days, when the Government have so much computer capacity at their elbow, they cannot readily produce information of this kind? Will the hon. Gentleman undertake to make arrangements to produce these figures in future?
    Mr. Joel Barnett: No. It may be incredible to the hon. Gentleman but it happens to be a difficult problem. As the hon. Gentleman—or even his hon. Friend the Member for Moray and Nairn (Mrs. Ewing)—may be aware, many companies outside Scotland have incomes arising in Scotland, and, equally, many companies in Scotland are assessed for corporation tax on profit that is earned in England.
    Mr. Dalyell: Will my hon. Friend accept that his reply was confusing only to those who positively want to be confused?
    Mr. Bruce-Gardyne: Instead of wasting the Treasury's time in meaningless statistical exercises such as that requested by the hon. Member for Aberdeenshire, East (Mr. Henderson), will the hon. Gentleman seek to assist Scotland's economy in one manner which would be most effective, namely, by helping to alleviate the discriminatory burdens of taxation on family companies, which are of such importance to the Scottish economy?
    Mr. Barnett: I do not accept what the hon. Gentleman says about discrimination against family companies. We have had this argument on many occasions before. I intend, as do my right hon. and hon. Friends, to encourage the economies in Scotland, England, Ireland and Wales.

    Personal Taxation (Expenses Allowance)
    Mr. Gwilym Robertsasked the chancellor of the Exchequer if he will propose bringing the tax position of industrial and office workers into line with that of companies by making expenses incurred in the course of their employment such as lunches, travelling to and from work and wear and tear on clothes all allowable against personal taxation.
    Mr. Joel Barnett: A deduction is allowable for the cost of maintaining special
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    clothing which an employee needs in his employment. Other expenses of this kind are not allowable against personal tax liabilities, whether the individual concerned is assessable under Schedule D or Schedule E. So far as a company meets the cost of such expenses, the outlay is in substance additional remuneration of the company's staff.
    Mr. Roberts: We do not expect tax legislation at this stage, but does my hon. Friend agree that this matter should be considered in the reasonably near future, in view of the unfortunate tendency for an increasing proportion of the population to have to travel considerable distances to work?
    Mr. Barnett: I take entirely my hon. Friend's point, but I do not necessarily agree that the course he suggests is the best way to deal with the matter.
    Mrs. Kellett-Bowman: Will the hon. Gentleman bear in mind the immense burden that falls on people in rural areas, in terms of going to work, particularly since the imposition of value added tax on petrol? Will the hon. Gentleman seriously consider making this an allowable expense?
    Mr. Barnett: There is another Question on that matter on the Order Paper. I do not accept that the problem applies only to people in the rural areas.
    Mr. George Cunningham: Does my hon. Friend accept that there is a real advantage in having income taxed under Schedule D rather than under Schedule E, and that a considerable number of employees arrange with their employers to enter into a contract as a result of which they are taxed under Schedule D for the sole purpose of gaining allowances to which most people are not entitled?
    Mr. Barnett: I agree that the tax rules provide an advantage under Schedule D, but any employee who obtains private benefit from the use of a car will be assessed on that private benefit.

    Road Fund Licence
    Mr. Wigleyasked the chancellor of the Exchequer if he will propose reducing the cost of a road fund licence for persons resident in areas where public transport services are inadequate.
    Mr. Dell: No, Sir.
    Mr. Wigley: Is the right hon. Gentleman aware that in many rural areas in Wales a car is a necessity of life, as opposed to a luxury? In some counties the number of private cars per 1,000 population is as much as 50 per cent. higher than the average for the United Kingdom, and in those areas personal income averages are 30 per cent. lower. With the increase in the price of petrol being aggravated by the imposition of VAT, a serious problem faces these people.
    Mr. Dell: I accept that in many areas in rural Wales and elsewhere the car is a necessity, but it would not be possible to police the hon. Gentleman's suggestion. It would be easy to evade, particularly, for example, by people with second homes, and I am sure that that is a practice which the hon. Gentleman would not wish to encourage.
    Mr. Ronald Atkins: Would it not be more logical to subsidise the public transport service in order to make it adequate?
    Mr. Dell: Improvement in the public transport system is an important aspect of this problem, but that is a question for the Secretaries of State for the Environment and for Wales.
    Mr. Pardoe: Does the Minister recognise that the circumstances which the hon. Member for Caernarvon (Mr. Wigley) has described as applying to Wales are exactly similar to those in Cornwall? Rather than give a tax concession, has not the time come to give serious consideration to converting the regional employment premium into a getting-to-work grant in rural development areas?
    Mr. Dell: The hon. Gentleman will be glad that we are continuing the regional employment premium and, no doubt, that we are considering its future and any improvements which we should make to it.
    Mr. Farr: Is the Minister aware of the point behind the Question? The point which the hon. Member for Caernarvon (Mr. Wigley) has tried to make is that many areas in the countryside have no public transport at all, and that people in these remote areas—often as many as 3,000 people—who have no public transport are at their wits end with the imposi-
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    tion of VAT on petrol and other increases which they have to bear. The Minister must recognise this problem.
    Mr. Dell: Certainly I recognise the problem. I am aware of what is behind the Question, but I do not think that what is suggested in the way to solve the problem.

    Balance of Payments (United Kingdom-Germany)
    Mr. Dalyellasked the chancellor of the Exchequer if he will give the latest convenient figures for the Anglo-German balance of payments situation.
    Mr. Dell: I regret that no reliable estimates of our balance of payments with individual countries are available. However, it is likely that there was a current account deficit, arising mainly from visible trade, of over £500 million with the German Federal Republic in 1973.
    Mr. Dalyell: Will my right hon. Friend select the most sceptical and hard-headed of his Treasury officials and detail them to scrutinise the MRCA project in order to discover how the BAC says that it will be £3 million plus on aircraft, whereas some members of the Defence Committee of the Bundestag say that it will be £9 million on aircraft? Without necessarily asking either our Chancellor of the Exchequer or Helmut Schmidt to commit infanticide on a project born in their previous incarnations as their countries' Ministers of Defence, may I ask what outside information the Treasury has, free of the Ministry of Defence and free of the aircraft companies, on the viability of the MRCA—which may be vulnerable to SAM missiles, and no good anyway?
    Mr. Dell: I am sorry that my hon. Friend thinks that we are anything but sceptical in the Treasury when considering advanced technology projects. My hon. Friend will be aware that there is always uncertainty in the costing of such projects—a fact of which there is much experience—but I remind him that the MRCA project will be considered in the course of the defence review.
    Mr. Dykes: Bearing in mind that the import propensity of the Germans appears to be as great as ours but that they do much better over the long term than we do, does the Minister feel that he and his

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    colleagues should consider ways of encouraging physical exports in order to sustain the export progression which we have experienced in recent years?
    Mr. Dell: That is a question for my right hon. Friend the Secretary of State for Trade. But I entirely agree with the hon. Gentleman; we very much need to improve our export performance in Germany.

    Scottish Budget
    Mrs. Winifred Ewingasked the chancellor of the Exchequer if he will in future present a separate Scottish Budget.
    Mr. Healey: No, Sir. The Budget is properly concerned with the development of the United Kingdom economy as a whole.
    Mrs. Ewing: In that event, will the Chancellor explain why the previous Labour Government took the trouble to introduce a Scottish Budget—at least, that is what it was called? Will the right hon. Gentleman comment on the absence of Scottish financial statistics, about which we have had an admission today? Does he say that one can plan for Scotland's economy without such statistics? If so, will he explain how one can have planning without the basic information on which to base the plans?
    Mr. Healey: The last Labour Government published a "Scottish Budget" in 1969 which was based on the best statistics available for 1967–68, but it was rightly criticised on the ground that although it is possible to assemble accurate and detailed statistics on expenditure in Scotland—indeed, that is done every year in the public expenditure White Paper—it is not possible to do it for revenue, for the reason which my hon. Friend the Chief Secretary gave a moment ago, namely, that it is not possible to discover what part of a company's profits derives from activities in Scotland if it has activities in other parts of the United Kingdom.
    Mrs. Ewing: On a point of order, Mr. Speaker. In view of the Chancellor's unsatisfactory reply to my Question, I beg to give notice that I shall raise the matter on the Adjournment.

    Value Added Tax (Students' Hostels)
    Mr. Waddingtonasked the chancellor of the Exchequer what steps he now proposes to take to relieve students' hostels of the obligation to pay VAT and amend the VAT (General) (No. 2) Order 1973; and if he will make a statement.
    Mr. Joel Barnett: After a full reexamination of all the relevant factors, I have decided not to amend the Value Added Tax (General) (No. 2) Order 1973.
    Mr. Waddington: Is the hon. Gentleman aware that his colleague, the hon. Member for Manchester, Ardwick (Mr. Kaufman), waxed lyrical about the evils of that part of the order that discriminated against halls of residence which were not attached to universities, compared with halls of residence which formed part of universities? Surely, the hon. Gentleman recognised then the logic of his colleague's case and, surely, being an honourable man, he will now do something to put in order what he then recognised to be a disorder?
    Mr. Barnett: I recall what my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) said at the time, but he will know only too well, as will the hon. Member for Nelson and Colne (Mr. Waddington), that I do not deny the anomalies in VAT—indeed, I have said a great deal about them in the past few years. There are difficult dividing lines on this issue, and, whenever there are dividing lines, once reliefs are given new dividing lines are created.
    Mr. Lee: Nobody will blame my hon. Friend for this ludicrous tax, but can something be done to simplify the forms which have to be completed? All sorts of people are being driven up the wall trying to fill them in. I speak from personal experience.
    Mr. Barnett: I shall consider my hon. Friend's personal request.
    Mr. Blenkinsop: Will my hon. Friend consider, if not student hostels, at least the representations we are making on behalf of the Youth Hostels Association, which is the only body of its kind in Europe that has to pay VAT?
    Mr. Barnett: I am always prepared to listen to representations from my hon. Friend, and if he cares to make them I shall be pleased to hear them.

    Taxation (Inquiry)
    Mr. Marquandasked the chancellor of the Exchequer whether he will now change the policy set out in the then Chief Secretary's evidence to the Select Committee on Procedure during its inquiry into the scrutiny of taxation and published in its report "Scrutiny of Taxation, 1971."
    Mr. Joel Barnett: In the course of the summer, I hope to consider fully the important issues discussed by the Select Committee.
    Mr. Marquand: That is a mildly encouraging reply, but is my hon. Friend aware that the Select Committee on Procedure unanimously recommended the setting up of a Select Committee on Taxation? Will he bring pressure to bear on his right hon. Friend the Leader of the House for a debate on that report, which has so far not been debated?
    Mr. Barnett: I am obliged to my hon. Friend for his opening remark, and I am sorry that my answer was only mildly encouraging. We have been in office only for a short period and during that time we have been very busy. I am giving consideration to the document.

    Gifts Tax
    Mr. Peter Reesasked the chancellor of the Exchequer whether he can now make a statement on his plans for making known in advance of his autumn Budget proposals relating to the gifts tax which he proposes to introduce.
    Mr. Joel Barnett: Liability to the new tax in any individual case must depend on the actual legislation, and my right hon. Friend has no plans for publishing detailed proposals before his next Budget.
    Mr. Rees: Will the Financial Secretary and the Chancellor show themselves a little more sensitive to those who have to put in cold storage innocent transactions, particularly transactions involving applications to the courts?
    Mr. Barnett: I cannot agree with the hon. and learned Gentleman. We are
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    looking at this matter generally, and all the information will be given in the next Budget.
    Dr. Phipps: In view of the corrupting effect of inherited wealth, will my hon. Friend ensure that the gifts tax is confiscatory above £50,000, thereby helping rich and poor alike?
    Mr. Barnett: I shall take careful note of my hon. Friend's suggestion.

    Motor Fuel Duty
    Sir David Rentonasked the chancellor of the Exchequer, in view of the fact that certain people, especially those who live in rural areas, have to travel to and from work by means of their own motor vehicles, if he will propose the exemption from VAT on motor fuel in such cases.
    Mr. Joel Barnett: No, Sir.
    Sir D. Renton: Is the hon. Gentleman aware that people who have a turnover of £5,000 a year can register for VAT—in fact, have to do so—and can reclaim the VAT which they spend on petrol, whereas people who are less prosperous but have to use their cars to go to work are not in that fortunate position? Does the hon. Gentleman think that is fair? What will he do about it?
    Mr. Barnett: Not many employees are able to register for VAT. If the right hon. and learned Gentleman is talking about giving relief for this kind of tax, I cannot agree with him that it should be done in that way for one group of workers.

    SCOTLAND
    Mr. Harry Ewingasked the Prime Minister when he next plans to pay an official visit to Scotland.
    The Prime Minister (Mr. Harold Wilson): I am visiting Scotland on 5th May to attend a May Day rally in Glasgow. I have as yet no plans for any other visit.
    Mr. Ewing: Is my right hon. Friend aware that with the election of a Labour Government the people of Scotland now have confidence in the future? When my right hon. Friend addresses the rally

    1315
    in Glasgow, on Sunday, will he assure his audience that the Offshore Supplies Office and the drilling technology centre promised by the Labour Party when we were in opposition, and a reality now that we are in Government, are only a start in the provision of new jobs, and that the North Sea oil industry will be used to provide permanent advantage to the economy of Scotland?
    The Prime Minister: The answer to all parts of my hon. Friend's supplementary question is, "Yes, Sir."
    Mr. Barry Henderson: When the Prime Minister comes to Scotland on 5th May, will he explain to Scottish local authorities and ratepayers why the cost of the reorganisation of local government in Scotland was not reflected in the rate support grant, as was the cost of local government reorganisation in England?
    The Prime Minister: I have the feeling that the reorganisation of local government in Scotland was carried through by the previous Government.
    Mr. Douglas Henderson: When the right hon. Gentleman is in Scotland on 5th May, will he learn from the Scottish TUC why it supports a Parliament in Scotland, whereas the Labour Party in Scotland is completely divided?
    The Prime Minister: I cannot anticipate what I shall learn from the Scottish TUC.
    Mr. David Steel: On a future occasion, will the right hon. Gentleman pay a visit to Scotland somewhere outside the central industrial belt?
    The Prime Minister: Yes, Sir. I have often done so, and I hope to do so again many times as Prime Minister.
    Mr. Monro: When the right hon. Gentleman visits Scotland, will he come to the countryside to talk to the farmers and listen to their advice about the current position of beef production? Will he then talk to the Minister of Agriculture, Fisheries and Food and take action in the interests of agriculture and the consumers in the long run?
    The Prime Minister: I thought that responsibility for agriculture in Scotland was with my right hon. Friend the Secretary of State for Scotland and not with the Minister of Agriculture, Fisheries and
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    Food. I cannot undertake to visit farming areas this weekend, but I know that my right hon. Friend and his colleagues are in the closest touch with the farmers of Scotland.

    TUC AND CBI (TALKS)
    Mr. Pardoeasked the Prime Minister when he next expects to meet representatives of the TUC.
    Mr. Norman Lamontasked the Prime Minister when he next plans to meet the CBI and the TUC.
    Mr. Skinnerasked the Prime Minister what plans he has to meet further with groups of trade union leaders; and if he will make a statement.
    The Prime Minister: I have no immediate plans to meet the TUC and the CBI, both of which I met at the end of March. I also met representatives of the TUC and the CBI when I chaired the NEDC on 3rd April. Discussion on individual aspects of our social and economic policies are being held with both bodies by the responsible departmental Ministers.
    Mr. Pardoe: In the light of his discussions with the TUC, will the Prime Minister be helpfully forthcoming about the social contract, or compact? Does he consider that on behalf of the public interest he has done his share in delivering his side of the contract? If not, what further steps does he intend to take? While we are all prepared to do our bit towards honouring our side of the contract, before having to make further payments in advance, such as £10 million or so, we should like an exchange of contracts. When does the right hon. Gentleman expect to put the contract document in the Library of the House?
    The Prime Minister: I am not at all certain that the hon. Gentleman and his party have done all they could have done to help the agreement on a voluntary policy. As to the Government's fulfilment of their side of the contract—[Interruption.] I did not spend three days trying to organise a coalition with them. With regard to the fulfilment by the Government of their contributions to a voluntary policy, I think that they have gone a very long way in that direction.

    1317
    The hon. Gentleman asks me to be more forthcoming about the TUC's response; I anticipated his question in a very full speech I made in Margate to a trade union audience last Sunday, a copy of which speech I placed in the Library immediately afterwards. The hon. Gentleman can study it if lie wishes. With regard to the £10 million, I also dealt with that subject in my speech. It is only the chivalry of my right hon. Friend the Secretary of State for Employment, who is trying to make "an honest woman" of the Conservative Front Bench and its promises. As for the Liberals, they voted with us on 23rd March 1971 and are now going to vote against us.
    Mr. Lamont: Did the Prime Minister notice that the recent remarks of his right hon. Friend the Home Secretary, when announcing his amnesty for illegal immigrants, included a reference to the extreme undesirability of retrospective legislation in taxation matters? Since this is exactly what the Government are introducing in refunding the amounts paid to the trade unions, should not the Prime Minister require the resignation of the Home Secretary?
    The Prime Minister: In those circumstances I have drawn the distinction that retrospective legislation to put right a wrong in the interests of the taxpayer is different from retrospective legislation imposing a burden on people who previously were not liable for tax. In this case it is incumbent on the present Government to fulfil the obligation that was entered into by the Conservative Government.
    Mr. Skinner: When my right hon. Friend meets the trade union leaders and, most probably, discusses the question of the sensible Cabinet decision to hand back the proposed £10 million to the provident funds of the respective unions, will he also make a point of contrasting the position of the 11 incorruptible trade union members of Clay Cross, who are giants of the Labour movement compared with some of those concerned in the shabby dealings that we have been seeing and hearing about lately?
    The Prime Minister: In my discussions with the TUC its representatives have not raised the question of Clay Cross with me. Should they do so, I shall consider anything they may have to say. I find
    1318
    it interesting that my hon. Friend is supporting the line taken by the then Secretary of State for Employment in 1971. I am even more fascinated that from not one Conservative Member today have we heard reference to their favourite bogey figure, Mr. Hugh Scanlon. I was wondering why they had not referred to him.
    Mr. Arthur Jones: Is the Prime Minister of the opinion that the absence of copies of the OFFICIAL REPORT in the Vote Office is due to an industrial dispute? Is he also aware that HANSARD was not available until 1 p.m. yesterday, and that when a member of the Vote Office staff inquired earlier today about the delay in its receipt in the Vote Office he met with a cagey reply?
    The Prime Minister: There is no need to be cagey. There is a printing dispute. It has happened in the past, and certainly happened under the Conservative administration.

    PRICES
    Mr. Tebbitasked the Prime Minister if he is satisfied with the co-ordination between the Secretaries of State for Prices and Consumer Protection, Industry and Energy with regard to protecting the consumer against price increases consequent upon the Chancellor's Budget Statement.
    The Prime Minister: Yes, Sir.
    Mr. Tebbit: The Prime Minister has a lower threshold of satisfaction than I thought. Does he not agree that co-ordination might be improved if he asked his right hon. Friend the Lord President of the Council to repeat the advice he gave at Stockport on 13th February, that a sensible Government who wanted to contain price rises would cut the tax on petrol? This would give some co-ordination in the protection of the consumer against the activities of the Chancellor of the Exchequer.
    The Prime Minister: I do not think that at that time my right hon. Friend—I myself speculated about these problems much earlier—had any conception of the financial position left to us by the previous Government. This was a difficulty he shared with the whole electorate and with those Conservatives who were not members of the then Government. My right

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    hon. Friend's Budget Statement was approved by the Conservative Party.
    Mr. Molloy: Does my right hon. Friend agree that, apart from the political aspects of this question, the facts are that if he and his Cabinet colleagues were not in office today Britain would be on a two-day working week, let alone a three-day working week, the miners would still be on strike, and prices would have gone through the roof? Is it not a fact that the instant action taken by the Labour Government has made the biggest contribution to restoring industrial sanity, increasing Britain's productivity and contributing to a reduction of prices?
    The Prime Minister: I think that in general my hon. Friend is on the right lines in his remarks, but I regret to inform him that I have no direct knowledge of the dangers to Britain of a two-day working week. My only information on that subject came from the right hon. Gentleman the former Prime Minister, who is now Leader of the Opposition.
    Mr. Peyton: Do not the Prime Minister's comments about the state of the economy seem a little odd against the background of the Chancellor of the Exchequer's description of his own Budget as a neutral one?
    The Prime Minister: The right hon. Member for Yeovil (Mr. Peyton) is not doing very well these days. My right hon. Friend the Chancellor of the Exchequer used the word "neutral" in his Budget judgment as to whether it should be net reflationary or net deflationary. I think that his judgment on this was supported by the Conservative Front Bench. Although his judgment has been criticised in certain sections of the Press and approved in others, that Budget obviously was considered by Conservative Members to be fair—or they would have voted against it.

    CENTRAL POLICY REVIEW BODY
    Mr. Rostasked the Prime Minister whether he proposes to make any changes in the structure of the Central Policy Review Body.
    The Prime Minister: No, Sir.
    Mr. Rost: Will the Prime Minister give an assurance that the "Think Tank" will retain its independent advisory function and will not be infiltrated by the Prime Minister's personal political staff or by those at Transport House or the TUC who are now dictating Government policy?
    The Prime Minister: I assure the hon. Gentleman that it is independent and is not being infiltrated. The hon. Gentleman will remember having won his seat in 1970 on the basis of a document which included the phrase "at a stroke", the author of which was appointed to the "Think Tank" when the Conservatives set it up.
    Mr. Bidwell: Will my right hon. Friend assure the Conservative Party that the members of the "Think Tank" have a thorough appreciation of the Socialist mission of the Labour movement? Will he say what the "Think Tank" has that the Parliamentary Labour Party has not got?
    Mr. Burden: The short answer is, brains.
    The Prime Minister: In the first place, it is a bit smaller, and I think that on balance it is slightly more cohesive. The organisation set up by the Leader of the Opposition when he was Prime Minister—he will recall that some thought had been given to the concept before he became Prime Minister, a concept which I criticised a little at the time—I now believe to be a very good development in central Government. Its job is nonpolitical, whether it serves a Conservative or a Labour or, conceivably any other kind of Government—[Interruption.]—if they have not all claimed their old-age pensions by that time. It has a non-political rôle, and its duties are carried through with high distinction. On political matters, I do not think that any Prime Minister or party leader has had more contacts, even in the past two months, with members of the Parliamentary Party, or made his time more freely open for Members to express freely any views that they might have.
    Mr. Heath: On a number of occasions since becoming Prime Minister the right hon. Gentleman has paid tributes to the work of the CPRS—he has repeated it today—which he has also said was in

    1321
    contradiction to what he said as Leader of the Opposition. Therefore, I welcome what he says. However, I fear that his recollection is confused about the gentleman to whom he referred today and also in his mention of these matters last Tuesday during Question Time when he referred to a Conservative "spy" in the CPRS. In fact, the gentleman to whom he refers was recruited into the Cabinet Office. Members of the CPRS have always been recruited through the Civil Service machine. I suggest that the question of recruiting people from outside into Govenment service is a principle which has been long accepted, whether from industry or from political parties. The extent to which it is done is obviously a matter for debate in this House or in public. I hope the Prime Minister will withdraw the allegation that the gentleman in question was recruited on a party basis into the CPRS, because that was not the case. I hope, too, that he will withdaw his accusation about there being spies in the CPRS.
    The Prime Minister: On one part of the right hon. Gentleman's statement, I fully agree with him. I made it clear before that what he did and what I have done has been in compliance with the recommendations of the Fulton Commission. I think that only good can come from it, on the basis that those specially recruited from outside, if they are of a political origin, go out when the Government go out, whether Conservative, Labour or of any other party.
    The word "spies" was not mine. It was used the other day by one of the right hon. Gentleman's own supporters and I picked it up.
    As for the gentleman who came from the Cabinet Office to the CPRS—referred to by the right hon. Gentleman—he was recruited into the Cabinet Office by the then Prime Minister and he was the author of the document which included the words "at a stroke". I would not have regarded him, therefore, as an entirely neutral political person. Despite the damage that he did to the then Prime Minister, the right hon. Gentleman generously promoted him.
    As for the other person whom the right hon. Gentleman might have in mind, he worked in the Conservative Central Office for a period. He was then inserted
    1322
    into the CPRS. I understand that he is now the political head of the right hon. Gentleman's office. I should have thought that that justified anything I said the other day.
    Mr. Heath: I must take issue with the Prime Minister on this matter. Both persons were recruited through the normal Civil Service machinery, and the gentleman to whom the Prime Minister refers was first in the service of the Department of Economic Affairs, under a Labour Secretary of State.
    The Prime Minister: They were recruited into the Civil Service during the right hon. Gentleman's incumbency. I do not criticise that, because both of us have recruited politically oriented people into the Civil Service. [HON. MEMBERS: "Withdraw."] There is nothing to withdraw. The fact that an individual was a civil servant under a Labour administration, I think, dismissed by the fact that the Leader of the Opposition was himself in the Board of Trade during the period of the Attlee Government—
    Mr. Heath: No. It was Aviation.
    The Prime Minister: I beg the right. hon. Gentleman's pardon. It was Aviation. I regret the inaccuracy.

ROYAL COMMISSION ON THE PRESS
The following Question stood upon the Order Paper:
Mr. Moonmanto ask the Prime Minister if he is now in a position to say whether there will be a Royal Commission on the Press to include an examination of the national and regional structure of the industry and the manning and management of national newspapers.
The Prime Minister (Mr. Harold Wilson): With Mr. Speaker's permission, I will now answer Question No. 9.
As the House will recall, when I first answered Questions after the Opening of Parliament on 21st March I was asked whether I would recommend the setting up of a Royal Commission on the Press. I replied that this proposal was under urgent consideration.
On that occasion and later the House expressed its anxiety about the closure of

1323
the Scottish Daily Express, with the loss of nearly 2,000 jobs, and this was the subject of further Questions in the context of suggestions for setting up a Royal Commission.
Following that and other Questions about an inquiry into the Press, I have decided to recommend to the Queen the appointment of a Royal Commission on the Press. The Queen has approved this recommendation.
The terms of reference of the Royal Commission will be as follows:
To inquire into the factors affecting the maintenance of the independence, diversity and editorial standards of newspapers and periodicals, and the public's freedom of choice of newspapers and periodicals, nationally, regionally and locally, with particular reference to:

(a) the economics of newspaper and periodical publishing and distribution;

(b) the interaction of the newspaper and periodical interests held by the companies concerned with their other interests and holdings, within and outside the communications industry;

(c) management and labour practices and relations in the newspaper and periodical industry;

(d) conditions and security of employment in the newspaper and periodical industry;

(e) the distribution and concentration of ownership of the newspaper and periodical industry, and the adequacy of existing law in relation thereto;

(f) the responsibilities, constitution and functioning of the Press Council;

and to make recommendations.
The Royal Commission will have all the usual powers. It will be free to submit interim reports or recommendations, if it considers that there are matters within its terms of reference which ought to be dealt with urgently, before its final report is available.
I am glad to he able to tell the House that Mr. Justice Finer has agreed to serve as Chairman of the Royal Commission. The rest of the membership will be announced in due course.
Mr. Heath: The Prime Minister will recognise that there has been no discus-
1324
sion in advance about the terms of reference and, therefore, that the first that we have heard of them has been what he has just announced. Therefore, we on this side of the House would like to give careful consideration to the terms of reference of the Royal Commission. Perhaps the right hon. Gentleman will agree to consider any representations made to him about the terms of reference before the Royal Commission is set up.
There is one further matter of deeper significance which I addressed to the right hon. Gentleman when he first raised the matter earlier in the Session. What is the real purpose of a Royal Commission at this time on these matters? There have been very deep investigations into the problems of the Press—two important ones over the past few years—which have analysed the situation very clearly and set forth recommendations as to how they should be handled. Moreover, all those concerned with the Press know what the problems are. What is required is action very largely within the industry itself to put its own house in order so as to deal with those problems. Furthermore, is not it the case that, with an agenda such as the right hon. Gentleman has announced, by the time this Royal Commission has finished taking evidence, has made its recommendations and the report is published the problems of which we are all aware in some sections of the Press will have become acute to the point where some sections of the Press may well have disappeared altogether? Is it not urgent to take steps to enable the Press to deal with its problems quite irrespective of whether a Royal Commission is set up?
The Prime Minister: I agree with a lot of what the right hon. Gentleman has said, and I am perfectly prepared to give the assurance for which he asks about terms of reference. The procedure followed here is that which occurred when the right hon. Gentleman recommended the appointment of Royal Commissions. I have in mind, for example, the one on injuries and damages. We had no previous intimation about it. However, on considering these terms of reference, if the right hon. Gentleman has any points or suggestions to make we shall be only too ready to consider them.
I also agree with the right hon. Gentleman that there have been inquiries over the past few years, though the last one

1325
occurred seven years ago and was, in fact, commissioned from the Economist Intelligence Unit. It did not carry the authority, nor did it have the width of terms of reference, that the Royal Commission which I have announced today will have. Many facts about the problems of the newspaper industry, especially on the economic side, have been widely discussed. The right hon. Gentleman, the whole House, and I know the facts. The tragedy is that there is no agreement within the industry on what the facts are. There has been no agreement, despite the Economist Intelligence Unit report, despite what I think the right hon. Gentleman said at the time, and despite what I said in very strong terms about the need for improving labour practices and many other things. Therefore, I think it right that there should be a Royal Commission at this time.
Mr. Moonman: I am sure that there will be a warm welcome for the Prime Minister's proposal. I have two questions. The first relates to the terms of reference of the Royal Commission. The Shawcross Royal Commission made hardly any reference to the provincial Press and magazines. To some extent what the Prime Minister said has taken account of that, but does he agree that the commission should have a wider remit?
Secondly, there is the problem of time. At least one national paper and a London evening newspaper are in serious financial difficulties. I hope that my right hon. Friend will go further than merely inviting the Royal Commission to produce an interim report and will insist that it makes a statement by 1st September.
The Prime Minister: I am grateful to my hon. Friend. I think that I have already replied to his first question. When he studies the words that I have used he will see that I referred to
"the public's freedom of choice of newspapers and periodicals, nationally, regionally and locally".
Throughout the terms of reference reflect that concept.
I also agree—the right hon. Gentleman the Leader of the Opposition made the same point—about the grave urgency and dangers of a further restriction on the newspaper reading public's choice in the
1326
matter of possible closures. Indeed, since the first Question was put down to me two months ago on this matter one newspaper has folded and others are threatened. I think that raises a question of urgency. The Royal Commission is free to report urgently. However, the setting up of a Royal Commission does not mean any more than it has meant in the past—that the Government do not have responsibility where there is a threat either to employment or to the freedom of the newspaper reading public to have as wide a choice as possible of what they can read.
Mr. Grimond: As usual, I declare my interest in this matter. Is it too late to ask the Prime Minister to think again about this method of dealing with the real problems of the Press? I agree with those who have already said that this Royal Commission will presumably go on for years. Its remit is extremely wide. It is to examine newspapers and periodicals. What reason has he to suppose that at the end of the day another Royal Commission will get any action? Did he not say that the facts are there but action has not been taken upon them? It is action that is needed. Can the right hon. Gentleman reassure the House that some action will be taken after yet another inquiry? Will he also tell us what relationship this inquiry will have to the inquiry into broadcasting?
The Prime Minister: The question of action is for those in the industry. The right hon. Gentleman, as always, has declared his interest. Perhaps it was for him and others within the industry to have taken the action that has not been taken. As I said, I do not believe that the establishment of a Royal Commission, which is urgent, need in any way inhibit actions which should be taken within the industry and any actions which may be appropriate on the part of the Government. It is a fact that there is deep concern about the condition of the Press. While I do not always agree with every dot and decimal point of public opinion polls—they have not always been proved right, as two right hon. Gentlemen, of whom I am one, have reason to know—The Times survey this week, allowing for the usual margin of error, showed an appalling lack of confidence in the national Press on the part of the British people. I believe that there are long-term as well as the more urgent

1327
problems. That is why there is to be a Royal Commission.
The inquiry into broadcasting is a separate inquiry with sufficiently wide terms of reference when it gets under way. The only link between the two inquiries is the question of newspaper holdings within and outside the communications industry, which will be within the terms of reference of the Royal Commission. That will obviously include holdings by the newspaper industry within commercial broadcasting.
Mr. Edelman: Will the Prime Minister define a little more closely the reference in the Royal Commission's terms to "editorial standards"? Will he make it clear that the commission, while protecting the legitimate privacy of individuals, will not do anything to limit or restrict the investigative duties and rights of the Press generally?
The Prime Minister: It is not for me to spell out the terms of reference. It is for the Royal Commission, under its distinguished chairmanship, to interpret these phrases. I am sure that the House has confidence that this will be done with the greatest possible responsibility.
The question of privacy has been before the House on a number of occasions. A Bill was introduced in the last Parliament which failed to make progress late one Friday afternoon. The Government are considering the law of privacy in relation to the Younger Report, which was published a very long time ago, and how far the greater privacy of the individual, not only outside but within the sphere of newspapers and communication, can be safeguarded without interfering with the legitimate rights of the Press.
Mr. Nigel Lawson: Will the Prime Minister ensure that this Royal Commission is able to look into the serious matter that he raised in his speech on 20th July last year—namely, the practice of inhibiting free Press comment by the issue of writs with which the plaintiff has no intention of proceeding?
The Prime Minister: I am grateful to the hon. Gentleman, who, like the diary column of the newspaper of which he was once a distinguished financial editor, got the quotation right. It was not right in
1328
another newspaper which tried to copy it yesterday. The key words were,
"has no intention of proceeding with."
I entirely agree with what the hon. Gentleman has in mind and with what I said on 20th July last year. I was thinking of a case where for 12 years no action was taken. I entirely agree that journalistic freedom should not be inhibited by the issue of writs with which the plaintiff has no intention of proceeding. I am not aware of any such writs current today.
Mr. Dalyell: As one who was sent by the then Secretary of State for Social Services the right hon. Member for Leeds, North-East (Sir K. Joseph) to see Mr. Morris Finer on the question of alimony, may I remind the Prime Minister that Mr. Justice Finer's last Committee has drooled on for four years and five months? Can we be certain that he will get adequate Civil Service help this time to make sure that this Royal Commission reports rather quicker than the Committee on one-parent families?
The Prime Minister: I am sure that on consideration my hon. Friend will feel that he has not been entirely fair to the distinguished judge, because most people who studied the report on one-parent families felt that a very thorough job was done on a problem which had caused misery and agony for millions of families. It is to the credit of the previous Government that that Royal Commission was set up. But, regarding newspapers, I have already indicated the need for urgency in certain directions. It is for Mr. Justice Finer and his Royal Commission to report urgently on any particular case or, as I said, for the Government or those within the industry to act in the face of any prospective crisis.
Mr. St. John-Stevas: Does the Prime Minister agree that even the Press sometimes gets things right? Will he include in that the recent reporting of the use of Government information services for a personal statement? Will he also take this opportunity of putting right the erroneous statement that he made in the House on Tuesday and perhaps for once admit that he was wrong?
The Prime Minister: Of course the Press frequently gets facts right, but, unfortunately, not when it is asked to

1329
print a statement by the hon. Gentleman. I replied to this point last night. In view of the interest stirred up in the Press by the hon. Gentleman I felt that I should hand a copy to the Press. What I said in my reply to the hon. Gentleman on this matter was correct. In all his interventions this week he has only succeeded in demonstrating to the House the fundamental depths of his shallowness.
Mr. Ioan Evans: Does my right hon. Friend realise that, whichever way this matter is received in Fleet Street tomorrow, his decision to set up a Royal Commission will be welcomed in the country? My right hon. Friend has already referred to the fact that it was my Question in the first week of Parliament that drew attention to the need for a Royal Commission. There is deep anxiety about the concentration of Press ownership in this country. What Lord Thomson said a few years ago about ending up with two national newspapers is fast approaching. Will my right hon. Friend therefore ensure that in the proposed membership of the Royal Commission consideration will be given to having a representative from the National Union of Journalists or a working journalist?
The Prime Minister: On the last point. I am sure that when we have been able to decide on recommendations for appointment there will be a completely representative group of people on it, including those who have had long experience in an editorial or journalistic capacity.
The anxieties that have been expressed about concentration are widely felt, mainly, as I have said—and not least after the Scottish experience—about the restriction of reading choice.
My hon. Friend began by using the phrase "whatever the response in Fleet Street". I have the impression—though I may be wrong about this, and if I am the matter will no doubt be taken up—that there is a fairly general welcome in Fleet Street for the setting up of a general inquiry.
Mr. Wyn Roberts: Following the concern expressed by the hon. Member for Coventry, North-West (Mr. Edelman) about editorial standards, may I ask whether it is not, nevertheless, a fact that newspapers, from The Times to Private
1330
Eye, will be asked to justify their mode of conducting themselves and their inquiries? Is the Prime Minister not aware that that is likely to be interpreted as an attempt to gag the Press?
The Prime Minister: Only by the hon. Gentleman and others vociferously defending their marginal seats—but not for very much longer.
I have said that the Royal Commission, which will be composed of commissioners of distinction who will ultimately be announced, will have the duty of interpreting this phrase. I shall be most surprised if those members were going to sit as a court of judgment on individual Press stories. For one thing, it would be a full-time job. I am sure that the commissioners will be concerned only with the principles set out in the terms of reference that they have been given.
Mr. Heath: Before we leave the statement, may I put two further points to the Prime Minister? The first relates to his answer to my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas). Is the right hon. Gentleman aware that he told the House last week that the Lord President's statement did not involve the work of the Civil Service, whereas it is quite clear that it did? I am not arguing whether that is right or wrong, or asking the Prime Minister for a judgment. I am suggesting that, as it is plain that what happened is contrary to what he said, it would be right to tell the House frankly that civil servants were involved in that statement by the Lord President. The House is always sympathetic to a Minister who says frankly that he was not aware of the facts and now corrects his statement.
Secondly, I should like to make it clear that when I said we should want to consider the terms of reference of the Royal Commission I was referring to the maintenance of the independence of the Press. That is what concerns us. It has been emphasised in the House recently that no one should be beholden to any body or organisation. That means, above all, that the Press should not be beholden to any Government through their arrangements, subsidies, supplies of newsprint or anything else of that kind. This is a basic aspect of the independence of the Press.
The Prime Minister: I agree with the last point made by the right hon. Gentleman, and the very first words of the terms of reference are
"To inquire into the factors affecting the maintenance of the independence, diversity and editorial standards of newspapers and periodicals".
I agree that that is of great importance, and it will be a matter for consideration how far the Press is independent today and what threats there are to this independence from various sources, including those mentioned by the right hon. Gentleman. I said that we shall be glad to have any views which the right hon. Gentleman may wish to express when he has studied the terms of reference.
Dealing with my answer to the hon. Member for Chelmsford (Mr. St. John-Stevas), I should withdraw what I said if I felt that what I had said was wrong. I have taken that action on a number of occasions, from both sides of the House, but the question was put in the context of the Cabinet Office, and I answered that in my letter.
The point that I was trying to make clear to the hon. Gentleman—I thought that this was what he was after from his question, though it may not have been 100 per cent. well drafted any more than my answer was. [Interruption.] This was an exchange across the Floor of the House. I answered what I thought the hon. Gentleman had in mind. I thought that he might have had in mind that the Civil Service had been used in drafting the statement.
Mr. St. John-Stevas: Issuing a statement.
The Prime Minister: That was not the case, because my right hon. Friend saw me on his arrival in London on Monday and showed me the first draft of his statement which he had written on the train. The statement was in manuscript, and he discussed it with me. There was no question of the use of the Civil Service in drafting that statement.
The hon. Gentleman is right about the issue of the statement, and I have already explained this in my letter to him. Unfortunately, journalists were upstairs until a late hour, in the uncomfortable conditions which we know they occupy. My right hon. Friend could have taken the statement and handed it to the
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journalists, which he would have been glad to do even at one o'clock in the morning, but he did not do that. Instead, he used a Press officer, not of the Cabinet Office, for that purpose.
If there is any reason for criticism, perhaps I may tell the House that I have a copy of a statement made in not dissimilar circumstances by a Minister of the Conservative Party which was issued by his Department on his behalf on a purely political matter.
Mr. Speaker: I call the right hon. Member for Sidcup (Mr. Heath) to ask about the business for next week.
Mr. Heath rose—
Sir Harmar Nicholls: On a point of order, Mr. Speaker. I wonder whether I may seek your guidance in trying to unravel a matter whereby the procedure seems to have got into a tangle.
Mr. Speaker: This is not the appropriate moment for that. We must deal first with the business question.
Sir Harmar Nicholls: May I ask when it will be convenient to raise the matter?
Mr. Speaker: I shall tell the hon. Baronet.

BUSINESS OF THE HOUSE
Mr. Heath: May I ask the Leader of the House to state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): The business for next week will be as follows:
MONDAY 6th May—Second Reading of the Housing Bill.
TUESDAY 7th May—Second Reading of the Trade Union and Labour Relations Bill.
Motions on the weights and measures orders on dentifrices—which I understand is toothpaste—and sale of wine.
WEDNESDAY 8th May—Supply (4th Allotted day): There will be a debate on Agriculture, which will arise on a motion for the Adjournment of the House.
THURSDAY 9th May—Second Reading of the Finance Bill.

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FRIDAY 10th May—Private Members' Bills.
MONDAY 13th May—Supply (5th Allotted day): There will be a debate on Defence, on a motion for the Adjournment of the House.
Mr. Heath: When does the right hon. Gentleman expect to bring forward proposals for the register of Members' interests?
Secondly, can the right hon. Gentleman tell the House the position about the production of HANSARD, and what action he, as Leader of the House, is taking to ensure that Members receive their copies at the right time?
Mr. Short: I hope next week to send to the parties proposals for a register, and I further hope that the House will be able to debate the matter before the Whitsun Recess. This is a matter for the House of Commons, but the matter ought to go to the political parties first for their consideration.
I regret the difficulties over HANSARD. As my right hon. Friend said, there is a printing dispute. but I hope very much that HANSARD will come out later today.
Mr. Heath: The House knows that various proposals to deal with a register of Members' interests have been put to the parties through the usual channels, and that in so far as they concern the parties these have been passed back to the Leader of the House. Has not the time come for the Government to come forward with such proposals as they think right, to let everybody see them and then to have a debate?
Mr. Short: That is what I said. They will be sent to the parties next week through the usual channels, and I hope that we can debate the matter in the House. Sending them through the usual channels is the same as sending them to individual Members. I hope that the parties will discuss the matter with all their members, and that the House will discuss the issue before the recess.
Mr. Heath: I hesitate to press this matter further, but there is a point here. We have party mechanisms, or most of us have, whereby we can discuss this matter. These have been used. Has not the time now come when the Government
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should put on the Order Paper what they are proposing and let it be a matter for debate?
Mr. Short: I take the view that this is a very special matter on which Members in all parties should have the right to express a view before it comes to that.
Mr. Whitehead: Have not recent events made it conspicuously clear that, when these proposals have been put before the House, nothing other than a compulsory public register will be satisfactory? Does my right hon. Friend further accept that this would be to the benefit and the interest of not only those who have no outside interest to declare and can afford to be sanctimonious but also those who have been harried by disclosure and innuendo, as he has recently been, and no doubt other Members will be in the future?
Mr. Short: I agree very much that this is a matter which should be decided by the House on a free vote—and not only the content of the proposals but whether the register is to be compulsory or voluntary.
Sir David Renton: Regarding the Trade Union and Labour Relations Bill, will the Leader of the House put down a motion next week that the Bill should be referred to a Standing Committee or will he give an undertaking that, in view of its great importance, the Committee stage of the Bill will be taken on the Floor of the House?
Mr. Short: I propose to table a motion that the Bill be referred to a Standing Committee.
Mr. William Hamilton: Does not my right hon. Friend recognise that some of us agree with the comment of the Leader of the Opposition about Members' interests? Does he not agree that the Labour Party has made its views very clear, that it wants nothing other than a compulsory public register, and that it shall be—[HON. MEMBERS: "Who says so?"] I am saying that. My hon. Friend the Member for Bolsover (Mr. Skinner) should keep cool. It is a very unusual occasion. I am agreeing with the Leader of the Opposition to the extent that this matter ought not to be delayed further by referring it to the separate parties. The Labour Party—the Government—should take the

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advice of the right hon. Gentleman the Leader of the Opposition and produce their own proposals based on our party policy decisions, which would mean a compulsory register, including coverage of the other place—because if there is any corruption in Parliament it is along there rather than here.—[HON. MEMBERS: "Oh".] Yes, indeed. My right hon. Friend the Leader of the House and the Government should take their courage in their hands, accept the right hon. Gentleman's advice, produce their own proposals and let us have a free vote on the matter.
Mr. Short: I did not understand the Leader of the Opposition to say that he was in favour of a compulsory register. But I think that the House should decide by a free vote, first, whether the register is compulsory or voluntary, and, second, what Members are required to disclose—which raises the extremely difficult question of definition.
Mr. Jopling: Has the Leader of the House yet had an opportunity to study the report of the National Parks Policy Review Committee which was published at about Easter time? In view of the right hon. Gentleman's well-known interest in the Lake District, and the fact that he has a house in my constituency, will he give early and sympathetic consideration to a debate on this important report?
Mr. Short: I will look at this matter. It is a very important and interesting report, which I have read. I cannot promise a debate before Whitsuntide, but I shall look at the matter.
Mr. Molloy: For the record, will my right hon. Friend take into consideration the fact that, irrespective of the arguments there may be about Members holding interests outside the House, it was a distasteful and offensive remark of my hon. Friend the Member for Derby, North (Mr. Whitehead) that those of us who take the view that our parliamentary salaries ought to be enough and feel that it is a great honour to be a Member of the House are necessarily, because of that view, sanctimonious? My hon. Friend the Member for Derby, North is almost suggesting that it is offensive to be totally honest. Does not my right hon. Friend agree that, on the Government side of
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the House, a decision has been made that is almost part of party policy—that it ought to be compulsory for Members to register their interests? Does not my right hon. Friend take the view that this ought to be the manner in which the matter should be debated, with one side of the House opposed to the other on the principles and policies of the parties?
Mr. Short: That is a point of view. But it should be decided by a free vote. "Sanctimonious" is the very last adjective that I would apply to either of my hon. Friends.
Mr. Marten: Reverting to the business for next week, may I ask whether the Leader of the House is aware that on Tuesday 7th May there is to be a meeting of the Council of Foreign Ministers in Brussels? Will the right hon. Gentleman ask his right hon. Friend the Foreign Secretary to make a statement on either Wednesday or Thursday of next week about the meeting, particularly in view of the important stage of the Common Market at present?
Mr. Short: I will convey the hon. Gentleman's remarks to my right hon. Friend.
Mr. Maxwell-Hyslop: The Leader of the House must have noted that a substantive motion dissenting from a ruling of Mr. Speaker has now been on the Orders of the Day—not on the Early Day Motion Paper, as the right hon. Gentleman incorrectly stated in a letter to me—since 11th April. These motions are normally given time to be taken quickly on the Floor of the House, because they are the only redress that any Member has against bias or incompetence by the Chair. If the right hon. Gentleman denies time for such a motion, there is no redress whatever. This is a matter which affects every Member. When will the right hon. Gentleman give time for this matter to be debated?
Mr. Short: As the hon. Gentleman knows, I have looked into this matter very carefully. I wrote to him about it. If I made a mistake in the terminology of my reply, I apologise for that. His motion has been down for some time. It has not attracted any support. It was for that reason that I decided not to give time to it. I am well aware of the understanding about not keeping motions of

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this kind on the Order Paper. But as the hon. Gentleman's motion attracted no support I felt it right not to give it time.
Mr. Peyton: Will the right hon. Gentleman consider making statements next week on, first, the timing of statements by Ministers, and, second, what part, if any, he intends to play in the forthcoming meeting of the Committee of Privileges?
Mr. Short: On the first point, the timing of all ministerial statements comes to me for comment, as the right hon. Gentleman knows quite well. On the second point, I propose to play the normal part played by Leaders of the House in that Committee.
Mr. Farr: What is the routine which is proposed this year to deal with the Finance Bill? In view of the state of Parliament, will it be possible for the Bill to have a greater amount of time on the Floor of the House to enable back benchers to make a greater contribution?
Mr. Short: I propose to put down the committal motion on Tuesday, and perhaps the hon. Gentleman would await that. Discussions are taking place about this matter. This will give the House two days to study it before the debates on the Finance Bill begin. The committal motion will be taken on the day of the Finance Bill, but there will be two clear days with a motion on the Order Paper.
Mr. Heath: I should like to ask the right hon. Gentleman about one important matter, in view of what he has just said. Is it not true that the chairmanship of all committees, including that of Privileges, rests in the hands of Members of the committee itself?
Mr. Short: Of course. I did not say otherwise. What I said was that I am the Leader of the House and that I shall be a member of that committee and play the normal part played by Leaders of the House on that committee.

KENNETH JOSEPH LENNON
The Secretary of State for the Home Department (Mr. Roy Jenkins): With permission, Mr. Speaker, I should like to
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make a statement about the case of Mr. Kenneth Joseph Lennon.
As I informed the House by Written Answer on 29th April, I have received a report from the Commissioner of Police of the Metropolis about matters raised in the published account of an interview between Mr. Lennon and the National Council for Civil Liberties on 10th April.
It is not the usual practice to publish a report to me by a chief officer of police, but the circumstances here are exceptional and, in my view, the Commissioner's report should be made available to the House. It does, however, contain material which might affect appeals pending before the courts by persons with whom Mr. Lennon had associated.
I have consulted my right hon. and learned Friend the Attorney-General on the action which it is open to me to take. I am advised that it would be improper to publish the report while the appeals are pending or to comment on its content in any way which might be held to be prejudicial. I therefore considered whether I should adopt the alternative course of publishing a heavily truncated version of the report. I have come to the conclusion that this would be unsatisfactory both to the House and to the public. It is, therefore, my intention to wait until the court proceedings are over and then to publish the full report.
I should in the meantime make clear the status of the report I requested from the Commissioner. What I sought was a detailed account of the transactions between the police and Mr. Lennon, on the basis of which I could decide whether there were, in my view, matters that required further and independent investigation.
My judgment on the basis of the evidence presented to me by this report is that there are no grounds for a further investigation into the actions of any of the police officers involved. The House will be able to judge for itself when it sees the report. I very much regret this cannot be for some weeks, but I am satisfied that it would be improper for me to publish the report until the proceedings before the courts are concluded.
Mr. Prior: Is the right hon. Gentleman aware that I do not intend to question his judgment that there are no

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grounds for further investigation into the actions of any of the police officers involved? Does the right hon. Gentleman agree that when the law and our institutions are under attack by the IRA and others it is right that the security authorities should have the confidence of the nation, but that, equally, the right hon. Gentleman should be satisfied that such confidence is well placed?
I ask the right hon. Gentleman two questions. First, is he entirely satisfied that the statement by Mr. Lennon to the National Council for Civil Liberties was an accurate reflection of what he intended to say and was properly recorded? Secondly, does he agree that it is all too easy for the IRA and other hostile interests to impede the necessary activities of the security authorities in combating terrorism by spreading suggestions that informants have been pushed or pressurised into assisting the authorities?
Mr. Jenkins: I note what the right hon. Gentleman says in his preliminary remarks and I agree entirely that it is very important at present that there should be high morale and confidence accompanied by proper conduct on the part of the body of police officers who are of great importance to our security.
Regarding the first of the two questions which the right hon. Gentleman asked, I think he will agree on further consideration that it would be impossible for me satisfactorily to answer it without beginning to transgress the rule which I laid down. I cannot publish the report, and it is not sensible to publish parts of it, or to summarise parts in my answers to the House. I therefore ask the right hon. Gentleman to await publication of the report.
My answer to his second question was embraced in my reply to his general comments at the beginning.
Mr. Clemitson: Does not my right hon. Friend realise that his statement will be greeted with considerable disappointment by many hon. Members on this side of the House? Would he not agree, in view of the seriousness of the questions raised by the statement by Mr. Lennon to the NCCL, particularly in regard to the rôle of the Special Branch in this case, that the usual objections to police investigat-
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ing police are particularly reinforced? Would he not in any case agree that asking the police for their version of the facts hardly constitutes the kind of inquiry which some of us are asking for? Will he not reconsider his decision about setting up a full independent inquiry, preferably through a committee of the House?
Mr. Jenkins: No, Sir. I hope that when my hon. Friend says that there is widespread disappointment he is speaking for himself and not for the majority of my hon. Friends. One has to consider a matter of this sort very carefully. I am sorry that the report cannot be published today. I wish it could be published today. It will be published in due course and my hon. Friend will have to make his judgment on it, as I have to make my judgment on it.
I must again make clear that this is not a question of the police being asked to inquire into themselves. I asked the police to provide me with an account of the facts of their relationship with Mr. Lennon. In the discharge of the responsibilities laid upon me I had to decide whether some form of special inquiry would be helpful. I have decided that that is not justified, on the basis of the report. My hon. Friend and the House can judge whether they agree with me when the report is published which, as I say, I wish could be today—but for reasons which I believe the House will accept it cannot be today. If I thought that there was abuse I would not hesitate to order an inquiry, but we must be careful that we are not very strong on inquiries and very weak on protection.
The Special Branch was set up 90 years ago to deal with certain terrorist activities, and the need for protection today is at least as great as at any time during those 90 years.
Mr. Beith: Does the right hon. Gentleman accept that many hon. Members will be pleased and will repose some confidence in the vindication of his judgment on the difficult work of the security forces? Given that we accept the reasons why the report cannot be published today and why there cannot be questioning of substance on it, will the right hon. Gentleman indicate that, although he has made a decision that no further inquiries are necessary, he will take account of what is said in the House when the report

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is published, since that may give rise to points of view which cannot be heard today?
Mr. Jenkins: Of course I will.
Mr. Maude: I am well aware of and recognise the legal difficulties about publication of the report in the light of possible appeal proceedings, but does the right hon. Gentleman realise that the allegations of Mr. Lennon and the National Council for Civil Liberties have left a considerable slur on the security authorities? Is not the right hon. Gentleman at least able to say at this stage whether it is true that pressure was brought to bear on Mr. Lennon to co-operate or whether Mr. Lennon approached the security authorities himself of his own volition?
Mr. Jenkins: No, Sir. I have told the House, and I think the House accepts, that I had a choice to make—whether I publish a heavily truncated version and ask the House to be satisfied with it or whether I ask the House to wait for a little time and then see the whole report. If I am to follow the rule, on which I am strongly advised by my right hon. and learned Friend, and which was indeed obvious to me, that I must not prejudice proceedings, it would not be reasonable for me to begin to select parts of the report and to announce those parts without announcing other parts.
Mr. Prescott: I fully appreciate my right hon. Friend's difficulties regarding publishing the report at present, but he referred to the fact that he has asked for a report of the Special Branch's relationships with Mr. Lennon and there was a question whether certain actions were improper. In asking those questions, did my right hon. Friend take into consideration the industrial activities of this person, or the improper activities, about which some of us are concerned, regarding the Special Branch in the industrial field and in trade union activities in this country? When we have, as I presume we shall have, an oportunity to debate the report, will my right hon. Friend go further into the matter than he has today?
Mr. Jenkins: I took account of the relationship of Mr. Lennon with the Special Branch, but this was a relationship which was not in any way primarily
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concerned with his previous trade union activities. I note what my hon. Friend said, as well as representations which he has made, but this matter does not arise out of the case of Mr. Lennon.
Mr. Norman Fowler: Does the right hon. Gentleman accept that his statement is widely welcomed, at least on this side of the House? Will he recognise that, with the current spread of terrorist activities in this country, there is urgent need for an effective police agency for gathering intelligence? Does he also realise that the Special Branch has over the years acquitted itself with distinction in this particular rôle?
Mr. Jenkins: I think that to a large extent I have answered the hon. Gentleman's questions in the course of previous answers, but I take note of what he says and I stress again the fact that the Special Branch has an extremely important rôle to play, particularly in present circumstances.

COMMITTEE OF PRIVILEGES
Sir Harmar Nicholls: On a point of order, Mr. Speaker. In putting the point to you, may I say how much I appreciate the Leader of the House staying on, at some inconvenience, to listen to the point as I make it. It may come within his province.
My point concerns a tangle of our procedure which is, apparently, interfering with the freedom of people outside the House. It will be within the recollection of Members of the last Parliament that on 25th January the right hon. Member for Bristol, South-East (Mr. Benn) succeeded in having remitted to the Committee of Privileges a matter arising out of a letter he had received from solicitors who had told him that their clients intended to pursue, through the courts, claims for defamation arising out of a speech he had made.
The right hon. Gentleman established, to the satisfaction of the House, that that was a matter that should go before the Committee of Privileges. Arising from that, the people concerned were invited to attend before the Committee of Privileges on 14th February, only to find that the last Parliament was dissolved on 8th February.

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Under our present procedures matters which have been remitted to the Committee of Privileges fall at the end of a Parliament. Therefore, those who felt that they had a claim in the courts for a defamation that had injured them were estopped from proceeding with that because this matter figured on the proceedings of the House still to be dealt with.
Can you help us, Mr. Speaker, on how we can approach the tangle in a way which will either call upon the Leader of the House to withdraw the matter from the Committee of Privileges or allow the right hon. Gentleman who originally raised it to state that he will not proceed with it, so that the people outside who would wish to follow their rights through the courts can do that without infringing the procedures of the House and being in contempt of the House?
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): First, may I say that I do not know whether the hon. Member for Peterborough (Sir H. Nicholls) informed my right hon. Friend the Member for Bristol, South-East (Mr. Benn) that he intended to raise this matter, but I very much regret that my right hon. Friend is not here. He should have been present to hear this exchange.
I received today a letter from Messrs. Lovell, White and King, the solicitors concerned, stating broadly what the hon. Member has said. I am looking into the matter and I will certainly do my best to resolve it. I fully agree that the parties outside are entitled to have a resolution of the matter, and I will do my best to ensure this.
Mr. Speaker: The hon. Member for Peterborough (Sir H. Nicholls) asked me for a ruling. I have no intention of ruling at such short notice today. The matter will be considered, as the hon. Gentleman now knows.

BALLOT FOR NOTICE OF MOTIONS FOR MONDAY, 20th MAY
Members successful in the Ballot were:
Mr. Norman Lamont.
Mr. Barry Henderson.
Mr. Arthur Jones.

NUCLEAR REACTORS
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]
4.23 p.m.
The Secretary of State for Energy (Mr. Eric G. Varley): This debate is being held following an undertaking given by this Government when they came to office that a decision about the choice of the next generation of nuclear reactors would not be made until the House of Commons had had the opportunity of expressing its views. The same undertaking was of course given by the right hon. Member for Worcester (Mr. Walker) when he was Secretary of State for Trade and Industry.
At the outset, therefore, I should like to repeat and emphasise the categorical assurance that I gave to the House on Monday that no decision of any kind, either firm or even in outline, has been made by the Government on this issue. For us to have done so, in contravention of assurances given by this Government and their predecessors, would have been a gross affront to this House. I therefore again repudiate the unfounded Press report that a decision has been made. It has not.
It is on these same grounds that this debate is taking place on a motion for the Adjournment of the House, and not on a motion to take note of the First Report from the Select Committee on Science and Technology on choice of a reactor system. I should like to assure the members of the Committee, and in particular my hon. Friend the Member for Bristol, North-East (Mr. Palmer) and the hon. Member for Abingdon (Mr. Neave), that I have read with care the report itself and all the evidence and appendices. I have met many experts and discussed this matter with them. I have read a large number of documents published in this country and overseas. But no person and no document has been more informative than the Minutes of Evidence of the Select Committee, including the testimony of two brilliant witnesses—I name only two of many—Sir Arnold Weinstock and Sir John Hill.
As I say, I have read the report with care. But if we had debated it. even on a "take note" basis, it could have

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been inferred that the Government had arrived at a view on the report, one way or the other. We have arrived at no such view yet. Our response to the report will come in my eventual statement about the Government's decision on the choice of a reactor. This, of course, is some weeks away.
At Business Question Time on Thursday, 11th April the right hon. Gentleman the Leader of the Opposition asked that in this debate I should
"take care to set out as fairly as possible the various options open to the Government in reaching their decision."—[OFFICIAL REPORT, 11th April 1974; Vol. 872, c. 647.]
I had already decided on that course, and I therefore readily respond to his request.
Also on that day the right hon. Member for Wanstead and Woodford (Mr. Jenkin) asked for the House to be furnished with a forecast of electricity demand. He will be the first to agree that this is not as easy as it may sound, but I certainly agree that this debate cannot meaningfully proceed without an attempt to provide this information, and I shall do my best to help the House on this matter.
However, on electricity demand, as on almost everything else to do with this highly charged and controversial subject, the evidence is sometimes confused and sometimes disputed, and sometimes both, as this debate will prove, and as my own speech will, I fear, illustrate. Apart from any other factors, the mere application of compound interest in the calculations means that a very slight deviation can produce quite startling differences to the figures within a few years.
The only aspect beyond dispute is the history of the development of atomic power in this country. To decide how we are to go forward, it is necessary first to consider how we arrived at where we are now. Britain ought today to have been particularly well placed to move forward quickly on a comprehensive nuclear programme. We were among the earliest pioneers in developing nuclear energy to generate electrical power. Even today nuclear power, from Magnox stations, provides a higher proportion of our electricity—10 per cent.—than it does in any other country. We still have an inter-
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national reputation on research and development capability and inventiveness.
But it must be admitted that our overall record is disappointing. We have not applied the fruits of our technology sufficiently successfully. We have slipped behind other countries. While they have ordered heavily, we have placed no new orders since 1971. By 1980, on present plans, we shall be behind France and Germany.
The origins of our thermal nuclear reactors lie in defence programmes. In order to produce atomic weapons either plutonium or enriched uranium was required, and while the latter can be obtained only by processing uranium in an enrichment plant, plutonium is formed as a by-product in the operation of a reactor fuelled with natural uranium. Such a reactor must either use heavy water as the moderator or use graphite for this purpose and be gas-cooled. In the immediate post-war period heavy water was not available to us and the graphite-moderated Magnox system was developed, initially with air-cooling at Windscale, but later using carbon dioxide at Calder Hall, which then became standard.
When a civil nuclear power programme was required, it was this magnox technology which was available to us. It was used for the first commercial ordering programmes which began in the mid-1950s. The advanced gas-cooled reactor was a logical development from Magnox, using as fuel enriched uranium oxide clad in stainless steel, instead of natural uranium metal clad in magnesium alloy. This allowed higher operating temperatures and reactor core power densities, which opened the way to reduced capital cost. The 34 MW prototype advanced gas-cooled reactor at Windscale began operation in 1963 and orders for commercial units were placed from 1965 onwards.
The high temperature reactor is a further logical development of the gas-cooled line. Higher operating temperatures and power densities than in the case of the AGR are obtained by the elimination of metallic fuel cladding. The experimental high temperature DRAGON reactor at Winfrith is an OECD project, though with the United Kingdom contributing the largest single share of the cost.

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The steam generating heavy water reactor was developed as a reactor which would provide insurance against unexpected difficulties with the gas-cooled systems. It was hoped it might also prove saleable to countries requiring reactors of comparatively small output. The 100MW prototype at Winfrith has been operating since 1968.
Fast reactors have always been seen as the ultimate route to efficient use of the world's uranium resources, and the United Kingdom began a development programme at Harwell in the early 1950s. The centre of fast reactor activity later moved to Dounreay, where a small experimental—15MW—reactor was commissioned in 1959 and gradually raised to full power in 1963, and where the 250MW prototype fast reactor has recently gone critical.
On 8th August 1972 the right honourable Member for Knutsford (Mr. Davies) made a statement about nuclear reactor policy. In summary his decisions were: first, to step up the development of the fast reactor, supplementing the Atomic Energy Authority's research and development by a further £15 million of component development over the next five years; second, to complete urgently work on the advance gas-cooled reactor with a view to optimising the benefit to be achieved from the five AGRs currently under construction; third, to study whether design improvements to the AGR could be made with a view to maintaining it as a possibility for future construction; fourth, to commission a complete and specific design and development programme over 18 months for the steam generating heavy water reactor; fifth, to achieve assurance about the questions of safety that have arisen on the light water reactor; and, sixth, to explore the possibilities of an international collaborative development of the high temperature gas-cooled reactor. The announcement indicated that within about 18 months all this work should have reached the stage where firm orders could be placed.
Some of this programme required joint action by the two consortia—British Nuclear Design and Construction and the Nuclear Power Group—in advance of establishment of the National Nuclear Corporation. This was a cause of initial
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delay while the two created the necessary structure in which to concert proposals.
Against the background of the August 1972 statement, we have reached the following situation. I will deal first with the AGR. All those concerned—CEGB, SSEB, British Nuclear Design and Construction and the Nuclear Power Group—are devoting considerable resources to solving problems which have arisen during construction. There is uncertainty about when each of these stations will be on power—although the first reactors should start to produce power in 1974—and about the reliability and rating which will be achieved in service. Present AGR commissioning date estimates are: Hinkley Point B 1974–75; Hunterstone B 1974–75; Dungeness B 1976; Hartlepool 1977; Heysham 1977. Work goes on continuously to improve the present designs in relation to the stations now under construction and to the possibility of further AGR orders. All such work on AGR improvements must avoid unnecessary interference with the effort needed to complete the current programme. It will benefit from experience of Hinkley Point B—the station expected to be finished first.
I come now to the SGHWR. In the light of the August 1972 statement the Nuclear Power Group and British Nuclear Design and Construction jointly submitted proposals for a phased £5 million programme, financed by Government, to take SGHWR work to the point where they considered a construction order could be placed. On their assumptions, this was thought to be by late 1974. Expenditure has been agreed to take work to completion of an outline design with indicated price, to an assurance that major safety features can be fully justified to the Nuclear Installations Inspectorate, and to completion, or taking to an advanced stage, development work supporting the safety case and designing certain options or improvements.
I will now deal with the light water reactor. Some of the queries raised on environmental and safety issues concerning light water reactors relate to the particular circumstances of the United States of America. But others are of great importance to the United Kingdom if we should choose to adopt LWR.
Therefore the AEA, CEGB and NNC are following closely work being done in

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the United States, Germany, Japan and elsewhere on key safety matters, such as emergency core cooling systems and pressure vessel integrity. The NII keeps in close touch on safety matters with its opposite numbers in Europe. Major work is being undertaken by the United States Atomic Energy Commission, but is now unlikely to be concluded before early 1975.
I come to HTR work. Government-financed contracts have been placed with the Nuclear Power Groun and British Nuclear Design and Construction, based on their own proposals, to support work on HTR until the end of June 1974, mainly to maintain an effort in this area as a basis for further international collaboration. A reference design has been formulated as a basis for future discussions and decisions on design and development and possible construction of a 1,300 MWe station, and for the subsequent negotiations of possible international collaborative arrangements.
Developments since the August 1972 statement have resulted in increasing interest in the HTR system world-wide. In particular Shell has joined Gulf in its large programme. The AEA continues to study the system, making use of the experimental reactor DRAGON at Winfrith.
On the fast reactor, the prototype at Dounreay is now operating at low power. After a period of testing it will be raised to full power, and begin to generate electricity, during the next few months. As for the commercial development of the fast reactor, considerable progress has been made on two test rigs, sited at Risley and costing £3·7 million. A number of smaller projects have been put in hand. Further finance to the end of the current financial year for design work on the commercial fast reactor has been agreed. The Nuclear Power Group and British Nuclear Design and Construction have jointly put forward proposals on the CFR covering mainly work on project engineering. They and the UKAEA have identified those aspects which need to be initiated urgently if delay in related design work is to be avoided, and approval has been given for interim Government expenditure over three years to 1975–76.
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There is still a good deal of design work to be done upon which the safety case for the commercial fast reactor will rest. This work, and experience of the prototype fast reactor, is intended to lead to an order for CFR being placed within two to three years. Further effort may be needed if this time scale is to be maintained. The PFR should be valuable on data and core information—for example, sodium behaviour—but the design of the CFR is expected to be different because it must take into account the lessons learned during the development of the PFR.
Mr. Patrick Jenkin: Will the Minister say now or later to what extent there is any exchange of information on these critical points about the commercial fast reactor with the people who are designing Super-Phenix, which is the FBR planned to be built by the consortium of French, Germans and Italians?
Mr. Varley: There are some collaborative arrangements on this but I want to be absolutely certain about the matter because of the importance of the right hon. Gentleman's point. Perhaps I could get in touch with him, or perhaps my hon. Friend who is to wind up will give more information.
That is some of the background which I hope will help the House, and it is against that background that I want to consider the levels of demand for electricity.
Mr. Tom Boardman: Before the Minister leaves the reactors will he say something about the production of heavy water? Is this not a relevant factor to which he ought to refer?
Mr. Varley: I have not left reactors and I do not want to give that impression. So far I have tried to look at the history leading up to the present state of reactor systems, and I intend now to deal with electricity demand. I shall then come back to reactors and wind up on some of the safety matters and other matters of crucial importance.
I was referring to the question of forecasting the levels of electricity demand. They give a guide to the size of the nuclear programme required, and this in

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turn can have implications for the choice itself. It is notoriously difficult to forecast demand even six years ahead, which is the normal planning period. Demand depends on the rate of economic growth, the relationship of energy demand to economic growth, and relative prices of electricity and other fuels.
For reactor choice we need to look much further ahead, up to 1990 and beyond. We cannot expect precision or rely on a single view. We also need to see how the estimates relate to the size of programme needed to develop an effective nuclear capability. Indications here are that a steady and sustained annual programme of not less than 2,500 MW—that is 2·5 GW—gigawatts—is required for the necessary investment in facilities and skills.
The growth rates given by Mr. Hawkins of the Central Electricity Generating Board to the Select Committee in December indicate the following build-up of demand: in 1980–81, 61·9 GW; in 1985–86, 79·9 GW; in 1990–91, 103 GW. On this basis the CEGB saw the need to commission about 36 GW nuclear during the 1980s, with the rest peak load and other fossil plant. It reached this view before the full implications of rising fossil fuel prices could be assessed.
As the House may know, the Electricity Council has prepared a new provisional estimate for demand in 1979–80 of 57·5 GW, in the light of rising fossil fuel prices. It is not yet ready to firm this up or to reach a definite view on the longer-term implications. But the CEGB accepts that its own figures need to be revised downward. It proposes that the whole of that cut should fall on the fossil programme, with nuclear unaltered at 36 GW. Hon. Members may feel that these forecasts are in the upper half of the range.
My Department considers that 3·6 per cent. annual growth in the demand for electricity would be a reasonable estimate of the lower end of the range. This assumes further progress to more economic pricing. For the CEGB this means by 1980–81, 56·7 GW; by 1985–86, 67·3 GW; by 1990–91, 84·1 GW. That would still mean a substantial requirement for new capacity by 1990—some 35 GW.
Allowing some peak load plant—gas turbines, for example—some new fossil
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stations, and the fact that no nuclear station ordered now can be producing electricity before the 1980s, this suggests a minimum of 3 GW of nuclear plant to be ordered each year for the CEGB. This is equivalent to considerably more than one very large twin reactor station per year, and Scottish requirements would be additional. The overall annual nuclear programme when it gets fully into its stride might, therefore, be as much as 4 GW.
Ultimately, therefore, there will be a major shift in our energy pattern. Fossil fuels will continue to be of great importance—if declining relative importance—and new fossil stations must certainly be considered. We have vast coal resources, and the tripartite examination now taking place aims at ensuring that the coal industry is equipped to meet the continuing demand which the nation will place on it, and most importantly in electricity generation.
Oil will obviously play its part, although we cannot fail to be aware of the problems affecting prices and security of supply Even North Sea oil will not solve all these problems. Like our other indigenous fuels, it will be a valuable but finite resource which in the longer term we may increasingly want to reserve for higher-grade uses than burning under power station boilers. The question is how fast we shall—or need to—move to nuclear generation before the fast reactor can come into commercial service alongside the thermal systems. We cannot expect the fast reactor in any number before the 1990s.
The differences of opinion about the pace at which we should move in the interim are marked, even given that nothing we can do now will provide additional nuclear capacity before the 1980s. There are those who believe that we should move as fast as possible toward reliance on nuclear energy for its potential security and to increase the flexibility of supply, and because on current forecasts even Magnox, the most expensive system, is expected to be cheaper than either coal or oil.
Mr. Tam Dalyell: Will my right hon. Friend bring his words of good sense on the finite nature of North Sea oil to the attention of the South of Scotland Electricity Board, which is to be

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engaged—at considerable public expense and great advantage to lawyers—in a complicated inquiry in Bo'ness in my constituency on 13th May with a view to building an oil-fuelled power station at Carriden? Will he ask the board what the price and availability of oil, not mainly from the North Sea, will be for oil-burning power stations in the mid-1980s?
Mr. Varley: I shall draw the attention of my right hon. Friend the Secretary of State for Scotland, who has the statutory responsibility, to the remarks made by my hon. Friend, and I am sure that those who are responsible within the industry will read his words and note them.
I was saying that there are those who believe that we should move as fast as possible to nuclear reactors. I should like to quote what several people have said. Sir Arnold Weinstock told the Select Committee:
"Looking at the thing from a relatively informed position I think the matter is very, very urgent."
Mr. Arthur Hawkins of the CEGB declared:
"We have had a long time to debate this and we have made good use of that time. We can see what we believe is best for the electricity consumer in England and Wales and we think we have come to the time of decision."
But contrary views were expressed to the Select Committee. Mr. F. L. Tombs of the SSEB said:
"In my view one should not feel it necessary to be stampeded into a rapid programme of nuclear stations, because there is not a low-risk route to a large amount of nuclear power quickly. Therefore, if one were to take very rapid action along a risk route one should at least weight the alternatives in this case by diluting the rate of progress to nuclear power with some fossil fuels during the 1980s."
Sir John Hill, Chairman of the UKAEA said:
"I can really see no reason for making a decision for years ahead as to what type of reactor system we should build in five, six or ten years' time."
Right from the start, therefore, there are differing and authoritative views about the pace at which we should proceed. I must tell the House that, in our consideration of the range of choices open to us, none emerges clear and unquestioned as the obvious choice. Otherwise, there
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would be no problem and no need for this debate.
There are three main technological routes on thermal reactors that can be taken. They are not mutually exclusive. The first is gas-cooled reactors, our main route till now, with Magnox and AGR so far, and HTR as the next stage of development. The second is the heavy water pressure tube reactor, our secondary effort, with the prototype SGHWR. This is Canada's chosen route through the commercial CANDU programme. Thirdly—and I am placing these in no special order—is the light water pressure vessel reactor. This system is the most widely built in the world, with the United States Westinghouse PWR version preferred by the CEGB and the NNC.
We thus have the list: Magnox, AGR, HTR, SGHWR, CANDU and LWR. How are we to judge them? The criteria must include efficiency, working experience and availability, and cost—capital cost and operating cost, including expectations of delivery on time and performance.
I can tell the House that all figures on cost are hotly disputed but it is reasonably fair to say that LWR looks the cheapest, by however great a margin—and I know that that is in dispute—and Magnox the most expensive.
Other very important considerations in drawing up a balance of gain and loss for the country as a whole are prospects for British technology and employment and possibilities for international collaboration and export potential. There is also the consideration that many would place ahead of all others. That, of course, is inherent safety, with its implications for siting in United Kingdom conditions.
Dr. M. S. Miller: Taking into account the projection of the number of nuclear reactors necessary to produce energy in the 1980s and 1990s, on the assumption that there will be a take-over of the present orthodox methods of production of energy by nuclear power, can my right hon. Friend indicate roughly how many such reactors will be required in the country? I know that it is a difficult calculation.
Mr. Varley: I am sorry, but I cannot give that kind of answer. Perhaps I can examine in HANSARD what my hon. Friend said and write to him about it

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after seeing whether it is possible to make meaningful projections over that period.
Mr. E. Fernyhough: My right hon. Friend referred to the export potential. I hope that before the decision is made we shall also take into account the effects on our balance of payments if we import most of the technology and most of the equipment.
Mr. Varley: I am glad my right hon. Friend raised that matter. I am coming to it, although I shall probably not cover it in detail. I was about to mention some of the factors affecting the importation of technology.
I had just gone through the considerations and the reactor choices open to us. Permutations are possible; it is not necessary to go for one particular reactor. We can have LWR alone, which is the CEGB's strategy. This would be ruled out if it is not believed beyond all reasonable doubt that LWR will be licensable.
We can have SGHWR only: this is the SSEB's strategy. An acceptable rate of build-up of SGHWR capacity would require substantial additional fossil or other nuclear capacity.
We could have LWR, with SGHWR as insurance against licensing problems.
We could have AGR only: a high-risk option, and in any case an unsuitable reactor for series ordering.
We could have AGR/LWR: work to go ahead on both, with a choice made in 1976. This would provide somewhat greater security than LWR only.
We could have CANDU only: series ordering could start at an early date. Operating experience on this type of reactor is good but limited. Or we could have CANDU and SGHWR, with CANDU seen as providing a breathing space while SGHWR is developed to a point where it can be ordered in quantity.
So much for the permutations. What about the individual reactor types?
Mr. T. H. H. Skeet: The right hon. Gentleman is being all things to all men now. Sooner or later he must make up his mind which way he is going. I am not asking him to declare himself this afternoon, but will he give
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us a date when the Government will decide firmly what they want?
Mr. Varley: I am sorry the hon. Gentleman should suggest that I am being all things to all men. That is not usually the case. I am usually much more clear and explicit. No party politics are involved. I was specifically asked by the Leader of the Opposition to set out all the options as clearly as possible and not come to a decision today. I hope that within a few weeks I shall be able to make another statement to the House setting out the Government view.
What about the individual types of reactor? The case for Magnox is that it is of British design, it can be installed on "relaxed" sites, it has on-load fuelling, proven reliability in operation, and it can be regarded as the most fully developed of all the reactor systems. It uses non-enriched fuel. The case against Magnox is that its operating flexibility is limited, it is technically obsolescent, it is expensive and it has no further development potential and thus will remain expensive. It cannot be built in large sizes, it has poor thermal efficiency and has no export potential.
The case for AGR is that it is of British design, it can be installed at "relaxed" sites, licensed sites are available and it is designed for higher thermal efficiency and on-load refuelling. British industry is experienced in its components and is geared to supply them.
The case against AGR is that it is not cheap even if its performance meets design assumptions. There are substantial doubts whether corrosion problems at present ratings can be solved. Further work would be necessary to solve insulation difficulties. Precision work would be required on site and that could lead to labour and other problems. It could be difficult to build in large sizes, and it is not expected to have export potential. It could be ordered now only if a substantial commercial risk were accepted beyond what the generating boards would think reasonable.
The case for HTR is that it would utilise United Kingdom experience of gas-cooled reactors. It has high thermal efficiency, inherent safety of concrete

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pressure vessels and off-load refuelling leading to simplicity of design. The Nuclear Installations Inspectorate, subject to further study, believes that HTR presents no fundamental siting problem. It is considered to have development potential and the possibility of use as a source of process heat for the steel industry. It could lead towards a gas-cooled fast reactor. There are good prospects for international collaboration making use of United Kingdom experience. HTR makes low demand on uranium ore supply.
The case against HTR is that it involves heavy development costs, new technology and the possibility of high introduction costs. It is unlikely to be available for large-scale ordering before the 1980s.
The case for the steam generating heavy water reactor is that it is of British design and that outstanding issues on safety are considered likely to be resolved on the design favoured so far. In principle, licensed sites are available. There has been good experience with the prototype. Its modular construction gives the possibility of producing smaller sizes for export. It has good load-following ability, and all components could be made in the United Kingdom. In principle, it could be ordered quite quickly as a design concept available for up-dating, but turbine design and other work would have to be carried out before the order were finalised.
The case against SGHWR is that its adoption would leave the United Kingdom out of the main line of world development despite the scope for collaboration with Canada. There is little experience of commercial sizes, so it could not be ordered in quantity without risk until some construction experience was gained from the first order. Substantial development work is still required and costs may have to be recovered over a small volume of sales. It needs precision work on site and a heavy water production plant would be necessary and expensive.
The case for CANDU is that it uses non-enriched fuel. It has been shown to be constructable to time and to be reliable in operation. It is refuelled on load. It makes a low demand on uranium ore supply and it has low fuel cycle costs. The case against CANDU is that
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its reliable operating experience is limited to about two and a half years. It is thought to be expensive largely because of the heavy water inventory, but no independent cost assessment is available to us. The importation of heavy water would be required at first, with subsequent large investment in production facilities. Safety has not been examined in the United Kingdom, so that delays and possible modifications could be involved. Its operating flexibility is limited.
The case for LWR includes the well-established systems of PWR and BWR. There are prospects of further limited improvement. It should have low development and launching costs and would probably be the cheapest system. It does not require precision work on site. It could form the basis of collaboration with European nuclear firms. Installation in the United Kingdom should enable British manufacturers to improve their export of components. The design is available and in principle the decision to order could be taken quickly, depending on the version chosen. It could be installed at a high rate without experience by the generating authority of first order, subject to licensing considerations and to sites being available.
The case against LWR is that the basic technology must be imported, probably from the United States. It could be seen as a blow to part of the United Kingdom nuclear industry. There is uncertainty over whether some of the latest United States designs now under construction will operate to specification. Some components representing about 8 per cent. of total cost would have to be imported initially. Safety questions would be raised because difficulties are still unresolved in the United States. We must consider possible public antipathy. More research and development might be necessary due to safety problems. The solutions of safety problems could mean design changes and stringent quality control in manufacturing processes. It is unlikely that an order to start construction could be placed within two years. The export markets for complete reactors are dominated by well-established United States companies.
Mr. Peter Hardy: In addition to the disadvantages that my right hon. Friend has so frankly presented

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to the House, is it not possible that there is a further disadvantage—namely, that the experience of the light water reactor and its capacity over 500 MW is much more limited than many people believe?
Mr. Varley: That is a matter to which I want to turn my attention.
When we come to consider the LWR we must bear in mind that it is the system that arouses the most passionate advocacy and the most passionate opposition. Therefore, the House will expect me to go into a little more detail on the system. Operating experience is considerable. For the larger sizes of LWR—namely, 500 to 1,100 MW—the total reactor years in the United States for the pressure water reactor version are about 10, and 12 reactors are now operating. For the boiling water version total reactor years are about 20, and 10 reactors are operating. The experience with smaller reactors of 100 to 500 MW is greater in the United States, being about 40 reactor years for PWR and 10 for BWR. To that must be added the experience in other countries. The reactors that the CEGB wishes to buy are still larger—namely, about 1,250 MW.
Although a number of such reactors have been ordered, there is little prospect of much operating experiencing before 1980. Both have significant changes in fuel and core design, which on theoretical calculations are expected to give some relief to the problem of emergency core cooling.
Mr. Airey Neave: The right hon. Gentleman has referred to pressurised water reactors of 1,200 to 1,300 MW. Will he confirm that the reactor of this size that the CEGB wishes to order is not in service?
Mr. Varley: I think that is the case.
For the LWR there have so far arisen three major safety issues—namely, pressure vessel integrity, assurance of functioning of the emergency core cooling system and of shutdown devices. For the past two or three years these matters have been the object of intense technical argument, which is still unresolved to the complete satisfaction of all concerned. However, the CEGB seems confident that it will be able to satisfy the
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public and the Nuclear Installations Inspectorate on these matters.
Several hon. Members will know that a specialist team led by Dr. Walter Marshall, Director of the AEA's research establishment at Harwell, has recently visited the United States to consider the integrity of LWR steel pressure vessels. The report of Dr. Marshall's team will be one input—a most important one—into the detailed independent examination of LWR safety which the Nuclear Installations Inspectorate will need to make in the event of the Government authorising the CEGB to take the steps necessary to obtain a specific LWR design and put it to the inspectorate for examination.
Mr. Arthur Palmer: Will Dr. Marshall's report be made available to the Select Committee on Science and Technology if it asks for it?
Mr. Varley: May I at this stage take note of that request? All I have seen from Dr. Marshall's team is an interim report, which does not amount to very much—three foolscap pages. The right hon. Member for Wanstead and Woodford has had a copy and it is wise that he should have had a copy. Dr. Marshall's report will come out in a few weeks' time. I take my hon. Friend's point on board and will see what information can be made available.
Dr. M. S. Miller rose—
Mr. Varley: I would rather not give way. I have already spoken for a long time. This is a complicated matter—
Dr. Miller: My point relates to the dangers of the light water reactor as against the steam generating reactor.
Mr. Varley: I would normally give way. I have given way a good deal and many hon. Members wish to speak.
The safety of steel pressure vessels for LWRs is certainly a key issue. That was generally acknowledged in the evidence given to the Select Committee, and the views expressed to the Committee by Sir Alan Cottrell clearly merit very serious consideration. In view of the importance of the subject and the widespread interest, I invited Dr. Marshall and his colleagues who accompanied him to the United States to give me a background briefing to their visit. I have had a background

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briefing, and so has the right hon. Member for Wanstead and Woodford.
The British Nuclear Inspectorate estimates that about two years from the date of receipt of a firm proposal would be needed to examine all the issues involved in the LWRs. Much must depend on the successful outcome and timing of the research and development work now being undertaken in the United States and elsewhere. To formulate the final advice to me on the issue of a licence, the Nuclear Installations Inspectorate must have from the CEGB a specific design in considerable detail and the opportunity to question the CEGB and the vendors on the physical processes and engineering detail concerned with safety.
The NII has taken its studies on LWR safety matters as far as it can on the published information. I should also seek the advice of the Nuclear Safety Advisory Committee. In a matter of this magnitude in which, for example, the reversion to steel pressure vessels from prestressed concrete pressure vessels would be regarded by many as a retrograde step, the Nuclear Installations Inspectorate would not be willing to take a hurried judgment. That is absolutely right. I do not think any Member would wish the inspectorate to be rushed on this matter.
To me and my Department, safety is a fundamental factor. On LWR, CANDU or any indigenous system our safety requirements must be met. There is no question of any reactor system being granted a site licence and being built in this country until it is clear that it can meet our safety requirements. There has been in this country a most remarkable public acceptance of nuclear power. Our future energy policy depends upon a large element of nuclear electricity generation, and this public acceptance must be preserved.
I hope that the House will forgive me for having gone into such long and inevitably tedious detail on this matter, but the choice of nuclear reactor involves the expenditure of thousands of millions of pounds. It affects the very economic existence of the country in the remaining decades of this century and beyond. We shall listen with great care to what is said today. There will then follow dis-
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cussions in the Nuclear Power Advisory Board at which I shall take the chair. Having received the board's advice, the Government will arrive at decisions.
We shall take decisions as soon as possible—I hope within the next few weeks. I shall make a statement to the House announcing the Government's decision and explaining it. I am conscious of the immense responsibility I carry and the necessity to make a decision which meets the needs of the nation.
5.16 p.m.
Mr. Patrick Jenkin: The House will have listened to the Secretary of State with a great deal of interest. There is also much interest outside the House in this subject. I accept without qualification the right hon. Gentleman's statement that no decision has been reached. I say that in some disappointment because Mr. Fishlock, to whose report the right hon. Gentleman referred, is highly respected and is usually a well-informed reporter. However, I entirely accept that he got it wrong this time.
As a result of the Secretary of State's not reaching a decision, it was inevitable that his speech should be largely a rehearsal of facts and figures with which most Members would have been familiar as they prepared themselves for this debate and read the many communications sent to them from interested parties outside. I do not necessarily complain about that, but it is inevitable that there are many other matters which hon. Members on both sides of the House will wish to raise, going more deeply into the merits of particular systems and the objections to particular systems, as they put forward their proposals.
One point on which I think everyone agrees is that this is a decision of immense complexity and importance. It must be one of the most complex and difficult technological and industrial questions which has faced any Government. Certainly we were conscious of that when we were in office. Before the election I was privy to the up-to-date papers of the Nuclear Power Advisory Board and, contrary to what Mr. Keith Richardson said in the Sunday Times, we read them very thoroughly indeed. That was a valuable introduction to the subject.

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Since the election I have, with a number of my colleagues, steeped myself in the literature and other sources of information on this matter. We have had discussions with the Central Electricity Generating Board, with the South of Scotland Electricity Board, with the Atomic Energy Authority, with many firms involved in industry, with a number of scientists, both British and foreign, with embassies and so on. We have visited Harwell and Winfrith, and a number of us hope to go to Canada in a few days' time to discuss CANDU.
I wish to express my and my colleagues' thanks to all those who have so generously given of their time and expertise in advising us. Oppositions face many problems, but access to information is not one of them. There are difficulties about processing and evaluating the information, but I thank all those who have helped us.
The decision which the Government are to make is very important for Britain. The Secretary of State indicated that we generate as high a proportion of electricity as any other country. It would be idle to pretend, however, that we begin to have the pre-eminence in the nuclear industry that we had in the 1950s and early 1960s. On the contrary, no new nuclear station has been commissioned in Britain since Wylfa in 1971, and that was three years late. The AGR programme has so far entirely failed to live up to the high promise that was offered in 1965, and the construction of the stations is years behind schedule.
Having reread our debate in 1965 on AGR, perhaps I might say on a personal note that I was the only speaker to suggest then that we might have done better to go instead for light water reactors, but I let that pass. As a result, the United Kingdom nuclear industry, in so far as it exists, is demoralised. Apart from two stations for Italy and Japan we have had virtually no exports, and the design teams have been half-starved of work and are very dispirited. It is vital for the Government to take a decision to revive confidence in the industry, restore the morale of the designers, provide a basis for exports and, above all, ensure for the United Kingdom economy a secure and safe source of nuclear energy in the 1980s and beyond.
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I come to one point of criticism of the right hon Gentleman. I asked that before the debate we should be given information about the figures for future electricity demand so that we might have the opportunity to consider them and to prepare our speeches accordingly. I recognise that the right hon. Gentleman has tried to be helpful during the debate, but I am sure he will agree that it is almost impossible to assimilate and assess the figures he gave us, except to say that the range between the high and the low is extraordinarily wide. For 1980 the range is from 69 GW to 57 GW, for 1985 from 79·9 GW to 67 GW and for 1990–91 the gap is as wide as from 103 GW at the upper end to 84 GW at the lower end. Forecasts as wide as that are almost useless, and they give us no clue of the likely size of the ordering programme over the next few years. That is extremely important because upon the size of the ordering programme, as upon many other factors, the choice of the reactor depends.
Mr. Dalyell: In a previous incarnation the right hon. Gentleman was Chief Secretary to the Treasury, and his own forecasts were equally wide. It is a question of the pot and the kettle.
Mr. Jenkin: I appreciate what the hon. Gentleman says, but to enable us to make this extremely important decision, where the size of the programme can determine the nature of the decision, we might have had more specific figures perhaps in advance of the debate. With respect to the figures, my hon. Friend the Member for Guildford (Mr. Howell) will have a little more time to study what the right hon. Gentleman said and may wish to offer one or two further comments.
It is true to say that the bigger the programme of ordering nuclear stations, the more important is certainty of construction and performance; equally, the more difficult the problems of siting and the more crucial the question of safety. These two factors—the proven capacity to build and produce power and the essential question of safety—are by far the most important factors in the choice which faces the nation. The other questions of cost, enriched fuel, heavy water, the capacity of the industry to build and the export potentialities are all important, but a proven system and

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safety are perhaps the most important of all.
I turn, therefore, to the central question—which system? If my speech to some extent follows the pattern of the right hon. Gentleman's speech, it is because that is the nature of the debate.
The Secretary of State mentioned Magnox. That is not suggested as a system for which there could be a long series of further orders. We might build one or two more Magnox stations as a stopgap before more modern systems can be held to be proven. Magnox is proven and it is safe, but there are formidable objections. It is twice as expensive to build as any other system. There would need to be fairly substantial redesigning to overcome the corrosion problem. The latest Magnox at Wylfa has a long way to go before achieving full output. It is operating only at 26 per cent. of its theoretical capacity. Magnox has obsolete technology, with low volume power density—perhaps one-hundredth of that of a pressure water reactor. While I do not rule out Magnox as a short-term stopgap, I would require some convincing that it would be right to build many more except as a last resort.
The right hon. Gentleman referred to the well-known construction difficulties of AGR. This programme has fallen so far behind that it has defeated the hopes of those who were so enthusiastic for it 10 years ago. But that is far from saying that AGR is a bad system. On the contrary, it may work very well. We do not yet know. If we did not have to order in the immediate future—and I was interested in the right hon. Gentleman's suggestion that that was one of the permutations that the Government are considering—AGR could turn out to be a much better bet than many commentators fear. It was always envisaged as an intermediate step between Magnox and the high temperature reactors in the sequence of United Kingdom designed and built gas-cooled reactors and United Kingdom technology. It is safe ; it has good siting characteristics and a high thermal efficiency; but as of today nobody could say that it is yet a proven system, and that is a factor of great importance.
I should not like to be the Secretary of State for Energy who had to tell Mr. Hawkins that he now had to order a
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further large programme of AGRs. I suspect that the answer would be that he could have either Hawkins or AGRs but not both! AGR depends upon timing and timing is as important as anything.
At the other end one has the most advanced design, the fast breeder reactors, which, it is generally acknowledged, are still at the development stage. They must remain at the centre of the United Kingdom AEA research and development effort. The Select Committee rather underrated the importance of FBR research and development work for the AEA when it suggested that if the choice were for light water reactors that would virtually destroy the AEA's research and development efforts. I do not think that is true.
I have a question to raise later following what I said in an intervention, but at this point it is not possible to disagree with the view that fast breeder reactors could not be a basis for a series of commercial stations here and now. Yes by the 1980s, but not now. The choice we face now is that of thermal reactors, and we have three broad kinds: light water, heavy water and high temperature.
Is it the Government's view that the high temperature reactor is a system of great promise but one that cannot yet be said to be commercially proven? The Secretary of State mentioned Dragon, which is a small experimental reactor, based on very advanced fuel technology—coated particle fuel—using graphite not only as moderator but also for fuel containment. It has a high thermal efficiency and a high safey factor. Dragon works extremely well. I am happy to say that I was invited the other day to switch it off. Of course, it is only experimental.
In the United States, General Atomics—jointly Gulf and Shell—is further advanced. There is a demonstration commercial reactor which is in process of going critical with a rated output of 330 MWe.
Further, the Americans claim that they have a number of straightforward commercial orders for the HTGR, as they call it, from respectable power utilities in the United States. They claim that this is, therefore, a proven system. Is this a system for which we could go now, or is it too soon? When one probes deeper

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into the matter, one finds that the Americans are still going through the throes of the lengthy licensing procedures that apply in the United States. The earliest station ordered by Philadelphia Electric is not expected to begin construction for at least a year.
Secondly, we need to look at the small print of the contracts won for HTGR. I understand that because the HTGR is based on the thorium fuel cycle there are considerable problems of reprocessing. To obtain contracts, guarantees have had to be given by the Atomic Energy Cornmission—that is to say, by the American taxpayer—on the reprocessing costs. This again raises the question whether it can be said to be commercially proven.
High temperature reactors have a great potential. Not only would they be more efficient sources of energy for electricity, but they have a possibility of a direct gas cycle to gas turbines, eliminating altogether the steam stage. They may be used for process heat, as, for instance, in steel-making, chemicals, extracting oil from oil shales and tar sands, and perhaps for hydrogen manufacture with its immense potentialities. All this is a number of years ahead but it warrants a sustained effort of development, probably on an international basis, and the United Kingdom must be at the heart and centre of it.
At this point I must ask a further question. Are the Government considering as one of their options letting one of the boards—perhaps the CEGB—give an order as soon as possible for a fully commercial demonstration model of the high temperature reactor? There appears to be a strong case for taking that course now. I hope that the Minister will be able to say something about this in his reply.
I turn to the other two systems: the light water and heavy water reactors. This is where the nub of the problem lies and where so much emotion has been generated, because the light water technology is American and the heavy water technology is partly British and partly Canadian. We are confronted not only with the technical, economic and safety merits, but with pressures of economic and technical nationalism.
I do not necessarily discount nationalism of itself. It may represent a proper
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desire to see an advance in British technology; to be independent of foreign technology; and to ensure employment of British designers and fabricators. It may also represent a proper desire to secure British exports.
All that is quite proper and to be applauded, but emotions can sometimes be false guides. We must beware when these are based on little more than the NIH syndrome—"not invented here"—or when arguments are adduced against one system when really aimed at nuclear power as a whole. If these things happen, emotions can become dangerous. We must ask the people responsible to seek to differentiate between the arguments of substance and those which must be explained but discounted when it comes to the question of choice of reactor.
Let us look at the choice in the light of the two paramount factors, safety and reliability. At once we come up against the one undoubted and, for some, uncomfortable fact that between light water and heavy water reactors the difference in experience is colossal. Westinghouse now has 23 pressure water reactors actually working, and an order book of over 100 from more than a dozen countries. I am told that by the time a firm order would need to be placed in this country for a pressure water reactor there would be operating experience of 50 reactors of the size the CEGB would wish to order. This may answer the point put by the hon. Member for Rother Valley (Mr. Hardy).
Mr. Hardy: The point is that we may well have dozens or scores of reactors operating, but they will not have operated for very long. The light water reactor would be based largely on the experience of small reactors. We are talking about ordering large reactors with little experience of operation.
Mr. Jenkin: I do not disagree with the hon. Gentleman, but by the time an order was placed there would be a great deal more experience than there is now, and that is a factor of some importance. In contrast, the United Kingdom-designed steam generating heavy water reactor has one small prototype operating and not one single commercial-size plant operating or indeed ordered anywhere in the world.

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It is true that the CANDU system, also based on pressure tube technology, is operating and next week I hope to visit a plant. There is one large station at Pickering and there are seven more on order. One must, however, ask whether CANDU as it stands is suitable for the United Kingdom. This is a difficult question. CANDU requires heavy water not only as moderator but as the coolant. Because it uses natural uranium, it has a low power density and is a large and expensive plant. Canadian engineers and scientists have scored a great triumph in getting the plant built on time and operating to design capacity.
While that is a factor of great importance, would CANDU be the right system for the United Kingdom? There must be doubts about this system, which Dr. Lorne Gray recognised when he was here a few weeks ago. We have fuel-enrichment facilities and do not need to build the much bigger power stations for natural uranium. Canada has not these facilities. On the other hand, Canada has heavy water capacity and we do not. Therefore, if heavy water reactors are right for us, it would probably be our own SGHWR's and not CANDU. What CANDU can offer is valuable knowhow and design on particular items of equipment such as pumps, valves and other components. No doubt an exchange of information on this topic could give extremely valuable help to the designers and fabricators.
Furthermore, it is argued that United Kingdom/Canadian heavy water collaboration could secure valuable export orders, particularly from the less developed countries for which this technology might be more suitable. Here one needs to ask the question: is it the Government's view that any heavy water reactor for Britain would be the steam-generated heavy water reactor scaled up to full commercial size, using components built with CANDU help? If so, are the Government prepared to ask the CEGB to base a whole new programme on a reactor type of which not one commercial prototype or demonstration model exists—and, moreover, to do so when the consequences of a similar decision on AGR are still unresolved?
Mr. Skeet: Will my right hon. Friend say where the heavy water for such a programme would come from? A number of reactors would be involved, but we
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have no plant and it would be some time before one was under construction.
Mr. Jenkin: My hon. Friend makes a valid point, to which the Secretary of State for Energy referred in opening. I have no doubt that the initial charge of heavy water for the first station would come from Canada, but if there were to be a large programme we would have to have our own expensive heavy water facilities.
Mr. Neave: My right hon. Friend suggested that the SGHWR had not yet been built to a commercial size. Is he aware that all the evidence before the Select Committee was that this could easily be done by British industry and that this was within its capacity?
Mr. Jenkin: I accept that. That is claimed by the manufacturers, and they go on to say that the calandria and tubes of the prototype at Winfrith have been built to a size of 600 MW. That is a factor which clearly must be taken into account. Mr. Hawkins may not want it, but Mr. Tombs wants to order the SGHWR and, as a result of the decision of the previous administration, a full-scale design exists and export orders are in the offing. Apparently there is a very serious inquiry from Romania. The design and construction team based on the Fairey Engineering Company and Clark Chapman—John Thompson has done a great deal of work on it. Therefore, even supposing that the decision for England and Wales were not for heavy water reactors, could it nevertheless be right to authorise the Scottish Board to order them as a foundation for what might be a profitable export trade based on United Kingdom technology?
Turning to light water reactors, the main option is the pressure water reactor with, on the surface, a fairly impressive record of commercial success. The generating board argues that it is the only system with a proven design, a proven operating capacity and proven efficiency. But there is a big question about safety.
There can be no question of making any compromise on safety. We have a system of reactor licensing and a record of nuclear safety of which we can be proud, and the skill and independence of the Nuclear Inspectorate under its Chief Nuclear Inspector, Mr. Bill

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Williams, are beyond reproach. They are the bedrock upon which nuclear safety in Britain has been, and must continue to be, founded.
There can be no question of allowing the board to order pressure water reactors until the inspectorate says that they are safe. It is no use talking about remote areas, because to the people who live there those areas are not remote. I suspect that to the Members who represent them they are not remote. It is no good talking about the laws of probability. If people have to live within reach of these plants, they want to know that they are safe.
We are not talking about bombs. There is no scientific possibility, I have been assured, of a civil nuclear reactor turning into a nuclear bomb. For that reason I am very critical of those media —television and newspapers—which accompany a serious discussion on the nuclear safety of civil reactors with a picture of mushroom clouds ascending to the sky. I hope that they will not do this, because it is scaremongering and calculated to cause alarm when no such risk exists.
What there is is a danger of an escape of radioactive particles. It is this accident which must at all costs be prevented, whether it happens from a rupture of the pressure vessel because of a flaw in manufacture, because of a failure in the emergency core-cooling systems or because of some other failure.
It is there that the safety of PWRs has been questioned. In the United States, attention has been focused primarily on failure due to the loss of coolant and the consequent need for the emergency core-cooling systems to work properly. The LOFT experiment in the Arizona Desert will prove that, but it will be many months before it is brought to a conclusion.
In the United Kingdom, attention has tended to focus on the risk of a sudden rupture of the pressure vessel—through propagation of a crack which has lain undisclosed during the manufacturing process, leading to failure under stress conditions. Sir Alan Cottrell's memorandum about the science of fracture mechanics dealt, with consummate brevity and expertise, with this very difficult area of technology.
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It is a truth which needs repeating that the PWR cannot be licensed in the United Kingdom until the Nuclear Inspectorate pronounces the designs and the procedures for quality control as safe, and Mr. Williams said that that would take 24 months.
The CEGB says that it wants to order now. I see that it was suggested by David Fishlock in the Financial Times on 16th April:
"An attempt by the Central Electricity Generating Board to accelerate the choice of a new nuclear reactor by issuing a letter of intent to Westinghouse for two 1,200 MW pressurised water reactors was foiled by the Conservative Government decision to call an election."
I can assure the House that there is not a scintilla of truth in that. Not only is there no question of a decision having been reached, but the precise question of the board's timing difficulty in ordering pressure water reactors, had the choice gone that way. was discussed frankly in a comprehensive manner between Mr. Hawkins, my right hon. and noble Friend Lord Carrington and myself. It was clear to all concerned that no letter of intent could have been issued without ministerial approval of pressure water reactors—and that depends on the Nuclear Power Advisory Board's advice, on the debate in this House and then on a Government decision.
It is true that if the inspectorate is to give a licence it must have the information on which to work. Therefore. there has to be some sort of agreement with Westinghouse. The inspectorate would have to get the designs, the manufacturing techniques and so on. But there could be no agreement to build until the inspectorate was satisfied, and we were told that that would take two years.
Does that rule out PWR? Does it mean that the Government are obliged because of timing difficulties to narrow the choice to one of the other systems and to overrule the generating board and the NNC?
When Mr. Williams gave his estimate of 24 months, he assumed that the inspectorate would have to generate all the necessary information itself. In reply to Question 476 he said:
"I am literally starting from scratch in this country."

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However, from what the right hon. Gentleman said today—and I am grateful to him for making me privy to this information from Dr. Marshall—it appears that a great deal of the information on pressure vessel integrity is already in the hands of the Atomic Energy Authority and could be quickly made available to the inspectorate.
There has been this study by Dr. Marshall's study group. It has been given a great deal of help by Westinghouse, which has been very forthcoming in providing all the information that the study group could possibly have. As manufacturers, Westinghouse has an enormous amount—
Mr. Palmer: When the inspector gave evidence to the Select Committee, he was of course referring to a licence for a light water reactor on a particular site. The reactor must be related to the site.
Mr. Jenkin: I am grateful to the hon. Member for Bristol, North-East (Mr. Palmer). I am coming to that. I shall ask a question of the Secretary of State which refers to it.
Dr. Marshall's study group has now come to the provisional view that, subject to very stringent quality control procedures at all stages of manufacture, and subject to two points on which further work has to be done,
"the pressure vessels should be safe when put into service under normal, upset and test conditions."
Does that shorten the inspectorate's time scale? It has to have a design on a site before issuing its final certificate. However, it has to proceed to approve the various components in the design. Does this shorten the time scale, and does it enable the inspectorate to approve pressure vessel integrity before it gives the final licence for the full design on the specific site? This might have a material bearing on the timing. Could this be done for the emergency core-cooling systems and for the concrete containment of the whole structure? Could it be done? If so, would it shorten the time scale, and is it a feasible procedure?
There are other timing difficulties. There is the NNC's suggested tie-up with the French company Framatome. We are told that the French require a decision in
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weeks to go ahead with pressure water reactors. I do not believe that that is so. In fact, Framatome told Keith Richardson that six months was all right. Therefore, despite Sir Alan Cottrell's problem of fracture mechanics and Mr. Williams' problem of timing, it may be that, if the CEGB can wait a few months before ordering key components, it is still open to the Government to choose pressure water reactors. I think the right hon. Gentleman indicated that this option was still open.
I should like to make two further points. The first concerns the capacity of the United Kingdom's scientific and nuclear industry effort in this sphere. I think most people would be satisfied that both the scientists and the industry could cope with building SGHWRs and a demonstration commercial high temperature reactor, and with pressing ahead with research and development on the fast breeder reactor. They could cope with building pressure water reactors and a high temperature reactor and with the research and development on fast breeder reactors. There must, however, be a big question mark whether they could build pressure water reactors and heavy water reactors and a high temperature reactor and carry out the research and development on fast breeder reactors. The general consensus seems to be that this would not be possible. That was the view to which Lord Rothschild gave expression last year.
Some of the pro-heavy water reactor people quite frankly say that that is right and that we should therefore abandon the high temperature reactor. Others would regard that as a disaster because of the great promise and development potential of the high temperature reactor and the fact that that is in the main stream of the United Kingdom's gas-cooled technology. I take it that it would be unthinkable to abandon the fast breeder reactor.
If we choose pressure water reactors, do we therefore face another, equally difficult choice whether to go on with the tube heavy water reactors or with the high temperature reactor? Do the Government see that as an inevitable consequence of opting for pressure water reactors? If so, it indicates the depth of the choices we must make on this important issue.

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The second point concerns the fast breeder reactor. The sad fact is that France, which was behind us in this matter, has now overtaken us. The United Kingdom must catch up. The Phenix prototype went critical in France last year and Dounreay went critical this year.
The three utilities—RWE in Germany, EDF in France and ENEL in Italy—are reported to be on the point of ordering a full-scale commercial prototype fast breeder reactor, to be known as Super-Phenix, to be built on a site near Lyons.
Mr. John H. Osborn: Will my right hon. Friend bear in mind that those three countries are co-operating in that venture, whereas in this debate we have been talking about going ahead alone?
Mr. Jenkin: I do not know whether my hon. Friend was present when I expressly asked the Government whether there would be any international co-operation on the fast breeder reactor. I was promised a reply either by letter or later in the debate.
If the CEGB is not prepared to order a commercial reactor sooner than the two or three years indicated, is there no other body that could do so? What about British Nuclear Fuels Ltd. or the Atomic Energy Authority itself?
We must learn from the mistakes of the past. If in eight or 10 years we are debating, as we are today, the choice of the next generation of nuclear reactors—fast breeder reactors—and we are faced with the prospect of a prototype at Dounreay and perhaps a commercial station in the course of construction, or an operating, proven French-German-Italian system—the Super-Phenix—will we not find ourselves in the same state over the FBR as we are today over the heavy water reactor? I cannot begin to judge, on the basis of information available to me, whether the suggestion of building a commercial size fast breeder reactor sooner than the right hon. Gentleman indicated is remotely possible. But if France can do it, based on the Phenix prototype, why cannot we do it based on our Dounreay prototype?
I have spoken at some length, but I hope not irrelevantly or unconstructively. I should like to end by quoting some wise words by a distinguished engineer who
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wrote a pamphlet for PEST which was published a month or two ago. I refer to Mr. Derrick Streeton. After noting the unpalatable facts of the supremacy of the United States in light water reactors and the continental achievements in high temperature and fast breeder reactor technology, Mr. Streeton wrote:
"Some claim that it was money and the so-called 'technological gap' which put the Americans and Continentals into this position. In reality we have never suffered from a lack of funds while our basic nuclear technology has kept abreast, and indeed led, anything coming from the other sides of the Atlantic and the English Channel. The 'gap' of which some people speak does exist, but it is more concerned with attitudes and organisation, rather than technological capability."
This may indeed be the heart of the United Kingdom's problem. It is not confined only to the nuclear race but applies to other advanced technologies.
The previous Government, by setting up the National Nuclear Corporation, by establishing the Nuclear Power Advisory Board and the Department of Energy itself recognised the necessity of adopting new attitudes and creating new organisations to maintain our supremacy in this sphere, and we were steadily moving towards reaching a decision. It remains to be seen whether the Present Government can build on those advances to restore to this country the world supremacy in the peaceful uses of nuclear power that we once enjoyed.
Several Hon. Members rose
Mr. Deputy Speaker (Mr. Oscar Murton): Order. Before calling upon the next speaker, I should advise the House that a considerable number of right hon. and hon. Members are desirous of speaking in the debate. Therefore, short speeches would be to the advantage of everyone.
5.56 p.m.
Mr. Arthur Palmer: I am glad that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) referred to the recent progress that has been made in the organisation of the nuclear industry. Naturally, he also referred to the contribution made by the last Government, who carried out two recommendations made by the Select Committee on Science and Technology. I do not think that any complaint could be made against my right hon. Friend the

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Secretary of State for Energy taking a long time, because the previous administration started to think about making a decision three years ago. As my right hon. Friend has had responsibility for less than two months I do not think that an accusation of delay can be made against him at the moment. Of course, the hon. Member for Bedford (Mr. Skeet)—he is not present now, but he has been here, jumping up and down—rather gave the impression that he would have made the decision by half-past six. He has probably gone out to make it and may return.
I suggest, from my experience on the Select Committee on Science and Technology, that in discussing nuclear power and the choice of reactors Governments would always make a great mistake if they supposed that somewhere there are impartial experts who can advise them. The truth is that experts vary and differ in their opinions. Eminent scientists and engineers divide themselves into rival camps on these matters and can get as passionate and divisive one with another as theologians.
The Select Committee has carried out four investigations into the affairs of the nuclear reactor industry in this country since 1967. There was a full-scale investigation in 1967, a follow-up report a little later, a new investigation into the structure of the industry in 1973, and this year a short, rather lively, inquiry was made into the new desire of the Central Electricity Generating Board to install American-style light water reactors.
The contrast between the evidence of experts was particularly noticeable at our last inquiry. There was the Hawkins versus Tombs debate. Mr. Hawkins is an eminent engineer. I know him personally, and he has some of the best nuclear technical brains behind his organisation. Equally. Mr. Tombs, who is Chairman of the South of Scotland Electricity Board, is another eminent engineer with great experience, not only in supply but in manufacturing too. He is assisted by Mr. Berridge, who was once chief nuclear designer at the Central Electricity Generating Board.
Let me consider the conflict of evidence given to the Select Committee by these two gentlemen about the steam generated heavy water reactor. In 1973, Mr. Hawkins told the Select Committee that
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it was an "out of date technology", but Mr. Tombs said in 1974 that it was a "tested and proven system" and that if it were left to him the SSEB would put it into commercial operation.
Dealing with the light water reactor, Mr. Hawkins said that it was a thoroughly "proven system" which could be put into operation almost immediately. He added that there would be a little difficulty for the nuclear inspector, of course, but that that could be overcome. Mr. Tombs denied the Hawkins' claim. He said that it could be up to five years before British industry would be ready to manufacture the light water reactor successfully on a wide enough scale.
Let us not deceive ourselves, therefore, by supposing that this decision can be left to experts, because if it is to be left to them one has to choose one's expert. Also, in retrospect experts can prove themselves to have been wrong. This is seen when we try to understand the historical perspective against which the present required decision must be made.
In 1964 the then Labour Government decided, on the recommendations of experts, including the CEGB—at any rate it did not dissent openly—to adopt the AGR as the standard large-scale British reactor as an answer to the American LWR system for the future. American reactors were as available in 1964 as they are now, but they were rejected. Now, nearly 10 years later, there is still no AGR working in this country, and, as we know, there has been a sad history of delay and difficulty. There is a tendency to say that the AGR is a failure. I do not agree with that view in a design, research or engineering sense. The design is difficult, but to say that it is technically a failure is unfair.
Mr. Ronald Brown: Does my hon. Friend agree that the basic fault was that there were three different designs?
Mr. Palmer: My hon. Friend's mind and mine are working almost in tandem, and I shall come to that.
It is not the reactor that is a failure. The trouble has been the system of management administration under which AGR stations have been constructed. The AGR programme has been carried through by three, and more recently by

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two industrial groupings, or consortia as they were called. As my hon. Friend reminded me, there were three separate engineering teams, with the result that talent has been spread instead of being concentrated as it should have been. Inevitably, mistakes have been made, and they have been made separately.
I have had some experience, even though some time ago now, of engineering in power stations. Mistakes are inevitable, but one should try so to organise project management that one learns from mistakes. Separating the teams means that there is not the same possibility of learning from pooled experience. We have been building three types of AGR instead of one, and that is the root of the dilemma facing us in our choice for the future.
The matter goes back to 1967 when, in defiance, if I may say so modestly put it, of the advice of the Select Committee, the Government of the day—a Labour Government I regret to record —accepted the CEGB view that technical separation or so-called competition in applying the same Atomic Energy Authority design to different stations should be maintained. That was an absurd view and the great bulk of the evidence given to the Select Committee was against it but, unfortunately, the Minister backed the CEGB.
We now have one design and contruction company for nuclear matters, and Mr. Hawkins on the last occasion but one when he gave evidence to the Select Committee was handsome enough to say that the Select Committee had been right and that the CEGB had been wrong. Had the AGR programme been properly organised under the arrangement now set up the AGRs would probably have been available, and it is doubtful whether we should have heard much of the proposal to install light water reactors.
In fairness, in those circumstances the future of the steam generating heavy water reactor would have been also a little in doubt because the natural progress would have been to move from the AGR, the gas-cooled reactor, to a high temperature reactor and eventually, as the right hon. Member for Wanstead and Woodford said, to the fast breeder. Indeed, only two years ago—and there
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was an earlier report of the Select Committee on nuclear power policy in 1972–73—in evidence given to us Mr. Hawkins and the CEGB seemed to be moving along that line of development.
I suggest that the House should, therefore, consider with a little caution the latest argument that is coming principally from Sir Arnold Weinstock of GEC Ltd., which is dominant in the new nuclear construction company. It is an argument that has its supporters in French industry, because it dropped its own gas-cooled programme some years ago in favour of the LWR system.
Sir Arnold's latest argument for Britain turning to the American light water technology is that we must bow to the inevitable and adopt the American light water reactor system because all the rest of the world is doing it anyhow. I suggest that had it not been for the difficulties in the organisation of the AGR programme there would be no need for that argument to be brought forward because there would be no suggestion of adopting the American system, rightly or wrongly. We should have kept our own system in spite of the rest of the world.
The fact is that in international markets the gas-cooled reactor system still has a bright future. The Japanese are beginning to realise this. They have had many difficulties, in that over-populated country, with their American style light water reactors. Also, in the United States itself there is now a very real investment interest in the gas-cooled system. So let us not suppose that in the long term, in world markets, the gas-cooled technique is necessarily a system which has no future.
I turn now to a criticism which was made in the columns of the Sunday Times by Mr. Richardson, who heads the Sunday Times school of nuclear reactor fanciers. He charged the Select Committee—we did not raise this as a matter of privilege; we were much too kind and generous about it—with bias, because we subjected witnesses, he said, particularly Mr. Hawkins. who came forward advocating the claims of the light water reactor, to a more rigorous examination than that to which we subjected those who put the case for the still available British systems. But what was biased about that? After all, for the last 25 years Parliament and the country

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have come to regard Britain as a leader in nuclear technology. A whole generation of British infants has grown up imbibing that faith almost with their mothers' milk. We have been reassured in the House from time to time that all was well, and many millions of pounds of public money have gone into the development of gas-cooled and British heavy water reactor technology.
Now it is suddenly announced by the CEGB that it wishes to order nine twin-reactor stations, each of 2,400 Mw to 2,600 Mw capacity, and that the bulk of them are to be American designed or styled light water reactors. In those circumstances, surely one has to take breath and gasp a little. The question that sprang to the collective mind of the Select Committee was, "Why"? Please explain yourselves." We thought it necessary for this U-turn in British nuclear policy to be justified, because the old familiar path had been so well trodden.
The Select Committee came to the broad conclusion—nothing beyond this—that in the light of the oral and written evidence to us, in our admittedly very short examination—the CEGB's case for a switch to the American nuclear technology had not been made out. We did not go beyond that.
I shall say practically nothing about safety. The report is there for all to read. But I will say this: if it had not been for the existence of the Select Committee and our decision to look at this CEGB request to adopt the American technology, I am doubtful whether the vital evidence of Sir Alan Cottrell would have been uncovered at all. Indeed, it was only by chance that some of us heard that he had written a most interesting paper. We asked for it to be submitted. We received it. Now it is in front of the House and the public. It has been a key paper in discussion since then.
We shrank from going beyond the conclusion that the case for the change to the American technology had not been proved. We shrank from trying to tell the CEGB its business. We assumed that if the American system was not used, naturally British systems would continue to be developed.
In view of the AGR now not perhaps being repeated but evolving to the high temperature system—in those circum
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stances—the British heavy water technology becomes of outstanding importance if we are to supply the extra nuclear capacity which the electricity supply system undoubtedly needs. I believe that here a new opportunity shows itself. It is an opportunity that was not necessarily in existence a few years ago. It is the opportunity of combining in a joint programme of development the British heavy water technology with the rather similar Canadian technology. The opportunity is there. If taken, it would certainly be attractive to the South of Scotland Electricity Board; but less attractive to the CEGB and the National Nuclear Corporation.
I know that my right hon. Friend the Secretary of State has a difficult decision to make. He has to serve the long-term interests of the country in matters of investment and employment and to maintain the standards of British advanced technology. All of those are interests which are beyond the understandably narrow interest of the CEGB, and that is to produce electricity cheaply. The CEGB is bound to think within a rather narrower bracket of reference. One cannot complain about that. After all, this House approved the statute under which it works. I can understand my right hon. Friend's difficulty. It is not easy for him to set aside the desire of the principal generating utility in this country—indeed, in the world, in terms of size—to use the reactor of its choice. It is not easy for a Minister to turn aside that wish. I shall not now give the view of the Select Committee, because it was not that positive; I shall just give my view, for what it is worth, of what I think should be done.
First, we should examine carefully the estimates of load demand which have been made by the CEGB. No one has worked more enthusiastically for the expansion of the electricity supply industry than I, but I am inclined to think that the CEGB is probably tending to exaggerate the extent of the development of the country's electricity demand in the future, particularly with so much natural gas coming in. Therefore, those estimates have to be looked at carefully.
Secondly, we should also look critically at the size of reactor proposed by the CEGB. I am inclined to think that it is too large and will present problems of its own, whichever system is taken.

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Smaller reactors would be easier all round.
Thirdly, I think that we should let the South of Scotland Electricity Board have its way in this matter of reactor choice. It is a responsible generating authority in its own right. It has excellent technical leadership. It wants to install a steam-generating heavy water reactor system. Let it. This could be combined as part of a general CANDU programme, but immediately the SSEB should give to the steam-generating heavy water reactor something which so far it has lacked: some commercial experience.
Finally, I turn to what is, perhaps, a controversial suggestion. If the CEGB insists on taking light water reactors it should, in my view, be allowed to do it, but on a far more limited programme than it is at present proposing. I am not too sure about the much canvassed argument that the country cannot sustain a mixed programme. The Swedes have done this fairly successfully; they have a mixed bag of reactor types. It is not necessarily a question of all or nothing, and in that way it might be possible to find a route through the present controversy.
Mr. Ronald Brown: Would my hon. Friend be happy to have one of the LWRs near Bristol?
Mr. Palmer: I do not know whether I would be happy to have one near any place, but I am not putting forward safety arguments at present. I am doubtful whether we need American reactors at all but I am trying now to deal with a situation where a responsible utility wants a particular system. The South of Scotland board has a right to the other system. Perhaps the CEGB should have a limited choice as well. I know this view will not please GEC or Sir Arnold Weinstock, who gave skilful evidence to the Select Committee. GEC is, however, far too dominant a part of the National Nuclear Corporation. There has been a suggestion that Sir Arnold and GEC might withdraw from the National Nuclear Corporation if they do not have their LWR way In that case it is always possible, if the CEGB went ahead with light water reactors on a limited scale, for it to make direct arrangements with American companies with a cast-iron
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guarantee that the great bulk of the manufacturing is done under licence over here. That could be the answer to Sir Arnold. It would not be a desirable development but it could be a good bargaining counter.
I would like to see the National Nuclear Corporation given statutory force instead of, as at the moment, being a kind of loose coming together of interests under Government influence, but not under Government control.
I do not envy my right hon. Friend the difficult decision facing him. We need an up-to-date electricity supply system, one in which primary fuel sources are mixed. There is room for coal, and for some oil, particularly when North Sea oil becomes available, and there is certainly room for a great deal of nuclear energy. It is a question of balance, and I emphasise again the need to avoid all or nothing solutions. Under that condition progress can be made, and be made fairly quickly.
6.25 p.m.
Miss Harvie Anderson (Rcnfrewshire, East): I shall not presume to match the hon. Member for Bristol, North-East (Mr. Palmer) in his experience and knowledge in this field. The House recognises that the hon. Gentleman and my hon. Friend the Member for Abingdon (Mr. Neave) have almost unique experience in the work that they have done, and the debate today is only part of the result of their work. The House will be grateful to them.
I am glad to have an opportunity to catch your eye, Mr. Deputy Speaker, because I have had close concern about the future nuclear reactor programme for several years and I have worked with men, unions and management in examining the capability of British industry in this field.
The first conclusion that I and many others reach is that there is a strong British capability and that those who advocate "buy British" do not do so simply as a jingoistic slogan but because in this field and at this time the British contribution is still extraordinarily good. We have the know-how, and the men, unions and management have been working together as a team harmoniously to establish the capacity of British firms and the British work force in this field.

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I wish to bring to the notice of the House the often overlooked point about conditions of work. I do not know how many hon. Members are familiar with a modern nuclear shop, but it is a new world. All the horrors of nineteenth century heavy industry have gone. Men are working in clean air, in clean clothes, in pleasant atmosphere, with precision and pride, and the whole presents a picture until now only in the minds of distinguished and far-seeing writers. Such transformation has been made possible both by the quality of the work required and by massive investment of British firms, some of which the hon. Member for Bristol, North-East referred to.
The choice of system is a matter where inevitably experts must have their say. The Minister will be given much advice on this as on other aspects, but the experts' view has a big part to play. For my part, without going into the detail of relative merits, I simply want to redress the balance in one direction. Unless the experts have identified something in the AGR system not widely known, the AGR will produce megawatts, and this is very important. Moreover, it will probably produce them more quickly and more effectively than any alternative. The system is not cheap to install, but it has lower running costs. There have been teething troubles, and still are, but there will be just the same teething troubles in any alternative not yet producing megawatts to the extent now required. This has been pointed out already in the debate and is important. Delay, too, is built into the alternatives, however adequate their performance on a modest scale. For example. Winfrith output is at present about 100 MW, while today we are discussing orders which are expected to produce 1,000 MW. Even hearing that in mind and even with permutations which have been referred to, there will be considerable delay in alternative systems.
The particular point I wish to make in connection with the AGR is that prejudiced propaganda has gone a long way to discourage this project, and I hope that no decision will be taken in this connection, or in any other, on that basis. Most importantly, there is need for a quick decision. I appreciate the difficulties for any Minister and I understand the pressures, but I suspect that any foreseeable decision will be limited to
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two stations with, one hopes, at least an outline for future ordering.
Industry cannot progress in a void, and it, too, has huge sums at stake. Men's jobs are also at stake. I have never believed in a policy which enables a public utility to buy marginally cheaper products from abroad, or even from regions of full employment at home, when one result is the subsequent spending of taxpayers' money to the tune of £10,000 in creating each new job for each person thus made unemployed. Over the years I have had considerable experience of this approach in and around my constituency.
In my constituency at present, and especially in that part of the constituency now represented by the hon. Member for Renfrewshire, West (Mr. Buchan), should there be no equivalent work to that at present going on for the AGR, the jobs of 1,000 highly skilled men in this new sphere of nuclear work are at stake. This is in a works where the nuclear shops are as I have described them, where the example of good relations throughout is the envy of many, where there are presently cranes capable of a 600-ton lift, a dock capable of shipping a 1,000-ton load and ample scope for development.
What this adds up to is that we British are, and can continue to be, in the business. We have the skill. We have the men and we have the capacity. Our duty today in the House is to see that they are given the job.
6.31 p.m.
Dr. John A. Cunningham (White-haven): I am pleased to have the opportunity to speak in this debate, for several reasons. First, I am a member of the Select Committee on Science and Technology. Secondly, as many hon. Members know, I have a major constituency interest, in that the Windscale-Calder Hall complex employs a considerable number of people in my constituency. Thirdly, I am a sponsored member of the National Union of General and Municipal Workers, which represents a large number of men who work in the industry.
We listened to two very long Front Bench speeches today. Both speakers seemed to be at great pains to keep all their options open. That is perhaps understandable in a very difficult and complex area. One of the problems which they cannot escape is that successive

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Governments have never acted with sufficient decision in the matter of the British nuclear industry and its capabilities.
I asked the right hon. Member for Wanstead and Woodford (Mr. Jenkin) to give way on a point which interests me. This is the point about public acceptability. I am in complete agreement with what the right hon. Gentleman said, but it contrasted sharply with his attitude when in office when I pressed him on a number of occasions to publish the report of the nuclear inspector into an incident at Windscale.
Before the right hon. Gentleman seeks to rise, I acknowledge immediately that this was not an incident involving a nuclear reactor. It involved the plutonium plant at Windscale, but the point is still important. If the public are to accept nuclear installations of any kind, they must be continually reassured that every effort is being made, both by those running the industries and by the Government, to ensure that they, their families, and people living and working in the surrounding area are being properly protected.
I expect the right hon. Gentleman wants me to give way. I do not see why I should in view of his previous attitude.
Mr. Patrick Jenkin: I think that the hon. Member does me an injustice. I well remember the question he asked. My answer, which I cannot quote verbatim, was to the effect that I would certainly consider whether the report could be published in some form but that it could not be published in full because to do so would disclose details of individual medical histories. I believe that the hon. Member will on consideration acknowledge that that is a pretty fair approach.
Dr. Cunningham: It is this kind of hedging about problems involving nuclear installations which gives rise to modern public mythology about the dangers and disadvantages of going along this line.
I also have words of criticism on the same topic for the Secretary of State, because when pressed to publish a report by my hon. Friend who is now the Chairman of the Select Committee he said that he hoped to be able to publish it. Here again, there is this qualification about the need to make absolutely clear, not only
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to the public, but to those of us who are considering these matters, what is at stake. I also remember, for good measure, the difficulty the Select Committee had in obtaining copies of the Vinter Report, which was never published.
However, I must press on. The Central Electricity Generating Board wants to embark on a very substantial programme of power station building involving nine nuclear stations, although late in 1972 its evidence to the Committee was that there was no immediate rush. Indeed, in the last six years not one order has been placed in Britain for a nuclear station. This evidence was given before the energy crisis. We are entitled to ask: why was there this sudden and very remarkable change of direction by the CEGB?
The chairman of the board went out of his way to say that the board must be empowered to build light water reactors. There are many serious question marks to be raised against these reactors. A reactor of the size suggested by the board is not in operation anywhere. Further, the option the board is choosing—the Westinghouse pressurised water reactor—has not had clearance in America at this size yet and is unlikely to achiev clearance this year. That, too, is a very significant point to bear in mind.
I believe that in going for a massive programme of an entirely new reactor of this type the board would be placing us in the situation that we have known all too well: we would be committing a large number of eggs to a basket of which we had no experience. In short, we would be in a prototype situation.
Mr. Ronald Brown: It is even more serious than that, because as every month goes by the Americans are finding more and more reasons for reinvestigating the present water reactor.
Dr. Cunningham: Absolutely, Being in a prototype situation with a large-scale programme would mean probably an even more disastrous series of events than we have seen with the AGR programme. I also agree with my hon. Friend that the main weakness of the AGR programme was not a matter of the technology. It still is not a matter of the technology. The problems were problems of constructional engineering and of project management of the CEGB itself. To be fair to the

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Chairman of the CEGB, he acknowledged this in evidence to the committee. There were also problems arising from the fact that we chose three different designs and no one at that time saw the necessity for a standardised approach. If there is one contrast between the American experience and our own in this field, it is that very important point.
We have been told that America has now produced an off-the-peg reactor system. I do not accept this argument either. The nuclear inspector certainly does not accept it. Whatever the claims may be for light water reactors, we should be quite clear that if there is an urgency about this programme, if it is important to place orders, if it is important to have nuclear stations coming on line in the early 1980s, this cannot be guaranteed simply by choosing light water reactors.
I have considerable faith in the AGR system. The Chairman of the Atomic Energy Authority said in evidence to the Committee that in his view the logical progression for us would be to build a further AGR, to build a high temperature reactor, and then to go on to a fast breeder programme.
All the scientific evidence about the progression and development of reactors supports that view. There is no reason at all why we should not have faith in British gas technology. I agree with the right hon. Member for Renfrewshire, East (Miss Harvie Anderson) that for us to decry our achievements in this area is damaging. One of the most damaging aspects of this long debate has been the fact that it has dismayed British scientists and technologists to such a great extent that many have felt there was no point in going on because there was no future for them in the British industry. If I could make a brief aside here, may I say that I hope that the Government will not vaccilate much longer on the issue of scientists' pay. However, that is another problem.
If we are to have this substantial programme we should remaln with a system that has been proved in terms of safety. There are many serious question marks about the safety of American reactors. The paper by the Government Chief Scientist drew attention to the problem of the integrity of the pressure vessel, which confirmed the worst fears of many
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people. There is also the unproven state of the emergency core cooling system.
The conclusion of the Select Committee is the right attitude to take. It is for the manufacturers of the system to prove its safety beyond all doubt. It is not for anyone else to prove that the system is unsafe. It would be unthinkable for any Government to take a decision to locate a reactor of this type near a densely populated area if there were any question marks about the safety factors.
It is clear that in our reactor programme there has been a considerable measure of success, in terms of industrial relations, in getting the labour force to accept the undoubted dangers, hazards and risks. It could be impossible to get people to work in reactor systems. Even without major failures it is clear that water-cooled systems would produce radiation in areas where regular maintenance was necessary, where men would have to go to put things right. This is a serious objection to water-cooled systems.
I do not think that we should embark upon any new co-operation with the Canadians. Here again we would be making a right turn when the more simple method of progress would be to keep going in the path we have trodden. The critics of the AGR system are simply saying that the programme has been delayed, that conventional power stations are badly delayed. More than 30 light water stations in America are behind schedule. A considerable number have been down-graded. Which nuclear programme anywhere has not had major problems?
One of the major disappointments to me has been the complete lack of co-operation in these areas and in high technology generally within Europe. I remember the right hon. Member for Knutsford (Mr. Davies) telling the Select Committee during our research and development inquiry that one of the best arguments for being in the Community was that Britain would be able to continue in high technology on a shared basis when otherwise we would have to give up.
Mr. Fernyhough: Like Concorde.
Dr. Cunningham: There is absolutely no evidence that this has happened during our membership of the EEC. The

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reverse is true with plutonium enrichment capacity. We now see ourselves, with the Germans and the Dutch, going in one direction and the rest of Western Europe heading in quite another. There has been no co-operation in reactor design. We should decide on a programme which is suitable not only in terms of our construction and design industries but also in terms of CEGB ordering policy. There is no argument in favour of a multitude of design choices. The programme should be kept as simple as possible.
It is essential to retain British control. We have been told that this is a jingoistic approach. I do not accept that. It is essential to retain British control of our energy supplies. If we handed over the whole programme to American technology the reactors would need to be fuelled by American fuels. We would then be in the position of having to import fuel elements. The price of uranium is expected to increase sixfold by the 1990s. We would immediately have fuel supply problems. For all these reasons I hope that we will stay with British technology.
6.46 p.m.
Mr. Airey Neave: The hon. Member for Whitehaven (Dr. Cunningham) was a member of the Select Committee, under my chairmanship, in the last Parliament. He has given an effective account of some aspects of the evidence which was before us. I do not entirely agree with him in that, while I think we should keep our gas-cooled technology, we shall in the short term require the heavy water reactor now being developed at Winfrith Heath.
I have first of all to declare an interest in the Clarke Chapman-John Thompson boiler-making group which has already been referred to. I have been engaged in that group for many years. It will, of course, be affected by what we are discussing. It has a 10 per cent. shareholding in the National Nuclear Corporation. I also have a large interest, in that many thousands of my constituents are employed by the Atomic Energy Authority at Harwell.
I wish to thank all of my colleagues in the last Parliament who were members of the Select Committee under my chairmanship and who helped produce the
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report which has been mentioned. Although I was Chairman of the Committee, I sat under the extremely able chairmanship of the hon. Member for Bristol, North-East (Mr. Palmer) as a member of his sub-committee which took the evidence on reactor choice. The Committee's report demonstrates not only the difficulties involved in the Secretary of State making a decision but the need for this House—because the Select Committee is part of the proceedings of this House—to question the assumptions and judgment of the CEGB. Since it continues to assert the advantages of the American water reactors it must be made to justify that decision. This is the function of Parliament and the Select Committee in this case.
We must try to prevent a wrong decision being made, such as has been made in the past and from which the industry has suffered gravely. It was to meet those who claimed that British science and reactor design should not be included in the programme of nuclear power to be commissioned in the 1980s that we insisted on this inquiry. That is why we published our evidence and report. It is not true that the Committee set out to find reasons why the CEGB's "buy American" proposals should be rejected. That was one of the less unpleasant remarks directed at us in an article in the Sunday Times in March. The Select Committee set out to test by cross-examination—and, I think it will be generally agreed, by pretty rigorous cross-examination—the breath-taking assertions of certain people, particularly Sir Arnold Weinstock and Mr. Hawkins, that there was no alternative to a large American order. That was the reason for the Select Committee's inquiry. It was not a question of bias. We simply put the questions to the test and came to the conclusions which are now before the House.
We also felt that there were people who were prepared to announce decisions which had not been fully discussed in the House. For that reason, we welcome today's debate and we congratulate the Secretary of State on putting before us the various difficult options. However. there are those who have already decided what will happen. In the New Scientist of 28th February this year the CEGB headquarters was advertising under the heading of "Research opportunities" for

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physicists, mathematicians and statisticians experienced in the neutronics of reactor systems related to power distribution, and particularly to hydraulics coupling for light water reactors. The board is already advertising for personnel for light water reactors on the assumption that the Minister will make that decision, one more reason why the Select Committee should eo into these matters and report to the House on them.
It is difficult to discover what is the opinion of the CEGB on the potential demand for electricity, and in this respect I sympathise with the Secretary of State. However, assuming that we have to order two or three nuclear stations between 1974 and 1977, the test which the Secretary of State should broadly apply is "What is the national interest?", and by that I mean not only the cost and reliability of the stations but the state of our own science and our industry.
It is ingenuous in the extreme to imagine that if the National Nuclear Corporation is allowed to make Westinghouse pressurised water reactors under licence in the United Kingdom future design and construction will not come largely under American domination. It is ingenuous in the extreme to imagine anything else, and I do not believe that our industry deserves that treatment. There is, as I shall seek to show, a viable alternative. We do not need to be the licensees of Westinghouse as the French are. Just because the French are licensees—Framatome is one example—there is no reason why we should do the same. Nor is it the case that what is good for Westinghouse is necessarily good for Britain. Those are not sound industrial arguments. The answer lies in the type of reactor which is most likely to be required in the world markets in the next 20 years. We all wish to see built up an effective British nuclear industry in view of the many disappointments of the past. In spite of the large sales of American water reactors in many industrial countries I do not think, judging from my contacts with the industry, that the pressure vessel system will be the most suitable in the long term. It is certainly not the easiest for this country to make, and even if Dr. Marshall reports satisfactorily on safety, that does not mean from the long-term manufacturing point of view that it is the best
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system for most countries, particularly the under-developed countries.
I come to a most important aspect of my personal opinion. The International Atomic Energy Authority estimates that between 100 and 200 power reactors of less than 660MW—the smaller reactors—will be required in the next 10 years and that the pressure tube type of reactor is much more suited to these requirements. CANDU and the SGHWR reactors are pressure tube systems which are already classified as safe by our nuclear inspectorate. Already the Canadians have more export business for CANDU than they can manage on their own, and the argument for collaboration with the Canadian Government is strengthened by this. The pressure tube market presents significant opportunities for British and Canadian exports, which would hardly be the case if we were licensees of the Westinghouse Corporation for the rest of the century. No one suggests that it would increase the export potential for Britain if the market was already dominated by our licenser, Westinghouse, which is what would happen.
To argue that Sir Arnold Weinstock and GEC could create a British nuclear industry by manufacturing American components in collaboration with France is unlikely to indicate any benefit for heavy engineering in Britain since many of the products which have to be exchanged would be French. I hope the Minister will bear that very much in mind. The creation on the other hand of a pressure tube industry with Canada would help our firms which have had no stable orders, as the Minister told us, since 1971. In effect, it would mean that both the SSEB, which wants to, and the CEGB, which does not, would have to order water-cooled reactors of either the CANDU or the SGHWR variety.
It is in this area that the Secretary of State will have to act, if necessary by using his statutory powers. He was asked this afternoon what would happen if the CEGB insisted on ordering light water reactors. He could always withhold his approval and he could also give a direction in this case if he thinks it to be in the national interest. The SGHWR is not considered obsolete by anybody except those who are fanatically in favour of American reactors, and this is one of the

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difficulties of people attacking other people's reactors. The Canadians do not think the SGHWR is obsolete. They want to work with us, and Sir John Hill, Chairman of the Atomic Energy Authority told the Committee that it was sad that so many years had been lost in not adopting SGHWR. He did not agree that it was out of date. Those who have sought to decry and devalue this British reactor are not speaking the truth. Nor has Mr. Hawkins' statement that it is unproven, as he told the Committee, any validity. It has been operating at 100MW for some years. The House should not forget that Mr. Hawkins is proposing light water reactors of 1,200 to 1,300MW which are completely unproven. The ZION reactor is up to 1,100MW but the larger the reactor the greater the safety problem, and I hope that the Minister will pay particular attention to that. Since no one has even built a 1,200 to 1,300MW light water reactor, either pressurised or boiling water, it would be an enormous risk for the Minister to authorise the board to order these reactors when it did not even know when it came to the Select Committee that these reactors were not in service. It came to a Select Committee not knowing that the reactors it proposed to order were not yet in service. We must bear that in mind when assessing the CEGB's judgment.
To start a British-Canadian pressure tube industry is what I am proposing. We need an agreement between the two Governments as soon as possible. The SGHWR is a modular construction, which can be made in a large size. It should be ordered.
The supporters of Westinghouse in this country say that British industry lacks the capacity to make it. I intervened in the speech of my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) on that point, because it is very important. People are going around the country saying that British industry cannot make the SGHWR. It may seem astonishing that that sort of sales propaganda from a foreign competitor should be so easily absorbed. It is quite untrue.
The hon. Member for Bristol, North-East and I have discussed the matter with the Canadians, and we know that it is also
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untrue so far as they are concerned. They do not believe it for one moment. We could make the pressure tube reactors, as Sir John Hill told the Committee in evidence, and we could not for some years make the pressure vessel in this country, as Sir Arnold Weinstock readily admits. So in point of time, if this is a decision for the short term, the Secretary of State has the advantage of those facts.
Mr. Palmer: Does not the hon. Gentleman agree that it is probable that the steam-generating heavy water reactor is the easiest of all reactor types of engineering?
Mr. Neave: I agree. The pressure tubes and everything else have been thoroughly tested since the late 1960s at Winfrith Heath. It is nonsense to say that the reactor could not be brought to commercial size. It has been developed on the basis that it will be brought to at least 600MW. Let us in any case move to smaller-sized reactors. Let us not allow them to become too big. The engineering industry has a great deal of difficulty over the matter, and one of the causes has been moving suddenly to the large reactors, which are inherently less safe. I emphasise that the larger light water reactors are inherently less safe.
That is not to say that we should not pursue our interests in gas-cooled technology and the HTGR with Gulf Atomic to the extent of planning a prototype station at a later date. But it is possible to fill the gap between the HTR and the fast reactor in the short term by the Canadian connection. That is a very realistic possibility that I am sure the Secretary of State has examined.
I finish by referring, as others have done, to the people in the industry, with whom I have worked for nearly 20 years. Whether they are research workers, engineers, or people who make boilers and turbines, they have been obliged to live in hopes that after years of indecision their industry would benefit and people in important position in their own country would stop devaluing that industry, especially when there are no fresh orders at present on the nuclear side of heavy engineering.
For years they have been assured, especially the scientists and engineers to whom the hon. Member for Whitehaven

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referred, that nuclear power was a growth industry. In a memorandum circulated to hon. Members recently, the Institution of Professional Civil Servants stated:
"All this time our career prospects have dwindled. We have maintained our professional standards and have stuck to our work while the CEGB have attacked our products in the most outrageous terms."
It is not unfair to say that. The CEGB has attacked British capacity, British industry and British designs before the Select Committee on two or three occasions. There is only too much truth in that statement by the IPCS. I regret it very much.
Many scientists and engineers resent it. They certainly resent the pay dispute. I hope that that will be resolved through the intervention of the Secretary of State for Employment.
The failure to order British designs has had a very bad effect, but it is not too late. My right hon. Friend the Member for Renfrewshire, East (Miss Harvie Anderson) referred to Scotland and the works in Glasgow which should be given encouragement to get down to the job. If that happened everywhere, there would be a viable solution to the problem.
The Secretary of State must be heroic, and stand up to those who want dependence on foreign sources of technology. That is not the way to benefit our industry and give our own designs a fair chance. If he gives them that chance, he will have my support and, I hope, that of all hon. Members.
Mr. Deputy Speaker (Mr. George Thomas): I remind the House that many hon. Members want to take part in the debate. Unless some self-discipline is exercised, many will be disappointed.
7.6 p.m.
Mr. E. Fernyhough: I shall try to respond to your request, Mr. Deputy Speaker.
Like the right hon. Member for Renfrewshire, East (Miss Harvie Anderson), I must declare a substantial interest. In my constituency 6,000 men are engaged in the heavy electrical engineering industry. Six years ago there were 11,000. I have a feeling that if Mr. Hawkins and Sir Arnold Weinstock have their way the number employed in the works that I represent will continue to fall. As the
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right hon. Lady said, when we make decisions, whether about a power station or anything else, nobody takes into account the social consequences and their costs.
I do not believe that there is a need for hurry. Ten years ago we had not struck the first North Sea gas field. The first discovery of gas was not made until December 1964. We know full well what it has meant. It was only in comparatively recent times that we discovered oil. In view of the coal industry's new image and the availability of the other sources of energy, I do not believe that there is anything like the hurry that Mr. Hawkins and Sir Arnold Weinstock show in rushing across the Atlantic to bring back technology and equipment which I am satisfied we are capable of building here.
I am certain that the vast majority of the British people are not prepared to think in terms of 0·001 per cent. of the cost of a unit of electricity unless they are sure that the cheapness will not bring with it fatal consequences. All those who would rush into buying American power stations must be prepared to have them put on their own doorstep. Given the safety factor, about which there are still some doubts, anyone who is prepared to rush to buy those power stations should say "Let the first one be built in my constituency."
Mr. Skeet: Is not the housewife also interested in cheap electricity? Are there not many housewives in France, West Germany, Italy and elsewhere, where there are pressurised water reactors? Is there not an element of great safety there?
Mr. Fernyhough: I am saying that those who have great faith in them should have them in their constituencies. Let the hon. Member for Bedford (Mr. Skeet) put the point to the housewives in his constituency. Let him ask them whether they are prepared to take the risk.
I do not believe the experts. You and I, Mr. Deputy Speaker, were here when we were told that there was to be an explosion of an experimental bomb in the Pacific. We were told that provided the ocean was cleared for a few hundred miles nobody would be hurt. We all know that Japanese fishermen who were 700 miles away from the area in which the explosion took place suffered severe burns. If there is a mishap with one of

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the reactors in question. I am not as sure as some that we can quantify the consequences and say now how much or how little damage will be done. I do not believe, therefore, that we should take any risks until we are sure of the position.
I am not prepared to run the risk. Like the hon. Member for Abingdon (Mr. Neave), I believe that we should look towards some co-operation with the CANDU system. That could be the answer to the early part of our problem. It may be that as a result of that cooperation we could again begin to think in terms of becoming once more a real world leader. I should like to see that happen because it would be good for the British economy, good for my constituency and, good for the safety of the entire population.
7.13 p.m.
Mr. Ian Lloyd: The interests of brevity demand that we must be brief almost to the point of being brusque and not refer to what has been said so far, although that is something I should like to do. I turn straight away to other points I should like to make. In this context I have no axe to grind and no interest to declare.
The impartiality of the Select Committee was to some extent criticised by the Press. It was alleged that the Committee had a bias against the American light water reactor system. That was not true of myself and I do not think that it was true of the Committee. I came to the subject with a mind like a blank slate. Therefore, I approached it with as much impartiality as it is possible to obtain in this imperfect world.
On the basis of the argument and on the evidence which was presented to the Select Committee I accepted the conclusion that the Commitee reached and made available to the House. I was, however, concerned that the scale of investigation and evidence that the Committee had available was utterly disproportionate to the complexity of the issues, to the size of the investment that the country was being asked to make and to the industrial and national importance of the issue.
The Committee had no comprehensive evidence from the United States. It had no such evidence from Japan, vir-
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tually none from Western Europe and none from Sweden, which is facing the same problems and considering the same matters. I found it strange that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) should have said that access to information was no problem to the Opposition. I think that such access is always a problem not only for Oppositions but for all Select Committees. My instinct made me conclude that the expertise of some of the witnesses that appeared before the Committee was narrowly based at least in a geographical sense.
Occasionally one has a stroke of luck not in the political sense but in another sense. Two or three weeks ago it came to my notice that there had been made available in Washington a comprehensive report on the nuclear reactor choice for the United States. I made some inquiries and I found that there were no copies of the report available in England. Thanks to the good offices of the Library the first copy of the report to arrive in this country reached me yesterday afternoon. I shall make some observations on what I have been able to discover from the contents of the report in the past 24 hours.
The report consists of five volumes and the two which I have here are the tip of the iceberg. It is a report that is comprehensive, analytical, informative and, above all, illuminating. It is an outstanding example of open government. Had it been in my hands for more than 24 hours I could probably have made a greater contribution to the debate.
I think that my conclusions are important. The report suggests even more than the report of the Select Committee that we are not deciding an issue of whether we build light water reactors of an American kind or a British type of burner breeder reactor. The major and great divide in the technological history of our civilisation is whether we go on to build burner breeder reactors or go over as soon as possible, as the Americans are clearly contemplating, to the liquid metal fast breeder reactor. The whole of the five volume report is on the environmental impact and on the whole range of economic and technological consequences for the United States of the liquid metal fast breeder reactor. The report casts a powerful searchlight on the subject of

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the debate because the United Kingdom light water reactor programme cannot fail to be judged in such a context.
Time permits me to draw but five limited but defensible conclusions. The first is that the decision turns on an issue that we have so far glossed over completely. The second is that the United States is now making a massive commitment to the next stage of the nuclear power technology and control of that technology.
Third, Western Europe should, with, if possible, the United States, and without if not, embark on a breeder reactor crash programme as soon as possible.
My fourth conclusion is that the light water reactor programme or any burner converter programme—SGHWRs and CANDU, for example, being burner converter reactors—should be regarded at the very best as a stopgap. I should describe it as a nuclear fossil fuel substitute and no more.
My fifth conclusion is that unless we bring a combined OECD effort to a successful conclusion the OECD Governments as a whole, with perhaps the exception of the United States, will be making a conscious decision to default and to add, according to the report, which is my sole source of information, tens of billions of dollars to the cost of our energy programme within the foreseeable future. In the year 2000 the nuclear power defaulters will loom much larger in the history books, if the report is correct, than will the oil sheikhs' action of the past few months.
An issue that we have glossed over is the uranium supply. It is the most critical parameter bar none of any of the parameters that we are now considering before making our decision. What are the facts? Mr. Hawkins gave the Select Committee a complete reassurance that uranium was not an important matter. However, the world resources of uranium in 1974 are just over 1 million tons—namely, 1,150,000 tons. The world requirements to 1985, given the foreseeable nuclear reactor development, are exactly 1 million tons. That is assuming that our reserves will function at the current price level which is approximately eight dollars a pound.
Mr. Skeet: It is going up.
Mr. Lloyd: It may go up from 8 dollars to 12 dollars.
The distribution of reserves will become of fundamental importance. The United States and Canada have between them 556,000 tons or 49 per cent. of reserves. South Africa and South-West Africa have 300,000 tons or 26 per cent. of known reserves. In France, Gabon and Nigeria the figure is 124,000 tons, or 11 per cent. In Australia it is 8 per cent. and in the other countries 6 per cent.
What are the United States requirements for their foreseeable light water reactor programmes? These figures are available for anyone who wishes to study them in detail. I shall summarise them baldly.
Mr. J. Grimond: Do the figures refer to the whole world or to the free world?
Mr. Lloyd: The figures which I have given refer to the whole world. The figures which I am about to give refer only to the United States programme.
By 1985 United States uranium requirements will be 1·5 million tons, 50 per cent, greater than the total known world reserves. By 1990 they will be 2·6 million tons. By 2000, with the liquid metal breeder reactor programme, they will be 4·4 million tons. By 2000, without such a breeder reactor programme, the requirement will be 6·4 million tons, six times current world known reserves. A 1,000 megawatt reactor requires the mining of 1,600 metric tons of ore per day and the removal of roughly 9·5 million tons of overburden per annum. This is the nuclear fuel requirement of one of the proposed burner converter reactors. Even taking the United States uranium resources as being at 30 dollars per pound—which is three or four times the figure mentioned by one of my hon. Friends—the total available reserves are thought to be a maximum of 2·4 million tons.
The Atomic Energy Commission concludes that the extension of the light water reactor capacity beyond 1990 would
"depend on the location of large additional quantities"
of uranium ore. That conclusion applies equally to the programme we are considering, not only for the United Kingdom but for the whole of Western

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Europe. The commission has pointed out that the reserves, if they are to be made available, taking the eight-year cycle from discovery to availability, will have to be found in this decade. There is no sign of that happening. The commission concludes:
"It is prudent to assume that conventional uranium resources will probably not support continued growth of burner-convertor capacity beyond the year A.D. 2000."
That is looking merely 26 years ahead, and the expected life of the type of reactor we are debating is 30 years.
If the United States depends on light water reactors alone, 7 million tons of uranium will be needed by 2020, according to the AEC estimates. It concludes that this need
"could be met only by using the most expensive sources of uranium ore at recovery costs up to the range of $100 per pound."
This in turn would increase electricity costs in the United States by $100 billion.
The capital investment required for uranium mining alone is about $10 billion. If shale mining is required, as the AEC thinks possible if the programme is brought forward, 12 million tons of shale will have to be mined each day in the United States to provide the uranium required—that is about 150,000 lbs. of uranium oxide a day—with a total investment requirement of from $50 to $85 billion, 300,000 men in mines and mills, a continuous mining process and such other factors as the consumption of sulphuric acid at a rate five times greater than the present United States consumption.
This is a sombre picture, but it is a picture of immense importance. If it is correct—and clearly the Government will have their views about it and the House will have to make a decision on the correctness of their conclusions—we must be facing a similar position in Western Europe, but in our case at least half the mining—and the House has controversial views on this question—would take place in South Africa or South-West Africa, and we must draw conclusions from that.
Therefore, the United States solution and requirements are of great importance and are, perhaps, controversial. They have decided to go flat out for the liquid metal fast breeder reactor. They have
1404
made massive and comprehensive cost-benefit analyses which show that on almost every one of 40 separate parameters they have analysed there will be an enormous plus for the United States. They have made a major commitment. They have started a major demonstration plant which will produce 400 megawatts. They have set up two major national corporations, the Breeder Reactor Corporation and the Project Management Corporation, to carry their great programme forward. They have established three major industrial groups. Major contracts were signed by the AEC in July 1973. They have concluded that the project requires the support of the entire utility industry of the United States if it is to be brought to a successful conclusion.
Dr. M. S. Miller: For the benefit of those who do not have the tremendous knowledge and experience of the hon. Gentleman, will he tell us what is a liquid metal fast breeder reactor? Is it a plutonium metal reactor?
Mr. Lloyd: I understand that it consists of a mixture of radioactive materials and is designed in such a way that when the reactor operates the radiation process breeds greater radioactivity and the liquid metal is merely a coolant used for that process.
The United States feel that they will not succeed unless they combine all the private and public utilities in one massive organisation. That is possibly a controversial conclusion. If it is right, how can we in Western Europe, with our fragmented mini-world, with nations of, perhaps, 40 or 50 million people, and with our much more limited public utility resources, hope to achieve anything like the same results if we carry on as we are? I do not think we shall do so.
As recently as 1971 President Nixon, in his message to Congress, said that it was important to establish a successful demonstration utility by 1980 as a major national goal. Whatever the merits of our problem, and whatever the problems of choice in the context which we have been discussing, my conclusion is that the United States, rightly or wrongly, have gone one step beyond. They are reaching out in a major way to an entirely new spectrum and horizon in nuclear energy. It is also happening in the USSR.

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Therefore, what right have we to look at these problems with the confidence with which we are apparently looking at them? Since the USSR has the largest liquid metal fast breeder reactor facility in the world about to come on stream—within 18 months or so, I believe—and already has a 300 megawatt prototype operating. it suggests that in that part of the world a different view has been taken of the vulnerability of the world's electrical power generation industry to an obviously dangerous limited uranium resource. So back we come to the fundamental question of uranium resource.
Dare we in the United Kingdom say with any confidence that we can contemplate, or even should be contemplating, going it alone as we seem to be doing? The evidence suggests in every word, syllable, figure and statistic that we shall fail abysmally if we do. That is the major conclusion I wish to put before the House.
7.30 p.m.
Mr. Ted Leadbitter:: I am not sure that we should consider the conclusion arrived at by the hon. Member for Havant and Waterloo (Mr. Lloyd) to be final. In this debate we are dealing only with a relatively small part of our total energy resources. We cannot plan the future nuclear programme of the United Kingdom without bearing in mind the need to balance it with our total fuel requirements, including coal and North Sea oil. Many of us feel that we are relying far too much on outside sources for our energy requirements.
It would be foolish to sweep aside more than two decades of work that has been done on nuclear power and the vast amount of investment that has been made in the companies concerned. We must remember also the hopes and aspirations of the scientists and the work force in the industry. It is of paramount importance to calculate the long-term needs of the country and assess them properly against any makeshift short-term provision.
The experts are consistent only in inconsistency. Eighteen months ago the Chairman of the CEGB was adamant that there would be no nuclear programme in this decade, with the possible exception of a fast breeder reactor. On 8th March 1973 Sir Arnold Weinstock told the Select
1406
Committee on Science and Technology that it was not in his mind to have a light water reactor programme for the United Kingdom, although he said that the choice of an advanced gas-cooled reactor programme had not worked out so well. That observation is understandable, because with high technology there are bound to be teething troubles and we are only on the threshold of nuclear energy production. To sweep aside what has already been done in the United Kingdom would not make sense.
By December 1973 Sir Arnold Weinstock had changed his position. When he was questioned, he spoke not so much in terms of the justification for light water reactors as in terms of preferences. The word "preferences" was used in an attempt to scotch the Select Committee's questions which were in pursuit of more technical arguments for some justification of the change. Sir Arnold appeared to be confused when I asked him whether he had changed his mind. He has an even more remarkable facility for talking himself out of more contradictions than has the Prime Minister—and that is an achievement. That is a parliamentary skill which is not to be criticised. Sir Arnold said that he had not changed his mind, he had changed his position. When I asked him whether his mind and his position were two different things, he took up his silk handkerchief and sniffled for a few moments until another question inevitably had to be put. Those two men, the Chairman of the CEGB and Sir Arnold, both of considerable ability and unquestionable reputation, arrived at new conclusions in a few months.
Over the past two decades we have moved from the principle of consortia to the principle of two groupings—the National Nuclear Power Group and the British National Design Corporation—and from there to the National Nuclear Corporation. In that time there has been little more than starts and bursts in the nuclear programme because there has been an overall lack of understanding of the total United Kingdom energy needs.
A national energy board should be set up. It is not in the national interest that decisions about future power stations and their nature should rest entirely with the CEGB. I accept the argument that the CEGB has a duty, taking all commercial considerations into account. to

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produce energy at the best possible price for the consumer, but that notion defeats us year after year. To give an example, it was said that North Sea oil and gas would be cheaper and that with certain types of nuclear power station electricity would be cheaper. But that is not the world in which we live. The priority overall must be the national interest.
A national energy board such as I suggest could bring together men of the calibre of Sir Arnold Weinstock and Mr. Hawkins, leaders of the gas and oil industries, consumer representatives, trade unionists and Government representatives. The board could arrive at a rational energy policy and eliminate wasteful competition between the different forms of energy. This would produce long-term certainty for the coal industry and long-term investment for the nuclear industry.
Mr. Skeet: Where is the White Paper?
Mr. Leadbitter: The value of the hon. Gentleman's interventions is in inverse proportion to his contributions. He is quick with his comments. But he belonged to a Government to whom we appealed many times for a White Paper which we never had. At least under a Labour Government we had a White Paper.
We start on the basis of seeking to coordinate the various elements of our energy resources. In no other way can we utilise our material, mineral, manpower and investment resources for the good of the people as a whole. If we manage to do that, we shall succeed in putting a competitive edge on our export programmes which in the past have failed to satisfy the industry. The industry has been found wanting.
Following the recommendations made by the Select Committee, the Government agreed to set up the National Nuclear Corporation. I wish to question the way in which that body was set up. GEC has the controlling interest with 50 per cent. of the shareholding. other parts of the private sector have been given an option of 35 per cent. of the shareholding and the Government have taken 15 per cent. Is it right for the Government, which is the agent of the British taxpayer, to take only 15 per cent. of the shareholding in this important sector? When the going is critical, the taxpayers shoulder the burden and probably have
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to provide more finance to ease the situation, but if the system proves to be profitable we can have a hand in only 15 per cent. of the profits.
I should have thought that the Select Committee's recommendations might be acceptable to the Government. I should like to quote from the Second Report of the Select Committee on Science and Technology, 1972–73, Paper 350. It states:
"The correct policy for the Government to follow in the public interest would be to take up a larger investment of its own at the outset—not less than 30 per cent. as a minimum. They should then offer the remainder of the equity on an open-tender basis to such private interests as are willing to participate. No single commercial interest should be permitted to hold more than 30 per cent. of the total share-issue. If, in the judgment of the directors of the new company when set up, any existing organisation—GEC or otherwise—has a special expertise in management, then such services could be secured on a contract basis. Under no circumstances should the Government favour any particular private commercial interest, financially or otherwise, by its advance policy decisions."
The Committee concluded, I believe wisely:
"We therefore recommend that the company should not be represented on the Nuclear Power Board."
In other words, we sought by that recommendation to enhance an equal partnership. The total private enterprise interest would have amounted to 66 per cent. at the highest, or 60 per cent. at the lowest. There would have been a three-way partnership, the GEC taking 30 per cent., the Government a further 30 per cent. and private interests taking up the remainder.
Mr. Ronald Brown: Does my hon. Friend agree that the position is worse than that at present because, although the GEC has only 50 per cent. of the shares in this co-operative venture, its pressure on the rest of the industry associated with it, which has 35 per cent. interest, means that de facto GEC has 85 per cent. of the shares?
Mr. Leadbitter: I agree with my hon. Friend; the situation is worrying.
There must be concern at the pressure being mounted for a light water reactor. For example, the Westinghouse people have been to the House of Commons seeking to persuade hon. Members to come

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round to their way of thinking. There is a GEC and Westinghouse interest, and if GEC has a 50 per cent. holding its influence and pressure on the other sector of industry may have the result that Sir Arnold Weinstock will rule the roost. That is the position in a nutshell.
The House should take care over this matter because the programme over the next 15 years may well involve a sum as great as £10 billion. This was the situation outlined by the Chairman of CEGB and it is in contrast to the earlier judgment which envisaged a need for caution. A change of ground of that kind must be questioned. In the Select Committee we found no reason that such a view was justified other than Sir Arnold Weinstock's view. Certainly on the grounds of safety or technology we could find no reason for that change of attitude.
It would be helpful if there were a statement of preference in regard to the possibility of using the SGHWR system for the Scottish Electricity Board. We must not lose faith—
Mr. Nicholas Winterton: Will the hon. Gentleman agree that in connection with the argument he is building up. with a great deal of which I have some sympathy, one of the most important questions is whether the CEGB's estimate of future energy requirements has been thoroughly and heavily over-estimated bearing in mind oil and gas finds in the North Sea?
Mr. Leadbitter: I agree with the hon. Gentleman. Past practice and information show that these assessments are bound to be wrong. Therefore, there must be a continual re-examination of the evidence before coming to any final decision. Decisions must be made on the basis of hastening slowly rather than coming to any quick conclusion. I hope that the Government will be more receptive to feelings expressed in the House of Commons than to any pressure groups of influential people outside the House.
7.45 p.m.
Mr. John H. Osborn: I had prepared a lengthy contribution to this debate but, in view of the remarks made by the Chair, I shall try to abbreviate my speech, in which I wish to express the considerable consterna-
1410
tion felt in industry on this important subject.
I have some sympathy with those, including the Secretary of State, who now have to make a decision, and, indeed. I had similar sympathy with those who found themselves in that situation in the past. I was a member of the Select Committee on Science and Technology, and I accept the conclusion which was so ably advanced by my hon. Friend the Member for Abingdon (Mr. Neave) supporting 3 GHW and CANDU. I am a rapporteur for the Science and Technology Committee of WEU, which is looking into nuclear problems. It is a committee that has observed the dilemma facing Britain from outside—that is looking at the European industrial capacity as a whole in terms of international considerations rather than merely from an isolated point of view.
I agree with those hon. Members including my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin), who have said that attitudes are all-important. This is such a complicated problem that it is extremely difficult not to adopt some prejudice or other. It may be that I myself am guilty of this attitude.
My hon. Friend the Member for Havant and Waterloo (Mr. Lloyd) stressed the question of international cooperation. In looking at what has been said in this debate and at the general dialogue which has taken place on this whole subject, my view is that Britain appears to have been looking at this matter in blinkers and alone. Therefore, perhaps it would be wise to look at the situation as a whole. The international scene has been examined by an OECD commission, and its findings on this complex subject are overdue by several months. I could quote some vital statistics, but I shall content myself merely with saying that world electricity requirements in the period 1950 to the year 2000 will see a tenfold rise.
I could comment on types of reactor, but I shall stress only one point. The European experience in terms of LWR reactors, which is very much less than experience in the United States with its own LWR reactors, shows that some 65 per cent. of reactors under construction or in operation in Europe are light water reactors. We have many prejudices and

1411
objections about light water—PWR—reactors, but we must not forget that the objections seem to have been overcome in other parts of the world.
I touch briefly on industrial attitudes. I was very impressed when I met German leaders of the industry through the Deutsche Atomforum. I was reminded that when I visited the 1955 Atoms for Peace conference there was, after all, no German industry. Germany's policy has been based on competition and on international co-operation. German and French investment in the peaceful uses of atomic energy has far away exceeded investment in this country over the past 20 or 25 years. I can produce statistics to prove that.
The Germans have tackled the problem in an interesting way. Companies have been given high grants to build pilot plants. When those plants have been proved, they have then been given grants of lesser proportion for prototypes. In other words, German industry has had public funds in order to build up its strength, and that is a complete reversal of the situation in the United Kingdom, even though expenditure in the private sector has increased.
In the United States of America, the AEC for a number of years has concentrated on building up its industrial strength in the private sector. There is now a total throughput of construction of 40,000MW nuclear capacity per annum. That is nearly our total nuclear generating capacity. Of it, approximately 40 per cent. is construction through Westinghouse, 40 per cent. through General Electric, and the remainder is divided between International Combustion, Babcock, and General Atomics. Our problem in Britain is that the scale of demand has not been big enough.
If there had been sufficient time, I would have picked up the hon. Member for Hartlepool (Mr. Leadbitter) when he commented on the industrial structure. In the Select Committee we had difficulty in deciding what was a fair public shareholding. I content myself with the comment that the creation of the National Nuclear Corporation, even with private sector investment, leaves us with a monopoly supplier supplying a monopoly user. In Germany there are a number
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of utilities and two major suppliers owing to amalgamations. In France we have a monopoly utility, EDF, but there are two groups, of which Framatome is one and Societe Electricite Generale is the other.
I had intended to comment on our Magnox and gas-cooled programme. If Britain continues with the gas-cooled programme as a major venture, we shall find ourselves isolated from programmes elsewhere in the world.
I had also intended to comment on the dramatic French decision two years ago to go over to light water reactors. That was dramatic enough, but to go over to a direct licensing arrangement and organisational arrangement between Framatome and Westinghouse must have been galling to the French, who are extremely nationalistic about these matters.
A number of hon. Members have been quite right to ask what is our likely future energy demand. The Minister has given the estimate of nuclear capacity likely to be required in the 1980s.
Some comment has been made about North Sea oil. It should be borne in mind that the cost of extraction of North Sea oil, according to unverified estimates, is about 10 times that of Middle East extraction. On the basis of those estimates, it would appear that the extraction of oil from shale and tar sands could be competitive.
Mr. Hawkins of the CEGB informed me in a letter recently that last year the best coal-fired and oil-fired power stations were costing respectively 0·40 and 0·39 pence per kilowatt hour of electricity produced. This has to be compared with a nuclear cost of 0·33 pence per kilowatt hour. The latest estimate from France is that conventional power stations cost 4 cents per kilowatt hour compared with 2 cents per kilowatt hour for nuclear generation. A crash programme was proposed, part of which was to dismantle smaller conventional powers stations. If those estimates are true, we too ought to consider carefully this new situation because it could have an important impact on our decision making.
The Minister has to consider a number of factors. There is collaboration in Europe, and there is international collaboration. Strangely, we seem to have

1413
gone our own way. We ignored the rest of the world, possibly because 10 or 15 years ago we thought that we were in the lead. However, we have now been overtaken, and we must ensure that this state of affairs does not continue.
The French and German budgets for the peaceful development of atomic energy have been far in excess of our own. Perhaps because we have had a monopoly user, some of the flexibility shown in other countries to join in research programmes and to explore different alternatives has been denied to us.
What are the alternatives facing Britain? Four months ago—before the Select Committee made its recommendations—I would have advised the Minister not to make a precipitate decision. However, having discussed the Select Committee's report with others, I do not think that we can afford to wait. The Minister has to make some decision fairly soon.
What have we to guide us? Canada has gone down one road and has been very successful with the CANDU. But we must bear in mind that France, for instance, is going down all the four roads at once with HTR development, fast breeder development and boiling water and pressure water reactors.
When my right hon. Friend was talking about the Super-Phenix, I intervened to point out that the present project has a 51 per cent. French majority share-holding, the second will have a German majority shareholding and the third an Italian majority shareholding. Co-operation between manufacturers and utilities is evident, but where does Britain come in, especially in view of the fact that fast breeder reactors could well be important in the future?
Looking back a little, light water reactors have been developed. The only outstanding question concerns making the commercial arrangement. The National Nuclear Corporation could work on the pressure water reactor with Framatome, Westinghouse, Babcock and Wilcox Combustion Engineering or Kraftwerke Union. A direct link with Westinghouse seems to be the likely choice.
The CANDU reactor has many advantages, especially in manufacturing terms, and we have the capacity to make it. The difficulties have been outlined. There
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is the question of the supply of heavy water, there is the problem of spillage, there is the difficulty of repairs in operation, and it could well be that some utilities, unless they were sophisticated ones. would shy away from such a sophisticated reactor.
The high temperature reactor has gone ahead more rapidly than many people realise, and General Atomic has given it an impetus which we should all recognise. In the States, a capacity of 8,000 to 10,000 MW has already been ordered. In my view, the high temperature reactor could well be the next line of action for us to follow. Again, we are extremely proud of the Dounreay project, but there must be greater international collaboration.
We have talked about sodium cooling. Some say that it may prove too difficult for the utilities. Perhaps there could be an international project with helium or some form of gas cooling as an alternative.
The South of Scotland Electricity Board wishes to buy the CANDU type reactor. Why should it have to follow the CEGB? Utilities elsewhere in the world are going their own way. Why should not the SSEB, if it has know-how to exchange with utilities in Canada, do the same? The CEGB wants the light water reactor. The NNC has said so, too. No one knows whether or not it is a winner. Most of the rest of the world think it is, but there are those who do not agree. Perhaps the SSEB should be permitted to place an order for the CANDU.
Dr. M. S. Miller: On a point of correction. The South of Scotland Electricity Board has opted for the steam-generating heavy water reactor, not the CANDU.
Mr. Osborn: I think that we might have a discussion on the extent to which the steam-generating heavy water reactor—SCHW-—for which the SSEB has opted, could be constructed in conjunction with the Canadians' know-how. If it were to go solely on a prototype that we have developed without industrial experience it might take longer than hon. Members in this House, particularly Scottish Members, would tolerate. However, I thank the hon. Gentleman for drawing that point to my attention.

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No one is certain about the future of the fast breeder or the high temperature reactor. It is useful to have prototype experience of both.
What must we do for the future? I hope that the Minister will look at what is going on elsewhere in the world and will encourage industry, our scientists and the AEC to look at and benefit from experience and knowledge elsewhere and give other countries the benefit of our knowledge.
I hope that the Minister will consider the operation of financing prototype and pilot plants specifically, particularly if the CEGB is not prepared to consider the financing of pilot and prototype development.
I hope that the Minister will take note of what is going on in the Soviet Union, the United States of America and other alternative sources of nuclear supply. A week ago today the Anglo-Soviet Parliamentary Committee of which I was a member went to the Institute of High Energy Physics and we learned about alternative materials or sources of energy. such as hydrogen plasma and anti-matter. It would be too complicated a matter to describe the thinking that is going on amongst our scientists. However, there are other long-term sources of energy for nuclear power generation. We must share the expenditure or long-term research and development with other nations.
What should the Minister do now? He should not rule out the AGR. It may be better than we believe. In my view, we should go ahead with at least two out of the three water programmes, of which one could be the CANDU steam-generating heavy water reactor. However, I do not wish to rule out the light water reactor, which seems to be the universal answer today, although it may not be later. The fact that General Atomic and Brown Boveri are interested in the high temperature programme in Germany means that it could come on quickly, and, as a collaborative venture, should also go ahead with the fast breeder with all speed and develop, if not a 1,000 MW reactor, something smaller, but not in isolation, from breeder reactor development elsewhere. Britain should learn to walk before we try to run in this field. That
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is why I support the view of many hon. Members who suggest that there should be prototype work on large reactors. Let us be safe. We should import nuclear power station technology, and develop at slightly below the maximum world capacities, but get to our goal as quickly as possible.
8.4 p.m.
Mr. David Stoddart: We have had a most interesting and at times impassioned debate for such a technical subject. I have listened with great interest to hon. Members who served on the Select Committee on Science and Technology. The House owes that Committee a debt of gratitude for bringing this issue to public light and getting it debated on the Floor of the House. I feel that but for its action we would not be debating this subject today.
I can claim neither nuclear expertise nor membership of the Select Committee on Science and Technology, but having worked for the CEGB for a quite long period I know something of the workings of that organisation.
I am also a member of the Electrical, Electronic and Telecommunications and Plumbing Trades Union and I must straight away declare that I enjoy the sponsorship of that union. As a member of the union I know that it has taken a great interest in this subject and conducted a great deal of research into it. Indeed, the general president is the chairman of the TUC Energy Committee.
What surprises me is that, with all their knowledge of the industry and their incipient common sense, the trade unions have hardly, if at all, been consulted about future reactor types. That is most unfortunate. There is certainly no trade union representation on the Nuclear Advisory Board, and the Select Committee did not think to invite the TUC to give its views. I believe that it has been altogether reprehensible that the trade unions have been virtually excluded from consultation on this crucial matter, especially bearing in mind the implications that the decision will have for jobs in the engineering and construction industry. I do not blame the present Secretary of State. However, I wish that the previous Secretary of State had thought about the trade union expertise

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and common sense that could have been brought to this problem.
Sir Arnold Weinstock and the CEGB do not have a monopoly of expert knowledge on the subject of nuclear technology; still less do they have a monopoly of common sense, which is so often lacking amongst those who usually give advice on such crucial matters as this. It may be too late for the proper consultation between the trade unions and the Minister to take place, since my right hon. Friend is now on the threshold of taking a decision on future reactor types for this country.
Is it necessary to take a decision so soon? I have been reading the report of the Select Committee. Clearly the CEGB is of the opinion that it must have a quick decision if it is to meet demands on the system in the 1980s. But the Select Committee, wisely in my view. questions the need for such urgency. I agree with the view that the estimates of demand up to 1982 and beyond could be wildly inaccurate. Indeed it is questionable whether it is desirable to attempt to meet that sort of demand.
Is it sensible to attempt to meet a demand of 400 million tons of coal equivalent of generation of electricity by the year 2000? That is an absolutely mammoth figure. We should question whether it is in the interests of the nation and the conservation of world energy supplies to attempt to meet that kind of demand by the year 2000. We should take account of our ability as a nation to meet the capital requirements that will be necessary to meet that demand of 400 million tons of coal equivalent. That figure appears in the report as the CEGB's thinking about demand by the year 2000.
The projected demand even up to 1982 is questionable and probably does not take into account the considerably increased cost of energy to the consumer both now and in the future. Increased cost will inevitably, and rightly result in the more careful use of energy, and in particular of electrical energy. Indeed, there is evidence that some industrial consumers who gained experience of operating standby equipment during the coal mining dispute intend to use that equipment to reduce their maximum demand on the supply system. That is some
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thing that ought to be taken into account, because if it were done on a relatively large scale it would affect the estimates of the CEGB of its future load requirements.
That leads me to the matter of spare generating capacity. For a long time the CEGB and the Government have believed that absolute or near-absolute security of supply is vitally necessary. That is undoubtedly a laudable aim, but it is no longer an aim. It has virtually been achieved, but there could be an argument about whether the cost of achieving absolute or near-absolute security of supply is worth while.
It has been held by the CEGB that 20 per cent. spare capacity is essential if security of supply is to be maintained, and again some would argue that that figure is too high. Be that as it may, before coming into the Chamber I looked at the CEGB's annual report for 1972–73. Perhaps I misread it, but nevertheless I read it.
The report shows that output capacity of the board was 56,427MW, yet the maximum demand met for that year was only 40,639MW. That means that there was spare capacity in the system of nearly 16,000MW. In percentage terms of maximum demand, that means spare capacity of no less than 40 per cent., and 29 per cent. of output capacity. Whichever of those figures one takes, it is clear that the spare capacity in 1972–73 was well in excess of the safety margin of 20 per cent. thought desirable by the board.
That is clearly an aspect which the Secretary of State should take into account when examining the board's projections of demand and when he has to meet the pressures on him for an immediate decision about the nuclear programme. He should clearly be asking what margin of spare capacity is being catered for and weigh the cost of that very seriously, bearing in mind that as we shall be installing nuclear equipment to meet that spare capacity—that is what it means—it will cost about £250 per kW to install electricity generation capacity which in essence will be standing idle. I hope that my right hon. Friend will take serious note of that, because hundreds of millions of pounds are involved and there might be millions of pounds worth of spare capacity.

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As far as I can see from research carried out by my union, there are compelling reasons for much hesitation before falling hook, line and sinker for the Westinghouse light water reactor system. The doubts on the safety of these reactors voiced in the United States and here are well known, and we cannot afford to take a chance on safety in our densely-populated island.
We should also have grave reservations about contributing to a world monopoly situation that is being built up by the United States nuclear industry. We must bear in mind too the implications for our own industrial potential if we go for the light water reactor, and of course our balance of payments will be affected. I am sure that the Secretary of State will want to take that into account.
What, then, is to be done? My hon. Friend the Member for Bristol, North-East (Mr. Palmer) hit the nail on the head when he said that there was a good case for going for the natural progression from AGR to HTR and perhaps filling in with the SGHWR. I believe that that is a good idea, and I understand that it is the view of the Select Committee. It would look in to a great degree with the Canadian system, and the co-operation with other countries about which so many hon. Members have spoken would be possible with Canada. This is the kind of solution for which I should be looking, and I am sure that it would be welcomed by the great majority of the people of this country.
This decision obviously needs a some-what longer time scale. That is why the Minister should not allow himself to be stampeded by the charge of the light water brigade into an over-quick decision. If necessary, he can bring up his heavy water cannon against those concerned. But if the Minister takes the wrong decision now it will hang round his neck like a political-technical albatross for the rest of his life, particularly as it has not been discussed with the trade union movement—let us make no mistake about it. The Minister could perhaps stand the albatross round his neck for the rest of his life, but unfortunately the country cannot afford a mistake now. I urge him to hesitate very long before he
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takes that decision. It would be better for him to take longer to make the right decision, than make the wrong decision too soon.
8.18 p.m.
Colonel Sir Harwood Harrison: We have had a learned and rather technical debate, and I should like to speak purely from the human angle. I do so because in my constituency we have for some years had the Magnox nuclear generator. It has become part of our countryside and our life.
About seven years ago it was thought that a twin generator should be built. The site was cleared, and about £3 million was spent on it but at the last minute the CEGB found that it had got its figures wrong and the project was put off for a year. It has continued to be put off for seven years, and has still not been built.
People in my constituency are desperately worried that this is one of the first sites for a nuclear power station, and they are concerned about what will happen in the future. People have telephoned me about this matter. I have met many people about it. I have received telegrams today. All of them are against the light water American reactor.
I have had discussions with the Leiston Urban District Council. There is no party politics in this matter. We were united in the view that we had to see that people's fears were completely allayed. I gave my assurance that I would never vote for an American-type reactor if this would endanger the life of a single child in my constituency.
Although the safety factor has been mentioned on both sides of the House. it has not received quite enough attention. My county council, quite rightly, engaged the services of Professor Leslie, Professor of Nuclear Engineering at the University of London, to write a report. The Leiston UDC and the Suffolk County Council have read the report. I have had letters about it from villages far away from Leiston. I shall not give the House some of Professor Leslie's arguments because time is short. However, he was firmly of the opinion that there was a far greater

1421
risk with the American reactor than with the British-built reactor.
Why should we give way on this matter and have an American reactor when we have our own? This is a factor which has caused tremendous unease in my constituency. That unease must be allayed if the Minister decides on the American reactor. I invite the Minister to visit Leiston. I know he is very busy, but if he is thinking, on those lines he should see the anxieties of the people of Leiston. They have seen this report. They are not stupid. They know that accidents happen and that if a reactor went wrong the disaster would be catastrophic for the people of that area.
Just over a year ago, as Chairman of a Select Committee dealing with the defence of this country, I visited Washington. I had the pleasure of meeting there Admiral Rickover, who is a very unusual character. He has done more in recruiting men and training them for work in nuclear submarines than any other American. He made a very wise remark when he said "You can get experts on anything, on one side or the other. The first side proves that what the other side says is entirely wrong." He was very polite. He also said "I believe that a committee of Members of Parliament such as yourselves have a wide knowledge, and you are more likely to arrive at the right answer than is a body of experts."
That is why I was glad to see my hon. Friend the Member for Abingdon (Mr. Neave) appointed Chairman of the Select Committee. The hon. Member for Bristol, North-East (Mr. Palmer) is also very knowledgeable on these matters. Other members of that Committee have spoken today and have elaborated on the report. I fully endorse the view that:
"In fields of conflict of opinion on the safety of the LWRs it is in our opinion for the proponents of the light water technology to prove its safety beyond all reasonable doubt rather than for its opponents to have to prove the contrary."
That point is of particular importance in a densely populated country such as Britain. It may work all right in America, where there are vast expanses of land, but it is not proved that these reactors are all right here.
Although my constituency is a low-density area, Leiston is a town of 3,000
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people. Up to now there has been a restriction of two miles on building because of the nuclear power station there. That has now been relaxed a little. But with this American reactor it would be up to five miles for anything like the same safety factor.
Before this matter is decided upon, the House must, above all, think of people. That is what politics is about. We must think how people live and the sort of conditions in which they work. There is a risk in this matter. It has not been proved otherwise. I should be uncertain in my mind about the American reactor and I would not vote for it—not because of any party politics but purely for the protection of the welfare of the people.
I was delighted that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) spoke highly of the Nuclear Inspectorate and said that it would not pass any site as suitable for a nuclear power station if it thought there was a risk. I hope that the Minister will ensure that safety factors predominate over factors of cost or anything else before he makes his decision.
8.25 p.m.
Mr. Ronald Brown: I commence by congratulating my right hon. Friend the Secretary of State on accepting a debate before he makes his decision on this crucial matter. I endorse very much his view about the confused situation In which one finds oneself in dealing with this matter.
The Sunday Times article has been referred to frequently in the debate. It seemed to be anxious that the Select Committee was not biased. I am bound to tell the Sunday Times that I suppose that I was biased. On the Select Committee I wanted to discuss matters with witnesses and I wanted to inform myself on various matters. The more I did that the more questions I had to ask. Therefore, when the proponents of light water reactors came to the Committee I was very well fitted to question them. The fact that they failed to answer does not alter the fact that I had a right, as a member of that Committee, to question them. I am in no haste to deny that I was biased if by "biased" one means that one has fitted oneself to ask the right questions of those who purported to have the answers.

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The Select Committee's job was well done in attempting to unravel some of the confusion. The reality of the situation was made clear by the CEGB evidence.
It is worth recording again that when the question was put to Mr. Hawkins as to what were the requirements of the CEGB from 1972 through to 1983 he was absolutely clear and went through two possibilities. The first was a 5 per cent. growth which, he said, was absurd. We never reached it. He gave us then a 3½per cent. growth rate, although the Secretary of State's view today was a 3·6 growth rate. He made matters abundantly clear when he said:
"Therefore we would only require 4,000 MW more plant. That would mean in this period"?
that is, 10 years—
"for commissioning until 1980 only three new station starts, of which one would be probably nuclear—and probably the fast reactor."
We questioned him closely on that. He was adamant about it. At one point he asked why should he buy what he did not want and he said that his job was to produce cheap electricity. He said later:
"This, as I tried to stress, is the result of our very latest thinking, and, if it is of any advantage to say so to clear up Mr. Brown's point…"
He went on to give an illustration. He made it absolutely clear that that was the latest thinking, in August 1972. He said he did not really want any stations but that he might have to have three in ten years and that one might be nuclear.
However, on 18th December 1973 he told us:
"Regardless of what the choice of reactor is, we are saying at the moment that we would like to order in 1974 two stations and…in 1975 one station, another in 1976, another in 1977, two in 1978 and two in 1979."
He said that there would be nine new stations, and then nine more from 1980 to 1983, meaning 18 stations. He then went on to talk of two sets at each station, which meant 36 reactors. That meant that from the time of his latest thinking, in August 1972 during which he said that he did not want anything for 10 years, the argument was stepped up to 18 stations with 36 reactors.
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Therefore, my right hon. Friend was right when he said that there was confusion. Some of the greatest confusion lies with the CEGB. It has never been right. It has never backed the right horse yet. I have no reason to believe that what was called the latest thinking at 18th December is backing the right horse.
Therefore, I tried in the Select Committee to find out why the CEGB was so petulant about the AGR. I could not understand that. I could understand the frustration and the delay and one accepts that professional pride is involved, but the reason for the delay, as I have pointed out in an intervention, is that it stems from an excessive degree of extrapolation of the operating conditions, from the very successful small Windscale AGR prototype.
One of our problems is that we tend to believe that if something works in a small way we have then only to size it up and it will operate satisfactorily. I believe that sufficient work has been done on the AGRs to show that we will have ironed out snags.
I want to know from the CEGB why it wants to cast the AGR aside. It has cost a lot to arrive at this stage and the AGR should not be cast aside. It still has validity. I have faith in it. It will work well. Expertise and the inventiveness of the industry have together found solutions to the problems.
My principal concern for the past three years has been about the safety factors. Some people thought that I was, perhaps, on the wrong matter and that I should have addressed myself to other issues, but I still believe that the safety arguments about the LWR are real. I made a lot of inquiries to try to find out what sort of testing was done, what sort of parameters the Americans had made for the introduction of LWR in America.
I was a little worried why my right hon. Friend said that we must rely on the American Energy Commission. The AEC is regarded as being pretty low down the list in terms of veracity in America, one finds when speaking to people there. From what they say it seems that public confidence in the pronouncements of the AEC must be at a low ebb. Time and again it has been demonstrated that the AEC has been

1425
found not to have told the facts as they have been known, and I trust, therefore, that my right hon. Friend will not place too much reliance on the AEC.
I detected that my right hon. Friend has already spoken to Sir Arnold Weinstock and Lord Aldington. Both of those proponents of the LWR have got their evidence from exactly the same place. This was discovered by the Select Committee. The more one probes and presses about how information is being obtained and where it is coming from, the more it is found that it is all coming from the same fount of knowledge—the AEC. However, it seems that the AEC cannot any longer be relied upon, according to the Americans, and I am prepared to take their view. Therefore, I fail to see why this country should place much reliance on it.
I asked Sir Arnold Weinstock and Lord Aldington where they had done testing on the LWR in this country. The answer was that they had done nothing. All they could say was that it had been done by the Americans. The fallacy of the argument is that it has not been done by the Americans. The Americans have used a computer and simulated all the safety issues. They have then extrapolated the answer from the computer as being de facto what will happen if anything happens in real life.
The Americans are now discovering that the computer answer is wrong and they are building for themselves a prototype of a light water reactor way out in the desert to reduce it to dust. They hope to create each of the nine possible accidents that could arise, including the worst, the ninth, namely, that of a pressure vessel bursting so as to satisfy themselves that they are right.
If the Americans are still doing that at this late stage, if they are still so concerned as to spend huge sums of money to satisfy themselves of the answer, how wrong would it be of my right hon. Friend to jump in and say" That is all right. We do not mind. The AEC sold a duff story a long time ago, so we will buy it now. There is now all the evidence that we require."
I put this issue to Sir Arnold Weinstock and asked him about the evidence that had been offered at a public hearing. The Americans have a very useful way
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of dealing with this: they have public meetings at which people can probe the proponents of reactors before licences are granted. I asked Sir Arnold why a certain passage had been deleted from the report of the proceedings at one of the meetings, at Bethesda in America, of which I had knowledge. Sir Arnold told me "I do not know of any expurgation of a paragraph or what it said." It would not have caused much trouble for Sir Arnold to find out.
I found out. The heading of that paragraph, as I told the House in the debate on 22nd January 1973 was:
"Major accidents: Causes and the Consequences."
That part was deleted on the specious argument that it could cause panic, that if people could see what was possible they might think that it could happen immediately and not realise that this was a series of possible accidents whose effect increased in severity.
The public have the right to know the possibilities, however improbable they might be. It is not for anybody to delete that information. I was astounded to find that people like Sir Arnold Weinstock and Lord Aldington, who should have known, had not made themselves familiar with these matters, as they are the men who claim to be advising the Minister on advisory boards I therefore hope that my right hon. Friend will be careful before he accepts too easily and too readily what the American Energy Commission says.
I tried to create for our witnesses a scenario in which they could tell us how much work they have done on these issues. Nobody could show any evidence of understanding what these catastrophies could mean.
The Chief Inspector, who is a man of great capacity, was very helpful to us. The House has doubtless read his valuable evidence. He said that he was not prepared to accept the safety parameters from America. He said, in answer to me, "I will start with a clean sheet of paper and determine my safety requirements from there." Apparently it would take two and a half years before the Chief Inspector would be able to tell us what his requirements for the light water reactor would be. Yet the CEGB, Sir Arnold Weinstock and Lord Aldington had argued the case that there

1427
had to be an immediate decision, because these things had to be going in 1974. How can we go ahead with light water reactors then, up to the safety standard which the Chief Inspector says we cannot have for two and a half years—
Mr. Patrick Jenkin: Two years.
Mr. Brown: Mr. Williams made that remark. It was my figure. I said, "Two years." Mr. Williams agreed with me. He thought I was right in saying about two years. I was allowing for a 10 per cent. error. Let us call it two and a half years.
It was argued that we should purchase the light water reactors because they were the cheapest. I ask my right hon. Friend: How are they the cheapest? We were given the figures of £366 per kilowatt put out for the Magnox and £233 per kilowatt put out for the LWR. I asked on what rating was the £233 based for the LWR, because we know that many LWRs are down-rated. The Americans will not have them operating at the standard rate.
We had an altercation about what I meant by "rating" and "down-rating". When my right hon. Friend says that they are the cheapest, on what figure is he working for down-rating, since the Americans do not have one such reactor working to capacity? They are all down-rated 20 per cent., 30 per cent. or more. Why does my right hon. Friend choose to work on that particular rating?
There are wide areas dealing with safety which have not been checked. It is not right or proper for us to go ahead and undertake the enormous expansion of LWR capacity which the CEGB wants till we are satisfied about this. In paragraph 19 of the Committee's report I argue as I argued throughout. I was challenged so often. It is not for me or any individual parliamentarian to prove that the light water reactors are unsafe. It is for those who are manufacturing them, who are claiming that they are important to this country, to prove that they are safe. I submit that they have not done that.
8.43 p.m.
Mr. Hector Monro: The hon. Member for Hackney, South and
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Shoreditch (Mr. Brown) has very much added to the consensus that seems to be emerging that we will not accept the LWR system without a great deal more proof about the safety factor. I wish to deal with the issue in the Scottish context. Whatever the future of coal-powered and oil-fired power stations, nuclear power is not an option. We must accept that it is an essential. That is why this debate is so important and why the Select Committee's report is so valuable.
We must do first things first when dealing with the type of reactor that is to be used in future. It is also important to consider where reactors are to be situated in relation to such factors as environmental damage, transmission line problems and proximity to domestic and industrial consumers. I trust that in the decisions that are made a fair share of investment will be given to Scotland.
I wish to deal particularly with Chapel-cross nuclear power station in Dumfriesshire, geographically in the centre of Britain. It was a wise decision to site this Magnox reactor on a disused aerodrome near the Solway. It brought to the area new technologies and many new jobs, which is important to the South-West of Scotland where unemployment is higher than the national average. The UK AEA built houses and a fine social club and entered fully into the life of the community. After construction, and when the manufacture of plutonium was at a high level, there were more than 1,000 employees. In recent years, however, the labour force has declined to around 500 and Chapelcross has become a generating station run by British Nuclear Fuels, which sells power to the SSEB. The contract for the sale of power is due for renewal this year.
Chapelcross generates electricity most efficiently with a load factor of 92 per cent., which is very high compared with figures quoted for other types of reactor. It generates 200 MW for the grid and has a highly-skilled labour force and an exceptionally good training scheme for apprentices. A great deal of the credit for the power station must go to the recently retired superintendent Mr. Desbruslais, to his successor Mr. McDougall and to the work force. I hope that the difficulty over pay will be resolved as soon as possible.

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I hope too that the Minister will give some information about the future of Chapeicross. The Government have 100 per cent. ownership of British Nuclear Fuels and since BNF took over from the UKAEA it has been responsible for development. Over the years I have asked for additional reactors and turbines for greater generation of electricity, for laboratory work, for an experimental desalination plant and originally for the prototype fast-breeder reactor. That could not come to Chapeicross but I am delighted that it has remained in Scotland at Dounreay. I have urged appropriate and constructive work to keep the labour force together and to increase it.
I believe that the SSEB does not feel that it needs additional power in the south of Scotland, even though the recent electrification of the railway from Crewe to Glasgow takes power from Chapelcross. But surely Chapelcross is no more remote from industry or areas needing electric power than Girvan in South Ayrshire or Berwickshire on the East Coast, both of which I believe are front runners for future nuclear power stations in Scotland. One important factor about Chapelcross is that it has ample space around it and that planning permission for development should not be difficult to obtain provided that services are available, particularly fresh water—although obviously sea water presents no particular problem. I do not believe that planning permission would be easily obtainable at the other sites I have mentioned. The questions of planning and the environment are as important as the type of reactors which will be installed.
Mr. Ronald Brown: What we discovered through questioning in the Select Committee was that planning procedures had been altered. Planning permission is sought for every type of reactor one can think of, and when it is given the CEGB has carte blanche to choose whichever reactor it wishes.
Mr. Monro: I am interested in what the hon. Gentleman says, but my opinion is that, whatever type of reactor was sought around the coastline of Scotland, there would need to be a great deal of pressure and many public inquiries before permission was granted. But that does not apply to the site I am mentioning. That is why it is worth consideration.
1430
Because it is so valuable, the site at Chapelcross should be considered for future developments.
There is concern in the district about the future of the site. No one can state with certainty the life of a Magnox plant. Is it 20 years, 25 years or 30 years, or what is it? All the information I have managed to obtain is very vague. Chapel-cross has been running efficiently for 15 years and is therefore entering the area of doubt about its future. What is to happen to it during the next decade and further into the future if its life is to continue? It would be ridiculous to think of abandoning the site and leaving a modern generating station with no power to drive the turbines. It would be a monumental white elephant. The hon. Member for Midlothian (Mr. Eadie), now Under-Secretary, knows full well the size of the Chapelcross power station. We must think not only of the long-term future, which many hon. Members have discussed today, but the medium term, the period of 10–15 years ahead, in relation to the Magnox station of the present day.
To site a new reactor at Chapelcross would be a major decision. There are alternatives that could take up the present staff, and increase the staff, such as an enrichment plant which would separate U235 from U238; a centrifuge plant; a prototype HTR, which is a development of the AGR, a well-tried system; or a prototype SGHWR of the type favoured so strongly by the SSEB. That would fit well into the time scale of the future of Chapelcross.
I am not competent to agree or disagree with the Select Committee or Vinter on future policy. Naturally, however, one tends towards a British reactor, which includes all the research and development of our nuclear effort over many years. It would seem foolhardy to throw away our experience, though I suppose that many of our design and engineering staff would move over to work on whatever reactor system was accepted for the future.
I note that, whatever the CEGB says about the PWR or the HTR, the SSEB—and Mr. Tombs, the chairman, in particular—with its vast experience of nuclear generation of electricity in Scotland, came out strongly in support of the

1431
SGHWR. Its advice should not be discarded lightly. I believe that its evidence was the most conclusive put before the Select Committee.
We are all very conscious of safety. It has been a front runner throughout the debate. We are aware of the concern about the LWR system in America. I appreciate that in view of what can only be described as a very remote accident possibility, from whatever reactor system we choose, safety will be high on the agenda when the Secretary of State makes his decision.
Here I should like to say something, because of recent comments in the Press, about the transport of nuclear fuel by road. I believe that the fears are grossly exaggerated. The transport of nuclear fuel has been carried out in perfect safety, and I see no reason why there should be criticism of the system that is used now or of the drivers and staff who undertake the work.
I conclude by saying that we have ample space at Chapelcross in Dumfriesshire, and I am sure that the area would welcome developments which could take place at the site. I ask the Minister to make a statement as soon as he can about what will happen to this important Magnox station, and I ask for his assurance tonight that he will give its future the most careful consideration.
8.55 p.m.
Dr. M. S. Miller: I listened with great interest and with more than a degree of admiration to my right hon. Friend the Secretary of State. He gave the House the facts upon which any future decision will be based. He did so with clarity and precision. I am sure that we can have absolute confidence in him as someone who has obviously gone out of his way to master the complexities and intricacies of this highly technical matter.
I am glad that my right hon. Friend set out the whole position as he did. We must take into account all the factors that are involved before committing ourselves to something that may have irrevocable effects on the very lives of future generations for perhaps as long as the human race survives.
There are, if I dare to state the obvious, two main considerations. The first con-
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sideration, in the light of future power requirements, is what part nuclear reactors play. The second consideration, on the assumption that we shall have to build nuclear reactors, is what type they should be. It must be remembered that our thoughts about nuclear power in general were in the formation stage against a background of the rundown of the coal industry and when firm evidence of offshore oil was relatively scanty. That situation has undergone drastic change. The oil crisis of last autumn, which could recur at any time, has concentrated our minds wonderfully.
Oil has become very expensive, and we have rightly given a new lease of life to our coal industry. Both oil and coal are finite, but at a fairly conservative estimate we have enough coal under our soil to last 200 years. In the foreseeable future we should be producing sufficient oil for our needs. I agree with my right hon. Friend that we should not be profligate in the use of coal. It is much too valuable merely to be burned.
I agree with the right hon. and gallant Member for Eye (Sir H. Harrison) that the prime consideration must be safety. That consideration must not be sacrificed for greater energy. That is the real problem. The hotter the reactor the greater the pressure on the coolant and the more dangerous the apparatus becomes. We should make up our mind that we do not intend to proceed with any of the light water reactors because the dangers are too great. Both the Westinghouse PWR and the American Electric BWR use light water as coolant and as a moderator. The water therefore becomes radioactive, and as the operating pressure is high—it is a little more than a ton per square inch—leakage means the escape of radio-active material. Sir Alan Cottrell, the Government Chief Scientist, giving evidence to the Select Committee, impressed his views on the Committee to the extent that it indicated that the PWR system was not a proven design for the size of reactor envisaged.
It would therefore seem that heavy water reactors are a safer choice, and, as has been amply demonstrated today, there are in this respect the Canadian CANDU and the British steam generating heavy water reactor—the SGHWR. The advantage of heavy water is that it absorbs fewer neutrons than light water, thus

1433
permitting natural uranium to be used as fuel. In addition, in the steam generating heavy water reactors the pressure is much less. For example, the SGHWR, which has a fairly high power density, has a comparatively low pressure; it is considerably less than half that of the PWR. CANDU has a lower power density and a much higher pressure than the SGHWR. The Select Committee summed up the position regarding the LWRs, and the hon. and gallant Member for Eye quoted the words of the Select Committee which, in my opinion, concisely summarised the position concerning the light water reactors.
I have learned to be wary of scientists. I am not blinded by their flashing genius It is touching to hear erudite, knowledgable speeches by hon. Members who know their subject extremely well but accept all the blandishments of the scientists. Some of this rubs off in my profession. The extent to which people have confidence, which is often exaggerated, in the medical profession is extremely touching. I am very sceptical about what scientists tell us as definite facts because much of it is experimentation; it is not proved.
I do not disparage science; far from It. But, in the main, scientists do what they are asked to do. If asked to design an efficient nuclear reactor, they will do so, and they will in all probability draw attention to its deficiencies which are inherently and intrinsically involved in their terms of reference. For example, if more power is wanted, more risk must be accepted. A choice has to be made, and we have to make it not only on behalf of people today but for far into the future.
The danger is minimal when we have few reactors. We can watch them extremely carefully. If anything goes wrong, there are not many sources of contamination to involve ourselves with. But think of the time when the number of nuclear reactors runs into hundreds. Nuclear waste remains radioactive not for hundreds but for thousands of years. I should like the Secretary of State to estimate, on the basis of the decision which he must make at some time in the future, how many nuclear reactors we shall have in operation in this country In 20 years' time.
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I say to the Government, with all the seriousness I can muster: do not rush. There is plenty of time for experimentation, and it should be experimentation with safety in mind. Spend more on coal research. Powdered coal, on which the National Coal Board is experimenting. can be burnt with an efficiency approaching 95 per cent. There are also other sources of power which have to be investigated.
In conclusion, I can do no better than quote a paragraph of an article which appeared last week in the New Statesman. It runs as follows:
"The as yet unsolved problems of large-scale permanent radioactive waste management, the risk of catastrophic releases of radioactivity and proliferation of bomb-grade material create grave and justified misgivings about a premature major expansion of nuclear power."
It goes on to say that there is—
"an incontrovertible case for a much more thorough investigation of the issues involved than has so far been made available to Parliament and the public. The issues of public safety and the scale of the resources involved clearly require a public and properly researched investigation about a decision which threatens to cost many times more than Concorde and is inherently more dangerous."
The Government would do well to give this comment close attention.
9.6 p.m.
Mr. Edward Gardner: In the few minutes available to me I shall return to the question of safety. Whatever reactor is ultimately the choice of the British Government, it must clearly be one which satisfies British standards of safety. The consequences of a catastrophic accident in a nuclear power station, the disintegration of the reactor followed by the escape of radioactive particles, cannot be lightly contemplated.
British reactors all satisfy the high standards which British tests apply. One is not so certain about the standards being satisfied if we have American reactors. The nuclear fuel is contained in steel pressure vessels 15 ft. wide by about 45 ft. high. The fuel is covered by water and is kept from boiling by the water being under pressure of about 1 ton to the square inch. In the view of our best experts, the risk of a pressure vessel of this kind suffering a rapid fracture is in principle possible.
I have spoken this evening to one of my constituents who is a scientist at the

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Springfield works of the United Kingdom Atomic Energy Authority in my constituency. He expresses the concern that is felt on both sides of the House about the safety factor in American reactors. He says, perfectly seriously, that he would not live within 50 miles of an American reactor. He said that if we had 30 or more American reactors in this country he would consider leaving the country. That is the view he takes, rightly or wrongly, of the standard of safety as it is known at present of American reactors.
Sir John Hill, the chairman of the UKAEA, the South of Scotland Electricity Board and scientists and technologists who work in nuclear energy have all in turn expressed faith in British industry and British technology producing the kind of reactor which the country needs. I ask the Government to give those people a chance to see that their faith is justified.
9.10 p.m.
Mr. John Evans: I am grateful to have this opportunity of speaking in this debate because I must confess that at one stage I doubted whether I should be called to make my contribution. Most hon. Members have made clear in this debate that the decision which must be made is of profound importance to the future of this country —and I refer not only to the nuclear industry but to the engineering industry in general.
I agree with those of my hon. Friends who have said that the trade union movement should have been consulted on this occasion. I wish to make it clear that I am a sponsored member of the Amalgamated Union of Engineering Workers. I also have a large constituency interest in this subject since I have in my area the nuclear centre at Risley. Also situated in that area is the Nuclear Power Group, which is now being made part of the National Nuclear Corporation with its responsibilities for the design and construction of four Magnox stations. There are in the area the headquarters of the British Nuclear Fuel Company and the headquarters of the Reactor Group of the AEA, including its main mechanical engineering laboratory.
It is obvious that I have a tremendous constituency interest in this debate since
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hundreds, if not thousands, of my constituents are concerned with the issues which we are debating tonight. I hope the Minister has been made aware that this subject is not to be approached in a party political spirit. I was hoping that this debate would be marked by a concern for British technology, and it must be said that this topic has been debated irrespective of party affiliations.
Some hon. Members have suggested that a decision on this subject should be put off. I disagree. The CEGB is forcing a decision on the Government, and if my right hon. Friend the Secretary of State for Energy resists its blandishments and refuses to accept the American system I suggest that he will have time to give further consideration to the problems that face our own nuclear industry.
The industry has made clear in its evidence to the Select Committee—the Select Committee Report was a wonderful piece of work—that it wants to buy American, and wants to buy it now. What puzzles me greatly is that at one period the CEGB was suggesting that there was no hurry, but on 19th December the board suggested that it had to make an urgent decision on this enormously important matter. It said that it wished to purchase nine nuclear stations, all with twin reactors, making 18 reactors in all. It also said that nine further stations were involved. Since we already know that the South of Scotland Electricity Board is talking in terms of a further eight reactors for its own requirements, this envisages a total of 36 to 40 reactors in the next 10 years. This is an enormous decision for any one man to make. Therefore, I believe that the Secretary of State must make a decision and that it must be based on British technology.
I completely reject the suggestion that we should buy American technology. Our industry has a good record. Mistakes have been made, but it is the politicians who have made them in the past few years and not our scientists, engineers and technicians. It is quite possible that if the politicians had had the courage of our nuclear scientists and engineers we would not have been in the plight that we are today, arguing about whether to accept the case put forward by Sir Arnold Weinstock and Mr. Hawkins of the CEGB to buy American.

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I echo the sentiments of those hon. Members who have referred to paragraph 19 of the Select Committee's report. It was probably the most important statement by the Committee. It is incumbent upon those who favour the American system to prove beyond doubt that it is completely safe. It is not for those of us who oppose the system to disprove their arguments. It is for them to prove their arguments conclusively.
I accept what the right hon. Member for Wanstead and Woodford (Mr. Jenkin) said about not adopting scare-mongering tactics and not talking about atomic bombs. But we must recognise that if by chance there was a major accident with a PWR the result would be a disaster of proportions which we have never known in our history. Those who seek to promote this system must first prove to the British people that it is an entirely safe one.
If we accept the blandishments of the CEGB and put all our eggs into one nuclear basket by purchasing 30 or more reactors of this type, what will happen in the years ahead if one of them develops a major fault? Cracking has occurred in this type of reactor in various parts of the world, with potentially disastrous effects on the surrounding areas. I suggest that in the event of an accident the NII would insist on the stations being closed down. If that happened because of the dangers to the population, probably the Nuclear Inspectorate would insist on other stations being closed down. If in the 1980s we had 30 or more of these reactors, what would be the end product for the British economy as a result of having so much of our nuclear technology in them?
Mr. Nigel Lawson: Is the hon. Gentleman saying that there is no possibility of any kind of accident in any other type of reactor or nuclear power station?
Mr. Evans: Of course I accept that there could be accidents, but the point is that British reactors have been operating successfully for a considerable period and the British people are now satisfied with the safety standards and workmanship which have gone into producing them. My argument is that there is not the same reliability with the American system as British systems have been proved to have. I accept that there could
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be accidents. Anything that mortal man builds is subject to accidents. The argument is that our systems have been proved safe, and certainly the British people accept them as being safe and reliable.
I suggest that it would be foolish to throw away that regard of the British people for our systems in favour of a system about which there are doubts, even in America. Powerful voices are raised there suggesting that there are problems. Why should we purchase those problems before the Americans themselves are satisfied?
It is obvious that my right hon. Friend the Secretary of State has some very difficult decisions to take in the near future. I suggest that he should consider carrying on with the British systems. I believe that the go-ahead should be given to the SGHWR. I believe that the South of Scotland Electricity Board should be given the go-ahead immediately for one of those stations. It is suggested that there is considerable export potential for that type of reactor. However, I understand that there are problems. When representatives of developing countries inquire about this reactor, their first observation seems to be "It sounds very good, but where is the British reactor?" Surely this is something with which we could go ahead.
I believe that we should continue with the AGRs. I believe that, as has been suggested, having spent considerable sums of money in that area of technology, we will find it worth while in the long term.
We are at the crossroads of the British nuclear industry. Down one road lies disaster. The American system would bring about that disaster. Down the other road lies a promising future for the British nuclear industry. Men and women have given their lives working in that industry to create so many leads for Britain. I hope that today we have signposted the roads clearly enough for the Secretary of State to make the correct choice.
9.21 p.m.
Mr. David Howell: Whether or not we have signposted any roads clearly today, the House has certainly approached this complicated issue with a good deal of humility, and it is absolutely right to do so. For one reason the whole subject is hellishly complicated,

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and for another the nation's record in decision making in this sector has been, to put the best interpretation upon it, abysmal.
As a nation we have made one or, probably, two major national mistakes. As a result, whereas 18 to 20 years ago Calder Hall was the first nuclear power station in the world to feed electricity to the grid, the United Kingdom has now been put way back. If we in this House can agree on nothing else, at least there must be general agreement on both sides, in industry, in the generating boards and in the Government that we cannot afford further costly mistakes. This time the colossal decision must be right.
I think that all who have experience in this area would admit, as I do, that there is precious little ground for confidence from past performance. If we have learned anything from the stories of the last 20 years in nuclear reactor systems. it is that in government our decision-making procedures have been weak. We have a lot to learn in strengthening the processes by which the Government reach decisions on public policy in our major industrial sectors. The interesting book written by the Paymaster-General, the right hon. Member for Birkenhead (Mr. Dell), who analyses some of the industrial decisions and boobs made by the previous Labour Government, will repay study. It shows some of the devastating weaknesses in our decision-making processes on public policy in the major industrial sectors.
Looking back—I do not want to do too much looking back this evening, but we learn from the past for the future—the story of Magnox is terrifyingly instructive. We now know that the decision on Magnox was made without any proper economic appraisal. It was made with inflated ideas of export potential, which were never realised, and an unwarranted, almost absurd lack of attention to foreign experience.
Then we came to the decision in the mid-1960s on the advanced gas-cooled reactor. Some extremely interesting comments have been made about that matter, but the full story has yet to emerge. I shall come back to that in a moment.
What we know is that back in 1965, when it came to the job of the CEGB
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and the UKAEA to make a comparison with boiling water reactors, they came up with the decision for Dungeness B that the AGR was better on the basis of cost, of thermal efficiency and a number of other grounds, including development potential, yet here we are today with not one of the AGRs working. That is the dismal story, and we should be wise to keep it in our minds.
Having said that, I must say that the rôle of the House of Commons has been very much more creditable in the whole saga, and it would be wrong to end the debate without a tribute to both my hon. Friend the Member for Abingdon (Mr. Neave) and the hon. Member for Bristol, North-East (Mr. Palmer) who, with their colleagues, over the years have persistently and with vigour continued to open up and expand the public debate on these crucial issues. They particularly, but the House of Commons in general and its Select Committees, have played a creditable rôle in this otherwise sad story.
The truth is that as early as 1962 Select Committees were telling the Government that there was something basically and fundamentally wrong with the organisation of the whole nuclear problem, and later the Select Committee was pressing for a single construction company which eventually my right hon. Friend set up under the previous Government in the form of the National Nuclear Corporation. I believe that he was right to do so and that he deserves credit for it.
We are now faced with this colossal decision. If the CEGB has its way—and there have been discussions this afternoon on whether it should—the indications are that the board wants nine stations, 22GW, by 1980, and eight or nine GW right away. As I understand it—I should like the Minister to clarify this—the Government's estimates are lower. The Secretary of State gave us some figures. I think he said that the Government's estimate was of a likely growth of 3·6 per cent. in electricity demand per annum, and I think he mentioned an expectation of building about 3GW of nuclear capacity a year. If the Minister said that, does it mean that we are talking about a Government estimate of 15GW—15,000MW—by 1980, and should we measure that against the

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board's estimate of 22GW? But even if those are the figures, is that the right comparison to make in assessing who is right?
Whether the Government's estimate is right, or the board is right, either way we are talking about colossal sums of money. Depending on which figure one takes, we are talking about £3,000 million or £5,000 million before 1980, and possibly the same again in the 1980s. That is a vast expenditure of resources that will dominate every aspect of engineering, advanced technology and construction. It will be a huge programme. It will be a multiple of Concorde. All this emphasises the crucial need to get the decision right and to use the right decision-making processes to reach it. That is the central point to which all concerned must turn.
I should like, if I may, to press the Under-Secretary to elaborate on one or two things said by the Secretary of State. I know that the Secretary of State came here determined to give us a full rundown of all the different choices of reactor, and he did so. No one could quarrel with that, but I was a shade disappointed at the rather unprocessed and raw list of facts that came out. There were one or two bits of light and shade which the House might have expected to be filled in, and I should like the Under-Secretary to deal with them in replying to the debate.
Starting with the present situation on the AGR, what went wrong? Have the Government a view on this? Was it poor management or poor design? How do the Government react to the clear analysis of the hon. Member for Bristol, North-East that it was a question of three different managements, or three different operations, all working without coordination? Was it poor design? It is important to be clear about the Government's view on this—boiler design, vibration, inaccessibility, all these things—because, if there were administrative problems mainly, are we sure that under the NNC we can overcome all these problems? Must we be on our guard against difficulties in the future arising from the AGR programme?
Mr. Palmer: May I reinforce the view that I expressed? I think that it was a difficult design but that the major respon
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sibility lies with poor management, particularly the refusal of the generating authority to accept the idea of one nuclear design and construction company.
Mr. Howell: I share that view, and I should like to hear the Minister's comment on it.
As for the light water reactors, pressure water reactors or boiling water reactors, much has been said in the debate. This is not the time to add to that, nor would that be necessary. But what do the Government understand by the programme being proposed by Sir Arnold Weinstock and the NNC? Who will make what in the GEC-Framatome-Westing-house club? Is it the right club? Have the Government thought of looking at the alternative club, the Kraftwerk Union capability? When or if we go this way, what shall we be making? Shall we be making reactor internals, as Sir Arnold suggested? What will be export? Shall we find that everyone has got to the export market first while we have arrived in the line too late?
There are central questions of safety which have been mentioned. Do the Government have views on the sort of cost involved in any modifications? Have the Government assessed what changes will he necessary once the big light water reactors are built, and if they have to build to British specifications what major changes will be involved? Sir Alan Cottrell's words are on the record. The pressure vessel of the light water reactor
"would have to be subject to rigorous manufacturing and quality control standards and thorough, effective and regularly repeated examination of the vessel by ultrasonic crack detection techniques."
I share the view—this is saying nothing against the light water reactor that the safety aspect must be proved beyond doubt. I believe also that the Government should be beginning to form some views about the costs of this matter and reassuring those who support this choice, as many do, that we should not be going along the same path as we did with the Phantom aircraft—that by the time we had got it and modified it it would cost more than the British system.
Then we come to the steam-generating heavy water reactor and CANDU, its Canadian cousin. There is the question about the heavy water. From where will that come? Would we have to develop

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our own capability for that? How much will it cost, and where would it be set up? If we do not develop it ourselves, on which sources for imports could we rely? If we are to go along the path with CANDU and make what my hon. Friend the Member for Abingdon called the "Canadian connection", what is the export potential there? We have heard about countries such as Romania, the Argentine and Denmark. Are these orders which would be forthcoming if we were to make steam generating heavy water reactors, or have these merely been inquiries? Are such exports to be based on such lavish credit that we could not afford to supply them? What are the facts?
The next in line is the high temperature gas-cooled reactor, in the same technology as our present advanced gas-cooled reactor. I think everyone agrees that this is a starter. It is everyone's favourite son. It is about the one reactor on which no one seems to have anything nasty to say. I am told that Sir Arnold Weinstock is positively ecstatic about it. The Select Committee, at one stage before the present oil crisis, was putting heavy emphasis on this as its favourite. What information do the Government have on this matter? How far have the orders gone in the United States? What is the significance of the order by Philadelphia Electric, which is to be completed in 1981? Are the points made by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) about the present HTR fuel difficulties borne out by the Government's experience? We must have a Government view on these matters too if a proper public judgment is to be made.
Hon. Members are right to emphasise the virtues of the HTR. This is an open-ended technology. There is heat for process heat and even for cracking water eventually and producing hydrogen. There is virtually an unlimited energy source. There is process heat of every kind, and even heat for coal gasification and so on. Furthermore, the HTGR would be very much in line with the AGR technology and some components would be similar. Again, however, we must hear the Government's views on the extent of similarity of components. HTR a very efficient fuel user, has possibilities for European collaboration. Do the
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Government have any views? Dare we wait for it and dare we go straight from AGR to HTR, which in some ways would be more intellectually satisfying? But is it even a starter when it comes to contemplating the real immediate needs of the country?
We would like to ask the Government much more about timing. The Secretary of State spoke several times about decisions in a few weeks, but are these decisions to be to order in bulk now, and what are the sums on which the Government are working? It was a pity that until this afternoon we did not know the Government's mind on load growth, and it seems that information on the relative costs of other fuels is hazy. Comparison with coal has to be considered and oil prices must also be taken into account. The Secretary of State has not yet been able to make much of an assessment on the movement of oil prices, and one man's judgment is as good as another's. Yet this is the sort of context in which judgments have to be taken about investment in nuclear capacity.
There is also the question whether we could get away with a stopgap, with one or two orders, and be able to fill the generating capacity gap that might occur in 1980 or 1981. Or do we have to go ahead in a few weeks with a whole colossal commitment and a decisive undertaking which would commit us for the next generation?
The commercial fast reactor must also be considered. We welcome the prospect of an order being placed in this connection in three and a half years' time, but does this mean that the CFR will be coming forward in the early 1980s, the late 1980s or later still, and what are the prospects of international collaboration in this regard? Why have we fallen behind? How do the Government see this situation?
My hon. Friend the Member for Havant and Waterloo (Mr. Lloyd) referred to uranium and he made some telling points. Do the Government put these aside as being unimportant?
We must also consider the environment and safety. It is absolutely right that the main emphasis should be on this aspect. We must be well aware in the House that resistance to nuclear power stations on safety grounds could be much greater

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than anyone estimates in England, and for that matter in Scotland, as my hon. Friend the Member for Dumfries (Mr. Monro) reminded us when talking about Girvan. Safety must be put beyond all reasonable doubt; it must be the central consideration in talking about our major future nuclear programmes.
No one envies the Secretary of State in having to make these decisions, or not make them, as the case may be. Parliament can advise, and through the Select Committee it has advised, not without effect and not without credit. But now the Government must decide. My hope is that this debate might mark the end of an unhappy chapter in decision making in these matters and the beginning of something better. We shall see.
9.38 p.m.
The Under-Secretary of State for Energy (Mr. Alex Eadie): The Government are aware that the issue of nuclear reactor choice has in recent weeks been the subject of much comment and speculation in the media and among the public at large. In the minutes available to me I will attempt to do my best to answer in broad terms the points put in the debate. But it is fitting that I should say at the outset that the debate has contributed to a greater understanding of the issues involved and the House has had a chance to hear and judge some of the arguments for and against different reactor systems.
My right hon. Friend has repeatedly made clear that the House of Commons must have the opportunity to comment on this issue and that hon. Members must have the chance to give their views before a decision can be taken. When my right hon. Friend took that decision he had the support of the Select Committee which produced the report and he acted in accordance with the best traditions of the House.
The debate has emphasised the very complex nature of this highly technical subject. I am grateful to all those who have spoken. I assure the House that in reaching their decisions the Government will take full account of what they have heard.
I hope that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) will not mind my saying that it was difficult to understand him when he said that he was disappointed when a decision had not been reached.
Mr. Patrick Jenkin: I did not say that.
Mr. Eadie: The right hon. Gentleman should realise that we have been in government for about eight weeks whereas his Government were in office for about three and a half years.
Mr. Patrick Jenkin: I did not say that.
Mr. Eadie: I hope that the right hon. Gentleman will forgive me, but he did say that.
Mr. Patrick Jenkin: If I said that I gravely misled the House. It most emphatically is not my opinion. I was accepting that the right hon. Gentleman had not made a decision and that the report in the Press was wrong. That is what I was saying.
Mr. Eadie: Yes, that is all that the right hon. Gentleman said, but he expressed his disappointment that the decision had not been taken. [Interruption.] I do not think it is being churlish. I hope that the right hon. Gentleman will accept this in the best spirit. If he wishes to defend himself before the House, as he said, he surely does not think it out of the way that the Government should want to defend themselves. On the question of timing, I merely point out that the right hon. Gentleman had ministerial responsibility. I am sorry that this sour note has been introduced into the debate. [Interruption.] If the right hon. Gentleman dishes it out, he must have the courtesy to listen whilst it is being dished out to him.
The right hon. Gentleman raised important points and he is entitled to answers. He raised the question of a demand forecast. My right hon. Friend emphasised that the range of forecasts is wide. This must be recognised. In this debate there has been an attempt to signpost far ahead. My right hon. Friend made it clear that the ranges one can take mean that there must be a more substantial nuclear power programme.
Our nine Magnox stations have a nominal capacity below 5 GW while we may be looking now for a programme of at least 3 GW per year.
As to the heavy water reactor, the right hon. Gentleman must recognise that the resources are limited and we must be careful not to make any incompatible decision. My right hon. Friend is studying

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the position very carefully, and we are aware of the weight of the argument that it would not be sensible to have too many systems widely developed at the same time. We are considering the possibility of a demonstration order of the HTR. The CEGB and the NNC favour the HTR. The system does have potential and would represent a development of our gas-cooled technology. At the moment the system is not suitable for large-scale commercial ordering. The right hon. Gentleman said that he hoped to be going to Canada to examine the situation there. I hope he does, because the whole House will profit from his experience.
The right hon. Member spoke about the SGHWR and Mr. Tombs. I do not know whether he was looking at me then because this deals with the Scottish board. Dr. Johnson said that if Scots were scratched early rather than late it was possible to make them do what they were told. The right hon. Member may have some difficulty in persuading some of his hon. Friends about the validity of the SGHWR. The impression seems to have been created that SSEB had applied for an SGHWR. No such application has been made, although it has already been shown how the Scottish board feels about this reactor.
The right hon. Gentleman was correct to raise the issue of safety. Whatever type of reactor is decided on there can be no compromise here. While there has been argument on this issue it seems to have been directed more towards foreign nuclear technology. There has been a tendency for us to over-emphasise our disappointments.
Mr. Leadbitter rose—
Dr. John A. Cunningham rose—
Mr. Eadie: I cannot give way now. This issue of safety lasts for the lifetime of the reactor. It is not just a question of a reactor being declared safe and then being able to generate electricity for ever without being looked at again. This is an important subject. The safety record of the British industry is very good.
My right hon. Friend said that the time for decision was fast approaching. Such is the time scale of nuclear power that the reactors we are here discussing
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could not be operative until the 1980s. That creates uncertainty. The Government will have to weigh up all the evidence, including views expressed today, the report of the Select Committee and the advice of the Nuclear Power Advisory Board. It will not be an easy decision. No clear consensus has so far emerged from the debate either inside or outside the House. Hon. Members seem on balance to have placed more emphasis on the need to retain a large slice of British technology.
My hon. Friend the Member for Bristol, North-East (Mr. Palmer) summed up the situation well when he said that there were no impartial experts, as he had found from his experience as a professional engineer and in the Select Committee. He graphically described the "Hawkins and Tombs" debate in the Select Committee and said that the issue was so complicated that it could not be left to the experts. "You can choose your expert" he said, and that is just what hon. Members seem to have been doing in the debate.
The reactor choice must be considered as part of the whole canvas of the energy scene. Nuclear power must be part of the overall assessment of our energy needs, in which the question of security is of great importance. No single source can be totally secure, but the degree of insecurity can be reduced in a variety of ways, one of them being to spread the risk across a number of fuels. We have developed a four-fuel economy, but we are not immune from simultaneous disruption of supply, as recent events have demonstrated. We must take account of the prospects of other fuels, particularly oil and coal, which will both continue to be of great importance, for providing our energy supplies for the rest of the century. We shall have to pay a great deal more for our oil from now on, however. It would be self-deception to hope for a return to the old conditions. We can also expect to run up against the limits of our domestic coal supply. For those reasons we need to increase the amount of nuclear power. All these factors have reinforced our determination to make the best possible use of the United Kingdom's indigenous resources. We are better placed in that respect than most other industrialised countries, and it is realistic to hope that we shall be able

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to approach self-sufficiency in the 1980s. But our fossil fuel resources are not unlimited. I have said before that fossil fuels are wasting assets, although I have also said that the Government are conscious that of all the fossil fuels in these islands coal is the most abundant. The Government are determined to try to utilise this great reserve.
The world's reserves of fossil fuels are large, particularly in view of the unconventional sources, such as oil from deeper waters, oil shales and tar sands. Exhaustion is not round the corner, but our reserves will not last for ever. Lead times in energy matters, particularly nuclear technology, are long. It is not too early to plan carefully for the long term.
The size of the nuclear power programme has been mentioned in the debate. Clearly nuclear power must have an increasingly important rôle, but the construction problems must be related to the estimated demand for electricity.
I should like to point out briefly the main factors we have to take into account in reactor choice. I have already mentioned safety. Reliability must also enter into the argument. We need a reactor system that not only can be built in time but will perform reliably and be comparatively easy to maintain.
The question of employment was raised by one of my hon. Friends. He has 3,000 industrial workers involved in his constituency. Many other hon. Members have made the point that it is all very well to be oriented towards a modern technology but if it is to mean something technology must provide work and wages. Such matters must be borne in mind when we consider costs and commercial, industrial and technological factors.
The whole question of the AGR has been raised. It has also been put to me on television. It is true that the AGR programme has been disappointing, but it is extravagant to say that it has been a failure. Post mortems reveal only the cause of death, but the AGRs will generate electricity. I had the pleasure of visiting Hinckley Point last week. It will be the first AGR station to generate electricity for the grid. It is an exaggeration to talk about the failure of the AGR system when AGRs will provide valuable generating capacity.
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I am aware of the criticisms that can be made of particular systems. Some hon. Members have spoken for Britain and others for constituency interests. In such a debate hon. Members should reflect the views of Britain and their constituents.
It is their constituents who send them to this House so that they may represent them in the House of Commons.
One matter that emerges clearly from the debate is that there is no ideal solution. If the way forward were clear—
It being Ten o'clock, the Motion for the Adjournment of the House lapsed. without Question put.

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

EDINBURGH AIRPORT DEVELOPMENT (OBJECTORS' EXPENSES)
10.0 p.m.
Mr. Anthony Stodart: The objections by a small community to the laying of a new runway at Edinburgh Airport have become in many ways well nigh what is described as a cause célèbre. The interest in the matter has been far from confined to my constituency, to Edinburgh itself or even to Scotland. The fact that the BBC's "Man Alive" series devoted over half of its recent 50-minute programme to events at the airport is evidence of that.
I am anxious that the Minister of State should have time to deploy his answers to what I shall say. Therefore, I shall not go into the whole of the case apart from picking out certain episodes in what has been a long saga and relating them to the Parliamentary Commissioners' recommendation that the Scottish Development Department should consider whether it might not be a case for making a substantial and exceptional award of expenses to the objectors.
The pressure for a new runway at Edinburgh went on all through the 1960s, and it will be found in HANSARD of 31st January 1968 that the Under-Secretary of State to the Department of Trade and

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Industry said that current plans included a new runway.
It is conclusive that as a result of that statement three letters were sent off in February 1968 from Cramond. Two were sent from the Cramond Association to the British Airports Authority and the Scottish Development Department. The third was from the Cramond Kirk Session to the Scottish Development Department. Each asked for particulars of the proposals and suggested its own alignment of the runway.
The British Airports Authority replied saying that it had passed the letter to the Department of Trade and Industry. In fact, that Department never replied. The Minister of State will know that that matter was severely criticised by the reporter in the course of his inquiry. The Scottish Development Department replied by saying, in a fair paraphrasing of the situation, that objections could be lodged when the proposals were advertised.
On 15th April 1971 the British Airports Authority applied formally to the local planning authorities. On 6th July the period for the lodging of objections closed and 350 objections were lodged. It is only fair to say that none was lodged either from the Edinburgh Corporation or from the Midlothian County Council.
On 1st November 1971 the public inquiry was opened, and it lasted until 3rd February 1972. Many months later, in November 1972, the report was issued. The British Airports Authority's plans were rejected on the grounds of danger to the people of Newbridge and of excessive noise both for Newbridge and Cramond. Even the alignment suggested by Cramond to swing the runway away from that community was rejected on the grounds of excessive noise and of danger to the people of Newbridge.
That report was issued in November 1972, and on 26th January 1973 the then Secretary of State issued his decision in the form of a letter which concluded that
"In the public interest and notwithstanding increased noise disturbance for some, the British Airports Authority proposals must be approved."
The present policy on the sharing of expenses in an inquiry of this kind is very long established. Expenses are awarded in only two cases. First, if an attempt is
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made to acquire compulsorily someone's property and that person objects successfully, he gets his expenses. Secondly, if a party to an inquiry behaves, in the words of the statute, "frivolously, vexatiously or unreasonably", those suffering from that behaviour may get their expenses from him; otherwise each party pays his own. There is no question of anyone behaving in such a way at this long and expensive inquiry. The British Airports Authority on the one hand and my constituents on the other hand argued their case constructively and with complete and absolute responsibility.
The Parliamentary Commissioner is not an arbiter or an umpire. His rôle is to investigate allegations of maladministration as a result of which citizens feel that they may have suffered injustice. Ministers are not obliged to follow the Parliamentary Commissioner's recommendations; the responsibility for the administration of their Departments remains in their hands. But—here I speak as someone who has held a fair amount of departmental responsibility—a Minister must have very good reasons if he decides to reject a recommendation made by the Parliamentary Commissioner in a report which has attracted—nobody can deny this, I think—such widespread attention.
At this point I must comment on what was said by the noble Lord the Minister of State, Scottish Office in the House of Lords on this point yesterday. He said that the Parliamentary Commissioner recommended not that an award of expenses should be made but only that the Secretary of State should consider whether such an award might be made. This is an exercise in semantics which I hope neither the Secretary of State nor the Minister of State will pursue because I do not think it is worthy of them.
The Parliamentary Commissioner states in paragraph 99 of his report:
"I do not question the general policy about the payment of expenses, and I accept that the decision not to make an award to the Runway Joint Committee is based on that policy. I am aware, however, that the Council on Tribunals, whose recommendations were prayed in aid by the Scottish Development Department, do envisage that there may be exceptional circumstances in which third parties may be awarded expenses: they have not defined them beyond one illustration which does not apply here, but I know from other

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investigations I have carried out that the Council have not meant the illustration to represent the only kind of case that might deserve exceptional treatment. And although an inquiry might well not have been averted even if the Cramond Association proposals had been fully considered in advance by the Department of Trade and Industry and the British Airports Authority, I doubted if the Committee would have had reason to incur expenses on the scale they did if there had been an opportunity for them to make their ideas known earlier. In all the circumstances of this particular case I have invited the Scottish Development Department to consider whether there might not be a case for, exceptionally. some substantial contribution towards the committee's expenses."
I cannot believe that the noble Lord or the Minister of State can in their hearts regard this as other than a recommendation that an exception to the rule should be macle in this case.
The Parliamentary Commissioner felt that the expenses rule should be broken and that a substantial award should be made on two grounds. The first was that the objectors' expenses might not have been so great if they could have put their ideas forward sooner. That takes us back to the abortive correspondence of 1968. The second was that, in the absence of replies to those letters, it is not an answer to say that alternative proposals could have been put forward later. The recent Government White Paper "Land Resource Use in Scotland" recognises that people should not have that task put upon them.
There is a third point that is worth considering. One of the major points in the inquiry was noise, and on this the reporter said at page 93, paragraph 22, of his report:
"I obtained very little assistance from the expert evidence on noise problems adduced by the British Airports Authority. The limited nature of the investigation, arising from what I am satisfied was an incorrect view of the criterion to be applied for educational establishments, meant that no study had been made of a very important part of the problem. The remainder of this evidence while no doubt academically correct, gave little assistance in understanding the practical implications of the various proposals. In contrast, the expert evidence for the objectors appeared to me to be based on a more thorough study of the particular problems which I must consider."
That expert evidence, which convinced the reporter, was obtained at great expense to my constituents.
Mr. Gordon Campbell in his decision letter had refused expenses but on 7th February this year. after the Parliamen-
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tary Commissioner had reported, he wrote to me as follows:
"The payment of expenses to the runway objectors is not without difficulty, but I am giving the most careful and urgent consideration to the matter."
To the Chairman of the Runway Joint Committee on 18th February he said:
"I have noted what you say about the Committee's willingness to supplement the arguments for their application, and I will bear this in mind."
The Secretary of State has repeatedly told us in the House of all the problems which confronted him when he resumed office early in March, and he has referred to the many skeletons that were left in the cupboard. I must in all fairness pay him a tribute and say that he considered this matter urgently. A letter to the Runway Joint Committee Chairman within three weeks was evidence of that, and he has assured me in a letter that he gave very careful thought to all the factors involved, but he has totally rejected the Parliamentary Commissioner's advice. I hope he will telt us why he has done that.
The last thing I want, and I hope that the Minister shares my view, is that citizens should be totally discouraged—indeed, I would go so far as to say warned off from using their rights to object, provided that they use them responsibly. If that happened, it would put far too much power in the hands of the executive.
If the Minister is afraid of creating a precedent, let me try to help him by pointing out that the Parliamentary Commissioner has found exceptional reasons for him to act exceptionally. It would not be strictly accurate for me to say that the objectors won their case, because the reporter's word—rightly in my view——is not the final one. The ultimate responsibility for what in many circumstances may be the national interest must lie with the Government. The objectors, did, however, succeed in their attack upon the British Airports Authority's proposal so far as they were allowed to participate in it, with the result that the reporter rejected that proposal completely.
If the Government, having appointed a reporter of impartiality and great distinction—a matter for which we in Scotland can take credit since the appointee was a man high in the legal profession—feel obliged to overrule his findings because things touching upon the national interests so demand and in this case

1455
these interests were said in the decision letter to be better communications at the earliest possible date—surely it is only fair that the nation should pay.
10.17 p.m.
The Minister of State, Scottish Office (Mr. Bruce Millan): The concluding words uttered by the right hon. Member for Edinburgh, West (Mr. Anthony Stodart) would take us a good deal beyond Turnhouse, but I recognise the force of his remarks. I also recognise the extremely moderate but skilful way in which he presented his case. I agree with many of his points, although unfortunately I do not feel that there is a case for the Secretary of State for Scotland to reconsider his decision in this case.
This matter has raised strong feelings not only in the hon. Gentleman's constituency but much further afield, since it raises some of the most difficult questions of public inquiries of this sort—and, intrinsically, it was a public inquiry of considerable importance.
At the outset I should put one or two facts on the record and perhaps repeat in my own words some of the matters mentioned by the right hon. Gentleman. It is worth remembering since there is much public misunderstanding on the point, that the reporter did not recommend the adoption either of the BAA's proposals or the proposals put forward at the public inquiry by the objectors. What the reporter suggested was that the runway alignment and the question of an airport for central Scotland should be further considered.
The second matter which it is worth putting on record, which I believe the right hon. Gentleman accepted, is that in these decisions the ultimate responsibility to make the decision lies with the Secretary of State. There is a good deal of public misunderstanding about this matter, and the suggestion is sometimes made that if the Secretary of State turns down a reporter's recommendation somehow or other that is undemocratic. I would take the opposite view that the ultimate democratic safeguard is that these matters lie finally for decision with a Minister in this House. In any event, the right hon. Gentleman has accepted that.
The third point is that the then Secretary of State, at the time of the original
1456
decision in January 1973, turned down the payment of expenses on the basis of the well-defined policy which the right hon. Gentleman has outlined. There was no case for the Secretary of State, in line with long-established policy, to award expenses to the objectors.
The real crux of the matter comes in the light of the report of the Parliamentary Commissioner for Administration. My right hon. Friend considered the report, the implications of it and the passages which the right hon. Gentleman read to the House. The decision which he reached eventually was not reached lightly. It took into account the full circumstances of the case, especially the report of the Parliamentary Commissioner for Administration.
With a number of exceptions, all really incidental in character though important, the Parliamentary Commissioner found that there was no maladministration by the Scottish Office or the other Government Departments involved. Again this has to be stated because there is a good deal of public misunderstanding about this as well and a tendency to say that, first, the objectors convinced the reporter of their case, which was not strictly true, and secondly that they then convinced the Parliamentary Commissioner only to find at the end of the day that everything was simply set aside.
The Parliamentary Commissioner looked at the various proposals put to him that there had been maladministration, and he exonerated the Departments from the charges of maladministration.
There was a criticism of two passages in one paragraph of the decision letter of the Secretary of State of January 1973. In my view that criticism was justified. However, I do not think that it basically altered the situation. There is also the question of the passage in the Parliamentary Commissioner's report where he referred to the situation before the proposals were publicly formulated—that is to say, between 1968 and 1971—and to the correspondence which the right hon. Gentleman has mentioned. But on the generality of the matters with which the Parliamentary Commissioner was asked to deal and dealt with exhaustively and at length. the Departments were exonerated from maladministration.
Nevertheless, the Parliamentary Commissioner, even if he did not make

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a definite recommendation, gave an invitation to the Secretary of State to consider very seriously whether expenses should be paid in this case. He had two main reasons for doing this. The first was that the original representations made in 1968 were not answered adequately at the time. Nevertheless, as the Parliamentary Commissioner himself pointed out in paragraph 107 of his report, the normal procedures were strictly followed. He said:
"I am satisfied that, during the planning period which preceded the submission of the applications relating to the new Turnhouse runway, the normal procedures were strictly followed…that the reactions of the local communities were not directly tested before the statutory procedure was started does not mean that the DTI/British Airports Authority would have reached a different conclusion about their proposals…".
Later, he says that
"the groups affected are left with an understandable feeling that they could have put forward useful suggestions at a time when they could, at least arguably, have influenced the proposal".
That is one leg of the argument.
The second leg is that in developing these alternative proposals the objectors involved themselves in considerable expense. We must take these points against the generality of the case that I have mentioned: first, that the normal procedures were followed, and secondly that there was no maladministration by any of the Departments involved. Many of the charges that were given a good deal of currency about the behaviour of the Ministry of Defence, apart from the Departments most directly involved—the Scottish Development Department and the Department of Trade and Industry—were demonstrated to be unfounded.
Therefore, the real question is whether the "understandable feeling" that objectors had—that if they had had an opportunity of considering matters earlier they might have influenced the proposal—is in itself sufficient to set aside what would be an ex-gratia payment according to the normal rules for paying expenses in a case of that kind.
There would be considerable difficulty in doing that because, as the Parliamentary Commisisoner said, in such a case the decision
"will almost inevitably leave some party or interest dissatisfied".
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It is very difficult to determine criteria by which it would be possible to distinguish this case and perhaps a few other exceptional cases from time to time from the normal situation in which decisions "will almost inevitably leave some party or interest dissatisfied".
This is a real problem. I do not disguise from the House that a decision of the kind asked for in this case could set for the Government, as I think my predecessors would have agreed or admitted, difficult precedents. One would then be faced with many cases in which to consider whether the normal rules should be set aside because of special exceptional circumstances in the case in question.
The question of alternative proposals and the cost is not a satisfactory guide. Indeed it was the previous Government's policy, and it is ours, to adopt procedures which would not and should not involve objectors in the expense of producing alternative proposals.
Mr. Anthony Stodart: Does the hon. Gentleman agree that it is most unusual for a planning submission to go to the Parliamentary Commissioner?
Mr. Millan: It may be unusual, but it is open for any Member of Parliament, on behalf of any of his constituents in a case in which objectors may be dissatisfied with the Secretary of State's decision, to put the case to the Parliamentary Commissioner. I suggest that if in this case expenses were awarded there would be many cases going to the Parliamentary Commissioner. That would be a matter for Members of Parliament, but it is an an example of the precedent that this case would be likely to involve.
For these reasons, taking the whole generality of the case, because the way that the case was handled by the previous Secretary of State has not been demonstrated to involved maladministration, and considering the possible precedent which would follow from this case if we were to set aside the normal rules that successive Governments have found to work adequately in these difficult cases, can see no prospect—
The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock.

NATIONAL FINANCE
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Preamble
The House met at three of the clock: the LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop or Birmingham.
Lord Cohen of Birkenhead—Took the Oath.

MESSAGE FROM THE QUEEN
LORD MACLEAN: My Lords, I have the honour to present to your Lordships a Message from Her Majesty the Queen, signed by her own hand. The Message is as follows:
"I have received your Address praying that the Ministry of Posts and Telecommunications (Dissolution) Order 1974 be made in the form of the draft laid before your House. I will comply with your request".

THE LORD CHANCELLOR: LEAVE OF ABSENCE
THE LORD CHANCELLOR (LORD ELWYN-JONES): My Lords, I should like, if I may, to take this opportunity of acquainting your Lordships with the fact that I have accepted, with the Queen's approval, an invitation from the President of the Consultative Assembly of the Council of Europe to attend a ceremonial sitting of the Assembly in Strasbourg next Monday, May 6, to celebrate the 25th Anniversary of its foundation. Similar invitations have been extended to the Speakers and Clerks of all the Parliaments of the Member States of the Council of Europe. I hope, therefore, that your Lordships will agree to grant me leave of absence for this purpose for two days, Monday and Tuesday of next week, May 6 and 7. I shall be accompanied by the Clerk of the Parliaments.

MEALS ON WHEELS STUDY
3.9 p.m.
THE EARL OF SHANNON: 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 the report that Leeds University is to spend £67,500 on a study of the Nottinghamshire meals-on-wheels service is correct; and, if so, how much of this money comes from public funds.
LORD GARNSWORTHY: My Lords, if the financial resources are forthcoming, the Catering Research Unit of the Department of Food and Leather Science at Leeds University intends to undertake this research. So far, Nottinghamshire County Council has agreed to provide one-third of the estimated cost.
THE EARL OF SHANNON: My Lords, I thank the Minister for that reply. May I ask him whether Her Majesty's Government consider that expenditure of this nature is justified at this moment?
LORD GARNSWORTHY: My Lords, the universities are free to determine for themselves how they expend their funds. So far as the Government's position is concerned, no formal request for support has been made up to this moment. Therefore, at this moment there is no question of Government expenditure.
THE EARL OF SHANNON: My Lords, while thanking the Minister for that further reply, am I to understand that no public money is involved?
LORD GARNSWORTHY: My Lords, there is a point at which we must recognise that local authorities are free agents and ought to be so, because if this is a field in which they believe research can be usefully undertaken it can be of advantage not only to Nottinghamshire but to other local authorities as well.
LORD DERWENT: My Lords, I think the Minister said that two-thirds of the cost would be paid if the money was available. May I ask from where it might be available?
LORD GARNSWORTHY: My Lords, I stated that one-third was being provided by Nottinghamshire County Council. As to where the other two-thirds may come from, I am in no position to give any information on that to-day.
LORD DERWENT: My Lords, is the noble Lord saying that he does not know whether two-thirds will come from the Government?
LORD GARNSWORTHY: My Lords, I am saying precisely nothing.
THE EARL OF LAUDERDALE: My Lords, if the Government have received no formal request for funds, may I ask whether there has been any informal inquiry about the possibility of Government funds?
LORD GARNSWORTHY: My Lords, it would be surprising if I said that I was aware of any informal request. I have stated that no formal request has been made and that is the position.
THE EARL OF LAUDERDALE: Then, my Lords, I take it that an informal request has been made?
LORD GARNSWORTHY: Personally, my Lords, I would take nothing for granted.
BARONESS LEE OF ASHERIDGE: My Lords, may I ask the Minister to keep in mind that the concept of independent autonomous universities is very important? Governments and Ministers come and go and there are various changes all over the world, but we must not expect that the decisions made by independent autonomous universities will always meet with our 100 per cent. support. However, is it not important that we should keep this independent structure in our country?
LORD GARNSWORTHY: My Lords, I am very grateful to my noble friend for what she has just said. I had hoped that I made the position quite clear, but I am grateful that she has dealt with the matter rather more fully than I did.
LORD HAILSHAM OF SAINT MARYLEBONE: My Lords, while accepting that a decision by the University on what to do with its own funds is entirely independent, may I suggest that should the noble Lord be in a position at some stage to say something to the House about the special use of Government funds for this purpose, surely that is a matter about which the Government would be responsible to Parliament.
LORD GARNSWORTHY: My Lords, I had hoped that I had made it quite clear that at this time no special Government funds had been allocated for this purpose.
LORD SEGAL: My Lords, can my noble friend say what part of this amount is to be expended on the cost of the meals?
LORD GARNSWORTHY: My Lords, I cannot answer that question without notice. I should think that a very great deal of time and expense might be unnecessarily involved in attempting to answer that question at this point of time.
LORD DAVIES OF LEEK: My Lords, is my noble friend aware that some of us believe that it may have been wiser, before we started to knock this project, to see with what depth the University intended to look into the problem; because there are biological, health, digestive and other problems connected with the whole distribution of these meals.
LORD GARNSWORTHY: My Lords, I think that we ought not to underestimate the possible and, indeed, probable value of such an undertaking as is here proposed; that is, without any commitment at all in regard to financial support.

HOME DIALYSIS: PATIENTS' HEATING EXPENSES
BARONESS BROOKE OF YSTRADFELLTE: 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 Maesty's Government whether the Department of Health and Social Security offer any help to home dialysis patients for meeting the heavy expense of heating home extensions or mobile units in which treatment is carried out.
LORD WELLS-PESTELL: My Lords, the noble Baroness will know that as from April 1 last, when the National Health Service was reorganised, the Area Health Authority has been authorised to meet the cost of special heating of the dialysis room.
BARONESS BROOKE OF YSTRAD-FELLTE: My Lords, while thanking the Minister warmly for that most satisfactory reply, which must be one of the first benefits to emerge from the recent reorganisation of the National Health

195
Service undertaken by the last Government, may I ask him whether this indulgence will be available on a national basis, and whether the coming increases in the cost of electricity will be included in the allowances which are being made?
LORD WELLS-PESTELL: My Lords, with regard to the second part of the noble Baroness's supplementary question, I cannot say at this stage, but it is estimated that the cost of special heating for each patient will work out at between £25 and £45 per annum. Presumably there is a sufficient margin between the two figures to take into account certain increases in electricity charges.

EAST GERMANY: REPARATIONS TO NAZI VICTIMS
LORD JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is present position with regard to the German Democratic Republic's payment of reparations to the victims of Nazi persecutions in East Germany.
THE PARIAMENTARY UNDER-SECRETARY OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD GORONWY-ROBERTS): My Lords, compensation for victims of Nazi persecution was one of the questions raised during the preliminary talks on outstanding financial and property questions between the United Kingdom and the German Democratic Republic held in East Berlin on April 17 and 18. During the talks, East German officials reaffirmed their Government's public position; namely, that the G.D.R. considers that it has fulfilled its legal and moral obligations in this respect. We made it clear to the East Germans that we shall wish to revert to this subject in subsequent negotiations.
LORD JANNER: My Lords, I thank my noble friend for his reply. In view of the horrific experiences that these unfortunate victims had at the time of the Nazi régime; in view of the fact that East Gemany has in fact a large amount of money and property which belongs to
196
the victims of Nazi persecution: and in view of the fact that a considerable period has now elapsed and that in the near future people are likely to die as a consequence of the kind of treatment that they then received, would my noble friend be good enough to impress upon the Republic that on humanitarian grounds there is an obligation on their part to meet the claims, not only of people who are British nationals but of nationals throughout the world?
LORD GORONWY-ROBERTS: My Lords, these are precisely the points which we have constantly pressed on the East German authorities. In our last discussions with them, on April 17 and 18, our delegation made it absolutely clear to the G.D.R. that we consider they have a moral obligation to make good, in so far as it can be made good, the wrong suffered by many people in their territory during the Third Reich. We shall repeat our position as strongly and as firmly as possible in every subsequent discussion with this Government.
LORD JANNER: My Lords, I thank my noble friend.

COMMERCIAL TRAFFIC ON CANALS
3.19 p.m.
LORD DAVIES OF LEEK: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what consideration and encouragement is being made to increase commercial traffic on the canals.
LORD GARNSWORTHY: My Lords, the British Waterways Board are always seeking greater use of their canals for freight carrying. Her Majesty's Government would welcome any scheme for canal development for freight carrying which can be shown to be economically and socially desirable.
LORD DAVIES OF LEEK: My Lords, while thanking my noble friend for that partly constructive Answer, may I ask him whether the Government will not only encourage the commercial use of canals but would now be prepared to conduct some research into it, because such commercial use is increasing in the

197
Midlands? Finally, although it may not be relevant, would my noble friend draw the attention of Her Majesty's Government to a fascinating speech by a noble Baroness this week on fish farming? Some sections of the canals could be used commercially for fish farming and for increased fishing facilities.
LORD GARNSWORTHY: My Lords, I will see that the attention of my right honourable friend is drawn to the remarks of my noble friend.
VISCOUNT ST. DAVIDS: My Lords, I wonder whether my noble friend would consider one proposal which could possibly increase the use of canals for cargo carrying; that is, to arrange for a study on cargo carrying to be carried on centrally by a Government body? At the moment the only studies being carried out are those done by the British Waterways Board, which controls only a part of the waterway system and not necessarily that which is carrying the most cargo. A large number of—
SEVERAL NOBLE LORDS: Question!
VISCOUNT ST. DAVIDS: My Lords, I asked my noble friend whether he would consider the creation of a central body under Government auspices rather than leaving such research to the British Waterways Board.
LORD GARNSWORTHY: My Lords, the Department of the Environment is currently considering the report of the Inland Waterways Association entitled Barges or Juggernauts. It covers a very wide field and indeed all the points which have been raised by my noble friend. Comments will be made as soon as possible by the Department.
BARONESS STOCKS: My Lords, may I ask whether Her Majesty's Government are giving any assistance in the form of public money to those voluntary groups who are now engaged in clearing portions of canals?
LORD GARNSWORTHY: My Lords, I regret that I had not thought of obtaining detailed information on that point. If my noble friend will put down a Question, we shall be delighted to answer it.

BUSINESS OF THE HOUSE
THE LORD PRIVY SEAL (LORD SHEPHERD): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That leave be given to the Lord Alport to advance his Unstarred Question from Tuesday, May 14 to Monday, May 13.—(Lord Shepherd.)
On Question, Motion agreed to.

DEPUTY CHAIRMAN OF COMMITTEES
3.22 p.m.
LORD SHEPHERD LORD SHEPHERD rose to move, That the Lord Diamond be appointed, pursuant to the First Report from the Select Committee on the House of Lords Offices, Deputy Chairman of Committees for this Session. The noble Lord said: My Lords, I beg leave to move the second Motion standing in my name on the Order Paper. Your Lordships will know that the Offices Committee recommended the creation of a new post of a paid Deputy Chairman of Committees. The Report of this Committee was agreed to by your Lordships' House on Tuesday and, as your Lordships will see, my noble friend (if I may still so call him) Lord Diamond has agreed to be the first holder of this new post. I am sure that the whole House will welcome this. His principal duties will be to take the chair of the new European Communities Committee; but as Deputy Chairman of Committees he will deputise for the noble Earl, Lord Listowel, in connection with many other duties which the Lord Chairman of Committees may ask him to undertake.
Moved, That the Lord Diamond be appointed, pursuant to the First Report from the Select Committee on the House of Lords Offices, Deputy Chairman of Committees for this Session.—(Lord Shepherd.)
LORD WINDLESHAM: My Lords, I should like to support this Motion. As those of your Lordships who took part in the long debate in the Procedure Committee before the Dissolution of Parliament will recall, this is an extremely important new post. With the long experience of the noble Lord, Lord Diamond, and in view of the high regard in which

199
he is held in all parts of the House, all noble Lords will be in his debt for taking on this work. I can assure the noble Lord that he will have the support of all Members on this side of the House in his new task.
LORD BYERS: My Lords, I should just like to add that we, from these Benches, have exactly the same feeling. I think that the House is indebted to the noble Lord, Lord Diamond, for the courage he has shown in shouldering this very onerous office.
On Question, Motion agreed to.

RABIES BILL
Brought from the Commons, read 1a; and to be printed.

CONSUMER CREDIT BILL [H.L.]
3.24 p.m.
LORD SHEPHERD: My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Shepherd.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 37 [Death, bankruptcy etc. of licensee]:
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): Before I call Amendment No. 43, I should point out to the Committee that if it is agreed to I cannot call Amendment No. 44.
LORD ABERDARE LORD ABERDARE moved Amendment No. 43:
Page 19, line 17, leave out subsection (2).
The noble Lord said: I should like to say that I have no intention of trying to move this Amendment into the Bill, so the noble Lord, Lord Airedale, may be assured that we shall reach his Amendment No. 44. Amendment No. 43 is a probing Amendment relating to Clause 37(2), which states:
"… regulations may specify other events relating to the licensee on the occurrence of which the licence is to determine."
This Amendment seeks to ascertain what the Government had in mind in regard
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to the "other events" on the occurrence of which the licence is to determine. I beg to move.
LORD JACQUES: The original Bill divided the events into two categories. The first is where a licensee dies, is adjudged bankrupt or becomes a patient within the meaning of Part VIII of the Mental Health Act 1959, and that category is also in the present Bill. But the original Bill also laid down other events, which were somewhat different. These included the situation where a liquidator, receiver or manager had been appointed to a body corporate or unincorporated body of persons; where the Official Receiver became liquidator of a licensed company; where a trustee was appointed under or in pursuance of a composition or scheme of arrangement to which Section 16 of the Bankruptcy Act 1914 applies, or a deed of arrangements to which the Deeds of Arrangements Act 1914 applies.
This is a pretty comprehensive list, but there is still doubt as to whether it is sufficiently comprehensive. At the moment it is not intended to add to this list and it is considered preferable to specify events in regulations, so that they may be varied in the light of experience rather than that we should attempt to mention every eventuality in the text of the Bill. With that explanation, I hope that the Amendment may be withdrawn.
LORD ABERDARE: I am very grateful for that explanation, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD AIREDALE LORD AIREDALE moved Amendment No. 44:
Page 19, line 21, leave out ("determine") and insert ("terminate").
The noble Lord said: We read in the first line of Clause 37 that a licence is to be terminated in certain circumstances. When we reach line 21 on page 19, we read that a licence "is to determine". When we were last in Committee I was reminded by the Minister of the importance of the consistency of a Bill. I do agree, because if Parliament does not use the same word twice when it means the same thing there is always a danger that lawyers will start arguing that Parliament must have meant something different, because if Parliament meant the

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same thing Parliament would have used the same word. I think the same word is really intended in both cases here: at any rate, the meaning is the same. I beg to move.
LORD JACQUES: I am still of the opinion that the Bill should be unambiguous and consistent. This Amendment improves the Bill and I have pleasure in accepting it.
On Question, Amendment agreed to.
Clause 37, as amended, agreed to.
Clauses 38 to 40 agreed to.
Clause 41 [Appeals under Part III]:
3.30 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 45:
Page 21, line 13, leave out ("on payment of the prescribed fee (if any), and").
The noble Lord said: I am very confident in moving this Amendment because it is certainly consistent and certainly improves the Bill, and I hope therefore the noble Lord will also accept this Amendment. We very much welcome the inclusion of this clause in the Bill giving an appeal to the Secretary of State. This matter was debated in another place under the previous Government and strong feelings were expressed during the Committee stage on the fact that there was no appeal procedure. My honourable friend Mr. Heseltine (who was then in charge of the Bill) gave certain assurances that he would be considering that point. Though there is a right of appeal to the Secretary of State, it is only, "on payment of the prescribed fee". Admittedly "(if any)" follows those words. It seems to me unfair that a person who has a grievance, who feels that a decision of the Director General of Fair Trading is not correct and who has the right of appeal, should have to pay a fee for the privilege. I believe he should be able to appeal without having to pay a fee. I wonder whether there is a precedent for the charging of a fee for an appeal to the Secretary of State. It seems especially unjust if in fact he is given the benefit of the doubt and the Secretary of State allows his appeal. Therefore he has right on his side, and it seems unjust that he should have to pay a fee in order to establish that he
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is right. On the other hand, if he was wrong and lost his appeal, then under subsection (3) the Secretary of State may make a direction for the payment of costs by any party to the appeal. This would seem to be the fair way to approach it: to allow the person to appeal and then make it possible for the Secretary of State to allocate the costs to any party; in other words, to the party that had lost the appeal, as normally happens. I hope that noble Lords will feel able to agree that this is a good Amendment. I beg to move.
LORD JACQUES: I am personally in complete agreement with the noble Lord, and I have been authorised to accept the Amendment.
On Question, Amendment agreed to.
LORD WELLS-PESTELL: The purpose of this Amendment is to correct a misprint. Clause 32(5), not 31(5), empowers the Director to give directions authorising a licensee (whose licence is revoked or suspended) to carry into effect agreements made before the revocation or suspension. The item in the Table appended to Clause 41 gives the licensee the right to appeal to the Secretary of State against the Director's refusal to give such a direction. I beg to move Amendment No, 46.
Amendment moved—
Page 21, line 35, leave out ("31(5)") and insert ("32(5)").—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
LORD WELLS-PESTELL: Your Lordships have agreed on no fewer than eight occasions for the insertion of the word "standard" in place of "personal". With your permission, I will not go into the reasons again for that. I beg to move Amendment No. 47.
Amendment moved—
Page 21, line 38, leave out ("personal") and insert ("standard").—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
3.35 p.m.
LORD REDMAYNE LORD REDMAYNE moved Amendment No. 48:
Page 21, line 47, at end insert—
("Refusal to grant an The Licensee.") application, or the imposition of unreasonable conditions, under section 64(4).
The noble Lord said: Clause 64(4) was drafted particularly for the nine or so mail order agency houses to take account of the peculiar nature of their business, and provides that regulations in respect of their business may be made specially by the Director. I hope when we come to that clause I may say something about that. It seems to them that if they are accepted as a special case in the Bill, it is sensible that they should have a right to appeal against any regulations so made, and I beg to move the Amendment to that effect.
LORD JACQUES: This Amendment attempts to mix the water with the milk; we intend that the water and the milk should be kept entirely separate. The Table on page 21 of the Bill sets out the cases where there will be an appeal to the Secretary of State, who will appoint assessors to deal with it. The matters in which provision for appeal is made fall into two classes. One consists of decisions as to the fitness of a person to have a licence, and the other consists of decisions as to whether to allow enforcement of agreements made by, or on the introduction of, unlicensed traders. In both categories the facts of the particular case and the individual trader's conduct are highly relevant. In both cases the Bill lays down criteria for the Director's decisions. These are all concerned with licensing. It is a matter of vital importance when a licence is refused; it makes it impossible for a person who has entered a chosen profession to carry on in that profession. The decisions which are made in this field are semi-judicial decisions, and it was thought right that there should be an appeal to assessors appointed by the Secretary of State, and, indeed, on a point of law, to the High Court.
But under Clause 64(4) with which this Amendment is concerned, there is an entirely different position. Clause 64(4) empowers the Secretary of State to make regulations setting out circumstances in which the Director may release a licensee from the requirements in Clause 64(1)(b). The Director has to make an administrative decision, not a judicial one, as to whether and how a licensee can be exempted without prejudicing the interests of debtors or hirers. Because it is an administrative decision we feel that this
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is not a case where there should be an appeal to the assessors. If the Director General was to have all his administrative decisions questioned in this way his life would not be worth while. This does not mean that anyone who fails to get the concession—and that is all that is provided for in Clause 64(4), that somebody may ask for a concession—he has a right to appeal to the Secretary of State and the Secretary of State has the power within this Bill to give directions to the Director General. We think that that is the proper course.
LORD REDMAYNE: That seems very reasonable. Since I am not as familiar with this Bill as I should be, can the noble Lord tell me where the Secretary of State's powers are laid down?
LORD JACQUES: It is open to the Secretary of State under Clause 2 to give the Director directions as to the exercise of his powers under Clause 64(4).
THE EARL OF LIMERICK: I have listened carefully to the arguments of the noble Lord, Lord Jacques. He put them over very clearly. Would it be right to say that there is no case anywhere in the Bill where an appeal is allowed against administrative decisions of the Director? Is the noble Lord able to say that this is a distinction which is maintained throughout the Bill, and that appeals are granted only in the case of the not granting of a licence to the respective licensee, and there is no procedure elsewhere in the Bill for an appeal on administrative decisions?
LORD JACQUES: To the best of my knowledge and belief the only cases from which there is an appeal to the assessors appointed by the Secretary of State are those in the Table. In all other cases there is an appeal against the Director's administrative decision to the Secretary of State, and the Secretary of State can then give directions. There is this clear distinction.
LORD REDMAYNE: In view of what the noble Lord has said I beg leave to withdaw the Amendment.
Amendment, by leave, withdrawn.
Clause 41, as amended, agreed to.
Clause 42 agreed to.
Clause 43 [Advertisements to which Part IV applies]:
On Question, Whether Clause 43 shall stand part of the Bill?
THE EARL OF LIMERICK: This is purely an idea that I should like to mention. Clause 43 extends control over advertising, as was foreshadowed in the White Paper, to mortgage transactions exceeding £5,000. These transactions are distinguished by three features: they are generally the largest transaction undertaken by the individuals concerned; they are generally very long term, and thirdly, they are subject to change in interest rates at the discretion of the lender. The regulations will require disclosure of the true rate of charge. I want to raise the question, without now expecting an answer, of whether it was contemplated that the advertisements might perhaps make it clear that, unlike the generality of consumer credit agreements, the lender has the right to vary the rate. I think I am right in saying that many people who take mortgages are probably unaware of this right and are somewhat taken aback when it is exercised.
LORD SHEPHERD: I think I am correct in advising the noble Earl that the lender will be able to make it quite clear that the rates he is advertising are variable. Clearly it is to the advantage of the consumer that, if interest rates fall, as we all hope they will, he should take the benefit of the variable rates. My understanding is that in an advertisement of this character it will be made clear that the variable rate does apply.
Clause 43 agreed to.
Clauses 44 to 47 agreed to.
Clause 48 [Definition of canvassing off trade premises (regulated agreements)]:
3.44 p.m.
LORD WELLS-PESTELL LORD WELLS-PESTELL moved Amendment No. 49:
Page 24, line 24, leave out ("his employee or agent") and insert ("any other individual").
The noble Lord said: The purpose of this Amendment is to remedy a slight weakness in Clause 48 which defines canvassing off trade premises. Subsection (1) defines canvassing as attempting to persuade the consumer or "his employee or agent" to enter into an agreement
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during a visit for that purpose which has not previously been requested.
Under the present wording it might still be permissible for a salesman to go to an address, knowing that the householder was likely to be out, and canvass the householder's relations or friends without coming within the definition of canvassing by using the justification that they were not the consumer's "employees or agents". The Amendment accordingly brings within the definition of canvassing off trade premises members of the consumer's family and other persons who are not his employees or agents. The purpose of this Amendment is to remedy a slight weakness. I beg to move.
On Question, Amendment agreed to.
Clause 48, as amended, agreed to.
Clause 49 [Prohibition of canvassing debtor-creditor agreements off trade premises]:
3.48 p.m.
BARONESS YOUNG BARONESS YOUNG moved Amendment No. 50:
Page 24, line 39, after ("offence") insert ("other than in the case of individuals exempted by the Director.").
The noble Baroness said: The main purpose of this Amendment is to seek clarification of this clause and to remove what appears to be an injustice. If I understand it correctly, this clause makes it an offence to canvass debtor-creditor agreements off trade premises except for canvassing overdrafts on existing current accounts where the Director General has permitted this.
Under the clause only the clearing banks which allow current account facilities are to enjoy this exemption. It has been put to me that there are other financial institutions which also offer current account facilities and have done so for many years without complaint, and it seems difficult to understand why such institutions should not also enjoy an exemption by the Director General. I should have thought it more logical to grant exemptions based on the facilities offered, and the reputation of the credit granter, rather than on the basis of the kind of institution offering the facilities.
The purpose of the Amendment, therefore, is to make this possible. It will not, I believe, weaken the clause because no institution would enjoy exemption except

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by a decision of the Director General. I believe it would remove what must appear as an injustice to some financial institutions offering current account facilities which cannot be exempted as the clause stands but which are institutions of long standing. Although this may not necessarily be an argument that would appeal to noble Lords opposite, by extending the exemption it would help competition between the banks and other financial institutions, and in so doing could offer a better service ultimately to the consumer. I hope that this Amendment will be acceptable to the Government. It may well be that the Amendment is not correctly worded and if this is so I am all too familiar with the difficulty and would quite understand it, but I should be grateful to the noble Lord who is to reply if he would say that he will at least take it away and look at it. I beg to move.
LORD SHEPHERD: Despite the charm of the noble Baroness and still being a reasonably honest man, I regret that I cannot accept the Amendment. It raises an issue which we shall be discussing at greater length on later clauses dealing with those accounts which other noble Lords are seeking to have exempted from the provisions of this Bill. I should like to say, however, that it is not just the clearing banks who will have the opportunity of operating current accounts which are exempted from the provisions of this Bill. There could be quite a number of other important organisations which in the public mind do not rank as banks. If the Amendment were to be accepted, however, any creditor exempted by the Director would be able to canvass cash loans of any description to consumers at home or elsewhere. The Director would be under very great pressure to grant exemptions in a wide variety of cases with no guidance in the Act as to the sort of cases which would merit such exemption. Moreover, the canvassing of cash loans away from business premises, which is already prohibited to moneylenders at present, is not a practice we wish to see permitted.
The Crowther Committee recommended that the ban should be made general and, except in the special case of current account overdrafts, we can see no reason why general exemptions
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should be allowed. If credit businesses wish to approach potential customers for cash loans they can do so by advertising, direct mail and, if necessary, by telephone and obtain written consent for a visit.
This is an important protection for the consumer who, in the relaxed surroundings of his home, might otherwise be pressurised into unwise cash borrowing. This is something we do not wish to see and we believe that if the Amendment were put in the Bill it would make this possible. With that explanation, perhaps the noble Baroness will feel able to withdraw her Amendment. I think the philosophy of the noble Earl, Lord Limerick, when in his Department responsible for this Bill, might incline his sympathy towards me in this particular position.
BARONESS YOUNG: May I thank the noble Lord, Lord Shepherd, for that answer, and perhaps press upon him a further question? If I understood it correctly that other organisations will enjoy exemption, can he say what they are and how they will be chosen?
LORD SHEPHERD: They will be chosen by the Director General on a judgment as to how those organisations conduct their business. I. do not think one needs to advertise any particular company; but there are a number of organisations—I will mention one, United Dominion Trust—who operate current accounts and provide overdrafts. They are the kind of organisations which the Director General would consider. I drew the noble Baroness's attention to this only because she referred to the clearing banks specifically. It is not just the clearing banks who will have the opportunity of this exemption.
Amendment, by leave, withdrawn.
3.52 p.m.
LORD MAIS LORD MAIS moved Amendment No. 50A:
Page 25, line 10, leave out ("to overdraw") and insert ("to obtain credit")
The noble Lord said: May I first associate myself with the remarks made on Tuesday last by the noble Viscount, Lord Amory, and by Lord Seebohm, and express my appreciation to the noble Lords, Lord Shepherd and Lord Jacques, and their Department for the courtesy and assistance they have given us outside this Chamber when dealing with one

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or two rather complicated matters. The fact that these meetings were held may have facilitated the solutions to many difficult problems that might have arisen.
Turning to the Amendment in my name, the reason for raising this point—and I hesitate to do so in view of the reply given by the noble Lord, Lord Shepherd, to the last Amendment—is that the Bill as it stands makes it extremely difficult for a manager to discuss in detail the various alternatives available to the customer. It is essential that a bank branch manager, in particular, should feel reasonably free to discuss the affairs of the customer and recommend what is best for him. The clauses and the penalties in the Bill at the moment have significance; for the bank branch manager, as you know, often visits in their homes those customers who may not be able to visit the bank. Their homes do not qualify as business premises. Often the branch managers go in response to an oral request on the telephone. These visits are very useful, and are sometimes essential from the point of view of the customer. Let us take as an example the widow who has just lost her husband. She needs advice and is not in a mood to visit or is otherwise unable to visit a branch. As things stand at the moment we feel that the branch manager is in some difficulty over giving people advice without committing an offence. The manager would be able to agree to an overdraft on an existing current account but not to borrowing being taken on a loan account. The latter many customers might prefer and it may be in their own interests. Similarly he would be unable to suggest financial assistance at all to an existing customer who had only a deposit or savings account.
The Amendment seeks to remove these difficulties by allowing the manager to suggest methods of current account borrowing either by overdraft or by current loan account, whichever best suits the customer's needs. It does not seek in any way to allow him to advocate personal loans or to offer borrowing facilities to non-customers. While there is no evidence of abuses of existing bank practices in this connection it is accepted in the context of the Bill that such abuses would be unwelcome. We find it very
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difficult to differentiate between an overdraft account and a current loan account; they are so close to each other. We feel that this Amendment would enable a bank manager to offer the alternative. I hope that the noble Lord will give this Amendment serious consideration. It will give more flexibility.
LORD SHEPHERD: Would my noble friend agree that we also discuss Amendment No. 51B, which I believe goes with No. 50A? I am first of all grateful to my noble friend for his very kind remarks. I enjoyed the meetings. I believe they were very helpful—both to those who came to see me, and, particularly, to me, since then was the first time I began to understand the complexities of the Bill. But I am sorry that having rejected the Amendment of the noble Baroness, I cannot possibly do anything about meeting the point that my noble friend Lord Mais has put down. The effect of the Amendment would be to enable the Director to allow by determination certain creditors to canvass any credit drawings on a current account, for example, overdrafts and loan accounts. The canvassing of overdrafts has been allowed because a current account facility must already be existing. It would not make much sense to prohibit the taking of loans on a facility already opened; but a loan account is specially opened—just like a personal loan—and we consider a loan account should be treated on the same basis. What we are seeking here to do—and I recognise that it places some restriction or difficulty on a bank manager—is to protect the consumer, the potential borrower, in his home from being visited and canvassed (and perhaps pressurised, as we know has happened in the past) into taking loans of this sort. We think that the consumer or potential borrower should be protected.
For these reasons we do not wish to see loan accounts canvassed away from business premises. If a credit business wishes to approach a potential customer for a loan account away from business premises it can do so, as I said to the noble Baroness, by advertising and by direct mail. Since my noble friend mentioned the word "telephone", I may say that of course under the Bill it is now possible for canvassing and conduct of business to be done by telephone, in the

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sense of obtaining a written request for a visit in order to pursue the negotiations for a loan. I think that in the general context of the Bill, and of the principle behind it, it would be quite wrong for the Government to go any way further than they have in the general relaxation provided for the banks and other organisations who conduct current account and overdraft facilities.
LORD MAIS: I thank my noble friend for his comments. I still feel that there is some confusion between loan and current loan accounts. I know that this matter comes up again later and I will not delay the Committee by going through it twice; but there is little or no difference between the two. In both cases the interest is calculated on a daily basis; the customer can at any time close the account. It is completely flexible and there is virtually no difference between the two; but there are advantages to the customer sometimes in current loan accounts—and it is the current loan account that we are asking for and not loan accounts generally. Perhaps we could build on the collaboration that we have had from the noble Lord in the past few days and ask him to look at this again, so that perhaps at another pleasant meeting we might come to a satisfactory compromise.
VISCOUNT AMORY: The noble Lord, Lord Shepherd, has been patient in listening to this point being made; it has been made on several occasions. It is that in practice the difference between an overdraft and a current account loan is a very small one indeed. He is clearly scared that if he accepts this point he will be in trouble with loans generally; I am sure that that is his view. I wish he could have been persuaded that in practice these two things are very close together. So we are left still with the rather ridiculous situation that a bank manager off the premises can refer to overdrafts with the utmost purity, but should he mention the term "current account loan" he would be guilty of a great impropriety. That seems to us a rather absurd situation, but I think it is the situation and, if the Bill is to stand as it is, presumably it will mean that some very detailed instructions will have to be given to bank managers to keep them
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on the straight and narrow path here. I wish the noble Lord could have accepted what has been put so lucidly by the noble Lord, Lord Mais, that in practice the overdraft and the current account loan are in many cases almost identical.
LORD CLITHEROE: I do not actually have to declare an interest, but I think I should remind the Committee that I was for many years the director of a bank. I no longer am. However, I feel very sympathetic indeed towards the Amendment which has been moved and also to what my noble friend Lord Amory has said. I hope that the noble Lord, Lord Shepherd, who I know has taken a great deal of trouble to get this matter right, will give it further consideration.
LORD SEEBOHM: I very much hope that we may have a further discussion on this question when we come to Amendment No. 62 on Clause 74, because this is something upon which I personally should like to express my views at some length. I do not think that in speaking on this particular Amendment it is the time to do it, but may we have an assurance that we shall have time on Amendment No. 62 to discuss the subject again? I should as a practising banker like to make some comments.
LORD SHEPHERD: I would assure the noble Lord that if there is an Amendment on the Order Paper it will be called, even though we may have discussed it in some detail earlier on, so far as the general principle is concerned. I am sorry; I should like to be conciliatory, but I cannot undertake to give the Committee an assurance of further consideration in the sense that I have any possible hope of changing either my view or that of my right honourable friend, the Secretary of State for Prices and Consumer Protection. I think that noble Lords who say there is very little difference between a current account and a loan account in terms of an ordinary consumer are being less than fair. A current account is normally an account with an active life. Money is being put into it, and drawings are taken from it. Sometimes it deliberately goes into an overdraft facility, and sometimes it may do so by accident. But it is an account in which there is regular contact between the debtor and the creditor. The loan

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account is quite different. It arises as a consequence of specific negotiation; and in the general interest of consumers, recognising what loan accounts could be and the problems they have caused in the past, these two things should be treated quite separately.
I do not believe there are many bank managers who are going to be inconvenienced by the provisions in this Bill, by being prevented from discussing at a golf club or perhaps at some cocktail party whether their client wishes to have a loan account. It is quite true that it would be illegal for a manager to canvass but if in a discussion on an overdraft the client were to say, "Is there another procedure by which we can overcome my temporary financial difficulties?", then I am sure it would be right for the bank manager to say: "Yes, there is. Come to my office to-morrow morning and we will deal with the matter quite within the law." As I have indicated earlier, we are going to have a very full discussion on this question, and I would suggest that my noble friend Lord Mais should withdraw his Amendment, and not move Amendment No. 51B, and we can give the matter further consideration in the Committee later on. But I must be fair, frank and honest with him in saying that I do not offer him any hope at all in the subsequent Amendments.
LORD MAIS: In view of the noble Lord's assurance that we shall have an opportunity later to discuss the matter, I beg leave to withdraw Amendment No. 50A, and I do not propose to move No. 51B.
Amendment, by leave, withdrawn.
THE EARL OF LISTOWEL: Before I call Amendment No. 51, I should mention to the Committee that if this Amendment is agreed to I cannot call Amendment No. 51A or Amendment No. 51B.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 51:
Page 25, leave out lines 12 to 16 and insert—

"(a) the Director has determined that current accounts of that description kept with the creditor are excluded from subsections (1) and (2), and

(b) the debtor already keeps an account with the creditor (whether a current account or not)."

The noble Lord said: Clause 49(3) allows the canvassing, off trade premises, of overdraft facilities on existing current accounts where the Director has made a determination allowing this. The Amendment, which has been made in response to representations from the Committee of London Clearing Banks, slightly extends the exemption to apply in any case where the person canvassed already has an account with the creditor, whether a current account, a deposit account, a savings account or any other sort of account. This will allow the clearing banks and large finance houses, whose current accounts are likely to be exempted by the Director, a little more flexibility in dealing with their customers. Bank managers will be able to raise the question of overdraft facilities with their customers when meeting them socially or at home without having to ask themselves whether the customer concerned has a current account. Any abuse, which is most unlikely, could always be controlled by the threat of withdrawal of exemption by the Director. I beg to more.
On Question, Amendment agreed to.
Clause 49, as amended, agreed to.
Clause 50 [Circulars to minors]:
On Question, Whether Clause 50 shall stand part of the Bill?
4.9 p.m.
BARONESS YOUNG: May I raise two points on this clause, for clarification? I am absolutely in favour of the principle behind this clause, which, as I understand it, is that minors should be protected from unsolicited advertisements encouraging them to enter into credit agreements. I understand that minors are defined as those persons under the age of 18. My first point is that in subsection (2) of this clause it appears to be assumed that anyone in a school or other educational establishment for minors is under 18, when in fact in many secondary schools there will be boys and girls of 18 and over. Is it therefore to be an offence to send advertising material to them; and, if it is, is it true that it is not an offence to send it to them if they are not in a school? We should be quite clear about this.
The second point I would raise is a more general one. What about the case of a very young married couple? We

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have read in the newspapers recently of several cases of 16-year-old girls still at school but married, and of course there are other examples of couples aged 16 or 17 who are married. They are exactly the kind of people least likely to have any capital at all and most likely to need credit facilities of some kind. Are they to be denied them if they receive any information by post, and does there not appear to be some inconsistency in that the law allows them to get married but will not allow them to receive this kind of material through the post, though they may receive it in other ways? I should be very grateful for the noble Lord's comments on these points.
LORD SHEPHERD: If there is any inconsistency, it has been operating since 1892 because Sections 2 and 3 of the Betting and Loans (Infants) Act 1892 containing these provisions, have been extracted and placed into the Bill, and I am advised that no difficulty has as yet arisen.
In regard to young married couples—I am not going to be led into the question whether it is right or wrong, but it is a fact—if a married couple under 18 wish to receive advertising material they can do so by asking for it. In regard to the sending of advertising literature to places where minors are to be found—for instance, schools—but where there are adults, I am sure that the Committee would not wish advertising material for credit to be sent indiscriminately to such establishments, but the staff or those over the age of 18 may obtain such material by request. I am quite certain that if they need credit or feel that they can sustain the high interest charges, they will be able to find sources from any newspaper which advertises.
The general feeling is that we should maintain the position which has operated satisfactorily since 1892 but, if the noble Baroness has any particular problems or has heard of any, I should be very willing to consider them. However, the Department is not aware of any difficulties and this principle is based on an Act which has seen considerable service.
BARONESS YOUNG: I thank the noble Lord, Lord Shepherd, for that reply. Since the Act of 1892 the age of majority has
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come down from 21 to 18, and it is for that reason that this point arises. I entirely accept the general thesis that it is not a desirable practice to send unsolicited material to minors, but of course we now have this unusual situation that, by law, we have adults—and possibly married adults—in school.
LORD SHEPHERD: True. If the noble Baroness is aware of any difficulties I shall be very ready to consider them; but, as I say, when I considered this matter the Department was not aware of any problems.
Clause 50 agreed to.
Clauses 51 to 56 agreed to.
Clause 57 [Withdrawal from prospective agreement]:
4.15 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 52:
Page 28, line 3, leave out from ("(whether") to end of line 4 and insert ("at the time it is received by him, and if not so received shall be ineffective.")
The noble Lord said: I think it might be convenient for the Committee to consider Amendment No. 58 which also stands in the names of my noble friend Lord Aberdare and myself. The Amendments are concerned with the practicalities and with fair play. I think that the point which they seek to make is apparent by comparing subsection (3)(a) and (b), and the question must arise why there should be these differences of treatment. In the one case notices shall take effect at the time of posting and in the other they are to take effect at the time of receipt. Of course there is a much more fundamental difference—namely, that, as the Bill stands, notice of withdrawal by a debtor from a regulated agreement is deemed to be received at the time of posting whether or not it is actually received by the creditor at all. How can anyone react to a communication which he has not received? What would prevent the debtor, who for whatever reason decides later that he wishes he had given notice of withdrawal when in fact he gave none, claiming that he had posted a letter within the cooling-off period? The same point arises on Clause 69, the subject of Amendment No. 58. In respect to that clause it is probably more important,

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since it deals with the cancellation of an executed agreement within the cooling-off period.
At this stage, I am asking for elucidation only of what, prima facie, are quite unreasonable provisions. I note that Clause 88(3) gives what seems to be a much more normal provision. I do not immediately see the reason for these distinctions, nor do I see why as a minimum some proof of posting—a certificate of posting perhaps by recorded delivery—should not be demanded. I appreciate the underlying thought that it is more important that the right of genuine cancellation should not be lost than that the lender should have the right of enforcement against an unwilling borrower. However, as I have said, as the Bill is now drafted and bearing in mind the far-reaching effects of the cancellation provisions in Clause 69, I believe that it now requires too little evidence that the lender has genuinely sought to cancel within the statutory period. I beg to move.
LORD SHEPHERD: I thank the noble Earl. I think he will agree, if he casts his mind back, that there is a similar provision dealing with cancellation in the Hire Purchase Act 1965. This Amendment would, as the noble Earl says, alter the provisions so that the debtor's notice of withdrawal would only have effect from the time when it was received by the creditor. It would put the debtor in the same position as the creditor whose notice of withdrawal under subsection (3)(b) only takes effect when it is received by the creditor and it would also bring the debtor's position into line with what it would be under the normal law of contract.
The reason for the debtor's special position with regard to the service of a notice of withdrawal is to ensure that he is fully aware of the exact moment from which the withdrawal takes effect. As well as being in writing, the notice may also be given orally—that is provided for in Clause 57(2)—and it may be given to the negotiator as well as the creditor. In each case, the debtor will know the exact moment from which his rights and duties under the withdrawal provisions take effect. This is necessary if, for example, the goods have been delivered to him in advance of the agreement being made. He has a duty to take
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reasonable care of them for 21 days from the date of withdrawal, as provided for in Clause 72. If the debtor's posted withdrawal notice took effect only from the date of its being received, the debtor would not be certain when his rights and duties under the withdrawal notice dated from. He could be kept in suspense for a considerable time, and it would be open to an unscrupulous creditor to deceive the debtor as to when the withdrawal notice was received.
This provision is important in two areas—the withdrawal from a second mortgage (Clause 58), and withdrawal from an agreement not yet fully executed. In both cases the creditor can protect himself by not providing the credit until the document has been fully executed. I hope that the noble Earl will feel that although this provision appears to be rather one-sided as between a creditor and a debtor, it is a necessary provision in the consumer's interests but at the end of the day it must be for the creditor to make up his mind on the negotiations—and the client with whom he is conducting his negotiations. Having said that, if there are any genuine difficulties that the noble Earl may have in mind, I should be very happy to look at them; but as I said earlier, these provisions are in the Hire Purchase Act 1965. We are not aware of any great difficulties; we think that it is right in the consumer's interests to follow the experience of the 1965 Act and to include these provisions in this legislation.
THE EARL OF LIMERICK: I am naturally grateful to the noble Lord for that explanation. I do indeed recognise the antecedents of this provision. I should like to study more carefully what he has said. I have no intention of pressing this Amendment; I have no specific instance in mind, but I should be grateful if he could just give a little more attention to this question—that a debtor, if he wished to withdraw from an agreement after the conclusion of the cooling-off period, might come forward and say, "I posted a notice of cancellation. Evidently you never received it". I believe that there is a potential difficulty here, although as I say, I have no evidence that it has become actual. If the noble Lord is able to think a little more about that, I should be quite happy now to withdraw the Amendment.
LORD SHEPHERD: I know that my Department is in continual touch with the various organisations in this industry. I will see that they put that specific question to those concerned and will see what advice they can give me upon it.
Amendment, by leave, withdrawn.
Clause 57 agreed to.
Clauses 58 to 60 agreed to.
Clause 61 [Signing of agreement]:
4.23 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 53:
Page 29, line 30, after ("signed") insert ("or sealed")
The noble Lord said: When I first put this Amendment down it was to remedy what I thought was an omission, in that there was no provision for a document to be sealed by a corporate body. But if I am right the Government's Amendment No. 115C will overcome that difficulty and it states that:
"(2A) Any provision of this Act requiring a document to be signed is complied with by a body corporate if the document is sealed by that body."
Therefore, I imagine that my Amendment is not necessary.
If I may take the opportunity to mention another point that arises upon this matter—I have not been able to give notice of this to the noble Lord, and if he will be kind enough to take it away, if he thinks that there is substance in it, I shall be very grateful—I should like to draw attention to the fact that it is not now normal practice for a mortgage to be signed or sealed by the lender. However, as I understand it, this clause would require a mortgage to be signed or sealed by the lender. The fact that it has not been so signed by the lender has not caused any problem and there has been no abuse, but there are very positive reasons against providing that a lender should sign the mortgage.
Under present practice, the borrower's solicitor does not release the mortgage once it has been signed by his client until completion, for the very good reason that by the mortgage the borrower pledges his property and undertakes to make payments. Naturally, then, the solicitor does not release such a document
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except in exchange for the lender's cheque. But if the Bill remains as it is, the borrower's solicitor will be obliged to release the mortgage to the lender before completion in order that the lender may sign it. I should have thought that solicitors would be very reluctant to do this, as they would take the view that it could be detrimental to the interests of their clients.
There is another reason why I think that it would create a difficulty. This is a very complicated reason and it is contained in a memorandum by the Law Society, who say that there are intricate and technical rules concerning the delivery of deeds and of escrows; the need for an agent to be authorised to deliver a document as a deed and other similar things which are so esoteric that under present practice they are normally ignored. But the provisions of this Bill would prevent these problems from being ignored and would create difficulties. I should be very grateful if the noble Lord could have a look at this point at a later stage, and see whether there is a difficulty when a lender has to sign in the case of a mortgage. I beg to move.
LORD SHEPHERD: In regard to the second point that the noble Lord raised I am advised that, in general, most mortgages are not covered by the Bill—and I think that he could refer to Clause 16. In other cases, I see no reason why a mortgage document cannot be separate from the agreement, thus getting over the difficulty that the noble Lord raised. However, I will certainly look at this matter and will write to the noble Lord. In regard to the purpose of moving the Amendment, may I say that we accept it in principle, but naturally, as usual, Governments are not particularly happy with the drafting. If the noble Lord will withdraw the Amendment, I will put down an appropriate Amendment for Report stage.
LORD ABERDARE: I am very grateful. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD ABERDARE LORD ABERDARE moved Amendment No. 54:
Page 29, line 43, after ("hirer") insert ("or his legal representative").
The noble Lord said: Subsection (2) of Clause 61 requires that in certain cases an unexecuted agreement must be sent to the debtor or hirer for signature, and that during a specified period the creditor or owner must not approach the debtor or hirer. This seems to overlook the fact that in many of the cases in question it is likely that the debtor or hirer will be represented by a solicitor. Where he is not represented, then I see the point of subsection (2). It gives him protection while he considers whether to sign the agreement. However, where the debtor or the hirer is represented, it would surely be usual to send the unexecuted agreement to the solicitor and not to the client, and the purpose of this Amendment is to suggest that the agreement could be sent either to the hirer or to his solicitor. I beg to move.
LORD SHEPHERD: I am advised that this Amendment is unnecessary. Where the Bill requires anything to be given to a debtor or hirer, this implicitly permits the document to be given to anybody who is, in fact, authorised by the debtor to receive this on his behalf. In particular this applies to a solicitor authorised to act for a debtor or hirer in a particular transaction.
The other matter is that this authority to act could be given to somebody else who is not a solicitor, and I am sure that the noble Lord will agree that if one were to include these words it would place that particular position in doubt. However, as I have explained, this Amendment is unnecessary.
LORD ABERDARE: I am very grateful, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 54A:
Page 30, line 1, leave out from first ("the") to third ("the") in line 3, and insert ("consideration period").
The noble Lord said: I beg to move this Amendment and to speak to Amendments Nos. 54B and 54C because they go together. At present, Clause 61(2)(c) prevents a creditor or owner approaching the proposed debtor or hirer for seven days after he has sent him an unexecuted land mortgage agreement for him to sign. The purpose of this is to ensure that the
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debtor or hirer is not pestered into signing, but it goes too far because it prevents the creditor or the owner from approaching him during the seven days, even though the debtor may have signed and returned the agreement in a day or so, thus specifying that he did not want to withdraw it. These Amendments allow the creditor or owner to approach the debtor or hirer either after seven days or when the debtor or hirer returns the signed agreement, whichever happens first. I beg to move.
On Question, Amendment agreed to.
LORD SHEPHERD: I beg to move Amendment No. 54B.
Amendment moved—
age 30, line 7, leave out ("giving of the copy under section 58(1)") and insert ("beginning of the consideration period ").—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD: I beg to move Amendment No. 54C.
Amendment moved—
Page 30, line 11, at end insert—
"(2A) In subsection (1)(c), "the consideration period" means the period beginning with the giving of the copy under section 58(1) and ending—

(a) at the expiry of seven days after the day on which the unexecuted agreement is sent, for his signature, to the debtor or hirer, or

(b) on its return by the debtor or hirer after signature by him,

whichever first occurs."—(Lord Shepherd.)
On Question, Amendment agreed to.
Clause 61, as amended, agreed to.
Clause 62 agreed to.
Clause 63 [Duty to supply copy of executed agreement]:
LORD SHEPHERD LORD SHEPHERD moved Amendment No. 54D:
Page 30, line 31, leave out ("where subsection (1) does not apply").
The noble Lord said: I beg to move this Amendment and also to speak to Amendment No. 54E as they go together and correct a drafting error. At present, Clause 63(2) requires a copy of an executed agreement to be given to a debtor or hirer within seven days following the making of an agreement in a number of cases, including a case where an agreement was already signed by the

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other party when it was sent to him so that it became an executed agreement when he signed it. We do not feel that it is necessary that debtors and hirers should get further copies in this case. We feel that it is sufficient for them to have a copy which Clause 62(2) requires to be sent to them, together with the agreement when it is sent to them for signature. These two Amendments give effect to this view. I beg to move.
On Question, Amendment agreed to.
LORD SHEPHERD: I beg to move Amendment No. 54E.
Amendment moved—
Page 30, line 34, at end insert—
("unless—

(a) subsection (1) applies, or

(b) the unexecuted agreement was sent to the debtor or hirer for his signature and, on the occasion of his signing it, the document became an executed agreement.").—(Lord Shepherd.)

On Question, Amendment agreed to.
Clause 63, as amended, agreed to.
Clause 64 [Duty to give notice of cancellation rights]:
LORD SHEPHERD: Amendment No. 54F is consequential on the Amendment I moved to Clause 63(2). I beg to move.
Amendment moved—
Page 31, line 8, leave out ("where section 63(1)") and insert ("except where section 63(2)").—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD: This again is to correct a drafting error. Clause 64(1)(b) deals with notices and not copies. It is therefore wrong for Clause 64(2) to refer to a "copy" under subsection (1)(b); it should refer to a "notice" under subsection (1)(b) and this Amendment corrects that error. I beg to move Amendment No. 54G.
Amendment moved—
Page 31, line 11, leave out ("copy") and insert ("notice").—(Lord Shepherd.)
On Question, Amendment agreed to.
LORD SHEPHERD: This again is a drafting Amendment consequential to the Amendment which I moved to Clause 63(2). I beg to move Amendment No. 54H.
Amendment moved—
Page 31, line 17, leave out ("in a case where section 63(1)") and insert ("except where section 63(2)").—(Lord Shepherd.)
On Question, Amendment agreed to.
4.36 p.m.
LORD REDMAYNE LORD REDMAYNE moved Amendment No. 55:
Page 31, line 21, leave out ("may") and insert ("notice").—(Lord Shepherd.)
The noble Lord said: It might be for the convenience of the Committee if I were to move Amendment No. 55 and at the same time discuss Amendment No. 56. As I said previously, subsection (4) of Clause 64 was inserted in the previous Bill as a result of a number of representations made by the Mail Order Traders' Association on behalf of the agency mail order houses and it was then accepted—and it is perhaps now accepted—that the existing methods of agency mail order give the consumers very real protection. The safeguards which their customers already enjoy could be summarised by saying that, first, no money is sent when the goods are ordered, unless it is required by Statute; secondly, that the consumer may have the goods at home on approval for 14 days, and thirdly, that the goods may then be returned through the local agent at no expense to the consumer.
There can be no sales pressure because the selling for a mail order house is done in a very localised way by a housewife acting as an agent and selling to only a handful of friends. Again the first instalment is paid only after the consumer has decided to make the purchase. The cash price is the same as the credit price and all goods are sold under an unconditional guarantee of quality, of which I have a very striking example here.
This subsection, as drafted, is of course only discretionary on the Director and I must say on behalf of these traders that if in fact the Director, under the Bill as drafted, should decide for any reason that regulations should not be made, it really would be catastrophic for their trading because it would destroy the whole existing system. Therefore in this Amendment I ask that the subsection should be mandatory on the Director.
Amendment No. 56 admittedly seeks to widen the discretion given to the Director

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in respect of this particular type of business so that he can extend his jurisdiction to the whole question of what is to be put in writing to the mail order consumer. The business is as it were, conducted on paper and as a trader myself I must say that it is a remarkably simple system.
I will not waste your Lordships' time with lengthy explanations, but this business is done by about nine major mail order houses. They have 3½ million agents, all of whom are housewives, dealing with 15 million customers, so that there are only five or six customers per agent. and the business—which runs at something like £750 million a year—is supported basically on five simple pieces of paper, of which also I have brought samples. There is the agency order form, to order the goods from the mail order house which the customer requires; there is the customer's sales form to complete the sale; there is the agent's return form to be used to send back the goods which the customer does not want; an agent's payment ticket which is simply to effect settlement of the agent's account and a customer's payments card which is the customer's record, which is very similar in type to a rent book or some such thing.
The important fact is that this paper does work and has done so for a great number of years. The prospect or the necessity for some alternative for very complex agreements to be handled by far from complex housewives is not really acceptable. Therefore, it is suggested in this Amendment that the existing systems, with some amendment no doubt, should be allowed to suffice and should take the place of the provisions of Clauses 60, 61, 62, 63 and 64 which are really designed for other purposes. Of course, I would make it clear that the other requirements of Part V, relating to antecedent negotiations and cancellations which would be in addition to the ability to return goods from a pool, would ail be binding as written.
In conclusion, I would mention that before rising to move this Amendment, a paper was put into my hands from the Consumers Association strongly objecting to the clause on the grounds that it was an unwarranted exemption for a particular class of trader. Now that I
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have explained, I hope lucidly, what a simple operation this is, I hope the noble Lord may see fit to accept these Amendments. I beg to move.
VISCOUNT HANWORTH: This Amendment goes far too far and, in my view, is against the whole spirit of the Bill. One may well have sympathy with the mail order method of trading but it is perfectly possible under the Bill for them to be exempt. They are trying to say that if they are exempted, if it is mandatory to exempt them from a great number of clauses of the Bill—and this really may go far further than the mail order people—it is in any case not necessary because presumably one trusts the Director of Fair Trading to take a sensible view here.
Another effect of this is that at present all credit sales are governed by the Hire Purchase Act 1965. The present Amendments would allow this time-proven protection to be done away with. There is no case whatever for making something which can be done by discretion far wider than it need be so that it can be abused in other areas.
LORD REDMAYNE: If I may interrupt the noble Viscount, I would make one point clear; namely, that for convenience I moved the two Amendments together. There is a considerable distinction, in relation to what the noble Viscount has said, between one Amendment and another.
4.43 p.m.
LORD SHEPHERD: My only criticism of the speech of the noble Lord, Lord Redmayne, is that it was put forward in such a conciliatory way that it hid the fact that if this Amendment were accepted, it would remove a very massive area of protection within the proposed legislation. Even for high-priced goods such as television sets priced at over £100 and sold by mail order, acceptance of this Amendment could take away from consumers, as the noble Viscount, Lord Hanworth said, the present protection they enjoy under the Hire Purchase Act 1965 for credit sales which are included in that Act—and mail order transactions are, of course, credit sales. We should recognise that the documentation provisions in the Bill are very important safeguards to the consumer, who can see precisely what he is letting himself in for,

227
what his rights are, what he will have to pay, and when. If he is approached in his own home he has a cooling-off period during which he can study the agreement and change his mind if he wishes.
The agency mail order companies argue that they are in a special position because their agents are non-professional housewives who are the friends and neighbours of the people from whom they take orders; they do not use high pressure sales techniques, but rely in the main on simply leaving a catalogue for the neighbour to look through at leisure. Just because the agency mail order sales process is usually friendly and informal, it does not follow that the consumer should not have the basic right of examining on paper what he is committed to. Such companies already go through some process of agreeing credit purchase, even if it is merely signing a customer's card retained by the agent, and there is no reason why this could not be modified to conform to the regulations under this Bill. I cannot advise the Committee to accept Amendment No. 56. As I have said, it would be a massive cut in the protection which already exists.
With regard to Amendment No. 55, which in a sense is a paving Amendment to Amendment No. 56, it would be wrong to seek to lay a mandatory duty on the Secretary of State in this matter. Under Clause 44, where the Secretary of State is required to make regulations as to the form and content of advertisements, and under Clause 60 where the Secretary of State is required to make regulations as to the form and content of agreements, this duty does exist, but both powers involve truth in lending and are central to the purpose of the Bill. We wish these parts to stand out as being important. There will always be advertisements and agreements, so regulations will always be needed.
All other extensive powers in the Bill are permissive. We do not consider it would be appropriate to single out the particular regulations which are the subject of this Amendment for special treatment. They are no more and no less important than many of the other powers elsewhere in the Bill. It may be that later in time there will be no area where regulations are needed to be made because
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methods of trading have altered. Therefore, it would be wrong in these circumstances that the Secretary of State none the less had to make regulations. However, I can give an assurance that these regulations will be made well before the documentation provisions of the Bill come into effect, so that companies in the mail order trade have plenty of time to apply to the Director for the requisite determination. I have spoken a little longer than I intended, but these Amendments were taken together, as suggested by the noble Lord, Lord Redmayne. I hope that he will be willing to withdraw Amendment No. 55 and not to move Amendment No. 56.
LORD REDMAYNE: I think it would be reasonable that I should do that. There is a certain nervousness that the regulations might not be drawn, but I do not believe that is a practical possibility from what the noble Lord has said. I would have thought that those who put these words into my mouth will agree that they do not particularly seek to question what is done in another place. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 64, as amended, agreed to.
Clauses 65 and 66 agreed to.
Clause 67 [Cancellable agreements]:
4.50 p.m.
LORD WELLS-PESTELL LORD WELLS-PESTELL moved Amendment No. 57:
Page 32, line 18, after ("land") insert ("or is an agreement for a bridging loan in connection with the purchase of land").
The noble Lord said: This is a drafting Amendment required to bring Clause 67(a) into line with Clause 58(2)(b), which provides specifically for a bridging loan for land purchase to be excluded, together with an agreement for land purchase, from the requirement to provide an opportunity for the debtor to withdraw from a prospective land mortgage; for example, a second mortgage. A bridging loan agreement is effectively an extension of the credit agreement for land purchase. The loan is usually needed quickly and the borrower is normally legally represented. It is therefore sensible to exclude this type of transaction from the cancellation provisions. This the Amendment does. Not to so exclude

229
them might hold up debtors from completing house purchases, which would not be in their interest. I beg to move.
On Question, Amendment agreed to.
Clause 67, as amended, agreed to.
Clause 68 agreed to.
Clause 69 [Notice of cancellation]:
4.52 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 59:
Page 33, line 25, at end insert—
("(6) Except with the consent of the creditor a notice of cancellation shall be for the hole of a credit.").
The noble Earl said: It would, I think, be helpful to consider together Amendments Nos. 59, 60 and 61 which all relate to partial cancellation by a debtor. This is a question I raised on Second Reading, when the noble Lord, Lord Jacques, practically invited these Amendments by replying—I think I have his words exactly—that there was a case for and case against and the matter could usefully be discussed in Committee. On April 9 the noble Lord explained the type of potential abuse against which this denial of partial cancellation is intended to guard. With the small minority of unscrupulous lenders I concede the risk that he defined. But for the vast majority, the reputable lenders and consumers who borrow in good faith, I cannot see that the suggested remedy would be regarded as satisfactory; namely, that the credit will not effectively be made available until the end of the 14-day cooling-off period. Human nature being what it is, the debtor or the hirer who, let us say for the sake of argument, is acquiring the use of a motor car under a cancelled agreement will want to drive it away as soon as possible after his decision has been made.
What, I wonder, will his reaction be if he is told, in effect, that he must wait a fortnight to protect himself against the risk that the financier will charge him too much, which, of course, a reputable financier would not do anyway, and then refuse a partial refund when he wakes up to it and seeks to cancel his agreement? I think his reaction would probably be to seek finance from a less reputable financier who gives him his accommodation at once without waiting for the expiry of the 14-day period and is prepared
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to run the risk, presumably at a higher rate of interest, that the occasional borrower may indeed insist on partial cancellation within the cooling-off period and cause him inconvenience, and cost him some money in unscrambling. Overall I do not think that that could be said to protect the consumer.
This is not a small or academic point, because the notices of cancellation covered by Clause 69 relate to all cancellable credit or hire transactions and also to link transactions. So that my object in moving these Amendments is to stir up the debate which was foreshadowed in our Second Reading. Hope springs eternal that the noble Lord in replying will say that he can accept them, but essentially I want to hear the counter-arguments more fully developed than was possible, naturally, in the context of our Second Reading debate, and to have an opportunity to consider whether a sizeable baby may not here be disappearing with the bath water. I beg to move.
LORD SHEPHERD: After this afternoon's debate I shall speak rather crossly to my noble friend Lord Jacques for having encouraged the noble Earl to put down these Amendments. As I suspect the noble Earl already realises, I shall have to ask the Committee not to accept them. The cancellation provisions of the Bill provide that in the case of a cash loan the debtor, on cancellation, is obliged to return as much as possible of the credit. If he returns less than the full amount he remains liable to pay interest on the balance. There is no obligation on the creditor to make the money available to the debtor before the expiry of the cancellation period and, therefore, if a creditor puts himself in this position we consider that he should take the risk. The Amendment would have the effect of making repayment of the whole of the credit a condition of cancellation, except with the consent of the creditor.
As set out above, the Bill provides that on cancellation of a cash loan the debtor (under Clause 71) is required to repay the whole or a portion of the credit, but if he does not repay the whole interest is payable on the balance. We admit that this is a very harsh provision, but it has been inserted deliberately to protect the consumer. As I said earlier, there is no requirement that the creditor must make

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the cash available before the expiry of the cancellation period, and he can, therefore protect himself. He can also make it available in a form that is not effective until the expiry of the cancellation period, for example, by a post-dated cheque.
The provision is designed to protect consumers against creditors who will thrust more money on them than they really require in the form of cash, knowing that they will be unable to resist the temptation to spend some of it. If then the consumer did so, according to the Amendment he would have effectively negated his entire cancellation right, unless the creditor agrees otherwise. We consider that this is one of the necessary provisions for the debtor and that no creditor need be harmed by it. At the bottom of my brief is the suggestion that the Amendment should be strongly resisted. I hope in those circumstances the noble Earl will withdraw this Amendment.
THE EARL OF LIMERICK: I think I achieved my object in provoking the debate and the fuller reply. That was the object of setting the Amendment down. The noble Lord, Lord Shepherd, gave a very carefully considered reply, which, naturally, I should like to study with the attention it deserves. Meanwhile, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 69 agreed to.
Clauses 70 and 71 agreed to.
Clause 72 [Cancellation: return of goods]:
4.58 p.m.
LORD REDMAYNE LORD REDMAYNE moved Amendment No. 61A:
Page 36, line 33, leave out subsection (9).
The noble Lord said: I shall try to be brief about this Amendment. I put it down because I do not quite understand what subsection (9) means. Does it mean that agreements or transactions for goods in categories (a), (b) and (c) are not cancellable, or does it mean that being cancellable the goods are not returnable? The point I am getting at is this. If I buy a Christmas turkey or a bottle of whisky by mail order, or if I set in concrete
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a greenhouse which I purchased by mail order, I can understand that it is sensible that they cannot be returned. But there is a duty to pay for them and the transaction cannot be cancelled without payment. Equally, because the goods are either consumed, in the case of foods, or, in a sense, damaged by being installed, the customer must rely only on the supplier's guarantee as to the quality of the merchandise. I beg to move.
LORD SHEPHERD: The clause lays down what is to happen to the goods following cancellation. The clause sets it fairly well out. There is a normal responsibility for a person who takes goods on credit. Subsection (9) makes clear that the possessor has no obligation to return perishable goods for which he does not have to pay or,
(b) goods supplied to meet an emergency …"
which must be paid for under the provisions of Clause 70(5)(b) or (c), goods which have been consumed or incorporated in any land or thing—for example, a central heating system which has been installed in a house, for which he again does not have to pay. The subsection further provides that no duty as to care, et cetera, shall lie on the possessor in respect of any perishable goods incorporated on his land.
I must say that when I saw this particular subsection I thought that this was particularly hard. But it was explained to me that the purpose of the subsection is to protect the consumer against an unscrupulous supplier who, having persuaded the consumer into a cancellable agreement, or his relative into a linked transaction, puts pressure on the consumer not to cancel the agreement by supplying goods before the end of the cooling off period in circumstances where it would be difficult for the consumer to return them. For example, frozen foods supplied under a transaction linked to a hire purchase agreement for the purchase of a deep freeze unit might be dumped at the consumer's door and partly consumed before they could be returned. A spare part of milking machinery might be supplied under a credit agreement during a breakdown, and could obviously not be returned as new if the debtor decided to cancel the credit agreement. The installation of a central heating system being purchased on credit might

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have been begun before the consumer decided to cancel, and the cost of removing it and making it good could by then become prohibitive. In all these cases we consider that it is impossible to return the goods, and in order to protect the consumer it is made clear that he is not required to do so.
I should have thought that here is rather the reverse of caveat emptor, "let the buyer beware "; it is a question here of the lender beware: make sure that when you enter into such an agreement that you are fully satisfied as to the standard of the potential borrower, and have a clear judgment on whether he will fulfil and execute his agreement before the handing over of goods. I think that this subsection is well known to the industry, and I should hope that they will be particularly careful, in the supply of goods to persons who wish to have a credit agreement like this, to ensure that they have a sound basis on which they could proceed for the lending of the credit.
LORD REDMAYNE: I think that that is very fair and is a very good argument, but it is taking a sledge-hammer to crack a nut. I wish this could be looked at again. On the argument which the noble Lord has used it is absolutely justifiable, but I suspect that there is a good deal of opportunity for a fairly well-worked customer's racket. Customers do operate rackets. Customers have terrible, had tempers on Boxing Day which are apt to show themselves on the days afterwards, and the noble Lord, Lord Jacques, knows that very well. I think this is something worth looking at again.
LORD SHEPHERD: I never refuse to do that. However, I never wish to mislead. I will certainly look with particular attention as to the consequences of the Hire Purchase Act 1964, which I think was re-enacted in 1965, where similar provisions apply. I am not aware of any difficulties, but I shall certainly consult with the Department.
LORD REDMAYNE: I am grateful to the noble Lord. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 72 agreed to.
Clause 73 agreed to.
Clause 74 [Exclusion of certain agreements from Part V]:
5.6 p.m.
THE EARL OF LIMERICK THE EARL OF LIMERICK moved Amendment No. 62:
Page 38, line 13, leave out paragraph (b) and insert—
"(b) a debtor-creditor agreement allowing the debtor either

(i) to overdraw on a current account or

(ii) to obtain a current account loan"

The noble Earl said: We come now to a matter of some substance. I would suggest that it would be convenient to consider Amendment No. 110 together with this Amendment. As it is the first time that I have spoken this afternoon on the subject of banks, may I briefly, and out of order, refer to an undertaking on our little difficulty on Clause 10 which was given by the noble Lord, Lord Shepherd. He said that he would put a letter into the post to me on Wednesday evening. I think that it should be equally on record that he was not only as good as his word but was even better. The letter was in my hands at half-past seven on Wednesday evening, and I am grateful.
This picks up the threads of the echoes on the earlier debates on Amendments Nos. 50 and 50A. Here we are not challenging a principle; we are looking at its application in practice, because this is a matter of substantial concern to clearing bankers. This concerns the proposed restriction of the facility on the current account loans which they widely and usefully make available to their customers. Can we look first at Amendment No. 110, which adds to Clause 184 the definition of a current account loan. This is done by reference to its two distinguishing characteristics: first, that interest is payable on a day-to-day basis; and secondly, that the debtor has the right to reduce or to cancel the loan without notice. It seems to me that these characteristics serve adequately to distinguish a current account loan from other forms of consumer credit, and these we agree should be regulated and documented in the ways prescribed by the Bill, particularly in Part V. It seems to me also that these characteristics identify the current account loan closely with the same features of the bank overdraft, which led to the recognition that overdrafts should be exempted from the documentation requirements.
I revert to Amendment No. 62, which would bring current account loans as well as overdrafts within the general exemption from the antecedent negotiation and documentation requirements of Part V. Why should these loans be so regulated if it is agreed that overdrafts need not be regulated? Why should the banks be driven, as they would be, to add complication and expense to the negotiations, and possibly to a large extent to cease altogether from conducting business on lines which have long been found useful by their customers, who are the consumers we seek to protect in this Bill? The only reason that I can think of—and it is a very respectable one—is that it is found that the exemption of current account loans would be open to abuses leading to the loss of the consumer protection which we are seeking for if they were so manipulated by unscrupulous credit givers other than the clearing banks. If this be so, as I assume, I should have thought that a little more time and ingenuity would have produced a solution which drew another reasonable, more helpful line, allowing this useful bank facility to survive.
I am aware that the Consumers' Association has sent out a circular to the effect that where abuse is possible a line has to be drawn somewhere, and I agree. But surely it is not beyond the wit of the draftsman to draw a line in such a way as not to inhibit this useful and widely used facility, which no one anticipates will be abused. The problem is a genuine one and it arises from the particular nature of the banker-customer relationship. I think we should here draw a distinction between the relationship of the customer and his bank manager, which is an on-going, day-to-day one, and the customer's relationship in one-off transactions which he may undertake with other lenders. The banker is, one might say, the residuary legatee for all the other financial transactions of his customers. They are reflected over his account; he borrows money from somebody else which is paid into the creditor's account and so on. Therefore it is a relationship which is different in kind and which demands a different consideration.
I should here like to draw attention to an exercise in the form of a flow chart which was drafted by the clearance banks
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for the guidance of their branch managers if the current account dealings with their customers fall, subject to the provisions of Part V of the Bill as it now stands. It is a most ingenious and interesting exercise, which is expressed in this flow chart form. Although it is longer than I care to remember since I played the game of Monopoly, I can only say that it reminds me vividly of that game. Having followed the various rules and exercised the options open to you, one ends up in the bottom right-hand corner with the statement that the banker goes to gaol and pays £200. But at least in the ordinary course of the game of Monopoly, when one passed "Go" one received £200. Here it is a question of payment. I also recall that in the game of Monopoly there is something called a chance card. I fear that if we get into this area of regulation on current account lendings, there will be an undesirable element of chance if one has to go into a post-mortem about some of these transactions.
We start off in our flow chart with the question: Is the banker soliciting someone to borrow money? We all know that in the normal social intercourse, at a cocktail party perhaps, the line between soliciting something and being solicited is a narrow one which many of us might find difficult to draw if the question were raised many months later: who raised the topic and in what connection? The last thing we want to do is to make offenders out of honest people conducting their business in an honest way, or to deny to the customers of the clearing banks what, by the use they have made of it over the years, they consider to be a useful and relevant service. I beg to move.
VISCOUNT HANWORTH: I must strongly oppose the Amendment. One entirely appreciates the necessity of exempting ordinary overdrafts. But a current account loan is a different matter altogether. So far we have not even heard from the noble Earl, Lord Limerick, why this causes banks such inconvenience. In many respects it is on all fours and certainly it is in competition with a number of other types of loan, for example personal loans and loans by finance companies and similar organisations. To exempt this weakens the Bill in an important way. I know

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that it can be argued there is not much difference between an overdraft and a current account loan. Nevertheless, there are only small shades of difference all the way along the line, and somewhere You have to draw that line.
I think that the Crowther Report was quite definite on this aspect and it would have considered that this Amendment represented a considerable weakening of the Bill. I cannot really see why such responsible organisations as the banks in England, as we know they are to-day, should not be delighted to show the lead on a measure which, at least, by conforming with the Bill gives the maximum information and the maximum protection to the borrower. I think that no case whatever has been made out for the Amendment and I hope that it will not be pressed.
LORD SEEBOHM: Perhaps I may try to make out that case. The noble Lord, Lord Shepherd, has made it clear what he thinks and I believe it is right and proper that I should be allowed to speak before he or the noble Lord, Lord Jacques, replies to the Amendment. Several arguments have been put forward. For example, why should this cause so much trouble for the banks? At no stage have the clearing banks talked of the trouble to themselves. They talk only about the millions of customers and the advantages to them.
I have for some time felt very concerned that the discussions that have been taking place, not only in your Lordships' House but outside in other places, have been discussions purely of terminology. I hope that the House will bear with me for a little time to see if I can clear this matter up. It is the one point where, I think, the Government have not felt able to meet us and to me it is really a question not of conflict but of terminology. There is a very strong similarity between the current account loan and the overdraft. They are not separate. They have one unique feature which I think is unlike any other form of lending I know; certainly it is miles away from the personal loan. As the noble Earl, Lord Limerick, has said, this feature is the charging of interest on a daily basis of interest rate which has fluctuated in keeping with the movements at a general level of interests, and is chargeable in arrears. In
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this way we have managed to ensure that our customers can get the cheapest borrowing in the market at any one time and that they will not have to pay any more money than is actually borrowed at any one time.
The contrast between that situation and the personal loan is, to me, completely different. The personal loan is where the interest is charged in advance and added on to the loan. I readily accept that in this particular case the customer needs every protection possible. What is more, there is genuine competition between banks, hire-purchase companies and other vendors of credit, and, in that case, there must be no differentiation whatsoever between the bankers and other people who lend on personal loan basis. I believe that personal loan is readily identifiable in all cases and that there is no confusion whatever in drawing a line between a current account loan and a personal loan. We all know that there is no provision for repayment on demand of a personal loan. We also know that there is no need to provide for all sorts of documentation on the current account loan at the present time. The personal loan quite rightly needs to be properly documented. At the moment there is no such documentation needed in current account loans.
To my mind, this Bill proposes legislation which will make an artificial distinction between the current account loan and the overdraft, which distinction does not in fact exist. We have in fact had extraordinarily good co-operation from the Government on this question of overdrafts, and I believe that if they gave it a little further thought they would realise that the current account loan should be treated in precisely the same way as the overdraft. On the question of terminology, I cannot help feeling rather sorry that, perhaps, after so many years, we have got used to talking about overdrafts and current account loans, whereas if we had talked about current account borrowing it would have covered the whole lot with very little more definition.
We are told that the current account loan is an entirely different animal, but the only point of difference which has been promulgated is that, in general, it is a premeditated lending, and that it is this capacity, the premeditation, which

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renders it necessary for inclusion within the full rigours of the proposed legislation. There is no substance in the suggestion that the consumer needs protection from the unscrupulous activities of a hitherto unknown lender in this case, because the ordinary loans are made available only to established customers, anyway. There is also no substance in the suggestion that ordinary current account loans are the subject of high-pressure salesmanship or any doorstep selling techniques. They are not even the subject of specific promotional advertising; they are merely made available to established customers on request.
In my view, it is quite illogical to contend that ordinary current account loans are more akin to personal loans than to overdrafts. Ordinary loans are but an extension of the overdraft arrangements. The interest system is the same, the terms of payment on demand are the same and the loan is made available through the medium of the current account, as is the overdraft. The true purpose of the distinction between a current account overdraft and a current account loan is to enable the less financially prudent to budget. There are all these points of similarity, and yet we are asked to accept that the artificial distinction of premeditation overrides all the other natural and positive distinctions between personal loans and ordinary current account loans.
The real point here, in effect, is: what is the consumer to gain or lose by this Part of the Bill? In terms of gain, I suppose it can be said that he will be provided in the future with some documentary evidence of his premeditation, but this seems to me to be the sum total of his achievement. In contrast, his losses are great. No longer can he rely upon an informal deposit of security with his bank as providing adequate collateral for his loan: he will be required yet again to call in person to sign the required documentation. No longer can his bank manager discuss with him the advantages of a loan in financial budgetary during the course of a visit to his home. This is not a stupid point at all. Many private customers who are ill can be seen only in their home, and it is there that these arrangements are very often made.
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Perhaps, however, it is in terms of cost that the consumer will lose the most. In the long run, it is inevitable that the additional requirements of literally millions of pieces of paper and the additional administrative manpower required must reflect themselves in the price to the consumer. It may well be said that these costs can be absorbed quite easily by a bank, but this can be said about every single cost. Sooner or later it has to come back on the consumer.
Bearing in mind that there are millions of accounts involved—somewhere between 16 to 17 million customers are borrowers on overdraft or current account loans—I would ask your Lordships to consider this proposed legislation very carefully in terms of practicality and cost to the consumer, and decide whether the ends justify the means. As a practical banker, I have no hesitation in wholeheartedly supporting the proposed Amendment, and I would urge the Government to reconsider their position, if possible by means of definition, or by accepting this Amendment.
LORD JACQUES: We contend that a current loan account is somewhat different from an overdraft. There are two main differences. First, a current loan account is treated in a separate loan account; an overdraft account is also a current account; and the payments in and out are interspersed with other daily movements; for example, cheques in and out, standing orders, debit orders, et cetera. So that the two accounts are quite different in that respect. Furthermore, a current loan account cannot be created inadvertently in the same way as an overdraft can; it is something which is negotiated. It is granted only to current account holders in exactly the same way as a moneylender might advance new loans only to a previous customer; or in times of a credit squeeze a loan might be granted only to a savings account holder.
It would not be possible to limit only to clearing banks any further exemption that might be granted because current accounts go much wider than that. There are not only the clearing banks; there are the overseas banks, the merchant banks and those institutions which are treated as banks under Section 127 of the Companies Act 1967 for the purpose of

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exemption from the provisions of the Protection of Depositors Act 1963. Then, most numerous of all, there are those institutions with a certificate under Section 123 of the Companies Act 1967 that they can be treated as being a person bona fide carrying on the business of banking for the purpose of exemption from the Moneylenders Acts 1900 to 1927.
So it will be seen that if this Amendment were accepted it would apply not just to the clearing banks; it would have pretty wide application, because there is a large number of institutions which have current accounts and which would be able to have current loan accounts. Because an overdraft can be created inadvertently by a cheque being honoured or by an unexpected cheque being presented and honoured, we have found it advisable to exempt overdrafts from Part V. It would be difficult in practice to control such inadvertence so that overdrafts could be within Part V. In the case of the current loan account, there is an entirely different position. Current loan accounts are created, not inadvertently but by negotiation.
Finally, why not treat current loan accounts as overdrafts? First, they are considered to be on a par with personal loans. To exempt them would lead to a switch from personal loans to loan accounts. Lenders not now offering loan accounts would be tempted to offer such accounts. Furthermore, it is considered that the debtor should be told in writing of the full terms of his agreement, and this we can do only by bringing them within Part V. It would be quite impossible to grant an exemption to the current loan accounts of the clearing banks only. This would be against the whole philosophy of the Bill, and would give the clearing banks a competitive advantage over other lenders providing a similar facility. We regret that we cannot accept this Amendment.
LORD SEEBOHM: May I ask the noble Lord a question by way of definition? I believe the noble Lord, Lord Jacques, said we could not confine this to clearing banks. Is he assuming that the overdraft is confined to clearing banks?
LORD JACQUES: No. The Director General will have power to give the exemption from Part V to overdrafts, not on an institutional basis but as he
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so determines. His determination will not be on an institutional basis: it will be on the basis of the status of the firm and the kind of services it offers. That is in the Bill because the overdraft can be created inadvertently, and it would be unwise to try to subject it to Part V of the Bill. The current loan account is something quite different. It is not something which can be created inadvertently; it is something which is created quite deliberately, as any other loan is created and, in the same way as every other loan should have an agreement, so this should have an agreement. It is vastly different from the overdraft, which is created inadvertently.
THE EARL OF LIMERICK: I am grateful for what the noble Lord has said. While I understand what he has said, I am bound to tell him that I think it is most unsatisfactory. I do not think he has begun to answer the question which has really been asked. On this question of specific exemptions, this is the heart of the matter. If it is possible to give specific exemptions in the case of banks granting overdrafts—not necessarily confined to clearing banks, as the noble Lord has just said in reply to the noble Lord, Lord Seebohm—I cannot for the life of me see why it is not equally possible to make this distinction in the case of banks granting current account loans.
Here, we are addressing ourselves to a particular Amendment, but I honestly do not think that the noble Lord has considered adequately the broad principle concerned with the interests of the many consumers who, as customers of the banks, use and value this facility and would not wish to see it inhibited. It may be that the Amendment as it appears on the Marshalled List is not framed in precisely the best terms by which to approach this problem; but if there is a case—and I am convinced there is—for the continuation of this facility, we have had no explanation at all as to why it is not possible to deal with this by exemptions in favour of specified institutions as, to the best of my belief, is proposed in the case of the overdraft, and as is certainly the case regarding the other exemptions which have been discussed earlier this afternoon in relation to other clauses. I cannot regard the present position as satisfactory and I feel I must press the matter a little further.

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I do not think it would be in the spirit of our discussions if I were to seek to divide the Committee, and indeed if I did so I do not know what would happen or whether there are sufficient Members present to achieve a useful result. Of course I am aware—indeed it is no secret—that there are to be discussions tomorrow afternoon between officials of the noble Lord's Department and representatives of the bankers. I think that at the very least the noble Lord might tell us that the matter will again be considered in those discussions to see whether some way might be found, on the lines I have indicated, to meet this point, without opening the way to the sort of abuse to which the noble Lord rightly drew the attention of the Committee, as indeed did the noble Viscount, Lord Hanworth. This is not what is being asked for by this Amendment and I would urge the noble Lord to reconsider the matter on the lines I have indicated.
LORD JACQUES: I thought I had answered the question. I shall have to try again. Why are we granting exemption to overdrafts?—because they can be created inadvertently, and it would not be practical to try to make them subject to Part V. That is the main reason. Secondly, exemptions will not be granted on an institutional basis, but they be granted by the Director, having regard to the status and services of the firm in question. So much for overdrafts. Now let us look at current account loans.
THE EARL OF LIMERICK: I am sorry to interrupt the noble Lord, but when he refers to the status of "the firm in question", does he mean the lender or the borrower?
LORD JACQUES: I mean the lender, the institution which is in a corresponding position to the bank.
THE EARL OF LIMERICK: That is the institution; exactly.
LORD JACQUES: But it would not be on an institutional basis. I think the noble Earl would agree that things would be on an institutional basis if we said, "Here is an exemption which would apply to the clearing banks". We are not attempting to do anything like that. The giving of overdrafts is not by any stretch of imagination limited to the clearing
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banks. It is far more widespread. In the case of the current account loan, if we were to give a similar exemption it could not be on an institutional basis. All institutions which had current accounts would have to be given the same facility of offering separate current account loans. Therefore the door would be opened much wider; and while we have good reasons for giving the concession in the case of overdrafts, because they may be created inadvertently, we can see no reason for granting a concession regarding a current account loan. This is something which is negotiated. There is an agreement; and all we are saying is that the loan should comply with the Act and that the agreement should be in the form provided by the Act. We believe that if we were to open this door it would then be opened very wide indeed, because one might get the position where some institutions who did not grant overdrafts but who are at present, and would be in the future, granting personal loans, could say, "Deposit £1 with us and open a current account"—and then they would give a current account loan, and because of the exemption of current account loans they would be able to get outside Part V. Acceptance of this Amendment would open that door wide, and we are not prepared to do that.
VISCOUNT AMORY: I should like to make one point. I did not think it was an essential of the case put forward by my noble friend Lord Limerick that this should necessarily be done on an institutional basis. As I followed his argument, it was based on the nature of the credit, and the case he was making was that the nature of a current account loan was very close indeed to that of an overdraft. The noble Lord, Lord Jacques, clearly does not accept that. I am forced back to the conclusion that what the noble Lord is really worried about is that, if he were to agree to this, some of the "fringe" lending organisations might find some way of abusing the situation. I cannot quite follow that argument myself, but that is the only ground I can think of on which the noble Lord seems to resist the essence of what is proposed in the Amendment. However, I think we are going to have very great difficulty in convincing the noble Lord, Lord Jacques; and perhaps my noble friend will have to do some further thinking as

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to whether some other opportunity might be found of having another "go" at the noble Lord, Lord Jacques, in order that he may explain the risks he sees which might be damaging to the interests of the customer.
VISCOUNT HANWORTH: It has been said by those speaking from the bankers' angle that it really does not worry them one way or the other. What worries them is that this would impose undue hardship on the borrower. I cannot agree wholly with that, but I think one might say that on the whole their borrowing is very often necessary and is a service. It is a good thing if the borrower realises precisely what he is doing and that the transaction is not made without a certain amount of thought. Everything that has been said so far has not convinced me that, although the documents and so on that have to be produced may be onerous, the whole position is made utterly clear. I cannot see any case at all for not following Crowther here, and following also other instances of personal loans.
THE EARL OF LIMERICK: The noble Lord, Lord Jacques, in his reply left me in some difficulty. I have no desire to be unreasonable. He said that I had not understood his arguments, but I can assure him I shall study very carefully what he has said. On the other hand, I do not think he quite took my point that, while I was not insisting that this Amendment had been framed in the best possible way, because I appreciate it may go wider than is desirable, we are both aware that there is to be a meeting to, morrow afternoon. If at this stage as I am minded to do, I should further consider the evidence that has been put forward to see whether it is possible to revert to the matter at a later stage, it would certainly be reassuring if the noble Lord would say now, before we leave the subject, that this would be one of the matters discussed, if only for clarification, at the meeting which is to take place to-morrow afternoon.
LORD JACQUES: I have no hesitation in giving that assurance. I failed to give it earlier only because I was so wrapped up in my argument.
Amendment, by leave, withdrawn.
Clause 74 agreed to.
Clause 75 [Liability of creditor for breaches by supplier]:
On Question, whether Clause 75 shall stand part of the Bill?
LORD ELTON: I should like to seek reassurance on two areas which are concerned here. Clause 75 aims to add extra protection to the debtor by means of making the creditor jointly and severally liable with the consumer for a misrepresentation or breach of contract. This is the first area of concern. Under certain circumstances this would mean the debtor, when aggrieved, would not be able to get his money back in exchange for the unsatisfactory goods. So long as the supplier is solvent and accessible the debtor is all right; under the Sale of Goods Act he can have recourse against the supplier and be recompensed in full. Should the supplier go bankrupt, abscond or become otherwise unavailable, the debtor's only recourse is to the creditor. The creditor's liability is expressed in subsection (1) as being only for damages for a misrepresentation or breach of contract.
I am advised—though I am not too expert in legal terminology—that in some circumstances this situation would result in the debtor not being able to get a rescission, he would not be able to get cash back for a faulty piece of equipment, but only damages for restitution to the condition in which it should have been when sold. We all know how annoying it is to get 12/6d. back for a hexagonal nut, when what one really wants is to return the bicycle, or article, get the money back and forget all about it. If we may have some assurance that the wording of this clause is such that the debtor taking action under Clause 75 is at least as well-protected vis-à-vis the creditor as he would have been under the Sale of Goods Act had the supplier remained solvent, this would be a considerable help and an improvement to the Bill.
The second area in which I should like to express a reservation relates more of less specifically to credit card agencies—and perhaps I should declare a small interest as the holder of a Barclaycard. The concern is the protection of the aggrieved debtor who in this case would be potentially myself, I suppose, but whom one should see not as myself, nor as a young executive on the "make" but as a 65 year old lady flustered and unsure

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what to do. She should have recourse to the supplier in the first instance when she is not satisfied with the goods which she has been sold while using a credit card. The supplier is to be defined as the person with whom she dealt over the counter. It should not be defined as the credit card agency, who has this joint and several liability, which is quite proper in some circumstances. She ought to be able to go to the village shop, the chain store or the motor car agency, and not have to write to somebody in Southend or Northampton whom she has never seen. The result will not merely be to reduce vastly the amount of work for the credit card agencies, but also to simplify the procedure for the debtor.
It is possible that the statutory indemnity which is written into subsection (2), which gives the credit card agency the right of indemnity against the supplier, would have the effect in practice of meaning that eventually the normal practice would be for the aggrieved debtor to have recourse against the supplier in the first instance. But why can the Bill not say this so that the law is understood by the protected debtor as well as by the lawyers? This is important not only because of the debtor, but also because of the position of the credit card agency; they could become involved in a large volume of work which is not connected with their experience. Their expertise is in cash, credit and credit worthiness. The supplier's expertise is in supplying goods that are serviceable for the purposes for which they are sold.
If the supplier becomes insolvent or absconds then the credit card agency is very much involved, and its expertise and judgment are in question, because they should not service a firm which is likely to default in this way; to involve them therefore is just. But to involve them when it is perfectly possible for the debtor to receive recompense from a supplier is unnecessary and involves them in work to which they are not accustomed, and which will not be profitable to the debtor. Therefore, if the Government can see some way of making this point clear, which may be implicit in the Bill, I shall be most grateful.
5.46 p.m.
LORD JACQUES: May I congratulate the noble Lord, Lord Elton; I understand
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it is his maiden speech from the Box. I hope we will hear him often from the Box—but the Opposition Box and not the one in font of which I stand. He has raised an important point and I think that I should deal with it in two ways—first in general, and then in particular. The idea of the joint and several liability is not new. We already have it in hire-purchase, conditional sale and credit sale. But strong representations were made to the Crowther Committee that it should also apply to agreements where there are the three parties, the creditors, suppliers and debtors. Instances were given where the supplier had gone bankrupt or disappeared and the unfortunate debtor was left with an obligation to repay his loan to the credior but with no redress against the supplier. But there were other representations. The representations that were made to the Crowther Committee were not restricted to bankruptcy and disappearance. There were numerous other cases of suppliers who were rather ruthless, stubborn and evasive. They used tactics which put off the debtor; and, consequently, although the supplier was not bankrupt and had not disappeared, the debtor could get no satisfaction from him but had to continue to pay the full instalments to the creditor.
After a full consideration of the representations the Crowther Committee came to the conclusion that, when there was a business relationship as between the creditor and the supplier, they were in a joint venture from which they both expected to profit. Consequently, they should be jointly and severally liable for the claims by the debtor against the supplier. I am in a position, having been in the retail trade all my life, to go farther than that and tell your Lordships from practical experience that many of the large institutions in this country, which act as the creditor in the token trade, not only receive a charge which they make to the debtor, but also take up to one half of the retailer's entire profit. There are cases where they take a complete half. These are not small institutions. There are important well-known national institutions getting 12½ per cent. from the retailers on the tokens which are handled. The creditor is not in this joint venture for nothing; it is joint in the sense that in this case he is taking half of the profit. We believe that, in

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general, the Crowther Committee were absolutely right.
Let us now take the bank credit card which, of course, is a newer creation. First, I would point out that here, again, there is a joint venture. The bankers do not give this service for nothing and they do not restrict their charge to the debtor; they also have a commission from the supplier. If the banker has a commission from the supplier, there is a joint venture between the banker and the supplier and there should be joint and several liability. But we would admit that in the case of the credit card there is a little difficulty and we have tried to overcome it. There are two elements in the credit card; the element of a monthly account, and the element of longer term credit. For example, some people use the credit card as a sort of monthly account. Instead of having a monthly account with a number of stores, they have only one account with a Barclay Card or Access or some other one, and they present their card and make one payment at the end of the month. There is a case for that being exempt, because if it were an ordinary monthly account settled at the end of the month it would be exempt.
There is also an important second element, where the card is used for longer-term credit. We have had discussions with the institutions concerned and have tried very hard to get over this problem. We have a provision in the Bill that the joint and several liability will not apply unless there is a single item of £30 or more in value. For all other single items there is no joint and several liability, and the representatives of the card companies agreed that this would exclude practically the whole of what could be described as the monthly account element. So we have gone out of our way to try to meet the point of the card people, and we believe we have met it fairly and reasonably.
Of course the card people have a remedy in their own hands so far as joint and several liability is concerned. Once they grant an agency they give the supplier some status, and their remedy is to have a greater choice in selecting their agents. They could choose those suppliers who would give them less trouble in respect of their joint and several liability and who would meet their
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obligations. Consequently, there would never then be any call on a creditor to meet a liability which was really that of a supplier. Furthermore, the Bill provides that if a creditor is called upon to pay he has a right of indemnity. So they could choose suppliers against whom they would have a successful right of indemnity. We are concerned not only with bankruptcy and disappearance, but to see that a debtor is able to use the influence of a creditor in order to get a fair deal from a supplier. It is the creditor who has given the supplier the status, and it is he who should help the debtor to get a fair deal from him. We therefore feel that the provisions in the Bill are extremely fair. I would further say that we are now taking exactly the same line as the previous Administration took in all their negotiations with the people concerned.
Regarding the other point raised by the noble Lord about the limit of the liability upon the creditor, we take the view that if something is bought for £100 and its use is quite disastrous and gives rise to damages of £200, which in law are a liability of the supplier, then that should also be part of the joint and several liability of the supplier and the creditor. I understood that to be the point raised when the noble Lord talked of not being able to get a rescission.
VISCOUNT COLVILLE OF CULROSS: No.
LORD JACQUES: Can the noble Viscount explain to us what is the point.
VISCOUNT COLVILLE OF CULROSS: If my noble friend will allow me, it is a technical point and if the noble Lord has not had it explained to him in legal terms nobody will blame him for not being able to give an answer straight off. Perhaps I may explain what it is. Clause 75(1) refers specifically to a claim for damages in relation either to misrepresentation or to a breach of contract. The noble Lord, Lord Jacques, has rightly said that this covers a case where the damages involve not only the equivalent of the price of the article but some consequential damages as well, because the article has caused more damage than its actual cost. That is one set of affairs. That is a perfectly ordinary claim for damages.

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But both in the case of misrepresentation and also in the case of ordinary contract, there is another thing you can do. You do not sue for damages at all. You simply say, "This contract was to buy a kettle and you sold me a saucepan. There is complete failure to honour the contract; there is no contract. I am going to give you back the thing that turned out to be a saucepan and you must give me back the £31 which I paid for it." That, of course, is a rescission of contract and it is not covered, according to my reading of Clause 75(1). It seems to me that if the noble Lord, Lord Jacques, is saying that the greater should be the liability of the credit card agency as well as that of the supplier when the saucepan blows up and causes a lot of damage, then so also should it be in the lesser case of the rescission of a contract where there was no contract at all but where a fundamental condition had been breached. I do not think that those circumstances, where you want to get the whole thing set aside and go back to where you were before any idea of contract arose, are at all covered by the Bill and I wonder why they are not. It seems to me that bankruptcy by the Access Card or the Barclay Card people should also be covered.
I will give the noble Lord a moment to read the carrier pigeon's message—which was always kindly accorded to us when we sat on the other side. I do not know whether he was going to deal with the second point raised by my noble friend Lord Elton, but, if not, can be at some time tell us how the arrangement will work out. I understand the principle that you have joint and several liability and can sue the credit card agency as well as the supplier, but are we not going to get into a situation where, if I advise a client who has bought faulty goods on a credit card arrangement, there is absolutely no reason why I should ever bother with the supplier at all? I am not interested whether they are solvent or insolvent, or difficult or easy to sue. I know that the credit card agency is good for the money and I shall automatically sue the credit card agency instead of the supplier. It is perfectly true that the credit' card agency has an indemnity against the supplier.
LORD JACQUES: More than an indemnity; it can insist on the supplier being a party to the court proceedings.
VISCOUNT COLVILLE OF CULROSS: I was coming on to that. According to the Rules of Court under Clause 75(5), they can join the supplier and that is right. But it seems to me to turn the ordinary legal process on its head. One would normally have expected to sue the person who sold you the article, in the way that you do under the Sale of Goods Act. You go for the retailer who supplied the article and only if you do not get success with him do you go against the credit agency or credit card organisation. That is the ordinary way of proceeding. Can the noble Lord, either to-day or at some other time, tell us how this provision will ordinarily work? Does he expect the ordinary defendant in a suit of this sort to be, as a matter of course, a credit agency, or does he expect the aggrieved plaintiff normally to have recourse first of all against the shop and only bring in the credit agency as a second defendant or in the case of default by the supplier. That is what we want to know: how it is expected to work in practice. If those two questions cannot be answered to-day, nobody would be more forgiving than I; but they are important to understanding how the Bill is to work in the courts.
LORD JACQUES: Let us be clear. I am not trying to be a lawyer; my knowledge of the law is elementary. Therefore I am not going to try to give legal answers to the questions which have been raised. I will only say that as rescission is concerned, we now understand the point raised and will look at it. So far as the question of suing the debtor first is concerned, I do not think—
VISCOUNT COLVILLE OF CULROSS: The noble Lord means "suing the supplier first".
LORD JACQUES: I do not think the debtor should be put to inconvenience. It means he can be compelled to have two bites at the cherry: he can sue the supplier and after that, if he fails to get the money even after a court orders the supplier to pay, then he can sue the creditor. Surely it is right that he should

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have the facility of suing them jointly and getting the whole thing over in one fell swoop. That is surely the way to protect the consumer.
VISCOUNT COLVILLE OF CULROSS: I think the noble Lord has now really put his finger on what everybody is afraid is going to happen. I understand that one wants to have the complete certainty that, whoever you sue, the debtor is going to get his damages in the end. I understand the consumer protection side of this and it seems to me, with great respect, to make the utmost sense. But are we going to get into the situation where the supplier is never the defendant? He would be the person who gives the indemnity to the credit card agency, but this never involves him in any court action—or not necessarily so. The person who bought the faulty goods will, as the noble Lord now admits, automatically sue the credit card agency. This means that no shopkeeper is ever going to be joined in the first instance in a suit at all. It will be for an internal arrangement between the credit card agency and supplier to idemnify the credit card agency for any damages which have been gained.
This is fine from the point of view of the consumer; but it seems that the shopkeeper is going to get away with a great deal. There is never to be any suggestion that the shopkeeper has been selling faulty goods. He is never going to suffer the ridicule of being the defendant in a court case where it is shown that he has sold goods that he ought never to have sold and which he ought to have known, and did know, were faulty. This is another substantial protection for the consumer, that there is the danger that the shopkeeper is actually put into the county court to show why he should not make good the damage which his faulty goods have caused. In those circumstances, unless we think about the procedure more, he is going to get away with this every time and the defendant is always going to be only the credit card agency.
Would the noble Lord consider this? I believe in the value of the publicity. This is the point of having court hearings in public, that the defendant if in the wrong is shown to the world to be in the wrong; and the shopkeeper does not like to be a defendant and to be shown
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to be in the wrong when selling faulty goods. These also are powerful protections in the public interest. At the moment, the way this is going to work is going to remove this protection. I do not know what the answer is. Perhaps they could be joined the other way round. Perhaps you sue the shopkeeper and automatically the credit agency is joined as a second defendant so that you do not have any question of two law suits, which I agree is undesirable. You can draft this either in the Bill or in the Rules of Court so that it is the supplier (who, after all, is primarily in default) who takes the "rap" first, and in the same action you also get a judgment in default, if the supplier does not pay, against the credit card agency; so that you do not have two separate actions. Nevertheless, the onus is really on the supplier to show why it is that he should not pay. I believe that it would be beneficial to look at this. It is not the principle that we are concerned with, just the machinery. If the noble Lord could consider it again I should be grateful.
LORD JACQUES: I should like to draw the attention of the noble Viscount to the Crowther Report which specifically rejected the idea that the debtor should first sue the supplier and then, if he failed, should "have a go" at the creditor.
VISCOUNT COLVILLE OF CULROSS: I agree, and I said so.
LORD JACQUES: The supplier can be joined as a defendant in any action.
VISCOUNT COLVILLE OF CULROSS: Yes, I agree.
LORD JACQUES: Then why not leave it at that?
VISCOUNT COLVILLE OF CULROSS: If the noble Lord will do me the justice—this is a very complicated matter—of reading what I have said, he will see that I understand and accept the point that you do not want two law suits and also that the supplier can be joined by the credit card agency. I am simply saying have one action but, in the first place, put the burden on the supplier and let him be backed up by the credit card agency if he will not pay. There is no necessity to have more than one action; it is simply that you put the order of defendants in reverse of what the noble

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Lord has suggested. There is no difference between us in principle at any stage but I have added one extra point for consumer protection which I do not think the Bill achieves.
LORD JACQUES: What I agree with most is that there is no difference between us. As a matter of fact, I think the outcome would be the same whether we took our line or the line of the noble Viscount. Frankly, the fact that the supplier can be joined as a defendant closes the matter. But we will look at what he has said and give it further consideration.
Clause 75 agreed to.
Clause 76 [Duty to give information to debtor under fixed-sum credit agreement]:
6.7 p.m.
LORD ABERDARE LORD ABERDARE moved Amendment No. 63:
Page 39, line 15, leave out ("fee of 15 new pence") and insert ("prescribed fee").
The noble Lord said: I beg to move Amendment No. 63 and, if I may, to speak also to Amendments Nos. 66 and 71. These are simple Amendments. They refer to Clauses 76, 77 and 78 and they deal with the duty of the creditor to give information to the debtor or hirer in each case on payment of 15 new pence. The only question really is this. Why is there the figure of 15 new pence in the Bill?—when in many other cases in the Bill we have referred to the "prescribed fee" or the "prescribed period". I should have thought that in this case it would be more flexible if this fee were prescribed in regulations rather than put as a figure in the Bill. Certainly a person who wishes to inspect the licensing register under Clause 35 is required to pay the specified fee. Why not also put "specified fee" in this case? I know that under Clause 177 the figure of 15 new pence can be amended by order subject to the Negative Resolution procedure; whereas the specified fee is fixed, I believe, by the Director General of Fair Trading. I suggest that this might be more flexible than specifying the figure of 15 new pence.
I wonder whether the noble Lord knows how much longer we must go on talking about new pence. I should have thought the time must come shortly when, in Statutes, 15 new pence meant 15 pence in
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current use. If the noble Lord is able to delete the word "new" at the next stage of the Bill I think that it would be an improvement.
LORD JACQUES: On the question of new pence, I cannot speak for the Government here, but I should say that a little more time will be needed before we can dispense with the use of the term "new". There are still many of us who think that prices are rising so high that we convert them into old money and make a comparison with the old rate and I think that, for some time yet, the pence will have to be "new".
For this fee we followed the precedent of the Hire Purchase Act, which lays down 12½p. We wanted to give some idea of what the figure would be, and thought it right to put a figure in. If it needs altering—due to inflation, for instance, or for any other reason—there is power to vary the amount under Clause 177(1). To that extent, the figure is already a prescribed fee.
LORD ABERDARE: I am interested in what the noble Lord, Lord Jacques, said on that not very important point. I think he said that the Bill was not designed to be read by the consumers but by those who had to interpret it legally. I should have thought, therefore, that the word "pence" would mean what it was supposed to mean in the courts, and that it was not necessary to describe it in the Bill. To be consistent, as the noble Lord has been harping on this throughout the Bill, I suggest that as "prescribed fee" occurs in other parts of the Bill it might usefully have been kept.
VISCOUNT AMORY: Before my noble friend withdraws the Amendment, I should like to say that I personally agree with what he said about "new" pence. I was entirely in favour of metrication but it has been most inflationary. I have become wildly extravagant—for instance, with tips to taxi drivers—because I do not yet quite understand it. However, I think that we should have it forced on us that a "penny" is a new penny, and a new penny is a penny. If the noble Lord says we must go on talking about "new pence", perhaps we must also talk about the "new Government" and, if so, for how much longer must we do so before we talk about "the Government" or perhaps "the late Government"?
LORD ABERDARE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.13 p.m.
LORD JACQUES LORD JACQUES moved Amendment No. 64:
Page 39, line 19, leave out ("of") and insert ("showing, according to the information to which it is practicable for him to refer").
The noble Lord said: This Amendment is made at the request of the clearing banks. They pointed out that it was possible for information to be in the pipeline as a result of a drawing at a remote branch, which a bank could not be expected to have when preparing the statement under this clause. In respect of other creditors, a cheque might be in the post of which they know nothing. This Amendment is to cover those representations. I beg to move.
LORD SEEBOHM: I thank the noble Lord, Lord Jacques, for putting forward this Amendment, which is very helpful.
On Question, Amendment agreed to.
LORD JACQUES: Rather belatedly, I will explain that Clause 76 deals with statements which can be required by the debtor in the case of fixed sum credit. This Amendment allows a creditor to give the basis of the sum and the date of ascertainment when he cannot give the amounts. This Amendment is to deal with such occasions as when the interest rate is going to change and again, is put forward as a result of representations. I beg to move Amendment No. 64A.
Amendment moved—
Page 39, line 28, at end insert—
"(1A) If the creditor possesses insufficient information to enable him to ascertain the amounts and dates mentioned in subsection (1)(c), he shall be taken to comply with that paragraph if his statement under subsection (1) gives the basis on which under the regulated agreement, they would fall to be ascertained." —(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: I beg to move Amendment No. 65, which is purely drafting.
Amendment moved—
Page 39, line 36, leave out ("this section") and insert ("subsection (1)").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 76, as amended, agreed to.
Clause 77 [Duty to give information to debtor under running-account credit agreement]:
LORD JACQUES: Amendment 67 is exactly parallel to Amendment No. 64, which deals with fixed sum credit. It deals with running-account credit and makes the same concessions after representations. I beg to move.
Amendment moved—
Page 40, line 7, leave out from ("creditor") to end of line 7 and insert ("showing, according to the information to which it is practicable for him to refer").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: Amendments Nos. 68 and 69 refer to running-accounts and are exactly parallel to Amendment No. 64, which deals with fixed sum credit. Both Amendments allow the creditor to give in statements such information as is practicable. Again, this is a concession to representations. I beg to move Amendment No. 68.
Amendment moved—
Page 40, line 30, after ("showing") insert ("according to the information to which it is practicable for him to refer").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: I beg to move Amendment No. 69:
Amendment moved—
Page 40, line 35, after ("showing") insert ("according to the information to which it is practicable for him to refer").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: Amendment No. 70 is a purely drafting Amendment. I beg to move.
Amendment moved—
Page 40, line 42, leave out ("this section") and insert ("subsection (1)").—(Lord Jacques.)
On Question, Amendment agreed to.
LORD SEEBOHM LORD SEEBOHM had given Notice of his intention to move Amendment No. 70A:
Page 41, line 5, at end insert:
"(8) Where the creditor carries on business at more than one place the statement referred to in subsection (1) shall contain only the latest information which is recorded by the creditor at the place where the debtor's account is maintained."
The noble Lord said: I am content not to move this Amendment in view of the

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previous Amendments which I think are most helpful and which I think meet our requirements, although we should like further discussion on working out the details.
LORD JACQUES: I can give the noble Lord the assurance that that discussion can take place.
On Question, Whether Clause 77, as amended, shall stand part of the Bill?
LORD REDMAYNE: I should like to ask one short question. Clause 77(4)(b) provides that if there is a charge of interest and any change in the state of the account, a statement should be made to the customer. The noble Lord will know that there are now so many forms of credit that it is impossible to cover them all in any detail and the types of accounts used in the retail trade—budget accounts, revolving credit or subscription accounts—where the customer is given sanction for a sum of credit which is paid off by equal instalments over a period and those subscriptions are interest-bearing and normally, since that is a regular event, no statement would normally be issued. If purchases are made against a credit unit, a statement is sent.
I would ask the noble Lord whether, if in fact in that type of account there is no real movement other than the payment of subscription cum interest, a statement is then required under this clause. If it is so, then I think one would have to try to see at some other stage whether an Amendment should be put down to cover the point.
LORD JACQUES: I will undertake to write to the noble Lord on this point.
LORD REDMAYNE: I am most grateful.
Clause 77, as amended, agreed to.
Clause 78 [Duty to give hirer information]:
6.21 p.m.
LORD JACQUES: Amendment No. 72 is parallel to Amendment No. 64. Whereas Amendment No. 64 applied to credit trade, this applies to hiring, but it gives the same concession. I beg to move.
Amendment moved—
Page 41, line 11, leave out ("of") and insert ("showing, according to the information to which it is practicable for him to refer").(Lord Jacques.)
On Question, Amendment agreed to.
LORD JACQUES: Amendment No. 73 is a purely drafting Amendment. I beg to move.
Amendment moved—
Page 41, line 22, leave out ("this section") and insert ("subsection (1)").—(Lord Jacques.)
On Question, Amendment agreed to.
Clause 78, as amended, agreed to.
Clauses 79 and 80 agreed to.
Clause 81 [Variation of agreements]:
LORD JACQUES: The purpose of this Amendment is to avoid the need for documentation where the credit limit is temporarily exceeded on a running account. This would apply to credit cards and all other forms of running account. I beg to move Amendment No. 73A.
Amendment moved—
Page 42, line 35, at end insert—
"(3A) Where, in relation to running-account credit, the creditor at any time agrees to allow the credit limit to be exceeded, but intends the excess to be merely temporary, Part V (except section 56) shall not apply to that agreement (as modified by subsection (2))."—(Lord Jacques.)
On Question, Amendment agreed to.
On Question, Whether Clause 81, as amended, shall stand part of the Bill?
LORD ABERDARE: Clause 81 provides that a variable term agreement shall not be varied without notice of variation being given to
"the debtor or hirer in the prescribed manner".
I understand that in many agreements the rate of charge is linked to finance house base rate, which is the only objectively calculated base rate available. This rate is published daily in the Financial Times and in some other leading papers, and I would hope that publication in this way would meet the requirements of the "prescribed manner". If the noble Lord could kindly look at this point, and either say that this is so or would consider that when regulations are made a reference to this publication of the finance house base

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rate would meet the requirement, I should be most grateful.
LORD JACQUES: In essence the Bill is conceived as a flexible measure so that all the varied types of transactions can be dealt with appropriately. Where an agreement has been expressed with a rate of charge linked to a recognisable base rate the method of notification of variation of the base rate will depend upon the type of transaction. If it is the type of transaction where a debtor may reasonably be expected to see a newspaper or a notice displayed in a financier's office it could well be that that will be the "prescribed manner". Where the debtor is not likely to appreciate that a notice in a newspaper applies to his loan agreement, or where the creditor is in periodic contact with the debtor, it is likely that the regulations will prescribe that individual notification he given. "Horses for courses" will be the motto, and the fullest consultation will take place between the interested parties before the regulations are made formal.
LORD ABERDARE: I am extremely grateful for that very full answer, and much admire the noble Lord's grasp of the Bill.
Clause 81, as amended, agreed to.
Clause 82 [Liability for misuse of credit facilities]:
6.27 p.m.
VISCOUNT AMORY VISCOUNT AMORY moved Amendment No. 73B:
Page 42, line 41, at end insert ("unless contributory negligence can be proved").
The noble Viscount said: This clause provides that the debtor in a regulated agreement is not liable to the creditor for any loss arising through the use of the credit facilities through the action of another person who is not acting as agent to the debtor. This provision, I am advised, would mean an alteration in the existing banking law as it has been established in the courts. The object of this Amendment would be in part, at least, to restore the present position as established in the courts. The clause as drafted ignores the duty of the debtor to take reasonable care in drawing cheques. It has, I believe, been established in several cases in the courts that, where the debtor ignores obvious precautions, the bank cannot
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be held liable for the loss. I hope that the noble Lord will be able to give me assurances that my interpretation of the effects of this clause is wrong. I beg to move.
LORD JACQUES: The clause goes very much wider than cheques. Its purpose is to protect the consumer against careless administration of credit facilities by the creditor; for instance, in cases where goods et cetera are allowed to be taken on credit without adequate means of identification. We consider that in such cases the onus should be on the creditor to build in adequate safeguards, and that there should be no liability on the debtor. At the moment a bank credit card, both Access and Barclaycard, can be used without production of the card to obtain goods on mail order by just quoting the card number. This is so obviously open to abuse that we consider that no liability for such misuse should fall on the debtor; although under Clause 83 subsections (1) and (2) the debtor can still be liable for loss to the creditor of up to £30 if he loses the credit token, or for loss up to any amount if the token is misused by someone to whom the debtor gave it.
The Amendment would apply to cases in this broad area as well as to the narrow issue of cheques. It would also remove protection under the clause from the debtor where he had been at all careless, so that a small slip might make him liable for a very large amount. While this is the present legal position with regard to cheques, its extension across the whole range of consumer credit, where carelessness can be much less well defined, would be damaging to the consumer's interest. If the creditor issues means of obtaining credit such as credit cards or cheque books, we consider that he should himself take good care to ensure that they are issued only to responsible people who can use them responsibly.
So it is arguable that the banks' fears are excessive. This is because Clause 82(1) does not relieve a debtor of any liability for the use made of his credit facilities by another person who acts as his agent or who is to be treated as acting as his agent; that is to say, in some cases, the person misusing the cheque book could be regarded as the debtor's agent. It may be that the words underlined will cover many of the cases which

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worry the banks. However, if the banks were to specify the sort of cases which they fear may arise, where they feel that the debtor should be liable, we should be happy to consider to what extent this provision could reasonably be amended without the spirit of the Bill being contravened.
VISCOUNT AMORY: The noble Lord has given me a very fair reply. I must own that I have not considered the effects of my Amendment in the wider field to which the noble Lord has turned my attention. I will think over what he said. I think his offer to ask the banks to specify affairs in rather greater detail is a very fair one indeed, and in those circumstances I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 82 agreed to.
Clause 83 agreed to.
BARONESS LLEWELYN-DAVIES OF HASTOE: I beg to move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

NATIONAL HEALTH SERVICE (TRANSFER OF SOCIAL SERVICES STAFF) ORDER 1974.
6.31 p.m.
LORD REIGATE LORD REIGATE rose to move, That an humble Address be presented to Her Majesty, praying that the National Health Service (Transfer of Social Services Staff) Order 1974, laid before the House on March 7 last (S.I., 1974, No. 318), be annulled. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I feel that I ought to apologise or begin by apologising to the noble Lord, Lord Wells-Pestell, who has had a rather arduous day. This Motion relates to an Order which has been made under the National Health Service Reorganisation Act 1973. Your Lordships may recall that the issue I am going to raise was discussed in your Lordships' House on January 25, 1973, and I regret very much
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that I was not present to be able to take part in the debate on that day. The present Order that I am praying against, it might interest your Lordships to know, was signed by Sir Keith Joseph on February 28 which was, of course, Election day. It was laid before Parliament on March 7 and was effective from April 1.
This is an abstruse and complex issue affecting some 750 National Health Service workers—a tiny minority, if you wish, but a very important minority. I hope that I may be allowed to redeploy the case which was made so ably by others on the Committee stage of the Bill, just for the Record. The main purpose of the reorganisation was, of course, to unite the three branches of the National Health Service, the hospitals, the general practitioners and the public health—an admirable ideal which we all support, even if we are critical of some of the details. The purpose was unity, but I must confess that I think that this Order is, in fact, divisive. It is against the will of the majority that these social workers who are now in the National Health Service are to be transferred to the local authorities.
These social workers of whom I am speaking are the medical and psychiatric social workers, known in the jargon phrase as M.S.W.s and P.S.W.s, who are now working in the hospitals. Once upon a time they used to be called almoners—a very honourable name—and even lady almoners, but since those days the name has been changed and the profession has radically changed its duty; and as it now is the medical and psychiatric social workers are important members of the clinical team in the hospital: the consultant, physician, surgeon or psychiatrist, the nurse, the social worker and, of course, the administration as well. They are concerned with the total care of the patient, and it was the hope of many of us that the wonderful service which they give in the hospitals would, in the reorganised Health Service, be extended more widely in other hospitals and also to the general practitioner as well. It is in the nature of their work that they have close liaison with local authorities, but to achieve close liaison you do not have to be under the command of the local authority. The prime duty of the M.S.W.s and P.S.W.s is to the patient and to the clinical team of which they are

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part, and they have, I think, played an important role in the last 25 years in completing the care of the patient.
If I may quote from a letter which I received, which I thought was very telling:
"Modern medicine has become too disease-orientated and can easily overlook the personal and emotional problems of the patient. The medical and psychiatric social worker brings the humanising element. If the medical social worker was employed outside the hospital it is feared that her influence on the medical profession would diminish."
There was an endearing postcript to the letter, which I will quote, which said:
"We are not just a group of elderly ladies afraid of changes for ourselves".
I can vouch for that. They are social workers who, I think, have welcomed the challenge of the National Health Service reorganisation and the wider opportunities that it will give to them. They know the nature of their own work as, if I may say so, no remote planner can possibly do. I was reminded of a quotation by, I think, Edmund Burke who said of a not dissimilar proposal, that,
"these philosophers consider man no more in their experiments than mice who are the recipients of mephitic gas,"
which I think sums up for all time the attitude of the practical man to the theorist. The special nature of their work has, I know, been recognised by the Department of Health and Social Security and, I believe, by Sir Keith Joseph in person who gave an assurance that they would not be removed from the hospital environment, which makes this change of employer, if I may so put it, even more peculiar and unnecessary.
I have tried very hard to understand the reasoning behind this change and I have read what was said in the debate. I read the reports of the various Working Parties. I think that there is an element of bureaucratic tidy-mindedness which is the work of someone with no knowledge of the work that goes on in a hospital, and I am quite certain that the noble Lord, Lord Platt, will be able to amplify that particular point. It seems to me that the argument runs something on these lines: any social worker is a social worker for all purposes, "and that's that", and social work is a local authority function because the Local Authority Social Service Act of 1970 says so. In one section it says that the after-care of the sick is a
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local government function—Q.E.D. M.S.Ws and P.S.Ws come under the same umbrella as all other social workers.
If I may quote my noble friend Lord Aberdare, he said, most succinctly:
"… health skills should be deployed from a National Health base and social work skills from a local authority base."—[OFFICIAL REPORT, 25/1/73, c. 293.]
That is very simple, but who is really going to say that the M.S.Ws and the P.S.Ws do not in fact have medical skills? It is very much a part of the role that they have to play. If I am being unfair in my analysis of the situation, no doubt the noble Lord, Lord Wells-Pestell, will correct me, but I ask him in particular to consider whether he would support probation officers being put under local authorities. I believe it has been done in one part of the United Kingdom but I have yet to hear that it is welcomed as a great success.
The other reason given, again by my noble friend Lord Aberdare, on January 25, was the maldistribution of medical M.S.Ws. He put it this way—and there is a slight misprint so I will quote a little more:
"… an important factor which has been ignored in the case presented by the hospital social workers is that social work support is at present very unevenly spread in the hospital service, and that for many hospitals the need is not to safeguard existing standards but to provide a service."
It is of course quite true that social work is better developed in what I might call the "higher grade hospitals", partly for historical reasons, one of which is that the National Health Service has never had a statutory obligation or duty to employ social workers as part of the hospital team. But what will the position now be when the Order is made effective? We shall have M.S.Ws employed by the local authorities, apparently—if the promise is correct—working in the districts (that is to say, in the hospitals) dependent on the Area Health Authorities both for accommodation and for staff, which again does not seem to me to make very good sense.
Here I should like to interpolate one small but vital point. The reports by the M.S.W.s on patients are kept in the social service department of the hospital or, if the consultant has called for a report, with the patient's file. These are very confidential documents and they are

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by law the property of the hospital. Whose property will they be now? Will the social service department of the local authority own them? Will it have access to them? Will it retain them? How easy it would be for patients to lose confidence in medical treatment if the files were available outside the hospitals. I do not think anyone with a knowledge of the social work of local authorities could relish the idea that some of the details of patients' cases should be available for other purposes in—let us call it the town hall for short.
I should like to have a slight interlude here in order to point out some other change which is being made. Many hospitals have "special clinics", which is the refined name given to the clinics for the treatment of venereal diseases. In these clinics social workers are employed on what is known as "contact chasing", which is quite obviously seeking out those who are transmitting the disease and persuading them to come in for treatment. This is essentially work in the community and is not actually relevant to the clinical team. Hitherto by tradition they have been employed by the local authorities but now—and, on the whole, quite rightly in my view—they are being transferred to the service of the Area Health Authorities. So it is a two-way traffic, but it seems rather irrational if the unification of social workers is the reason behind it.
Others will be able to speak more fully than I have of the work of these social workers and I want to end by pointing out one or two things. As I have said, this Order, Statutory Instrument No. 318, is effective from April 1. When the matter was last discussed in your Lordships' House on January 25, 1973, my noble friend Lord Aberdare said this:
"I would reiterate that we have not yet made a decision, and I would also point out that the provisions in Clause 18(4) are permissive; they do not provide for transfer on the day appointed for other Health Service staff, but for transfers to be on such day or days as may be determined by or under the order."
In effect, they were transferred on exactly the same day as the other staffs; namely, April 1, 1974, in theory, although not necessarily in practice.
In the Order it also states that notice of transfer is to be served on the transferred worker as soon as possible, but I understand that on May 2—that is to-day
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—many have not yet received that notice and it seems only reasonable that the Order should have been delayed until that could be done. Furthermore, I should like to comment on the fact that in Section 6 there is a right of appeal against transfer.
This is quite frankly valueless. If you are an M.S.W. and you find yourself being transferred to a local health authority which is—unless the Government change their mind—100 per cent. to be your employer, you are not likely to engender much good will if you appeal against that transfer. There is a not unnatural fear of victimisation.
The more I study this matter and the more I read of it, the more convinced I am that an error is being made. I do not want to accuse anyone of any malign intentions; there may be a touch of "empire building" latent in the proposal but there is certainly nothing sinister and I am sure it is done with the best intentions. But I think—and I know that other speakers to-day will support me in this—that a mistake is being made. It is of course my hope that the noble Lord, Lord Wells-Pestell, will announce that the Government are going to withdraw the Statutory Instrument. After all, it is not their Order so they would lose no face if they did so.
Noble Lords will be relieved to know that I do not propose to divide the House, although I have a feeling that if I did we might even win. If I may say so to the noble Lord, no harm would be done by delay. The reorganisation of the National Health Service is, to say the least, a little confused. If the Government, in their wisdom, chose (to make a non-political point) to stay their hand, they could issue a standstill Order to the local authorities delaying the transfers pending consideration. After all, they are considering pensions under the Social Security Act and this is a much smaller matter. It would also give them an opportunity for reconsideration. Also—and this is a most im-important matter—it would enable the newly-constituted Regional Health Authorities and Area Health Authorities to give the matter proper consideration and make their recommendations now that they are in the saddle.
I am sure the noble Lord will have been told by his officials that everyone

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has been consulted, that the British Association of Social Workers supports the change, and that only a small minority concerned with this matter do not support it. I am sure he will also be told that before this is done everyone should be consulted, including the Joint Liaison Committees, and everyone else. I will not say that there has been a state of chaos in the Health Service, but most of us now think that they have all been working under appalling pressure in the last two years, increasing towards the appointed day, and that pressure still continues. In this very small matter I feel that the new authorities have a very real right to be consulted afresh. I therefore beg to move.
Moved, That an humble Address be presented to Her Majesty, praying that the National Health Service (Transfer of Social Services Staff) Order 1974, laid before the House on March 7th last (S.I. 1974 No. 318), be annulled.—(Lord Reigate.)
6.52 p.m.
LADY RUTHVEN OF FREELAND: My Lords, I should like to support the Prayer of my noble friend Lord Reigate, and I do so most willingly and with great feeling because when the Amendment was moved in January, 1973, by the noble Lord, Lord Amulree, I spoke in support of it and I have not changed my views since. I can only repeat what I said in January last year; that the medical and psychiatric social workers are truly part of a clinical team. They play a very important part in the diagnosis, treatment and rehabilitation of the patient. If they are not readily available in the multi-disciplinary team, there is a very real danger that a crisis may develop which needs attention from the social, medical or psychiatric social worker. If this crisis is not met, it may result unfortunately in a lack of what one might call "on-the-spot help", and far more serious problems for the patient might develop.
My Lords, while I fully accept the good intentions behind the transfer, I cannot agree that it was necessary to develop and improve liaison and good communications between social workers. Provided the interests of the client, as they are now called (although I still prefer to think of these people as patients)
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are of primary concern, I am sure all the social workers would work together towards this, whoever was their employer. To ensure that all patients (including a large number who have no need of help from local authority social service departments) get the help they need at the time they need it, I am sure it is essential that the Health Service should employ its own social workers.
I would support the statement made by my noble friend Lord Reigate, and point out that a number of functions which used to belong to the local authorities are now the responsibility of the Health Service. My noble friend mentioned one, and there are a number of others which I could state, but I will not delay your Lordships' House. Should not these have social work cover as an integral part of the care and treatment of patients?
6.54 p.m.
LORD AMULREE: My Lords, briefly I wish to support the Motion which has been moved so cogently by the noble Lord, Lord Reigate. I do so for two reasons, first because it was I who moved the Amendment in January last year that the medical and psychiatric social workers should not be transferred to the local authority. I do not want to repeat at any great length what I said at that time, but I should like to put forward one or two points in support of what I am saying, because the psychiatric and medical social workers are really more medically and psychiatrically trained and experienced than the ordinary social worker. They really do know more about the medical side of what they are doing than the average social worker who comes from a social service department. Their work is extremely specialised and requires a great deal of training and experience. Here I can talk with a good deal of experience gained from working with these people, because for 19 years I worked in the closest proximity and liaison with one or two medical social workers. If they had not given me their support in the way they did, it would not have been possible for me to do my work during those 19 years. I am quite sure there will be trouble if they are transferred to the social service department of the local authority.
My Lords, I would put forward these questions. Will the clinical side be able

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to get the social workers they require at the time that they require them? Will the social workers they get from the local authority be of the same training and experience they expect to get now? These are very important points, because as both the noble Lord, Lord Reigate, and the noble Lady, Lady Ruthven of Freeland, have pointed out, the medical social worker is part of the clinical team taking care of the patient. There is very little, except the unfortunate change of name from "almoner" to "social worker", to tie them in with the modern idea of a working department called a local authority. The welfare of the patient in question may well depend on the work of an expert, trained medical social worker or psychiatric worker being present when required and being able to work closely with all the other members of the team looking after the patient. So I would support what the noble Lord, Lord Reigate, said, in making a plea that the implementation (if I may call it that) of this Order may be postponed so that further consideration may be given to all the enormous problems involved.
6.59 p.m.
LORD PLATT: My Lords, the noble Lord, Lord Reigate, with his usual skill and clarity, has presented all the arguments. I rise only to make a few remarks in support. I have worked in various capacities in hospitals since 1921, I am ashamed to say. Some of us have considerable concern as to how much reorganisation of the National Health Service will really help the patient. But however we may think of that, we are mostly agreed, as the noble Lord, Lord Reigate said, that what seems to be a very good aim in this reorganisation is to bring the various branches of the medical and allied professions together under one authority, under one roof as it were, whereas now they are divided into what has been called the tripartite system.
If it is a good thing for general practitioners and medical officers of health, the hospital doctors, consultants and juniors all to be under the same authority, surely their chief aides—perhaps I should not call them that because there are many other very important aides such as the technicians—the medical and social workers should also be
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under that same authority. I feel quite sure that it is the wish of most of them (although I know they are a little divided on this) to be with the medical people and to be regarded as part of the medical team, as indeed they are. The noble Lord reminded us that they started as almoners, and, as he said, even lady almoners. If I may lighten the proceedings for a moment, that brings back a memory of the early 'twenties when I was a very junior hospital doctor. We had one lady almoner who was an enormous woman whom we used to call "the battleship", and it was therefore no surprise to me when a rather ignorant patient said to me one day, "Doctor, I have just seen the lady Armada". At any rate in those days one of their duties was, of course, to see how much patients should be encouraged to pay towards their treatment. Those days are now over and I suppose since they no longer have that function they are no longer called almoners.
All I can really say in support of Lord Reigate—and I do support him very strongly; I cannot see the arguments on the other side at all—is that it has been my own personal experience that these people are of the greatest value, and they like to be part of the medical team. In any good medical unit they are part of the medical team. In a teaching hospital they also have a special function in bringing the social side of a patient's difficulties to the notice of students. In my medical unit in Manchester we always had our medical social worker at our weekly conferences when we went through a number of cases of particular difficulty or importance, patients presenting particular problems. Sometimes the problems were brought to our notice entirely by the medical social worker. At any rate, I need say no more than to tell your Lordships that I am convinced that she—it usually is she—is a very important and integral part of the medical team, and I cannot see why she should be employed by a different authority.
When the noble Lord, Lord Amulree, brought up his Amendment on January 25, 1973, he was—against my will, I should say—persuaded to withdraw it largely on the grounds that the Government had not made up their mind and were going to think again. We never got a guarantee that we should be

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able to discuss this matter when they had thought again, and we never even heard that they had thought again. I am bound to confess, and it may be because I am not careful enough in my reading of Parliamentary affairs, that the next I heard of it was that it was all cut and dried and set down; and then the next I heard—and I was very pleased to hear it—was Lord Reigate's determination to move this Motion this afternoon, which I strongly support.
LORD BROCK: My Lords, I wish to associate myself with emotion with the Prayer which the noble Lord, Lord Reigate has so eloquently proposed. It is difficult for many of us to comprehend the reason why the problem arose. He has presented gut so efficiently that it would be redundant for me to say more or to enlarge on the proposition, except to emphasise the importance of retaining the relevant case histories and clinical and social notes with the hospital team; this will follow provided the social workers are retained within the National Health Service.
7.4 p.m.
BARONESS SEEAR: My Lords, I hesitate to speak after such distinguished medical opinion, but I would nevertheless like to support the Prayer of the noble Lord, Lord Reigate, for two reasons certainly not raised by the medical speakers. After the reorganisation of the social services, it is common knowledge, or it must be common knowledge to any of your Lordships who have their ear to the ground in these matters, that while in some areas the reorganisation went through smoothly and satisfactorily, in a number of areas it was followed by great confusion and distress. I have evidence, in some cases, of a deterioration in the service given to the people who need social services, and this, after all, is what this is all about.
The noble Lord, Lord Reigate, spoke of the question of confidential files. I know of one case in which previously confidential files following reorganisation were left in an open office in which a large number of unqualified persons were able to have access to them. I do not say this was anybody's intention but I think we ought to grasp that reorganisation has by no means everywhere been a success.
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The time will come when the objectives of that reorganisation will be generally achieved, but, in my view, that time has not yet come. This in itself is a very good reason for delaying this transfer until we are more satisfied of the standards that have been achieved or that will have been achieved after reorganisation.
Of course, it is not only that there was disturbance, and in some cases deterioration, in service to clients after re-organisation; that situation was compounded by the fact that the re-organisation of the social services took place before re-organisation of local government. I have never been able to understand, when everybody knew that the re-organisation of local government was coming, why it was considered appropriate to re-organise social services prior to re-organisation of local government. I can quote a case in which, following the reorganisation of the social services, a considerable amount of disturbance was created; and that whole situation has been put in the melting pot because the boundaries have been redrawn and people's responsibilities have been further confused. Is it sensible in this situation to stir the matter up once again by bringing about yet further reorganisation by introducing the medical social services into the local authority departments?
I should like to make one further point from the point of view of the client; and I repeat that it is not the panels, it is not the authorities, it is not even the social workers, it is the people who need their services that we ought to be considering in this matter. I know that re-organisation of the social services is based on the tidy idea—and I detest tidiness—that it is better that all the social services should come under one authority. Why? I have never been satisfied by the arguments in support of that doctrine. If you are in need of social services you are by definition at a disadvantage; you do not go there for fun or exhilaration. It can very easily happen that an individual client can get across the authority. It may not be the authority's fault. I believe it is highly desirable that there should not be only one source of social help, and if a client has got across the authority he should know that there is some other source of social help open to him. I do not like monopoly, and I do not like monopoly in the social

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services. The transfer of the medical social workers into the local authority, in my view, is a further step in the direction of monopoly in the social services, the last place in which it should occur.
7.9 p.m.
LORD ABERDARE: My Lords, perhaps I might just say a brief word at this stage, before I leave it to the noble Lord, Lord Wells-Pestell, who has far more expert advice available to him than I have, to say something about the reasons why this decision was taken. There is just one implication, at least, in the remarks of my noble friend Lord Reigate that I should like to put right. He suggested that perhaps this decision had been taken in a rush or under the stress of great pressures at the time of the re-organisation of the National Health Service. That most certainly was not so in this case. The then Secretary of State took a personal interest in this particular matter, on which the arguments on both sides are very finely balanced.
To-night we have heard all the arguments for leaving the medical social workers and psychiatric social workers within the hospital service, but there are arguments on the other side which I tried to put in the debate we had in January of last year. When my right honourable friend was Secretary of State he paid the most tremendous heed to the representations made to him by the hospital social workers. Indeed, both he and I have as high a regard for the work they do as anyone in the House. In fact, their views were put to us very forcefully. I think that practically every hospital social worker in the country wrote a letter to the Ministers at that time. We took their views into account. We also took into account the view of the British Association of Social Workers, whose opinions were different. In particular, the whole matter was gone into carefully by the Working Party on Collaboration, on which the local authorities were represented as well as the National Health Service.
One has to sympathise with the position that some of the hospital social workers find themselves in as a result of this reorganisation. I have great personal sympathy, but the whole of any reorganisation necessarily must be designed for the future. When the
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noble Baroness, Lady Seear, criticises what has happened in certain cases in the reorganisation I am not in the least surprised. To reorganise the entire National Health Service and not have one or two little difficulties is being too idealistic. There will be things that go wrong. The whole idea behind the reorganisation is to improve matters in the future. I would have thought, and I suggest, that looking to the future there are serious arguments why the coming together of all social work, be it in hospital or in the community, under one employer has advantages both for the services that benefit and also from the point of view of the career structure of people who are working in this service in the future.
I should not like it to be thought that the case made on both sides had not been seriously considered at that time. As my noble friend mentioned, although he did not think it was a very useful provision, Section 18(5) was put into the National Health Service Reorganisation Act specifically to protect those hospital social workers who wished to continue to serve in the hospitals and not become part of a wider profession. I would not go so far as he did in saying that this is a useless protection. I think that it is valuable. I shall leave it to the noble Lord, Lord Wells-Pestell, to carry the case further.
7.14 p.m.
LORD WELLS-PESTELL: My Lords, it has been suggested by the noble Lord, Lord Aberdare, that I may have some advice to give to your Lordships on this matter. It has always been a dictum of mine that all advice is bad, and good advice is fatal, so I do not propose to give the House any advice at all on this matter. What I should like your Lordships to know at the very outset is that there is more than just a certain amount of sympathy with regard to the situation which the noble Lord, Lord Reigate, has set forth so clearly. I myself deliberately spent some years as a full-time professional social worker. I know it from that side. From there I went on to training social workers, and finally did a certain amount of lecturing in the social sciences.
I am not unaware of what must be the feelings of some people to-day with regard to this particular change. I think

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that it is a pity that perhaps this matter was not raised much sooner. The Order was laid before Parliament on March 7; it is now May 2, and I think that it would have been possible to have put this Motion down much sooner, and perhaps to have had the discussion on it before April 1. I think that would have been possible. If we had done that, the discussion would have been more meaningful, but I do not think that it can be very meaningful at the present moment.
The noble Lord, Lord Reigate, referred to the Probation Service being incorporated into the social services in Scotland and implied that that had been a failure. There is nothing between the noble Lord and I on this matter, but the real difference here is that the medical social workers in the hospitals concerned are protected. Nobody is saying that they have to give up being medical social workers and join the generic social worker that one so often finds in the local authority. This is not said, and it is not even suggested. The Act goes so far as to say in Section 18(5):
"A person transferred … shall not be required in the course of that employment to perform duties otherwise than at or in connection with a hospital unless he has consented to perform such duties."
So their position is protected. This is the important thing. We are talking about the present several hundred medical social workers, and I say that their being responsible to the local authority is not going to affect their normal daily task.
It is customary in your Lordships' House—a custom of which I do not altogether approve—to always thank a noble Lord for raising a matter. I do so on this occasion with very real sincerity, because it is quite right and proper that the noble Lord should raise this question of the future position of hospital social workers so that it may be fully discussed and so that I can indicate the attitude of the present Government to the questions that have been raised this evening. I think that this debate will be of value to hospital social workers, and in indicating, as I shall, that we support the same line of policy as our predecessors, I hope to make it clear that even though we consider the apprehensions of the social workers mistaken, we fully understand the considerations which have given rise to them, and we hope that the
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statements already given by the Working Party on Social Work Support for the Health Service, and the further suggestions which they will be issuing shortly, will go a long way towards providing the much needed reassurance.
The National Health Service (Transfer of Social Services Staff) Order 1974 provided for the transfer of National Health Service social workers to the employment of local social services authorities; for the transfer of local authority doctors, nurses, speech therapists and staff in the professions supplementary to medicine—I do not want to take up time setting up the various categories—to the employment of the new health authorities, and for various safeguards and means of appeal for those persons.
The Order was made by Sir Keith Joseph, the previous Secretary of State for Social Services, under Section 18(4) of the National Health Service Reorganisation Act 1973, which was introduced by the Conservative Government. These transfers were based on the proposal, first formulated by Mr. Crossman when he was Secretary of State, that the new health authorities should be responsible for all services where the primary skill needed was that of the health professions, while local authorities should be responsible where the primary skill was social care or support. The basis for this proposal was that only in this way could scarce and valuable skills be deployed to the best advantage of the service needed by every citizen. So far from weakening or reducing the quality of the social work services provided to patients undergoing Health Service treatment, the change to provision from a local authority base should open up a much wider range of forms of social support and care which can be made available according to the needs of each person.
I think one has also to face the fact—and this is a matter which concerns me primarily—that if we have a fragmentation of social work groups it will be difficult to provide the in-service, the ongoing and further training which all groups of social workers need. I think it can best be done in a local authority set-up, although I am not unmindful of the difficulties which local authorities are experiencing at present. At the same time, like our predecessors, we do not wish to underrate the problem.

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The organisation of services according to skills poses great problems of co-operative working if the organisation and delivery of services is to be properly responsive to the needs of individuals in the many different situations. In the case of hospital social work, there is much concern among some hospital social workers and among health care staff that the change to local authority employment for the social workers will adversely affect the quality of service received by hospital patients from social workers. But in bringing about this change, the Government, like their predecessors, have a responsibility to see that arrangements are made which will preserve and enhance the standard of service which the public rightly expect, and I do not see any difficulty bearing in mind that the medical social workers at present employed in our hospitals will be allowed to continue there, or any reason why this should change at all.
It was with such considerations in mind over the whole field of the Health Service and related local authority services that Sir Keith Joseph set up a Working Party on Collaboration between the National Health Service and local government to consider ways in which the new authorities should collaborate in the delivery of the services. Among the recommendations of that Working Party was one that a further Working Party should be established on Social Work Support for the Health Service, and I propose to return later to its recommendations.
Hospital social workers represent a very small group when compared with the total of local authority employed social workers. Social work is developing and expanding rapidly, and there was a danger that if hospital social workers had been left as a small autonomous group within the Health Service they would have become isolated from the mainstream of development. Time and time again, both in the field of voluntary social work and in the field of professional social work, we have seen groups working—and I do not mean to be offensive—in splendid isolation. This is what we have to avoid.
Despite the growing number of social workers generally, they are still a very scarce resource and there is advantage in all social workers joining together to
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provide a comprehensive service for all those at risk in a local authority's area, whether they are living in the community or happen for a time to be in hospital. Social work, whether practised in a local authority or in a hospital setting, rests on a common core of professional theory and practice, supplemented by specialised training which is important, and experience. The type of service needed by the client will depend upon his circumstances and whether he is in local authority residential accommodation, in his own home or in a hospital. Social workers have particular interests and develop particular skills in helping particular client groups, and this applies, among others, to social workers in hospitals.
If I may again reminisce for a second, there is probably nobody in your Lordships' House at the moment who over the years has spent as much time as I as a patient in hospital, and I know from personal experience the tremendous psychological fillip that a good medical social worker can give. In the circumstances of their transfer to local authority employment the Act provides protection—and I repeat this because I want people to understand it—for hospital social workers, not only in regard to their terms and conditions of service, but also with regard to their place of work. No social worker transferred to local authority employment on April 1 may be required to perform duties other than at or in connection with a hospital unless he has so consented. So not only are they protected, but the quality and the kind of service is maintained, which is precisely what everybody wants.
I recognise the special position of the hospital social worker as a member of a clinical team, although not all hospital social workers are so employed, and there is nothing in the transfer to the local authorities that need disturb that relationship. That will be determined by the medical members within the hospital, the clinical team and the medical social workers. The local authority will have no jurisdiction or authority at all over that matter. The Working Party on the Social Work Support for the Health Service, which Was set up to consider the practical problems of the transfer, has recommended that social workers should continue as members of clinical teams and, indeed, that their position should be

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strengthened and developed. Local authorities have been asked by my right honourable friend the Secretary of State for Social Services—and I quote—
"To ensure that the duties of social workers in hospitals are not changed in any way which could be detrimental to the level of service they provided before transfer or which would prevent any social worker from remaining a full member of a clinical team, without full consultation with the health authorities and the social workers concerned".
I do not see how one can safeguard the position any more. It is a kind of direction from my right honourable friend, and it could not be better.
The main safeguard for hospital social work, however, will be the Joint Consultative Committees to be set up under the National Health Service Reorganisation Act by the Area Health Authorities and for their matching local authorities. These Committees have been strongly advised to set up sub-committees specifically concerned with collaboration in the provision of social work support for health service. Such a Committee will be closely supported by committees of officials drawn from both authorities who will deal with any day-to-day problems of collaboration that may arise.
From my own experience as a professional social worker, I appreciate the fears and uncertainties of hospital social workers about their transfer, and I regret that through pressure of time the Department has been unable, until fairly recently, to issue all the advice and guidance that we would have wished. I think this is a pity. Perhaps it should have been set out more clearly, and sooner. This lack of information has undoubtedly given rise to some misunderstandings about how social work is to be provided in hospitals in the future. There has been a fear that social workers would be withdrawn from hospitals into the local authority departments, and would cease to be members of hospital clinical teams. I hope I have dealt with that point to the satisfaction of your Lordships.
Many of these misunderstandings have, I think, now been cleared up by the issue of the interim report of the Working Party on Social Work Support for the Health Service. The Working Party is broadly based, and includes hospital social workers and hospital consultants having social workers in their clinical teams. I
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understand that the interim report, which dealt with the organisation and management of social work support, was agreed unanimously by the members of the Working Party, and that they hope to issue a second and final report very soon. If the recommendations of the Working Party are followed by the local authorities, as I am sure they will be, I believe that social work in hospitals, far from being destroyed—that does not arise—will be considerably strengthened. The hospital social worker will in future have the support of the much larger local authority organisations and the right of access to their resources—and they are getting more and more resources in regard to raising the whole standard of social work in this country. I believe also that by harnessing the resources of local authorities social work will be extended into the many areas of the Health Service where it is now deficient or totally lacking.
I do not want to take up much more of your Lordships' time, but I want now to return to the Motion moved by the noble Lord, Lord Reigate, in which he prays for the transfer Order to be annulled. I would advise the noble Lord—and I do not do this at all with any sense of impertinence—that if this Motion is agreed to it will have the reverse effect to that which I believe he intends. The transfers of staff have now taken place. The annulment of the Order cannot affect this situation; it is too late. All it would do is remove from those transferred their rights of appeal and the safeguards as to their terms and conditions of service provided in the Order; and I think this would be a pity from their point of view. I would remind noble Lords of the Statutory Instruments Act 1946, which at Section 5(1) states—and I want to quote again:
"… if either House, within the period of forty days … resolves that an Address be presented to Her Majesty praying that the instrument be annulled, no further proceedings shall be taken thereunder after the date of the resolution, and Her Majesty may by Order in Council revoke the instrument…".
But the section goes on to say—and again I quote:
"… so, however, that any such resolution and revocation shall be without prejudice to the validity of anything previously done under the instrument or to the making of a new statutory instrument".

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The transfers have now taken place, and neither the National Health Service Act nor this Motion can alter that fact.
My right honourable friend the Secretary of State for Social Services will be keeping a close watch on how the new arrangements are working, and will give further guidance to local authorities or take any other action that may be necessary to ensure that hospital social work is not only maintained at its present level but is developed and improved. We recognise the value not only of the contribution being made to-day by medical social workers, but the importance of that contribution to the patients. There are bound to be teething troubles—and I would say this to the noble Baroness, Lady Seear. There are always teething troubles, as she knows probably better than anybody in your Lordships' House, when one makes changes, when one passes from one thing to another. This always happens in any reorganisation. But I hope that all concerned with these services will work together to overcome them and see how best they can organise the services in the best interests of the clients. This is what is important. I hope the noble Lord, Lord Reigate, will not proceed with this Motion. If he does—and, I repeat, I hope he does not—I hope your Lordships will feel that it will be quite right and proper to reject it.
7.35 p.m.
LORD REIGATE: My Lords, I understand that it is in accordance with the procedure of your Lordships' House that I have the right to make some comments. I must confess that there are a good many passages in the speech of the noble Lord, Lord Wells-Pestell, which, if I had heard them before I said I would not press this Motion to a Division, would have made me press it to a Division with alacrity. The thought that my action might thereby force him to obtain an Order in Council to put it all back again is too tempting for words. I have a shrewd feeling that, if he had had to do that, he would have had second thoughts, and his Secretary of State would have had second thoughts, and would almost certainly have cancelled this Instrument anyway. Because the transfer has not taken place. The whole gravamen of most of my speech was that the majority of these 750 workers have not received their notice of transfer.
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They are sitting in the hospitals where they have been working wondering what is going to happen to them.
A good many of the noble Lord's remarks, I think, are common ground to us all. We all want the Health Service to work; we all want more social work. I never said the contrary, did I? I am sure not. The whole point is to have an expansion in this field; everybody wants it. The simple issue is: who commands the authority of the medical social worker who is most of the time occupied in the hospital? The fact is that when the noble Lord says that they will have all the resources of the local authorities open to them, in the majority of cases they have them now. Furthermore, the noble Lord entirely forgets that very many hospitals, perhaps even the majority, deal with more than one local authority, anyway. They are used to this; it is part of the pattern of their work. Why put them under one? Why not leave them under the Area Health Authorities, whose boundaries are, by and large, more likely to coincide with their clientele than the the others?
My Lords, I am most grateful to those noble Lords who have supported me, particularly the two noble medical Lords, whose testimony, I think, we all value very highly. I do not think they will be satisfied, and I do not think any of the consultants in the Health Service will be satisfied, if this situation continues. I think that this is something which will be brought up again. I do not think anybody is satisfied with the rather (if I may say so) bland and almost emollient phrases which the noble Lord used. I would have hated it if he had been aggressive, although I was a little aggressive myself; but it is not quite good enough to speak like a White Paper. This is a very human problem. There are 750 people who are very concerned about, not their own futures—they can all go out and get better jobs (yes, better jobs!) under local authorities than those they have in hospitals now—but with the patients.
If I may make one other point, I was rather sorry for my noble friend Lord Aberdare. I thought that he did very well, and I am quite certain that he has some sympathy, as I think the noble Lord, Lord Wells-Pestell, has, with the point of view which I was trying to put. I was not suggesting that this had been done in

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a hurry. Good heavens!—there has been enough consultation. I was trying to point out that the timing of it was such that the people with whom he was consulting, apart from the British Association of Social Workers, of whom only a small minority are affected, were health authorities, who were going out of existence, and local government authorities who were also in the process of reorganisation. I cannot believe that the matter can have had the proper consideration it should have been given.
If I may make one final point, the noble Lord, Lord Wells-Pestell, said that it would all have been a little different had I brought my Prayer earlier. I think, with respect, that is a little unfair. This matter was not drawn to my attention—I am neither a Minister, nor a Front Bench Peer—until comparatively recently. I must also point out that I do not think that Election day is a very good day to sign an Order of this nature. Parliament did not meet again until March 12 and there has been a Recess since then. The whole purpose of giving 40 days for a Prayer is that you have 40 days in which to pray—and this is the 39th. There seems to be an implication that if I had brought up this matter at an earlier time the noble Lord might have been more sympathetic. I do not believe he would have been: if I may say this without discourtesy, I do not think he would have been allowed to be more sympathetic.
At the end of the day, my Lords, I am very glad to have raised the matter and I am very grateful for the support that I have received. The noble Lord has not heard the last of this matter, because one aspect I have been most careful to exclude from my remarks concerns the appalling anomalies which happen in the pay structure. I mentioned the social workers in the V.D. clinic: they are coming over from the local authorities at local authority rates of pay, which are higher than those of the National Health Service social workers. The National Health social workers are being transferred to local authorities at their lower rates of pay, while new entrants will be paid at the higher rates. I am sure that no noble Lord would call that justice, and the matter is therefore going to be brought up again, I can assure your Lordships. So, despite the noble Lord's emollient and bland approach, I can assure him
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there is still a great deal of trouble ahead. I beg leave to withdraw my Motion.
Motion, by leave, withdrawn.

CLERICAL, MEDICAL AND GENERAL LIFE ASSURANCE BILL [H.L.]
A Message ordered to be sent to the Commons to request them to be pleased to return the Bill, the same having been sent to them in error before the privilege Amendment had been made.
  THE M.42 AND M.64 MOTORWAYS
  THE M.42 AND M.64 MOTORWAYS
  GENERAL ACT OF 1928 AND INTERNATIONAL DISPUTES
  GENERAL ACT OF 1928 AND INTERNATIONAL DISPUTES